<PAGE>
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.1)
--------------------------
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)
449933
(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)
--------------------------
CALCULATION OF FILING FEE
-------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$4,000,000 $500
-------------------------------------------------------------------------------
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS CALCULATION
ASSUMES THE PURCHASE OF 500,000 SHARES AT A PURCHASE PRICE OF $8.00 PER
SHARE.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY
PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE FILING PARTY: NOT APPLICABLE
FORM OF REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
-------------------------------------------------------------------------------
Page 1 of 8
<PAGE>
AMENDMENT NO. 1 TO SCHEDULE 14-D-1
This Amendment No. 1 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
500,000 share of common stock $.01 par value ("Shares") of the issued and
outstanding Shares of ILM II Senior Living, Inc., a Virginia Corporation (the
"Company") upon the terms and conditions set forth in the Offer to Purchase
dated June 4, 1998 (the "Offer to Purchase") and the related Agreement of
Sale (which, together with any supplements or amendments, colectively
constitute the "Offer").
Page 2 of 8
<PAGE>
14D-1(A)
-------------------- --------------------
CUSIP NO. 449933 Page 2 of 8 Pages
-------------------- --------------------
-----------------------------------------------------------------------------
i. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Redwood Investors, LLC - IRS Identification #33-0744348
-----------------------------------------------------------------------------
ii. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) ___
(b) ___
-----------------------------------------------------------------------------
iii. SEC Use Only
-----------------------------------------------------------------------------
iv. Sources of Funds (See Instructions)
WC
------------------------------------------------------------------------------
v. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) ____
------------------------------------------------------------------------------
vi. Citizenship or Place of Organization
State of Delaware
-----------------------------------------------------------------------------
vii. Aggregate Amount Beneficially Owned By Each Reporting Person
Less than 1 percent of the issued and outstanding Shares
-----------------------------------------------------------------------------
viii. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions) ____
-----------------------------------------------------------------------------
ix. Percent of Class Represented by Amount in Row (7)
Less than 1 percent of the issued and outstanding Shares
-----------------------------------------------------------------------------
x. Type of Reporting Persons (See Instructions)
OO
-----------------------------------------------------------------------------
Page 3 of 8
<PAGE>
14D-1(A)
-------------------- --------------------
CUSIP NO. 449933 Page 3 of 8 Pages
-------------------- --------------------
-----------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Arlen Capital, LLC - IRS Identification #33-0713478
-----------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) ____
(b) ____
-----------------------------------------------------------------------------
3. SEC Use Only
-----------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF
-----------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) ____
-----------------------------------------------------------------------------
6. Citizenship or Place of Organization
State of California
-----------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned By Each Reporting Person
Less than 1 percent of the issued and outstanding Shares
-----------------------------------------------------------------------------
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions) ____
-----------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1 percent of the issued and outstanding Shares
-----------------------------------------------------------------------------
10. Type of Reporting Persons (See Instructions)
OO
-----------------------------------------------------------------------------
Page 4 of 8
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is ILM II Senior Living, Inc., a
Virginia Corporation, and the address of its principal executive office is 28
State Street, Suite 1100, Boston, Massachussetts 02109.
(b) The information set forth in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
This Schedule 14D-1 relates to a tender offer by Redwood Investors, LLC, a
Delaware limited liability company ("Purchaser"), to purchase 500,000 shares of
common stock $.01 par value ("Shares") of ILM II Senior Living, Inc., a Virginia
Corporation, (the "Company"), at $8.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated June 4, 1998 and the related Agreement of Sale
(which together constitute the "Offer"), which are attached to and filed with
this Schedule 14D-1 as Exhibits (a)(5) and (a)(6), respectively, and
incorporated herein by reference. This Schedule 14D-1 is being filed on behalf
of Purchaser.
(c) The information set forth in the "Introduction" and Section 7 ("Purpose
and Effect of the Offer") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) The information set forth in the "Introduction," Section
11 ("Certain Information Concerning the Purchaser"), Section 12 ("Source and
Amount of Funds") and Schedule 1 of the Offer to Purchase is incorporated herein
by reference.
(e)-(f) During the last five years, neither Purchaser, nor to the best of
their knowledge, any of their respective executive officers and directors listed
in Schedule 1 of the Offer to Purchase (i) have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) were a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding any such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
(g) The information set forth in Schedule 1 to the Offer to Purchase is
incorporated herein by this reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) Not applicable.
(b) The information set forth in Section 9 ("Past Contacts and Negotiations
with Company") of the Offer to Purchase is incorporated herein by this
reference.
Page 5 of 7
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth in Section 12 ("Source and Amount of Funds")
of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(g) The information set forth in the "Introduction," Section 7
("Purpose and Effect of the Offer") and Section 8 ("Future Plans") of the Offer
to Purchase are incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth in the "Introduction" and Section 11
("Certain Information Concerning the Purchaser") of the Offer to Purchase are
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES
Not applicable.
ITEM 8. PERSONS RELATED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the "Introduction" and Section 15 ("Fees and
Expenses") of the Offer to Purchase are incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
(a) Not applicable.
(b)-(c) The information set forth in the "Introduction," Section 7
("Purpose and Effect of the Offer") and Section 14 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase are incorporated herein by
reference.
(d) Not applicable.
(e) Not applicable.
Page 6 of 7
<PAGE>
(f) Reference hereby is made to the Offer to Purchase and the related
Agreement of Sale, copies of which are attached hereto as Exhibits (a)(5) and
(a)(6), respectively, which are incorporated in their entirety herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(5) - Offer to Purchase, dated June 11, 1998.
(a)(6) - Agreement of Sale.
(a)(7) - Cover Letter, dated June 11, 1998 from Purchaser to Shareholders.
(a)(8) - Summary Publication of Notice of Offer.
(b) - Not applicable.
(c) - Not applicable.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
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: June 11, 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 7 of 7
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description Page Number
(a)(5) - Offer to Purchase, dated June 11, 1998.
