EXHIBIT 10.6
CHANGE IN CONTROL AGREEMENT
Agreement, made this 6th day of May, 2005, by and between Gentiva
Health Services, Inc., a Delaware corporation (the "Company"), and
__________________ (the "Executive").
WHEREAS, the Executive is a key employee of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") considers
the maintenance of a sound management to be essential to protecting and
enhancing the best interests of the Company and its stockholders and recognizes
that the possibility of a change in control raises uncertainty and questions
among key employees and may result in the departure or distraction of such key
employees to the detriment of the Company and its stockholders; and
WHEREAS, the Board wishes to assure that it will have the continued
dedication of the Executive and the availability of his or her advice and
counsel, notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce the Executive to remain in the employ
of the Company; and
WHEREAS, the Executive and the Company previously entered into a Change
in Control Agreement dated _______________; and
WHEREAS, the Executive and the Company wish to amend and restate the
Change in Control Agreement as set forth herein; and
WHEREAS, the Executive is willing to continue to serve the Company
taking into account the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the respective
covenants and agreements of the parties herein contained, the parties agree as
follows:
1. Operation and Term of Agreement. This Agreement shall
commence on the date first set forth above and shall terminate on May 6, 2008
unless this Agreement is terminated earlier as set forth below; provided,
however, that after a Change in Control of the Company during the term of this
Agreement, this Agreement shall remain in effect until all of the obligations of
the parties hereunder are satisfied and the Protection Period has expired.
Notwithstanding the foregoing, prior to a Change in Control this Agreement shall
immediately terminate upon termination of the Executive's employment, except in
the case of such termination under circumstances set forth in the last paragraph
of Section 4 below.
2. Change in Control; Protection Period. A "Change in Control"
shall be deemed to occur on the date that any of the following events occur:
(a) any person or persons acting together which would
constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Company or any subsidiary and other than Permitted Holders) shall
beneficially own (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, at least 25% of the total voting power of all
classes of capital stock of the Company entitled to vote generally in
the election of the Board;
(b) either (i) Current Directors (as herein defined) shall
cease for any reason to constitute at least a majority of the members
of the Board (for these purposes, a "Current Director" shall mean any
member of the Board as of March 22, 2004, and any successor of a
Current Director whose election, or nomination for election by the
Company's shareholders, was approved by at least two-thirds of the
Current Directors then on the Board) or (ii) at any meeting of the
shareholders of the Company called for the purpose of electing
directors, a majority of the persons nominated by the Board for
election as directors shall fail to be elected;
(c) consummation of (i) a plan of complete liquidation of the
Company, or (ii) a merger or consolidation of the Company (A) in which
the Company is not the continuing or surviving corporation (other than
a consolidation or merger with a wholly owned subsidiary of the Company
in which all shares of common stock of the Company (the "Common Stock")
outstanding immediately prior to the effectiveness thereof are changed
into common stock of the subsidiary) or (B) pursuant to which the
Common Stock is converted into cash, securities or other property,
except a consolidation or merger of the Company in which the holders of
the Common Stock immediately prior to the consolidation or merger have,
directly or indirectly, at least a majority of the common stock of the
continuing or surviving corporation immediately after such
consolidation or merger or in which the Board immediately prior to the
merger or consolidation would, immediately after the merger or
consolidation, constitute a majority of the board of directors of the
continuing or surviving corporation; or
(d) consummation of a sale or other disposition (in one
transaction or a series of transactions) of all or substantially all of
the assets of the Company.
For purposes of this Section 2 under this Agreement, "Permitted
Holders" shall mean Miriam Olsten, Stuart Olsten, and Cheryl Olsten, and each of
their spouses, their lineal descendants and their estates and their Affiliates
or Associates (as defined in Rule 12b-2 of the Exchange Act) (collectively the
"Olsten Stockholders"), so long as the Olsten Stockholders beneficially own 20%
or less of the voting power of all classes of capital stock of the Company
entitled to vote generally in the election of the Board.
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A "Protection Period" shall be the period beginning on the date of a
Change in Control and ending on the third anniversary of the date on which the
Change in Control occurs.
3. Termination Following Change in Control. The Executive
shall be entitled to the benefits provided in Section 4 hereof upon any
termination of his or her employment with the Company within a Protection
Period, except a termination of employment (a) because of his or her death, (b)
because of a "Disability," (c) by the Company for "Cause," or (d) by the
Executive other than for "Good Reason."
