UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Odyssey HealthCare, Inc.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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ODYSSEY
HEALTHCARE, INC.
717 North Harwood Street,
Suite 1500
Dallas, Texas 75201
Dear Stockholder:
We invite you to attend a special meeting of the stockholders of
Odyssey HealthCare, Inc. (Odyssey) to be held at 717
North Harwood Street, Suite 1600, Dallas, Texas, at
8:00 a.m. local time, on August 9, 2010.
At the special meeting, you will be asked to consider and vote
on a proposal to (i) approve the merger
(Merger) of GTO Acquisition Corp., a wholly-owned
subsidiary of Gentiva Health Services, Inc.
(Gentiva), with and into Odyssey, resulting in
Odyssey becoming a wholly-owned subsidiary of Gentiva, pursuant
to the Agreement and Plan of Merger, dated as of May 23,
2010 (as it may be amended from time to time, the Merger
Agreement), among Odyssey, Gentiva and GTO Acquisition
Corp. and (ii) adopt the Merger Agreement. You will also be
asked to consider and vote on a proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies.
If the Merger is consummated, holders of shares of Odyssey
common stock (other than shares owned by holders properly
exercising dissenters appraisal rights under Delaware law,
shares that are owned by Odyssey as treasury stock and any
shares owned by Gentiva, GTO Acquisition Corp. or any other
wholly-owned subsidiary of Gentiva) will become entitled to
receive $27.00 in cash, without interest and subject to any
required withholding of taxes, for each share of Odyssey common
stock owned as of immediately prior to the effective time of the
Merger. The $27.00 per share cash consideration to be paid in
the Merger represents a premium of approximately 40% over the
$19.29 closing price of Odyssey common stock on May 21,
2010, which was the last trading day before the signing of the
Merger Agreement was publicly announced.
Our board of directors has unanimously determined that the
Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement are advisable, fair to and
in the best interests of Odyssey and its stockholders.
Accordingly, our board of directors unanimously recommends
that you vote FOR the proposal to approve the Merger
and adopt the Merger Agreement and FOR the proposal
to adjourn the special meeting, if necessary or appropriate, to
solicit additional proxies.
Your vote is important.
We cannot consummate
the Merger unless holders of at least a majority of our
outstanding common stock entitled to vote approve the Merger and
adopt the Merger Agreement. Failure to submit a properly
executed proxy will have the same effect as a vote against
approval of the Merger and adoption of the Merger Agreement.
Whether or not you plan to be present at the special meeting, we
urge you to vote by completing, signing, dating and returning
the enclosed proxy card or voting by telephone or via the
Internet as promptly as possible. By submitting your proxy now,
you will not be precluded from attending the special meeting and
voting in person.
The enclosed proxy statement provides detailed information about
the proposed Merger, the Merger Agreement and the special
meeting. We urge you to read the entire document carefully,
including the attached annexes.
Thank you for your cooperation and continued support.
Sincerely,
Robert A. Lefton
President and Chief Executive Officer
Neither
the Securities and Exchange Commission nor any state securities
regulatory agency has approved or disapproved the Merger, passed
upon the merits or fairness of the Merger or passed upon
the adequacy or accuracy of the disclosure in this document. Any
representation to the contrary is
a criminal offense.
THIS
PROXY STATEMENT IS DATED JULY 9, 2010 AND IS FIRST BEING
MAILED TO STOCKHOLDERS OF ODYSSEY HEALTHCARE, INC. ON OR ABOUT
JULY 9, 2010.
ODYSSEY
HEALTHCARE, INC.
717 North Harwood Street, Suite 1500
Dallas, Texas 75201
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To Be Held August 9,
2010
Dear Stockholder:
Notice is hereby given that a special meeting of the
stockholders of Odyssey HealthCare, Inc., a Delaware corporation
(Odyssey), will be held at 717 North Harwood Street,
Suite 1600, Dallas, Texas, at 8:00 a.m. local time, on
August 9, 2010, for the following purposes:
1.
Approval of the Merger and Adoption of the Merger
Agreement.
To consider and vote on a proposal to
(i) approve the merger (the Merger) of GTO
Acquisition Corp., a wholly-owned subsidiary of Gentiva Health
Services, Inc. (Gentiva), with and into Odyssey,
resulting in Odyssey becoming a wholly-owned subsidiary of
Gentiva, pursuant to the Agreement and Plan of Merger, dated as
of May 23, 2010 (as it may be amended from time to time,
the Merger Agreement), among Odyssey, Gentiva and
GTO Acquisition Corp., and (ii) adopt the Merger Agreement.
2.
Adjournment of the Special Meeting.
To
consider and vote on a proposal to adjourn the special meeting,
if necessary or appropriate, to solicit additional proxies if
there are not sufficient votes at the time of the special
meeting to approve the Merger and adopt the Merger Agreement.
Only stockholders of record at the close of business on
July 2, 2010 are entitled to notice of and to vote at the
special meeting and at any adjournment or postponement of the
special meeting. All stockholders of record are cordially
invited to attend the special meeting in person. To ensure your
representation at the meeting in case you cannot attend, you are
urged to vote your shares by completing, signing, dating and
returning the enclosed proxy card as promptly as possible in the
postage prepaid envelope enclosed for that purpose or by voting
by telephone or via the Internet.
Stockholders of Odyssey who do not vote in favor of adopting the
Merger Agreement will have the right to seek appraisal of the
fair value of their shares of Odyssey common stock if the Merger
is consummated, but only if they submit a written demand for
appraisal to Odyssey prior to the time the vote is taken on the
Merger and the Merger Agreement, continuously hold their shares
through the effective date of the Merger and comply with all
other applicable requirements of Delaware law. A copy of the
applicable statutory provisions is included as Annex C to
this proxy statement, and a summary of these provisions can be
found under
Dissenters Rights of
Appraisal
in the accompanying proxy statement.
The approval of the Merger and adoption of the Merger Agreement
requires the affirmative vote of the holders of at least a
majority of the outstanding shares of our common stock entitled
to vote thereon. The failure to vote your shares will have the
same effect as a vote against the approval of the Merger and
adoption of the Merger Agreement. Because the affirmative vote
of at least a majority of the shares of our common stock
represented in person or by proxy and entitled to vote at the
special meeting is required to approve the proposal to adjourn
the special meeting, whether or not a quorum is present, the
failure to vote your shares will have no effect on the outcome
of this proposal.
Even if you plan to attend the special meeting in person, please
complete, sign, date and return the enclosed proxy card or vote
by telephone or via the Internet as instructed in these
materials as promptly as possible to ensure that your shares
will be represented at the special meeting if you are unable to
attend. If you do attend the special meeting and wish to vote in
person, you may withdraw your proxy and vote in person. If you
sign, date and mail your proxy card without indicating how you
wish to vote, your vote will be counted as a vote for the
proposal to approve the Merger and adopt the Merger Agreement
and for the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies. If you
fail to return your proxy card, the effect will be that your
shares will not be counted for purposes of determining whether a
quorum is present at the special meeting and will effectively be
counted as a vote against the approval of the Merger and
adoption of the Merger Agreement.
By Order of the Board of Directors,
W. Bradley Bickham
Secretary
Dallas, Texas
July 9, 2010
TABLE OF
CONTENTS
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ANNEX A AGREEMENT AND PLAN OF MERGER
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A-1
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ANNEX B OPINION OF GOLDMAN SACHS & CO.
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B-1
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ANNEX C SECTION 262 OF THE DELAWARE GENERAL
CORPORATION LAW
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C-1
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ii
SUMMARY
The following summary highlights selected information in this
proxy statement and may not contain all the information that may
be important to you. Accordingly, we encourage you to read
carefully this entire proxy statement, its annexes and the
documents referred to or incorporated by reference in this proxy
statement. Each item in this summary includes a page reference
directing you to a more complete description of that topic. See
also Where You Can Find More Information on
page 72. References to Odyssey, the
Company we, our or
us in this proxy statement refer to Odyssey
HealthCare, Inc. and its subsidiaries unless otherwise indicated
by context.
Proposals
(Page 17)
You are being asked to vote on a proposal to adopt the Agreement
and Plan of Merger dated as of May 23, 2010 (as it may be
amended from time to time, the Merger Agreement), by
and among Odyssey, Gentiva Health Services, Inc.
(Gentiva), and GTO Acquisition Corp., a wholly-owned
subsidiary of Gentiva (Merger Sub) pursuant to which
Merger Sub will merge with and into Odyssey (the
Merger), and to approve the Merger. Odyssey will be
the surviving corporation in the Merger (the Surviving
Corporation) and will become a wholly-owned subsidiary of
Gentiva. If there are insufficient votes at the time of the
special meeting to approve the proposal to approve the Merger
and adopt the Merger Agreement, then Odysseys stockholders
may be asked to vote on a proposal to adjourn the special
meeting, if necessary or appropriate, to permit solicitation of
additional proxies.
The
Parties to the Merger (Page 17)
Based in Dallas, Texas, Odyssey is one of the largest providers
of hospice care in the United States in terms of both average
daily patient census and number of locations. Odyssey seeks to
improve the quality of life of terminally ill patients and their
families by providing care directed at managing pain and other
discomforting symptoms and by addressing the psychosocial and
spiritual needs of patients and their families.
Gentiva is a leading provider of home health and hospice
services, delivering innovative, high quality care to patients
across the United States. Gentiva is a single source for skilled
nursing; physical, occupational, speech and neurorehabilitation
services; hospice services; social work; nutrition; disease
management education; help with daily living activities; and
other therapies and services.
Merger Sub is a Delaware corporation that was organized solely
for the purpose of completing the proposed Merger. Merger Sub is
a wholly-owned subsidiary of Gentiva and has not engaged in any
business except for activities incidental to its organization
and as contemplated by the Merger Agreement. Upon the
consummation of the Merger, Merger Sub will cease to exist and
Odyssey will be the Surviving Corporation and will become a
direct wholly-owned subsidiary of Gentiva.
The
Merger (Page 20)
In the Merger, each issued and outstanding share of Odyssey
common stock (other than shares owned directly or indirectly by
Odyssey, Gentiva, Merger Sub, or any other subsidiary of
Gentiva, or shares held by stockholders who have properly
exercised dissenters appraisal rights under Delaware law)
will be converted into the right to receive $27.00 in cash,
without interest and subject to any applicable withholding of
taxes. We expect to consummate the Merger in the third quarter
of 2010, assuming that all of the conditions set forth in the
Merger Agreement have been satisfied or waived.