(a)(6) - Agreement of Sale.
(a)(7) - Cover Letter, dated June 11, 1998
from Purchaser to Shareholders.
(a)(8) - Summary Publication of Notice of
Offer.
(b) - Not applicable.
(c) - Not applicable.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
Page 8 of 7
<PAGE>
EXHIBIT 99(a)(5)
AMENDED OFFER TO PURCHASE SHARES
OF
ILM II SENIOR LIVING, INC.
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME,
ON JULY 15, 1998, UNLESS THE OFFER IS EXTENDED.
Redwood Investors, LLC, a Delaware limited liability company ("Redwood"
or the "Purchaser"), hereby offers to purchase 500,000 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").
Redwood will pay a purchase price of $8.00 per Share, net to the seller
in cash, without interest, 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), whether
such dividends or other distributions are classified as a return on, or a
return of, capital ("Purchase Price"), upon the terms and subject to the
conditions set forth in this Amended Offer to Purchase (the "Offer to
Purchase") and in the Agreement of Sale, as each may be supplemented or
amended from time to time (which together constitute the "Offer"). 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,
including, without limitation, that certain lawsuit disclosed by the Company
in its Form 14A filed with the Securities and Exchange Commission on May 22,
1998. SEE SECTION 10 - CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE
COMPANY AND RELATED MATTERS.
The Shares sought to be purchased pursuant to the Offer represent, to
the best knowledge of the Purchaser, approximately 9.65 percent of Shares
outstanding as of the date of the Offer.
REDWOOD IS NOT AN AFFILIATE OF THE COMPANY
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON THE VALID TENDER OF ANY MINIMUM
NUMBER OF SHARES.
IF MORE THAN 500,000 SHARES ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASER WILL ACCEPT FOR PURCHASE UP TO 500,000 SHARES, ON A PRO RATA BASIS,
SUBJECT TO THE TERMS AND CONDITIONS HEREIN, SEE "TENDER OFFER - SECTION 13,
CERTAIN CONDITIONS OF THE OFFER."
A SHAREHOLDER MAY TENDER ANY OR ALL SHARES OWNED BY SUCH SHAREHOLDER.
IMPORTANT
Any Shareholder desiring to tender ("Seller") any or all of such Shares
should complete and sign the Agreement of Sale in accordance with the
instructions in the Agreement of Sale and mail or deliver the Agreement of
Sale and any other required documents to Arlen Capital, LLC at the address
set forth on the back cover of this Offer to Purchase, or request his or her
broker, dealer, commercial bank, credit union, trust company or other nominee
to effect the transaction for him or her.
----------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE AGREEMENT OF SALE. NO SUCH
RECOMMENDATION, INFORMATION, OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
QUESTIONS OR REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES OF THIS OFFER
TO PURCHASE OR THE AGREEMENT OF SALE MAY BE DIRECTED TO:
ARLEN CAPITAL, LLC
1650 HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CA 92108
(800) 891-4105
<PAGE>
TABLE OF CONTENTS
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. Terms of the Offer.. . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Acceptance for Payment and Payment for Shares. . . . . . . . . 3
Section 3. Procedures for Tendering Shares. . . . . . . . . . . . . . . . 3
Section 4. Withdrawal Rights. . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Extension of Tender Period; Termination; Amendment . . . . . . 4
Section 6. Certain Tax Consequences . . . . . . . . . . . . . . . . . . . 5
Section 7. Purpose and Effects of the Offer.. . . . . . . . . . . . . . . 5
Section 8. Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 9. Past Contacts and Negotiations With Company. . . . . . . . . . 5
Section 10. Certain Information Concerning the Company . . . . . . . . . . 6
Section 11. Certain Information Concerning the Purchaser . . . . . . . . . 7
Section 12. Source and Amount of Funds . . . . . . . . . . . . . . . . . . 8
Section 13. Certain Conditions of the Offer. . . . . . . . . . . . . . . . 8
Section 14. Certain Legal Matters and Required Regulatory
Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 15. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . 9
Section 16. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 9
SCHEDULE 1
Information with respect to the Managers of Arlen Capital, LLC,
the Manager of Purchaser (Redwood) . . . . . . . . . . . . . . . . . . . S-1
SCHEDULE 2
Properties Owned by the Company. . . . . . . . . . . . . . . . . . . . . S-2
<PAGE>
INTRODUCTION
OFFER TO PURCHASE
ILM II SENIOR LIVING, INC. SHARES
FOR
$8.00 CASH PER SHARE
REDWOOD IS NOT AN AFFILIATE OF THE COMPANY
REDWOOD'S OFFER
Redwood is offering to purchase your Shares in the Company for $8.00 cash
per share of common stock $.01 par value ("Shares") of the issued and
outstanding Shares, which amount will be reduced by any cash dividends or
other distributions declared or paid from any source, by the Company 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.
THE OFFER IS FOR 500,000 SHARES, REPRESENTING APPROXIMATELY 9.65 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 500,000 SHARES ARE VALIDLY TENDERED TO REDWOOD, WE WILL ACCEPT
UP TO 500,000 SHARES, ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND
CONDITIONS IN THE OFFER.
SPECIAL FACTORS
Before selling your Shares to Redwood, please consider the following:
- The Company's Annual Report on Form 10-K filed April 7, 1998 with
the Securities and Exchange Commission ("SEC") for the fiscal year
ended August 31, 1997, stated:
"The Company and ILM II Lease Corporation are considering
a merger of the Company with ILM I, a merger of ILM II
Lease Corporation with ILM I Lease Corporation and other
business combinations. The Company has not fully evaluated
any of these alternatives and is not in a position at this
time to recommend any actions to the shareholders. There can
be no assurance that the Company will recommend taking any
of the actions identified above or any others which may be
recommended by its investment bankers."
- No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Redwood's offer, and no
representation is made as to such fairness or other measures of value
that may be relevant to the Shareholders. We urge you to consult your
own financial advisor in connection with Redwood's offer.
