Exhibit 10.4

 

SEVENTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT

 

This SEVENTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (this “Amendment”)
is made and entered into as of February 11, 2013, 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 5, 2012 and Sixth Amendment to Master Lease
and Security Agreement dated as of July 30, 2012 (as so amended, the “Master
Lease”).  Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Master Lease.

 

B.                                    Lessor and Lessee desire to modify certain
terms and provisions of the Master Lease as more particularly provided herein.

 

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.                                      Changes to Certain Definitions.

 

(a)                                 The Master Lease is hereby amended by
deleting the definition of “Consolidated Adjusted Total Net Debt” contained in
Section 2.1 thereof in its entirety and inserting the following definition in
lieu thereof:

 

“Consolidated Adjusted Total Net Debt:  (x) the aggregate principal amount of
all Funded Debt of Guarantor and its Subsidiaries at such date, minus cash and
Cash Equivalents held by Guarantor and its Subsidiaries on such date, in each
case determined on a consolidated basis in accordance with GAAP, plus (y) eight
(8) times the total aggregate annual lease payments under this Lease of
Guarantor and its Subsidiaries.”

 

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(b)                                 The Master Lease is hereby amended by
deleting the definition of “Consolidated EBITDA” contained in Section 2.1
thereof in its entirety and inserting the following definition in lieu thereof:

 

“Consolidated EBITDA:  With respect to any Person for any period, Consolidated
Net Income of such Person and its Subsidiaries for such period plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of:

 

(a)                     provision for taxes based on income, profits and/or
capital, including, without limitation, federal, foreign, state, franchise,
excise and similar taxes and foreign withholding taxes of such Person paid or
accrued during such period, including any penalties and interest relating to
such taxes;

 

(b)                     Consolidated Net Interest Expense of such Person and its
Subsidiaries and, to the extent not reflected in such Consolidated Net Interest
Expense, any losses on hedging obligations or other derivative instruments
entered into in the ordinary course of business for the purpose of hedging
interest rate risk, net of interest income and gains on such hedging
obligations, amortization or write-off of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness (including commitment, facility letter of credit and administrative
fees and charges with respect to the Facilities);

 

(c)                      depreciation and amortization expense (including, but
not limited to, deferred financing fees and capitalized software expenditures,
customer acquisition costs and incentive payments, conversion costs, contract
acquisition costs and amortization of unrecognized prior service costs and
actuarial gains and losses related to pensions and other post-employment
benefits);

 

(d)                     amortization or impairment of intangibles (including,
but not limited to, goodwill) and organization costs;

 

(e)                      any extraordinary, unusual or non-recurring expenses or
losses (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business and accruals and payments for
amounts payable under executive employment agreements in connection with the
transactions contemplated under the Purchase Agreement);

 

(f)                       any other non-cash charges, expenses or losses (except
to the extent such charges, expenses or losses represent an accrual of or
reserve for cash expenses in any future period or an amortization of a prepaid
cash expense paid in a prior

 

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period), including in relation to earn outs and similar obligations and any
non-cash expenses resulting from the revaluation of inventory (including any
impact of changes to inventory valuation policies or methods and changes in
capitalization of variances);

 

(g)                      restructuring and integration costs or reserves,
including, without limitation, any severance costs, costs associated with office
and facility openings or closings and consolidation, relocation or integration
costs and other non-recurring business optimization and restructuring charges
and expenses;

 

(h)                     stock-option based and other equity-based compensation
expenses;

 

(i)                         transaction costs, fees, losses and expenses
(including those relating to the transactions contemplated by the Purchase
Agreement or this Lease) payable in connection with (1) the sale of Capital
Stock, (2) the incurrence of Indebtedness or dispositions, (3) any Restricted
Payments, or (4) any acquisition or other investment (in each case whether or
not successful);

 

(j)                        all fees and expenses paid pursuant to (i) that
certain Consulting Services Agreement, by and between HCR ManorCare, Inc. and TC
Group V, L.L.C., (ii) that certain Transaction Services Agreement, by and
between HCR ManorCare, Inc. and TC Group V, L.L.C., each as in effect on or
about April 6, 2011, and each as modified from time to time; and (iii) any other
agreement between HCR ManorCare, Inc. or any of its Subsidiaries and any equity
holder or any affiliated entity of such equity holder of HCR ManorCare, Inc.;

