EXHIBIT 10.2

 

TWELFTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT

 

This TWELFTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (this “Amendment”)
is made and entered into as of February 24, 2016, by and between the parties
signatory hereto, as lessors (collectively, “Lessor”) and HCR III Healthcare,
LLC, as lessee (“Lessee”).

 

RECITALS

 

A.         Lessor is the current “Lessor” and Lessee is the current “Lessee”
pursuant to that certain Master Lease and Security Agreement dated as of April
7, 2011, as amended by that certain First Amendment to Master Lease and Security
Agreement dated as of April 7, 2011, as further amended by that certain Second
Amendment to Master Lease and Security Agreement dated as of May 16, 2011, Third
Amendment to Master Lease and Security Agreement dated as of January 10, 2012,
Fourth Amendment to Master Lease and Security Agreement dated as of April 18,
2012, Fifth Amendment to Master Lease and Security Agreement dated as of May 4,
2012 (incorrectly referred to as dated May 5, 2012 in certain amendments due to
a scrivener’s error), Sixth Amendment to Master Lease and Security Agreement
dated as of May 30, 2012 (incorrectly referred to as dated July 30, 2012 in
certain amendments due to a scrivener’s error), Seventh Amendment to Master
Lease and Security Agreement dated as of February 11, 2013,  Eighth Amendment to
Master Lease and Security Agreement dated as of July 31, 2014, Ninth Amendment
to Master Lease and Security Agreement dated as of September 30, 2014 (the
“Ninth Amendment”), Tenth Amendment to Master Lease and Security Agreement dated
as of March 29, 2015 (the “Tenth Amendment”), Eleventh Amendment to Master Lease
and Security Agreement dated as of August 1, 2015, Addendum #1 to Master Lease
and Security Agreement dated as of October 23, 2015, Addendum #2 to Master Lease
and Security Agreement dated as of November 2, 2015, Addendum #3 to Master Lease
and Security Agreement dated as of December 16, 2015, and Addendum #4 to Master
Lease and Security Agreement dated as of February 16, 2015 (as so amended, the
“Master Lease”).  Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Master Lease.

 

B.         Lessee’s obligations under the Master Lease are guaranteed by HCR
ManorCare, Inc., a Delaware corporation, successor in interest to HCR ManorCare
LLC, a Delaware limited liability company, pursuant to that certain Guaranty of
Obligations dated as of April 7, 2011 (as the same may have been or may
hereafter be further amended, modified, or reaffirmed from time to time on
accordance with the terms thereof, the (“Guaranty”). 

 

C.         Lessor and Lessee desire to amend the Master Lease to modify certain
provisions of the Ninth Amendment and Schedule 1 attached to the Tenth Amendment
as more particularly provided herein.

 

 

 

 

 

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AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee hereby agree as follows:

 

1.         Recitals.  The foregoing recitals are adopted by Lessor and Lessee as
true and correct and, by this reference, are incorporated herein as if set forth
herein in full.

2.        Modifications to Ninth Amendment. 

(a)       The Master Lease is hereby modified by deleting Recital E from the
Ninth Amendment in its entirety and replacing it with the following in lieu
thereof:  “Reference is made to the Pool 3 Facility identified on Exhibit A-3 to
the Master Lease as “Old Orchard Health Care Center,” located on the land
identified on said Exhibit as 4100 Freemansburg Avenue, Easton, PA 18045 (the
“Old Orchard Facility”).  Lessee desires to develop a sixty-four (64) bed
assisted living facility (as used herein and in the Master Lease, the “Arden
Courts of Old Orchard Facility”) on behalf of Lessor on the land located
adjacent to the Old Orchard Facility and more particularly described as the
crosshatched area shown on Exhibit B attached hereto (the “Arden Land”) and
thereafter lease from Lessor pursuant to the Master Lease, the Arden Courts of
Old Orchard Facility.  The Arden Land is currently being leased to Lessee by
Lessor pursuant to the Master Lease, and Lessor is willing to agree to such
development and lease, under the terms and conditions set forth in this
Amendment.”

(b)       The Master Lease is hereby modified by deleting the heading of Section
4 from the Ninth Amendment in its entirety and replacing it with the following
in lieu thereof:  “Construction of Arden Courts of Old Orchard Facility.”

