Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 6, 2015

The Providence Service Corporation

(Exact name of registrant as specified in its charter)

Delaware

001-34221

86-0845127

(State or other jurisdiction

of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)


64 East Broadway Blvd., Tucson, Arizona		85701
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (520) 747-6600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Chief Executive Officer and Director

On August 6, 2015, the Board of Directors of The Providence Service Corporation, or Providence, appointed James Lindstrom as President and Chief Executive Officer. Mr. Lindstrom, who has served as Executive Vice President and Chief Financial Officer of Providence since January 14, 2015, was also appointed to the Board of Directors by the Board (upon recommendation of the Nominating and Corporate Governance Committee) to fill the vacancy on the Board created by the resignation of Warren Rustand effective June 1, 2015. Before his employment with Providence, Mr. Lindstrom, age 42, was President and Chief Executive Officer of Integrated Electrical Services, Inc., or IES, since October 2011, and previously served as Interim President and Chief Executive Officer of IES since June 2011, and as a member of the Board of Directors of IES since May 2010. Over a 20 year-career, Mr. Lindstrom has led or invested in major turnarounds and companies experiencing strategic transformations in a variety of industries, including the financial services, energy, business services and manufacturing industries. Prior to joining IES, Mr. Lindstrom was employed by Tontine Associates, LLC, a private investment fund and an affiliate of IES's majority stockholder, from 2006 until October 2011. Mr. Lindstrom's operating experience also includes his role as the Chief Financial Officer of Centrue Financial Corporation from 2003 to January 2006 and his time at ChiRex Inc., a pharmaceutical services company, from 1996 through 2000. Mr. Lindstrom began his career at CS First Boston in 1994. He received his BA from Colby College and his MBA from the Tuck School of Business at Dartmouth. Mr. Lindstrom has also served as a director or a board observer of multiple publicly-traded companies.

There are no family relationships between Mr. Lindstrom and any director or officer of Providence, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Mr. Lindstrom had served as the Company’s Chief Financial Officer since January 26, 2015 under the terms of an employment agreement (the “Prior Employment Agreement”) dated that date. The Company and Mr. Lindstrom entered into an employment agreement (the “Employment Agreement”), dated August 6, 2015 (the “Effective Date”), in connection with the appointment of Mr. Lindstrom as President and Chief Executive Officer. The Employment Agreement replaces the Prior Employment Agreement. The Employment Agreement provides for a term commencing as of the Effective Date and ending December 31, 2017.

Under the terms of the Employment Agreement, as of the Effective Date Mr. Lindstrom’s annual base salary is $650,000. In addition to his annual base salary, during the term of the Employment Agreement Mr. Lindstrom is eligible to participate in bonus plans or incentive compensation programs, if any, as may be in effect from time to time, at a level consistent with his position and with the Company’s then current policies and practices. For the period commencing January 14, 2015 and for the remainder of 2015, Mr. Lindstrom is eligible to participate in a bonus program under which he will be paid an amount equal to seventy-five percent (75%) of his aggregate base salary payable during 2015 under the Prior Employment Agreement and the Employment Agreement, upon the achievement of a financial performance target set by the Board for 2015, and up to an additional twenty-five percent (25%) for performance in excess of such target. For the 2016 calendar year, Mr. Lindstrom will be eligible to receive as a bonus an amount equal to ninety percent (90%) of his base salary for such year upon the achievement of goals to be determined by the Board or compensation committee of the Board.

The Company will maintain term life insurance on the life of Mr. Lindstrom for a period of five years. Mr. Lindstrom will have the absolute right to designate the beneficiaries under his policy. The Company will pay the premium for the shorter of (i) the period of five years commencing on the later of (a) the Effective Date or (b) the date the insurance goes into effect or (ii) the period Mr. Lindstrom is employed by the Company. Premiums in respect thereof will thereafter be paid by Mr. Lindstrom.

Mr. Lindstrom is eligible to receive a severance benefit in the event he is terminated by the Company without Cause (as such term is defined in the Employment Agreement). The severance benefit to which Mr. Lindstrom will be entitled following such termination is equal to (i) any bonus, if earned, relating to a fiscal year which was completed before the effectiveness of his termination, (ii) any bonus, if earned, for the fiscal year through the date of effectiveness of his termination (pro-rated based on the number of days he is employed during the applicable fiscal year), and (iii) an amount, paid in periodic installments corresponding to the Company’s regular payroll periods, equal to the base salary he would be entitled to receive for the period (the “Post Employment Payment Period”) which is (a) the lesser of (1) the date of effectiveness of Mr. Lindstrom’s termination through the end of the term of the Employment Agreement, or (2) one year from the date of effectiveness of Mr. Lindstrom’s termination, or (b) if greater, six months from the date of effectiveness of Mr. Lindstrom’s termination. Payment of the severance benefit to Mr. Lindstrom will be contingent upon his execution of a general release in favor of the Company and that on or prior to the payment date such general release is not revoked and Mr. Lindstrom is not in material breach of the Employment Agreement.

Certain payment provisions of the Employment Agreement with Mr. Lindstrom are also triggered by a Change in Control (as such term is defined in the Employment Agreement) and an ensuing negative employment event. If a Change in Control of the Company occurs during the term of the Employment Agreement, and after such Change in Control but prior to the end of the term of the Employment Agreement the Company terminates Mr. Lindstrom’s employment without Cause, in lieu of any other amounts payable under the Employment Agreement, Mr. Lindstrom is entitled to receive the sum of (i) a lump sum payment in an amount equal to two times his base salary, and (ii) a pro-rata portion of any bonus earned prior to Mr. Lindstrom’s termination.

If the sum of any lump sum payments and other benefits payable to Mr. Lindstrom in connection with a Change in Control would constitute an “excess parachute payment” (as defined in Section 280G of the Internal Revenue Code of 1986, as amended), then such lump sum payment or other benefit due to Mr. Lindstrom will be reduced to the largest amount that will not result in receipt by him of a parachute payment.

The Employment Agreement includes restrictive covenants providing for non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement by Mr. Lindstrom. The term of the non-solicitation and non-piracy covenants is the period that includes the term of Mr. Lindstrom’s employment and for two years thereafter. The term of the non-competition covenant is the period that includes the term of Mr. Lindstrom’s employment, and (A) in the case of Mr. Lindstrom’s resignation or termination by the Company for Cause, two years following the effective date of Mr. Lindstrom’s termination of employment, or (B) in the case of termination by the Company without Cause, during the Post Employment Payment Period or, if the Company elects to continue to pay Mr. Lindstrom his base salary for such period, up to two years following the effectiveness of termination of Mr. Lindstrom’s employment.

The preceding description of the Employment Agreement is qualified in its entirety by reference to the text of the Employment Agreement, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.

Appointment of interim Chief Financial Officer

On August 6, 2015, the Board of Directors of Providence also appointed David Shackelton to serve on an interim basis as Chief Financial Officer while the Company conducts a search for a permanent replacement. Mr. Shackelton, age 29, has served with Providence as Vice President, Head of Corporate Development, since February 17, 2014. Prior to joining Providence, he served as a private equity investment professional at Mill Road Capital in 2013 and at the Blackstone Group from 2008 to 2011. Mr. Shackelton has a B.A. in economics from Yale University and a M.B.A. from Stanford Graduate School of Business. In connection with his appointment as interim Chief Financial Officer, Mr. Shackelton’s base salary was increased to $300,000 per year.

Mr. Shackelton is the brother of Chris Shackelton, the Chairman of the Board of Providence and interim Chief Executive Officer from June 1, 2015 until August 6, 2015. David Shackelton has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Adoption of Long Term Incentive Program and Grant of Options

On August 6, 2015 the Compensation Committee of the Board of Directors of Providence adopted the 2015 Holding Company LTI Program (the “HoldCo LTI Program”) under the Providence 2006 Long-Term Incentive Plan, as amended (the “2006 Plan”). The HoldCo LTI Program is designed to provide long term performance based awards to certain executive officers of Providence. Under the program, executives will receive shares of Providence common stock based on the shareholder value created in excess of an 8.0% compounded annual return between the grant date (calculated on the basis of the Providence stock price equal to the volume weighted average of the common share price over a 90 day period ending on the award date) and December 31, 2017, calculated on the basis of a similar 90 day volume weighted average (the “Extraordinary Shareholder Value”). A pool for use in the allocation of awards will be created equal to 8.0% of the Extraordinary Shareholder Value. Participants in the HoldCo LTI Program will receive a percentage allocation of any such pool and, following determination of the size of the pool, will be entitled to a number of shares equal to their pro rata portion of the pool divided by the volume weighted average of the Company’s per share price over the 90 day period ending on December 31, 2017. Of the shares allocated, 60% will be issued to the participant on or shortly following determination of the pool, 25% will vest and be issued on the one year anniversary of such determination date, subject to continued employment, and the remaining 15% will be issued on the second anniversary of the determination date, subject to continued employment.

The HoldCo LTI Program provides for pro rata participation by a participant who has had a Qualified Termination (as defined in the HoldCo LTI Program) payable when awards are paid to other participants, and provides for forfeiture of all participation rights for a termination other than a Qualified Termination. The program provides that in the event of a Change in Control (as defined by the 2006 Plan) on or before December 31, 2017, all outstanding awards will be settled on the closing date of the Change in Control in an amount of cash and/or unrestricted stock that together have a fair market value equal to the total amount otherwise payable to the participant under the program determined as of such closing date without reference to any vesting requirements otherwise applicable. In the event of a Change in Control after December 31, 2017, each participant will receive on the closing date of the Change in Control cash and/or unrestricted stock having a fair market value equal to the total amount otherwise payable to the participant based on the determination as of December 31, 2017 with no delay with respect to any otherwise applicable vesting requirements.

On August 6, 2015, the Compensation Committee of Providence made awards to executive officers under the HoldCo LTI Program with participation percentages as follows:

James M. Lindstrom, President and Chief Executive Officer	40%

David Shackelton, interim Chief Financial Officer	20%

Michael-Bryant Hicks, Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer	7.5%

Justina Uzzell, Senior Vice President and Chief People Officer	7.5%

The preceding description of the HoldCo LTI Program is qualified in its entirety by reference to the text of the program and the related award agreement, which is attached hereto as Exhibit 10.2 and is incorporated by reference herein.