Effects
of the Merger (Page 47)
If the Merger is consummated, you will be entitled to receive
$27.00 in cash (the Merger Consideration), without
interest and subject to any applicable withholding of taxes, for
each share of Odyssey common stock you own, unless you have
properly exercised your appraisal rights under Delaware law with
respect to the Merger. As a result of the Merger, Odyssey will
cease to be an independent, publicly traded company and
1
will instead be a wholly-owned subsidiary of Gentiva. You will
not own any shares of the Surviving Corporation or Gentiva as a
result of the Merger.
The
Special Meeting (Page 17)
Time,
Place and Date (Page 17)
The special meeting will be held on August 9, 2010,
starting at 8:00 a.m. local time, at 717 North Harwood
Street, Suite 1600, Dallas, Texas.
Purpose
(Page 17)
You will be asked to consider and vote on the proposal to
approve the Merger and adopt the Merger Agreement and also to
consider and vote on the proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies.
Record
Date and Quorum (Page 18)
You are entitled to vote at the special meeting if you owned
shares of Odyssey common stock at the close of business on
July 2, 2010, which is the record date for the special
meeting. You will have one vote for each share of common stock
that you owned on the record date. As of the record date there
were 33,685,292 shares of common stock outstanding and
entitled to vote. A majority of the shares of common stock
issued, outstanding and represented at the special meeting in
person or by a duly-authorized and properly completed proxy
constitutes a quorum for the purpose of considering the
proposals.
Vote
Required (Page 18)
Consummation of the Merger requires the approval of the Merger
and adoption of the Merger Agreement by the affirmative vote of
the holders of at least a majority of the outstanding shares of
Odyssey common stock entitled to vote thereon.
Failure to
vote your shares of common stock in person or by proxy or by
abstaining will have the same effect as a vote
AGAINST approval of the Merger and adoption of the
Merger Agreement.
Approval of the proposal to adjourn the
special meeting, if necessary or appropriate, for the purpose of
soliciting additional proxies requires the affirmative vote of
at least a majority of the shares of our common stock
represented in person or by proxy and entitled to vote at the
special meeting, whether or not a quorum is present. Failing to
vote your shares of common stock will not have an effect on the
approval of the proposal to adjourn the special meeting.
Abstaining from voting your shares of common stock will have the
same effect as a vote
AGAINST
the proposal to
adjourn the special meeting.
Ownership
of Directors and Executive Officers (Page 67)
As of the record date, the directors and executive officers of
Odyssey held in the aggregate approximately 1,624,190 of the
shares of Odyssey common stock entitled to vote at the special
meeting. In the aggregate, these shares represent approximately
4.7% of the votes necessary to approve the proposal to approve
the Merger and adopt the Merger Agreement at the special meeting.
Voting
and Proxies (Page 18)
Any stockholder of record entitled to vote at the special
meeting may vote by returning the enclosed proxy card by mail,
by submitting a proxy by telephone or via the Internet, or by
voting in person by appearing at the special meeting. If your
shares of Odyssey common stock are held in street
name by your broker, you should instruct your broker on
how to vote your shares of common stock using the instructions
provided by your broker. If you do not provide your broker with
instructions, your shares of common stock will not be voted and
that will have the same effect as a vote
AGAINST
the approval of the Merger and
adoption of the Merger Agreement. The persons named in the
accompanying proxy will also have discretionary authority to
vote on the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies.
2
Revocability
of Proxy (Page 18)
Any stockholder of record who executes and returns a proxy card
(or votes by telephone or via the Internet) may revoke the proxy
at any time before it is voted at the special meeting in any one
of the following ways:
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if you hold your shares in your name as a stockholder of record,
by notifying our Secretary, W. Bradley Bickham, at 717 North
Harwood Street, Suite 1500, Dallas, Texas 75201;
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by attending the special meeting and voting in person (your
attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting);
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by submitting a proxy card bearing a later date;
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if you voted by telephone or via the Internet, by voting a
second time by telephone or via the Internet; or
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if you have instructed a broker, bank, trust or other nominee to
vote your shares of Odyssey common stock, by following the
directions received from your broker, bank, trust or other
nominee to change those instructions.
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Treatment
of Options, Restricted Stock and other Equity Awards
(Page 47)
Under the terms of the Merger Agreement, each outstanding option
to purchase Odyssey common stock (each, an Option),
whether vested or unvested, that is outstanding immediately
before the effective time of the Merger will be cancelled and
converted into the right to receive, from the Surviving
Corporation, an amount in cash determined by multiplying
(i) the excess, if any, of the Merger Consideration over
the applicable exercise price of the Option; by (ii) the
number of shares subject to such Option (subject to any
applicable withholding of taxes). Options with an exercise price
greater than or equal to the Merger Consideration will be
cancelled immediately prior to the effective time of the Merger
for no consideration.
Each right to receive shares of Odyssey common stock based on
the satisfaction of service or performance-based conditions or
otherwise (each, a Restricted Stock Unit), whether
vested or unvested, that is outstanding immediately before the
effective time of the Merger will be cancelled and converted
into the right to receive, from the Surviving Corporation, an
amount in cash determined by multiplying (i) the Merger
Consideration; by (ii) the number of shares subject to such
Restricted Stock Unit (subject to any applicable withholding of
taxes).
In addition, each share of Odyssey common stock subject to
restrictions on transfer
and/or
forfeiture, including those shares of common stock subject to
satisfaction of service or performance-based conditions
(Restricted Stock) will accelerate and vest in full
immediately prior to the effective time of the Merger and will
be treated in connection with the Merger as a share of Odyssey
common stock, including the right to receive the Merger
Consideration (subject to any applicable withholding of taxes).
Recommendation
of Our Board of Directors (Page 27)
Our board of directors unanimously (i) determined that the
Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement are advisable, fair to and
in the best interests of Odyssey and its stockholders,
(ii) approved and authorized to be taken all corporate
action required to authorize the execution of the Merger
Agreement and the consummation of the Merger and the other
transactions contemplated by the Merger Agreement and
(iii) resolved to recommend that the stockholders approve
the Merger and adopt the Merger Agreement.
Our board of
directors unanimously recommends that our stockholders vote
FOR the proposal to approve the Merger and adopt the
Merger Agreement and FOR the proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies.
3
For a discussion of the material factors considered by our board
of directors in reaching its conclusions, see The
Merger The Recommendation of our Board of Directors
and the Reasons for the Merger beginning on page 27.
Interests
of Odysseys Directors and Executive Officers in the Merger
(Page 39)
In considering the recommendation of our board of directors, you
should be aware that our directors and executive officers may
have interests in the Merger that are different from, or in
addition to, your interests as a stockholder, and that may
present actual or potential conflicts of interest.
Opinion
of Financial Advisor (Page 31)
Goldman, Sachs & Co. (Goldman Sachs)
delivered its opinion to Odysseys board of directors that,
as of May 23, 2010 and based upon and subject to the
factors and assumptions set forth therein, the $27.00 per share
in cash to be paid to the holders (other than Gentiva and its
affiliates) of Odyssey common stock pursuant to the Merger
Agreement was fair from a financial point of view to such
holders.
The full text of the written opinion of Goldman Sachs, dated
May 23, 2010, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as
Annex B. Goldman Sachs provided its opinion for the
information and assistance of Odysseys board of directors
in connection with its consideration of the Merger. The Goldman
Sachs opinion is not a recommendation as to how any holder
of shares of Odyssey common stock should vote with respect to
the Merger or any other matter. Pursuant to an engagement letter
between Odyssey and Goldman Sachs, Odyssey has agreed to pay
Goldman Sachs a transaction fee of approximately
$12 million, the principal portion of which is payable upon
consummation of the Merger.
Financing
of the Merger (Page 37)
Gentiva received a commitment letter, dated as of May 23,
2010, from Bank of America, N.A., Banc of America Bridge LLC,
Banc of America Securities LLC, Barclays Bank PLC, Barclays
Capital, General Electric Capital Corporation, GE Capital
Markets, Inc., SunTrust Bank and Sun Trust Robinson
Humphrey, Inc. (collectively, the Lenders) to
provide, subject to the conditions set forth in the commitment
letter, debt financing for the purposes of paying the Merger
Consideration and other costs and expenses related to the
Merger, repaying certain existing indebtedness of Odyssey and
Gentiva and their respective subsidiaries, and the financing of
the ongoing working capital and other general corporate needs of
Gentiva and its subsidiaries after the consummation of the
Merger in the following amounts: (i) $925 million in
senior secured credit facilities, comprising (a) term loan
facilities aggregating $800 million and (b) a
revolving credit facility of $125 million; and
(ii) $305 million in gross proceeds from the issuance
and sale by Gentiva of senior unsecured notes, or, if, and to
the extent that, less than $305 million in such senior
notes are issued and sold on or prior to the closing date of the
Merger, $305 million of senior unsecured loans under a
bridge facility.
The commitments of the Lenders under the commitment letter are
subject to the negotiation, execution and delivery of definitive
documentation with respect to the financing, and the
satisfaction of certain other conditions. For a discussion of
the conditions to the commitments of the Lenders under the
commitment letter, see The Merger Financing of
the Merger beginning on page 37.
The Merger Agreement does not contain any financing-related
closing conditions.
Regulatory
Approvals (Page 44)
Under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR
Act), and the rules promulgated thereunder by the Federal
Trade Commission (FTC), the Merger may not be
consummated until notification and report forms have been filed
with the FTC and the Antitrust Division of the Department of
Justice, and the applicable waiting period has expired or been
terminated. Odyssey and Gentiva filed notification and report
forms on June 4, 2010 and the applicable waiting period
expired on July 6, 2010.
4
The Merger may also be subject to review by the governmental
authorities of various other jurisdictions under the antitrust
laws of those jurisdictions.
Material
U.S. Federal Income Tax Consequences (Page 43)
The exchange of shares of Odyssey common stock for cash pursuant
to the Merger Agreement generally will be a taxable transaction
for U.S. federal income tax purposes. A
U.S. stockholder that exchanges shares of common stock in
the Merger generally will recognize gain or loss in an amount
equal to the difference between the cash received in the Merger
and such stockholders adjusted tax basis in the shares of
common stock. You should consult your tax advisor for a complete
analysis of the effect of the Merger on your U.S. federal,
state and local
and/or
non-U.S. taxes.
