THIRD AMENDMENT AND CONSENT TO THE AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT Dated as of September 3, 2015 among THE PROVIDENCE SERVICE CORPORATION, as the Borrower, CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER, as the Guarantors, BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, SUNTRUST BANK and ROYAL BANK OF CANADA, as Co-Syndication Agents, BMO HARRIS BANK, N.A. and HSBC BANK USA, NATIONAL ASSOCIATION, as Co-Documentation Agents and THE OTHER LENDERS PARTY HERETO MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, SUNTRUST ROBINSON HUMPHREY, INC. and RBC CAPITAL MARKETS,1 as Joint Lead Arrangers and Joint Bookrunners
Exhibit 10.1
THIRD AMENDMENT AND CONSENT
TO THE
AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT
Dated as of September 3, 2015
among
THE PROVIDENCE SERVICE CORPORATION,
as the Borrower,
CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER,
as the Guarantors,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer,
SUNTRUST BANK
and
ROYAL BANK OF CANADA,
as Co-Syndication Agents,
BMO HARRIS BANK, N.A.
and
HSBC BANK USA, NATIONAL ASSOCIATION,
as Co-Documentation Agents
and
THE OTHER LENDERS PARTY HERETO
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
SUNTRUST ROBINSON HUMPHREY, INC.
and
RBC CAPITAL MARKETS,1
as Joint Lead Arrangers and Joint Bookrunners
1 RBC Capital Markets is a marketing name for the capital markets activities of Royal Bank of Canada and its affiliates.
THIRD AMENDMENT AND CONSENT TO THE AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT
THIS THIRD AMENDMENT AND CONSENT TO THE AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT dated as of September 3, 2015 (this "Agreement") is entered into among The Providence Service Corporation, a Delaware corporation (the "Borrower"), the Guarantors, the Lenders and Bank of America, N.A., as Administrative Agent. All capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).
RECITALS
WHEREAS, the Borrower, the Guarantors, the Lenders and Bank of America, N.A., as Administrative Agent, entered into that certain Amended and Restated Credit and Guaranty Agreement dated as of August 2, 2013 (as amended by that certain First Amendment dated as of May 28, 2014 and by that certain Second Amendment and Consent dated October 23, 2014, the "Credit Agreement");
WHEREAS, on the date hereof, the Borrower and Ross Innovative Employment Solutions Corp., a Delaware corporation, intend to sell Providence Human Services, LLC, a Delaware limited liability company, Providence Community Services, LLC, a Pennsylvania limited liability company, and their respective Subsidiaries set forth on Schedule 1 hereto (collectively, the “Services Business”) to Molina Healthcare, Inc., a Delaware corporation (the "Purchaser"), for consideration in an amount not less than $175,000,000, plus any additional amount, which may be paid from time to time (the "Sale Price"), on the terms, limitations and conditions as provided in the Membership Interest Purchase Agreement, dated as of the date hereof, by and between Borrower and the Purchaser (such sale, the "Services Business Disposition");
WHEREAS, the Services Business Disposition would constitute a violation of Section 8.05(b) of the Credit Agreement because the aggregate net book value of assets Disposed exceeds the permitted $35,000,000 threshold for asset dispositions;
WHEREAS, the Borrower has requested that any mandatory prepayment of Net Cash Proceeds from the Services Business Disposition pursuant to Section 2.05(b)(ii) of the Credit Agreement be waived (the "Prepayment Waiver") and that the Borrower be permitted to use up to 50% of such Net Cash Proceeds for the Stock Repurchase Program (as hereinafter defined) (the “Stock Repurchase Application”); and
WHEREAS, the Borrower has requested that the Lenders provide the consent to the Services Business Disposition, the Prepayment Waiver and the Stock Repurchase Application and amend the Credit Agreement as set forth below (the Credit Agreement, as amended as set forth below, the "Amended Credit Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Consent. The Required Lenders hereby consent to the Services Business Disposition, Prepayment Waiver and the Stock Repurchase Application; provided that a minimum amount equal to 50% of the Net Cash Proceeds received from the Services Business Disposition shall be applied pro rata to the prepayment of the Revolving Loans and Swing Line Loans. The above consent shall not modify or affect the Loan Parties' obligations to comply fully with the terms of the Amended Credit Agreement or any other duty, term, condition or covenant contained in the Amended Credit Agreement or any other Loan Document in the future. The consent is limited solely to the specific consent identified above and nothing contained in this Agreement shall be deemed to constitute a future waiver of any other rights or remedies the Administrative Agent or any Lender may have under the Credit Agreement or any other Loan Document or under applicable law.
