Exhibit 10.1
AMENDMENT NO. 1
dated as of March 11, 2009
(this “ Amendment No. 1 ”) to the
Credit Agreement referred to below among THE PROVIDENCE SERVICE
CORPORATION, a Delaware corporation (the “
Borrower ”), the Required Lenders (as such term
is defined in the Credit Agreement), and CIT HEALTHCARE LLC, as
Administrative Agent (the “ Administrative
Agent ”).
PRELIMINARY
STATEMENTS:
Reference is hereby made to the
Credit and Guaranty Agreement dated as of December 7, 2007
(the “ Credit Agreement ”) among the
Borrower, the banks, financial institutions and other institutional
lenders party thereto, the Administrative Agent, and the other
agents thereto. Capitalized terms not otherwise defined in this
Amendment No. 1 have the same meanings as specified in the
Credit Agreement.
The parties hereto agree to amend
the Credit Agreement as set forth herein on the terms and
conditions set forth herein.
SECTION 1. Amendments to Credit
Agreement . The Credit Agreement is, effective as of the
Amendment No. 1 Effective Date (as defined below) and subject
to the satisfaction of the conditions precedent set forth in
Section 2 hereof, hereby amended as follows:
(a) The following definitions in
Section 1.01 are amended and restated in their
entirety:
“‘ Applicable
Margin ’ means the following percentages per annum:
(a) with respect to Loans, 5.50% for Base Rate Loans and 6.50%
for LIBOR Loans and (b) with respect to Letters of Credit,
6.50%; provided , that in each case, each percentage
specified above in this definition of Applicable Margin shall
increase by (x) 0.75% effective as of September 30, 2009
if the Consolidated Senior Leverage Ratio for the four Fiscal
Quarters ending on such date is greater than 4.13 : 1.00 and
(y) 0.25% effective as of December 31, 2009 if the
Consolidated Senior Leverage Ratio for the four Fiscal Quarters
ending on such date is greater than 3.62 : 1.00; provided ,
further , that if the Consolidated Senior Leverage Ratio for
the four Fiscal Quarters ending September 30, 2009 is less
than or equal to 4.13 : 1.00 and the Consolidated Senior Leverage
Ratio for the four Fiscal Quarters ending December 31, 2009 is
greater than 3.62 : 1.00, the Applicable Margin shall increase by
1.00% effective as of December 31, 2009. For the avoidance of
doubt, the aggregate increases in clauses (x) and (y) in
the preceding sentence shall not exceed 1.00%.”
“‘ Consolidated
EBITDA ’ means, for any period for the Consolidated
Group on a consolidated basis (without duplication), an amount
equal to (a) Consolidated Net Income for such period, minus,
(b) to the extent included in calculating Consolidated Net
Income, the sum of, without duplication, (i) interest income
(whether cash or non-cash) for such period, (ii) income tax
credits for such period and (iii) gain from extraordinary or
non-recurring items for
such period, plus (c) the following to the
extent deducted in calculating such Consolidated Net Income,
(i) Consolidated Interest Charges for such period,
(ii) the provision for federal, state, local and foreign
income taxes payable by the Consolidated Group for such period,
(iii) the amount of depreciation and amortization expense for
such period, (iv) all of the transaction fees, costs and
expenses incurred by the Borrower in connection with the Target
Acquisition in such period (including without limitation, fees
associated with the negotiation and execution of this Agreement and
the issuance of the Convertible Notes but exclusive of legal fees)
in an aggregate amount not to exceed $20,000,000, (v) the
amount of bonuses paid to employees, officers and the executive
management team of the Borrower in connection with the Target
Acquisition in such period in an aggregate amount not to exceed
$1,000,000 (vi) directors’ and officers’ insurance
premiums, fees in connection with the filing of notification and
report forms under the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended, in connection with the Target Acquisition,
accountants’ fees, the bonuses paid to the executive
management team of the Target, investment banking fees, legal fees
and management transaction fees, in each case incurred by the
Target in connection with the Target Acquisition in such period in
an aggregate amount not to exceed $5,500,000, (vii) other
accounting, consulting, amendment and legal fees, costs and
expenses incurred by the Target in such period and not related to
the Target Acquisition in an aggregate amount not to exceed
$1,700,000, (viii) the net settlement amount paid to the
Washington Metropolitan Area Transit Authority in such period in an
aggregate amount not to exceed $850,000, (ix) fees, costs and
expenses incurred by the Target to Capital Associates, Inc. in such