Conditions
to the Merger (Page 57)
As more fully described in this proxy statement, the
consummation of the Merger depends upon the satisfaction, or
where legally permissible, waiver of certain conditions. Each
partys obligation to consummate the Merger is subject to
the satisfaction of certain conditions, including the approval
of the Merger and adoption of the Merger Agreement by our
stockholders, compliance with federal antitrust laws, and the
absence of any legal or other prohibition of the Merger.
Gentivas and Merger Subs obligations to consummate
the Merger is further conditioned upon the satisfaction of
specific conditions, including:
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the accuracy of our representations and warranties, except where
the inaccuracy would not, individually or in the aggregate, have
a Company Material Adverse Effect (as defined in the The
Merger Agreement Representations and
Warranties beginning on page 48); provided, that
(i) our representations and warranties relating to
capitalization (subject to de minimis exceptions) must be true
in correct in all respects and (ii) our representations and
warranties relating to (x) our authorization of the Merger
Agreement and the Merger and (y) the opinion of our
financial advisor, must be true and correct in all material
respects;
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the performance in all material respects of our obligations
under the Merger Agreement prior to the consummation of the
Merger;
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the absence of any event, circumstance, change or effect
occurring or being discovered since the date of the Merger
Agreement that is continuing and has had, or is reasonably
likely to have, a Company Material Adverse Effect; and
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the delivery of certificates attesting to the accuracy of our
representations and warranties and the performance of our
obligations under the Merger Agreement.
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Our obligation to consummate the Merger is further conditioned
upon the satisfaction of certain conditions, including:
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the accuracy of Gentivas and Merger Subs
representations and warranties, which must (i) in the case
of those representations and warranties that are qualified by
materiality, be true and correct and (ii) in the case of
those representations and warranties that are not qualified by
materiality, be true and correct in all material respects;
provided that the representations and warranties of Gentiva and
Merger Sub relating to (x) authorization of the Merger
Agreement and the Merger and (y) capitalization and
operation of Merger Sub, must be true and correct in all
respects;
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the performance in all material respects of Gentivas and
Merger Subs obligations under the Merger Agreement prior
to the consummation of the Merger; and
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the delivery of certificates attesting to the accuracy of
Gentivas and Merger Subs representations and
warranties and the performance of their respective obligations
under the Merger Agreement.
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5
Restrictions
on Solicitations of Other Offers (Page 58)
Until 11:59 p.m. (Central Time) on June 22, 2010, we
were permitted to (i) initiate, solicit or encourage the
submission of Acquisition Proposals (as defined in The
Merger Agreement Restrictions on Solicitations of
Other Offers beginning on Page 58) (including by way
of contacting third parties or public disclosure and providing
non-public information pursuant to an acceptable confidentiality
agreement); provided that we had to promptly provide to Gentiva
any material non-public information that is provided to any such
person and was not previously provided to Gentiva and
(ii) enter into, participate in and maintain discussions
regarding, and facilitate any inquiries or the making of any
proposal that constitutes, or would be reasonably likely to lead
to, an Acquisition Proposal. This period ended without receipt
of any Acquisition Proposals.
After 11:59 p.m. (Central Time) on June 22, 2010,
until the earlier to occur of the effective time of the Merger
or the termination of the Merger Agreement, we may not directly
or indirectly (i) solicit, initiate, knowingly facilitate
or knowingly encourage any inquiries, proposals or offers that
constitute, or that would reasonably be expected to lead to, an
Acquisition Proposal, (ii) knowingly engage in, continue or
otherwise participate in any discussions or negotiations with
any person (other than Gentiva), regarding, or furnish to any
such person information in connection with or for the purposes
of encouraging or facilitating an Acquisition Proposal, or
(iii) enter into any letter of intent, agreement, contract,
commitment or agreement in principle with respect to an
Acquisition Proposal or requiring us to abandon, terminate, or
fail to consummate the Merger. In addition, we must cease and
terminate any existing solicitation, encouragement, discussion
or negotiation with any third party that we have conducted with
respect to an Acquisition Proposal and we must request that all
non-public information previously provided by us be returned or
destroyed in accordance with the applicable acceptable
confidentiality agreement.
Notwithstanding the restrictions in the preceding paragraph,
after 11:59 p.m. (Central Time) on June 22, 2010 and
prior to the earlier to occur of the approval of the Merger and
adoption of the Merger Agreement by our stockholders or the
termination of the Merger Agreement, we may continue to engage
in the activities described in the first paragraph of this
section Restrictions on Solicitation of Other Offers
and not request the return or destruction of non-public
information from any Excluded Party (as defined in The
Merger Agreement Restrictions on Solicitations of
Other Offers beginning on Page 58).
In addition, if at any time after 11:59 p.m. (Central Time)
on June 22, 2010 and prior to the approval of the Merger
and adoption of the Merger Agreement by our stockholders,
(i) we receive a written Acquisition Proposal from a third
party, (ii) such Acquisition Proposal did not result from a
material breach of our agreement not to solicit such proposals
(as described above), (iii) our board of directors
determines in good faith (after consultation with Goldman Sachs
or another independent financial advisor and outside legal
counsel) that such Acquisition Proposal constitutes or would be
reasonably likely to lead to a Superior Proposal (as defined in
The Merger Agreement Restrictions on
Solicitation of Other Offers beginning on Page 58), and
(iv) our board of directors determines in good faith (after
consultation with Goldman Sachs or another independent financial
advisor and outside legal counsel) that the failure to furnish
information and data with respect to Odyssey to, and to enter
into, maintain and participate in discussions or negotiations
with, such third party would be reasonably likely to be
inconsistent with its fiduciary duties to our stockholders under
applicable laws, then we may (a) furnish information and
data with respect to Odyssey to, and (b) enter into,
maintain and participate in discussions or negotiations with,
such third party regarding such Acquisition Proposal or
otherwise cooperate with or assist or participate in, or
facilitate, any such discussions or negotiations; provided that
we have agreed not to furnish any non-public information except
pursuant to an acceptable confidentiality agreement and will
promptly provide to Gentiva any material non-public information
concerning us that is provided to such third party and was not
previously provided to Gentiva. In addition, (x) we are
permitted to take any of the actions described in
clauses (a) and (b) of this paragraph with respect to
any Excluded Party and (y) may (1) following the
receipt of an Acquisition Proposal, contact the third party
making such Acquisition Proposal in order to clarify and
understand the terms and conditions of such proposal so as to
determine whether such Acquisition Proposal constitutes or would
be reasonably likely to lead to a Superior Proposal or
(2) direct any person to the Merger Agreement.
6
We have agreed to provide Gentiva with notice of certain events
with regard to alternative Acquisition Proposals, including a
copy of the applicable written Acquisition Proposal (or if oral,
the material terms of such proposal) and the identity of the
third party making such Acquisition Proposal.
Termination
of the Merger Agreement (Page 62)
The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the effective time of the Merger:
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by the mutual consent of Gentiva and us;
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by either Gentiva or us if:
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a court of competent jurisdiction or other governmental
authority has issued an order or taken other action permanently
restraining, enjoining or otherwise prohibiting the Merger;
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prior to the effective time of the Merger, the other party
materially breaches any representation, warranty, covenant or
agreement set forth in the Merger Agreement, which breach
(i) in the case of a breach by us, would give rise to the
failure of certain conditions to the consummation of the Merger
and is incapable of being cured or, if capable of being cured,
is not cured prior to the earlier of (x) October 28,
2010 or (y) the date that is 30 days from the date
that we are notified by Gentiva of such breach and (ii) in
the case of a breach by Gentiva or Merger Sub, would prevent
Gentiva or Merger Sub from consummating the Merger or give rise
to the failure of certain conditions to the consummation of the
Merger and is incapable of being cured or, if capable of being
cured, is not cured prior to the earlier of
(x) October 28, 2010 or (y) the date that is
30 days from the date that Gentiva is notified by us of
such breach (no prior notice of breach is required with respect
to a breach of any covenants or agreements to be performed on
the closing date of the Merger); provided, however, that
(a) the right to terminate the Merger Agreement pursuant to
this provision will not be available to any party who is then in
material breach of any of its (including, in the case of
Gentiva, any breach by Merger Sub) representations, warranties,
covenants or agreements set forth in the Merger Agreement and
(b) the right to terminate the Merger Agreement pursuant to
this provision will not be available to Gentiva during the
pendency of a legal proceeding by us for specific performance of
the Merger Agreement;
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the closing date of the Merger has not occurred by
October 29, 2010; provided that the right to terminate the
Merger Agreement pursuant to this provision will not be
available to any party whose failure to fulfill any obligation
or whose breach of any representation, warranty, or covenant
under the Merger Agreement has been the primary cause of, or
primarily resulted in, the failure of the closing date to have
occurred (including in the case of Gentiva, any breach by Merger
Sub); or
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our stockholders do not approve the Merger and adopt the Merger
Agreement at the special meeting or any adjournment or
postponement thereof;
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by Gentiva, at any time prior to the approval of the Merger and
adoption of the Merger Agreement by our stockholders, if:
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our board of directors withdraws, qualifies, modifies, changes
or amends in any adverse manner its recommendation to our
stockholders to approve the Merger and adopt the Merger
Agreement;
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our board of directors publicly approves, endorses or recommends
an Acquisition Proposal to our stockholders or we enter into a
contract or agreement relating to an Acquisition Proposal (other
than a confidentiality agreement or standstill agreement in
accordance with the Merger Agreement);
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a tender offer or exchange offer that constitutes an Acquisition
Proposal (other than by Gentiva or its affiliates) is commenced
prior to the approval of the Merger and adoption of the Merger
Agreement by our stockholders and our board of directors fails
to recommend against acceptance of such tender offer or exchange
offer by our stockholders within ten business days after
commencement;
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our board of directors fails to reaffirm its recommendation to
our stockholders to approve the Merger and adopt the Merger
Agreement within ten business days after a request to so
reaffirm by Gentiva; or
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we or our board of directors publicly announce the intention to
do any of the foregoing; or
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by us, at any time prior to the approval of the Merger and
adoption of the Merger Agreement by our stockholders in order to
accept a Superior Proposal, provided that such termination will
not be effective until Gentiva has received the applicable
termination fee (as described below), and unless we have
complied in all material respects with specified obligations
under the Merger Agreement.
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Termination
Fees (Page 63)
We have agreed to pay Gentiva a termination fee of $24,100,000
if the Merger Agreement is terminated by us in order to accept a
Superior Proposal made by an Excluded Party.
