- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 13, 1999
Commission File Number: 0-18924
-------
ILM II SENIOR LIVING, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 06-1293758
----------------------- -----------------
(State of organization) (I. R.S. Employer
Identification No.)
8180 Greensboro Drive, Suite 850, McLean, Virginia 22102
- -------------------------------------------------- ----------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (888) 357-3550
----------------------
Item 5. Other Events
As previously reported by ILM II Senior Living, Inc., a Virginia
finite-life corporation (the "Company"), Andrew A. Feldman & Jeri Feldman, as
trustees for the Andrew A. & Jeri Feldman Revocable Trust dated September 18,
1990, commenced an action on May 8, 1998 on behalf of that trust and a putative
class of all other shareholders of the Company and ILM Senior Living, Inc. a
Virginia finite-life corporation and affiliate of the Company ("ILM I"), against
the Company, ILM I and the directors of each of the Company and ILM I. On March
9, 1999, following the announcement of the execution of the Agreement and Plan
of Merger (the "Merger Agreement") dated February 7, 1999, among the Company,
Capital Senior Living, Inc. a Delaware corporation ("Capital"), Capital
Senior Living Acquisition, LLC, a Delaware limited liability company and wholly
owned subsidiary of Capital ("Merger Sub"), and Capital Senior Living Trust I, a
Delaware business trust and wholly owned subsidiary of Capital (the "Trust"),
the plaintiffs filed a second amended complaint seeking to enjoin the
transactions contemplated by the Merger Agreement and, in the alternative,
seeking damages in an unspecified amount. In response to the Company's motion to
dismiss the second amended complaint on June 7, 1999, which motion addressed
only the pleadings, the United States District Court, the Southern District
of New York issued an order dismissing the plaintiffs' federal securities law
claims, but denying defendants' motion to dismiss plaintiffs' claims for breach
of fiduciary duty and judicial dissolution.
On June 21, 1999, the Company, ILM I and each of their directors answered
the second amended complaint and denied any and all liability to plaintiffs or
the putative class, and moved for reconsideration of the portion of the Court's
June 7, 1999 order denying their motion to dismiss. In response to discovery
requests, the Company, ILM I and other defendants produced documents to the
plaintiffs and the depositions of current and former directors as well as others
were taken. As of July 1, 1999, all discovery was completed in this action.
On July 2, 1999, the parties to this action reached an agreement-in-
principle to settle the action. On August 11, 1999, the parties entered into a
Stipulation of Settlement (the "Stipulation") and on August 13, 1999, the Court
"so ordered" the Stipulation and provided for notice of the settlement to the
putative settlement class, which notice was mailed on August 16, 1999. The Court
scheduled a hearing for September 30, 1999 to determine whether the proposed
settlement is fair, reasonable and adequate, whether a final judgment should be
entered dismissing the action with prejudice to the plaintiffs and all members
of the putative settlement class, and whether an application to be made by
plaintiffs' counsel and the putative settlement class should be approved.
There can be no assurance that the Court will approve the Stipulation.
In the event that the Court does not approve the Stipulation, the Company
intends to continue to contest the action vigorously.
Pursuant to the Stipulation, among other matters, Capital has agreed
to increase the aggregate amount and modify the form of consideration to be
received by shareholders in the Merger Agreement by $872,000 to $74,982,000, and
provide each shareholder with the right to elect to receive payment of the
merger consideration in the form of all cash,
(Page 2 of 5 pages)
Exhibit Index Appears on Page 5
or a combination of cash and Capital Trust convertible preferred securities
(which securities will ultimately be convertible into shares of Capital's common
stock); provided that the preferred securities elections may not, in the
aggregate, exceed 35% of the total merger consideration.
To facilitate consummation of the Merger, Capital has also agreed to
amend the Merger Agreement to extend the previously scheduled March 31, 1999
outside termination date of the Merger to September 30, 2000. The Company also
generally has agreed to apprise class counsel of certain material developments
relating to extraordinary transactions involving the Company.
Pursuant to the Stipulation, if the Company and ILM I consummate an
extraordinary transaction with Capital, including, but not limited to, a
transaction of the type contemplated by the Merger Agreement, Capital has agreed
to pay the class action plaintiffs' attorneys fees awarded by the Court an
amount not to exceed $1,500,000, as well as reimbursement of their out of pocket
expenses. If the Company and ILM I consummate extraordinary transactions with a
third party purchaser other than Capital, or the Company's and ILM I's Boards of
Directors ultimately approve extraordinary transactions with a third party
purchaser other than Capital, the Company and ILM I will, under the Stipulation,
be required to pay attorneys' fees awarded by the Court an amount not to exceed
$1,500,000, plus reimbursement of class counsel's out of pocket expenses.
The foregoing description is qualified in its entirety by the full text of
the Stipulation filed as Exhibit 99. hereto and incorporated herein by
reference.
Item. 7 Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) The following Exhibits are filed as part of this Current Report on
Form 8-K:
99. Stipulation of Settlement in the matter of Andrew A. Feldman &
Jeri Feldman, as trustees for the Andrew A. & Jeri Feldman
Revocable Trust dated 9/18/90, on behalf of themselves and others
similarly situated, as plaintiffs, against, 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., as defendants, filed in the United States District Court
for the Southern District of New York, 98 Civ. 3789 (LAK).
(Page 3 of 5 pages)
Exhibit Index Appears on Page 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ILM II SENIOR LIVING, INC.
By: /S/ J. William Sharman, Jr.
-----------------------------------
J. William Sharman, Jr.
Chairman of the Board and President
Dated: August 19, 1999
(Page 4 of 5 pages)
Exhibit Index Appears on Page 5
Exhibit Index
99. Stipulation of Settlement in the matter of Andrew A. Feldman & Jeri
Feldman, as trustees for the Andrew A. & Jeri Feldman Revocable Trust dated
9/18/90, on behalf of themselves and others similarly situated, as
plaintiffs, against, 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., as defendants, filed in the United States
District Court for the Southern District of New York under docket #98 Civ.
3789 (LAK).
(Page 5 of 5 pages)