- Although Redwood cannot predict the future value of the Company's
assets on a per Share basis, the purchase price could differ
significantly from the net proceeds that would be realized from a
current sale of the Properties owned by the Company or that may be
realized upon future liquidation of the Company
- Redwood is making the offer with a view to making a profit.
Accordingly, there is a conflict between the desire of Redwood to
acquire your Shares at a low price and your desire to sell your Shares
at a high price. 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.
- The tax consequences of the Offer to a particular Shareholder may be
different from those of other Shareholders, and we urge you to consult
your own tax advisor in connection with the Offer.
- Shareholders who sell their Shares to Redwood will be giving up the
opportunity to participate in any future potential benefits of
ownership of the Shares such as future dividends or other
distributions, proceeds from the sale or refinancing of the Company's
Properties, or liquidation of the Company.
1
<PAGE>
- Partnership Spectrum, a national reporting service covering limited
partnerships and non-trading REIT's reported the following activity
for the Company's shares between March 1 and April 31, 1998: High
$9.08; Low $8.05; Weighted Average $8.55, with 6 trades reported and
a total shares of 10,493 traded.
The purpose of the Offer is to allow the Purchaser to benefit from any one
or a combination of the following: (i) any cash dividends or other
distributions, whether such dividends or other distributions are classified as a
return on, or a return of, capital, from the operations in the ordinary course
of the Company; (ii) any distributions of net proceeds from the sale of assets
by the Company; (iii) any distributions of net proceeds from the liquidation of
the Company; (iv) any cash from any redemption of the Shares by the Company, (v)
any stock or interest in an entity into which the Company may be merged. The
Purchaser is acquiring the Shares as an investment 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 Offer is not conditioned upon the valid tender of any minimum number of
the Shares. If more than 500,000 Shares are tendered and not withdrawn, the
Purchaser will accept up to 500,000 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 terminate the Offer at any time
and to waive any or all of the conditions of the Offer, although the Purchaser
does not presently intend to do so.
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith is required to file reports and other information with the Securities
and Exchange Commission ("SEC") relating to its business, financial condition
and other matters. Such reports and other information may be inspected at the
public reference facilities maintained by the SEC at room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and is available for inspection
and copying at the regional offices of the SEC located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Room of the SEC in
Washington, D.C. at prescribed rates or from the SEC's Website at
http://www.sec.gov.
The Purchaser has filed with the SEC a Tender Offer Statement on Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, which provides certain additional
information with respect to the Offer. Such Statements and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the SEC in the manner specified above.
According to publicly available information, there were 5,181,236 Shares
issued and outstanding on August 31, 1997, and 3,356 record holders of the
Company's shares as of August 31, 1997. Redwood owns less than 1 percent of
the outstanding Shares.
Information contained in this Offer to Purchase which relates to, or
represents statements made by, the Company, has been derived from information
provided in reports and other information filed with the SEC by the Company.
Shareholders are urged to read this Offer to Purchase and the accompanying
Agreement of Sale carefully before deciding whether to tender (sell) their
Shares.
2
<PAGE>
SECTION 1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for up to 500,000 Shares that are validly
tendered on or prior to the Expiration Date. The term "Expiration Date"
shall mean 12:00 midnight, Pacific Time, on July 15, 1998 unless and until
the Purchaser shall have extended the period of time for which the Offer is
open, in which event the term "Expiration Date" shall mean the latest date on
which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
"Tender Offer--Section 13. Certain Conditions of the Offer," which sets forth
in full the conditions of the Offer. Purchaser in its sole discretion, for
any reason, may terminate the offer on or before the Expiration Date, by
providing notice of termination as set forth in Section 5. The Purchaser will
not be required to accept for payment or to pay for any Shares tendered, and
may amend or terminate the Offer if the following conditions are not
satisfied or waived by Purchaser on or before the Expiration Date:
(i) Purchaser shall have received from the Seller, a properly
completed and duly executed Agreement of Sale; and
(ii) Purchaser shall have received from the Company, confirmation,
to the reasonable satisfaction of Purchaser, that upon purchase
of the Shares: (a) the Purchaser will be entitled to receive
all dividends or other distributions, from any source, made by
the Company after May 1, 1998; and (b) the Company will admit
Purchaser as a Shareholder of record.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
If not more than 500,000 Shares are validly tendered and not properly
withdrawn prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment all such
Shares so tendered.
If more than 500,000 Shares are validly tendered and not properly
withdrawn on or prior to the Expiration Date, the Purchaser, upon the terms
and subject to the conditions of the Offer, will accept for payment 500,000
Shares so tendered, on a pro rata basis.
In the event that proration is required, the Purchaser will determine
the precise number of Shares to be accepted and will announce the final
results of proration as soon as practicable, but in no event later than five
business days following the Expiration Date. Purchaser will not pay for any
Shares tendered until after the final proration factor has been determined.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to Shareholders pursuant to the Offer, such increased
consideration shall be paid for all Shares accepted for payment pursuant to
the Offer, whether or not such Shares were tendered prior to such increase.
Purchaser will pay for the Shares within 5 business days after Purchaser
has received written confirmation from the Company that the Company has
admitted Redwood as a Shareholder of record.
SECTION 3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Agreement of Sale and all share
certificates, if any, must be received by Redwood at its address set forth on
the back cover of this Offer to Purchase on or prior to the Expiration Date
and not withdrawn by the Expiration Date. A Shareholder may tender any or
all Shares owned by such Shareholder.
The delivery of the Agreement of Sale will be deemed made only when
actually received by Redwood. Sufficient time should be allowed by Seller to
ensure timely delivery.
BACKUP FEDERAL INCOME TAX WITHHOLDING. A tendering Shareholder must
verify such Shareholder's correct taxpayer identification number or social
security number, as applicable, and make certain warranties and
representations that it is not subject to backup federal income tax
withholding as set forth in the Agreement of Sale.
