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EXHIBIT 2.3
ADDENDUM
THIS ADDENDUM (this "Addendum") dated this 31st day of December, 1998,
is by and between HCR Manor Care, Inc., a Delaware corporation ("HCR") and
Alternative Living Services, Inc., a Delaware corporation ("ALS").
WHEREAS, on the date of this Addendum HCR and ALS have entered into an
Agreement of Purchase and Sale (Construction Residences) (the "Construction
Purchase Agreement") and an Agreement of Purchase and Sale (Operating
Residences) (the "Operating Purchase Agreement" and, together with the
Construction Purchase Agreement, the "Agreements");
WHEREAS, the parties wish to set forth in this Addendum certain
agreements they have reached with respect to certain changes they shall make to
the Agreements after the date hereof, notwithstanding anything to the contrary
set forth in the Agreements.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Terms designated with an initial capital letter and not otherwise
defined herein shall have the meanings ascribed to such terms in the respective
Agreements amended hereby.
2. Within thirty (30) days after the date hereof, the parties shall
amend and/or restate the Agreements to provide as follows:
A. Development Fees. In consideration of development services
rendered by HCR and/or its subsidiaries with respect to the Construction
Residences up to and including December 31, 1998, ALS shall pay to HCR, at the
time of the first Residence Closing (whether for a Construction Residence or
Operating Residence) development fees of $4,000,000. In addition, in
consideration of development services to be rendered by HCR and/or its
subsidiaries with respect to the Construction Residences after December 31, 1998
and until the completion thereof and rendered with respect to the Operating
Residences, ALS shall pay to HCR aggregate development fees of $6,000,000, which
shall be payable upon the Residence Closing of each Construction Residence (with
the proportion of such $6,000,000 payable upon any such Residence Closing being
equal to its proportionate share of the aggregate purchase price for all
Construction Residences as indicated on Annex 1 hereto).
B. Withdrawal Fee. In the event that any Operating Residence
or Construction Residence is not sold by Seller to Purchaser and a Withdrawal
Condition (as hereinafter defined) exists with respect thereto, Seller shall
promptly pay to Purchaser a "Withdrawal Fee" with respect to such Residence in
the amount set forth opposite such Residence's name on Annex 1 hereto. A
"Withdrawal Condition" shall be deemed to exist if any of the following occur:
(i) One or more conditions to Purchaser's obligation to close
is not satisfied (and is not waived by Purchaser) and such Residence
is withdrawn pursuant to Sections 14.C or 14.D of the applicable
Agreement (unless Purchaser and Seller agree upon a substitute
residence therefor in accordance with Section 14.D of the applicable
Agreement);
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(ii) Purchaser breaches its obligation to purchase, or Seller
breaches its obligation to sell, such Residence under the applicable
Agreement; or
(iii) Such Residence is not sold by Purchaser to Seller for any
reason (unless Purchase and Seller agree upon a substitute residence
therefor in accordance with Section 14.D of the applicable
Agreement).
C. Liquidated Damages. The liquidated damages payable by Purchaser
upon any breach of its obligation to purchase an Operating Residence or
Construction Residence under the applicable Agreement shall be an amount equal
to the product of $5,000,000 times the amount of the allocated purchase price
for such Residence as set forth on Annex 1 hereof divided by $185,000,000,
unless no Residence Closings occur under either Agreement, in which event
liquidated damages shall be $9,000,000 for all of the Residences.
D. Purchase Price. The purchase price for the Operating Residences
and the Construction Residences pursuant to the Agreements shall be as set forth
in Annex 2 hereto.
3. Pending the amendment and/or restatement of the Agreements in the
manner contemplated by paragraph 2 hereof, this Addendum shall constitute an
amendment of each of the Agreements effective as of the date hereof.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
first set forth above.
HCR MANOR CARE, INC.
BY: /s/ R. Jeffrey Bixler
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R. Jeffrey Bixler
Vice President and General Counsel
ALTERNATIVE LIVING SERVICES, INC.