2. Amendments.
(a) Section 1.01. The following definitions are hereby added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order to read as follows:
“Services Business Disposition” means the sale by the Borrower and Ross Innovative Employment Solutions Corp. of all issued and outstanding Equity Interests of Providence Human Services, LLC, a Delaware limited liability company and Providence Community Services, LLC, a Pennsylvania limited liability company pursuant to the Services Business Disposition Agreement.
"Services Business Disposition Agreement" means the Membership Interest Purchase Agreement, dated as of September 3, 2015 by and between the Borrower, Ross Innovative Employment Solutions Corp., a Delaware corporation, and Molina Healthcare, Inc., a Delaware corporation.
“Services Business Prepayment” means the prepayment of the Revolving Loans by the Borrower with the proceeds of the Services Business Disposition in an amount equal to 50% of the Net Cash Proceeds received from the Services Business Disposition.
"Stock Repurchase Program" means that certain stock repurchase program approved by the Board of Directors of the Borrower whereby the Borrower may purchase common Equity Interests of the Borrower, for an aggregate amount not to exceed 50% of the Net Cash Proceeds received from the Services Business Disposition.
(b) Section 2.02(a). The first parenthetical of Section 2.02(a) of the Credit Agreement is hereby amended to read as follows:
(provided, that a notice of Borrowing with respect to funding of a Permitted Acquisition or Stock Repurchase Program may state that such notice is conditioned upon the completion of such Permitted Acquisition or Stock Repurchase Program, in which case, subject to Section 3.05, such notice of Borrowing may be revoked by the Borrower if the Permitted Acquisition or Stock Repurchase Program is not consummated at the time specified)
(c) Section 7.11. Section 7.11 of the Credit Agreement is hereby amended to read as follows:Use the proceeds of the Credit Extensions (a) to finance a portion of the consideration payable in connection with the Matrix Acquisition (it being understood that no more than $25,000,000 of Revolving Loans may be used to finance the Matrix Acquisition), to repay certain existing indebtedness of Matrix and its subsidiaries and to pay fees and expenses in connection with the Matrix Acquisition and the Second Amendment, (b) to refinance certain existing Indebtedness, (c) to finance working capital, capital expenditures, Permitted Acquisitions and repayment of the Convertible Notes, (d) to finance a portion of the consideration payable in connection with the Stock Repurchase Program and (e) for other general corporate purposes, provided that in no event shall the proceeds of the Credit Extensions be used in contravention of any Law or of any specific provision in any Loan Document.
(d) Section 8.06. Section 8.06 of the Credit Agreement is hereby amended by (i) deleting the "and" at the end of clause (j) thereof, (ii) renumbering clause (k) thereof as clause (l) and (iii) inserting a new clause (k) to read as follows:
(k) the Borrower may make Restricted Payments to repurchase its common Equity Interests pursuant to Borrower's Stock Repurchase Program, in an aggregate amount not to exceed an amount equal to 50% of the Net Cash Proceeds received from the Services Business Disposition, provided that (i) no Default or Event of Default shall have occurred and be continuing before or after giving effect thereto and (ii) such Restricted Payments shall be made with the proceeds of the Services Business Disposition and/or Revolving Loans so long as the aggregate amount of Revolving Loans used to make such Restricted Payments does not exceed the amount of voluntary prepayments of the Revolving Loans made by the Borrower with the proceeds of the Services Business Disposition that were in excess of the Services Business Prepayment; and
3. Release.
(a) The Required Lenders hereby authorize the Administrative Agent to (i) release each of the entities listed on Schedule 1 hereto as Guarantors under the Credit Agreement and (ii) release any Liens granted by or on such entities and their property (such collateral, collectively, the "Released Collateral") in favor of the Administrative Agent pursuant to the Credit Agreement, in each case, upon the consummation of the Services Business Disposition.