(c)       The Master Lease is hereby modified by deleting Section 4(a) from the
Ninth Amendment in its entirety and replacing it with the following in lieu
thereof:  “Lessor hereby requests Lessee to construct and Lessee hereby agrees
to construct the Arden Courts of Old Orchard Facility on behalf of Lessor,
pursuant to the terms and conditions set forth in this Amendment. 
Notwithstanding anything to the contrary contained in the Master Lease,
including, without limitation, Section 6.3 thereof, within 360 days of
“Substantial Completion” (as hereinafter defined) of construction of the Arden
Courts of Old Orchard Facility, Lessee will lease the Arden Courts of Old
Orchard Facility pursuant to the Master Lease from Lessor (such date, the “Arden
Courts of Old Orchard Lease Start Date”).  Lessee will determine the Arden
Courts of Old Orchard Lease Start Date, by providing at least thirty (30) days
prior written notice to Lessor within three hundred (300) days after Substantial
Completion.  If Lessee does not provide such written notice to Lessor within
three hundred (300) days after Substantial Completion, then Lessor shall have
the right to determine the Arden Courts of Old Orchard Lease Start Date, which
shall be within such 360 day period following Substantial Completion, by
providing written notice to Lessee.  As used herein, “Substantial Completion”
means the date on which Lessor has received from Lessee an Officer's Certificate
stating the following:  (i) Lessee has received a copy of the certificate of
occupancy for the Arden Courts of Old Orchard Facility from the applicable
Governmental Authority; (ii) Lessee has received copies of all

 

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necessary permits, approvals, healthcare licenses and Medicare certifications
necessary for the operation of the Arden Courts of Old Orchard Facility; (iii)
Lessee has received copies of lien releases from all parties that provided labor
or materials for construction of the Arden Courts of Old Orchard Facility; (iv)
the Arden Courts of Old Orchard Facility has commenced regular business
operations; and (v) construction of the Arden Courts of Old Orchard Facility has
been substantially completed in accordance with the plans and specifications and
the applicable provisions of this Amendment and the Master Lease, except for
punch-list items that remain to be completed.”

(d)       The Master Lease is hereby modified by deleting Section 4(b) from the
Ninth Amendment in its entirety and replacing it with the following in lieu
thereof:  “In connection with Lessee’s construction of the Arden Courts of Old
Orchard Facility pursuant to the request of, and on behalf of, Lessor, Lessor
shall reimburse Lessee for its costs, expenses and fees related to such
construction (including, without limitation, a lease inducement fee and a
construction management fee) in the total amount of Fifteen Million Dollars
($15,000,000.00) (the “Arden Courts of Old Orchard Construction Fee”), which
such amount shall be payable by Lessor to Lessee on the Arden Courts of Old
Orchard Lease Start Date.  Additionally, on or before the Arden Courts of Old
Orchard Lease Start Date, Lessee shall supply or cause to be supplied to Lessor
all documents and information pertaining to the construction of the Arden Courts
of Old Orchard Facility as Lessor shall reasonably request (including, without
limitation, any and all plans and specifications and all building, foundation,
grading or other permits and/or authorizations necessary for the construction of
the Arden Courts of Old Orchard Facility, and copies of the certificate of
occupancy for the Arden Courts of Old Orchard Facility, copies of all necessary
permits, approvals, healthcare licenses and Medicare certifications necessary
for the operation of the Arden Courts of Old Orchard Facility) and Lessee shall
also assign to Lessor each construction contract to which Lessee is a party and
all guaranties and warranties relating thereto.  For purposes of clarity, the
Arden Courts of Old Orchard Facility is and will remain Lessor’s property during
and after the construction thereof and Lessee shall have no ownership rights
thereto except as a lessee under the Master Lease.”

(e)       The Master Lease is hereby modified by deleting the phrase “the
closing of the Purchase Transaction or the Closing Date, each” from Section
3(d)(ii) from the Ninth Amendment in its entirety and replacing it with the
following in lieu thereof:  “the Arden Courts of Old Orchard Lease Start Date,”.

(f)       The Master Lease is hereby modified by deleting the term “Closing
Date” from Sections 4(c), 4(c)(i)(2), 4(c)(ii)(4)(a), 4(c)(ii)(4)(b),
4(c)(ii)(4)(c), 4(c)(iii)(2), and 4(c)(iii)(3) from the Ninth Amendment in its
entirety and replacing it with the following in lieu thereof:  “Arden Courts of
Old Orchard Lease Start Date”.

