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Exhibit 10.9
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Second Amendment to Purchase and Sale Agreement ("Second Amendment") amends
that certain Purchase and Sale Agreement (the "Agreement") by and between the
Hillsdale Group, L.P., a California limited partnership ("Seller"), and ARV
Assisted Living, Inc., a California corporation ("Buyer"), dated as of February
12, 1998, and amended as of March 2, 1998. All capitalized terms not defined
herein shall have the same definition as in the Agreement.
1. Section 1.2 of the Agreement is amended to delete therefrom Exhibit G,
Allocation of Purchase Price, and to add thereto the new Exhibit G, Amended
Allocation of Purchase Price, attached hereto. In addition, the third
sentence of Section 1.2 is hereby amended to delete "$26,300,000" and to
substitute "$28,300,000" therefor.
2. Section 1.3.3 is hereby amended in its entirety to read as follows:
Prior to the Initial Closing (defined in Section 2.3), Buyer shall deposit
into Escrow sufficient funds to fund the balance of the Purchase Price
allocated to the "Initial Closing Properties" under the 3-Agreements on
Exhibit G (the total of which is $44,575,000). In addition, Buyer and
Seller shall establish a second escrow with the Escrow Holder (the "Second
Escrow"), into which Buyer shall deposit, on the Initial Closing Date,
$21.725 million (the "Second Deposit"), subject to adjustment by reason of
any applicable prorations and the allocation of closing costs described
below. The deposits required by this Section 1.3.3 shall be made by wire
transfer of federal funds or in another immediately available form.
Interest on the Second Deposit shall be credited as follows: (1) Seller
shall be credited with the interest allocated to the HM Property and the
WGV Property (defined in Section 1.6 below) at the HM/WGV Closing (defined
in Section 2.3 below); and (2) Buyer shall be credited with the interest
allocated to the EH Property and interest on the WT Allocated Amount at the
EH Closing and the WT Closing (as those terms are defined in Section 2.3
below), respectively.
3. The third paragraph of Section 1.4 of the Agreement is amended to delete
therefrom the last sentence thereof, to revise the reference therein to
"July 1, 1998" to read "September 1, 1998," and to revise each reference
therein to "Closing" to read "Initial Closing."
4. The third paragraph of Section 1.4 of the Agreement is further amended to
replace the second sentence thereof with the following:
Prior to the Initial Closing, Buyer will deposit into the Second Escrow
cash in the amount of the WT Allocated Amount and Seller and WTP will
deposit a duly executed assignment(s) of the WT Rights (the "WT Rights
Assignment") in a mutually acceptable form.
5. Section 1.5 of the Agreement is amended to replace the third paragraph
thereof with the following:
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Prior to the Initial Closing, Buyer will deposit into the Second Escrow, as
part of the Second Deposit, cash in the amount of $4.0 million. From and
after the Initial Closing, and pending satisfaction of the EH Property Sale
Conditions and the Conveyance, or earlier abandonment of the EH
Transaction, Hillsdale will remain as lessee of the EH Property. At the
Initial Closing, Buyer and Hillsdale shall also enter into an agreement on
terms reasonably satisfactory to both parties (the "Transition Agreement").
Buyer shall be entitled to a fee equal to five percent of gross revenues
from the EH Property during the term of the Transition Agreement, which fee
may be payable to Buyer as an offset against other sums due Seller
hereunder or outside of this Agreement. The term of the Transition
Agreement shall commence on May 18, 1998 and shall terminate at 12:00 a.m.
on the earlier of the EH Closing Date (as defined in Section 2.3 below) or
September 1, 1998. At least one day prior to the EH Closing Date, Buyer
shall deposit into the Second Escrow cash, which, when taken together with
the $4.0 million deposit, shall equal the EH Allocated Amount. On the EH
Closing Date, the Escrow Holder will distribute to Hillsdale from the
Second Escrow the EH Allocated Amount and record and deliver to Buyer the
grant deed to the EH Property. In the event the EH Property Sale Conditions
are not satisfied on or before September 1, 1998, the Escrow Holder will
return the EH Allocated Amount, together with all interest thereon, to
Buyer and the grant deed to Seller, and all further rights and obligations
of the parties to one another hereunder with respect to the EH Property
shall terminate. Notwithstanding the foregoing, if on the EH Closing Date
Buyer breaches its obligation to acquire the EH Property for any reason,
then the Escrow Holder shall pay to Seller the $4.0 million deposit and
shall pay to Buyer the accrued interest thereon, all as provided for in
Section 8.1.2(b) below.