(b) Upon the consummation of the Services Business Disposition and the receipt by the Borrower of the Sale Price, the Administrative Agent, on behalf of itself and the Lenders and in accordance with the foregoing clause (a), hereby (i) releases each of the entities listed on Schedule 1 hereto as Guarantors under the Credit Agreement, (ii) releases the Liens in favor of the Administrative Agent in or on the Released Collateral arising or created under the Loan Documents, excluding however any Liens in the proceeds received in connection with the consummation of the Services Business Disposition and (iii) agrees to execute and deliver to the Borrower, at the sole expense of the Borrower, all documents or instruments reasonably requested by the Borrower in connection therewith.
(c) The Borrower hereby acknowledges that the releases in clause (b) above are being made without recourse to, or any representation or warranty by, the Administrative Agent.
4. Conditions Precedent. This Agreement shall be effective (the date of such effectiveness, the "Third Amendment Effective Date") upon (i) execution and delivery of counterparts hereof by the Borrower, the Guarantors, the Required Lenders and the Administrative Agent, (ii) the Borrower having paid, or causing to be paid, to the Administrative Agent for the account of each Lender that consents to this Agreement by execution and delivery of counterparts hereof, an amendment consent fee of 0.05% of the aggregate principal amount of such Lender's Revolving Commitment and Term Loans and (iii) the Loan Parties having paid the reasonable and invoiced out-of-pocket costs and expenses of the Administrative Agent, including, without limitation, the reasonable and invoiced fees and expenses of Moore & Van Allen, PLLC.
5. Miscellaneous.
(a) The Credit Agreement and the obligations of the Loan Parties thereunder and under the other Loan Documents are hereby ratified and confirmed and shall remain in full force and effect according to their terms. This Agreement is a Loan Document.
(b) Each Guarantor (i) acknowledges and consents to all of the terms and conditions of this Agreement, (ii) affirms all of its obligations under the Loan Documents and (iii) agrees that this Agreement and all documents executed in connection herewith do not operate to reduce or discharge its obligations under the Credit Agreement or the other Loan Documents.
(c) The Borrower and the Guarantors hereby represent and warrant as follows:
(i) Each Loan Party has taken all necessary action to authorize the execution, delivery and performance of this Agreement.
(ii) This Agreement has been duly executed and delivered by the Loan Parties and constitutes each of the Loan Parties' legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity and principles of good faith and fair dealing.
(iii) No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement other than (A) those approvals, consents, exemptions, authorizations or other actions, notices or filings, that have already been obtained, taken, given or made and are in full force and effect, (B) filings and recordings necessary to perfect and continue certain Liens on the Collateral created by the Collateral Documents and (C) recording of the transfer of registrations and applications for IP Rights upon foreclosure.
(d) The Loan Parties represent and warrant to the Lenders that (i) the representations and warranties of the Loan Parties set forth in Article VI of the Credit Agreement and in each other Loan Document are true and correct in all material respects as of the date hereof with the same effect as if made on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date in which case they shall be true and correct in all material respects as of such earlier date and (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default.