Further, on August 6, 2015, the Compensation Committee made awards of options to purchase common stock of Providence to certain executive officers and other employees of Providence. The awards were granted in two forms. First, each executive received a special stock option exercisable for ten business days from the date of grant to purchase 11,319 shares of common stock at an exercise price of $44.17 per share (the fair market value on the date of grant) (the “Special Options”). All shares purchased pursuant to the Special Options will be fully-owned and vested as of the date of purchase. Each optionee also received a matching option grant to purchase the same number of shares at the same exercise price as the Special Options (the “Matching Options”), which will vest on the third anniversary of grant and be exercisable for a period of two years thereafter, for a term of five years. Matching Options will be forfeited on a share per share basis to the extent the Special Options are not exercised prior to termination such that if a Special Option expires without exercise, the full related Matching Option would be forfeited. Further, until vested, the Matching Options are subject to forfeiture on a share per share basis to the extent the optionee sells any shares of Providence common stock held by the optionee whether received pursuant to the 2006 Plan or purchased in the open market. The Matching Options are otherwise subject to terms substantially identical to those applicable to Providence’s previously granted time-vested stock options, including continued employment, and will vest fully in connection with a Change in Control. All options were granted pursuant to the 2006 Plan.

The preceding description of the options granted is qualified in its entirety by reference to the text of the forms of option agreement, which are attached hereto as Exhibit 10.3 and 10.4 and are incorporated by reference herein.

On August 6, 2015, Special Options and Matching Options were granted to the following executive officers in the following amounts, as well as four other employees:

Name	Number Special Options	Number Matching Options
James Lindstrom	11,319	11,319
David Shackelton	11,319	11,319
Michael-Bryant Hicks	11,319	11,319
Justina Uzzell	11,319	11,319
Herman Schwarz	11,319	11,319
Jack Sawyer	11,319	11,319
Michael Fidgeon	11,319	11,319
Walt Cooper	11,319	11,319

Item 8.01 Other Events.

On August 6, 2015, Providence issued a press release announcing the appointment of Mr. Lindstrom and Mr. Shackelton as described herein, which is set forth in Exhibit 99.1 hereto and incorporated by reference herein.

Item 9.01

(d) Exhibits

10.1	Employment Agreement, dated August 6, 2015, by and between The Providence Service Corporation and James Lindstrom

10.2	2015 HoldCo LTI Program of Providence Service Corporation

10.3	Form of Special Option Award Agreement

10.4	Form of Matching Option Award Agreement

99.1	Press release, dated August 6, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	THE PROVIDENCE SERVICE CORPORATION

Date: August 11, 2015	By:	/s/ Michael-Bryant Hicks
	Name:	Michael-Bryant Hicks
	Title:	Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), is entered into as of this 6th day of August, 2015 (the “Effective Date”) by and between The Providence Service Corporation, a Delaware corporation, with its corporate headquarters located at 64 East Broadway Blvd., Tucson, Arizona, 85701 (the “Company”), and James Lindstrom, an individual residing at ---------------------------------- (“Employee”).

BACKGROUND

WHEREAS, Employee has served as the Company’s Executive Vice President and Chief Financial Officer since January 14, 2015 pursuant to that certain Employment Agreement, dated January 14, 2015, between Employee and the Company (the “Prior Employment Agreement”);

WHEREAS, effective as of the Effective Date, the Company’s Board of Directors (the “Board”) has elected Employee as a director of the Company; and

WHEREAS, effective as of the Effective Date, the Board has appointed Employee as the Company’s Chief Executive Officer, and the Company and Employee are entering into this Agreement to set out the agreement between them regarding the terms of Employee’s employment effective beginning the Effective Date and to replace the Prior Employment Agreement as of such date.

NOW, THEREFORE, in consideration of the facts, mutual promises and covenants contained herein and intending to be legally bound hereby, the parties hereto agree that, effective as of the Effective Date, the Prior Employment Agreement is terminated and shall no longer have any force or effect, except as provided in Section 3(c) of the Prior Employment Agreement and with respect to the Restricted Stock Unit Award (as defined in the Prior Employment Agreement) and other provisions of the Prior Employment Agreement expressly relating to the Restricted Stock Unit Award, and hereby further agree:

1. Employment and Term. The Company hereby agrees to employ Employee and Employee hereby agrees to work in the employ of the Company. Such employment will have a term (the “Term”) commencing as of the Effective Date and, if not previously terminated in accordance with the terms of this Agreement, ending at the close of business on December 31, 2017. Employee’s employment may continue hereunder following the Term. Employee’s employment, whether during the Term or thereafter, shall be subject in all respects to the terms and conditions set forth in this Agreement, as well as to all of the Company’s policies and rules that are binding on executive employees generally.

2. Office and Duties.

(a) During the Term, Employee shall serve as the Chief Executive Officer of the Company, and shall report directly to the Board and/or an executive committee established by the Board, whether acting as such or through the Chairman of the Board or chairman of such executive committee.

(b) In his capacity as Chief Executive Officer of the Company, Employee shall have such authority, perform such duties, discharge such responsibilities and render such services as are customary for the person serving as chief executive officer of a public company of a similar size, and as are reasonably designated from time to time by the Board.

(c) While employed by the Company or any Affiliate (as hereinafter defined), Employee shall render his services diligently, faithfully and to the best of his ability, and shall devote substantially all of his working time, energy, skill and best efforts to the performance of his duties hereunder, in a manner that will further the business and interests of the Company.

(d) While employed by the Company or any Affiliate, Employee shall not be engaged in any business activity which, in the reasonable judgment of the Board, conflicts with Employee’s duties hereunder, whether or not such activity is in breach of Section 7 or pursued for pecuniary advantage.

3. Compensation.

(a) Base Salary. In consideration of the services rendered by Employee to the Company during the Term, effective as of the Effective Date, Employee shall receive an annual base salary of Six Hundred Fifty Thousand and 00/100 Dollars ($650,000.00) (the “Base Salary”), payable in equal periodic installments in accordance with the Company’s regular payroll practices in effect from time to time.

(b) Bonus Plans/Incentive Compensation Programs.

(i) In addition to the annual Base Salary, during the Term, Employee shall be eligible to participate in bonus plans or incentive compensation programs, if any, as may be approved by the Board from time to time (“Bonus”).

(ii) For the period commencing January 14, 2015 and through balance of calendar year 2015, Employee will participate in the following Bonus program: Employee shall be paid an amount equal to seventy-five percent (75%) of the 2015 Aggregate Base Salary upon the achievement of one hundred percent (100%) of the Company’s budgeted EBITDA performance for 2015, and up to an additional twenty-five percent (25%) of the 2015 Aggregate Base Salary if the Company exceeds such budgeted performance, with the precise amount of such additional Bonus to be calculated on a basis consistent with additional EBITDA-based bonus opportunity payments made to other executive officers of the Company in respect of 2015. For the purposes hereof, Employee’s “2015 Aggregate Base Salary” shall mean the sum of: (i) the Base Salary to which Employee was entitled under the Prior Employment Agreement and (ii) the Base Salary to which Employee is entitled under this Agreement starting on the Effective Date and ending on December 31, 2015. Unless otherwise specified in respect of a Bonus, (i) the Bonus shall be paid, net of any required withholdings, during calendar year 2016 promptly following the completion and filing of the Company’s annual audited financial statements for 2015, and (ii) Employee’s rights to receive the Bonus shall be contingent upon being employed by the Company on the date that payment of the Bonus is due, except as otherwise expressly provided in this Agreement.

(iii) For the 2016 calendar year, Employee shall be eligible to receive as a Bonus an amount equal to ninety percent (90%) of the Base Salary for such year upon the achievement of goals to be determined by the Board or compensation committee of the Board.

(i) During his employment hereunder, Employee also shall be entitled to participate in all fringe benefits, if any, as may be in effect from time to time that are generally available to the Company’s senior executive officers, and such other fringe benefits as the Board and/or Compensation Committee shall deem appropriate, subject to eligibility requirements thereof (collectively, the “Benefits”).

(ii) During the Term, in addition to the foregoing Benefits, the Company shall, subject to the terms hereof (including as set forth in Section 3(c)(iii)), use its reasonable efforts to procure and maintain term life insurance (“Life Insurance”) on the life of Employee (if such term insurance is not already in effect on the date of this Agreement). Such Life Insurance shall be in the amount of One Million Two Hundred Thousand and 00/100 Dollars ($1,200,000.00). Employee shall be the owner of the Life Insurance policy and shall have the absolute right to designate the beneficiaries thereunder. The premiums in respect of such Life Insurance policy shall be paid by the Company for the shorter of (A) the period of five (5) years commencing on the later of (1) the date of this Agreement and (2) the date the Life Insurance goes into effect and (B) the period Employee is employed by the Company hereunder; premiums in respect thereof shall thereafter be paid by Employee.

(iii) Employee agrees to submit to any physical examination required by the insurer of any such policy and will otherwise cooperate with the Company in connection with any life insurance on Employee’s life the Company may wish to obtain, provided, however, that the results of any such physical examination shall not be shared with the Company or used in any way in connection with Employee’s employment other than the procurement of insurance pursuant to this Subsection. Employee agrees to execute any HIPAA or other privacy waiver in favor of the Company that the Company considers necessary or appropriate for sharing of such information, or to waive the coverage otherwise under this Section 3(c). In the event Employee is determined to be suffering from a congenital defect or other illness or condition which would preclude the Company from obtaining the insurance referred to in the preceding paragraph at a cost substantially equivalent to the cost of obtaining such insurance for a healthy individual of Employee’s age and gender, the Company shall, in lieu of purchasing the insurance in the amount set forth in the preceding paragraph, purchase the amount of insurance, if any, that can be purchased at a cost substantially equivalent to the cost of obtaining such insurance for a healthy individual of Employee’s age and gender.

(d) Vacation. During his employment hereunder, Employee shall be entitled to the number of paid vacation days in each calendar year as determined by the Company from time to time for its senior executive officers. Vacation days which are not used during any calendar year may not be accrued or carried over to the next year, nor shall Employee be entitled to compensation for unused vacation days.