 

(k)                     proceeds from any business interruption insurance (in
the case of this clause (k), to the extent not reflected as revenue or income in
such statement of such Consolidated Net Income);

 

(l)                         the amount of cost savings and other operating
improvements and synergies projected by Guarantor in good faith and certified in
writing to Lessor to be realized as a result of any acquisition, merger,
disposition (including the termination or discontinuance of activities
constituting such business) of business entities, properties or assets
constituting a division or line of business of any business entity, division or
line of business that is the subject of any such acquisition or

 

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disposition, including any synergies and cost savings (calculated on a pro forma
basis as though such cost savings and other operating improvements and synergies
had been realized on the first day of such period), net of the amount of actual
benefits realized during such period from such actions to the extent already
included in the Consolidated Net Income for such period, provided that
(i) Guarantor shall have certified to the Lessor that (A) such cost savings are
reasonably anticipated to be realizable within 12 months following such
acquisition or disposition and (B) such actions are taken or committed to be
taken within 12 months after such acquisition, disposition or operational change
and (ii) no cost savings shall be added pursuant to this clause (l) to the
extent duplicative of any expenses or charges relating to such cost savings that
are included in clause (g) above and clause (o) below with respect to such
period;

 

(m)                 cash expenses relating to earn outs and similar obligations;

 

(n)                     to the extent actually reimbursed, expenses incurred to
the extent covered by indemnification provisions in any agreement in connection
with a permitted acquisition or other permitted investment;

 

(o)                     the amount of cost savings and other operating
improvements and synergies reasonably expected to result from any operational
change taken or committed to be taken during such period (calculated on a pro
forma basis as though such cost savings had been realized on the first day of
such period), net of the amount of actual benefits realized during such period
from such actions to the extent already included in the Consolidated Net Income
for such period, provided that no cost savings shall be added pursuant to this
clause (o) to the extent duplicative of any expenses or charges relating to such
cost savings that are included in clauses (l) and (g) above with respect to such
period;

 

(p)                     the non-cash portion of straight-line rent expense;

 

(q)                     payments made to Guarantor or Manor Care, Inc. to pay
(i) any taxes which are attributable to Guarantor or Manor Care, Inc. or any of
their respective parent companies, (ii) customary fees, salary, bonus, severance
and other benefits payable to, and indemnities provided on behalf of, their
current and former officers and employees and members of their board of
directors, (iii) ordinary course corporate operating expenses and other fees and
expenses required to maintain their corporate

 

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existence, (iv) fees and expenses related to the agreements described in clause
(j) above, (v) fees and expenses incurred in connection with any unsuccessful
debt or equity offering by Guarantor or Manor Care, Inc. or any of their
respective parent companies to the extent that the proceeds of such proceeds
were intended to be used for the benefit of Lessee, Guarantor or any of their
respective Subsidiaries;

 

(r)                        costs of surety bonds in connection with financing
activities of such Person and its Subsidiaries;

 

(s)                       losses from start-up businesses;

 

(t)                        other non-operating expenses (including, without
limitation, environmental and asset retirement obligations);

 

(u)                     accretion of asset retirement obligations in accordance
with SFAS No. 143, Accounting for Asset Retirement Obligations and FASB
Interpretation No. 47, and any similar accounting in prior periods;

 

(v)                     the amount of cash payments made in respect of pensions
and other post-employment benefits in such period;

 

(w)                   charges, losses or expenses to the extent indemnified or
insured by a third party as to which the indemnifying or insuring party has not
denied liability; and

 

(x)                     equity earnings in affiliated companies received in cash
by Guarantor or its Subsidiaries,

 

minus, to the extent reflected as income or a gain in the statement of such
Consolidated Net Income for such period, the sum of:

 

(a)                     any extraordinary, unusual or non-recurring income or
gains (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business);

 

(b)                     any other non-cash income or gains (other than the
accrual and/or deferral of revenue in the ordinary course), but excluding any
such items (i) in respect of which cash was received in a prior period or will
be received in a future period or (ii) which represent the reversal in such
period of any accrual of, or cash reserve for, anticipated cash charges in any
prior period where such accrual or reserve is no longer required, all as
determined on a consolidated basis; and

 

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(c)                      cash payments in connection with “straight-line” rent
expense which exceed the amount expensed in respect of such rent expense;