TENDERS BY BENEFICIAL HOLDERS. A tender of Shares can only be made by
the Registered Owner of such Shares, and the party whose name appears as
Registered Owner must tender such Shares on behalf of any beneficial holder,
as set forth in the "Instructions" to the Agreement of Sale.
3
<PAGE>
SIGNATURE GUARANTEES. The signature(s) on the Agreement of Sale must be
guaranteed by a commercial bank, savings bank, credit union, savings and loan
association, or trust company having an office, branch, or agency in the
United States, or a brokerage firm that is a member firm of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., as set forth in the Agreement of Sale.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the form of
documents and validity, eligibility (including time of receipt), and
acceptance for payment of any tender of Shares will be determined by the
Purchaser, in its sole discretion, which determination will be final and
binding on all parties.
OTHER REQUIREMENTS. By executing and delivering the Agreement of Sale, a
tendering Shareholder irrevocably appoints the Purchaser as such
Shareholder's proxy, with full power of substitution. All such proxies are
irrevocable and coupled with an interest in the tendered Shares and empower
the Purchaser to exercise all voting and other rights of such Shareholder as
they in their sole discretion may deem proper at any meeting of Shareholders.
The complete terms and conditions of the proxy are set forth in the Agreement
of Sale.
By executing and delivering the Agreement of Sale, a tendering
Shareholder also irrevocably constitutes and appoints the Purchaser and its
designees as the Shareholder's attorneys-in-fact. Such appointment will be
effective upon Purchaser's payment for the Shares. The complete terms and
conditions of the Power of Attorney are set forth in the Agreement of Sale.
By executing and delivering the Agreement of Sale, a tendering
Shareholder will irrevocably assign to the Purchaser and its assignees all
right, title, and interest that such Shareholder has to the Shares,
including, without limitation, any and all dividends or other distributions
made by the Company after May 1, 1998, regardless of the fact that the record
date for any such dividends or other distributions may be a date prior to the
Expiration Date and whether such dividends or other distributions are
classified as a return on, or a return of, capital. The complete terms and
conditions of the assignment of the Shareholder's Shares are set forth in the
Agreement of Sale.
By executing the Agreement of Sale, a tendering Shareholder represents
that either (I) the tendering Shareholder is not a plan subject to Title 1 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R
Section 2510-3-101 of any such plan; or (ii) the tender and acceptance of
Shares pursuant to the applicable Offer will not result in a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
By executing the Agreement of Sale, a tendering Shareholder also agrees
that regardless of any provision in the Company's Articles of Incorporation
and Bylaws which provides that a transfer is not effective until a date
subsequent to the date of any transfer of Shares under the Offer, the
Purchase Price shall be reduced by any dividends or other distributions with
respect to the Shares after May 1, 1998, whether such dividends or other
distributions are classified as a return on, or a return of, capital.
Shareholders will not have any appraisal or dissenter's rights with respect
to or in connection with the Offer.
SECTION 4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date. In the event the
Offer is extended beyond the Expiration Date and beyond August 3, 1998, the
Shares tendered may be withdrawn at any time.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal, with signature(s) guaranteed in the same
manner as in Section 3 above, must be timely received by the Purchaser at its
address set forth on the last page of this Offer to Purchase. Any such notice
of withdrawal must specify the name of the person who tendered the Shares to
be withdrawn, and the number of Shares to be withdrawn. Any Shares properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but
may be re-tendered at any subsequent time prior to the Expiration Date by
following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
The Purchaser expressly reserves the right, in its sole discretion, at
any time (i) to extend the period of time during which the Offer is open;
(ii) to terminate the Offer; (iii) upon the failure of the Seller to satisfy
any of the conditions specified in Section 13, to delay the acceptance for
payment of, or payment for, any Shares; and (iv) to amend the Offer in any
respect (including, without limitation, by increasing or decreasing the
consideration offered). Any extension, termination, or amendment will be
followed as promptly as practicable by public announcement; the announcement
in the case of an extension to be issued
4
<PAGE>
no later than 9:00 a.m., Pacific Time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public
announcement requirement of Rule 14e-1(d) under the Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which
an offer must remain open following a material change in the terms of the
offer or of information concerning the offer, other than a change in price or
a change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the change in the terms
or information. With respect to a change in price or a change in percentage
of securities sought, however, a minimum ten-business-day period is generally
required by Redwood to allow for adequate dissemination to security holders
and for investor response. As used in this Offer, "business day" means any
day other than a Saturday, Sunday, or a federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, Pacific Time.
SECTION 6. CERTAIN TAX CONSEQUENCES
SHAREHOLDERS SHOULD CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO EACH SUCH SHAREHOLDER OF SELLING SHARES
PURSUANT TO THE OFFER.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER.
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes with a view towards making a profit, 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. 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.
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. The Purchaser established the
Purchase Price based on its own independent analysis of the Company, which
included a valuation of the properties owned by the Company, Purchaser's or
Purchaser's agent's inspection of each property, and by a subjective
determination of the financial condition of the Company. The Purchaser made
its subjective determination of the Purchase Price per Share from its
analysis of financial information which was available from information in the
Form Annual Report on Form 10-K filed with the SEC ("10-K") and the Form
Quarterly Report on Form 10-Q ("10-Q").
CERTAIN RESTRICTIONS ON TRANSFER OF SHARES. The Articles of
Incorporation and Bylaws of the Company restrict any single Shareholder from
holding more than 9.8 percent of the Company's total outstanding Shares,
without the approval of the Company's Board of Directors.
EFFECT OF SALES THROUGH "MATCHING SERVICE" AND PRICE RANGE OF THE
SHARES. If a substantial number of Shares are purchased pursuant to the
Offer, the result will be a reduction in the number of Shareholders. In the
case of certain kinds of equity securities, a reduction in the number of
security holders might be expected to result in a reduction in the liquidity
and volume of activity in the trading market for the security. In this case,
however, there is no active trading market for the Shares, but only several
services that "match" buyers and sellers of Shares, typically by means of an
auction, and the Purchaser believes a reduction in the number of Shareholders
will not materially further restrict the Shareholders' ability to find
purchasers for their Shares. The Company disclosed in its Annual Report on
Form 10-K filed with the SEC for the fiscal year ended August 31, 1997,
"There is no current market for these Shares."