(e) Business Expenses. During his employment hereunder, the Company shall pay or reimburse Employee for all reasonable expenses incurred or paid by Employee in the performance of Employee’s duties hereunder, upon timely presentation of expense statements or vouchers and such other information as the Company may reasonably require and in accordance with the generally applicable policies and practices of the Company, in each case to the extent such expenses are consistent with Company policies; provided that the Company may at any time, further limit, or eliminate, Employee’s right to incur such expenses. Any reimbursement due hereunder shall be separately requested and paid as soon as practicable and in any case within one (1) year after Employee incurs the expense for which reimbursement is requested.

(f) Withholding. All payments made pursuant to this Agreement shall be subject to such withholding taxes as may be required by any applicable law.

4. Representations of Employee. Employee represents to the Company that: (a) there are no restrictions, agreements or understandings whatsoever to which Employee is a party that would prevent, or make unlawful, Employee’s execution of this Agreement and his employment hereunder; (b) Employee’s execution of this Agreement and Employee’s employment hereunder shall not constitute a breach of any contract, agreement or understanding, oral or written, to which Employee is a party, or by which Employee is bound; and (c) Employee is of full capacity, free and able to execute this Agreement and to enter into this Agreement with the Company.

5. Termination. This Agreement and Employee’s employment hereunder shall continue during the Term and thereafter until terminated as provided herein. Upon termination of this Agreement and Employee’s employment hereunder, Employee shall immediately resign from any officer, director or other position in which he is serving on behalf of the Company or any Affiliate, and shall tender his resignation as a director of the Company and any and all Affiliates of the Company (with such tender being subject to being accepted by the Board).

(a) Termination by Company for Cause. The Company shall have the right, during the Term and thereafter, to terminate this Agreement and Employee’s employment hereunder at any time for “Cause”, effective immediately or as of a date specified by the Company in a notice of termination. For purposes of this Agreement, the term “Cause” shall mean the following:

(i) Employee commits fraud or theft against the Company or any of its subsidiaries, affiliates, joint ventures and related organizations, including any entity managed by the Company (collectively referred to as “Affiliates”), or is convicted of, or pleads guilty or nolo contendere to, a felony or any crime involving fraud or moral turpitude;

(ii) In carrying out his duties hereunder, Employee engages in conduct that constitutes gross neglect or willful misconduct and that results, in either case, in material financial or reputational harm to the Company or its Affiliates;

(iii) Employee materially breaches any provision of this Agreement (including but not limited to the restrictive covenants contained in Section 7) or breaches any fiduciary duty or duty of loyalty owed to the Company or its Affiliates or shareholders;

(iv) Employee engages in any wrongful or questionable conduct which does or which is reasonable likely to bring the Company or its Affiliates into public disgrace or embarrassment, or which is reasonable likely to cause one or more of its customers or clients to cease doing business with, or reduce the amount of business with, the Company or its Affiliates;

(v) Employee repeatedly neglects or refuses to perform his duties or responsibilities as directed by the Board or any committee established by the Board, or violates any express direction of any lawful rule, regulation or policy established by the Company, the Board or any committee established by the Board which is consistent with the scope of Employee’s duties under this Agreement, and such failure, refusal or violation continues uncured for a period ten (10) days after written notice from the Company to Employee specifying the failure, refusal or violation and the Company’s intention to terminate this Agreement for Cause;

(vi) Employee commits any act or omission resulting in or intended to result in direct material personal gain to Employee at the expense of the Company or its Affiliates; or

(vii) Employee materially compromises trade secrets or other confidential and proprietary information of the Company or its Affiliates.

Action or inaction by Employee shall not be considered “willful” unless done or omitted by him intentionally and without his reasonable belief that his action or inaction was in the best interests of the Company or its Affiliates, and shall not include failure to act by reason of total or partial incapacity due to physical or mental illness.

(b) Termination upon Death/Termination by Company upon Disability of Employee. Employee’s employment will terminate upon his death. The Company shall have the right to terminate this Agreement and Employee’s employment hereunder at any time upon the Disability of Employee. The term, “Disability”, as used herein, means any physical or mental illness, disability or incapacity which prevents Employee from performing the essential functions of his job, with or without reasonable accommodations, hereunder for a period of not less than one hundred fifty (150) consecutive days or for an aggregate of one hundred eighty (180) days during any period of twelve (12) consecutive months. Periods where Employee can perform the essential functions of his job with a reasonable accommodation shall not be included in the determination of a Disability hereunder. During any period of Disability, Employee agrees to submit to reasonable medical examinations upon the reasonable request, and at the expense, of the Company.

(c) Termination By Company Without Cause. The Company shall have the right to terminate this Agreement and Employee’s employment hereunder at any time without Cause and/or without the occurrence of Employee’s death or Disability by giving written notice which shall be effective on the date specified in such notice of termination.

(d) Termination by Employee; Termination Following Term. In the event Employee terminates his employment, whether or not during the Term, or if the Company terminates this Agreement and Employee’s employment hereunder effective following the end of the Term, Employee shall give the Company not less than sixty (60) days prior written notice of termination. Upon a termination of Employee’s employment with the Company under this Section 5(d), the effective date of termination shall be the date set forth in Employee’s resignation notice (assuming such date is in compliance with the notice provisions of this Section 5(d)) or an earlier date as determined by the Company after the Company’s receipt of such notice, in its sole discretion, but not earlier than the date on which the Company learned of Employee’s decision to terminate his employment.

(e) Notice of Termination. Any termination, except for death, pursuant to this Section 5 shall be communicated by a Notice of Termination. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provisions so indicated. The Notice of Termination shall also set forth that Employee’s employment is terminated and be delivered in accordance with the terms of this Agreement.

Notwithstanding anything to the contrary set forth herein, Sections 7, 8 and 9 shall survive the end of the Term and/or the termination of Employee’s employment hereunder for any reason, and shall remain in full force and effect thereafter.

6. Payments Upon Termination and Change in Control.

(a) Termination for Cause. In the event Employee’s employment hereunder is terminated for Cause at any time, whether or not during the Term, all of Employee’s rights to his Base Salary, Benefits and Bonus, if any, shall immediately terminate as of the date of such termination, except that Employee shall be entitled to any earned and unpaid portion of Employee’s Base Salary and accrued Benefits up to the date of termination, less all deductions or offsets for amounts owed by Employee to the Company. Employee shall not be entitled to any Bonus, prorated or otherwise. The Company shall have no further obligations to Employee under this Agreement.

(b) Termination Due to Death or Disability. In the event Employee’s employment hereunder is terminated at any time, whether or not during the Term, due to his death or Disability, all of Employee’s rights to his Base Salary, Benefits (except to the extent that any Benefits are expressly available following termination of employment) and Bonus, if any, shall immediately terminate as of the effective date of such termination, except that Employee (or, in the event that Employee’s employment hereunder is terminated due to Employee’s death, Employee’s heirs, personal representatives or estate) shall be entitled to any earned and unpaid portion of Employee’s Base Salary, any Bonus (if earned) relating to a fiscal year which was completed before Employee’s death or Disability and accrued Benefits up to the date of termination, in each case less all deductions or offsets for amounts owed by Employee to the Company. Subject to the provisions of the applicable Company stock option or stock incentive plan, should Employee’s death occur within one (1) year following his termination for Disability, but prior to his exercise of any options vested at the date of termination, Employee’s estate shall be entitled to exercise Employee’s options for the earlier of (i) the remainder of the one (1) year period or (ii) the date upon which the option would have expired by its terms. The foregoing clause (ii) shall apply to the extent needed to avoid adverse tax consequences under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The Company shall have no further obligations to Employee under this Agreement.

(c) Termination By the Company Without Cause. If, during the Term, the Company terminates Employee’s employment other than for Cause or the occurrence of Employee’s death or Disability, Employee shall be entitled to continue to receive (i) any Bonus (if earned) relating to a fiscal year which was completed before the effectiveness of such termination (payable as set forth in Section 3(b)), (ii) any Bonus for the fiscal year through the date of effectiveness of such termination, to the extent earned, pro-rated (based on a percentage defined by a fraction, the numerator of which is the number of days during the fiscal year prior and through the date of effectiveness of the termination, and the denominator of which is three hundred sixty-five (365)), payable following the completion and filing of the Company’s annual audited financial statements in respect of such fiscal year, and (iii) an amount equal to (I) the lesser of (A) Employee’s Base Salary that would have been paid from the date of effectiveness of such termination through the end of the Term and (B) Employee’s Base Salary in effect as of the date of effectiveness of such termination, or (II) if greater, at least six (6) months of Employee’s Base Salary in effect as of the date of effectiveness of such termination (in the case of clause (iii), Employee’s Base Salary will be paid in periodic payments which correspond to the Company’s regular payroll periods) (the period during which Employee’s Base Salary will continue as provided in this Clause (iii), the “Post Employment Payment Period”); provided that any payments set out in clauses (i), (ii) and (iii) shall only be made so long as Employee is not in breach of this Agreement and shall be net of appropriate tax and other withholdings. Notwithstanding the foregoing, the Company may suspend payments of such Bonus or Base Salary until seven (7) days following the date on which Employee executes and delivers to the Company a general release of all claims relating to Employee’s employment and termination from employment (the “General Release”) in a form provided by the Company (which General Release shall not affect any rights Employee may have under COBRA or under any vested award previously issued to Employee by the Company under any Company benefit plan) assuming such General Release is not revoked during such seven (7) day period and assuming Employee is not in breach of this Agreement. Employee understands that if the conditions set forth in the preceding sentence are not met, Employee shall not be entitled to a Bonus or any payments of Base Salary relating to periods of time following the effective date of the termination of Employee’s employment under this Section 6(c) or otherwise. The Company shall have no further obligations to Employee under this Agreement. Notwithstanding any other provision in this Agreement to the contrary, by notice to Employee during the Post-Employment Payment Period, the Company may elect to continue to pay Employee’s Base Salary for any additional period ending no later than the second anniversary of the effectiveness of termination of Employee’s employment hereunder by the Company without Cause (“Continuing Payment Period”).

(d) Termination By Employee During Term. In the event Employee terminates his employment during the Term, all of Employee’s rights to his Base Salary, Benefits (except to the extent any Benefits are expressly available following such event) and Bonus, if any, shall immediately terminate as of the effective date of termination, except that Employee shall be entitled to any earned and unpaid portion of his Base Salary and accrued Benefits up to the date of termination. Employee shall not be entitled to any Bonus, prorated or otherwise. The Company shall have no further obligations to Employee under this Agreement.