(g)       The Master Lease is hereby modified by deleting the phrase “the
closing of the Purchase Transaction on the Closing Date” from Sections 4(c)(i),
4(c)(ii) and 4(c)(iii) from the Ninth Amendment in its entirety and replacing it
with the following in lieu thereof:  “the Arden Courts of Old Orchard Lease
Start Date”.

 

 

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(h)       The Master Lease is hereby modified by deleting the phrase “and the
closing of the Purchase Transaction” from Section 5 of the Ninth Amendment in
its entirety.

3.         Arden Courts of Old Orchard Lease Start Date.  The parties hereby
acknowledge and agree that the Arden Courts of Old Orchard Lease Start Date
shall be February 24, 2016.  Concurrently with the execution of this Amendment,
Lessor shall pay to Lessee the Arden Courts of Old Orchard Construction Fee as
reimbursement for the construction of the Arden Courts of Old Orchard Facility
on behalf of Lessor.  Notwithstanding anything to the contrary contained herein
or in the Master Lease, Allocated Minimum Rent for the Arden Courts of Old
Orchard Facility for the month of February 2016 commencing as of the Arden
Courts of Old Orchard Lease Start Date shall be due and payable on March 1, 2016
(together with all other Allocated Minimum Rent due on such date pursuant to the
Master Lease).

4.Schedule 1 (Additional Facilities).  The Master Lease is hereby amended,
effective as of October 23, 2015, by deleting Schedule 1 (Additional Facilities)
attached to the Tenth Amendment in its entirety and replacing it with Schedule 1
attached hereto in lieu thereof.  The parties hereby acknowledge and agree that
the revised Schedule 1 attached hereto does not impact or affect in any way the
Initial Deferred Rent Obligation or the Deferred Rent Obligation, as both terms
are defined in the Tenth Amendment, or the provisions related thereto contained
in the Tenth Amendment.

5.         Tranche B Rental Factor.  For purposes of clarity, the parties hereby
acknowledge and agree that the Tranche B Rental Factor (as defined in Section
3.5.3 of the Master Lease) shall be calculated as being compounded annually.

6.         Further Assurances.  The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Amendment.

7.         Effect of Amendment.  All references in the Master Lease to the
“Master Lease” shall be deemed to be references to the Master Lease as amended
hereby.

8.         Full Force and Effect; Acknowledgement.  The Master Lease, as hereby
amended, shall remain and continue in full force and effect.

9.Counterparts; Facsimile or Electronically Transmitted Signatures.  This
Amendment may be executed in any number of counterparts, all of which shall
constitute one and the same instrument.  Signatures transmitted by facsimile or
other electronic means may be used in place of original signatures on this
Amendment, and Lessor and Lessee both intend to be bound by the signatures on
the document transmitted by facsimile or such other electronic means.

[NO FURTHER TEXT ON THIS PAGE]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the day and year first written above.

 

 

 

 

“Lessor”

HCP PROPERTIES, LP, a Delaware limited partnership

By:    HCP I-B Properties, LLC, a Delaware limited liability company, its
General Partner

HCP WEST VIRGINIA PROPERTIES, LLC, a Delaware limited liability company

HCP PROPERTIES OF ALEXANDRIA VA, LLC, a Delaware limited liability company

HCP PROPERTIES OF ARLINGTON VA, LLC, a Delaware limited liability company

HCP PROPERTIES OF MIDWEST CITY OK, LLC, a Delaware limited liability company

HCP PROPERTIES OF OKLAHOMA CITY (NORTHWEST), LLC, a Delaware limited liability
company

HCP PROPERTIES OF OKLAHOMA CITY (SOUTHWEST), LLC, a Delaware limited liability
company

HCP PROPERTIES OF TULSA OK, LLC, a Delaware limited liability company

HCP PROPERTIES-ARDEN COURTS OF ANNANDALE VA, LLC, a Delaware limited liability
company

HCP PROPERTIES-CHARLESTON OF HANAHAN SC, LLC, a Delaware limited liability
company

HCP PROPERTIES-COLUMBIA SC, LLC, a Delaware limited liability company

 

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HCP PROPERTIES-FAIR OAKS OF FAIRFAX VA, LLC, a Delaware limited liability
company

HCP PROPERTIES-IMPERIAL OF RICHMOND VA, LLC, a Delaware limited liability
company