We have agreed to pay Gentiva a termination fee of $28,900,000
in cash if the Merger Agreement is terminated:
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by Gentiva, at any time prior to the approval of the Merger and
adoption of the Merger Agreement by our stockholders, if:
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our board of directors withdraws, qualifies, modifies, changes
or amends in any adverse manner its recommendation to our
stockholders to approve the Merger and adopt the Merger
Agreement;
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our board of directors publicly approves, endorses or recommends
an Acquisition Proposal to our stockholders or we enter into a
contract or agreement relating to an Acquisition Proposal (other
than a confidentiality agreement or standstill agreement in
compliance with the Merger Agreement);
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a tender offer or exchange offer that constitutes an Acquisition
Proposal (other than by Gentiva or its affiliates) is commenced
prior to the approval of the Merger and adoption of the Merger
Agreement by our stockholders and our board of directors fails
to recommend against acceptance of such tender offer or exchange
offer by our stockholders within ten business days after
commencement;
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our board of directors fails to reaffirm its recommendation to
our stockholders to approve the Merger and adopt the Merger
Agreement within ten business days after a request to so
reaffirm by Gentiva; or
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we or our board of directors publicly announce the intention to
do any of the foregoing;
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by us, prior to the approval of the Merger and adoption of the
Merger Agreement by our stockholders in order to accept a
Superior Proposal by a third party other than an Excluded
Party; or
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by us or Gentiva, if:
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prior to the approval of the Merger and adoption of the Merger
Agreement by our stockholders, an Acquisition Proposal is
(a) communicated directly to our stockholders,
(b) communicated to senior management or our board of
directors and senior management or our board of directors failed
to keep such Acquisition Proposal confidential, or
(c) otherwise publically disclosed;
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thereafter, the Merger Agreement is terminated by Gentiva
because of a material breach of our representations, warranties
or covenants, or by us or Gentiva because the Merger has not
been consummated by October 29, 2010 or our stockholders do
not approve the Merger and adopt the Merger Agreement at the
special meeting; and
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within 180 days after the termination, we enter into a
definitive agreement relating to a transaction contemplated by
any Acquisition Proposal or any transaction contemplated by an
Acquisition Proposal is consummated.
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Only one of the termination fees described above, if any, would
be payable by us to Gentiva upon a termination as described
above.
8
Specific
Performance (Page 65)
Prior to the termination of the Merger Agreement and in addition
to any other remedy to which they might be entitled at law or in
equity, subject to the limitations set forth in the Merger
Agreement, Odyssey and Gentiva are entitled to an injunction or
injunctions to prevent breaches of the Merger Agreement and to
enforce specifically the terms and provisions of the Merger
Agreement.
Dissenters
Rights of Appraisal (Page 68)
Under Delaware law, any holder of Odyssey common stock who does
not vote to adopt the Merger Agreement will have the right to
seek appraisal of the fair value of its shares of common stock
as determined by the Delaware Court of Chancery if the Merger is
consummated, but only if such holder submits a written demand
for appraisal to Odyssey prior to the time the vote is taken on
the Merger and the Merger Agreement, continuously hold its
shares through the effective date of the Merger and complies
with all other requirements of Delaware law, which are
summarized in this proxy statement. This appraisal amount could
be more than, the same as or less than the Merger Consideration.
Any holder of common stock intending to exercise such
holders appraisal rights, among other things, must submit
a written demand for an appraisal to us prior to the vote on the
approval of the Merger and adoption of the Merger Agreement,
must not vote or otherwise submit a proxy in favor of approval
of the Merger and adoption of the Merger Agreement, and must
continuously hold its shares of common stock from the date it
makes the demand through the effective date of the Merger.
Your failure to follow exactly the procedures specified under
Delaware law will result in the loss of your appraisal rights.
A copy of the relevant section of Delaware law is attached
as Annex C to this proxy statement.
Litigation
(Page 45)
Three lawsuits have been filed in connection with the Merger.
The first, filed on May 27, 2010, is captioned
Pompano
Beach Police & Firefighters Retirement
System v. Odyssey Healthcare, Inc., et al.
, Cause
No. CC-10-03561-E
in the County Court at Law No. 5 in Dallas County, Texas.
The second, filed on June 9, 2010, is captioned
Eric
Hemminger, et al. v. Richard Burnham, et al.,
Cause
No. DC-10-06982,
in the 14th Judicial District Court, Dallas County, Texas.
The third, filed on July 7, 2010, is captioned
Hansen v. Odyssey Healthcare, Inc., et al.
, Case
3:10-cv-01305-G in the United States District Court for the
Northern District of Texas. All three suits name Odyssey, the
members of Odysseys board of directors, Gentiva, and
Merger Sub as defendants.
All three lawsuits are brought by purported stockholders of
Odyssey, both individually and on behalf of a putative class of
stockholders, alleging that our board of directors breached its
fiduciary duties in connection with the Merger by failing to
maximize stockholder value, and that Odyssey and Gentiva aided
and abetted the purported breaches. The
Pompano Beach Police
and Firefighters
suit seeks additional proxy disclosures
regarding the Merger.
The petitions each seek equitable relief, including, among other
things, to enjoin consummation of the Merger, rescission of the
Merger Agreement, and an award of all costs of the action,
including reasonable attorneys fees. Odyssey believes none
of the suits has merit.
Market
Price of Common Stock (Page 66)
The closing sale price of our common stock on The Nasdaq Global
Select Market (symbol: ODSY) on May 21, 2010, the last
trading day prior to public announcement of the Merger
Agreement, was $19.29 per share. The closing sale price of our
common stock on The Nasdaq Global Select Market on July 7,
2010 was $26.73 per share.
9
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
The following questions and answers address briefly some
questions you may have regarding the Merger and the special
meeting. These questions and answers may not address all
questions that may be important to you as a holder of shares of
Odyssey common stock. For important additional information,
please refer to the more detailed discussion contained elsewhere
in this proxy statement, the annexes to this proxy statement and
the documents referred to in this proxy statement.
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Q:
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What is the transaction?
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A:
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Odyssey, Gentiva and Merger Sub have entered into a Merger
Agreement that provides for the Merger of Merger Sub with and
into Odyssey upon the terms, and subject to the conditions, of
the Merger Agreement. Odyssey will be the Surviving Corporation
in the Merger and will become a direct wholly-owned subsidiary
of Gentiva.
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Q:
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What will an Odyssey stockholder receive when the Merger
occurs?
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A:
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For each share of Odyssey common stock held at the time of the
Merger, Odyssey stockholders will be entitled to receive the
Merger Consideration of $27.00 in cash, without interest and
subject to any applicable withholding of taxes. This does not
apply to shares of Odyssey common stock held by stockholders who
have properly perfected, and not withdrawn or otherwise lost,
their appraisal rights under Delaware law.
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Q:
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What will happen in the Merger to Odyssey stock
options?
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A:
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Each Option, whether vested or unvested, that is outstanding
immediately before the effective time of the Merger (the
Effective Time) will be cancelled and converted into
the right to receive, from the Surviving Corporation, an amount
in cash determined by multiplying (i) the excess, if any,
of the Merger Consideration over the applicable exercise price
of the Option; by (ii) the number of shares subject to such
Option (subject to applicable withholding of taxes). Options
with an exercise price greater than or equal to the Merger
Consideration will be cancelled immediately prior to the
Effective Time for no consideration.
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Q:
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What will happen in the Merger to Odyssey restricted stock
units?
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A:
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Each Restricted Stock Unit, whether vested or unvested, that is
outstanding immediately before the Effective Time will be
cancelled and converted into the right to receive, from the
Surviving Corporation, an amount in cash determined by
multiplying (i) the Merger Consideration; by (ii) the
number of shares subject to such Restricted Stock Unit (subject
to applicable withholding of taxes).
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Q:
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What will happen in the Merger to shares of Odyssey
restricted stock?
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A:
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Each share of Restricted Stock will accelerate and vest in full
immediately prior to the Effective Time and will be treated in
connection with the Merger as a share of our common stock,
including the right to receive the Merger Consideration (subject
to applicable withholding of taxes).
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Q:
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How does the Merger Consideration compare to the market
price of Odyssey common stock?
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A:
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The Merger Consideration of $27.00 per share to be paid to
Odyssey stockholders represents a premium of approximately:
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40.0% over the closing price of Odyssey common stock
on May 21, 2010, the last trading day prior to the public
announcement of Merger Agreement;
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34.3% over the average closing price of Odyssey
common stock for the one-month period ended on May 21,
2010, the last trading day prior to the public announcement of
the Merger Agreement;
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56.3% over the average closing price of Odyssey
common stock for the six-month period ended on May 21,
2010, the last trading day prior to the public announcement of
the Merger Agreement; and
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85.4% over the average closing price of Odyssey
common stock for the one-year period ended on May 21, 2010,
the last trading day prior to the public announcement of the
Merger Agreement.
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The closing sale price of a share of Odyssey common stock on The
Nasdaq Global Select Market on May 21, 2010, the last
trading day prior to public announcement of the Merger
Agreement, was $19.29. The closing sale price of the common
stock on The Nasdaq Global Select Market on July 7, 2010
was $26.73 per share. You are encouraged to obtain current
market quotations for Odyssey common stock in connection with
voting your shares.
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Q:
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When do you expect the Merger to be consummated?
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A:
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The parties currently expect the Merger to be consummated in the
third quarter of 2010. However, the Merger is subject to various
closing conditions, including Odyssey stockholder and regulatory
approvals, and it is possible that the failure to timely meet
these closing conditions or other factors outside of our control
could require us to consummate the Merger at a later time or not
at all.
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Q:
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Why am I receiving this proxy statement?
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A:
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You are receiving this proxy statement because you were a
stockholder of Odyssey as of July 2, 2010, the record date
for the special meeting. We cannot consummate the Merger unless
holders of at least a majority of our outstanding common stock
entitled to vote at the special meeting vote to approve the
Merger and adopt the Merger Agreement. A copy of the Merger
Agreement is attached as Annex A to this proxy statement.
Odyssey will submit the Merger and the Merger Agreement to its
stockholders for approval and adoption at the special meeting
described in this proxy statement. You should read the section
entitled The Special Meeting beginning on
page 17.
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Q:
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When and where will the special meeting of stockholders be
held?
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A:
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The special meeting of Odyssey stockholders will be held on
August 9, 2010, starting at 8:00 a.m. local time, at
717 North Harwood Street, Suite 1600, Dallas, Texas.
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Q:
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What are the proposals that will be voted on at the
special meeting?
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A:
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You will be asked to consider and vote on (i) the proposal
to approve the Merger and adopt the Merger Agreement and
(ii) the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies if there
are insufficient votes at the time of the special meeting to
approve the Merger and adopt the Merger Agreement.