(e) Payment Upon Change in Control. Notwithstanding any other provision in this Agreement to the contrary, if a “Change in Control” of the Company (as defined herein) shall occur during the Term, and after such Change in Control but prior to the end of the Term the Company terminates Employee’s employment without Cause with such termination being effective during the Term, in lieu of any other amounts payable under this Agreement, Employee shall be entitled to receive the product of two multiplied by the Base Salary, in a lump sum payment, payable immediately upon cessation of employment and (ii) a pro-rata portion of the Bonus, contingent on the Company’s achievement of any performance criteria relating to such Bonus, payable promptly following completion and filing of the Company’s year-end audit for the applicable year (such payments shall be net of appropriate tax and other withholdings, and are referred to collectively as the “Change in Control Payments”); provided, however, that if such Change in Control Payments, either alone or together with other payments or benefits, either cash or non-cash, that Employee has the right to receive from the Company, including, but not limited to, accelerated vesting or payment of any deferred compensation, options, stock appreciation rights or any benefits payable to Employee under any plan for the benefit of employees, which would constitute an “excess parachute payment” (as defined in Section 280G of the Code), then such Change in Control Payments or other benefits shall be reduced to the largest amount that will not result in receipt by Employee of an excess parachute payment. A Change in Control will have no other effect on this Agreement, which will remain in full force and effect.

(i) Definition of Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean an event or events, in which:

(A) any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “1934 Act”) (other than (1) the Company, (2) any subsidiary of the Company, (3) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any subsidiary of the Company or (4) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Section 13(d) of the 1934 Act), together with all affiliates and Associates (as such terms are used in Rule 12b-2 of the General Rules and Regulations under the 1934 Act) of such person, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

(B) the consummation of a merger or consolidation of the Company with any other company, other than (1) a merger or consolidation which would result in the holders of voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, having at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) after which no “person” (with the method of determining “beneficial ownership” used in clause (A) of this definition) owns more than 50% of the combined voting power of the securities of the Company or the surviving entity of such merger or consolidation; or

(C) the Company consummates its liquidation or sale or disposition by the Company of all or substantially all of the Company’s assets.

(f) Recognition. Employee recognizes and accepts that the Company shall not, in any case, be responsible for any additional amount, severance pay, termination pay, severance obligation or other payments or damages whatsoever arising from the termination of Employee’s employment above and beyond those specifically provided for herein.

7. Restrictive Covenants.

(a) Business of the Company. The term “Business of the Company”, as used in this Section 7, shall mean the provision by the Company or its Affiliates of social services, counseling, client monitoring and mentoring, substance abuse treatment and counseling, school support services, case management and foster care services to children, adults and families in community based settings such as a client’s home, school or workplace, intake, assessment and referral, case management and network management services to governmental agencies and provider networks, educational tutoring, job readiness and private parole or probation, non-emergency medical transportation, health risk assessments and any other business in which the Company or its Affiliates have been, plan or have planned to be engaged during Employee’s employment with the Company or its Affiliates.

(b) Non-Competition. During Employee’s employment with the Company or any of its Affiliates and thereafter, as applicable, during (i) the Post-Employment Payment Period or, if applicable, during the Continuing Payment Period (as defined in Section 6(c)) or (ii) the two (2) year period following the effectiveness of the Company’s termination of Employee for Cause or Employee’s termination of his employment hereunder, Employee will not, in any capacity (including, but not limited to, owner, partner, member shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), directly or indirectly, for his own account or for the benefit of any natural person, corporation, partnership, trust, estate, joint venture, sole proprietorship, association, cooperative or other entity (any of the foregoing, a “Person”), establish, engage in, finance, advise, work for, or be connected with, except as an employee of the Company, any business in competition with the Business of the Company if such business competes with the Business of the Company or any Affiliate in any country, State, county, or municipality where the Company or its Affiliates conduct business, are preparing to conduct business or have conducted business during Employee’s employment with the Company or any of its Affiliates (a “Competitive Business”). Notwithstanding the foregoing, (A) nothing in this Section 7(b) shall preclude Employee from serving in any capacity (i.e., whether as an employee, partner, principal, member, investor, consultant or otherwise) to or in respect of a business or entity (including, without limitation, an investment trust or investment partnership) that provides investment services or is otherwise engaged in the business of investing capital for third parties, or any manager or affiliate of any of the foregoing (any such entity, manager or affiliate hereafter called an “Investment Firm”), so long as Employee does not have personal, direct and material responsibilities for the day to day operations of any Competitive Business in which such Investment Firm has made or directed an investment and (B) this Section 7(b) shall not apply, and therefore Employee shall not be subject to any covenant in this Section 7(b), in the event that, within one (1) year following the effectiveness of a Change in Control (I) Employee is terminated by the Company during or following the Term without Cause or (II) the Term has expired and Employee’s employment with the Company is terminated due to resignation by Employee at a time that the Company does not have the right to terminate Employee without Cause.

(c) Non-Solicitation/Non-Piracy. During Employee’s employment with the Company or any of its Affiliates and for a period of two (2) years thereafter, Employee will not, directly or indirectly, for his own account or for the benefit of any Person or entity:

(i) solicit, service, supply or sell to, contact, or aid in the solicitation, servicing, supplying or selling to any Person or entity which is or was a customer, prospective customer, client, prospective client, contractor, subcontractor or supplier of the Company or its Affiliates within three (3) years prior to Employee’s termination of employment (“Company Customers/Clients”), for the purpose of (A) selling services or goods in competition with the Business of the Company; (B) inducing Company Customers/Clients to cancel, transfer or cease doing business in whole or in part with the Company or any of its Affiliates or (C) inducing Company Customers/Clients to do business with any Person in competition with the Business of the Company; or

(ii) solicit, aid in solicitation of, induce, contact for the purpose of, encourage or in any way cause any employee of the Company or any of its Affiliates to leave the employ of the Company or its Affiliates, or otherwise interfere with such employee’s relationship with the Company or any of its Affiliates.

(d) Non-Disclosure. Other than in furtherance of the Business of the Company, in the ordinary course in Employee’s capacity as an employee hereunder, Employee will not, at any time, except with the express prior written consent of the Board, directly or indirectly, disclose, communicate or divulge to any Person, or use for the benefit of any Person, any secret, confidential or proprietary knowledge or information relating to the Company or any of its Affiliates including, but not limited to, customer and client lists, customer and client accounts and information, prospective client, customer, contractor or subcontractor lists and information, services, techniques, methods of operation, pricing, costs, sales, sales strategies or methods, marketing, marketing strategies or methods, products, product development, research, know-how, policies, financial information, financial condition, business strategies or plans or other information of the Company or its Affiliates which is not generally available to the public. Upon the expiration or termination of Employee’s employment with the Company or any Affiliate, Employee shall immediately deliver to the Company all memoranda, books, papers, letters and other data (whether in written form or computer stored), and all copies of same, which were made by Employee or came into Employee’s possession or under his control at any time prior to the expiration or termination of Employee’s employment, and which in any way relate to the business, assets or properties of the Company or any of its Affiliates as conducted or as planned to be conducted by the Company or its Affiliates; provided that Employee can keep such documents and information as are pertinent to the terms of his employment and the compensation payable to him in respect thereof subject to other restrictions and provisions set forth in this Section 7.

(e) Intellectual Property. Employee will promptly communicate to the Company, in writing when requested, all software, designs, techniques, concepts, methods and ideas, other technical information, marketing strategies and other ideas and creations pertaining to the Business of the Company which are conceived of or developed by Employee alone or with others, at any time (during or after business hours) while Employee is employed by the Company or any of its Affiliates. Employee acknowledges that all of those ideas and creations are inventions and works for hire, and will be the Company’s or its Affiliates’ exclusive property. Employee will sign any documents which the Company deems necessary to confirm its ownership of those ideas and creations and Employee will cooperate with the Company to facilitate the ability of the Company to own or exploit all of those ideas and creations.

(f) Non-Disparagement. Employee will not at any time publish or communicate disparaging or derogatory statements or opinions about the Company or its Affiliates, including but not limited to, disparaging or derogatory statements or opinions about the Company’s or its Affiliates’ management, products or services to any third party. It shall not be a breach of this Section 7(f) for Employee to testify truthfully in any judicial or administrative proceeding or to make statements or allegations in legal filings, including, without limitation, any such filings made by Employee to enforce his rights against the Company or any of its affiliates, that are based on Employee’s reasonable belief and are not made in bad faith.

(g) Enforcement. Employee acknowledges that the covenants and agreements of this Section 7 (the “Covenants”) herein are of a special and unique character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated for in an action at law. Employee further acknowledges that any breach or threat of breach by him of any of the Covenants will result in irreparable injury to the Company for which money damages could not be adequate to compensate the Company. Therefore, in the event of any such breach or threatened breach, the Company shall be entitled, in addition to all other rights and remedies which the Company may have at law or in equity, to have an injunction issued by any competent court enjoining and restraining Employee and/or all other Persons involved therein from committing a breach or continuing such breach. The remedies granted to the Company in this Agreement are cumulative and are in addition to remedies otherwise available to the Company at law or in equity. The Covenants contained in this Section 7 are independent of any other provision of this Agreement, and the existence of any claim or cause of action which Employee or any such other Person may have against the Company shall not constitute a defense or bar to the enforcement of any of the Covenants. If the Company is obliged to resort to litigation to enforce any of the Covenants which has a fixed term, then such term shall be extended for a period of time equal to the period during which a breach of such Covenant was occurring, beginning on the date of a final court order (without further right of appeal) holding that such a breach occurred, or, if later, the last day of the original fixed term of such Covenant.

(h) Acknowledgements. Employee expressly acknowledges that the Covenants are a material part of the consideration bargained for by the Company and, without the agreement of Employee to be bound by the Covenants, the Company would not have agreed to enter into this Agreement. Employee further acknowledges and agrees that the Business of the Company and its services are highly competitive, and that the Covenants contained in this Section 7 are reasonable and necessary to protect the Company’s legitimate business interests. In addition, Employee acknowledges that in the event his employment with the Company terminates, he will still be able to earn a livelihood without violating this Agreement, and that the Covenants contained in this Section 7 are material conditions to his employment and continued employment with the Company.