(i) Disability. The Executive's employment shall be deemed to
have terminated because of a "Disability" if the Executive applies for
and is determined to be eligible to receive disability benefits under
the Company's long-term disability plan or program, or, in the absence
of such a plan or program, as defined in Section 22 of the Internal
Revenue Code of 1986, as amended (the "Code").
(ii) Cause. Termination by the Company of the Executive's
employment for "Cause" shall mean termination due to (A) the
Executive's conviction of a felony, (B) any act of willful fraud,
dishonesty or moral turpitude, (C) the willful and continued failure by
the Executive to substantially perform his or her duties with the
Company, after a written demand for substantial performance is
delivered to the Executive by the Board which specifically identifies
the manner in which the Board believes that the Executive has not
substantially performed his or her duties, or (D) the willful engaging
by the Executive in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes hereof,
no act, or failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his or her action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote
of not less than a majority of the entire membership of the Board at a
meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together
with his or her counsel, to be heard before the Board), finding that in
the good faith opinion of the Board the Executive engaged in the
prohibited conduct set forth above in the first sentence of this
subsection and specifying the particulars thereof in detail.
(iii) Without Cause. The Company may terminate the employment
of the Executive without Cause during a Protection Period only by
giving the Executive written notice of termination to that effect. In
that event, the Executive's employment shall terminate on the last day
of the month in which such notice is given (or such later date as may
be specified in such notice), and the benefits set forth in Section 4
hereof shall be provided to the Executive.
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(iv) Good Reason. Termination of employment by the Executive
for "Good Reason" shall mean termination:
(A) if there has occurred a reduction by the Company
in the Executive's annual base salary (other than any
reduction therein which is in proportion to reductions in the
base salaries of all of the Company's executive officers,
unless, however, such proportionate reduction exceeds 20% of
the Executive's annual base salary);
(B) if without the Executive's written consent, the
Company has required the Executive to be relocated anywhere in
excess of forty (40) miles from the Executive's office
location in Melville, New York, except for required travel on
the business of the Company;
(C) if there has occurred a failure by the Company to
maintain plans providing benefits not materially less
favorable, when considered in the aggregate, than those
provided by any benefit or compensation plan (including,
without limitation, any incentive compensation plan, bonus
plan or program, retirement, pension or savings plan, stock
option plan, restricted stock plan, life insurance plan,
health and dental plan and disability plan) in which the
Executive is participating immediately before the beginning of
the Protection Period, or if the Company has taken any action
which would adversely affect the Executive's participation in
or reduce the Executive's benefits (other than stock option or
restricted stock grants) under any such plans in the aggregate
or deprive the Executive of any material fringe benefit in the
aggregate enjoyed by the Executive immediately before the
beginning of the Protection Period, or if the Company has
failed to provide the Executive with the number of paid
vacation days to which he or she would be entitled in
accordance with the normal vacation policy of the Company as
in effect immediately before the beginning of the Protection
Period; provided, however, that a reduction in benefits under
the Company's tax-qualified retirement, pension or savings
plans or its life insurance plan, health and dental plan,
disability plans or other insurance plans which reduction
applies equally to all participants in the plans and has a
less than 10% effect on the aggregate benefits of the
Executive under such plans shall not constitute "Good Reason"
for termination by the Executive;
(D) if there has occurred the assignment to the
Executive of any material duties inconsistent with his or her
status as a senior executive officer of the Company or a
substantial adverse alteration in the nature or status of the
Executive's responsibilities from those in effect immediately
prior to the Change in Control;
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(E) if the Company has failed to obtain the
assumption of the obligations contained in this Agreement by
any successor as contemplated in Section 9(c) hereof; or
(F) if there occurs any purported termination of the
Executive's employment by the Company without Cause which is
not effected pursuant to a written notice of termination as
described in subsection (ii) or (iii) above.
The Executive shall exercise his or her right to terminate
employment for Good Reason by giving the Company a written notice of
termination specifying in reasonable detail the circumstances
constituting such Good Reason. In that event, the Executive's
employment shall terminate on the last day of the month in which such
notice is given.
A termination of employment by the Executive within a
Protection Period shall be for Good Reason if one of the occurrences
specified in this subsection (iv) shall have occurred, notwithstanding
that the Executive may have other reasons for terminating employment,
including employment by another employer which the Executive desires to
accept.