(e) This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
(f) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(g) EACH PARTY HERETO AGREES AS SET FORTH IN SECTION 11.15 OF THE CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BORROWER: THE PROVIDENCE SERVICE CORPORATION,
a Delaware corporation
By: /s/ James Lindstrom
Name: James Lindstrom
Title: Chief Executive Officer, President & Assistant Secretary
GUARANTORS: ProvADO TECHNOLOGIES, LLC
By: /s/ James Lindstrom
Name: James Lindstrom
Title: Treasurer
LOGISTICARE SOLUTIONS, LLC
By: /s/ James Lindstrom
Name: James Lindstrom
Title: Assistant Secretary and Treasurer
LOGISTICARE SOLUTIONS INDEPENDENT PRACTICE
ASSOCIATION, LLC
By: LogistiCare Solutions, LLC, as Sole Member
By: /s/ James Lindstrom
Name: James Lindstrom
Title: Assistant Secretary and Treasurer
A to Z In-Home Tutoring LLC
AlphaCare Resources, Inc.
AmericanWork, Inc.
Camelot Care Centers, Inc.
Children’s Behavioral Health, Inc.
Choices Group, Inc.
Dockside Services, Inc.
Drawbridges Counseling Services, LLC
Family-Based Strategies, Inc.
Family Preservation Services, Inc.
Family Preservation Services of Florida, Inc.
Family Preservation Services of North Carolina, Inc.
Family Preservation Services of Washington D.C., Inc.
Family Preservation Services of West Virginia, Inc.
Health Trans, Inc.
Maple Star Nevada
Providence Human Services of Washington, Inc. (f/k/a Maple Star Washington, Inc.)
Oasis Comprehensive Foster Care LLC
Providence Community Corrections, Inc.
Providence Community Services, Inc.
Providence Community Services, LLC
Providence Management Corporation of Florida
Providence of Arizona, Inc.
Providence Service Corporation of ALABAMA
PROVIDENCE SERVICE CORPORATION OF DELAWARE
Providence Service Corporation of Maine
Providence Service Corporation of Oklahoma
Providence Service Corporation of Texas
RAYSTOWN DEVELOPMENTAL SERVICES, INC.
Red Top Transportation, Inc.
Ride Plus, LLC
RIO GRANDE MANAGEMENT COMPANY, L.L.C.
THE REDCO GROUP, INC.
Transitional Family Services, Inc.
W.D. Management, L.L.C.
By: /s/ James Lindstrom
Name: James Lindstrom
Title: Secretary and Treasurer
PINNACLE ACQUISITIONS, LLC
PROVIDENCE OF IDAHO, LLC
By: /s/ Warren S. Rustand
Name: Warren S. Rustand
Title: Manager
CCHN Group Holdings, Inc.
CCHN Holdings, Inc.
Community Care Health Network, Inc.
Ascender Software, Inc.
MMNRA, LLC
Votiva Health, LLC
Mission Medical Group of Alabama LLC
Matrix Medical Network of Arizona, LLC
Matrix Medical Network of Colorado, LLC
Matrix Medical Network of Florida, LLC
Matrix Medical Network of Georgia, LLC
Matrix Medical Network of Kentucky, LLC
Mission Medical Group of Louisiana, L.L.C.
Matrix Medical Network of Missouri, LLC
Matrix Medical Network of Nevada, LLC
Matrix Medical Network of New Mexico, LLC
Matrix Medical Network of Oklahoma, LLC
Matrix Medical Network of Oregon, LLC
Matrix Medical Network of Utah, LLC
Matrix Medical Network of Virginia, LLC
Matrix Medical Network of Washington, LLC
By: /s/ Walter W. Cooper
Name: Walter W. Cooper
Title: President and Chief Executive Officer
PROVIDENCE HUMAN SERVICES, LLC
By: /s/ Warren S. Rustand
Name: Warren S. Rustand
Title: Sole Manager
PHS II Corp.
Ross Innovative Employment Solutions Corp.