(i) Scope. If any portion of any Covenant or its application is construed to be invalid, illegal or unenforceable, then the remaining portions and their application shall not be affected thereby, and shall be enforceable without regard thereto. If any of the Covenants is determined to be unenforceable because of its scope, duration, geographical area or similar factor, then the court or other trier of fact making such determination shall modify, reduce or limit such scope, duration, area or other factor, and enforce such Covenant to the extent it believes such factor(s) to be lawful and appropriate.

(j) Costs; Expenses in the Event of Breach. In the event that Employee breaches or attempts to breach the Covenants contained, the Company shall be entitled to reimbursement from Employee for all costs and expenses associated with any successful action to enforce any of the Covenants, including but not limited to reasonable attorneys’ fees and costs of litigation. Should the Company file an action against Employee relating to a breach of the Covenants, and a court of competent jurisdiction determines that Employee did not breach any of the Covenants, Employee shall be entitled to reimbursement from the Company of all costs and expenses associated with defending against such action asserting a breach, including reasonable attorneys’ fees and costs.

8. Section 409A of the Code.

(a) Amounts payable under this Agreement are intended either to be exempt from the rules of Section 409A of the Code or to satisfy those rules and shall be construed accordingly. The Company shall not be liable to Employee with respect to any adverse tax consequences arising under Section 409A or other provision of the Code by reason of the operation of this Agreement or any benefit provide to Employee under any employee benefit plan sponsored or maintained by the Company, in either case, in accordance with its terms.

(b) If any provision of this Agreement contravenes any regulations or Treasury guidance promulgated under Code Section 409A or could cause an amount payable hereunder to be subject to the interest and penalties under Code Section 409A, such provision of this Agreement shall be deemed automatically modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service.

(c) Notwithstanding any provisions of this Agreement to the contrary, if Employee is a “specified employee” (as such term is defined for purposes of Code Section 409A), no payment of amounts not exempt from Code Section 409A shall be made under Section 6(c) or 6(e) hereof prior to the six (6) month anniversary of Employee’s separation of service to the extent such six (6) month delay in payment is required to comply with Code Section 409A. To the extent that this Section 8(c) applies to any Severance Payment under Section 6(c) hereof, and the actions described in this sentence do not cause adverse tax consequences to be imposed under the Code, the Company shall, as soon as practicable following Employee’s termination of employment, and after Employee executes and does not revoke the General Release, deposit an amount equal to the gross amount of such Severance Payment into an irrevocable Rabbi Trust in the form prescribed by Internal Revenue Service Revenue Procedure 92-64. Such Rabbi Trust shall be established and maintained by the Company, at its own expense, pending the distribution of such amount to Employee under this Agreement. The Trustee shall be a financial institution selected by the Company and the Trustee shall invest all amounts deposited therein with the purpose of preserving the Trust principal. All principal and income from the Rabbi Trust shall be paid to Employee on the first day following the six-month anniversary of Employee’s Separation from Service. The Trustee shall withhold or cause to be withheld all withholding taxes as may be required by applicable law.

(d) Miscellaneous.

(e) Indulgences, Etc. Neither the failure, nor any delay, on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same, or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(f) Controlling Law; Consent to Arbitration; Service of Process.

(i) This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the State of Arizona (notwithstanding any conflict of laws doctrines of such state or other jurisdiction to the contrary), and without the aid of any canon, custom or rule of law requiring construction against the draftsman.

(ii) Except to the extent provided for in Section 7 above (relating to injunctive relief and other equitable remedies), the Company and Employee agree that any claim, dispute or controversy arising under or in connection with this Agreement, or otherwise in connection with Employee’s employment by the Company or termination of his employment (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute, regulation or ordinance or any of the Company’s employee benefit plans, policies or programs) shall be resolved solely and exclusively by binding, confidential, arbitration. The arbitration shall be held in Tucson, Arizona (or at such other location as shall be mutually agreed by the parties). The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (the “AAA”) in effect at the time of the arbitration, except that the arbitrator shall be selected by alternatively striking from a list of five arbitrators supplied by the AAA. All fees and expenses of the arbitration, including a transcript if either requests, shall be borne equally by the parties, however, all costs for the services of the arbitrator shall be borne solely by the Company.

(iii) Each party is responsible for the fees and expenses of its own attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the party prevails on a claim for which attorney’s fees are recoverable under law). In rendering a decision, the arbitrator shall apply all legal principles and standards that would govern if the dispute were being heard in court. This includes the availability of all remedies that the parties could obtain in court. In addition, all statutes of limitation and defenses that would be applicable in court, will apply to the arbitration proceeding. The decision of the arbitrator shall be set forth in writing, and be binding and conclusive on all parties. Any action to enforce or vacate the arbitrator’s award shall be governed by the Federal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Company or Employee improperly pursues any claim, dispute or controversy against the other in a proceeding other than the arbitration provided for herein, the responding party shall be entitled to dismissal or injunctive relief regarding such action and recovery of all costs, losses and attorney’s fees related to such action.

(iv) Each of the parties hereto hereby consents to process being served in any suit, action or proceeding of any nature, by the mailing of a copy thereof by registered or certified first-class mail, postage prepaid, return receipt requested, to them at their respective addresses set forth in Section 9(c) hereof. Each of parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, all claims of error by reason of any such service pursuant to the terms hereof (but does not waive any right to assert lack of subject matter jurisdiction) and agrees that such service shall (A) be deemed in every respect effective service of process in any such suit, action or proceeding and (B) to the fullest extent permitted by applicable law, be taken and held to be valid personal service.

(v) Nothing in this Section 9(b) shall affect the right of any party hereto to serve process in any manner permitted by law or affect the right of any party to bring proceedings against any other party in the courts of any jurisdiction or jurisdictions.

(g) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by courier service such as Federal Express, or by other messenger) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below.

(i) If to Employee:

James Lindstrom
145 Pecksland Rd., Greenwich, CT 06831

(ii) If to the Company:

The Providence Service Corporation
64 East Broadway Blvd.
Tucson, AZ 85701
Attention: Chairman of the Board of Directors

In addition, notice by mail shall be by air mail if posted outside of the continental United States.

Any party may alter the addresses to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 9(c) for the giving of notice.

(h) Assignment of Agreement. The rights and obligations of both parties under this Agreement shall inure to the benefit of and shall be binding upon their heirs, successors and assigns. The Company may assign or otherwise transfer its rights under this Agreement, including but not limited to all Covenants contained in Section 7 above, to any successor or affiliated business or corporation whether by sale of stock, merger, consolidation, sale of assets or otherwise. This Agreement may not, however, be assigned by Employee to a third party, nor may Employee delegate his duties under this Agreement.

(i) Execution in Counterparts. This Agreement may be executed in any number of counterparts, including by facsimile or electronic submission, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

(j) Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

(k) Entire Agreement. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings between the parties, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

(l) Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

(m) Gender, Etc. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(n) Independent Review and Consultation. Employee is hereby advised to consult with an attorney before signing this Agreement. Employee acknowledges that it is his decision whether or not to do so.

(o) Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which entities which are provincially regulated are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement, intending to be legally bound hereby, as of the date first above written.

THE PROVIDENCE SERVICE CORPORATION

By:       /s/ Christopher Shackelton
Name:  Christopher Shackelton
Title:    Chairman of the Board

JAMES LINDSTROM

/s/ James Lindstrom

[Signature Page to Employment Agreement of James Lindstrom]

Exhibit 10.2

THE PROVIDENCE SERVICE CORPORATION

2006 LONG-TERM INCENTIVE PLAN

___________________________________

2015 Holding Company LTI Program

(as adopted by the Compensation Committee and effective on August 6, 2015)

___________________________________

This 2015 Holding Company LTI Program (the “HoldCo LTI Program”) is established as of the date referenced above as a sub-plan to the Providence Service Corporation 2006 Long-term Incentive Plan (as amended and restated effective June 30, 2015 and as thereafter amended from time to time in accordance with its terms, the “2006 Plan”). Accordingly, the terms and conditions of the 2006 Plan shall apply to all Awards hereunder, and shall govern in the event of any inconsistency with the terms set forth below.

1. Definitions

Exhibit 1, which is incorporated by reference, defines the terms used in this HoldCo LTI Program and sets forth certain operational rules related to those terms. Likewise, terms defined in Exhibit 1 of the 2006 Plan have the meanings set forth therein.

2. Purpose

This HoldCo LTI Program has been established effective August 6, 2015 for the granting of Performance Awards under the 2006 Plan to select key executives of the Company in order to encourage them to achieve goals relating to the long-term interests of the Company and its stockholders.

3. Administration

The Administrator responsible for the 2006 Plan shall administer this HoldCo LTI Program, and shall have all of the powers and rights set forth within the 2006 Plan, including but not limited to those set forth in Section 3 thereof.

4. HoldCo LTI Program Awards

(a) Determination of Holdco LTI Program Awards. In its sole and absolute discretion, the Administrator shall award Participation Percentages to the Company’s CEO and any other key Employees in any proportions that the Administrator shall determine. All awards of Participation Percentages shall be made in the form of individual written offer letters (substantially in the form attached as Exhibit 2, each an “LTI Offer Letter”) executed by or on behalf of the Administrator, and each individual Employee who receives such an award; provided that an Employee may only accept such an Award (and thereby become an “LTI Participant” ) by returning a signed copy of the LTI Offer Letter to the Company’s General Counsel within 20 days after such Award Date. Any LTI Offer Letter that is not finalized within such period shall be null and void.

(i) The total Participation Percentages awarded on the effective date of this Holdco LTI Program may not exceed eighty percent (80%) of the interests in the Holdco LTI Pool. The Administrator may thereafter award the remaining Participation Percentages through LTI Offer Letters of Participation Percentages to any Employees whom the Administrator may in its discretion select (including those who have already received Awards hereunder). If a Participant receives more than one Award hereunder, those Awards shall be treated independently of each other for all purposes. If a Participant forfeits an Award or Awards before the Determination Date, the Administrator may make new Awards hereunder with respect to the forfeited Participation Percentages.

(ii) In no event shall the sum of the Participation Percentages for all LTI Participants exceed one hundred percent (100%) at any time before the Determination Date.

