Document:

Exhibit 4.37

 

 

     

     

    

 

NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS CONVERTIBLE OR EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT, OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.Exhibit 10.1

 

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) is entered into effective as of April 4, 2017 (the “Amendment Effective Date”), by and between Mitchell E. Rudin, an individual residing at 15 Bradford Road, Scarsdale, New York 10583 (“Executive”), and Mack-Cali Realty Corporation, a Maryland corporation, with offices at Harborside 3, 210 Hudson Street, Suite 400, Jersey City, New Jersey 07311 (the “Company”).

 

RECITALS

 

WHEREAS, the Company and Executive have entered into that certain Executive Employment Agreement, dated as of June 3, 2015 (the “Agreement”);

 

WHEREAS, the Company and Executive desire to amend the Agreement in the manner set forth herein; and

 

WHEREAS, the Board of Directors of the Company, acting upon the recommendation of the Executive Compensation and Option Committee of the Board, has approved the amendment of the Agreement in the manner set forth herein;

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereby agree as follows:

 

1.             Duties and Responsibilities.

 

(a)           The Agreement is hereby amended by deleting Section 3(a) of the Agreement in its entirety and replacing it with the following:

 

Commencing on the Amendment Effective Date and during the remainder of the Employment Period, Executive shall be employed and serve as the Vice Chairman of the Company.  Executive shall be appointed to the position of Vice Chairman of the Company by resolution of the Board, as an officer of the Company pursuant to Section 1 of Article V of the Amended and Restated Bylaws of the Company.  In his position, Executive shall serve at the pleasure of the Board, subject to the terms of the Agreement, shall report directly to the Board and shall perform such duties, functions and responsibilities during the Employment Period as shall be established by the Board as soon as practicable following the Amendment Effective Date, as well as such other duties and responsibilities commensurate with Executive’s position as may be reasonably and lawfully directed by the Board from time to time.

 

 

(b)           The Agreement is hereby further amended by deleting the last sentence of Section 3(b) of the Agreement in its entirety and replacing it with the following:

 

Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for Executive to (i) with the advance approval of the Board or the Governance Committee of the Board (not to be unreasonably withheld), serve on up to two (2) corporate, civic or charitable boards or committees (in addition to those set forth on Schedule I attached hereto, which have previously been approved by the Board), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (iii) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of Executive’s responsibilities to the Company in accordance with this Agreement.

 

2.             Compensation and Benefits.  The Agreement is hereby further amended by deleting the first sentence of the first bullet of Section 4(b) of the Agreement (entitled “Bonus Opportunity”) in its entirety and replacing it with the following:

 

For 2017 and each subsequent calendar year during the Employment Period, Executive shall be entitled to receive an Annual Bonus equal to fifty percent (50%) of his then current Annual Base Salary if threshold performance is attained, an Annual Bonus equal to seventy-five percent (75%) of his then current Annual Base Salary (the “Target Bonus”) if target performance is attained, and an Annual Bonus equal to one hundred percent (100%) of his then current Annual Base Salary if performance exceeds the maximum performance level.

 

3.             Termination of Employment.  The Agreement is hereby further amended by deleting clause (i) of Section 5(h) of the Agreement in its entirety and replacing it with the following:

 

the material diminishment of Executive’s authority, duties or responsibilities (as shall be established by the Board as soon as practicable following the Amendment Effective Date), it being understood that during a Change in Control Period, Good Reason shall be deemed to have occurred if Executive is not the Vice Chairman of the ultimate parent following the Change in Control;

 

4.             Severance Benefits upon Termination without Cause or Resignation for Good Reason during the Term.

 

(a)           The Agreement is hereby further amended by deleting the proviso to Section 7(a) of the Agreement in its entirety.

 

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(b)           The Agreement is hereby further amended by adding the following at the end of Section 7(a) of the Agreement:

 

Notwithstanding anything to the contrary in Section 5(a) of the 2016 Performance-Based Long-Term Incentive Plan Award Agreement, dated as of March 8, 2016, between the Company and Executive (the “Performance-Based LTIP Award Agreement”) and Section 5(a) of the 2016 Time-Based Long-Term Incentive Plan Award Agreement, dated as of March 8, 2016, between the Company and Executive (the “Time-Based LTIP Award Agreement”), the provisions of this Section 7(a) shall supersede the provisions of Sections 5(b)(i), 5(b)(ii) and 5(b)(iii) of the Performance-Based LTIP Award Agreement and Section 5(b)(ii) and 5(b)(v) of the Time-Based LTIP Award Agreement, as applicable, and shall exclusively govern the treatment of all of Executive’s Award LTIP Units (as defined in the Performance-Based LTIP Award Agreement or the Time-Based LTIP Award Agreement, as applicable) in the event that during the Term (i) the Company terminates Executive’s employment for any reason other than Cause or Disability or (ii) Executive resigns for Good Reason.  The foregoing principles shall also apply to any LTIP awards granted in 2017 and 2018, and the award agreements for such awards shall reflect such treatment.