4. Benefits Upon Termination Within Protection Period. If,
within a Protection Period, the Executive's employment by the Company shall be
terminated (a) by the Company not for Cause and not due to the Executive's death
or Disability, or (b) by the Executive for Good Reason, the Executive shall be
entitled to the benefits provided for below (and the Executive shall not be
entitled to severance benefits otherwise payable under the Executive's separate
severance agreement with the Company or under any other severance plan or policy
of the Company):
(i) The Company shall pay to the Executive through the date of
the Executive's termination of employment salary at the rate then in
effect, together with salary in lieu of vacation accrued to the date on
which his employment terminates, in accordance with the standard
payroll practices of the Company;
(ii) The Company shall pay to the Executive an amount in cash
equal to two times the sum of (A) the Executive's annual base salary in
effect immediately prior to the date of the Executive's termination of
employment or the date of the Change in Control (whichever is higher),
and (B) the higher of (x) the Executive's target annual bonus for the
year that includes the date of the Executive's termination of
employment or (y) the annual bonus of the Executive averaged for the
three years immediately prior to the year that includes the date of the
Executive's termination of employment; and such payment shall be made
in a lump sum within 10 business days after the date of such
termination of employment;
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(iii) The Company shall continue to cover the Executive and
his or her dependents under, or provide the Executive and his or her
dependents with insurance coverage no less favorable than, the
Company's life, disability, health, dental or other employee welfare
benefit plans or programs (as in effect on the day immediately
preceding the Protection Period or, at the option of the Executive, on
the date of termination of his or her employment) for a period equal to
the lesser of (x) two years following the date of termination or (y)
until the Executive is provided by another employer with benefits
substantially comparable to the benefits provided by such plans or
programs, provided, however, that the provision of this benefit shall
be contingent upon the cooperation of the Executive (or his or her
dependent, as applicable) in any reasonable request by the Company to
facilitate the provision of such benefit, including responding to
questionnaires and submitting to minimally intrusive medical
examinations;
(iv) All options to purchase Company stock held by the
Executive and all restricted shares of Company stock, restricted
Company share units and other equity-based compensation awards held by
the Executive shall become immediately vested in full upon such
termination of employment, and all such stock options shall be
exercisable for the longer of (x) one year following such termination
of employment (but not beyond the original full term of the stock
option) or (y) such period of time as may be provided for in the plan
under which such stock options were granted; and
(v) All of the Executive's benefits accrued under the pension,
retirement, savings and deferred compensation plans of the Company
shall become vested in full; provided, however, that to the extent such
accelerated vesting of benefits cannot be provided under one or more of
such plans consistent with applicable provisions of the Internal
Revenue Code of 1986, as amended, such benefits shall be paid to the
Executive outside the applicable plan in a lump sum no earlier than six
(6) months after the date of termination of employment; provided,
however, that such payment shall offset any amount that would otherwise
have been payable to the Executive under that plan.
Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled to the benefits described in this Section 4, if the
Executive's employment with the Company is terminated by the Company (other than
for Cause) within one year prior to the date on which a Change in Control
occurs, and it is reasonably demonstrated that such termination (i) was at the
request of a third party who has taken steps reasonably calculated or intended
to effect a Change in Control or (ii) otherwise arose in connection with or
anticipation of a Change in Control. In such event, amounts will be payable
hereunder only following the Change in Control.
5. Non-exclusivity of Rights. Except as expressly set forth
herein, this Agreement shall not prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other plans, practices,
policies or programs provided by the Company or any of its subsidiaries and for
which the Executive may qualify, nor shall it limit or otherwise
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affect such rights as the Executive may have under any stock option or other
agreements with the Company or any of its subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
practice, policy or program of the Company or any of its subsidiaries at or
subsequent to the date of termination of the Executive's employment shall be
payable in accordance with such plan, practice, policy or program.
6. Full-Settlement; Legal Expenses. The Company's obligation
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.
The Company agrees to pay, upon written demand therefor by the Executive, all
legal fees and expenses which the Executive may reasonably incur as a result of
any dispute or contest by or with the Company or others regarding the validity
or enforceability of, or liability under, any provision of this Agreement
(including as a result of any contest by the Executive about the amount of any
payment hereunder) if the Executive substantially prevails in the dispute or
contest, plus in each case interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code. In any such action brought by the Executive
for damages or to enforce any provisions of this Agreement, the Executive shall
be entitled to seek both legal and equitable relief and remedies, including,
without limitation, specific performance of the Company's obligations hereunder,
in his or her sole discretion.