(b) Calculation of HoldCo LTI Pool. As soon as practicable following the Determination Date, but as of the Determination Date, the Administrator shall calculate the amount of the HoldCo LTI Pool, if any, that is associated with each Performance Period. If the HoldCo LTI Pool as of the Determination Date is greater than zero with respect to any Performance Period, then the LTI Participants holding Awards corresponding to that Performance Period shall be entitled to the payments described in Section 4(c) below. If the performance of the Company has been such that there is no HoldCo LTI Pool associated with an Award Date (i.e., that the LTI Program Pool is zero), then the LTI Participants holding Awards having that Award Date shall not be entitled to be paid any amounts under this HoldCo LTI Program, and those Awards shall be cancelled and terminated as of the Determination Date, with no amounts being paid to such LTI Participants.

(c) Share Awards. In the event that the HoldCo LTI Pool as of the Determination Date is greater than zero for any Award(s), then each LTI Participant holding such an Award shall receive on a date that occurs as soon as reasonably practicable after the Determination Date (the “Issuance Date”), the following equity awards that together have a value (based on the Determination Share Price, without regard to the transfer restrictions set forth in Section 7(c) below, which shall apply to all shares of Stock, including Unrestricted Stock, issued pursuant to any Award) equal to the product of (A) the HoldCo LTI Pool determined for such Award Date, and (B) the LTI Participant’s Participation Percentage for the Award having such an Award Date (the “Issuance Value”):

(i) Unrestricted Stock having a fair market value (based on the Determination Share Price) equal to sixty percent (60%) of the Issuance Value; and

(ii) Stock Units having a fair market value (based on the Determination Share Price) equal to forty percent (40%) of the Issuance Value, with sixty-two and one-half percent (62.5%) of such Stock Units to become vested and payable in unrestricted Stock on the first anniversary of the Determination Date and with thirty-seven and one-half percent (37.5%) to become vested and payable in unrestricted Stock on the second anniversary date of the Determination Date (each a “Vesting Date”); provided that the LTI Participant has continued Employment from the Award Date through such Vesting Date, or has incurred an earlier Qualified Termination.

Notwithstanding the foregoing, in the event of a Change in Control on or before the Determination Date, the Administrator shall settle any and all Awards on the closing date of the Change in Control by providing each LTI Participant with cash and/or Unrestricted Stock that together have a fair market value equal to the total amount otherwise payable to the LTI Participant under Sections 4(c)(i) and (ii) above (without any adjustment or delay due to inapplicability of the vesting requirements otherwise applicable after the Determination Date). In the event of a Change in Control after the Determination Date, each LTI Participant shall receive on the closing date of the Change in Control cash and/or Unrestricted Stock that together have a fair market value equal to the total amount otherwise payable to the LTI Participant, after the date of the Change in Control, pursuant to Sections 4(c)(i) and (ii) above (without any adjustment or delay due to inapplicability of the vesting requirements otherwise applicable after the Determination Date).

(d) Termination and Forfeiture; Vesting.

(i) In the event of termination of an LTI Participant’s Employment both more than one year after the Award Date and either, without Cause by the Company, or by reason of the LTI Participant’s death or Disability (a “Qualified Termination”) while holding an outstanding Award, then, with respect to the LTI Participant only, the LTI Participant shall be treated as having continued Employment through each of the dates on which Award payouts occur under Section 4(c) with respect to LTI Participants whose Employment has continued and the LTI Participant (or estate in the event of death) shall be paid any earned portion of any outstanding Award at the same time and on the same basis as though the Participant as described above, except that the amounts payable to an LTI Participant who has incurred a Qualifying Termination before the Determination Date shall be proportionately reduced such that the LTI Participant receives pro rata payments determined by a fraction with a numerator equal to the number of full months from the LTI Participant’s Award Date through the date on which the LTI Participant’s Employment ceases, and a denominator equal to the number of full months from the LTI Participant’s Award Date through the Determination Date. For example, if a Participant’s Employment ends due to a Qualifying Termination in the exact middle of the Performance Period, the LTI Participant would receive (whenever other LTI Participants receive payments) 50% of amounts payable on and after the Determination Date if the LTI Participant had continued Employment.

(ii) If an LTI Participant’s Employment shall cease for any reason other than a Qualified Termination, then any and all of such LTI Participant’s Awards under this HoldCo LTI Program (including any Stock Units that have not previously vested pursuant to the associated award agreement) shall be immediately forfeited at such time and without payment of any consideration to the LTI Participant, and no amounts whatsoever shall thereafter be payable to such LTI Participant pursuant to this HoldCo LTI Program.

(iii) For purposes of this Section 4(d), “Cause” means the following as determined by the Administrator in its sole discretion:

(I) the LTI Participant commits fraud or theft against the Company or any of its subsidiaries, affiliates, joint ventures and related organizations, including any entity managed by the Company (collectively referred to as “Affiliates”), or is convicted of, or pleads guilty or nolo contendere to, either a felony, or any crime involving fraud or moral turpitude;

(II) in carrying out the LTI Participant’s duties hereunder, the LTI Participant engages in conduct that constitutes gross neglect or willful misconduct and that results, in either case, in material financial or reputational harm to the Company or its Affiliates;

(III) the LTI Participant materially breaches any provision of this Agreement or any employment agreement with the Company or its Affiliates (including but not limited to any applicable restrictive covenants) or breaches any fiduciary duty or duty of loyalty owed to the Company or its Affiliates or shareholders;

(IV) the LTI Participant engages in any wrongful or questionable conduct which does or which is reasonable likely to bring the Company or its Affiliates into public disgrace or embarrassment, or which is reasonable likely to cause one or more of its customers or clients to cease doing business with, or reduce the amount of business with, the Company or its Affiliates;

(V) the LTI Participant repeatedly neglects or refuses to perform the LTI Participant’s duties or responsibilities as directed by the LTI Participant’s supervisor, the Board or any committee established by the Board, or violates any express direction of any lawful rule, regulation or policy established by the Company, the Board, any committee established by the Board, or the LTI Participant’s supervisor which is consistent with the scope of the LTI Participant’s duties to the Company and its Affiliates, and such failure, refusal or violation continues uncured for a period ten (10) days after written notice from the Company to the LTI Participant specifying the failure, refusal or violation and the Company’s intention to terminate any or all of the LTI Participant’s Awards for Cause;

(VI) the LTI Participant commits any act or omission resulting in or intended to result in direct material personal gain to the LTI Participant at the expense of the Company or its Affiliates, or the customers or the Company or its Affiliates; or

(VII) the LTI Participant materially compromises trade secrets or other confidential and proprietary information of the Company or its Affiliates.

Action or inaction by LTI Participant shall not be considered “willful” unless done or omitted by such participant intentionally and without his reasonable belief that his or her action or inaction was in the best interests of the Company or its Affiliates, and shall not include failure to act by reason of total or partial incapacity due to the LTI Participant’s physical or mental illness.

5. Continuance of Employment.

Neither this HoldCo LTI Program nor the grant of any Award hereunder shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any LTI Participant’s Employment at any time and for any reason (subject to the terms of any employment agreement), nor shall the HoldCo LTI Program or the grant of any Award hereunder impose any obligation on the Company or any Affiliate to continue the Employment of any LTI Participant.

6. Requirements of Law.

The grant of Awards hereunder and the settlement thereof in accordance with this HoldCo LTI Program and the 2006 Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies as may be required.

7. Miscellaneous

(a) Amendments. This HoldCo LTI Program, and any LTI Offer Letter entered into with any LTI Participant, may be amended or modified only in writing by the Administrator or the Board; provided that any amendment or modification of any kind which adversely affects an LTI Participant must be consented to by such LTI Participant in writing to be effective as against him or her.

(b) Incorporation of the 2006 Plan; Interpretation by Administrator. This HoldCo LTI Program is subject in all respects to the terms, conditions, limitations and definitions contained in the 2006 Plan. In the event of any discrepancy or inconsistency between this HoldCo LTI Program and the 2006 Plan, the terms and conditions of the 2006 Plan shall control. Without limiting the generality of the foregoing, the Administrator may in its sole and absolute discretion interpret the 2006 Plan and this HoldCo LTI Program, and take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the 2006 Plan, the HoldCo LTI Program or the administration or interpretation thereof, with such interpretations, actions, determinations, and decisions to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law; provided that the Administrator’s interpretations, actions, determinations, and decisions shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations are made exclusively by members of the Administrator who are individuals who served as Administrator members before the Change in Control. In the event of any dispute or disagreement as to interpretation of the 2006 Plan or this HoldCo LTI Program or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the 2006 Plan or this HoldCo LTI Program, the decision of the Administrator shall, except as provided above, be final and binding upon all persons, and the claims provisions of the 2006 Plan shall be controlling.

(c) Stock or Stock Unit Issuances. Any issuance of Unrestricted Stock or Stock Units pursuant to HoldCo LTI Program Awards shall occur pursuant to the 2006 Plan, and shall be subject to all terms and conditions thereof.

(d) Withholding of Tax. Anything to the contrary notwithstanding, all payments required to be made by the Company pursuant to Awards hereunder shall be subject to the withholding of such amounts as the Company reasonably may determine that it is required to withhold pursuant to applicable federal, state or local law or regulation. The Company’s obligation to deliver share certificates (or evidence of book entry) to any LTI Participant is subject to and conditioned on tax withholding obligations being satisfied by such LTI Participant, including the terms of the 2006 Plan applicable thereto.

(e) Anti-Alienation; Non-Assignability; Etc. Except as otherwise provided by the 2006 Plan, neither an LTI Participant nor any other person shall have any right to sell, assign, transfer, pledge, mortgage, or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable or deliverable hereunder, or any part thereof. The designation of a death beneficiary by an LTI Participant shall be permissible and shall not constitute a transfer.

(f) Section 409A. If and only to the extent that any compensation provided by this HoldCo LTI Program may result in the application of Section 409A of the Code, then notwithstanding Section 7(a) above, the Company may unilaterally modify the LTI Participant’s Award solely in the least restrictive manner necessary in order, where applicable –

(i) to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A, or

(ii) to comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and to make such modifications, in each case, without any material diminution in the value of the benefits granted under this HoldCo LTI Program to such LTI Participant.

