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): February 28, 2006
GENTIVA HEALTH SERVICES, INC.
(Exact Name Of Registrant As Specified In Charter)
Delaware 1-15669 36-4335801
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
3 Huntington Quadrangle, Suite 200S
Melville, New York 11747-4627
(Address of principal executive offices, including zip code)
(631) 501-7000
(Registrant's telephone number, including area code)
Not applicable
(Former name or 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 (see General Instruction A.2 below):
[_] 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 1.01 Entry into a Material Definitive Agreement.
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CREDIT AGREEMENT
On February 28, 2006, Gentiva Health Services, Inc. (the "Company") entered into
a Credit Agreement, by and among the Company, as borrower, Lehman Brothers Inc.,
as sole lead arranger and sole bookrunner, and Lehman Commercial Paper Inc., as
administrative agent (the "Administrative Agent") (the "Credit Agreement").
The Credit Agreement provides for an aggregate of $445.0 million including (i) a
seven year term loan of $370.0 million repayable in quarterly installments of 1%
per annum (with the remaining balance due at maturity on March 13, 2013) and
(ii) a six year revolving credit facility of $75.0 million, of which $55.0
million will be available for the issuance of letters of credit and $10.0
million will be available for swing line loans. There is a pre-approved $25.0
million increase available to the revolving credit facility. Interest under the
Credit Agreement accrues at Base Rate or Eurodollar Rate (plus 1.25% for Base
Rate Loans and 2.25% for Eurodollar Rate Loans) for the revolving credit and
Base Rate or Eurodollar Rate (plus 1.25% for Base Rate Loans and 2.25% for
Eurodollar Rate Loans) for the term loans. After the completion of two
post-closing fiscal quarters, such interest may be reduced if the Company meets
certain reduced leverage targets. Overdue amounts bear interest at 2% per annum
above the applicable rate.
The Credit Agreement requires the Company to meet certain financial tests,
including a consolidated leverage ratio (as defined) and an interest coverage
ratio (as defined). The Credit Agreement also contains additional covenants
which, among other things, require the Company to deliver to the lenders
specified financial information, including annual and quarterly financial
information, and limit the Company's ability to (or to permit any subsidiaries
to), subject to various exceptions and limitations, (i) merge with other
companies, (ii) create liens on its property, (iii) incur debt obligations, (iv)
enter into transactions with affiliates, except on an arms-length basis, (v)
dispose of property, and (vi) pay dividends or acquire capital stock of the
Company or its subsidiaries.
The foregoing description of the Credit Agreement is qualified in its entirety
to the full text of the Credit Agreement, a copy of which is attached hereto as
Exhibit 10.1 and which is incorporated herein by reference.
GUARANTEE AND COLLATERAL AGREEMENT
On February 28, 2006, the Company also entered into a Guarantee and Collateral
Agreement, among the Company and certain of its subsidiaries, in favor of the
Administrative Agent (the "Guarantee and Collateral Agreement"). The Guarantee
and Collateral Agreement grants a security interest in all personal property of
the Company and its subsidiaries, including stock of its subsidiaries. The
Guarantee and Collateral Agreement also provides for a guarantee of the
Company's obligations under the Credit Agreement by substantially all
subsidiaries of the Company.
Two Alabama properties owned by a subsidiary of The Healthfield Group, Inc. will
be subject to mortgages dated February 28, 2006.
The foregoing description of the Guarantee and Collateral Agreement is qualified
in its entirety to the full text of the Guarantee and Collateral Agreement, a
copy of which is attached hereto as Exhibit 10.2 and which is incorporated
herein by reference.
REGISTRATION RIGHTS AGREEMENT
On February 28, 2006, at the closing of its acquisition of The Healthfield
Group, Inc. ("Healthfield") as described in Item 2.01 below, the Company entered
into a Registration Rights Agreement with certain former stockholders of
Healthfield (the "Registration Rights Agreement"). Pursuant to the Registration
Rights Agreement, the Company agreed to file a registration statement with the
Securities and Exchange Commission within 90 days after the date of the
Registration Rights Agreement, covering the resale of the 3,194,197 shares of
common stock, $0.10 par value, of the Company (the "Company Common Stock")
issued to the former stockholders of Healthfield pursuant to the Merger (as
defined in Item 2.01 below). The Company agreed to use its commercially
reasonable efforts to cause the registration statement to be declared effective
under the Securities Act of 1933 no later than nine months after the date of the
Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
former stockholders of Healthfield were also granted certain "piggyback"
registration rights, entitling them to join in other registration statements
filed by the Company under specified circumstances.
The foregoing description of the Registration Rights Agreement is qualified in
its entirety to the full text of the Registration Rights Agreement, a copy of
which is attached hereto as Exhibit 10.3 and which is incorporated herein by
reference.
AGREEMENT WITH RODNEY D. WINDLEY
The Company has entered into a Confidentiality, Non-Competition and Intellectual
Property Agreement with Rodney D. Windley (the "Non-Compete Agreement"). The
Non-Compete Agreement restricts Mr. Windley's ability to engage in competition
with the Company for a period of seven years, starting from February 28, 2006.
The Non-Compete Agreement also contains confidentiality provisions and
provisions prohibiting the solicitation of the Company's employees and clients.
The foregoing description of the Non-Compete Agreement is qualified in its
entirety to the full text of the Non-Compete Agreement, a copy of which is
attached hereto as Exhibit 10.4 and which is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition.