HCP PROPERTIES-LEXINGTON SC, LLC, a Delaware limited liability company

HCP PROPERTIES-MEDICAL CARE CENTER-LYNCHBURG VA, LLC, a Delaware limited
liability company

HCP PROPERTIES-OAKMONT EAST-GREENVILLE SC, LLC, a Delaware limited liability
company

HCP PROPERTIES-OAKMONT OF UNION SC, LLC, a Delaware limited liability company

HCP PROPERTIES-OAKMONT WEST-GREENVILLE SC, LLC, a Delaware limited liability
company

HCP PROPERTIES-STRATFORD HALL OF RICHMOND VA, LLC, a Delaware limited liability
company

HCP PROPERTIES-WEST ASHLEY-CHARLESTON SC, LLC, a Delaware limited liability
company

HCP MARYLAND PROPERTIES, LLC, a Delaware limited liability company

HCP PROPERTIES-SALMON CREEK WA,  LLC, a Delaware limited liability company

HCP PROPERTIES-WINGFIELD HILLS NV, LLC, a Delaware limited liability company

 

 

 

 

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HCP PROPERTIES-UTICA RIDGE  IA, LLC, a Delaware limited liability company

HCR TWINSBURG OH PROPERTY, LLC, a Delaware limited liability company

By:

/s/ Darren Kowalske

Name:

Darren Kowalske

Title:

Executive Vice President

 

 

 

HCR STERLING HEIGHTS MI PROPERTY, LLC, a Delaware limited liability company

By:      HCR Schoenherr Road Property, LLC, a Delaware limited liability
company, its sole member

By:      HCP Properties, LP, a Delaware limited partnership, its sole member

By:      HCP I-B Properties, LLC, a Delaware limited liability company, its
General Partner

 

By:

/s/ Darren Kowalske

Name:

Darren Kowalske

Title:

Executive Vice President

 

 

 

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“Lessee”

HCR III HEALTHCARE, LLC, a Delaware limited liability company

 

 

 

By:

/s/ Martin D. Allen

Name:

Martin D. Allen

Title:

Vice President

 

 

 

 

 

 

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CONSENT, REAFFIRMATION AND AGREEMENT OF GUARANTOR

 

Guarantor hereby (i) reaffirms all of its obligations under the Guaranty, (ii)
consents to the foregoing Amendment and (iii) agrees that its obligations under
the Guaranty shall extend to Lessee’s duties, covenants and obligations pursuant
to the Master Lease, as amended pursuant to the foregoing Amendment.

 

HCR MANORCARE, INC., a Delaware corporation

 

 

By:

/s/ Martin D. Allen

Name:

Martin D. Allen

Title:

Vice President

 

 

 

 

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SCHEDULE 1

Additional Facilities

Facility

Facility Owner/
Lessor

Facility Description
and Primary Intended Use

Initial Monthly Allocated Minimum Rent(1)

Allocated Initial Investment

Fixed
Term

1st
Extended
Term

2nd
Extended
Term

HCP ID

To be included in Pool 4

MCNRC Winter Park

2075 Loch Lomond Dr
Winter Park, FL 32792

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 138 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2345

MCHS Washington Twn

378 Fries Mill Road
Sewell, NJ 08080

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus

with
Pool 4

Facilities

13 years

5 years

2348

MCHS Wingfield Hills

2350 Wingfield Hills Road
Sparks, NV 89436

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2342

MCHS Utica Ridge

3800 Commerce Blvd.
Davenport, IA 52807

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus

with
Pool 4

Facilities

13 years

5 years

2343

MCHS Salmon Creek

2811 N.E. 139th Street
Vancouver, WA 98686

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2344

MCHS Lacey

4524 Intelco Loop SE
Lacey, WA 98503

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2349

MCHS Sterling Heights

38200 Schoenherr Road
Sterling Heights, MI 48312

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2350

Heartland of Dublin

4075 W. Dublin-Granville Road Dublin, OH 43017

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2347

Heartland of Twinsburg

8551 Darrow Road
Twinsburg, OH 44087

HCP Properties, LP

Skilled nursing facility / long term care facility consisting of 120 beds

[***]

[***]

Coterminus
with
Pool 4
Facilities

13 years

5 years

2346

(1)If the closing for any Additional Facility does not occur before April 1,
2016, then the Initial Monthly Allocated Minimum Rent for such Additional
Facility will be increased by three percent (3%).

Portions of this schedule that have been marked by [***] have been omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

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