(g) Unfunded Nature of Program. This HoldCo LTI Program is intended to be an unfunded, nonqualified compensation arrangement for purposes of the Code. Except to the extent that an LTI Participant may otherwise be entitled to preferred status under applicable bankruptcy law, LTI Participants shall have the status of general unsecured creditors of the Company, and the HoldCo LTI Program constitutes a mere promise by the Company to make benefit payments in the future to the extent and consistent with the terms of any Awards hereunder, this HoldCo LTI Program, and the 2006 Plan.

(h) Exclusivity of Documents. The liability of the Company for the payment of benefits shall be defined only by this HoldCo LTI Program, the 2006 Plan, and the terms of each LTI Participant’s LTI Offer Letter, and the Company shall have no obligation to any person under the 2006 Plan except as expressly provided herein or therein.

(i) Binding Effect. The provisions of this HoldCo LTI Program shall bind and inure to the benefit of the Company and its successors and assigns, and to the benefit of each LTI Participant and such LTI Participant’s successors and assigns.

(j) Gender. Where appearing in this HoldCo LTI Program, the masculine gender shall be deemed to include the feminine gender and the singular number shall include the plural, unless the context clearly indicates to the contrary.

(k) Term and Expiration. This HoldCo LTI Program shall be effective until all LTI Participants have received full settlement of all Awards hereunder.

Adopted as of August 6, 2015 by the Compensation Committee at a duly held meeting.

Exhibit 1

PROVIDENCE SERVICE CORPORATION

2006 LONG-TERM INCENTIVE PLAN

___________________________________

Definitions

___________________________________

The following terms, when used in this HoldCo LTI Program, will have the meanings and be subject to the provisions set forth below:

“Award Date” means the date of Award set forth in the Participant’s LTI Offer Letter.

“Award Share Price” means the volume weighted average of the Company’s per share price over the 90-day period ending with the Award Date.

“Applicable Shares Outstanding” means, as of the Award Date, the sum of the Company’s total shares of Stock outstanding as of the most recent SEC filing period and the number of any unissued shares of Stock from any Company outstanding securities, including any shares of convertible preferred stock which remain subject to conversion and any outstanding options or restricted stock units.

“Award Shareholder Value” (“ASV”) means the product of the Award Share Price and the Applicable Shares Outstanding.

“Determination Date” means December 31, 2017 or, if earlier, the date upon which a Change in Control shall occur.

“Determination Share Price” means the volume weighted average of the Company’s per share price over prior 90 days ending with the Determination Date.

“Determination Shareholder Value” (“DSV”) means the product of the Determination Share Price and the Applicable Shares Outstanding, plus the sum of all cash dividends and securities (valued at the fair market value as of the date of distribution as determined by Board) paid or distributed to owners of the Company’s Stock during the period between the Award Date and the applicable valuation date (but not including any securities or Stock issued under the 2006 Plan to any owner of Company Stock); provided that under no circumstance shall interest or other earnings be credited on such amounts. In the event of a Change of Control, the DSV means the product of the Company’s share price at the date of a Change of Control and the Applicable Shares Outstanding, plus the sum of all cash dividends and securities (valued at the fair market value as of the date of distribution as determined by Board) paid or distributed to owners of the Company’s Stock during the period between the Award Date and the applicable valuation date (but not including any securities or Stock issued under the 2006 Plan to any owner of Company Stock); provided that under no circumstance shall interest or other earnings be credited on such amounts.

“Extraordinary Shareholder Value” means DSV less HSV, but shall not be less than zero.

“HoldCo LTI Pool” means, as of the Determination Date, a dollar amount calculated by multiplying the Extraordinary Shareholder Value by eight percent (8%); provided that in no event shall the HoldCo LTI Pool be less than zero. This formula for calculating the HoldCo LTI Pool is the Performance formula determined by the Performance Criteria for purposes of Section 6(a)(6) of the 2006 Plan.

“Hurdle Value Share Price” means the value per share calculated by compounding the Award Share Price at 8.0% on an annual basis over the period beginning on the Award date and ending on the Determination Date

“Hurdle Shareholder Value” (“HSV”) means the product of the Hurdle Value Share Price and the Applicable Shares Outstanding.

“LTI Offer Letter” has the meaning set forth in Section 4(a) of this HoldCo LTI Program.

“LTI Participant” means an Employee who has received an Award pursuant to this HoldCo LTI Program.

“Participation Percentage” means, with respect to each LTI Participant, such LTI Participant’s percentage of the amounts to be paid with respect to the HoldCo LTI Pool as set forth in such LTI Participant’s LTI Offer Letter.

“Performance Period” means, with respect to each Award hereunder, the period commencing on the Award Date and ending on the Determination Date.

“Qualified Termination” has the meaning set forth in Section 4(d)(i) of this HoldCo LTI Program.

Exhibit 2: LTI Offer Letter

PROVIDENCE SERVICE CORPORATION

2006 LONG-TERM INCENTIVE PLAN

___________________________________

2015 HoldCo LTI Program

___________________________________

_______ ___, 2015

CONFIDENTIAL

[Name]

[Address]

[City, State ZIP]

Re:	Performance Period ending 12/31/2017

Dear [Name]:

You have been selected by Providence Service Corporation to be a participant in the Providence Service Corporation 2015 HoldCo LTI Program (the “HoldCo LTI Program”). Capitalized terms used in this letter have the special meanings set forth in the HoldCo LTI Program.

Generally, the HoldCo LTI Program provides that in the event that the Company’s Determination Shareholder Value exceeds the Company’s Hurdle Shareholder Value (based on an 8% compound annual return hurdle) from the Award Date through December 31, 2017 or an earlier Change in Control (the “Performance Period”), then a HoldCo LTI Pool comprising 8% of such Extraordinary Shareholder Value will be formed and allocated to you based on your Participation Percentage designated below. See Section 4 of the HoldCo LTI Program for special provisions about how awards will be made and settled, the conditions for vesting in them, and the effect of change in control of the Company or a cessation of your Employment.

Subject to your acceptance of the terms and conditions of the HoldCo LTI Program, the following terms shall apply to your Award:

●

your Award Date shall be _______ __, 2015,

●

the Award Shareholder Value at the start of the Performance Period shall be $______,

●

the Hurdle Shareholder Value per share shall be $_____ if the Determination Date is December 31, 2017, and

●

your Participation Percentage in the HoldCo LTI Pool, if any, shall be ___ percent (___%).

Before accepting this Award, please consider the terms of this LTI Offer Letter, and the HoldCo LTI Program and the Providence Service Corporation 2006 Long-term Incentive Plan (which are attached for your review and reference). If there is any inconsistency between this LTI Offer Letter and the HoldCo LTI Program, the terms and conditions of the HoldCo LTI Program shall govern.

If you desire to accept this Award, please acknowledge receipt of this LTI Offer Letter and your acceptance of the foregoing terms and conditions for your participation in the HoldCo LTI Program by signing in the space provided below and returning the signed letter within 20 days after the Award Date to the attention of [ ]. Note that the deadline for accepting this LTI Offer Letter is the 20th day after the Award Date designated above.

Yours truly,

________________________

Chairman, Compensation Committee

AGREED TO AND ACCEPTED THIS ___ DAY OF _____, 2015, BY:

_________________________

[Name of HoldCo LTI Program Participant]

Exhibit 10.3

THE PROVIDENCE SERVICE CORPORATION

INCENTIVE STOCK OPTION – SPECIAL

To: ____________________

Date of Grant: August __, 2015

You are hereby granted an option, effective as of the date hereof, to purchase up to _____ shares of common stock, $.001 (“Common Stock”), of The Providence Service Corporation, a corporation (the “Company”), at the current fair market value price of $_____.__ per share, pursuant to the Company’s 2006 Long-Term Incentive Plan, as amended and restated effective June 30, 2015 (the “Plan”).

This option shall terminate and is not exercisable after the tenth (10th) business day following the Date of Grant designated above (the “Scheduled Termination Date”), except if terminated earlier as hereafter provided.

Your option may be exercised only between the Date of Grant and the Scheduled Termination Date, but not before that time. You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase. The payment may be in any of the following forms: cash, or any other form of consideration that the Administrator may in its sole and absolute discretion agree to accept.

As of the date hereof, you are also receiving a matching stock option (“Matching Option”) to purchase an equivalent number of shares of Common Stock pursuant to the Plan, subject to the following terms and conditions: the Matching Option will –

	●	is granted on the date hereof pursuant to the form of award (titled “Incentive Stock Option – Matching”), substantially in the form attached hereto as Exhibit “A”, but shall ultimately become exercisable only for that number of shares of Common Stock purchased pursuant to this special option;
	●	have a term of five (5) years following its date of grant;
	●	become vested and exercisable in full on the third anniversary of its grant date, and not before such date, provided your Employment has not ended for any reason before the scheduled vesting date; and
	●	be forfeited as to one share subject to the Matching Option, whether or not vested, for each share of Common Stock that you sell or otherwise dispose of during its five-year term and for each share of Common Stock not purchase pursuant to this special opinion prior to its termination as set forth herein.

This option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of Disability. Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company. The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.

It is the intention of the Company and you that this option shall, if possible, be an “Incentive Stock Option” as that term is used in Section 422(b) of the Code and the regulations thereunder. In the event this option is in any way inconsistent with the legal requirements of the Code or the regulations thereunder for an “Incentive Stock Option,” this option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment. To the extent that the number of shares subject to this option which are exercisable for the first time exceed the $100,000 limitation contained in Section 422(d) of the Code, this option will not be considered an Incentive Stock Option.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a) During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or foreign law, rule or regulation, or any applicable securities exchange or listing rule or agreement, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or

(b) Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Administrator) (i) all federal, state, local and foreign tax withholding required by the Company in connection with the option exercise and (ii) the employee’s portion of other federal, state, local and foreign payroll and other taxes due in connection with the option exercise.

Further, nothing herein guarantees you employment for any specified period of time. You recognize that, for instance, you may terminate your employment or the Company or any of its Affiliates may terminate your employment prior to the date on which your option becomes vested or exercisable.

You understand and agree that the existence of this option will not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the common shares or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

Any notice you give to the Company must be in writing and either hand-delivered or mailed to the office of the General Counsel of the Company. If mailed, it should be addressed to the General Counsel of the Company at its then main headquarters. Any notice given to you will be addressed to you at your address as reflected on the personnel records of the Company. You and the Company may change the address for notice by like notice to the other. Notice will be deemed to have been duly delivered when hand-delivered or, if mailed, on the day such notice is postmarked.