period in an aggregate amount not to exceed $1,558,000,
(x) the amount reserved in such period with respect to
Community Partnership of Southern Arizona in an amount not to
exceed $4,018,000 in respect of losses incurred in 2006 and 2007,
(xi) all of the transaction fees, costs and expenses incurred
by the Borrower in connection with Amendment No. 1 to this
Agreement for such period in an aggregate amount not to exceed
$250,000 and any other fees or costs paid to the Administrative
Agent or the Lenders during such period, (xii) fees, costs,
charges and expenses (including legal fees) incurred in connection
with Permitted Acquisitions, Dispositions, equity transactions and
any restructuring or reorganization of the Borrower’s
operations in such period in an aggregate amount not to exceed
$10,000,000 during the term of this Agreement; provided ,
such fees, costs, charges and expenses in connection with
(A) the sale of LogistiCare, Inc. shall not exceed $5,000,000
in the aggregate during the term of this Agreement and
(B) Permitted Acquisitions shall not exceed
(i) $5,000,000 in the aggregate during the term of this
Agreement and (ii) $2,000,000 in the aggregate during any such
period, (xiii) severance costs for such period in an aggregate
amount not to exceed $3,000,000 during the term of this Agreement,
(xiv) losses and expenses incurred during such period in
connection with claims for which the Borrower reasonably expects to
be indemnified in an aggregate amount not to exceed $500,000,
(xv) fees, costs, charges and expenses (including legal fees)
incurred in connection with any disputes with dissident
shareholders (including in connection with any Section 220
demands, proxy fights or consent solicitations) during such period
in an aggregate amount not to exceed $3,000,000 during the term of
this Agreement, (xvi) losses, fees, costs, charges and
expenses (including legal fees) incurred in connection with the
British Columbia, Canada contract dispute and arbitration in such
period in an aggregate amount not to exceed Cdn.$3,500,000 during
the term of this Agreement, (xvii) recurring non-cash stock
compensation expenses incurred in such period, (xviii) the
amount of any write-offs or increases in reserves during the Fiscal
Quarter ending December 31, 2008 for uncollected accounts
receivable in an amount not to exceed the amount previously
disclosed to the Agent and the
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Lenders and (xix) all other non-recurring
non-cash charges (including non-cash stock or equity compensation)
in such period for which no cash outlay prior to the Termination
Date is foreseeable.”
“‘ Consolidated
Fixed Charges Coverage Ratio ’ means, as of any date
of determination, the ratio of (a) Consolidated EBITDA for the
four Fiscal Quarters most recently completed on or prior to such
date less Capital Expenditures in such period to
(b) Consolidated Fixed Charges for such period;
provided , that for purposes of calculating the Consolidated
Fixed Charges Coverage Ratio for (i) the four Fiscal Quarter
period ending March 31, 2009, (A) each component of
Capital Expenditures and Consolidated Fixed Charges shall be the
respective amount for the Fiscal Quarter ending March 31, 2009
multiplied by four and (B) Consolidated EBITDA shall equal
Consolidated EBITDA for the three months ending March 31, 2009
multiplied by four, (ii) the four Fiscal Quarter period ending
June 30, 2009, (A) each component of Capital Expenditures
and Consolidated Fixed Charges shall be the respective amount for
the two Fiscal Quarter period ending June 30, 2009 multiplied
by two and (B) Consolidated EBITDA shall equal Consolidated
EBITDA for the two Fiscal Quarter period ending June 30, 2009
multiplied by two and (iii) the four Fiscal Quarter period
ending September 30, 2009, (A) each component of Capital
Expenditures and Consolidated Fixed Charges shall be the respective
amount for the three Fiscal Quarter period ending
September 30, 2009 multiplied by four-thirds and
(B) Consolidated EBITDA shall equal Consolidated EBITDA for
the three Fiscal Quarters ending September 30, 2009 multiplied
by four-thirds.”
“‘ Lender
’ means each Person identified as a “Lender” on
the signature pages hereto.”
“‘ Loan
’ means an extension of credit by a Lender to the Borrower
under Article 2 in the form of a Term Loan and/or a
Revolving Loan.”
“‘ Note
’ or ‘ Notes ’ means each Term Note
and/or each Revolving Note, individually or collectively, as
appropriate.”
(b) Section 1.01 is amended by
adding the following definitions in the appropriate alphabetical
order:
“‘ Amendment
No. 1 Effective Date ’ has the meaning specified
in Amendment No. 1 to this Agreement.”