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On February 28, 2006, the Company completed its previously announced acquisition
of Healthfield. Pursuant to an Agreement and Plan of Merger, by and among the
Company, Tara Acquisition Sub Corp. ("Merger Sub"), a wholly-owned subsidiary of
the Company, Healthfield, Rodney D. Windley, as representative of the
Securityholders of Healthfield (the "Stockholder Representative") and the
Securityholders named therein (the "Merger Agreement"), Merger Sub merged with
and into Healthfield (the "Merger"), as a result of which Healthfield became a
wholly-owned subsidiary of the Company. The former stockholders of Healthfield
received, in the aggregate, approximately $202 million in cash and 3,194,197
shares of Company Common Stock.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under
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an Off-Balance Sheet Arrangement of a Registrant.
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The information regarding the Company's entry into the Credit Agreement and
Guarantee and Collateral Agreement provided under Item 1.01 above, is hereby
incorporated by reference.
Item 3.02 Unregistered Sales of Equity Securities.
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In connection with the Merger, the Company issued 3,194,197 shares of Company
Common Stock to certain former securityholders of Healthfield with an aggregate
value of approximately $52 million. These shares were issued in a private
placement and without registration under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to Section 4(2) of the Securities Act and
Regulation D promulgated pursuant thereto. The exemption from registration was
based on, among other things, the number of former stockholders of Healthfield
and on representations of such persons made to the Company. Pursuant to the
Registration Rights Agreement (described in Item 1.01 above), the Company has
agreed to make available a shelf registration statement with respect to the
resale of such shares of Company Common Stock no later than November 28, 2006.
Item 5.02(d) Departure of Directors or Principal Officers; Election of
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Directors; Appointment of Principal Officers
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On February 27, 2006, the Board of Directors of the Company elected Rodney D.
Windley as a director and Vice-Chairman of the Board of Directors, effective
February 28, 2006. Previously, Mr. Windley was the founder, Chairman of the
Board and Chief Executive Officer of Healthfield from 1986 to February 2006. Mr.
Windley was elected as a director in accordance with the Merger Agreement, which
provided for his election to the Board upon the consummation of the Merger. Mr.
Windley is not currently serving on any committees of the Board of Directors.
Prior to the completion of the Merger, R.T. Ventures, LLC ("RT Ventures"), an
entity in which Mr. Windley has an approximately 25% beneficial interest, was a
party to the Aircraft Dry Lease Agreement, dated as of December 23, 2005, with
Healthfield, as amended on January 1, 2006 (the "Aircraft Lease"). The Aircraft
Lease provides for the use by Healthfield of an aircraft owned by RT Ventures.
The Company may continue to rent the aircraft from RT Ventures and such rentals
shall be on the terms and conditions contained in the Aircraft Lease. The
Company is not under any obligation to rent the aircraft, and the Aircraft Lease
may be terminated by the Company with thirty days' notice.
Pursuant to the Merger Agreement, Mr. Windley was appointed by the former
stockholders of Healthfield to serve as the "Stockholder Representative." In
that capacity, Mr. Windley is responsible for representing the interests of the
former Healthfield Stockholders with respect to any purchase price adjustments
or indemnity claims arising in connection with the Merger. In addition, Mr.
Windley is jointly and severally liable to the Company for breaches of certain
of the representations, warranties and covenants made by Healthfield in the
Merger Agreement.
Item 8.01 Other Events.
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On February 28, 2006, the Company issued a press release. A copy of the press
release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired. The Company intends
to file by amendment to this Form 8-K the required historical financial
information within 71 calendar days after the date this report has been filed.
(b) Pro Forma Financial Information. The Company intends to file by
amendment to this Form 8-K the required pro forma financial information within
71 calendar days after the date this report has been filed.
(d) Exhibits.
10.1 Credit Agreement, dated as of February 28, 2006, by and among Gentiva
Health Services, Inc., as borrower, Lehman Brothers Inc., as sole lead
arranger and sole bookrunner, and Lehman Commercial Paper Inc., as
administrative agent.
10.2 Guarantee and Collateral Agreement, dated as of February 28, 2006,
among Gentiva Health Services, Inc. and certain of its Subsidiaries,
in favor of Lehman Commercial Paper Inc., as administrative agent.
10.3 Registration Rights Agreement, dated as of February 28, 2006, by and
among Gentiva Health Services, Inc. Rodney D. Windley, as the
representative of the Stockholders of Gentiva Health Services, Inc.
listed therein.
10.4 Confidentiality, Non-Competition and Intellectual Property Agreement,
dated as of February 28, 2006, by and among Gentiva Health Services,
Inc., The Healthfield Group, Inc. and Rodney D. Windley.
99.1 Press release, dated February 28, 2006.
SIGNATURE
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.
GENTIVA HEALTH SERVICES, INC.
Date: March 3, 2006 /s/ John R. Potapchuk
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John R. Potapchuk
Executive Vice President and Chief
Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Credit Agreement, dated as of February 28, 2006, by and
among Gentiva Health Services, Inc., as borrower, Lehman
Brothers Inc., as sole lead arranger and sole bookrunner,
and Lehman Commercial Paper Inc., as administrative agent.
10.2 Guarantee and Collateral Agreement, dated as of February 28,
2006, among Gentiva Health Services, Inc. and certain of its
Subsidiaries, in favor of Lehman Commercial Paper Inc., as
administrative agent.
10.3 Registration Rights Agreement, dated as of February 28,
2006, by and among Gentiva Health Services, Inc. Rodney D.
Windley, as the representative of the Stockholders of
Gentiva Health Services, Inc. listed therein.
10.4 Confidentiality, Non-Competition and Intellectual Property
Agreement, dated as of February 28, 2006, by and among
Gentiva Health Services, Inc., The Healthfield Group, Inc.
and Rodney D. Windley.
99.1 Press release, dated February 28, 2006.