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) July 22, 1997
RESORT INCOME INVESTORS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10084 36-3593298
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(State of or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 683-3323
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On August 1, 1997, the Registrant issued the press release attached as
Exhibit 99.1 announcing that it had entered into agreements in principal
for the settlement of both the federal securities law class action
litigation pending in Federal District Court in Denver, Colorado, and the
derivative litigation pending in the Court of Chancery of Delaware
involving the Company and certain of its officers, directors and others, as
well as obtaining title to its borrower's interest in the subleasehold
mortgage of the International Market Place, a retail center in Honolulu,
Hawaii. The information contained in this press release is incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press Release of Registrant dated August 1, 1997.
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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.
RESORT INCOME INVESTORS, INC.
(Registrant)
DATE: August 1, 1997 By: /s/ John R. Young
Name: John R. Young
Title: Chairman of the Board of Directors,
Chief Executive Officer,
President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NUMBER ITEM
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99.1 Press Release
EXHIBIT 99.1
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RESORT INCOME INVESTORS, INC.
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FOR IMMEDIATE RELEASE
Contact: Karen Dickelman
Telephone: (312) 683-3323
Fax: (312) 683-3324
RESORT INCOME INVESTORS, INC. ANNOUNCES
AGREEMENT IN PRINCIPAL TO SETTLE THE CLASS ACTION
AND DERIVATIVE LITIGATION AND ACQUISITION OF TITLE
TO AN INTEREST IN INTERNATIONAL MARKET PLACE
Chicago, Illinois, August 1, 1997 -- Resort Income Investors, Inc.
(NASDAQ EBB: RIIV) today announced that it entered into agreements in
principle for the settlement of both the federal securities law class
action litigation pending in Federal District Court in Denver, Colorado,
and the derivative litigation pending in the Court of Chancery of Delaware
involving the Company and certain of its officers, directors and others.
The consolidated federal securities class action lawsuits were
originally filed in July 1995 in the United States District Court for the
District of Colorado against the Company and certain of its current and
former officers and directors and its independent auditors at the time (the
"class action lawsuits"). These class action lawsuits alleged violations
of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and
other provisions of the federal securities laws, and Rule 10b-5 of the
Securities and Exchange Commission.
The derivative actions were filed in June 1995 in the court of
Chancery in the State of Delaware in and for New Castle County against
certain of the directors and officers of the Company (the "derivative
actions"). In the derivative actions the Company is a nominal defendant.
These complaints allege that the officers and directors breached their
fiduciary duties to the Company, wasted Company assets and that its
chairman of the board and chief executive officer at the time was in a
conflict of interest position.
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The Company's Board of Directors believes that the proposed
settlements are beneficial to the Company because its liquidation will be
more readily accomplished once the Company is unencumbered by the expense
and uncertainty of defending the litigation.
The proposed settlement of the class action lawsuits provides that
all investors who purchased shares in the Company between March 31, 1993
and June 29, 1995 will be eligible to participate in the settlement
proceeds. The settlement proceeds will consist of $5,050,000 paid by the
Company's officers and directors insurer and its former auditors, plus an
amount equal to the greater of: (i) 44% of the Company's net assets in
liquidation as of: (a) December 31, 1997; or (b) the date the Company
files its certificate of liquidation, whichever is earlier; or (ii)
$1,000,000. $1,425,000 of the $5,050,000 will be contributed towards the
settlement of the derivative actions.
The amount available for distribution to the class will be determined
after court-ordered attorney fees and expenses have been awarded. The
amount that individual class members may receive will be determined
according to the settlement agreement and the amount of claims filed. The
full settlement documentation is expected to be completed over the next 30
days.
Notices which thoroughly address the settlement terms and the process
for filing claims will be forwarded to class members from the Clerk of the
Court after filing of a Stipulation and Agreement of Settlement and
approval by the court. A hearing for final approval of the settlement is
anticipated to be held in the fall of 1997. Further details on the
settlement will also be included in the Company's quarterly report to
stockholders and filings with the Securities and Exchange Commission.
The agreements in principle for the settlement emphasized that
approval of the proposed settlement should not be considered an admission
of liability by any defendant with respect to any of the claims asserted.
The Company also announced that it had completed negotiations with
the Company's Waikiki Borrower resulting in the Company receiving the
Borrower's interest in the subleasehold of the International Market Place,
a retail center in Honolulu, Hawaii. In addition to taking title, the
Company received approximately $195,000 of escrowed rental income for such
property from December 1, 1996. The Company currently anticipates that it
will receive approximately $25,000 per month of rental income from this
property.
The Company currently has 4,156,000 shares outstanding.
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Statements regarding future financial performance and results and the
other statements that are not historical facts contained in this release
are forward-looking statements subject to numerous risks and uncertainties,
and other factors detailed in the Company's Securities and Exchange
Commission filings.
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