 

provided that for purposes of calculating Consolidated EBITDA of Lessee,
Guarantor and their respective Subsidiaries for any period, (A) the Consolidated
EBITDA of any Person or property acquired by Lessee, Guarantor or their
respective Subsidiaries during such period (assuming any synergies, cost savings
and other operating improvements to the extent certified by Guarantor as having
been determined in good faith to be reasonably anticipated to be realizable
within 18 months following such acquisition), shall be included on a pro forma
basis for such period (but assuming the consummation of such acquisition and the
incurrence or assumption of any Indebtedness in connection therewith or such
designation, as the case may be, occurred on the first day of such period), and
(B) the Consolidated EBITDA of any Person or property disposed of by Lessee,
Guarantor or any of their respective Subsidiaries during such period, shall be
excluded for such period (assuming the consummation of such Disposition and the
repayment of any Indebtedness in connection therewith or such designation, as
the case may be, occurred on the first day of such period).

 

Notwithstanding the foregoing, Consolidated EBITDA shall be calculated without
giving effect to the non-cash effects of purchase accounting or similar
adjustments required or permitted by GAAP in connection with any other
acquisition or investment occurring prior to the date hereof.

 

Notwithstanding anything to the contrary herein, the rent and other expenses
associated with this Lease or any subleases hereunder shall reduce Consolidated
Net Income as used in the calculation of Consolidated EBITDA (with such rent and
other expenses being calculated as though such lease has operating lease
accounting treatment, irrespective of any accounting treatment or classification
of such lease as a capital lease obligation).”

 

(c)                                  The Master Lease is hereby amended by
deleting the definition of “Consolidated EBITDAR” contained in Section 2.1
thereof in its entirety and inserting the following definition in lieu thereof:

 

“Consolidated EBITDAR:  Consolidated EBITDA plus cash rent payments under this
Lease.”

 

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(d)                                 The Master Lease is hereby amended by
deleting the definition of “Consolidated Net Interest Expense” contained in
Section 2.1 thereof in its entirety and inserting the following definition in
lieu thereof:

 

“Consolidated Net Interest Expense:  Of any Person for any period, (a) total
cash interest expense (including that attributable to obligations under capital
leases) of such Person and its Subsidiaries for such period with respect to all
outstanding Indebtedness of such Person and its Subsidiaries, minus (b) the sum
of (i) total cash interest income of such Person and its Subsidiaries for such
period, in each case determined in accordance with GAAP plus (ii) any one time
financing fees (to the extent included in such Person’s consolidated interest
expense for such period). For purposes of the foregoing, interest expense of any
Person shall be determined after giving effect to any net payments made or
received by such Person with respect to interest rate hedge agreements (other
than early termination payments).”

 

(e)                                  The Master Lease is hereby amended by
deleting the definition of “Fixed Charges” contained in Section 2.1 thereof in
its entirety and inserting the following definition in lieu thereof:

 

“Fixed Charges:  As to any Person and its Subsidiaries, on a consolidated basis,
with respect to any period, the sum of, without duplication, (a) all
Consolidated Net Interest Expense paid in cash during such period, plus (b) the
aggregate cash rental payments under this Lease of Guarantor and its
Subsidiaries during such period.”

 

(f)                                   The Master Lease is hereby amended by
deleting the definition of “Funded Debt” contained in Section 2.1 thereof in its
entirety and inserting the following definition in lieu thereof :

 

“Funded Debt:  With respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, and (c) all
payment obligations of such Person under any capital leases (other than this
Lease or other operating leases given capital lease treatment under GAAP).”

 

(g)                                  The Master Lease is hereby amended by
deleting the definition of “Guarantor” contained in Section 2.1 thereof in its
entirety and inserting the following definition in lieu thereof:

 

“Guarantor:  Collectively, HCR ManorCare, Inc. (successor by merger to HCR Manor
Care, LLC and formerly known as HCRMC Operations, LLC), and any present or
future guarantor of Lessee’s obligations pursuant to this Lease (each
individually, a “Guarantor”).”