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Q:
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Who is entitled to attend and vote at the special
meeting?
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A:
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The record date for the special meeting is July 2, 2010. If
you owned shares of Odyssey common stock as of the close of
business on the record date, you are entitled to notice of, and
to vote at, the special meeting or any adjournment or
postponement of the special meeting. As of the record date,
there were 33,685,292 shares of Odyssey common stock issued
and outstanding and entitled to vote.
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Q:
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How many votes are required to approve the Merger and
adopt the Merger Agreement?
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A:
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The approval of the Merger and adoption of the Merger Agreement
requires the affirmative vote of the holders of at least a
majority of the outstanding shares of Odyssey common stock
entitled to vote thereon, in accordance with Delaware law.
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Q:
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How many votes are required to adopt the proposal to
adjourn the special meeting, if necessary or appropriate, to
solicit additional proxies?
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A:
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The approval of the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies requires
the affirmative vote of at least a majority of the shares of
Odyssey common stock represented in person or by proxy and
entitled to vote at the special meeting, regardless of whether a
quorum is present.
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Q:
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How does the board of directors recommend that I vote on
the proposals?
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Our board of directors unanimously (i) determined that the
Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement are advisable, fair to and
in the best interests of Odyssey and its stockholders,
(ii) approved and authorized to be taken all corporate
action required to authorize
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the execution of the Merger Agreement and the consummation of
the Merger and the other transactions contemplated by the Merger
Agreement and (iii) resolved to recommend that the
stockholders approve the Merger and adopt the Merger Agreement.
Our board of directors unanimously recommends that our
stockholders vote FOR the proposal to approve the
Merger and adopt the Merger Agreement and FOR the
proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies.
You should read
the section entitled The Merger The
Recommendation of Our Board of Directors and the Reasons for the
Merger beginning on page 27.
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Q:
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How are votes counted? Why is my vote important?
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A:
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Votes will be counted by the inspector appointed for the special
meeting, who will separately count
FOR
and
AGAINST
votes and abstentions. If you sign
your proxy card, but do not indicate how you wish to vote, your
shares will be voted
FOR
the proposal to
approve the Merger and adopt the Merger Agreement and
FOR
the proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies in accordance with the recommendations of our board of
directors. The affirmative vote of the holders of at least a
majority of the outstanding shares of Odyssey common stock
entitled to vote thereon is required under Delaware law to
approve the Merger and adopt the Merger Agreement. As a result,
the failure to vote or the abstention from voting will have the
same effect as a vote against the approval of the Merger and
adoption of the Merger Agreement.
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Because the affirmative vote of at least a majority of the
shares of Odyssey common stock represented in person or by proxy
and entitled to vote at the special meeting, whether or not a
quorum is present, is required to adopt the proposal to adjourn
the special meeting, if necessary or appropriate, to solicit
additional proxies, the failure to vote your shares will have no
effect on the outcome of the proposal unless you sign your proxy
card, but do not indicate how you wish to vote, in which case
your shares will be voted
FOR
the proposal.
Abstaining from voting your shares of common stock will have the
same effect as a vote
AGAINST
the proposal to
adjourn the special meeting.
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Q:
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What do I need to do now?
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A:
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We urge you to read this proxy statement carefully in its
entirety, including its annexes, and to consider how the Merger
affects you. After carefully reading and considering the
information contained in this proxy statement, including the
annexes and the other documents referred to in this proxy
statement, please vote your shares as described below.
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Q:
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How do I vote if I am a stockholder of record?
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A:
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You may vote:
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by using the telephone voting instructions printed
on your proxy card;
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by using the Internet voting instructions printed on
your proxy card;
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by completing, signing and dating each proxy card
you receive and returning it in the enclosed postage-paid
envelope; or
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in person by appearing and voting at the special
meeting.
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Voting by telephone or via the Internet or by mailing in your
proxy card will not prevent you from voting in person at the
special meeting. You are encouraged to submit a proxy by mail,
by telephone, or via the Internet, even if you plan to attend
the special meeting in person to ensure that your shares of
Odyssey common stock are represented in person or by proxy at
the special meeting.
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If you sign your proxy card, but do not indicate how you wish to
vote, your shares will be voted
FOR
the
proposal to approve the Merger and adopt the Merger Agreement
and
FOR
the proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies.
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Q:
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How do I vote if my shares are held by my brokerage firm,
bank, trust or other nominee?
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A:
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If your shares are held in a brokerage account or by another
nominee, such as a bank or trust, then the brokerage firm, bank,
trust or other nominee is considered to be the stockholder of
record with respect to those shares. However, you still are
considered to be the beneficial owner of those shares, with your
shares being held in street name. Street
name holders generally cannot vote their shares directly
and must instead instruct the brokerage firm, bank, trust or
other nominee how to vote their shares. Your brokerage firm,
bank, trust or other nominee will only be permitted to vote your
shares for you at the special meeting if you instruct it how to
vote. Therefore, it is important that you promptly follow the
directions provided by your brokerage firm, bank, trust or other
nominee regarding how to instruct them to vote your shares. If
you wish to vote in person at the special meeting, you must
bring a legal proxy from your brokerage firm, bank, trust or
other nominee authorizing you to vote at the special meeting.
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In addition, because any shares you may hold in street
name will be deemed to be held by a different stockholder
than any shares you hold of record, shares held in street
name will not be combined for voting purposes with shares
you may hold of record. To be sure your shares are voted, you
should instruct your brokerage firm, bank, trust or other
nominee to vote your shares. Shares held by a corporation or
business entity must be voted by an authorized officer of the
entity.
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Q:
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What if I fail to instruct my brokerage firm, bank, trust
or other nominee how to vote?
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A:
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Your brokerage firm, bank, trust or other nominee will not be
able to vote your shares unless you have properly instructed
your nominee on how to vote. The approval of the Merger and
adoption of the Merger Agreement require an affirmative vote of
the holders of at least a majority of the outstanding shares of
Odyssey common stock entitled to vote thereon. Because your
brokerage firm, bank, trust or other nominee does not have
discretionary authority to vote on the proposal, the failure to
provide your nominee with voting instructions will have the same
effect as a vote against the proposal to approve the Merger and
adopt the Merger Agreement, but it will have no effect on the
proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies.
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Q:
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What constitutes a quorum for the special meeting?
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A:
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The presence, in person or by proxy, of stockholders
representing the holders of at least a majority of the shares of
Odyssey common stock entitled to vote at the special meeting
will constitute a quorum for the special meeting. If you are a
stockholder of record and you submit a properly executed proxy
card, vote by telephone or via the Internet or vote in person at
the special meeting, then your shares will be counted as part of
the quorum. If you are a street name holder of
shares and you provide your brokerage firm, bank, trust or other
nominee with instructions as to how to vote your shares or you
vote your shares in person at the special meeting by obtaining a
legal proxy from such broker or nominee, then your shares will
be counted as part of the quorum. All shares of Odyssey common
stock held by stockholders that are represented in person or by
proxy and entitled to vote at the special meeting, regardless of
how such shares are voted or whether such stockholders abstain
from voting, will be counted in determining the presence of a
quorum.
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Q:
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What does it mean if I receive more than one proxy?
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A:
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If you receive more than one proxy, it means that you hold
shares that are registered in more than one account. For
example, if you own your shares in various registered forms,
such as jointly with your spouse, as trustee of a trust or as
custodian for a minor, you will receive a separate proxy card
for those shares because they are held in a different form of
record ownership. Therefore, to ensure that all of your shares
are voted, you will need to sign and return each proxy card you
receive or vote by telephone or via the Internet by using the
different control number(s) on each proxy card.
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Q:
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May I change my vote after I have delivered my
proxy?
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A:
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Yes. If you are the stockholder of record of Odyssey common
stock, you have the right to change or revoke your proxy at any
time before the vote is taken at the special meeting:
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by delivering to Odysseys Secretary a signed
written notice of revocation bearing a date later than the date
of the proxy, stating that the proxy is revoked;
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by attending the special meeting and voting in
person (your attendance at the meeting will not, by itself,
revoke your proxy; you must vote in person at the meeting);
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by signing and delivering a new proxy, relating to
the same shares of Odyssey common stock and bearing a later
date; or
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by voting by telephone or via the Internet on a
later date.
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Written notices of revocation and other communications with
respect to the revocation of any proxies should be addressed to:
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Odyssey HealthCare, Inc.
717 North Harwood Street, Suite 1500
Dallas, Texas 75201
Attention: Secretary
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If you are a street name holder of Odyssey common
stock, you should contact your brokerage firm, bank, trust or
other nominee to obtain instructions as to how to change or
revoke your proxy.
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Q:
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Should I send in my stock certificates now?
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A:
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No. After the Merger is consummated, you will be sent a
letter of transmittal with detailed written instructions for
exchanging your shares of Odyssey common stock for the Merger
Consideration. If your shares are held in street
name by your brokerage firm, bank, trust or other nominee,
you will receive instructions from your brokerage firm, bank,
trust or other nominee as to how to effect the surrender of your
street name shares in exchange for the Merger
Consideration.
PLEASE DO NOT SEND IN YOUR CERTIFICATES
NOW
.
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Q:
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What happens if I sell my shares of Odyssey common stock
before the special meeting?
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A:
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The record date for stockholders entitled to vote at the special
meeting is earlier than the date of the special meeting and the
expected closing date of the Merger. If you sell or transfer
your shares of Odyssey common stock after the record date but
before the special meeting, you will, unless special
arrangements are made, retain your right to vote at the special
meeting but will transfer the right to receive the Merger
Consideration to the person to whom you sell or transfer your
shares. In addition, if you sell or transfer your shares before
the special meeting or before the effective date of the Merger,
you will not be eligible to exercise your appraisal rights in
respect of the Merger. For a more detailed discussion of your
appraisal rights and the requirements for perfecting your
appraisal rights under Delaware law, see Dissenters
Rights of Appraisal on page 68 and Annex C
attached to this proxy statement.
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Q.
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What effects will the proposed Merger have on
Odyssey?
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A.
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As a result of the proposed Merger, Odyssey will cease to be a
publicly-traded company and will be wholly-owned by Gentiva.
Odyssey stockholders will no longer have any interest in our
future earnings or growth. Following consummation of the Merger,
the registration of our common stock and our reporting
obligations with respect to our common stock under the
Securities Exchange Act of 1934, as amended (the Exchange
Act), will be terminated upon application to the
Securities and Exchange Commission (the SEC). In
addition, upon completion of the proposed Merger, shares of our
common stock will no longer be listed on any stock exchange or
quotation system, including The Nasdaq Global Select Market.