 

5.             Non-compete.  The Agreement is hereby further amended by deleting Section 13(a) of the Agreement in its entirety and replacing it with the following:

 

During the Employment Period, and for a one (1) year period thereafter in the event Executive’s employment is terminated under circumstances in which he is entitled to receive and is receiving the benefits provided in Sections 6, 7, 8(b) or 8(c) hereof, Executive shall not, directly or indirectly, within Hudson County in the State of New Jersey, engage in, or own, invest in, manage or control any venture or enterprise primarily engaged in any office-service, flex, or office property development or acquisition activities that are competitive with the activities of the Company.  Nothing herein shall prohibit Executive from being a passive owner of not more than five percent (5%) of the outstanding stock of any class of securities of a company or other entity engaged in such business that is publicly traded, so long as Executive has no active participation in the business of such Company or other entity.

 

6.             Miscellaneous Provisions.

 

(a)           Legal Fees.  The Company shall reimburse Executive for reasonable and documented legal fees incurred by the Executive in connection with the negotiation and review of this Amendment and related documentation.

 

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(b)           Counterparts.  This Amendment may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

(c)           No Other Amendments.  All terms and provisions of the Agreement not expressly amended hereby shall remain in full force and effect.  From and after the Amendment Effective Date, all references to the term “Agreement” in this Amendment or the original Agreement shall include the terms and provisions contained in this Amendment.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written.

 

	
 
    	
Company:
    
	
 
    	
 
    
	
 
    	
MACK-CALI REALTY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Gary T. Wagner
    
	
 
    	
Name: 
    	
Gary T. Wagner
    
	
 
    	
Title: 
    	
General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Executive:
    
	
 
    	
 
    
	
 
    	
MITCHELL E. RUDIN
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/a/ Mitchell E. RudinExhibit 10.1

 

EXECUTION VERSION

 

FORBEARANCE AGREEMENT

 

This FORBEARANCE AGREEMENT (this “Agreement”) is made and entered into as of April 5, 2017, by and among the parties signatory hereto as lessors (collectively, “Lessor”), HCR III Healthcare, LLC, as lessee (“Lessee”), Quality Care Properties, Inc. (“QCP”) and HCR ManorCare, Inc. (the “Company”).

 

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 so amended through the date hereof, the “Master Lease”).  The Company is the guarantor of Lessee’s obligations under the Master Lease pursuant to that certain Guaranty of Obligations, dated as of February 11, 2013 (as so amended through the date hereof, the “Guaranty”), and Lessor is a substantial creditor of the Company.

 

B.                                    Lessor, Lessee and the Company desire to agree to defer Lessee’s and the Company’s respective obligations to pay certain amounts under the Master Lease, on the terms and subject to the conditions set forth herein.

 

C.                                    During the period of deferral, Lessee and the Company have agreed to provide information to and cooperate with Lessor and QCP as provided herein, and the parties wish to engage in negotiations to reach a viable comprehensive restructuring of the terms of the Master Lease, the Guaranty and the other economic relationships of the parties.

 

D.                                    QCP has entered into that certain Multi-draw Secured Note (the “Secured Note”) with HCR Home Health Care and Hospice, LLC, an affiliate of Lessee and subsidiary of the Company (the “Borrower”) on the date hereof, pursuant to which QCP has, on the terms and subject to the conditions set forth in the Secured Note, agreed to loan to Borrower up to $21,000,000 in three equal installments of $7,000,000 (each, an “Advance”), to be made on or after April 5, 2017, May 3, 2017 and June 5, 2107 (each, a “Loan Draw Date”).

