AMENDMENT NO. 3 TO CREDIT AGREEMENT

EX-10.43 2 d924229dex1043.htm EX-10.43 EX-10.43

Exhibit 10.43

Execution Version

AMENDMENT NO. 3 TO CREDIT AGREEMENT

AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of February 27, 2015 (this “Agreement”), by and among National Mentor Holdings, Inc., a Delaware corporation (the “Borrower”), the other Loan Parties party hereto, Barclays Bank PLC, as administrative agent (the “Administrative Agent”) under the Credit Agreement (as defined below), each Lender party hereto making a 2015-1 Incremental Term Loan (as defined below) (collectively, the “2015-1 Incremental Term Loan Lenders”) and, solely for purposes of Sections 2(c), 3 and 5 through 13, the other Lenders party hereto.

RECITALS:

WHEREAS, reference is hereby made to the Credit Agreement, dated as of January 31, 2014 (as amended by Amendment No. 1 to Credit Agreement dated as of September 8, 2014, as further amended by Amendment No. 2 to Credit Agreement dated as of October 21, 2014, and as further amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, NMH Holdings, LLC, the Administrative Agent and each Lender from time to time party thereto, and the other parties thereto (capitalized terms used but not defined herein having the meaning provided in the Credit Agreement);

WHEREAS, the Borrower has hereby notified the Administrative Agent that it is requesting Incremental Tranche B Term Loans pursuant to Section 2.25(a) of the Credit Agreement;

WHEREAS, pursuant to Section 2.25 of the Credit Agreement, the Borrower may obtain Incremental Tranche B Term Loans by, among other things, entering into one or more Incremental Facility Amendments in accordance with the terms and conditions of the Credit Agreement;

WHEREAS, the Borrower has requested that the 2015-1 Incremental Term Loan Lenders make Incremental Tranche B Term Loans in an aggregate principal amount equal to $55,000,000 (the Incremental Tranche B Term Loans made in such principal amount on the Amendment No. 3 Effective Date (as defined below), the “2015-1 Incremental Term Loans”);

WHEREAS, Section 2.25 of the Credit Agreement permits an Incremental Facility Amendment to effectuate such amendments to the Credit Agreement as may be necessary or appropriate to effectuate the provisions of Section 2.25;

WHEREAS, the 2015-1 Incremental Term Loan Lenders have indicated their willingness to lend the 2015-1 Incremental Term Loans on the terms and subject to the conditions of this Agreement; and

WHEREAS, the Required Lenders party hereto have indicated their willingness to consent to the amendments to the Credit Agreement further described in Section 2(c) below.

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Making of the 2015-1 Incremental Term Loans. Subject to the terms and conditions set forth herein, the 2015-1 Incremental Term Loan Lenders agree to make the 2015-1 Incremental Term Loans to the Borrower on the Amendment No. 3 Effective Date (it being agreed that such 2015-1 Incremental Term Loans shall be funded at 99% of the principal amount thereof and, notwithstanding said discount, all calculations hereunder and under the Credit Agreement with

respect to the 2015-1 Incremental Term Loans, including the accrual of interest and the repayment or prepayment of principal, shall be based on 100% of the stated principal amount thereof).

2.	Terms of the 2015-1 Incremental Term Loans and Credit Agreement Amendments. Effective as of the Effective Date (as defined below), the Credit Agreement is hereby amended as follows:

(a)

The 2015-1 Incremental Term Loans shall have terms identical to the Initial Tranche B Term Loans (after giving effect to Amendment No. 3) and shall otherwise be subject to the provisions, including any provisions restricting the rights, or regarding the obligations, of the Loan Parties or any provisions regarding the rights of the Tranche B Term Lenders, of the Credit Agreement and the other Loan Documents. Each reference to a “Tranche B Term Loan” or “Tranche B Term Loans” in the Loan Documents shall be deemed to include the 2015-1 Incremental Term Loans and each reference to “Tranche B Term Lender” or “Tranche B Term Lenders” in the Loan Documents shall be deemed to include the 2015-1 Incremental Term Loan Lenders, and the definitions of the terms “Tranche B Term Loan” and “Tranche B Term Lender” in Section 1.1 of the Credit Agreement shall be deemed modified to include the 2015-1 Incremental Term Loans and 2015-1 Incremental Term Loan Lenders, respectively.