6. A new Section 1.6 shall be added as follows:
Hillsdale Manor and Willow ▇▇▇▇ ▇▇▇▇▇. Hillsdale owns a leasehold (or
sub-leasehold) interest in the Properties known as Hillsdale Manor (the "HM
Property") and Willow ▇▇▇▇ ▇▇▇▇▇ (the "WGV Property").
Prior to the Initial Closing, Buyer will deposit into the Second Escrow
cash in the amount of the Purchase Price allocated to such Properties on
Exhibit G hereto (the "HM/WGV Allocated Amount"). Upon the HM/WGV Closing
Date (as defined in Section 2.3 below), the Escrow Holder will distribute
to Seller the HM/WGV Allocated Amount, and deliver to Buyer and Hillsdale
fully executed copies of the Assignments of Leases/Management Agreements
(as defined in Section 7.1.1 below) relating thereto. All net income from
the HM Property and the WGV Property shall be held by Seller for the
benefit of Buyer for the period from, and including, April 16, 1998 until
the HM/WGV Closing Date, against which Seller may offset the management fee
payable to Seller under Section 5.10. If on the HM/WGV Closing Date Buyer
breaches its obligation to acquire the HM Property and/or the WGV Property
for any reason, then the Escrow Holder shall pay to Seller the HM Allocated
Amount and/or the WGV Allocated Amount, as appropriate, including all
interest accrued thereon, all as provided for in Section 8.1.2(b) below.
7. Section 2.2 is amended to delete the last sentence thereof.
8. Section 2.3 of the Agreement is hereby amended to state as follows:
The Closing shall occur (and Escrow shall close) as follows:
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(a) on May 18, 1998, for the HM Property and the WGV Property (the
"HM/WGV Closing");
(b) on July 1, 1998 for the EH Property (the "EH Closing");
(c) on the date the WT Property Sale Conditions are satisfied (the
"WT Closing"), subject to the provisions of Section 1.4 above;
and
(d) on April 16, 1998 for all of the remaining Properties owned by
Seller (the "Initial Closing").
Notwithstanding the foregoing, no Closing shall occur unless and until the
Initial Closing occurs.
As used in this Agreement, unless specifically provided otherwise,
"Closing" shall mean the Initial Closing, the HM/WGV Closing, the EH
Closing or the WT Closing, as the context requires, and "Closing Date"
shall mean the date of such applicable Closing.
9. Except as to the EH Closing and the WT Closing (in which case only Sections
4.4 and 5.10 shall be amended, to the extent the same apply to such
Properties, as set forth herein), Sections 4.3, 4.4, 5.10 and 5.11 and
Article 6 shall be amended so that the references therein to the "Closing"
or "Closing Date" shall read "Initial Closing" and "Initial Closing Date."
As to the EH Closing and the WT Closing, the reaffirmation as provided for
in Section 4.3 of the representations and warranties set forth in Article 4
shall be given at such times as provided on EXHIBIT AA attached hereto.
10. The following paragraph shall be added to the end of Section 5.2:
Notwithstanding the foregoing, in the event that, after the Initial Closing
but prior to any other Closing, any portion of any remaining Property shall
be condemned or becomes the subject of any pending or threatened
condemnation action, Seller shall promptly notify Buyer thereof, this
Agreement shall remain in full force, and Buyer shall be deemed to have
elected pursuant to the provisions of this Section 5.2 not to terminate
this Agreement as to such Property.
11. The following paragraph shall be added to the end of Section 5.3:
Notwithstanding the foregoing, in the event of any damage to or destruction
to any unpurchased Property after the Initial Closing but prior to any
other Closing, Seller shall promptly notify Buyer thereof, this Agreement
shall remain in full force, and Buyer shall be deemed to have elected
pursuant to the provisions of this Section 5.2 not to terminate this
Agreement as to such Property.
12. Section 5.10 shall be amended to change "May 16, 1998" to "May 18, 1998."
13. Sections 7.1.1 and 7.1.2 shall be amended to provide that each party shall
additionally deposit into Escrow, at the time of the Initial Closing, duly
executed assignment and assumption documents in forms reasonably acceptable
to both parties, whereby Seller assigns to Buyer, and Buyer assumes from
Seller, effective as of the applicable Closing, all of Seller's right,
title and interest in and to (i) the Development Agreement, the Lease
Agreements and the Management Agreements (collectively, the "Assignments of
Lease/Management
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Agreements") and (ii) the WHW Partnership Interest (as described on Exhibit
A attached hereto).