 

E.                                     Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in 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:

 

 

1.                                      Deferral of Minimum Rent.  Lessor agrees that it shall forbear from bringing suit or exercising remedies (including, without limitation, delivering a notice of default under the Master Lease, terminating the Master Lease, declaring an Event of Default under the Master Lease or exercising any other right or remedy under the Master Lease) with respect to Lessee’s failure to pay the Deferred Portion of the Minimum Rent due on April 3, 2017, May 1, 2017 and June 1, 2017 (each, an “Applicable Rent Payment Date”) until the Deferred Payment Date (as defined below).  Unless this Agreement has been terminated pursuant to Section 6, the Lessor agrees that it shall not bring suit or exercise any right or remedy (including, delivering a notice of default under the Master Lease, without limitation, terminating the Master Lease, declaring an Event of Default under the Master Lease or exercising any other right or remedy under the Master Lease) against Lessee or the Company on grounds that a failure to pay the Deferred Portion of the Minimum Rent on any Applicable Rent Payment Date prior to the Deferred Payment Date constitutes a breach of or default under the Master Lease on the part of Lessee, or that the Deferred Portion of the Minimum Rent not paid when such amount would, but for this Agreement, otherwise be due is past due under the Master Lease prior to the Deferred Payment Date.  The “Deferred Portion of the Minimum Rent” means with respect to the each Applicable Rent Payment Date, the Minimum Rent due under the Master Lease on such Applicable Rent Payment Date in excess of $32,000,000.  The “Deferred Payment Date” means the earlier of (i) July 5, 2017, and (ii) the date on which this Agreement is terminated pursuant to Section 6 hereof.  For the avoidance of doubt, the Lessee acknowledges and agrees that the Deferred Portion of the Minimum Rent for each month is due and owing to the Lessor as of the Applicable Rent Payment Date for such month, and that the terms of this Agreement constitute a forbearance of the overdue debt and shall in no way be construed as a reduction of the underlying debt or modification to the terms of the Master Lease.  The Lessor hereby confirms to the Lessee that it has not issued or delivered any notice of default with respect to any failure to pay the Minimum Rent due on April 3, 2017.

 

2.                                      Impound Accounts.  Notwithstanding Section 4.4 of the Master Lease, Lessor agrees that it shall not bring suit or exercise any right or remedy (including, without limitation, delivering a notice of default under the Master Lease, terminating the Master Lease, declaring an Event of Default under the Master Lease or exercising any other right or remedy under the Master Lease) arising out of the failure of Lessee to deposit or pay any amounts required to be deposited pursuant to Section 4.4 of the Master Lease prior to the Deferred Payment Date; provided, however, that, on the Deferred Payment Date, Lessee will deposit, in accordance with Section 4.4 of the Master Lease, all amounts that, but for the operation of this Section 2 of this Agreement, Lessee would have been required to so deposit pursuant to Section 4.4 of the Master Lease during the period between the date hereof and date immediately prior to the Deferred Payment Date.  For the avoidance of doubt, the Lessee acknowledges and agrees that the amounts to be funded into Impound Accounts is due and owing to the Lessor under the Master Lease, and that the terms of this Agreement constitute a forbearance of the overdue obligation and shall in no way be construed as a waiver of the underlying obligation or modification to the terms of the Master Lease.

 

3.                                      Secured Loan.  During the term of this Agreement, subject to compliance with the terms and conditions thereof, QCP shall make available to the Borrower the Advances provided under the Secured Note.

 