 

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(h)                                 The Master Lease is hereby amended by adding
the following definition to Section 2.1 thereof :

 

“Indebtedness:  Of any Person shall mean, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person for the deferred purchase price of property or
services, (d) all guaranteed obligations by such Person of indebtedness of
others, (e) all capital lease obligations of such Person, other than any
capitalized rent or other capitalized obligation under this Lease, (f) all
payments that such Person would have to make in the event of an early
termination, on the date indebtedness of such Person is being determined in
respect of outstanding hedge agreements (such payments in respect of any hedge
agreement with a counterparty being calculated subject to and in accordance with
any netting provisions in such hedge agreement) and (g) the principal component
of all obligations, contingent or otherwise, of such Person (i) as an account
party in respect of letters of credit (other than any letters of credit, bank
guarantees or similar instrument in respect of which a back-to-back letter of
credit has been issued under or permitted by this Lease) and (ii) in respect of
bankers’ acceptances; provided that Indebtedness shall not include (A) trade and
other ordinary course payables arising in the ordinary course of business,
(B) prepaid or deferred revenue arising in the ordinary course of business,
(C) purchase price holdbacks arising in the ordinary course of business in
respect of a portion of the purchase price of an asset to satisfy unperformed
obligations of the seller of such asset or (D) earn-out obligations until such
obligations become a liability on the balance sheet of such Person in accordance
with GAAP.  The indebtedness of any Person shall include the Funded Debt of any
partnership in which such Person is a general partner, other than to the extent
that the instrument or agreement evidencing such Funded Debt expressly limits
the liability of such Person in respect thereof.”

 

2.                                      Additional Reporting Requirements.  From
and after the date hereof, Lessee shall provide to Lessor the following reports
with respect to Guarantor and its respective Subsidiaries:

 

(a)                                 as soon as available, but in any event not
later than thirty-one (31) days after the end of each calendar year, a monthly
budget for the following calendar year for the Guarantor, which will include a
consolidated balance sheet, a consolidated cash flow, and a consolidated income
statement, provided that the consolidated income statement shall be broken out
by Guarantor’s business lines;

 

(b)                                 within twenty (20) days after the end of
each calendar month, monthly reports comparing actual results vs. budget by
Guarantor’s business line, including relevant operational metrics, including
operating expenses in form and substance substantially similar to the Facility
level statements Lessee provides under the Master Lease; and

 

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(c)                                  within twenty (20) days after the end of
each calendar month, monthly reports of free cash flow reconciliation (comparing
actual results vs. budget) in a format to be mutually agreed upon by Guarantor
and Lessor.

 

All reports and statements required under this Section 2 shall be prepared on an
accrual basis consistently maintained throughout the applicable period and shall
be subject to the requirements of Section 25.1.3 of the Master Lease.  For the
avoidance of doubt, the reports required under this Section 2 shall be in
addition to any other reports and statements required to be delivered by Lessee
under Section 25.1.2 of the Master Lease and the annual and quarterly financial
statements required by Section 25.1.2(a) and (b) of the Master Lease shall be
prepared in accordance with GAAP applied on a basis consistently maintained
throughout the applicable period.  To the extent that and for so long as (i) MC
Operations Investments, Inc. or any other affiliate or subsidiary of HCP, Inc.
are shareholders of Guarantor; (ii) Guarantor files with the Securities and
Exchange Commission (the “SEC”) an annual report on Form 10-K or a quarterly
report on Form 10-Q, as applicable; and (iii) Lessee delivers to Lessor and its
Affiliates full copies of Guarantor’s SEC filings, Lessee’s obligations in
Sub-sections 2(a)-(c) shall be modified to the extent required to avoid the
disclosure of any items which the SEC prohibits to be disclosed by Lessee or
Guarantor to Lessor, for any period during which such prohibition shall apply.

 

In addition, the Master Lease is hereby amended by deleting sub-clause (d) of
Section 45.1.7 thereof in its entirety and inserting the following in lieu
thereof:  “(d) in connection with reporting of Facility portfolio based
performance, other Facility portfolio information and certain credit metrics for
Guarantor and its Subsidiaries in filings with Securities and Exchange
Commission by Lessor and its Affiliates;”

 

3.                                      Addition of Property to the Master
Lease.

 

(a)                                 In the event that Lessee shall desire to add
any real property (the “Additional Property”) to the Leased Property, Lessee
shall, at least forty-five (45) days prior to the date of such proposed
addition, provide to Lessor the following:

 

(i)                                     a written request to Lessor describing
the proposed location and use of the Additional Property;

 