(b)

Section 2.3 of the Credit Agreement is hereby amended and restated as follows:

Repayment of Tranche B Term Loans. The Borrower shall repay the Tranche B Term Loans in installments on each March 31, June 30, September 30 and December 31 of each year, commencing with June 30, 2014 and ending on the Tranche B Maturity Date, in an aggregate principal amount equal to (i) in the case of each such installment due prior to the Amendment No. 3 Effective Date, 0.25% of the aggregate principal amount of Tranche B Term Loans made on the Closing Date, (ii) in the case of each such installment due after the Amendment No. 3 Effective Date and prior to the Tranche B Maturity Date, $1,638,539.04, and (iii) in the case of the installment due on the Tranche B Maturity Date, the entire remaining balance of the Tranche B Term Loans; provided that any such installment may be reduced as a result of a prepayment in accordance with Section 2.17(b).

(c)

The definitions of “Repricing Premium” and “Repricing Transaction” set forth in Section 1.1 of the Credit Agreement is hereby amended and restated as follows:

“ “Repricing Premium” means, in connection with a Repricing Transaction, a premium (expressed as a percentage of the principal amount of such Tranche B Term Loans to be prepaid) equal to the amount set forth below:

(a) on or prior to the six month anniversary of the Amendment No. 3 Effective Date, 1.0%;

(b) thereafter, 0%.”

“ “Repricing Transaction”: (i) any prepayment of the Tranche B Term Loans using proceeds of a substantially concurrent incurrence of syndicated term loan facility Indebtedness by the Borrower (other than any Indebtedness incurred in connection with a Change of Control or a full refinancing of the Tranche B Term

Loans in connection with an Acquisition or Restricted Payment) for which the interest rate payable thereon on the date of such prepayment is lower than the Eurodollar Rate on the date of such prepayment plus the Applicable Margin with respect to the Tranche B Term Loans and (ii) any repricing of the Tranche B Term Loans pursuant to an amendment thereto (other than any Indebtedness incurred in connection with a Change of Control or a full refinancing of the Tranche B Term Loans in connection with an Acquisition or Restricted Payment) resulting in the interest rate payable thereon on the date of such amendment being lower than the Eurodollar Rate on the date immediately prior to such amendment plus the Applicable Margin with respect to the Tranche B Term Loans.”

(d)

The definitions of “ABR” and “Eurodollar Rate” set forth in Section 1.1 of the Credit Agreement are hereby amended by adding, immediately after the words “Initial Tranche B Term Loans” appearing in the proviso in each such definition, the following: “and the 2015-1 Incremental Term Loans”.

(e)

Section 1.1 of the Credit Agreement is amended by inserting the following new definitions in their correct alphabetical order:

“2015-1 Incremental Term Loans” shall have the meaning assigned to such term in Amendment No. 3.

“Amendment No. 3” shall mean Amendment No. 3 to this Agreement, dated February 27, 2015, among Borrower, the Administrative Agent, the other Loan Parties party thereto and the 2015-Incremental Term Loan Lenders.

“Amendment No. 3 Effective Date” shall mean the “Effective Date” under and as defined in Amendment No. 3.

3.	Effective Date Conditions.

This Agreement will become effective on the date (the “Effective Date”) on which each of the following conditions have been satisfied (or waived) in accordance with the terms therein:

(i)

this Agreement shall have been executed and delivered by the Borrower, the other Loan Parties, the Administrative Agent, the 2015-1 Incremental Term Loan Lenders and the Required Lenders;

(ii)

the Administrative Agent shall have received a certificate of the Borrower dated as of the Effective Date signed by a Responsible Officer of the Borrower (i) (A) certifying and attaching the resolutions or similar consents adopted by the Borrower approving or consenting to this Agreement and the incurrence of the 2015-1 Incremental Term Loans, (B) certifying that the certificate or articles of incorporation and by-laws of the Borrower either (x) has not been amended since the Closing Date or (y) is attached as an exhibit to such certificate, and (C) certifying as to the incumbency and specimen signature of each officer executing this Agreement and any related documents on behalf of the Borrower and (ii) certifying as to the matters set forth in clauses (v), (vi) and (vii) below;

(iii)

(A) all fees and out-of-pocket expenses for which invoices have been presented prior to the Effective Date (including the reasonable fees and expenses of legal counsel) required to be paid or reimbursed by the Borrower pursuant to Section 10.5 of the Credit Agreement or any other letter agreement in connection with this Agreement shall have been paid or reimbursed and (B) all accrued and unpaid interest, fees or other amounts then due and payable in respect of the Tranche B Term Loans outstanding immediately prior to effectiveness of this Agreement, to the extent not otherwise waived, shall have been paid;

(iv)

the Administrative Agent shall have received an opinion of Kirkland & Ellis LLP, in form and substance reasonably satisfactory to the Administrative Agent;

(v)

each of the representations and warranties made by each Loan Party contained in the Credit Agreement and in the other Loan Documents shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (other than representations and warranties which speak only as of a certain date, which representations and warranties shall be made only on such date);

(vi)

the representations and warranties in Section 5 of this Agreement shall be true and correct in all material respects as of the Effective Date; and

(vii)

no Event of Default shall exist on the Effective Date immediately before and after giving effect to the effectiveness hereof.

