Ezxhibit 10.2
 

CHANGE IN CONTROL AGREEMENT
 
Agreement, made this 12th day of November, 2008, by and between Gentiva Health
Services, Inc., a Delaware corporation (the “Company”), and Ronald A. Malone
(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 March 22, 2004; 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
set forth above and shall terminate on December 31, 2009 unless this Agreement
is terminated earlier, as set forth below; provided, however, that in the event
of a Change in Control of the Company and a termination of the Executive’s
employment by the Company not for Cause or a termination by the Executive for
Good Reason during the term of this Agreement, this Agreement shall remain in
effect until all of the obligations of the parties hereunder are
satisfied.  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
 

 
 

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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
set forth in the first paragraph of this Agreement, 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.
 
Notwithstanding the foregoing, none of the events set forth in clauses (a)
through (d) above in the definition of Change in Control shall constitute a
“Change in Control” unless such event is also a “change in control event” as
defined in Treas. Reg. § 1.409A-3(i)(5).
 
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.
 
A “Protection Period” shall be the period beginning on the date of a Change in
Control and ending on December 31, 2009.
 
3. Termination Following Change in Control.  The Executive shall be entitled to
the benefits provided in Section 4 hereof if, within a Protection Period, the
Executive’s employment by the Company shall be terminated (a) by the Company not
for
 

 
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“Cause” and not due to the Executive’s death or “Disability”, or (b) by the
Executive 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, or (B) any act of willful fraud, dishonesty or moral turpitude.
 
(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.  For purposes hereof, “Good Reason” shall mean, unless
remedied by the Company within thirty (30) days after the receipt of written
notice from the Executive as provided below or consented to in writing by the
Executive:
 
(A) 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) 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 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 the Company has failed to provide the Executive with the number of
paid vacation days to which he 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 taxqualified retirement, pension or savings plans or its life
insurance plan, health and dental plan, disability plans or other insurance
plans which reduction applies
 

 
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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;
 
(C) a material diminution in the Executive’s title, positions, duties and
responsibilities from those described in Section 2 of the Executive’s Employment
Agreement with the Company dated of even date herewith (the “Employment
Agreement”) as in effect on the date of the Change in Control (other than as
permitted under the Employment Agreement) or the assignment by the Company to
the Executive of duties and responsibilities that are materially inconsistent
with his position;
 
(D) a failure by the Company to assign to the Executive the duties,
responsibilites and obligations customarily assigned to individuals serving as
chairman of the board of directors of comparable companies;
 
(E) a material breach by the Company of the Employment Agreement;
 
(F) 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
 
(G) 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 (iii) above.
 
The Executive shall exercise his 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, and the Company will
have a period of thirty (30) days from receipt of such written notice during
which it may remedy the condition.  In the event the Company fails to remedy the
condition within such period, the Executive’s employment shall terminate
immediately following the end of such period.
 
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 Employment Agreement
with the Company or under any other severance plan or policy of the Company):
 
(i) The Company shall pay to the Executive (A) base salary at the rate then in
effect through the date of the Executive’s termination of employment in
accordance with the standard payroll practices of the Company, and (B) base
salary in lieu of vacation ac-
 

 
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crued to the date on which his employment terminates, which shall be paid,
subject to Section 10 below, 10 business days after the date of such termination
of employment;
 
(ii) The Company shall pay to the Executive an amount in cash equal to two and
one half (2.5) 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
amount shall be paid, subject to Section 10 below, in a lump sum 10 business
days after the date of such termination of employment;
 
(iii) The Company shall continue to cover the Executive and his dependents
under, or provide the Executive and his 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 on the date of termination of his employment,
whichever is more favorable to the Executive) 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 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; and,
so long as the Executive has not become eligible for substantially similar
health benefit coverage from a subsequent employer, for the period beginning on
the second anniversary of the date of termination of employment and ending on
the earlier of the date the Executive is eligible for substantially similar
health benefit coverage from a subsequent employer or the date he becomes
eligible for Medicare, the Company will reimburse the Executive’s premium cost
for health benefit plan coverage (to the extent such coverage is substantially
similar to the coverage provided from time to time under the medical, dental and
vision care plans of the Company for senior executives of the Company) up to a
monthly amount equal to the sum of (i) the monthly contribution the Company
would have made toward the premium cost of such coverage had the Executive
remained covered under the Company’s medical, dental and vision care plans, and
(ii) $417, and such reimbursement shall be made within thirty (30) business days
following presentment to the Company by the Executive of a receipt for such
payment of such premiums by him;
 
(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 three years 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;
 

 
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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 Code, such benefits shall be paid to the Executive outside the
applicable plan in a lump sum, subject to Section 10 below, 10 business days
after the date of termination of employment; provided, further, however, that,
to the extent any such unvested benefit constitutes deferred compensation for
purposes of Section 409A of the Code, the payment of such deferred compensation
shall instead be made at the time it was otherwise scheduled to be paid under
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 prior to December 31,
2009 (other than for Cause) and 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, and, subject to
Section 10 below, 10 business days after, the Change in Control.  Any amount so
payable hereunder shall be reduced by the amount of severance benefits paid to
the Executive under the Employment Agreement or under any other severance
agreement or plan of the Company.
 