Any dispute or disagreement between you and the Company with respect to any portion of this option (excluding Attachment A hereto) or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration, at a location designated by the Company, in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time. However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks. Thereafter, the dispute or disagreement will be submitted to arbitration. At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement. You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses. The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company. Further, neither you nor the Company shall appeal any such award. Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern. This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company. This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Delaware.

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.

THE PROVIDENCE SERVICE CORPORATION

By:

Title:

ACKNOWLEDGMENT

I hereby acknowledge receipt of a copy of the Plan. I hereby represent that I have read and understood the terms and conditions of the Plan and of this option. I hereby signify my understanding of, and my agreement with, the terms and conditions of the Plan and of this option. I agree to accept as binding, conclusive, and final all decisions or interpretations of the Administrator concerning any questions arising under the Plan with respect to this option. I accept this option in full satisfaction of any previous written or verbal promise made to me by the Company or any of its Affiliates with respect to option or stock grants.

Date: August ___, 2015

_____________________________________

Signature of Optionee

______________________________________

Print Name

Exhibit 10.4

THE PROVIDENCE SERVICE CORPORATION

INCENTIVE STOCK OPTION - MATCHING

To: _______________________

Date of Grant: August ___, 2015

You are hereby granted an option, effective as of the date hereof, to purchase up to ____ shares of common stock, $.001 (“Common Stock”), of The Providence Service Corporation, a corporation (the “Company”), at the current fair market value price of $_____ per share pursuant to the terms and conditions set forth below, and pursuant to the Company’s 2006 Long-Term Incentive Plan, as amended (the “Plan”), which shall control in the event of any inconsistency or conflict with the terms of this grant.

This option shall terminate and is not exercisable after five (5) years from the date of its grant (the “Scheduled Termination Date”), except if terminated earlier as hereafter provided.

Your option shall be fully vested and may be exercised on and after the third anniversary of the date of grant, but not before that date; provided that this option shall become fully vested upon a Change in Control occurring prior to the third anniversary date.

Notwithstanding the foregoing, these options shall be forfeited:

(1) on the basis of one option to purchase one share of Common Stock for each share of Common Stock that you (or someone treated with you as a beneficial owner of Common Stock of the Company) sell (or otherwise dispose of) before the third anniversary of the date of grant (other than any sale or disposition in a transaction that constitutes a Change in Control approved by the Board), whether or not such shares that you sell (or otherwise dispose of) were issued pursuant to the Plan; or

(2) on a one for one basis to the extent the Incentive Stock Option—Special to purchase ______ shares of Common Stock granted to you on the date hereof expires in accordance with its term without exercise. If the Incentive Stock Option—Special expires in its entirety without exercise, then these options shall be forfeited in their entirety. To the extent the Incentive Stock Option—Special is exercised in part, one option to purchase one share of Common Stock hereunder shall be forfeited for each such special option not exercise.

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase. The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) (unless prohibited by the Administrator) certificates representing shares of Common Stock of the Company, which will be valued by the Secretary of the Company at the fair market value per share of the Company’s Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) (unless prohibited by the Administrator) any combination of cash and Common Stock of the Company valued as provided in clause (b). The use of the so-called “attestation procedure”) to exercise a stock option may be permitted by the Administrator. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate three months after the date on which your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of Disability (as defined in the Plan) or death, in which case your option will terminate one year from the date of termination of employment due to Disability or death (but in no event later than the Scheduled Termination Date). After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated. Provided you are willing to continue your employment for the Company or a successor after a Change in Control (as defined in the Plan) at the same compensation you enjoyed immediately prior to such Change in Control, if your employment is involuntarily terminated without cause after a Change in Control, you may exercise this option for the number of shares you would have had a right to purchase on the date of the Change in Control, to the extent not previously exercised by you, and for a period of three years after the Change in Control notwithstanding the termination of your employment (but in no event later than the Scheduled Termination Date); provided, however, in the event of termination, other than involuntary termination without cause, following a Change in Control, you may exercise this option for the number of shares you would have a right to purchase on the date of the Change in Control, to the extent not previously exercised by you, for a period of three months after the date on which your employment by the Company or a Company subsidiary is terminated. If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation. Your Employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation.

If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime. If your Employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your Disability, you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination. Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option.

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Administrator deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Administrator, whose decision shall be final, binding and conclusive in the absence of clear and convincing evidence of bad faith.

In the event of a liquidation or proposed liquidation of the Company, including (but not limited to) a transfer of assets followed by a liquidation of the Company, or in the event of a Change in Control (as defined in the Plan) or proposed Change in Control, the Administrator shall have the right to require you to exercise this option upon thirty (30) days prior written notice to you. If at the time such written notice is given this option is not otherwise exercisable, the written notice will set forth your right to exercise this option even though it is not otherwise exercisable. In the event this option is not exercised by you within the thirty (30) day period set forth in such written notice, this option shall terminate on the last day of such thirty (30) day period, notwithstanding anything to the contrary contained in this option.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.

THE PROVIDENCE SERVICE CORPORATION

By:

Title:

ACKNOWLEDGMENT

Date: August __, 2015

__________________________________________

Signature of Optionee

__________________________________________

Print Name

Exhibit 99.1

AT THE COMPANY	AT CAMERON ASSOCIATES
David Shackelton – Interim Chief Financial Officer	Alison Ziegler 212/554-5469
520/747-6600

FOR IMMEDIATE RELEASE

Providence Service Corporation Appoints James M. Lindstrom as

Chief Executive Officer

TUCSON, ARIZONA – August 6, 2015 -- The Providence Service Corporation (Nasdaq: PRSC) today announced that, after the conclusion of its executive search process, the Company’s Board of Directors has appointed James M. Lindstrom as President and Chief Executive Officer and a member of the Board of Directors, effective immediately. Mr. Lindstrom has served as Chief Financial Officer of Providence since January 2015. Chris Shackelton, who had taken on the role of interim Chief Executive Officer in June of this year, will remain as Chairman of the Board of Directors, a role he has held since 2012.

Mr. Shackelton commented, “On behalf of Providence’s Board of Directors, we are excited to appoint Jim to the position of CEO. Jim is a highly respected leader with a strong track record of delivering exceptional financial, operational and shareholder performance across a variety of industries. Having had the privilege of working closely with Jim over the past few months, I have been particularly impressed with the robust and collaborative relationships he has forged throughout our organization, specifically the partnerships he has built with our vertical CEOs. Jim’s management approach, through our holding company structure, positions Providence to attract and develop elite leaders and, as a result, maintain the tremendous momentum and enthusiasm driving our businesses.”

Mr. Lindstrom commented, “Providence is a unique company that operates with both excellence and integrity. I am honored to have the opportunity to help build upon the Company’s success of recent years. I look forward to working in close partnership with our vertical CEOs to further deliver superior solutions for our clients as well as shareholder value well into the future.”

Mr. Lindstrom, age 42, joined Providence in January 2015 from Integrated Electrical Services, Inc. (IES), a publically traded industrial holding company, where he was Chairman, President and Chief Executive Officer. As IES’ Chief Executive, he implemented a value enhancement strategy that included operational improvements, a financial restructuring and strategic growth via acquisition and organic efforts, that transformed IES into a profitable industrial holding company. Prior to joining IES, Mr. Lindstrom spent five years as an employee of Tontine Associates, an affiliate of a private investment fund. Previous operating experience includes his role as Chief Financial Officer of Centrue Financial from 2003 to 2006, where he led a strategic transformation and multiple acquisitions, and as an executive at ChiRex, Inc., a pharmaceutical services company. Mr. Lindstrom has a BA in Economics from Colby College and an MBA from the Tuck School of Business at Dartmouth College.

The Company also announced that David Shackelton, currently Vice President, Head of Corporate Development, has been appointed as interim Chief Financial Officer, assuming the position vacated by Mr. Lindstrom on an interim basis while the Company conducts a search for a permanent replacement.

Kristi Meints, Chair of the Board’s Audit Committee, commented, “We are equally pleased to announce the appointment of David Shackelton to the role of interim Chief Financial Officer. David has proven to be a valuable member of the Providence team, providing leadership in the transformation of Providence, including overseeing acquisitions, supporting the transition to a holding company and working closely with our verticals in setting strategy and financial planning.”

-- more--

64 E. Broadway Blvd. • Tucson, Arizona 85701 •Tel 520/747-6600 •Fax 520/747-6605 •www.provcorp.com

Providence Service Corporation

Page 2

David Shackelton, age 29, joined Providence in February 2014 as Vice President, Head of Corporate Development, which included overseeing all major M&A activity. In addition to sourcing and leading due diligence on acquisitions and partnership opportunities, he has supported capital market activities, integration planning and execution, strategy setting, financial planning and analysis, and capital allocation decisions. Prior to joining Providence, he was a private equity investment professional at Mill Road Capital and at The Blackstone Group. Mr. Shackelton has a BA in Economics from Yale University and a MBA from Stanford Graduate School of Business.

The CEO search was conducted by Heidrick & Struggles, a worldwide executive search firm specializing in chief executive and senior level assignments.

About Providence

Providence is a Tucson, Arizona-based company that provides and manages government sponsored human services, innovative global employment services, comprehensive health assessment and care management services, and non-emergency transportation services. It offers: (1) non-emergency transportation management services to state Medicaid programs, local government agencies, hospital systems, health maintenance organizations, private managed care organizations and commercial insurers, as well as to individuals with limited mobility, people with limited means of transportation, people with disabilities and Medicaid members (2) home- and community-based counseling services, which include home-based and intensive home-based counseling, workforce development, substance abuse treatment services, school support services and correctional services; (3) foster care and therapeutic foster care services; (4) case management, referral and monitoring services; (5) social improvement, employment and welfare services to various international government bodies and corporations; and (6) in-home comprehensive health assessment and care management services primarily to Medicare Advantage programs. Providence is unique in that it provides and manages its human services primarily in the client’s own home or in community based settings, rather than in hospitals or treatment facilities and provides its non-emergency transportation services clients through local transportation providers rather than an owned fleet of vehicles.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, our continuing relationship with government entities and our ability to procure business from them, our ability to manage growing and changing operations, the implementation of the healthcare reform law, state budget changes and legislation and other risks detailed in Providence’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and subsequent filings. Providence is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

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