SECTION 8. FUTURE PLANS.
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. However, the
Purchaser and its affiliates may acquire additional 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. The Purchaser is acquiring the Shares as an investment and
presently intends to support the Company's existing management. At any time
after the Expiration Date, Purchaser may commence one or more limited tender
offers, or tender offers filed with the SEC pursuant to Schedule 14D-1, at
the same or a higher price ("Subsequent Offers"). If the price offered to a
seller in a Subsequent Offer is higher, then any Seller who tenders Shares
pursuant to this Offer would NOT be entitled to the higher price.
SECTION 9. PAST CONTACTS AND NEGOTIATIONS WITH THE COMPANY.
Since January 1998, and through May 1998, the Manager of the Purchaser
has contacted by telephone Lawrence A. Cohen, the President and Chief
Executive Officer and a Director of the Company, with regard to obtaining the
list of Shareholders for the Company and for ILM Lease Corporation and to
make arrangements for Purchaser to inspect the property owned by the Company
in Santa Barbara. On March 25, 1998, Purchaser sent a letter requesting the
list of Shareholders, and on April 7, 1998,
5
<PAGE>
Purchaser received a response which indicated that the Company's position was
that any shareholder would have to have been a Shareholder for six months
before such Shareholder would be entitled to request a copy of the list of
Shareholders. In April 1998, Purchaser's attorney spoke with the Company's
attorney with regard to obtaining the shareholder list. Mr. Cohen has
indicated that the Purchaser would only be able to receive the list of
Shareholders after Purchaser had been a Shareholder for six months. Mr.
Cohen did arrange for Purchaser to inspect the Santa Barbara property. On
May 13, 1998, the Manager of the Purchaser contacted Mr. Cohen to request a
clarification of certain information filed in the Company's 10-K for fiscal
year ended August 31, 1997. Mr. Cohen has been very responsive to Purchaser
and has promptly returned all telephone calls, but as of this date, Mr. Cohen
and Purchaser have not had discussions with regard to clarification of
certain matters in the Company's 10-K for fiscal year ended August 31, 1997.
SECTION 10. CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE COMPANY AND
RELATED MATTERS.
The Company was organized on February 5, 1990 in the Commonwealth of
Virginia for the purpose of making construction and participating mortgage
loans secured by rental housing complexes for independent living senior
citizens. The Company's principal executive office is located at 28 State
Street, Suite 1100, Boston, Massachusetts 02109.
The Company elected to qualify and be taxed as a Real Estate Investment
Trust ("REIT") under the Internal Revenue Code of 1986, as amended, for each
taxable year of operations. The Company originally invested the net proceeds
of the initial public offering in six participating mortgage loans secured by
Senior Housing Facilities located in five different states. All of the loans
made by the Company were originally with a borrower specializing in the
development, acquisition and operation of Senior Housing Facilities. In
February 1993, the borrower announced that it was experiencing liquidity
problems that resulted in the inability to meet its obligations and defaulted
on the regularly scheduled mortgage loan payments due to the Company.
Litigation ensued between the Company and borrower and their affiliates and
under the terms of a settlement agreement, each of the properties owned by
borrower was transferred to newly-created special purpose corporations
affiliated with the Company. In August 1995, each of the special purpose
corporations was merged into ILM II Holding, which holds title to the six
Senior Housing Facilities, and which is majority owned by the Company. The
Company completed its restructuring plans by converting ILM II Holding to a
REIT for tax purposes.
DIVIDENDS. The Company disclosed in its Annual Report on Form 10-K
filed with the SEC for the fiscal year ended August 31, 1997, that it made
dividends as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending Cash Dividends
August 31 Per Share
--------- ---------
<S> <C>
1995 $0.43
1996 $0.50
1997 $0.61
</TABLE>
The foregoing summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information and related
notes contained therein.
Set forth below is a summary of certain financial information with
respect to the Company, which has been excerpted or derived from the
Company's Annual Report on Form 10-K for the fiscal year ended August 31,
1997. More comprehensive financial and other information is included in such
reports and other documents filed by the Company with the SEC, and the
following summary is qualified in its entirety by reference to such reports
and other documents and all the financial information and related notes
contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the SEC at the addresses set forth
in the "Introduction." The Purchaser disclaims any responsibility for the
information included in such reports and documents, and extracted in this
Offer to Purchase.
6
<PAGE>
ILM II SENIOR LIVING, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Income Statement Data (in Fiscal Year Fiscal Year Fiscal Year
thousands): Ended 8/31/97 (a) Ended 8/31/96 Ended 8/31/95
----------------- ------------- -------------
<S> <C> <C> <C>
Revenues $4,515 $ 46 $ 87
Operating Income (Loss) $2,184 $ (587) $ (877)
Equity in Income from
Properties securing Mortgage
Loans -- $2,674 $2,308
Net Income $2,184 $2,087 $1,431
Earnings Per Share of Common
Stock $ 0.42 $ 0.40 $ 0.27
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data (in thousands): As of As of As of
8/31/97 8/31/96 8/31/95
------- ------- -------
<S> <C> <C> <C>
Total Assets $33,355 $33,973 $35,052
--------------------------------------------
Shares Outstanding 5,181,236 5,181,236 5,181,236
</TABLE>
(a) As a result of certain restructuring plans which the Company began to
implement during fiscal year 1995, the financial position and results of
operations of the combined operating investment properties in which the
Company has invested have been presented on a consolidated basis in the
Company's financial statements beginning in fiscal 1997. Prior to fiscal
1997, the Company had accounted for its interests in such properties under
the equity method as a result of the Company not holding majority voting
control of ILM II Holding.