Use of Proceeds of 2015-1 Incremental Term Loans. The net cash proceeds of the 2015-1 Incremental Term Loans shall be used by the Borrower (a) to redeem the outstanding Senior Notes of the Borrower called for redemption by the Borrower prior to the date hereof (and pay any premiums, interest, fees or expenses in connection with such redemption), (b) to pay any premium, interest, fees or expenses related to this Agreement and (c) the excess, if any, for other purposes not prohibited by the Credit Agreement.

Representations and Warranties. By its execution of this Agreement, the Borrower hereby certifies that the execution, delivery and performance by the Borrower and each other Loan Party of this Agreement, and each other Loan Document executed or to be executed by it in connection with this Agreement are within such Loan Party’s corporate or other organizational powers and have been duly authorized by all necessary corporate, limited liability company, or other organizational action on the part of such Loan Party. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms and the terms of the Credit Agreement, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and an implied covenant of good faith and fair dealing.

Reaffirmation of the Loan Parties. Each Loan Party hereby consents to the amendment of the Credit Agreement effected hereby and confirms and agrees that, notwithstanding the effectiveness of this Agreement, each Loan Document to which such Loan Party is a party is, and the obligations of such Loan Party contained in the Credit Agreement, this Agreement or in any other Loan Document to which it is a party are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, in each case as amended by this Agreement. For

greater certainty and without limiting the foregoing, each Loan Party hereby confirms that the existing security interests granted by such Loan Party in favor of the Administrative Agent for the benefit of, among others, the Lenders pursuant to the Loan Documents in the Collateral described therein shall continue to secure the obligations of the Loan Parties under the Credit Agreement and the other Loan Documents as and to the extent provided in the Loan Documents.

7.	Amendment, Modification and Waiver. This Agreement may not be amended, modified or waived except as permitted by Section 10.1 of the Credit Agreement.

Entire Agreement. This Agreement, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof. This Agreement shall not constitute a novation of any amount owing under the Credit Agreement and all amounts owing in respect of principal, interest, fees and other amounts pursuant to the Credit Agreement and the other Loan Documents shall, to the extent not paid or exchanged on or prior to the Effective Date, shall continue to be owing under the Credit Agreement or such other Loan Documents until paid in accordance therewith.

GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. SECTIONS 10.12 AND 10.16 OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE INTO THIS AGREEMENT AND SHALL APPLY HERETO.

10.

Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

11.	Counterparts. This Agreement may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

12.

WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

13.

Loan Document. On and after the Effective Date, this Agreement shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents (it being understood that for the avoidance of doubt this Agreement may be amended or waived solely by the parties hereto as set forth in Section 7 above).

[signature pages to follow]

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first set forth above.


NATIONAL MENTOR HOLDINGS, INC., as Borrower

By:	/s/ Bruce F. Nardella
	Name:	Bruce F. Nardella
	Title:	President and Chief Executive Officer

NMH HOLDINGS, LLC, as Holdings

By:	/s/ Bruce F. Nardella
	Name:	Bruce F. Nardella
	Title:	President and Chief Executive Officer

SUBSIDIARY GUARANTORS:

ADULT DAY HEALTH, INC.
CALIFORNIA MENTOR FAMILY HOME AGENCY, LLC
COMMUNITY REINTEGRATION SERVICES, INC.
(f/k/a REM Management, Inc.)
CORNERSTONE LIVING SKILLS, INC. FAMILY ADVOCACY SERVICES, LLC
FIRST STEP INDEPENDENT LIVING PROGRAM, INC.
HORRIGAN COLE ENTERPRISES, INC.
ILLINOIS MENTOR, INC.
ILLINOIS MENTOR COMMUNITY SERVICES, INC.
INSTITUTE FOR FAMILY CENTERED SERVICES, INC.
LOYD’S LIBERTY HOMES, INC.
MASSACHUSETTS MENTOR, LLC
MENTOR MANAGEMENT, INC.
MENTOR MARYLAND, INC.
NATIONAL MENTOR HEALTHCARE, LLC NATIONAL MENTOR HOLDINGS, LLC
NATIONAL MENTOR SERVICES HOLDINGS, LLC
NATIONAL MENTOR SERVICES, LLC
NATIONAL MENTOR, LLC
OHIO MENTOR, INC.
REM ARROWHEAD, INC.
REM CENTRAL LAKES, INC.
REM COMMUNITY OPTIONS, LLC
REM CONNECTICUT COMMUNITY SERVICES, INC.
REM DEVELOPMENTAL SERVICES, INC.