Amendment No. 5, dated as of March 13, 2019, to Term Loan Agreement by and among Genesis Healthcare, Inc., FC-GEN Operations Investment, LLC, GEN Operations I, LLC and GEN Operations II, LLC as borrowers, HCRI Tucson Properties, Inc. and OHI Mezz Lender, LLC as lenders and Welltower, Inc. as the administrative agent and collateral agent

EX-10.3 4 gen-20190331ex10318f496.htm EX-10.3 Ex103

Exhibit 10.3

AMENDMENT NO. 5 TO LOAN AGREEMENT

This Amendment No. 5 to Loan Agreement (this “Agreement”), dated as of March 13, 2019, is entered into by and among GENESIS HEALTHCARE, INC., a Delaware corporation (“Ultimate Parent”), FC-GEN OPERATIONS INVESTMENT, LLC, a Delaware limited liability company (the “Borrower”), GEN OPERATIONS I, LLC, a Delaware limited liability company (“Parent”), GEN OPERATIONS II, LLC, a Delaware limited liability company (“Holdings”, and together with Ultimate Parent, Borrower and Parent, “Amendment Parties”), each of the Lenders (as defined below) party hereto and WELLTOWER INC., as Administrative Agent (in such capacity, and together with its successors and permitted assigns, “Administrative Agent”).

WHEREAS, Amendment Parties, Administrative Agent, Collateral Agent and the financial institutions from time to time party thereto as lenders (the “Lenders”) are parties to that certain Term Loan Agreement, dated as of July 29, 2016, as amended by that certain Amendment No. 1 to Loan Agreement, dated as of December 22, 2016, as amended by that certain Amendment No. 2 and Waiver to Loan Agreement, dated as of May 5, 2017, as amended by that certain Amendment No. 3 to Loan Agreement, dated as of August 8, 2017, and as amended and restated by that certain Amendment No. 4 to Loan Agreement, dated as of March 6, 2018 (as it may have been further amended, restated, amended and restated, supplemented or otherwise modified through the date hereof prior to this Agreement, the “Existing Loan Agreement” and as amended hereby and as it may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Administrative Agent, Collateral Agent and the Lenders have agreed, among other things, to provide to Borrower certain loans and other financial accommodations in accordance with the terms and conditions set forth therein;

WHEREAS, Amendment Parties and the Loan Parties have requested that Administrative Agent and the Lenders agree to amend the Existing Loan Agreement to reflect, among other things, certain revisions to the financial covenants contained therein; and

WHEREAS, Administrative Agent and the Lenders constituting at least Required Lenders are willing to agree to Amendment Parties’ request for such amendments, subject to and in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, Amendment Parties, Administrative Agent and the Lenders constituting at least Required Lenders each hereby agrees as follows:

1. Recitals; Definitions. The foregoing recitals, including all terms defined therein, are incorporated herein and made a part hereof. All capitalized terms used herein (including, without limitation, in the foregoing recitals) and not defined herein shall have the meanings given to such terms in the Loan Agreement and the rules of interpretation set forth in Section 1.2 thereof are incorporated herein mutatis mutandis.

2. Amendments to the Existing Loan Agreement. Subject to the terms and conditions of this Agreement, including, without limitation, the conditions to effectiveness set forth in Section 3 below:

(a) The following defined term set forth in Section 1.1 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

““Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, plus (ii) Consolidated

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income tax expense for such period, plus (iii) all amounts attributable to the amount of the provision for depreciation and amortization; plus (iv) the amount of any non-cash charges (other than those related to bad debts), plus (v) the amount of any loss from unusual or extraordinary items in excess of $100,000, including any related management incentive or stay-pay plans in place as of the Closing Date, any restructuring charges and any other non-recurring loss not to exceed $20,000,000 in the aggregate for this clause (v) for any period, plus (vi) costs, fees and expenses for such period paid in connection with the Transactions, plus (vii) any non-recurring fees, costs or expenses for such period incurred in connection with a Permitted Acquisition or any Investment, Disposition, incurrence of (or amendments or modifications to) Indebtedness (including the Fourth Amendment), issuance of Capital Stock or entry into new (or amendments or modifications to) Material Master Leases, in each case, permitted under this Agreement (in each case, including any such transaction undertaken but not completed); provided that the costs, fees and expenses added pursuant to clause (vi) and this clause (vii), in the aggregate, shall not exceed 20% of Consolidated EBITDA in any period, plus (viii) the amount of cost savings and acquisition synergies projected by Ultimate Parent in good faith to be realized within (x) 15 months of the date such actions are first taken in connection with the Transactions or (y) 12 months of the date such actions are first taken in connection with any other acquisition or Disposition or restructuring of the business by the Parent Companies, the Borrower or any Restricted Subsidiary, in each case, calculated on a Pro Forma Basis as though such cost savings or acquisition synergies had been realized on the first day of such period, net of the amount of actual benefits realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions; provided that (A) such cost savings and acquisition synergies are reasonably identifiable and factually supportable, and (B) the aggregate amount of cost savings and acquisition synergies added pursuant to this clause (viii) shall not exceed (x) $50,000,000 in the aggregate (and in no event shall the total amount of all cost savings and acquisition synergies with respect to the Transactions exceed $50,000,000), in the case of net cost savings and acquisition synergies with respect to the Transactions; and (y) 15% of Consolidated EBITDA in any period, otherwise, plus (ix) [reserved], plus (x) the amount of management, consulting, monitoring and advisory fees (including termination fees and transaction fees) and related indemnities and expenses paid or accrued in such period (and prior to the Closing Date) to the Sponsor pursuant to any management agreement permitted by Section 7.6(a)(vi) and deducted (and not added back) in such period in computing such Consolidated Net Income, in an aggregate amount not exceeding $3,000,000 in any fiscal year, plus (xi) solely in connection with calculating the Fixed Charge Coverage Ratio, Consolidated Total Leverage Ratio and Interest Coverage Ratio for any periods, the Customer Charge, minus (xii) the amount of any cash or non-cash unusual or extraordinary gains that are in excess of $100,000 and any other non-recurring gains. Any non-cash expenses related to the management incentive or stay-pay plans in place as of the Closing Date will be included in clause (v) above. In addition, (A) there shall be included on a Pro Forma Basis in determining Consolidated EBITDA for any period, without duplication, Acquired EBITDA of any Person, business or other property acquired by Ultimate Parent or any of the Restricted Subsidiaries during such period (but not the Acquired EBITDA of any related Person or business to the extent not so acquired) in accordance with the terms of this Agreement, to the extent not subsequently sold, transferred or otherwise Disposed of by Ultimate Parent or such Restricted Subsidiary during such period (each such Person or business acquired and not subsequently so Disposed of, an “Acquired Entity or Business”), based on the actual Acquired EBITDA of such Acquired Entity or Business for such period (including the portion thereof occurring prior to such acquisition); (B) there shall be excluded on a Pro Forma Basis in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property,

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business transferred or otherwise Disposed of, closed or classified as discontinued operations as classified under GAAP by Ultimate Parent or any of the Restricted Subsidiaries during such period (each such Person, property, business so sold or Disposed of, a “Sold Entity or Business”), based on the actual Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer or Disposition); and (C) there shall be excluded on a Pro Forma Basis in determining Consolidated EBITDA for any period the Consolidated EBITDA of any newly constructed healthcare facilities for the twelve month period following receipt of a certificate of occupancy for such properties, in an aggregate amount not exceeding $5,000,000 in any four fiscal quarter period.”

(b) Section 7.13 of the Existing Loan Agreement is hereby amended and restated in its entirety as follows:

“7.13Minimum Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as of the last day of each fiscal quarter ending during a period set forth below to be less than the ratio set forth opposite such period below:

Period	Ratio
January 1, 2015 through March 31, 2015	2.00 to 1.00
April 1, 2015 through June 30, 2015	2.00 to 1.00
July 1, 2015 through September 30, 2015	2.00 to 1.00
October 1, 2015 through March 31, 2016	2.25 to 1.00
April 1, 2016 through December 31, 2016	1.25 to 1.00
January 1, 2017 through December 31, 2017	1.10 to 1.00
January 1, 2018 through June 30, 2018	1.00 to 1.00
July 1, 2018 through December 31, 2018	1.05 to 1.00
January 1, 2019 through December 31, 2020	1.07 to 1.00
January 1, 2021 and thereafter	1.15 to 1.00

“7.15Minimum Interest Coverage Ratio. Permit the Interest Coverage Ratio as of the last day of each fiscal quarter ending during a period set forth below to be less than the ratio set forth opposite such period below:

Period	Amount
January 1, 2015 through March 31, 2015	3.25:1.00
April 1, 2015 through June 30, 2015	3.25:1.00
July 1, 2015 through March 31, 2016	3.50:1.00
April 1, 2016 through December 31, 2016	2.00:1.00
January 1, 2017 through December 31, 2017	1.80:1.00
January 1, 2018 through December 31, 2020	1.70:1.00

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Period	Amount
January 1, 2021 and thereafter	1.80:1.00

3. Conditions. The effectiveness of this Agreement is subject to the following conditions, each in form and substance satisfactory to Administrative Agent:

(a) Administrative Agent shall have received a fully executed copy of this Agreement;

(a) no Default or Event of Default shall have occurred and be continuing as of the date hereof under this Agreement, the Loan Agreement or any other Loan Document; and

(a) Loan Parties shall have delivered such further documents, information, certificates, records and filings as Administrative Agent may reasonably request.

4. Reaffirmation of Loan Documents. By executing and delivering this Agreement, each Loan Party hereby (i) reaffirms, ratifies and confirms its Obligations under the Loan Agreement, the Notes and the other Loan Documents, as applicable, (ii) agrees that this Agreement shall be a “Loan Document” under the Loan Agreement and (iii) hereby expressly agrees that the Loan Agreement, the Notes and each other Loan Document shall remain in full force and effect.

5. Reaffirmation of Grant of Security Interest in Collateral. Each Loan Party hereby expressly reaffirms, ratifies and confirms its obligations under the Guarantee and Collateral Agreement, including its mortgage, grant, pledge and hypothecation to Administrative Agent for the benefit of the Secured Parties, of the Lien on and security interest in, all of its right, title and interest in, all of the Collateral.

6. Confirmation of Representations and Warranties; Liens; No Default. Each Loan Party hereby confirms that (i) all of the representations and warranties set forth in the Loan Documents to which it is a party continue to be true and correct in all material respects as of the date hereof as if made on the date hereof and as if fully set forth herein, except to the extent (A) such representations and warranties by their terms expressly relate only to a prior date (in which case such representations and warranties shall be true and correct in all material respects as of such prior date) or (B) any such representation or warranty is no longer true, correct or complete due to the occurrence of one or more events that are permitted to occur (or are not otherwise prohibited) under the Loan Documents, (ii) there are no continuing Defaults or Events of Default that have not been waived or cured, (iii) subject to the terms and conditions of the Loan Documents, Administrative Agent has and shall continue to have valid, enforceable and perfected Liens on the Collateral with the priority set forth in the Intercreditor Agreement, for the benefit of the Secured Parties, pursuant to the Loan Documents or otherwise granted to or held by Administrative Agent, for the benefit of the Secured Parties, subject only to Liens expressly permitted pursuant to Section 7.2 of the Loan Agreement, and (iv) the agreements and obligations of Borrower and each other Loan Party contained in the Loan Documents and in this Agreement constitute the legal, valid and binding obligations of Borrower and each other Loan Party, enforceable against Borrower and each other Loan Party in accordance with their respective terms, except to the extent limited by general principles of equity and by bankruptcy, insolvency, fraudulent conveyance, or other similar laws affecting creditors’ rights generally.

7. No Other Amendments. Except as expressly set forth in this Agreement, the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect. This Agreement shall be limited precisely and expressly as drafted and shall not be construed as consent to the

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amendment, restatement, modification, supplementation or waiver of any other terms or provisions of the Loan Agreement or any other Loan Document.

8. Costs and Expenses. The payment of all fees, costs and expenses incurred by Administrative Agent in connection with the preparation and negotiation of this Agreement shall be governed by Section 10.5 of the Loan Agreement.

9. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE JURISDICTION AND WAIVER OF RIGHT TO TRIAL BY JURY PROVISIONS IN SECTIONS 10.12 AND 10.17 OF THE LOAN AGREEMENT ARE INCORPORATED, MUTATIS MUTANDIS, HEREIN BY REFERENCE.

10. Successors/Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

11. Headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

12. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or by electronic mail in “portable document format” shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and Administrative Agent.

13. Release of Claims. In consideration of the Lenders’ and Administrative Agent’s agreements contained in this Agreement, each Loan Party hereby releases and discharges each Lender and Administrative Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Loan Party ever had or now has against Administrative Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of Administrative Agent, any Lender or any other Released Person relating to the Loan Agreement or any other Loan Document on or prior to the date hereof.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or has caused the same to be executed by its duly authorized representatives as of the date first above written.

GENESIS HEALTHCARE, INC.,
as Ultimate Parent