For information concerning the properties owned by the Company, please
refer to Schedule 2 attached hereto, which is incorporated herein by
reference.
The Company disclosed in a Form 14A filed on May 22, 1998 with the
Securities and Exchange Commission that "on May 8, 1998, Andrew A. Feldman
and Jeri Feldman, as Trustees for the Andrew A. & Jeri Feldman Revocable
Trust dated 9/18/90, commenced a purported class action lawsuit on behalf of
that trust and all other shareholders of the Company and ILM Senior Living,
Inc. in the Supreme Court of the State of New York, County of New York
against the Company, ILM and the directors of both corporations. Andrew A.
Feldman and Jeri Feldman, as Trustees for the Andrew A. & Jeri Feldman
Revocable Trust dated 9/18/90, on behalf of themselves and others similarly
situated, v. Lawrence A. Cohen, Jeffry R. Dwyer, J. William Sharman, Jr.,
Carl J. Schramm, Julien G. Redele, ILM Senior Living, Inc. and ILM II Senior
Living, Inc. (N.Y. Sup. Ct. N.Y. County)."
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser is a Delaware Limited Liability Company which was
organized for the purpose of acquiring the Shares pursuant to the Offer. The
Manager of the Purchaser is Arlen Capital, LLC, a California limited
liability company ("AC"), which is controlled by its two members, Don
Augustine and Lynn T. Wells. AC is engaged in financial and business
consulting and making tender offers and opportunistic investments. The
Purchaser's and AC's offices are located at 1650 Hotel Circle North, Suite
200, San Diego, California 92108. For certain information concerning the
members of AC, see Schedule 1 to this Offer to Purchase.
7
<PAGE>
Except as otherwise set forth herein, (i) neither the Purchaser nor, to
the best knowledge of the Purchaser, any of the persons listed on Schedule 1,
or any affiliate of the Purchaser beneficially owns or has a right to acquire
any Shares; (ii) neither the Purchaser nor, to the best knowledge of the
Purchaser, any of the persons listed on Schedule 1, or any affiliate of the
Purchaser or any member, director, executive officer, or subsidiary of any of
the foregoing has effected any transaction in the Shares; (iii) neither the
Purchaser nor, to the best knowledge of the Purchaser, any of the persons
listed on Schedule 1 or any affiliate of the Purchaser has any contract,
arrangement, understanding, or relationship with any other person with
respect to any securities of the Company, including but not limited to,
contracts, arrangements, understandings, or relationships concerning the
transfer or voting thereof, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies, consents, or authorizations; (iv) there have been no
transactions or business relationships which would be required to be
disclosed under the rules and regulations of the SEC between any of the
Purchasers, or, to the best knowledge of the Purchaser, any of the persons
listed on Schedule 1 or any affiliate of the Purchaser, on the one hand, and
the Company or affiliates, on the other hand; and (v) there have been no
contracts, negotiations, or transactions between the Purchaser or to the best
knowledge of the Purchaser, any of the persons listed on Schedule 1 or any
affiliate of the Purchaser, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer (other than as described in Section 8 of this
Offer) or other acquisition of securities, an election or removal of the
officers or directors of the Company, or a sale or other transfer of a
material amount of assets.
SECTION 12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser expects that approximately $4,000,000 (exclusive of fees
and expenses) will be required to purchase 500,000 Shares (approximately 9.65
percent of the outstanding Shares), if tendered. The Purchaser has a binding
commitment from its members to provide those funds as capital contributions
to Purchaser. Purchaser's members have an aggregate net worth substantially
in excess of the amount required to purchase the 500,000 Shares.
SECTION 13. CERTAIN CONDITIONS OF THE OFFER.
Purchaser in its sole discretion, for any reason, may terminate the
offer on or before the Expiration Date, by providing notice of termination as
set forth in Section 5. The Purchaser will not be required to accept for
payment or to pay for any Shares tendered, and may amend or terminate the
Offer if the following conditions are not satisfied or waived by Purchaser on
or before the Expiration Date:
(i) Purchaser shall have received from the Seller, a properly
completed and duly executed Agreement of Sale; and
(ii) Purchaser shall have received from the Company,
confirmation, to the reasonable satisfaction of Purchaser,
that upon purchase of the Shares: (a) the Purchaser will be
entitled to receive all dividends or other distributions,
from any source, made by the Company after May 1, 1998; and
(b) the Company will admit Purchaser as a Shareholder of
record.
The foregoing conditions are for the sole benefit of the Purchaser and
its affiliates and may be asserted by the Purchaser regardless of the
circumstances (including, without limitation, any action or inaction by the
Purchaser or any of its affiliates) giving rise to such condition, or may be
waived by the Purchaser, in whole or in part, from time to time in its sole
discretion. The failure by the Purchaser at any time to exercise the
foregoing rights will not be deemed a waiver of such rights, which rights
will be deemed to be ongoing and may be asserted at any time and from time to
time. Any determination by the Purchaser concerning the events described in
this Section 13 will be final and binding upon all parties.
SECTION 14. CERTAIN LEGAL MATTERS AND REQUIRED REGULATORY APPROVALS.
GENERAL. Except as set forth in this Offer to Purchase, based on its
review of publicly available filings by the Company with the SEC and other
publicly available information regarding the Company, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Company, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Shares as contemplated herein, or
any filings, approvals, or other actions by or with any domestic, foreign, or
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Shares by the Purchaser pursuant to the
Offer as contemplated herein. Should any such approval or other action be
required, there can be no assurance that any such additional approval or
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the Company's business, or that
certain parts of the Company's or the Purchaser's business might not have to
be disposed of or held separate or other substantial conditions complied with
in order to obtain such approval. The Purchaser's obligation to purchase and
pay for Shares is subject to certain conditions. See "Tender Offer-- Section
13. Certain Conditions of the Offer."
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated until certain
information and documentary material has been furnished for review by the
8
<PAGE>
Antitrust Division of the Department of Justice (the "Antitrust Division")
and the FTC and certain waiting period requirements have been satisfied. The
Purchaser does not currently believe any filing is required under the HSR Act
with respect to its acquisition of Shares contemplated by the Offer.