14. Section 8.1.1 shall be amended to delete therefrom the date "April 30,
1998" and to add thereto the date "June 1, 1998" and to amend the reference
therein to "Closing" to read "Initial Closing."
15. Notwithstanding anything to the contrary in this Agreement, the
determinations under Section 8.1.3 with respect to all Properties shall be
made as if Seller's interest in all of the Properties were to be sold to
Buyer on the Initial Closing Date. Except as provided herein below with
respect to the EH Property and the WT Property, the provisions of Section
8.1 shall not apply to any Closing after the Initial Closing, and Buyer
shall be deemed to have elected to acquire the remaining Properties in all
circumstances. With respect to each of the EH Closing and the WT Closing,
Section 8.1.3 shall be applicable only to Problems arising under clauses
(i) or (ii) of Section 8.1.3 prior to such applicable Closing Date but
after the Initial Closing Date (the "New Problems"). If the New Problems
affecting either the EH Property or the WT Property, when added to the
Aggregate Problems affecting the Properties at the Initial Closing, exceeds
the $500,000 threshold set forth in sub-Sections (a), (b) and (c), then
Buyer's rights and obligations under such sub-Section shall be to buy or
not buy (as required by such sub-Sections) the Property so affected.
16. The current paragraph of Section 8.2.1 shall be re-named "(a) Buyer's
Breach at Initial Closing," and two new paragraphs "(b) Buyer's Breach at a
Subsequent Closing" and "(c) Buyer's Breach at the WT Closing"," shall be
added to such Section 8.2.1 as follows:
(b) Buyer's Breach at a Subsequent Closing. NOTWITHSTANDING THE PROVISIONS
OF CLAUSE (a) OF THIS SECTION 8.2.1, IN THE EVENT THAT FOLLOWING THE
INITIAL CLOSING DATE BUYER BREACHES ITS OBLIGATION TO ACQUIRE EACH
REMAINING PROPERTY HEREUNDER (OTHER THAN THE WT PROPERTY) AT ITS SPECIFIED
CLOSING DATE, THEN THE ESCROW AGENT SHALL PAY TO SELLER FROM THE SECOND
DEPOSIT, AS APPLICABLE, THE FOLLOWING AMOUNT(S):
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PROPERTY AMOUNT OF LIQUIDATED DAMAGES
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If Buyer breaches as to the WGV Property The Allocated Purchase Price of
or the HM Property such Property, as shown on
Exhibit G, together with accrued
interest thereon
If Buyer breaches as to the EH Property $4.0 million, and no interest
thereon
WHICH AMOUNT (S) SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES, AND NOT
AS A PENALTY, TOGETHER WITH REASONABLE FEES AND DISBURSEMENTS OF ATTORNEYS
INCURRED BY SELLERS IN ENFORCING THIS SECTION 8.2.1, AND THE COLLECTION OF
SUCH AMOUNT SHALL BE IN LIEU OF ANY AND ALL OTHER REMEDIES WHICH ARE OR MAY
BE AVAILABLE TO SELLER AT LAW OR IN EQUITY.
INITIAL: /s/ MHS INITIAL: /s/ SMM
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(c) Buyer's Breach at the WT Closing. Notwithstanding the provisions of
clause (a) of this Section 8.2.1, in the event that following the Initial
Closing Date Buyer breaches its obligation to acquire the WT Property, then
the parties agree that the provisions of the Agreement, before being
affected by the provisions of this Second Amendment (other than this clause
(c)), shall control as to such circumstance.
17. Section 8.3 shall be amended to insert after the phrase "Notwithstanding
anything to the contrary," the words "prior to the Initial Closing."
18. This Second Amendment may be executed in counterparts, each of which shall
be deemed an original, but all of which, taken together, shall constitute
one and the same instrument.
19. Except as amended herein, the Agreement shall remain in full force and
effect.
20. IN WITNESS WHEREOF, the parties have executed this Second Amendment
effective as of the 6th day of April, 1998.
"HILLSDALE" "BUYER"
The Hillsdale Group, L.P., ARV Assisted Living, Inc.
a California limited partnership a California corporation
By: Hillsdale Advisors, L.L.C., its general partner
By: Fremont Group, L.L.C., its managing member By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Managing Director
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"WTP"
Woodside Terrace Partners
BY: THE HILLSDALE GROUP, L.P., GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: MANAGING DIRECTOR OF FREMONG GROUP, L.L.C.,
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MANAGING MEMBER OF GENERAL PARTNER
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