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14
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Q.
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What happens if the Merger is not consummated?
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A.
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If the Merger is not approved and the Merger Agreement is not
adopted by the stockholders or if the Merger is not consummated
for any other reason, our stockholders will not receive any
payment for their shares in connection with the Merger. Instead,
Odyssey will remain an independent public company and our common
stock will continue to be listed and traded on The Nasdaq Global
Select Market.
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Q:
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Am I entitled to appraisal rights in connection with the
Merger?
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A:
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Each stockholder of Odyssey is entitled to appraisal rights
under Section 262 of the General Corporation Law of the
State of Delaware (the DGCL), provided that such
stockholder satisfies the special criteria and conditions set
forth in Section 262 of the DGCL. For more information
regarding appraisal rights, see Dissenters Rights of
Appraisal on page 68. In addition, a copy of
Section 262 of the DGCL is attached as Annex C to this
proxy statement.
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Q:
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What are the material U.S. federal income tax consequences
of the Merger to me?
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A:
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The receipt of cash for shares of Odyssey common stock pursuant
to the Merger will be a taxable transaction for U.S. federal
income tax purposes. In general, for U.S. federal income tax
purposes, a holder of Odyssey common stock will recognize gain
or loss in an amount equal to the difference, if any, between
(i) the amount of cash received in the Merger and
(ii) the holders adjusted tax basis in the shares.
Because your individual circumstances may differ, we recommend
that you consult your own tax advisor to determine the
particular tax effects of the Merger to you (including the
application and effect of any state, local or
non-U.S.
income and other tax laws).
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Q:
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Who can answer further questions?
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A:
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For additional questions about the Merger, assistance in
submitting proxies or voting shares of Odyssey common stock, or
additional copies of the proxy statement or the enclosed proxy
card, please contact our proxy solicitor at:
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Georgeson,
Inc.
199 Water St.
26th Floor
New York, NY USA
10038-3650
Phone: 1 (212)
440-9800
If your brokerage firm, bank, trust or other nominee holds
your shares in street name, you should also contact
your brokerage firm, bank, trust or other nominee for additional
information.
15
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement and the documents to which we refer you in
this proxy statement include forward-looking statements based on
estimates and assumptions. There are forward-looking statements
throughout this proxy statement, including, without limitation,
under the headings Summary, The Special
Meeting, The Merger, Opinion of
Financial Advisor, Financial Projections,
Regulatory Approvals, and in statements containing
words such as believes, estimates,
anticipates, continues,
predict, potential,
contemplates, expects, may,
will, likely, could,
should or would or other similar words
or phrases. These statements are subject to risks,
uncertainties, and other factors, including, among others:
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the occurrence of any event, circumstance, change or effect that
could give rise to the termination of the Merger Agreement;
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the approval of the Merger and adoption of the Merger Agreement
by Odysseys stockholders or other conditions to the
consummation of the Merger may not be satisfied, or the
regulatory approvals required for the Merger may not be obtained
on the terms expected or on the anticipated schedule, if at all;
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diversion of management time on Merger-related issues and the
risk that the proposed Merger disrupts current plans and
operations;
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the risk that disruptions from the announcement of the Merger
Agreement will harm our operating results and business
generally, customer relationships, and relationships with our
employees, referral sources, patients and suppliers;
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the outcome of legal proceedings that have been or may be
instituted against us and others following announcement of the
Merger Agreement;
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the amount of the costs, fees, expenses and charges related to
the Merger;
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the ability to recognize the benefits of the Merger;
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the failure of Gentiva to obtain the necessary debt
financing; and
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Odysseys and Gentivas ability to meet expectations
regarding the timing and consummation of the Merger.
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In addition, we are subject to other risks, uncertainties and
factors that are also beyond Odysseys ability to control
or predict. In light of the significant uncertainties inherent
in the forward-looking statements contained herein, readers
should not place undue reliance on forward-looking statements,
which reflect managements views only as of the date
hereof. We cannot guarantee any future results, levels of
activity, performance or achievements. The statements made in
this proxy statement represent Odysseys views as of the
date of this proxy statement, and it should not be assumed that
the statements made herein will remain accurate as of any future
date. Moreover, we assume no obligation to update
forward-looking statements or update the reasons that actual
results could differ materially from those anticipated in
forward-looking statements, except as required by law.
16
THE
PARTIES TO THE MERGER
Odyssey
Odyssey HealthCare, Inc.
717 North Harwood Street, Suite 1500
Dallas, Texas 75201
Telephone:
(214) 245-3176
Based in Dallas, Texas, Odyssey is one of the largest providers
of hospice care in the United States in terms of both average
daily patient census and number of locations. Odyssey seeks to
improve the quality of life of terminally ill patients and their
families by providing care directed at managing pain and other
discomforting symptoms and by addressing the psychosocial and
spiritual needs of patients and their families.
Gentiva
Gentiva Health Services, Inc.
3350 Riverwood Parkway, Suite 1400
Atlanta, Georgia 30339
Telephone:
(631) 501-7214
Gentiva is a leading provider of home health and hospice
services, delivering innovative, high quality care to patients
across the United States. Gentiva is a single source for skilled
nursing; physical, occupational, speech and neurorehabilitation
services; hospice services; social work; nutrition; disease
management education; help with daily living activities; and
other therapies and services.
Merger
Sub
GTO Acquisition Corp.
c/o Gentiva
Health Services, Inc.
3350 Riverwood Parkway, Suite 1400
Atlanta, Georgia 30339
Telephone:
(631) 501-7214
Merger Sub is a Delaware corporation that was organized solely
for the purpose of completing the proposed Merger. Merger Sub is
a wholly-owned subsidiary of Gentiva and has not engaged in any
business except for activities incidental to its organization
and as contemplated by the Merger Agreement. Upon the
consummation of the proposed Merger, Merger Sub will cease to
exist and Odyssey will be the surviving corporation in the
Merger and will become a direct wholly-owned subsidiary of
Gentiva.
THE
SPECIAL MEETING
Date,
Time, Place and Purpose of the Special Meeting
This proxy statement is being furnished to Odysseys
stockholders as part of the solicitation of proxies by our board
of directors for use at the special meeting to be held at 8:00
a.m. local time on August 9, 2010, at 717 North Harwood
Street, Suite 1600, Dallas, Texas, or at any adjournment or
postponement thereof. The purpose of the special meeting is for
Odysseys stockholders to consider and vote on (i) a
proposal to approve the Merger and adopt the Merger Agreement
and (ii) a proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies if there
are insufficient votes at the time of the special meeting to
approve the Merger and adopt the Merger Agreement. Stockholders
holding at least a majority of Odysseys outstanding common
stock entitled to vote must approve the Merger and adopt the
Merger Agreement in order for the Merger to occur. If
Odysseys stockholders fail to approve the Merger and adopt
the Merger Agreement, the Merger will not occur. A copy of the
Merger Agreement is attached as Annex A to this proxy
statement. You are urged to read the Merger Agreement in its
entirety.
17
Record
Date and Quorum
We have fixed the close of business on July 2, 2010 as the
record date for the special meeting, and only holders of record
of Odyssey common stock on the record date are entitled to vote
at the special meeting. As of the record date, there were
33,685,292 shares of Odyssey common stock issued and
outstanding and entitled to vote at the special meeting. Each
share of Odyssey common stock entitles its holder to one vote on
each matter properly coming before the special meeting.
A majority of the shares of Odyssey common stock issued and
outstanding and entitled to vote at the special meeting
constitutes a quorum for the purpose of considering the
proposals. Shares of Odyssey common stock held by stockholders
present in person or represented at the special meeting but not
voted, including shares of Odyssey common stock for which
proxies have been received but for which stockholders have
abstained, will be treated as present at the special meeting for
purposes of determining the presence or absence of a quorum for
the transaction of all business. If a quorum is not present at
the special meeting, the special meeting may be adjourned or
postponed to solicit additional proxies.
Vote
Required for Approval
You may vote
FOR
or
AGAINST
, or you may
ABSTAIN
from voting on, the proposal to
approve the Merger and adopt the Merger Agreement. Consummation
of the Merger requires the approval of the Merger and adoption
of the Merger Agreement by the affirmative vote of the holders
of at least a majority of the shares of Odyssey common stock
entitled to vote thereon.
Therefore, if you abstain or fail
to vote, it will have the same effect as a vote
AGAINST the approval of the Merger and adoption of
the Merger Agreement
.
The approval of the proposal to adjourn the special meeting to a
later time, if necessary or appropriate, to solicit additional
proxies requires the affirmative vote of at least a majority of
the shares of Odyssey common stock represented in person or by
proxy and entitled to vote at the special meeting, whether or
not a quorum is present.
Therefore, if you fail to vote, it
will have no effect on the outcome of the proposal to adjourn
the special meeting. If you abstain from voting, it will have
the, same effect as a vote AGAINST the proposal to
adjourn the special meeting.
Proxies
and Revocation
If you are a stockholder of record of your shares of Odyssey
common stock and you vote by telephone or via the Internet or by
returning a signed and dated proxy card by mail that is received
by Odyssey before the date of or at the special meeting, your
shares will be voted at the special meeting as you indicate. If
you sign your proxy card without indicating your vote, your
shares will be voted
FOR
the proposal to
approve the Merger and adopt the Merger Agreement and
FOR
the proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies.
If your shares of Odyssey common stock are held in street
name, you will receive instructions from your brokerage
firm, bank, trust or other nominee that you must follow in order
to have your shares voted. If you have not received such voting
instructions or require further information regarding such
voting instructions, contact your brokerage firm, bank, trust or
other nominee, as the case may be. If you fail to provide your
brokerage firm, bank, trust or other nominee with instructions
on how to vote your shares of Odyssey common stock, your
brokerage firm, bank, trust or other nominee will not be able to
vote such shares at the special meeting. Please follow the
directions on the voting instruction form sent to you by your
brokerage firm, bank, trust or other nominee with this proxy
statement.
Proxies received by Odyssey at any time before the vote is taken
at the special meeting, which have not been revoked or
superseded before being voted, will be voted at the special
meeting. If you are a stockholder of record of shares of Odyssey
common stock, you have the right to change or revoke your proxy
at any time, unless noted below, before the vote is taken at the
special meeting:
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by delivering to Odysseys Secretary a signed written
notice of revocation bearing a date later than the date of the
proxy, stating that the proxy is revoked;
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by attending the special meeting and voting in person (your
attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting);
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by submitting a proxy card bearing a later date relating to the
same shares of Odyssey common stock; or
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by voting by telephone or via the Internet on a later date.
