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): January 23, 2002
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.)
1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia 22102
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(Address of principal executive office) (Zip Code)
(888) 257-3550
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(Registrant's telephone number, including area code)
(Page 1 of 5)
Exhibit Index Appears on Page 5
ITEM 5. OTHER EVENTS
On Jan. 23, 2002, ILM II Senior Living, Inc. ("ILM II") and its
subsidiary, ILM II Holding, Inc., a Virginia corporation (together with ILM II,
the "Company") entered into a purchase and sale agreement with Five Star Quality
Care, Inc., a publicly traded Maryland corporation ("FVE"), pursuant to which
the Company agreed to sell, and FVE agreed to purchase, all of the Company's
right, title and interest in and to its senior and assisted living facilities
and certain other related assets (the "FVE Agreement"). In consideration for the
sale of these facilities, FVE agreed, subject to certain conditions and
apportionments, to pay the Company a purchase price of $45.5 million,
approximately $5 million of which has been paid into escrow as a refundable
deposit.
Each of the parties' respective obligations under the FVE Agreement is
subject to customary closing conditions. FVE's obligation to close the
transaction is subject to a due diligence inspection period ending February 22,
2002, providing FVE with the right to notify the Company about certain property
defects requiring more than $250,000 to cure. Upon such notification, the
Company may elect whether to refund a portion of the escrow deposit or agree to
reduce the purchase price by the amount such defect exceeds $250,000. If the
Company elects to terminate the FVE Agreement, FVE may rescind such notice of
material defect and continue with the transaction on the previously agreed
terms. Further, after the inspection period has run, if either party should
breach the FVE Agreement, the non-breaching party shall be entitled to keep the
aforementioned deposit as liquidated damages, and in the case of the Company's
breach in limited circumstances, FVE may seek specific performance or other
remedies as liquidated damages.
As previously reported in a current report on Form 8-K dated November 16,
2001, the Company entered into a purchase and sale agreement with
BRE/Independent Living, LLC, a Delaware limited liability company for the sale
of the Company's senior and assisted living facilities and certain related
assets (the "BRE Agreement"). On January 15, 2002, the Company received a letter
from BRE, indicating its intention not to consummate the BRE transaction at the
agreed upon contract price contained in the BRE Agreement. The Company
determined that such refusal to consummate the BRE Agreement in accordance with
its terms constituted a breach by BRE of the BRE Agreement. Accordingly the
Company terminated the BRE Agreement.
Upon consummation of the transactions contemplated by the FVE Agreement or
otherwise upon sale of the senior and assisted living facilities to a third
party, the Company intends to liquidate and distribute its assets in accordance
with the Virginia Stock Corporation Act, which provides for the distribution of
the Company's assets first to the Company's creditors for purposes of
discharging all of the Company's liabilities, and then, to the extent assets are
remaining, to the Company's shareholders in accordance with their respective
rights and interests.
There can be no assurance as to whether the transactions contemplated by
the FVE Agreement will be consummated or, if consummated, as to the exact timing
thereof. Similarly, there can be no assurance as to the timing of a liquidation
and distribution of the Company's assets or the amount of assets that will be
distributed to the Company's shareholders, if any.
This report contains "forward-looking statements" based on our current
expectations and projections about future events. These forward-looking
statements are subject to a number of risks and uncertainties which could cause
our actual results to differ materially from historical results or those
anticipated and certain of which are beyond our control. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
(Page 2 of 5)
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:
99.1 Press Release of ILM II Senior Living, Inc. dated January
25, 2002.
99.2 Sale Purchase Agreement by and among ILM II Senior Living,
Inc., ILM II Holding, Inc. and Five Star Quality Care, Inc.
(Page 3 of 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 hereunto 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: January 31, 2002
(Page 4 of 5)
EXHIBIT INDEX
Page No.
99.1 Press Release of ILM II Senior Living, Inc. 6
dated January 25, 2002.
99.2 Sale Purchase Agreement by and among ILM II Senior 8
Living, Inc., ILM II Holding, Inc. and Five Star Quality
Care, Inc.
(Page 5 of 5)