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4.                                      Cooperation.  Between the date hereof and the Deferred Payment Date, the parties intend to engage in good faith discussions concerning a long-term restructuring of the terms of the Master Lease, the Guaranty and the other financial relationships of the parties. In connection with those discussions, the Company shall and shall cause its subsidiaries to (i) negotiate in good faith during such period concerning the circumstances under which the parties will jointly communicate and/or engage in discussions with creditors of, and other Persons having business dealings with, Lessee, the Company and their respective subsidiaries concerning such restructuring (including the timing and content of such communications and/or discussions), (ii) to the extent the parties reach agreement concerning the circumstances under which the parties will so communicate and/or engage in discussions with such creditors or other Persons, promptly facilitate such joint communications and/or discussions, (iii) provide such access and information to QCP and its representatives, advisers and agents as they may reasonably request from time to time in order to facilitate restructuring discussions, except for any information that is subject to attorney-client privilege or other privilege from disclosure (it being agreed that, in the event that any information of Lessee, the Company or their respective subsidiaries are restricted from disclosure as a result of attorney-client privilege or other privilege, Lessee, the Company, Lessor and QCP will cooperate in good faith to seek to design and implement alternative disclosure arrangements to enable Lessor and QCP to evaluate such information without waiver of such privilege), (iv) provide to QCP copies of any material notices delivered to or received from any potential acquirer, strategic partner, joint venture partner, acquisition target or other participant in any business combination or transfer of all or substantially all of the assets of the Company or any subsidiary of the Company, (v) notify QCP of all written material notices from material creditors of the Company or any subsidiary promptly and (vi) keep QCP informed of the status of any material discussions or negotiations with any material creditors as to any potential settlement, amendment, modification, extension, forbearance, refinancing or restructuring involving such creditor.  For the avoidance of doubt, the Company and the Lessee each represents and warrants to QCP and the Lessor that as of the date hereof, the Company and the Lessee are not currently engaged in any discussions regarding any potential material acquisition, merger, strategic partnership, joint venture or other business combination or disposition of material assets involving any business operated by the Company or its subsidiaries.  During the term of this Agreement, the Company and the Lessee shall promptly advise QCP and the Lessor of the commencement of any such discussions, including but not limited to, the receipt of any unsolicited bids, requests for information or proposals from third parties relating to the foregoing.  To the extent that any such discussions referred to in the immediately preceding sentence commence, the Company and its subsidiaries shall afford QCP the right to participate in all such discussions where QCP reasonably requests to participate in its capacity as a substantial creditor of the Company.  Furthermore, with respect to properties subject to the Master Lease and identified by QCP for potential remarketing to third parties, the Company and the Lessor agree to follow the procedures and processes outlined in the Master Lease in Section 26.1 applicable to lessor’s right to inspect and show the leased property and capital additions to facilitate a remarketing process for properties currently in the portfolio and, without duplication, (i) to provide all access and information to QCP and (subject to entering into reasonable confidentiality agreements) third parties as QCP may reasonably request to assess and prepare such properties for successful remarketing, (ii) to reasonably cooperate and assist in the preparation of marketing materials and due diligence activities by potential new operators and (iii) to otherwise cooperate and assist in such remarketing efforts as QCP may reasonably request.  All information and materials provided by or on behalf of the Company or Lessee pursuant to this Section 4 shall be subject to the confidentiality provisions of the Master Lease.

 

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5.                                      Financial Statements.  The Lessee shall (i) deliver to the Lessor not later than April 10, 2017, (i) the Company’s audited financial statements for the year ended December 31, 2016 (in the form and substance required by the Master Lease and in comparative form consistent with prior years) (the “HCR Audited Financial Statements”) and (ii) use its reasonable best efforts and deliver to the Lessor not later than April 10, 2017, the consent of Lessee’s auditors to the incorporation by reference of their report on such financial statements in the Company’s registration statements under the Securities Act of 1933 (the “Auditor’s Consent”).

 

6.                                      Term; Termination.  Unless terminated pursuant to the terms of this Section 6, the term of this Agreement shall be through July 5, 2017.  This Agreement and the forbearance and other obligations of the parties hereunder shall terminate automatically upon the occurrence of:  (i) the Lessee fails to pay the Minimum Rent (other than the Deferred Portion of the Minimum Rent) on the date it is first due in accordance with the Master Lease (other than the failure to pay the Minimum Rent due on April 3, 2017; provided that the Minimum Rent due on April 3, 2017 (other than the Deferred Portion of the Minimum Rent) is paid on the date hereof); (ii) the Lessee fails to comply with its obligations under Section 5 hereof; (iii) there is an Event of Default under the Master Lease (other than as set forth in clause (i) hereof or Section 2 hereof); (iv) the Lessee, the Company or any subsidiary of the Company has been adjudicated bankrupt or insolvent, has failed to vacate an involuntary bankruptcy or reorganization petition within sixty days of the date of such filing, files such a petition on a voluntary basis, fails to vacate the appointment of a receiver or trustee for it or for a substantial portion of its assets within sixty days of such appointment, makes a voluntary assignment for the benefit of its creditors or ceases to do business as a going concern; (v) there is a default or event of default under the Credit Agreement, dated as of April 6, 2011, among Manor Care, Inc., HCR Healthcare, LLC, the several banks and other financial institutions or entities from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent and the lenders thereunder  accelerate maturity of the obligations thereunder; (vi) there is a material change in the senior management of the Company; (vii) there is an Event of Default under the Secured Note; (viii) (A) the Company and Lessee fail to comply, in any material respect, with their obligations under Section 4 of this Agreement, as determined reasonably and in good faith by QCP, and such failure continues for ten (10) Business Days after receipt of written notice from Lessor of such failure and (B) QCP provides written notice to HCR on or after June 1, 2017, that it is terminating this Agreement due to the failure of Company and Lessee to comply, in any material respect, with their obligations under Section 4 of this Agreement or (ix) Lessee fails to deliver to the Lessor the Auditor’s Consent on or before April 10, 2017.  The Company or the Lessee may terminate this Agreement at any time upon the occurrence of any material breach of this Agreement by QCP or the Lessor.