Based upon an examination of publicly available information relating to
the business in which the Company is engaged, the Purchaser believes that the
acquisition of Shares pursuant to the Offer would not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer
on antitrust grounds will not be made, or, if such challenge is made, what
the result will be.
STATE TAKEOVER LAWS. The Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer, and nothing in the Offer, nor any action
taken in connection herewith, is intended as a waiver of that right. In the
event that any state takeover statute is found applicable to the Offer, the
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer.
In such case, the Purchaser may not be obligated to accept for purchase, or
pay for, any Shares tendered.
SECTION 15. FEES AND EXPENSES.
Arlen Capital has been retained by the Purchaser to act as the
Information Agent in connection with the Offer. The Information Agent will
receive reasonable and customary compensation for its services in connection
with the Offer and will be indemnified against certain liabilities and
expenses in connection therewith.
Except as set forth in this Section 15, the Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks,
trust companies, and other nominees, if any, will, upon request, be
reimbursed by the Purchaser for customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
SECTION 16. MISCELLANEOUS.
THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF) SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. THE PURCHASER IS NOT AWARE OF ANY JURISDICTION WITHIN THE
UNITED STATES IN WHICH THE MAKING OF THE OFFER OF THE ACCEPTANCE THEREOF
WOULD BE ILLEGAL.
In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Purchaser
will withdraw the Offer. The Purchaser has filed with the SEC the Schedule
14D-1, together with exhibits, pursuant to Rule 14d-3 of the General Rules
and Regulations under the Exchange Act, furnishing certain information with
respect to the Offer, and may file amendments thereto. Such Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies
may be obtained from the SEC as set forth above in "Introduction."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Agreement of Sale and, if given or made, any such
information or representation must not be relied upon as having been
authorized. Neither the delivery of the Offer to Purchase nor any purchase
pursuant to the Offer shall, under any circumstances, create any implication
that there has been no change in the affairs of the Purchaser or the Company
since the date as of which information is furnished or the date of this Offer
to Purchase.
REDWOOD INVESTORS, LLC
1650 HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CA 92108
(800) 891-4105
9
<PAGE>
SCHEDULE 1
INFORMATION REGARDING THE MANAGERS
OF ARLEN CAPITAL, LLC
Set forth in the table below are the names of the members of Arlen
Capital, LLC and their present principal occupations and five (5) year
employment histories. Each individual is a citizen of the United States and
the business address of each person is 1650 Hotel Circle North, Suite 200,
San Diego, California 92108.
Present Principal Occupation or Employment
Name and Five-Year Employment History
Don Augustine Member and Manager of Arlen Capital LLC. President of Arlen
Capital, Inc., a California corporation, its predecessor
entity since 1989.
Lynn T. Wells Member and Manager of Arlen Capital LLC. Vice President of
Arlen Capital, Inc., a California corporation, its
predecessor entity since 1989.
Arlen Capital LLC and its predecessor entity, Arlen Capital, Inc.
("AC"), have been providing business and financial consulting services since
1989. AC principals offer an extensive background in the capital markets,
real estate securities, and real estate markets. AC has developed
relationships with capital sources who furnish equity and debt for both
public and private transactions. In previous transactions, AC has provided,
for its clients, consulting services for the following types of transactions:
debt and equity placements for leveraged buy-outs; the making of tender
offers; debt and equity capital for real estate development projects;
structuring of companies to become REITs; and creation of joint venture
partnerships between real estate developers and investors. In addition, AC
provides financial structuring advice and analyses for refinancing and
financing alternatives for the design and structuring of joint ventures,
limited partnerships (both public and private), and for Real Estate
Investment Trusts.
S-1
<PAGE>
SCHEDULE 2
PROPERTIES OWNED BY THE COMPANY
The following Schedule of Properties owned by the Company was extracted from
the Company's Annual Report Form 10-K for the fiscal year ending August 31,
1997, as filed with the SEC.
<TABLE>
<CAPTION>
Property Name
and Location (1) Type of Property Size
- ---------------- ---------------- -----
<S> <C> <C>
The Palms Senior Housing Facility 205 Units
Fort Myers, FL
Crown Villa Senior Housing Facility 73 Units
Omaha, NE
Overland Park Place Senior Housing Facility 104 Units
Overland Park, KS
Rio Las Palmas Senior Housing Facility 164 Units
Stockton, CA
The Villa at Riverwood Senior Housing Facility 120 Units
St. Louis County, MO
Villa Santa Barbara (2) Senior Housing Facility 125 Units
Santa Barbara, CA
West Shores Senior Housing Facility 134 Units
Hot Springs, AR
Villa Santa Barbara (2) Senior Housing Facility 123 Units
Santa Barbara, CA
</TABLE>
(1) See Notes to the Financial Statements filed with the Company's annual
report for a description of the agreements through which the Company has
leased these facilities.
(2) The Santa Barbara facility is jointly leased by the Company and an
affiliated Company, ILM I Lease Corporation ("Lease I"). The Company and
Lease I have entered into a joint tenancy agreement which governs the
operation of the property and the apportionment of revenues and expenses
between the parties. Any amounts generated by the operations of the
Santa Barbara property are equitably apportioned between the Company and
Lease I (generally 75% and 25%, respectively).
More comprehensive financial and other information is included in
such report and other documents filed by the Company with the SEC, and the
following is qualified by reference to such report and other documents. Such
report and other documents may be examined and copies may be obtained from
the offices of the SEC at the addresses set forth in the "Introduction"
section of the Offer to Purchase. The Purchaser disclaims any responsibility
for the information included in such report and documents, and extracted in
this Schedule 2, as well as any changes which may have taken place in the
information in the report since the date it was issued.
S-2
<PAGE>
EXHIBIT 99(a)(6)
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 $7.00 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. 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.
