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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): October 15, 1999
Commission File Number: 0-18942
ILM II SENIOR LIVING, INC.
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(Exact name of registrant as specified in its charter)
Virginia 06-1293758
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(State of organization) (I.R.S. Employer
Identification No.)
8180 Greensboro Drive, Suite 850, McLean, Virginia 22102
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (888) 357-3550
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(Page 1 of 6 pages)
Exhibit Index Appears on Page 6
Item 5. Other Events
A. On October 19, 1999, ILM II Senior Living, Inc., a Virginia finite-life
corporation (the "Company"), entered into an Amended and Restated Agreement and
Plan of Merger (the "Restated Merger Agreement") with Capital Senior Living
Corporation, a Delaware corporation ("CSLC"), and Capital Senior Living
Acquisition, LLC, a Delaware limited liability company and wholly owned
subsidiary of CSLC ("Merger Sub").
Upon the terms and subject to the conditions of the Restated Merger
Agreement, the Company will be merged with and into Merger Sub, and Merger Sub
will be the surviving corporation in the merger (the "Merger"). Pursuant to the
Merger, among other things, each share of the Company's common stock, $.01 par
value ("Company Common Stock"), outstanding immediately prior to the effective
time of the Merger (the "Effective Time"), other than shares of Company Common
Stock owned by the Company, CSLC or Merger Sub (or any other subsidiary of the
Company or CSLC), automatically will be converted into the right to receive
$14.471836 in cash. Holders of Company Common Stock will have no dissenters'
rights in the Merger. The Merger is intended to be reported as a fully taxable
acquisition by CSLC of the Company and will be recorded by CSLC as a purchase
for accounting purposes.
The Company has agreed that immediately prior to the Effective Time, it
will cause its direct subsidiary and record owner of the Company's senior living
facilities, ILM II Holding, Inc. ("ILM II Holding"), to exercise its right to
terminate the Facilities Lease Agreement (the "Lease Agreement") dated September
1, 1995, between ILM II Holding and ILM II Lease Corporation, an affiliate of
the Company ("ILM II LeaseCo"). The Lease Agreement provides, among other
things, for the lease by ILM II LeaseCo of the senior housing facilities from
ILM II Holding and the payment to ILM II Holding of certain rents and fees in
respect of such lease. The Lease Agreement presently expires by its terms on
December 31, 2000 (and on December 31, 1999 in respect of a certain California
property) which date and lease the Company intends to extend, all subject to
earlier termination by ILM II Holding in connection with the sale of the senior
housing facilities to an unaffiliated purchaser.
Upon termination of the Restated Merger Agreement under certain
circumstances, CSLC would be entitled to receive reimbursement of certain
out-of-pocket transaction costs and expenses actually incurred by CSLC in
connection with the Merger and the transactions contemplated thereby, plus a
termination fee under certain circumstances.
The Company is entitled to a termination fee payable by CSLC under
certain circumstances.
Consummation of the Merger (which presently is expected to occur during
the first quarter of calendar year 2000) is subject to certain conditions,
including, without limitation, (i) approval and adoption of the Restated Merger
Agreement and the Merger by the holders of not less than 66-2/3% of the
outstanding Company Common Stock, (ii)
(Page 2 of 6 pages)
the receipt of all requisite consents and approvals by public and governmental
authorities, (iii) the transfer to the Company of the senior housing facilities
owned by ILM II Holding (together with cancellation of the intercompany mortgage
indebtedness thereon) and the liquidation of ILM II Holding pursuant to Section
332 of the Internal Revenue Code of 1986, as amended, (iv) the absence or
non-occurrence of certain material conditions and events, and (v) certain other
conditions to consummation customary in transactions such as the Merger.
Simultaneously with entering into the Restated Merger Agreement, ILM
Senior Living, Inc., a Virginia finite-life corporation and an affiliate of the
Company ("ILM I"), entered into an amended and restated agreement and plan of
merger with CSLC and Merger Sub providing for the merger of ILM I with and into
Merger Sub, (the "ILM I Merger Agreement") for aggregate cash consideration of
$12.901158 per outstanding share of ILM I common stock, $.01 par value (the "ILM
I Merger"). Consummation of the ILM I Merger is not a condition to consummation
of the Merger. If, however, the ILM I Merger is consummated but the Merger is
not consummated, the Company has agreed to cause ILM II Holding to transfer its
75% fee simple interest in a certain California senior housing facility to ILM I
(or one of its wholly owned subsidiaries) at the fair market value of such
property. ILM I has made the reciprocal agreement (with respect to its 25% fee
simple interest in such property) in the ILM I Merger Agreement.
There can be no assurance whether the Merger (or any of the
transactions contemplated thereby) will be consummated or, if consummated, as to
the timing thereof.
The foregoing description is qualified in its entirety by the full
text of the Restated Merger Agreement filed as Exhibit 2 hereto and incorporated
herein by reference.
B. On August 11, 1999, in the action captioned Andrew A. Feldman, et ano.,
v. ILM Senior Living, Inc. et al., 98 Civ. 3789 (S.D.N.Y.), the parties entered
into a Stipulation of Settlement providing for notice thereof to the putative
settlement class, which notice was mailed on August 16, 1999. On September 30,
1999, the Court conducted a hearing and on October 4, 1999 issued an Order
certifying a settlement class and approving the proposed settlement as fair,
reasonable and adequate, subject to the condition that certain modifications are
made to the Stipulation of Settlement and any related documents filed with
the Court on or before October 15, 1999. On October 15, 1999, the parties
entered into a revised Stipulation of Settlement and filed it with the Court. If
the Court approves the settlement, a final judgment will be entered dismissing
the action with prejudice to the plaintiffs and all members of the settlement
class. In its October 4 Order, the Court also denied the application by
plaintiffs' counsel for payment of attorneys' fees and expenses, without
prejudice to renewal within 14 days upon reapplication therefor. On or about
October 14, 1999, plaintiff's counsel reapplied to the Court for fees and
expenses.
Item. 7 Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not Applicable
(Page 3 of 6 pages)
(b) Not Applicable
(c) The following Exhibits are filed as part of this Current
Report on Form 8-K:
2 Amended and Restated Agreement and Plan of Merger
dated October 19, 1999, among the Company, CSLC, and
Merger Sub (including all exhibits and schedules
thereto).
99.1 Press Release of the Company dated October 20, 1999.
(Page 4 of 6 pages)
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.
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J. William Sharman, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
Dated: October 21, 1999
(Page 5 of 6 pages)
Exhibit Index
2 Amended and Restated Agreement and Plan of
Merger dated October 19, 1999, among the
Company, CSLC and Merger Sub (including
schedules and exhibits thereto).
99.1 Press Release of the Company dated October 20,
1999
(Page 6 of 6 pages)