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 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 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.  Following the final determination of the dispute in
which the Executive has substantially prevailed, the Company shall reimburse all
such reasonable costs within 10 days following written demand therefor
(supported by documentation of such costs) by the Executive, and the Executive
shall make such written demand within 60 days following the final determination
of the dispute; provided, however, that such payment shall
 

 
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be made no later than on or prior to the end of the calendar year following the
calendar year in which the cost is incurred.  Notwithstanding the foregoing, in
the event a final determination of the dispute has not been made by December 20
of the year following the calendar year in which the cost is incurred, the
Company shall, within 10 days after such December 20, reimburse such reasonable
costs (supported by documentation of such costs) incurred in the prior taxable
year; provided, however, that the Executive shall return such amounts to the
Company within 10 business days following the final determination if the
Executive did not substantially prevail in the dispute.  The amount of any
expenses eligible for payment under this Section 6 during a calendar year will
not affect the amount of any expenses eligible for payment under this Section 6
in any other taxable year.  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 sole discretion.
 
7. Excise Tax Gross-Up.
 
(a) In the event it shall be determined that any payment, award, benefit or
distribution (including, without limitation, the acceleration of any payment,
award, distribution or benefit), by the Company or any of its affiliates to or
for the benefit of the Executive (whether pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 7) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any corresponding provisions of state or
local tax law, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any Excise Tax, income tax or employment tax) imposed upon the
Gross-Up Payment and any interest or penalties imposed with respect to such
taxes, the Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions
of this Section 7(a), if it shall be determined that the Executive is entitled
to a Gross-Up Payment, but that the portion of the Payments that would be
treated as “parachute payments” under Section 280G of the Code does not exceed
by more than $25,000 the greatest amount (the “Safe Harbor Amount”) that could
be paid to the Executive such that the receipt of Payments would not give rise
to any Excise Tax, then no Gross-up Payment shall be made to the Executive and
the amount payable under Section 4(ii) of this Agreement shall be reduced so
that the Payments, in the aggregate, are reduced to the Safe Harbor Amount.  For
purposes of reducing the payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other Payments) shall be reduced. If the
reduction of the amounts payable under this Agreement would not result in a
reduction of the Payments to the Safe Harbor Amount, no amounts payable under
this Agreement shall be reduced pursuant to this Section 7.  Notwithstanding any
other provision in this Section 7, in the event a Change in Control occurs after
March 24, 2009 (other than pursuant to an acquisition agreement entered into by
the Company and the acquiror on or prior to March 24, 2009), for purposes of
this Section 7 the amount of any Gross-Up Payment resulting from such Change in
Control shall be no greater than $1 million.
 

 
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(b) Subject to the provisions of Section 7(c), all determinations required to be
made under this Section 7, including the determination of whether a Gross-Up
Payment is required and of the amount of any such Gross-up Payment, shall be
made by the outside firm of auditors regularly used by the Company to audit its
financial statements at the time of the Change in Control (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days after the receipt of notice from the
Company that the Executive has received a Payment, or such earlier time as is
requested by the Company.  The initial Gross-Up Payment, if any, as determined
pursuant to this Section 7(b), shall be paid to the Executive (or for the
benefit of the Executive to the extent of the Company’s withholding obligation
with respect to applicable taxes) no later than the later of (i) the due date
for the payment of any Excise Tax, and (ii) the receipt of the Accounting Firm’s
determination.  Any determination by the Accounting Firm meeting the
requirements of this Section 7(b) shall be binding upon the Company and the
Executive.  As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder.  In the event that the Company
exhausts its remedies pursuant to Section 7(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.  The fees and disbursements of the Accounting Firm shall be paid by
the Company.
 
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but not later than ten business days after the Executive receives
written notice of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due).  If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:
 
(i) give the Company any information reasonably requested by the Company
relating to such claim,
 
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
 
(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and
 
(iv) permit the Company to participate in any proceedings relating to such
claim;
 

 
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provided, however, that the Company shall bear and pay directly all fees, costs
and expenses (including additional interest and penalties, and reasonable
attorneys’ fees) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax,
income tax or employment tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of fees, costs
and expenses.  Without limitation on the foregoing provisions of this Section
7(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax, income tax
or employment tax, including interest or penalties with respect thereto, imposed
with respect to such advance; and further, provided that any extension of the
statute of limitations relating to the payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount.  Furthermore, the Company’s control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
 
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 7(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 7(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
 
(e) Anything in this Agreement to the contrary notwithstanding, except as
otherwise provided in Treas. Reg. Section 1.409A-3(i)(1)(v), in no event shall
any payment by the Company pursuant to this Section 7 be made later than the end
of the Executive’s taxable year next following the Executive’s taxable year in
which he remits the related taxes.
 
