CHANGE IN CONTROL AGREEMENT
Agreement, made this ___ day of January, 2000, by and between Gentiva
Health Services, Inc., a Delaware corporation (the "Company"), and Xxxxxx X.
Xxxxxxxxxxxx (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 is willing to continue to serve the Company taking
into account the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoinq, 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 at the
Effective Time of the Merger as contemplated in the Merger Agreement (defined
below) and shall continue through the third anniversary of such date; 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. 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.
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2. Change in Control; Protection Period. A "Change of 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 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 the date
hereof, 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 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
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(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 Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, and Xxxxxx Xxxxxx, 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; provided, however, such
percentage shall be increased on a percentage basis (rounded to the nearest
whole percent) to the extent the Olsten Stockholders acquire any such capital
stock on conversion of the convertible trust preferred securities which they
hold on March 15, 2000.
Notwithstanding the foregoing, the transactions provided for in the
Agreement and Plan of Merger By and Among Adecco SA, Staffing Acquisition
Corporation and Olsten Corporation dated as of August 17, 1999, as amended (the
"Merger Agreement"), shall not constitute a Change in Control for purposes
hereof.
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.
(ii) Cause. Termination by the Company of the Executive's employment
for "Cause" shall mean termination upon: (A) the willful and continued
failure by the Execu-
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tive 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 (B) 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 clauses (A) or (B) of 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.
(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 base salary in effect on the date hereof, as increased
from time to time thereafter, other than a reduction in the
Executive's base salary of not more than ten percent which is part of
a general salary reduction for a majority of
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the salaried employees of the Company and its subsidiaries;
(B) if without the Executive's written consent, the Company has
required the Executive to be relocated anywhere in excess of fifty
(50) miles from the Executive's office location on the date hereof,
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 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 of such plans or deprive the
Executive of any material fringe benefit 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 vacations 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 de minimis
effect on the Executive shall not constitute "Good Reason" for
termination by the Executive;
(D) 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
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of the Executive's responsibilities from those in effect immediately
prior to the Change in Control;
(E) if the Company has failed to obtain the assumption of the
obligations contained in this Agreement by any successor as
contemplated in Section 8(c) hereof; or
(F) if there occurs any purported termination of the Executive's
employment by the Company 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 other than for Cause or because of 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
Employment Agreement with 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) (a) If such termination of employment occurs prior to the first
anniversary of the date hereof, the
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Company shall pay to the Executive an amount in cash equal to 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 Executive's target annual bonus for
the year that includes the date of the Change in Control; and such payment
shall be made in a lump sum within 10 business days after the date of such
termination of employment;
(b) If such termination of employment occurs on or after the first
anniversary of the date hereof, 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 Executive's target annual bonus for the year that
includes the date of the Change in Control; and such payment shall be made
in a lump sum within 10 business days after the date of such termination of
employment;
(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 emp1oyee 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;
(iv) All options to purchase Company stock granted under the Company's
1999 Stock Incentive Plan (or other Company plan) held by the Executive
shall become immediately vested and exercisable in full upon such
termination of employment, and all such stock options shall remain
ex-
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ercisable for one year following such termination of employment (but not
beyond the original full term of the stock option); 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 in a
lump sum within 10 days after termination of employment outside the
applicable 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.
5. Non-exclusivity of Rights. Nothing in this Agreement shall 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 anything herein limit or otherwise 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
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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 Internal Revenue Code of 1986, as amended (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 Internal Revenue
Code of 1986, as amended (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 addi-
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tional payment shall be promptly made to the Executive in an amount equal to the
excess reduction.
(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 solely 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
shall not be or 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 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.
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to a11 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.
10. 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 therof. 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:
Xxxxxx X. Xxxxxxxxxxxx
c/o Gentiva Health Services, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company:
Gentiva Health Services, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and
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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
any stock option, severance letter agreement, employee benefit or other plan,
program, policy or practice in which Executive is a participant or under which
the Executive is a beneficiary.
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IN WITNESS WHEREOF, the Executive has hereunto set his 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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Xxxxxx X. Xxxxxxxxxxxx
GENTIVA HEALTH SERIVCES, INC.
By:
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Xxxx X. Xxxxxx, Chairman,
Human Resources and
Compensation Committee