BY: /s/ Thomas E. Komula
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Thomas E. Komula
Senior Vice President and Chief Financial Officer
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ANNEX 1
ALLOCATION OF DEVELOPMENT AND WITHDRAWAL FEES PAYABLE
CONSTRUCTION RESIDENCES
PROPERTY ALLOCATED DEVELOPMENT TOTAL AMOUNT WITHDRAWAL FEE
NUMBER NAME PURCHASE PRICE FEE PAYABLE PAYABLE PAYABLE
- ------ ---- -------------- ----------- ------------ -------------
22 Colorado Springs $ 5,365,000 $ 607,330 $ 5,972,330 $ 145,000
23 Charlotte $ 4,995,000 $ 565,445 $ 5,560,445 $ 135,000
24 Emerson $ 9,342,500 $1,057,592 $10,400,092 $ 252,500
25 Palmer Ranch $12,210,000 $1,382,199 $13,592,199 $ 330,000
26 Lynnwood $ 5,365,000 $ 607,330 $ 5,972,330 $ 145,000
27 Decatur $ 5,365,000 $ 607,330 $ 5,972,330 $ 145,000
28 Roanoke $ 4,995,000 $ 565,445 $ 5,560,445 $ 135,000
29 Denver $ 5,365,000 $ 607,330 $ 5,972,330 $ 145,000
----------- ---------- ----------- ----------
$53,002,500 $6,000,000 $59,002,500 $1,432,500
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OPERATING RESIDENCES
WITHDRAWAL FEE
NUMBER PROPERTY NAME ALLOCATED PURCHASE PRICE PAYABLE
- ------ ------------- ------------------------ --------------
1 Whittier $ 3,977,500 $ 228,033
2 Brea $ 4,902,500 $ 281,063
3 Laguna Palm $ 9,342,500 $ 535,611
4 Denidun $ 5,272,500 $ 302,276
5 Sarasota $ 6,475,000 $ 371,216
6 Boyton Beach $ 7,030,000 $ 403,034
7 Boyton Village $ 6,752,500 $ 387,125
8 Westlake $ 4,070,000 $ 233,336
9 Woodridge $ 4,625,000 $ 265,154
10 Tucson $ 8,880,000 $ 509,096
11 Fulton County (AC) $ 4,995,000 $ 286,367
12 Cobb County $ 4,347,500 $ 249,245
13 Mesa $ 4,717,500 $ 270,457
14 Fulton County (SH) $ 7,492,500 $ 429,550
15 Reno $ 4,810,000 $ 275,760
16 West Orange $12,395,000 $ 710,613
17 Overland Park $ 6,105,000 $ 350,004
18 Citrus Heights $ 6,105,000 $ 350,004
19 Peoria $ 4,625,000 $ 265,154
20 Wayne $10,082,500 $ 578,036
21 Sun City West $ 4,995,000 $ 286,367
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$31,997,500 $7,567,500
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ANNEX 2
ALLOCATION OF TOTAL ACQUISITION COST
RELATING TO THE OPERATING AND CONSTRUCTION RESIDENCES
NUMBER PROPERTY NAME STATUS ALLOCATED PURCHASE PRICE
- ------ ------------- ------ ------------------------
OPERATING RESIDENCES
1 Whittier Operating $ 3,977,500
2 Brea Operating $ 4,902,500
3 Laguna Palm Operating $ 9,342,500
4 Denidun Operating $ 5,272,500
5 Sarasota Operating $ 6,475,000
6 Boyton Beach Operating $ 7,030,000
7 Boyton Village Operating $ 6,752,500
8 Westlake Operating $ 4,070,000
9 Woodridge Operating $ 4,625,000
10 Tucson Operating $ 8,880,000
11 Fulton County (AC) Operating $ 4,995,000
12 Cobb County Operating $ 4,347,500
13 Mesa Operating $ 4,717,500
14 Fulton County (SH) Operating $ 7,492,500
15 Reno Operating $ 4,810,000
16 West Orange Operating $ 12,395,000
17 Overland Park Operating $ 6,105,000
18 Citrus Heights Operating $ 6,105,000
19 Peoria Operating $ 4,625,000
20 Wayne Operating $ 10,082,500
21 Sun City West Operating $ 4,995,000
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$ 31,997,500
CONSTRUCTION RESIDENCES
22 Colorado Springs Under Construction $ 5,365,000
23 Charlotte Under Construction $ 4,995,000
24 Emerson Under Construction $ 9,342,500
25 Palmer Ranch Under Construction $ 12,210,000
26 Lynnwood Under Construction $ 5,365,000
27 Decatur Under Construction $ 5,365,000
28 Roanoke Under Construction $ 4,995,000
29 Denver Under Construction $ 5,365,000
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$ 53,002,500
TOTAL OPERATING AND CONSTRUCTION $ 85,000,000
LICENSING FEE $ 5,000,000
DEVELOPMENT FEE $ 10,000,000
TOTAL ACQUISITION COST $200,000,000
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