<PAGE>
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 (Medallion Guarantee for EACH
Seller's 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:____________________________________ -
- - Authorized Representative -
- -------------------------------------------
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 INVESTORS
5.1.98.ILM-II
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(a)(7)
ILM II SENIOR LIVING, INC.
REDWOOD INVESTORS, LLC
June 11, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED OFFER TO PURCHASE
ILM II SENIOR LIVING, INC. SHARES
FOR
$8.00 CASH PER SHARE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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.
REDWOOD IS NOT AN AFFILIATE OF THE COMPANY
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
<PAGE>
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 500,000 SHARES, REPRESENTING APPROXIMATELY 9.65 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
500,000 SHARES ARE VALIDLY TENDERED TO REDWOOD, WE WILL ACCEPT UP TO 500,000
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 July 15, 1998 unless
extended.
For questions or assistance in completing the Agreement of Sale, please call
Arlen Capital at (800) 891-4105.
REDWOOD INVESTORS, LLC
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1650 HOTEL CIRCLE NORTH, SUITE 200 - SAN DIEGO, CA 92108 - (800) 891-4105 -
FACSIMILE (619) 686-2056
<PAGE>
EXHIBIT 99(a)(8)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE, NOR A SOLICITATION OF AN
OFFER TO SELL THE SECURITIES. THE OFFER IS MADE ONLY BY THE OFFER TO PURCHASE
AND THE RELATED AGREEMENT OF SALE AND IS NOT BEING MADE (NOR WILL TENDERS BE
ACCEPTED FROM) HOLDERS OF SHARES IN ANY JURISDICTION WHICH THE OFFER OR THE
ACCEPTANCE THEREOF WILL NOT BE IN COMPLIANCE WITH THE SECURITIES LAWS OF SUCH
JURISDICTION; IN THOSE JURISDICTIONS WHERE SECURITIES LAWS REQUIRE THE OFFER TO
BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON
BEHALF OF THE PURCHASER ONLY BY ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 500,000 SHARES OF COMMON STOCK $.01 PAR VALUE ("SHARES") OF
ILM II SENIOR LIVING, INC.
A VIRGINIA CORPORATION ("ILM-II") AT A PRICE OF $8.00 PER SHARE, BY:
REDWOOD INVESTORS, LLC
(THE "PURCHASER")
The Purchaser is offering to purchase for cash up to 500,000 Shares held by
the Shareholders of ILM-II (the "Shareholders") at $8.00 per Share upon the
terms and subject to the conditions set forth in Purchaser's Amended Offer to
Purchase and in the related Agreement of Sale (which together constitute the
"Offer" and the "Tender Offer Documents").
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME, ON JULY
15, 1998 UNLESS THE OFFER IS EXTENDED.
Funding for the purchase of the Shares will be provided through capital
contributions to the Purchaser by its members.
The Offer will expire at 12:00 midnight, Pacific time on July 15, 1998
and unless and until Purchaser, in its sole discretion, shall have extended
the period of time for which the Offer is open (such date and time, as
extended the "Expiration Date").
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The minimum period during which an offer must remain
open following any material change in the terms of the Offer, other than a
change in price or a change in percentage of securities sought or a change in
any dealer's soliciting fee, will depend upon the facts and circumstances
including the materiality of the change with respect to a change in price or,
subject to certain limitations, a change in the percentage of securities
sought. A minimum of ten business days from the date of such change is
generally required to allow for adequate dissemination to Shareholders.
Accordingly, if prior to the Expiration Date, Purchaser increases (other than
increases of not more than two percent of the outstanding Shares) or
decreases the number of Shares being sought, or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day
from the date that notice of such increase or decrease is first published,
sent or given to Shareholders, the Offer will be extended at least until the
expiration of such ten business days. For purposes of the Offer, a "business
day" means any day other than a Saturday, Sunday or federal holiday and
consists of the time period from 12:01 a.m. through 12:00 midnight, Pacific
Time.
In all cases payment for the Shares purchased pursuant to the Offer will
be made only after timely receipt of the Agreements of Sale (or facsimiles
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by such Agreements of Sale.
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shareholders who tender their Shares in response to the Offer will have
the right to withdraw their tendered Shares at any time prior to the
Expiration Date by sending a written or facsimile transmission notice of
withdrawal to Purchaser specifying the name of the person who tendered the
Shares to be withdrawn. In addition, in the event the Offer is extended
beyond the Expiration Date and beyond August 3, 1998, the Shares tendered may
be withdrawn at any time.
If tendering Shareholders tender more than the number of Shares that
Purchaser seeks to purchase pursuant to the Offer, Purchaser will take into
account the number of Shares so tendered and take up and pay for as nearly as
may be pro rata, disregarding fractions, and in accordance with ILM-II's
Articles of Incorporation and Bylaws, according to the number of Shares
tendered by each tendering Shareholder during the period during which the
Offer
<PAGE>
remains open.
The terms of the Offer are more fully set forth in the formal Tender
Offer Documents which are available from Purchaser. The Offer contains terms
and conditions and the information required by Rule 14d-6(c)(l)(vii) under
the Exchange Act which are incorporated herein by reference.
THE TENDER OFFER DOCUMENTS CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE
READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
The Tender Offer Documents may be obtained by written request to Purchaser
or as set forth below.
A request has been made to ILM-II pursuant to Rule 14d-5 under the Exchange
Act for the use of its list of Shareholders for the purpose of disseminating the
Offer to Shareholders. Upon compliance by ILM-II with such request, the Tender
Offer Documents and, if required, other relevant materials will be mailed to
record holders of Shares or persons who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
FOR COPIES OF THE TENDER OFFER DOCUMENTS CALL PURCHASER'S TOLL FREE AT
1-800-891-4105 OR MAKE A WRITTEN REQUEST ADDRESSED TO REDWOOD INVESTORS, LLC,
1650 HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CALIFORNIA 92108.
June 11, 1998