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If you are a street name holder of Odyssey common
stock, you may change your vote by submitting new voting
instructions to your brokerage firm, bank, trust or other
nominee. You must contact your brokerage firm, bank, trust or
other nominee to obtain instructions as to how to change or
revoke your proxy.
Written notices of revocation and other communications with
respect to the revocation of any proxies should be addressed to:
Odyssey HealthCare, Inc., 717 North Harwood Street,
Suite 1500, Dallas, Texas 75201, Attention: Secretary.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed, if necessary or appropriate, for the
purpose of soliciting additional proxies. Odysseys amended
and restated bylaws provide that, if a quorum is not present,
any adjournment may be made without notice if announced at the
meeting at which the adjournment is taken and if the adjournment
is to a date that is not greater than 30 days after the
original date fixed for the special meeting and no new record
date is fixed for the adjourned meeting. Any signed proxies
received by Odyssey before the special meeting in which no
voting instructions are provided on such matter will be voted
FOR
the proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies. Whether or not a quorum exists, holders of at least a
majority of shares of common stock represented in person or by
proxy and entitled to vote at the special meeting may adjourn
the special meeting.
The proposal to adjourn the special meeting to a later date or
time, if necessary or appropriate, to solicit additional proxies
requires the affirmative vote of at least a majority of the
shares of Odyssey common stock represented in person or by proxy
and entitled to vote at the special meeting. Therefore, if you
fail to vote, it will have no effect on the outcome of the
proposal. If you abstain from voting it will have the same
effect as a vote against the proposal to adjourn the special
meeting.
Any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies will allow
Odysseys stockholders who have already sent in their
proxies to revoke them at any time before the vote is taken at
the special meeting as adjourned or postponed.
Rights of
Stockholders Who Object to the Merger
Each stockholder of Odyssey is entitled to appraisal rights
under Section 262 of the DGCL, provided that such
stockholder satisfies the special criteria and conditions set
forth in Section 262 of the DGCL.
To properly exercise your dissenters appraisal rights, you
must submit a written demand for appraisal to Odyssey before the
vote is taken on the Merger Agreement, you must not vote in
favor of the approval of the Merger and adoption of the Merger
Agreement, you must continuously hold your shares through the
effective date of the Merger and you must comply with all other
requirements of Delaware law. Your failure to follow exactly the
procedures specified under Delaware law will result in the loss
of your appraisal rights. See Dissenters Rights of
Appraisal beginning on page 68 and the text of the
Delaware appraisal rights statute reproduced in its entirety as
Annex C to this proxy statement.
Solicitation
of Proxies
This proxy solicitation is being made and paid for by Odyssey on
behalf of its board of directors. In addition, we have retained
Georgeson, Inc. to assist in the solicitation. We will pay
Georgeson, Inc. approximately $9,000, plus
out-of-pocket
expenses for their assistance. Our directors, officers and
employees may solicit proxies by personal interview, mail,
e-mail,
telephone, facsimile or other means of communication.
19
These persons will not be paid additional remuneration for their
efforts. We will also request brokers and other fiduciaries to
forward proxy solicitation material to the beneficial owners of
shares of common stock that the brokers and fiduciaries hold of
record. Upon request, we will reimburse them for their
reasonable
out-of-pocket
expenses. In addition, we will indemnify Georgeson, Inc. against
any losses arising out of its proxy soliciting services on our
behalf.
Questions
and Additional Information
If you have questions about the Merger or how to submit your
proxy, or if you need additional copies of this proxy statement
or the enclosed proxy card or voting instructions, please
contact our proxy solicitor, Georgeson, Inc., by calling (877)
278-4774
(or
by mail at 199 Water St., 26th Floor, New York, NY
10038-3650).
Availability
of Documents
The reports, opinions or appraisals referenced in this proxy
statement will be made available for inspection and copying at
Odysseys principal executive offices during its regular
business hours by any interested stockholder.
THE
MERGER
Background
of the Merger
As part of the ongoing oversight and management of
Odysseys business, our board of directors and senior
management regularly review and discuss Odysseys
performance, risks, long-terms goals, prospects, and overall
strategic direction. In the course of these discussions, and in
light of economic, regulatory, competitive and other conditions,
our board of directors and senior management have from time to
time, evaluated the possibility of pursuing strategic
alternatives that could complement and strengthen Odysseys
business and enhance stockholder value. From time to time,
Odyssey has also engaged in discussions with senior management
of other hospice and home health care companies and other
potential strategic partners about the potential benefits of
possible business combinations.
On October 6, 2009, Robert Lefton, our President and Chief
Executive Officer, and Dirk Allison, our Chief Financial
Officer, met with the Chief Executive Officer and the Chief
Financial Officer of an industry competitor, which is referred
to herein as Company A, at an investor conference in
New York. Company As Chief Executive Officer expressed
interest on an unsolicited basis in exploring the possibility of
a strategic business combination between Odyssey and Company A.
In October and early November 2009, Mr. Lefton discussed
Company As interest in Odyssey and a potential tax-free
business combination of the two companies with several of our
directors, including Messrs. Richard Burnham, John Carlyle,
Robert Ortenzio and David Steffy, none of whom had any
relationships or conflicts of interest in connection with a
possible transaction with Company A. All of the directors
with whom Mr. Lefton spoke were supportive of such discussions
with Company A.
In early November 2009, Mr. Lefton and Company As
Chief Executive Officer spoke again, and Mr. Lefton
suggested a tax-free transaction structure for the possible
strategic business combination initially discussed on
October 6, 2009. Although Company As Chief Executive
Officer expressed continued interest in considering a strategic
business combination between Odyssey and Company A, he also
stated that any such business combination must result in Company
A being the surviving entity.
On November 12, 2009, our board of directors convened a
special meeting to discuss strategic planning, at which members
of our senior management were present. Although not formally
retained as our financial advisor at such time, at the request
of our board of directors, representatives of Goldman Sachs,
with whom Odyssey had a prior relationship, were also present in
an informal advisory capacity to assist us in identifying and
assessing our strategic alternatives. Mr. Lefton led a
discussion of the current economic and regulatory environment
and its possible impact on Odysseys operations, including
the potential impact of the budget neutrality adjustment factor
(BNAF) phase out and various health care reform proposals.
Messrs. Lefton and Allison then reviewed Odysseys
then-current, non-public financial projections that had been
prepared for
20
Odysseys internal use, which took into account
Odysseys financial results through the third quarter of
2009. At the meeting, representatives of Goldman Sachs discussed
its preliminary financial analysis of Odyssey and also discussed
their views as to potential strategic alternatives for Odyssey,
including a potential tax-free business combination with Company
A. Goldman Sachs financial analysis and views were based
on publicly available information and the financial projections
that had been reviewed earlier by Mr. Lefton and
Mr. Allison and provided to Goldman Sachs prior to the
meeting. Our senior management then led a discussion of
Odysseys 2010 strategic plan, and our board of directors
discussed various uses for Odysseys growing cash reserves,
which were approximately $98.8 million as of
September 30, 2009, in order to enhance stockholder value,
including growth through acquisitions of, or business
combinations with, other companies in the hospice industry or
complementary industries, organic growth by establishing new
hospice program locations
and/or
stock
repurchases.
On November 13, 2009, our board of directors convened a
regular meeting at which it discussed routine matters unrelated
to a potential business combination or other strategic
alternatives.
On December 11, 2009, our board of directors convened a
special meeting to further discuss the possibility of a
strategic business combination with Company A. Members of our
senior management were also present at the meeting.
Representatives of Goldman Sachs were also present at the
request of our board of directors to assist our board in its
consideration of a possible transaction with Company A.
Mr. Lefton provided background information regarding the
opportunity with Company A and an overview of the tax-free
business combination that previously had been proposed to, but
rejected by, Company As Chief Executive Officer. Following
a discussion of the potential benefits of a business combination
with Company A, our board of directors discussed with senior
management and representatives of Goldman Sachs possible next
steps to determine the feasibility and likelihood of such a
transaction. Based on such discussions, our board of directors
authorized Mr. Lefton to submit a proposal letter to
Company As Chief Executive Officer outlining a potential
tax-free strategic business combination of the two companies.
On December 11, 2009, Odyssey sent a written, preliminary,
non-binding proposal letter to Company A proposing a tax-free
strategic business combination of the two companies. The
non-public proposal letter expressed Odysseys willingness
to discuss alternative transaction structures.
On December 22, 2009, Company As Vice President of
Finance left a message with Mr. Leftons executive
assistant acknowledging receipt of Odysseys proposal
letter, and communicating that Company As board of
directors would review the proposal, but that Company A would
not be able to convene a board meeting until the second week in
January due to the holidays.
In late January 2010, Company As Chief Executive Officer
contacted Mr. Lefton and advised that Company As
board of directors had discussed Odysseys proposal and was
not interested in pursuing any type of transaction with Odyssey,
expressing generalized, non-specific concerns regarding both
Company As limited resources and ability to integrate the
two companies effectively and also increases in Odysseys
common stock price since October 2009.
In early February 2010, the Chief Development Officer of another
health care company, which is referred to herein as
Company B, contacted Mr. Lefton on an
unsolicited basis by telephone to arrange a meeting with Company
Bs Chief Executive Officer at a health care conference in
February.
On February 14, 2010, Mr. Lefton met with Company
Bs Chief Executive Officer at such conference. Company
Bs Chief Executive Officer expressed Company Bs
interest in acquiring Odyssey and Mr. Lefton indicated to
Company Bs Chief Executive Officer that Odyssey was intent
on remaining independent and pursuing its operating strategies,
but that Odysseys board of directors always was interested
in maximizing stockholder value and, if Company B desired to do
so, it could submit a proposal based on publicly available
information.
On March 4, 2010, our board of directors convened a regular
meeting. Members of our senior management were also present. At
the meeting, among other things, our board of directors and
senior management discussed the status of discussions with
Company A, including that Company As Chief Executive
Officer had expressed that, after Company As board of
directors reviewed and considered Odysseys written
proposal, it no longer had any interest in pursuing a strategic
business combination with Odyssey. Based on
21
that information, our board of directors concluded that it was
not in the best interest of Odyssey to continue to explore the
possibility of a business combination with Company A.