(c) Section 1.01 is amended by
deleting the following definitions in their entirety:
“Assuming Lender”, “Incremental Term Loan”,
“Incremental Term Loan Commitment Date”,
“Incremental Term Loan Effective Date”,
“Incremental Term Loan Lenders”, “Incremental
Term Loan Note”, “Participating Lender” and
“Prospective Lender”.
(d) The definition of
“Consolidated Senior Leverage Ratio” is amended by:
(1) inserting the words “as of such date” after
the words “Funded Indebtedness” in the second line
thereof and (2) inserting the words “on or” after
the word “completed” in the third line
thereof.
(e) The definition of
“Consolidated Total Leverage Ratio” is amended by
inserting the words “on or” after the word
“completed” in the third line thereof.
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(f) The definition of “Letter
of Credit Sublimit” in Section 1.01 is amended by
deleting “$40,000,000” in the second line thereof and
replacing it with “$30,000,000”.
(g) The definition of “Pro
Rata Share” is amended by: (1) deleting the comma at the
end of clause (a) therein and replacing it with the word
“and”, (2) deleting “, and” at the end
of clause (b) therein and replacing it with a period, and
(3) deleting clause (c) therein and the proviso that
follows it in their entirety.
(h) The last sentence in the
definition of “Revolving Commitment” in
Section 1.01 is amended and restated in its entirety as
follows: “The aggregate amount of the Revolving Commitments
as of the Amendment No. 1 Effective Date is
$30,000,000.”
(i) Section 2.04(b)(ii) is
amended by inserting the following at the end thereof: “;
provided , further however , that
notwithstanding anything herein to the contrary, any Net Cash
Proceeds of any Disposition made with the permission of the
Required Lenders shall be used to prepay the Loans as hereinafter
provided not later than thirty (30) days after such
Disposition in an aggregate amount equal to 100% of the Net Cash
Proceeds of such Disposition.”
(j) Section 2.10(a) is amended
by: (1) deleting the comma at the end of clause
(i) therein and replacing it with the word “and”,
(2) deleting the comma at the end of clause (ii) therein
and replacing it with a period, and (3) deleting clause
(iii) therein in its entirety.
(k) Section 2.13 is deleted in
its entirety.
(l) Section 4.02(e) is deleted
in its entirety.
(m) Section 6.01 is amended by
(1) deleting the word “and” at the end of clause
(a) therein, (2) deleting the period at the end of clause
(b) therein and replacing it with “; and” and
(3) inserting a new clause (c) therein to read as
follows:
“(c) as soon as available, but
in any event within thirty (30) days after the end of each
calendar month of the Loan Parties and their Subsidiaries,
consolidated balance sheets of the Loan Parties and their
Subsidiaries as at the end of such month, and the related
consolidated statements of income or operations, retained earnings,
shareholders’ equity and cash flows for such month, setting
forth in each case in comparative form the figures as of the end of
and for the corresponding month of the previous Fiscal Year, all in
reasonable detail and certified by a Responsible Officer of the
Borrower as fairly presenting in all material respects the
financial condition, results of operations, shareholders’
equity and cash flows of the Loan Parties and their Subsidiaries in
accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.”
(n) Section 6.02 is amended by:
(1) inserting “(i)” before the reference to
“ Sections 6.01(a) ” in the second line thereof
and (2) inserting the following before the semicolon at the
end thereof: “and (ii) Section 6.01(c) , a
duly completed certificate executed by a Responsible Officer of the
Borrower and setting forth the calculation of Consolidated EBITDA
for the three month period ending on the last day of the respective
month, in form and substance reasonably satisfactory to the
Administrative Agent;”.
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(o) Section 6.02 is further
amended by (1) deleting the word “and” at the end
of clause (d) therein, (2) relettering clause
“(e)” therein as clause “(f)” and
(3) inserting a new clause (e) therein to read as
follows:
“(e) not later than the close
of business on the last Business Day of (i) the week in which
Amendment No. 1 to this Agreement becomes effective and
(ii) each week thereafter during the remaining weeks of the
Fiscal Year ending December 31, 2009, cash flow projections
for the 13-week period beginning with such week in form and
substance reasonably satisfactory to the Administrative Agent, with
each such cash flow projections delivered after the initial cash
flow projections to separately reflect the variations in cash flow
projections from the immediately preceding cash flow
project