 

7.                                      Stipulations.  The Company and the Lessee hereby admit, stipulate and agree that (i) the Rent and other obligations of the Lessee under the Master Lease and the Company under the Guaranty constitute legal, valid and binding obligations of the Lessee and the Company, enforceable against the Lessee and the Company in accordance with the terms of the Master Lease and the Guaranty, (ii) no portion of the Rent and other obligations of the Lessee under the Master Lease or the Company under the Guaranty is subject to avoidance, recharacterization,

 

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recovery or subordination pursuant to the Bankruptcy Code or applicable nonbankruptcy law; and (iii) the Company and the Lessee do not have any claims, counterclaims, causes of action, defenses or setoff rights arising under or in connection with the Master Lease or the Guaranty against QCP, the Lessor and their respective affiliates, agents, officers, directors, employees and attorneys (other than the right to return of $4 million of cash previously deposited by Lessee in the tax and insurance impound account under the Master Lease to be returned to Lessee as per agreement of Lessor and Lessee promptly after execution of this Agreement).

 

8.                                      Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

9.                                      Counterparts; Facsimile or Electronically Transmitted Signatures. This Agreement 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 Agreement, and  each party hereto intends to be bound by the signatures on the document transmitted by facsimile or such other electronic means.

 

10.                               Severability.  If any term, condition or provision of this Agreement or the application thereof to any circumstance or party hereto shall be invalid or unenforceable to any extent, the remaining terms, conditions and provisions of this Agreement or the application thereof to any circumstance or party hereto, other than that held invalid or unenforceable, shall not be affected thereby and each remaining term, condition and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

11.                               Changes in Writing. This Agreement may not be orally changed or terminated, nor any of its provisions waived, except by an agreement in writing signed by the party against whom enforcement of any changes, termination or waiver is sought.

 

12.                               Headings.  The captions contained herein are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of the Master Lease or this Agreement nor the intent of any provision thereof or hereof.

 

13.                               Authority.  The Company, Lessee, QCP and Lessor each hereby represents and warrants that it has full right, power and authority to enter into this Agreement and that the person executing this Agreement on behalf of the Company, Lessee, QCP and Lessor, respectively, is duly authorized to do so.

 

14.                               No Presumption.  This Agreement has been freely negotiated by the parties hereto and in any controversy, dispute, or contest over the meaning, interpretation, validity, or enforceability of this Agreement or any of its terms or conditions, there shall be no inference, presumption, or conclusion drawn whatsoever against either party by virtue of that party having drafted this Agreement or any portion thereof.  Nothing herein shall be construed to limit or otherwise impair the ability of any party from exercising any rights or taking any steps not expressly restricted herein.

 

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15.                               Confidentiality.  This Agreement shall be subject to the confidentiality provisions of Section 45.1.7 of the Master Lease and Section 45.1.7 of the Master Lease is hereby incorporated by reference herein mutatis mutandi.  It is understood that QCP shall be permitted to disclose the existence and terms of this Agreement, as well as file a copy of this Agreement and the Secured Note as exhibits in its periodic or current reports filed with the Securities and Exchange Commission.  QCP will issue a press release with respect to the execution and delivery of this Agreement and the matters addressed in this Agreement in the form heretofore agreed by the parties and attached as Exhibit A hereto.  The parties shall cooperate in good faith to the full extent practicable prior to issuing any subsequent press release or public announcement with respect to this Agreement or the transactions it contemplates, including providing one another drafts of any such press release or public announcement in advance of issuance and considering and incorporating in such press release or public announcement of the reasonable comments of the other parties hereto. In advance of filing with the Securities and Exchange Commission any report containing the HCR Audited Financial Statements, QCP will provide the Company with a reasonable opportunity to review such report and shall consider and incorporate such reasonable comments provided by the Company related to the portion of such report referring to the HCR Audited Financial Statements.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement 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
    

 

 

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

 

 

	
 
    	
By:
    	
/s/ C. Marc Richards
    
	
 
    	
Name:
    	
C. Marc Richards
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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/ C. Marc Richards
    
	
 
    	
Name:
    	
C. Marc Richards
    
	
 
    	
Title:
    	
Chief Financial Officer
    
				

 

 

	
 