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
 

 
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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.
 
10. Section 409A.  It is intended that this Agreement will comply with Section
409A of the Code (and any regulations and guidelines issued thereunder) to the
extent the Agreement is subject thereto, and the Agreement shall be interpreted
on a basis consistent with such intent.  If an amendment of the Agreement is
necessary in order for it to comply with Section 409A, the parties hereto will
negotiate in good faith to amend the Agreement in a manner that preserves the
original intent of the parties to the extent reasonably
possible.  Notwithstanding any provision to the contrary in this Agreement, if
the Executive is deemed on the date of his “separation from service” (within the
meaning of Treas. Reg. Section 1.409A-1(h)) to be a “specified employee” (within
the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment
that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code,
such payment shall not be made prior to the earlier of (i) the expiration of the
six (6)-month period measured from the date of his “separation from service,” or
(ii) the date of his death (the “Delay Period”).  Upon the expiration of the
Delay Period, all payments delayed pursuant to this Section 10 (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid to the Executive in a lump sum together
with interest at 1% above the prime rate (as reported in The Wall Street
Journal, Eastern Edition), as in effect on the first day of the Delay Period,
and any remaining payments due under this Agreement shall be paid in accordance
with the normal payment dates specified for them herein.  Notwithstanding any
provision of this Agreement to the contrary, for purposes of Section 4 above,
the Executive’s employment will be deemed to have terminated on the date of the
Executive’s “separation from service” (within the meaning of Treas. Reg. Section
1.409A-1(h)) with the Company.  No action or failure to act, pursuant to this
Section 10 shall subject the
 

 
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Company to any claim, liability, or expense, and the Company shall not have any
obligation to indemnify or otherwise protect the Executive from the obligation
to pay any taxes, interest or penalties pursuant to Section 409A of the
Code.  With respect to any reimbursement or in-kind benefit arrangements of the
Company and its subsidiaries that constitute deferred compensation for purposes
of Section 409A of the Code, the following conditions shall be applicable:
(i) the amount eligible for reimbursement, or in-kind benefits provided, under
any such arrangement in one calendar year may not affect the amount eligible for
reimbursement, or in-kind benefits to be provided, under such arrangement in any
other calendar year (except that the health and dental plans may impose a limit
on the amount that may be reimbursed or paid if such limit is imposed on all
participants), (ii) any reimbursement must be made on or before the last day of
the calendar year following the calendar year in which the expense was incurred,
and (iii) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.  Whenever payments under this
Agreement are to be made in installments, each such installment shall be deemed
to be a separate payment for purposes of Section 409A.
 
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:

 
Ronald A. Malone
 
To the last address of Executive on record with the Company
 
If to the Company:

 
Gentiva Health Services, Inc.
3 Huntington Quadrangle, 2S
Melville, NY 11747

 
Attention:  Chairman, Compensation Committee
 
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.
 

 
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(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) Any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding arbitration.  This arbitration shall be
held in New York City and except to the extent inconsistent with this Agreement,
shall be conducted in accordance with the Expedited Employment Arbitration Rules
of the American Arbitration Association then in effect at the time of the
arbitration, and otherwise in accordance with principles which would be applied
by a court of law or equity.  The Executive and the Company shall be entitled to
discovery in any such proceeding.  All fees, costs and expenses of the
arbitration, with the exception (other than as provided in Section 6 above) of
the Executive’s attorney’s fees, costs and expenses, shall be borne by the
Company.  The arbitrator shall be acceptable to both the Company and the
Executive.  If the parties cannot agree on an acceptable arbitrator, the dispute
shall he held by a panel of three arbitrators, one appointed by each of the
parties and the third appointed by the other two arbitrators.  The arbitrator(s)
shall not have the power to commit substantive errors of law, legal reasoning or
fact, shall set forth their factual and legal reasoning in any award or
determination, and any such award or determination may be vacated or corrected
as a result.
 
(g) 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 Employment Agreement of even date herewith between the
Executive and the Company; provided, however, that this Agreement does supersede
and replace any prior severance agreement (but not the Employment Agreement) and
change in control agreements between the Company and the Executive, including
specifically all such agreements entered into by the Executive and the Company
as of March 14, 2000 and those entered into on June 14, 2002 and March 22, 2004.
 
[Next Page is Signature Page]

 
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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.
 

By:  /s/ Ronald A. Malone        
        Name:  Ronald A. Malone
        Title:    Chief Executive Officer and
                     Chairman of the Board
     
GENTIVA HEALTH SERVICES, INC.
 
By:  /s/ Stuart R. Levine        
        Name:  Stuart R. Levine
        Title:    Chair, Compensation Committee

 
 
 
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