7. Excise Tax Cut Back.
(a) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment, distribution or
benefit provided (including, without limitation, the acceleration of any
payment, distribution or benefit and the acceleration of exercisability of any
stock option) to the Executive or for his or her benefit (whether paid or
payable or distributed or distributable) pursuant to the terms of this Agreement
or otherwise would be subject, in whole or in part, to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the amounts payable to the
Executive under this Agreement shall be reduced (by the minimum possible amount)
until no amount payable to the Executive is subject to the Excise Tax; provided
however, that no such reduction shall be made if the net after-tax benefit
(after taking into account Federal, state, local or other income, employment,
self-employment and excise taxes) to which the Executive would otherwise be
entitled without such reduction would be greater than the net after-tax benefit
(after taking into account Federal, state, local or other income, employment,
self-employment and excise taxes) to the Executive resulting from the receipt of
such payments with such reduction. If, as a result of subsequent events or
conditions, it is determined that payments have been reduced by more than the
minimum amount required under this Section 7, then an additional payment shall
be promptly made to the Executive in an amount equal to the excess reduction.
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(b) All determinations required to be made under this Section
7, including whether a payment would result in an Excise Tax shall be made by
PricewaterhouseCoopers LLP (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive as requested by
the Company or the Executive. All fees and expenses of the Accounting Firm shall
be borne soley by the Company and shall be paid by the Company. Except as set
forth in the last sentence of Section 7(a) hereof, all determinations made by
the Accounting Firm under this Section 7 shall be final and binding upon the
Company and the Executive.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
subsidiaries and which has not become public knowledge (other than by acts of
the Executive or his or her representatives in violation of this Agreement).
After the date of termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 8 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Successors.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
heirs, executors, administrators, legal representatives or successor(s) in
interest.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.
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10. American Jobs Creation Act of 2004. The parties
acknowledge and agree that: (i) the recently enacted American Jobs Creation Act
of 2004 established a new Section 409A of the Code; (ii) Section 409A of the
code contains provisions governing the taxation of deferred compensation,
including provisions that accelerate income recognition and impose interest and
additional taxes on payments subject to Section 409A of the Code that fail to
conform with the requirements of Section 409A of the Code (collectively, the
"Penalties"); (iii) the compensation and other benefits to be paid or otherwise
agreed to under this Agreement, whether provided hereunder or any of the
Company's compensation plans, policies or arrangements, may be negatively
impacted by Section 409A of the Code (all such agreements, including this
Agreement, collectively referred to herein as the "Agreements"); and (iv) the
Internal Revenue Service has issued initial guidance and is expected to issue
additional guidance regarding the scope of Section 409A of the Code. The parties
agree that in the event the Company or the Executive determines, after a review
of such guidance, that any such compensation and benefits are subject to the
Penalties of Section 409A of the Code, the parties will negotiate in good faith
to take such reasonable actions, including amending the Agreements (which may
include, if applicable, the shortest delay in payment required under Section
409A), as may be necessary to ensure that such compensation and benefits are not
subject to such Penalties.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws thereof. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
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If to the Company:
Gentiva Health Services, Inc.
3 Huntington Quadrangle, Suite 200S
Melville, NY 11747-4627
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance
with any provision hereof shall not be deemed to be a waiver of such provision
or any other provision thereof.
(f) This Agreement contains the entire understanding of the
Company and the Executive with respect to the subject matter hereof but, except
as specifically provided in Section 4 hereof, does not supersede or override the
provisions of (i) any stock option, employee benefit or other plan, program,
policy or practice in which Executive is a participant or under which the
Executive is a beneficiary, or (ii) the Severance Agreement dated as
of____________, 200__ between the Executive and the Company; provided, however,
that this Agreement does supersede and replace any prior severance agreement
(except the Severance Agreement identified in subdivision (ii) of this
subsection (f)) and change in control agreements between the Company and the
Executive.
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IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed as of the day and year first above written.
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Name:
GENTIVA HEALTH SERVICES, INC.
By:
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Name: RONALD A. MALONE
Title: Chief Executive Officer
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