    	
IN WITNESS WHEREOF, the   parties hereto have caused this Agreement to be executed as of the day and   year first written above.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
“QCP”
    
	
 
    	
 
    
	
 
    	
QUALITY CARE   PROPERTIES, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ C. Marc Richards
    
	
 
    	
Name:
    	
C. Marc Richards
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

 

	
 
    	
IN WITNESS WHEREOF, the   parties hereto have caused this Agreement to be executed as of the day and   year first written above.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
“LESSEE”
    
	
 
    	
 
    
	
 
    	
HCR III HEALTHCARE,   LLC,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Matthew S. Kang
    
	
 
    	
Name:
    	
Matthew S. Kang
    
	
 
    	
Title: 
    	
Vice President
    

 

 

	
 
    	
IN WITNESS WHEREOF, the   parties hereto have caused this Agreement to be executed as of the day and   year first written above.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
“THE COMPANY”
    
	
 
    	
 
    
	
 
    	
HCR   MANORCARE, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Matthew S. Kang
    
	
 
    	
Name:
    	
Matthew S. Kang
    
	
 
    	
Title:
    	
Vice President and   Chief Financial Officer
    

 

 

Exhibit A:  Press Release

 

Quality Care Properties Enters Into Forbearance Agreement with HCR ManorCare

 

BETHESDA, Md., April 5, 2017  — Quality Care Properties, Inc. (NYSE: QCP) (“QCP” or the “Company”) today announced that it entered into a forbearance agreement (the “Agreement”) with its principal tenant, HCR III Healthcare, LLC and its parent HCR ManorCare, Inc. (together, “HCR ManorCare”).  Among other things, the Agreement would require HCR ManorCare to make cash rent payments of $32 million for each of April, May and June of 2017, with a deferral of the additional $7.5 million per month otherwise due until the earlier of (i) July 5, 2017 and (ii) an early termination of the Agreement, with all deferred amounts becoming immediately due and payable upon an early termination.  The Agreement also requires HCR ManorCare to deliver its 2016 audited financial statements and auditor consent to QCP not later than April 10, 2017, which is expected to include a “going concern” exception for HCR ManorCare in the auditor opinion.

 

Importantly, during the term of the Agreement, which will end on July 5, 2017, unless earlier terminated, QCP and HCR ManorCare intend to engage in good faith discussions concerning a long-term restructuring of the terms of the master lease, the guaranty of the master lease and certain other matters.  To facilitate the exploration of restructuring alternatives, QCP also agreed to provide HCR ManorCare with a temporary secured extension of credit of up to $7 million per month during each of April, May and June of 2017 (up to $21 million in the aggregate), which would be due and payable in full not later than December 31, 2017, subject to acceleration upon certain events.

 

“We are pleased to have reached this agreement and are working with HCR ManorCare to reach a comprehensive, long-term solution to the master lease that seeks to both preserve and enhance the value of our properties, while supporting the ability of HCR ManorCare and its thousands of employees and caregivers to provide high-quality care for their patients and residents.  We remain open to all appropriate solutions, including possibly transitioning to increased equity ownership in HCR ManorCare,” said Mark Ordan, QCP’s Chief Executive Officer.

 

Additional details regarding the Agreement are available in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on April 5, 2017.

 

 

HCR ManorCare accounted for 94% of QCP’s total revenues during the year ended December 31, 2016.  For additional information regarding the risks to QCP associated with HCR ManorCare, see “Risk Factors” included in QCP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which is available on QCP’s website at www.qcpcorp.com and at www.sec.gov.

 

About QCP

 

Quality Care Properties, Inc. is one of the nation’s largest actively managed real estate companies focused on post-acute/skilled nursing and memory care/assisted living properties. QCP’s properties are located in 29 states and include 257 post-acute/skilled nursing properties, 61 memory care/assisted living properties, a surgical hospital and a medical office building.  For more information regarding QCP, visit www.qcpcorp.com.

 

Safe Harbor Statement

 

Certain statements in this press release that are not historical statements of fact may be deemed “forward-looking statements.”  The Company intends to have its forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with those provisions. Forward-looking statements include, among other things, statements regarding our intent, belief or expectations.  In particular, we note as a forward-looking statement our intention regarding good faith discussions with HCR ManorCare concerning a long-term restructuring of the terms of the master lease, the guaranty of the master lease and certain other matters.  No assurance can be given that we will reach agreement with respect to any of these matters.  Forward-looking statements speak only as of the date of this press release. Except as may be required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.

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