(ii)                                  a pro forma owner’s title insurance policy
(“Pro Forma”) showing fee title to the Additional Property vested in HCP
Properties, L.P., a Delaware limited partnership, or such other entity as
designated by Lessor (“Grantee”), in an amount reasonably acceptable to Lessor,
subject to no financial encumbrances (other than tax liens not yet due and
payable), and containing the following endorsements (in each case, where and if
applicable):  owner’s comprehensive; same as survey; access and entry; separate
tax parcel; location; street assessments; zoning; environmental protection lien;
subdivision; mechanic’s lien; deletion of arbitration; and other endorsements
reasonably requested by Lessor;

 

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(iii)                               copies of all underlying documents for any
exceptions shown on the Pro Forma;

 

(iv)                              an ALTA survey which accurately depicts the
Additional Property, certified to Grantee (and such other parties as may be
reasonably requested by Lessor) and an affidavit of no change to survey
reasonably acceptable to the title company for the purpose of removing the
standard survey exception and issuing any survey-related endorsements;

 

(v)                                 a Phase I environmental report of the
Additional Property (completed within the six (6) month period prior to the date
of the proposed addition) and any other environmental reports concerning the
Additional Property in Lessee’s possession or control or reasonably available to
Lessee, in each case, which report(s) shall be certified to Grantee (or the
consultant(s) preparing such reports shall issue a reliance letter establishing
a relationship between such consultant and Grantee);

 

(vi)                              if applicable and requested by Lessor, a
property condition report for the Additional Property;

 

(vii)                           if applicable and requested by Lessor, a zoning
report for the Additional Property (which shall include a zoning letter from the
applicable municipal agency, provided that such agency issues such letters);

 

(viii)                        copies of all agreements and documents pursuant to
which Lessee purchased, or has contracted to purchase, the Additional Property;
and

 

(ix)                              forms of any conveyance documents (e.g.,
deeds, bills of sale, etc.) and any other documents required to be executed by
Grantee in connection with conveyance of the Additional Property to Grantee
(collectively, the “Conveyance Documents”).

 

(b)                                 Within thirty (30) days following Lessor’s
receipt of all of the documents and materials required pursuant to
Section 3(a) above, Lessor shall provide written notice to Lessee either
approving the addition of the Additional Property to the Leased Property,
requesting additional information regarding the Additional Property, or denying
the addition of the Additional Property to the Leased Property and setting forth
the reasons for such denial.  Lessor’s approval of the addition of the
Additional Property to the Leased Property, shall be conditioned on the
following:

 

(x)                                 Lessor’s receipt of an owner’s title policy
in the form of the Pro Forma (including all requested endorsements thereto in
accordance with the terms hereof) approved by Lessor (“Owner’s Policy”);

 

(xi)                              Lessor and Lessee’s execution of an addendum
to the Master Lease in the form attached hereto as Exhibit A (the “Addendum”);
and

 

(xii)                           Lessee’s payment of all costs in connection with
the conveyance of the Additional Property and the addition of the Additional
Property to the Leased Property, including, but not limited to, the cost of the
Owner’s Policy, all recording and escrow costs and any transfer taxes.

 

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(c)                                  If Lessor shall approve the addition of the
Additional Property to the Leased Property, Lessee shall deliver to Lessor:

 

(xiii)                        concurrently with the conveyance of the Additional
Property to Grantee:  an original of the Addendum executed by Lessee; copies of
all Conveyance Documents; and funds to cover the payment of all costs and
expenses of Lessor in connection with the conveyance of the Additional Property
to Grantee and the addition of the Additional Property to the Leased Property;
and

 

(xiv)                       promptly upon Lessee’s receipt, a copy of the
recorded deed conveying the Additional Property to Grantee and an original of
the Owner’s Policy.

 

(d)                                 The failure by Lessor to respond to Lessee’s
written request to approve the addition of the Additional Property (provided
that such request also includes all items required to be delivered to Lessor in
connection with any such request under Section 3(a) above) within the applicable
time period shall constitute Lessor’s deemed disapproval of the addition of the
Additional Property to the Leased Property, provided that Lessee shall have the
right to resubmit such request together with any additional information
subsequently requested by Lessor.

