According to the Company’s Form 10-Q for the quarterly period ended May 31, 2000, on October 15, 1999, the parties entered into a Stipulation of Settlement and filed it with the Court, which approved the settlement, by order dated October 21, 1999. In issuing that order the Court entered a final judgment dismissing the action and all non-derivative claims of the settlement class against the defendants with prejudice. This litigation was settled at no cost to the Company and ILM II. As part of the settlement, Capital Senior Living Corporation increased its proposed merger consideration payable to the Company and ILM II shareholders and is also responsible for a total of approximately $1.1 million in plaintiffs' attorneys fees and expenses if the proposed merger is consummated. If the proposed merger is not consummated and if the Company and ILM II were to consummate an extraordinary transaction with a third party, then the Company and ILM II would be responsible for the plaintiffs' attorneys fees and expenses.
On June 9, 1999, the Court entered the Order granting in part, Counts III and IV of the second amended complaint are dismissed with prejudice, denying in part all other respects of motion for an order pursuant to FRCP 12(b)(1), 12(b)(6) and 9(b), dismissing the Second Amended and Supplemental Class Action complaint as a whole or in part.
The case was originally filed in the New York State Supreme Court, and on May 27, 1998, a Notice of Removal to the U.S. District Court for the Southern District of New York was filed from the State Supreme Court. The Complaint alleges, among other things, that the funds disseminated false and misleading information about the alternative actions available for maximizing shareholder value and their intent to take action.