By: /s/ Michael Fidgeon
Name: Michael Fidgeon
Title: President and Chief Executive Officer
administrative
agent: bank of america, n.a.,
as Administrative Agent
By: /s/ Anthea Del Bianco
Name: Anthea Del Bianco
Title: Vice President
LENDERS: bank of america, n.a.,
as a Lender, Swing Line Lender and L/C Issuer
By: /s/ Heath Lipson
Name: Heath Lipson
Title: SVP
SUNTRUST BANK,
as a Lender
By: /s/ Mary E. Coke
Name: Mary E. Coke
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Rohan Trikha
Name: Rohan Trikha
Title: Vice President
BMO HARRIS BANK, N.A.
as a Lender
By: /s/ Brian Harbin
Name: Brian Harbin
Title: Director
MUFG UNION BANK, N.A.,
as a Lender
By: /s/ R. Cassandra Bolz
Name: R. Cassandra Bolz
Title: Authorized Signatory
CAPITAL ONE, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Parminder Atwal
Name: Parminder Atwal
Title: Managing Director
CITIZENS BANK, N.A.,
as a Lender
By: /s/ Andrea B. Goldman
Name: Andrea B. Goldman
Title: Senior Vice President
GE CAPITAL BANK,
as a Lender
By: /s/ Paul Sleet
Name: Paul Sleet
Title: Duly Authorized Signatory
BOKF, N.A., D/B/A BANK OF ARIZONA,
as a Lender
By: /s/ Margaret DelBrocco
Name: Margaret DelBrocco
Title: Senior Vice President
REGIONS BANK,
as a Lender
By: /s/ Kap Yarbrough
Name: Kap Yarbrough
Title: Senior Vice President
ROYAL BANK OF CANADA,
as a Lender
By: /s/ Steven T. Bachman
Name: Steven T. Bachman
Title: Authorized Signatory
VIST BANK,
as a Lender
By: /s/ Gary M. Moyer
Name: Gary M. Moyer
Title: EVP
BROWN BROTHERS HARRIMAN & CO.,
as a Lender
By: /s/ Jared S. Keyes
Name: Jared S. Keyes
Title: Partner
WESTERN ALLIANCE BANK,
as a Lender
By: /s/ Victor J. Napolitano
Name: Victor J. Napolitano
Title: Senior Vice President
Schedule 1
SERVICES BUSINESS
| 1. | PHS II Corp. |
| 2. | Providence Human Services, LLC |
| 3. | Alphacare Resources, Inc. |
| 4. | AmericanWork, Inc. |
| 5. | A To Z In-Home Tutoring LLC |
| 6. | Camelot Care Centers, Inc. |
| 7. | Children's Behavioral Health, Inc. |
| 8. | Choices Group, Inc. |
| 9. | College Community Services |
| 10. | Dockside Services, Inc. |
| 11. | Drawbridges Counseling Services, LLC |
| 12. | Family-Based Strategies, Inc. |
| 13. | Family Preservation Services, Inc. |
| 14. | Family Preservation Services Of Florida, Inc. |
| 15. | Family Preservation Services Of North Carolina, Inc. |
| 16. | Family Preservation Services Of Washington D.C., Inc. |
| 17. | Family Preservation Services Of West Virginia, Inc. |
| 18. | Maple Star Nevada, Inc. |
| 19. | Providence Human Services of Washington, Inc. (f/k/a Maple Star Washington, Inc.) |
| 20. | Oasis Comprehensive Foster Care LLC |
| 21. | Providence Community Corrections, Inc. |
| 22. | Providence Community Services, Inc. |
| 23. | Providence Community Services, LLC |
| 24. | Providence Human Services of Massachusetts, LLC |
| 25. | Providence Management Corporation Of Florida |
| 26. | Providence Of Arizona, Inc. |
| 27. | Providence Of Idaho, LLC |
| 28. | Providence Service Corporation Of Alabama |
| 29. | Providence Service Corporation Of Delaware |
| 30. | Providence Service Corporation Of Maine |
| 31. | Providence Service Corporation Of Oklahoma |
| 32. | Providence Service Corporation Of Texas |
| 33. | Raystown Developmental Services, Inc. |
| 34. | The Redco Group, Inc. |
| 35. | Rio Grande Management Company, L.L.C. |
| 36. | Transitional Family Services, Inc. |
| 37. | W.D. Management, L.L.C. |
| 38. | Maple Star Oregon, Inc. |
| 39. | Family Builders, Inc. |