 

(e)                                  Pursuant to Lessee’s obligations under
Section 42.2 of the Master Lease, Lessee hereby agrees to pay all costs and
expenses (including, without limitation, attorneys’ fees and expenses) incurred
by Lessor in connection with Lessor’s review of any requests to add Additional
Property to the Leased Property and the preparation, negotiation and
documentation of any documents or agreements in connection therewith (whether or
not such requests are approved by Lessor or such Additional Property is added to
the Leased Property), which amounts shall constitute Additional Charges under
the Master Lease, unless otherwise provided pursuant to Section 3(c)(i).

 

4.                                      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.

 

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

 

6.                                      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

 

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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

 

 

 

 

 

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

 

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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

 

 

 

 

 

By:

/s/ Susan M. Tate

 

 

Name:

Susan M. Tate

 

 

Title:

Executive Vice President

 

 

 

 

 

“LESSEE”

 

 

 

 

 

HCR III HEALTHCARE, LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Matthew S. Kang

 

 

Name: Matthew S. Kang

 

 

Title: Vice President, Chief Financial Officer

 

S-3

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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/ Matthew S. Kang

 

 

Name: Matthew S. Kang

 

 

Title: Vice President, Chief Financial Officer

 

Consent, Reaffirmation and Agreement

 

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EXHIBIT A

 

Form of Addendum

 

[Addendum #    ]

 

ADDENDUM #     TO MASTER LEASE AND SECURITY AGREEMENT

 

This ADDENDUM #     TO MASTER LEASE AND SECURITY AGREEMENT (this “Addendum”) is
made and entered into as of                        , 20    , 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 the same may have been amended, restated or otherwise modified
prior to the date hereof, 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 in
accordance with the terms thereof, the “Guaranty”).

 

C.            Pursuant to Section 3 of that certain Seventh Amendment to Master
Lease and Security Agreement, dated as of December     , 2012 (the “Seventh
Amendment”), by and between Lessor and Lessee, Lessor and Lessee desire to add
the real property more particularly described on Exhibit A attached hereto (the
“New Property”) to the Leased Property under the Master Lease.

 

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:

 

Exhibit A - 1

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1.             Lessee’s Representations and Warranties.  Lessee hereby
represents and warrants to Lessor that Lessee has delivered to Lessor the
materials and documentation required pursuant to Section 3(a) of the Seventh
Amendment and that, to Lessee’s knowledge, (i) all such materials and
documentation were true, correct and complete at the time delivered and
(ii) there have been no changes affecting any such materials or documentation or
any information disclosed thereby, that would interfere with or materially
adversely affect the consummation of the transactions contemplated hereby, that
have not been previously disclosed by Lessee to Lessor in writing.

 

2.             Additional Property. The Master Lease is hereby amended to modify
the “Leased Property” to add the New Property thereto and Lessor hereby leases
to Lessee, and Lessee hereby leases from Lessor, as part of the Leased Property,
all of Lessor’s right, title and interest in and to the New Property, including
any improvements currently and to be located thereon, subject to all of the
terms, conditions and provisions of the Master Lease, as it is hereby, and may
be hereafter, amended, supplemented, restated or otherwise modified.

 

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

 

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

 

5.             Counterparts; Facsimile or Electronically Transmitted Signatures.
This Addendum 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
Addendum, and Lessor and Lessee both intend to be bound by the signatures on the
document transmitted by facsimile or such other electronic means.

 

6.             Fees and Costs. Pursuant to Lessee’s obligations under
Section 42.2 of the Master Lease, Lessee hereby agrees to pay all of Lessor’s
actual out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and documentation of this Addendum, which amounts shall
constitute Additional Charges under the Master Lease.

 

[NO FURTHER TEXT ON THIS PAGE]

 

Consent, Reaffirmation and Agreement

 

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IN WITNESS WHEREOF, the parties hereto have caused this Addendum 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

 

S-1

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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

 

 

 

 

 

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

 

Exhibit A - S-2

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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

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

“LESSEE”

 

 

 

 

 

HCR III HEALTHCARE, LLC, a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

Exhibit A - S-3

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[Addendum #    ]

 

CONSENT, REAFFIRMATION AND AGREEMENT OF GUARANTOR

 

Guarantor hereby (i) reaffirms all of its obligations under the Guaranty,
(ii) consents to the foregoing Addendum 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 or modified pursuant to the foregoing
Addendum.

 

 

 

HCR MANORCARE, INC., a Delaware corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

Exhibit A - Consent, Reaffirmation and Agreement

 

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EXHIBIT A

 

Legal Description of Additional Property

 

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