Mr. Lefton advised our board of directors of his
conversation with Company Bs Chief Executive Officer on
February 14, 2010 concerning Company Bs interest in
acquiring Odyssey, and that Company Bs Chief Executive
Officer had subsequently called him to request a
follow-up
meeting with Mr. Lefton and other members of senior
management. Our board of directors instructed Mr. Lefton to
continue preliminary discussions with Company B. Mr. Lefton
also discussed Odysseys acquisition and development
efforts and the acquisition market in general. Mr. Lefton
reviewed the transactions that Odyssey had completed during the
prior two years and reviewed various development opportunities.
Our board of directors then discussed the current acquisition
and development market, including a discussion of potential
regional acquisition targets and pricing expectations, potential
new development opportunities and the operating results of
acquisitions completed during the past two years.
Mr. Lefton and Mr. Allison reviewed Odysseys
then-current, non-public financial projections that had been
prepared for Odysseys internal use, which had been updated
since the November 12 board meeting to take into account, among
other things, Odysseys financial results for 2009.
On March 12, 2010, Odyssey received a preliminary oral
indication of interest from Company B to acquire Odyssey in an
all cash transaction for approximately a 30% premium to the then
most recent closing price of Odysseys common stock.
On March 26, 2010, at the invitation of Company B,
Messrs. Lefton and Allison had lunch in Dallas with members
of Company Bs senior management. Company Bs Chief
Executive Officer reiterated Company Bs interest in
acquiring Odyssey and also informed Messrs. Lefton and
Allison that Company B had already begun discussing acquisition
financing with financing sources. Mr. Lefton informed
Company Bs Chief Executive Officer that if Company B
submitted an acquisition proposal to Odyssey, Mr. Lefton
would present the proposal to Odysseys board of directors
for its consideration.
On March 30, 2010, Odyssey received a written preliminary
non-binding proposal letter, dated March 29, 2010, from
Company B to purchase all of Odysseys outstanding capital
stock for $22.00 per share in cash. The proposal letter
requested that Odyssey agree to negotiate exclusively with
Company B for 45 days and to enter into mutually acceptable
exclusivity and confidentiality agreements. The proposal letter
also stated that Company Bs expected financing for the
proposed transaction would be a combination of existing cash and
senior debt, that Company B had met with and engaged in
discussions with several senior lenders, and also that Company B
and such lenders were highly confident in Company Bs
ability to obtain all required financing. On April 1, 2010,
Odyssey scheduled a meeting of our board of directors for
April 7, 2010 to discuss Company Bs proposal letter.
During the first week of April 2010, a representative of Edge
Healthcare Partners, LLC (EHP), Gentivas
financial advisor, contacted Mr. Lefton on an unsolicited
basis to arrange a meeting in Dallas between Mr. Lefton and
Tony Strange, Gentivas Chief Executive Officer, and a
representative of EHP for the purpose of discussing a potential
business combination between Odyssey and Gentiva. At such
meeting on April 7, 2010, Mr. Strange expressed
Gentivas interest in acquiring Odyssey and Mr. Lefton
indicated to Mr. Strange that if Gentiva desired to do so
it could submit a proposal based on publicly available
information.
Later in the day on April 7, 2010, our board of directors
convened the previously scheduled special meeting, at which
members of our senior management and representatives of Goldman
Sachs were also present. At the meeting, Mr. Lefton
provided background information to our board of directors
regarding Company Bs proposal to acquire Odyssey for
$22.00 per share in cash and Company Bs request for
exclusivity. Mr. Lefton then advised our board of directors
of his and Mr. Allisons discussions with Gentiva and
its expressed interest in acquiring Odyssey. Representatives of
Goldman Sachs then discussed its preliminary financial analysis
of Company Bs proposal. Representatives of Goldman Sachs
discussed with the board of directors that the proposed price of
$22.00 per share represented a premium of approximately 21% over
Odysseys weighted average trading price for the previous
month, 31% over the previous three months and 42% over the
previous six months. Representatives of Goldman Sachs also
discussed with our board of directors their views as to Company
Bs potential ability to finance the proposed acquisition
and other possible strategic and financial buyers, including
their potential ability to finance a transaction with Odyssey.
Goldman
22
Sachs financial analysis was based on publicly available
information and Odysseys then-current, non-public
five-year financial projections that had been prepared for
Odysseys internal use and provided to Goldman Sachs prior
to the meeting. Odysseys internal financial projections
had been updated since the March 4 board meeting to take into
account, among other things, Odysseys preliminary
financial results from the quarter ended March 31, 2010.
After extensive discussions, taking into consideration prior
discussions by our board of directors when considering our
strategic alternatives, our board of directors concluded that
the price offered by Company B did not offer a sufficient
premium to Odysseys stock price and then instructed
Mr. Lefton to advise Company B that the price offered was
not sufficient for Odyssey to enter into a confidentiality
agreement with Company B or to negotiate a possible transaction
with Company B, whether exclusively or otherwise. After the
board meeting on April 7, 2010, Mr. Lefton contacted
Company Bs Chief Executive Officer by telephone and so
advised him as directed by our board of directors.
On April 13, 2010, Odyssey received an updated non-binding
proposal letter from Company B to purchase Odyssey at an
increased offer price of $23.25 per share in cash. In the
proposal letter, Company B again requested access to non-public
information about Odyssey pursuant to a confidentiality
agreement and a 45 day exclusivity period during which
Odyssey would negotiate exclusively with Company B. The proposal
letter was accompanied by a letter from Company Bs
financing source expressing that it was highly confident that it
could provide the financing necessary for the transaction.
On April 15, 2010, our board of directors convened a
special meeting, at which members of our senior management and
Goldman Sachs also participated, to discuss the status of the
updated acquisition proposal received by Odyssey from Company B
and of Gentivas expressed interest in acquiring Odyssey.
Mr. Lefton advised our board of directors of the increased
offer price received from Company B and also of Company Bs
continued request for access to non-public information and
exclusive negotiations with Odyssey. Mr. Lefton also noted
that there had not been any new developments with Gentiva since
the meeting with Gentivas representatives on April 7,
2010. After a thorough discussion, our board of directors
authorized Odysseys senior management to negotiate a
confidentiality agreement with Company B but not grant Company B
any right to exclusive negotiations at that time. Our board of
directors also authorized Odysseys management to enter
into a confidentiality agreement with Gentiva if Gentiva were to
submit a written proposal that at least matched Company Bs
proposed acquisition price. After Goldman Sachs left the
meeting, our board of directors discussed the formal engagement
of Goldman Sachs as its financial advisor. In selecting Goldman
Sachs as its financial advisor, our board of directors
considered, among other things, the guidance and advice that
Goldman Sachs, from time to time, had previously provided to us
at the request of our board of directors in connection with our
acquisition of VistaCare, Inc. and our consideration of
strategic alternatives; Goldman Sachs strong familiarity
with us, our business and our industry; Goldman Sachs
general reputation and expertise, as well as its experience in
similar transactions; and the proposed terms of Goldman
Sachs engagement by us as our financial advisor. After
concluding its discussions, our board of directors authorized
management to negotiate and enter into an engagement letter with
Goldman Sachs.
Later in the day on April 15, 2010, Mr. Lefton
informed Company Bs Chief Executive Officer that Odyssey
would not agree to exclusivity but would enter into a
confidentiality agreement with Company B. On the same day,
Company Bs Chief Executive Officer delivered a letter to
Mr. Lefton that included a preliminary due diligence
information request outlining the items Company B believed
to be of high importance in understanding and confirming the
value of the proposed transaction.
On April 20, 2010, after a series of negotiations, Odyssey
and Company B entered into a confidentiality and standstill
agreement. Commencing on April 21, 2010, Company B began
actively conducting due diligence by meetings and
teleconferences with senior management of Odyssey and
representatives of Goldman Sachs and, when opened, review of
materials posted in Odysseys electronic data room.
On April 21, 2010, after a series of negotiations, Odyssey
entered into an engagement letter with Goldman Sachs pursuant to
which Goldman Sachs was formally engaged to act as
Odysseys financial advisor in connection with a possible
sale of Odyssey.
On April 22, 2010, Odyssey opened an electronic data room
and granted Company B access thereto.
On April 23, 2010, following a special meeting of the
Gentiva board of directors at which the potential transaction
with Odyssey and the related financing were discussed, Gentiva
delivered a written preliminary
23
non-binding proposal letter to acquire Odyssey for $25.50 per
share in cash. The proposal letter stated that Gentivas
expected financing for the proposed transaction would be through
a combination of existing cash and senior debt arrangements, and
also stated that Gentiva had been in contact with several
lenders and that such lenders were confident in Gentivas
ability to obtain all required third-party financing for the
proposed transaction. The proposal letter also noted that
Gentivas board of directors unanimously supported the
proposal and requested to enter into a confidentiality agreement
and be provided with non-public information for due diligence
purposes. With the proposal letter, Gentiva also sent Odyssey a
copy of a highly confident letter from Banc of
America Securities LLC expressing that it was highly confident
of its ability to arrange and syndicate fully underwritten
credit facilities in connection with the potential transaction.
Later in the day on April 23, 2010, Odyssey provided to
Gentiva a confidentiality and standstill agreement that,
following negotiations, was entered into on or about
April 25, 2010. During the period extending from
approximately April 25, 2010 through May 23, 2010,
Gentiva actively conducted due diligence by meetings and
teleconferences with senior management of Odyssey and
representatives of Goldman Sachs and K&L Gates LLP,
Odysseys outside legal counsel (K&L
Gates), and review of materials posted in Odysseys
electronic data room.
On April 28, 2010, our board of directors convened a
special meeting, at which members of our senior management were
also present, to review Odysseys then-current five-year
financial projections, which had been updated since the April 7
meeting to take into account, among other things, Odysseys
financial results for the quarter ended March 31, 2010 and
managements judgments with respect to the impact of recent
health care reform legislation on our business. (Odysseys
prior financial projections at the November 12, 2009,
March 4, 2010 and April 7, 2010 meetings took into
account only the financial results through the third quarter of
2009, for the year ended 2009 and preliminary results for the
first quarter of 2010, respectively.) At the meeting, our board
of directors and management also discussed the status of
discussions with Gentiva and Company B and the adoption of a
change of control severance program for support center and
regional leadership employees (excluding Odysseys
executive officers) in order to reduce the uncertainty to these
employees that could result from a change of control
transaction. On April 28, 2010, Company B also supplemented
its original due diligence request.
On April 30, 2010, Gentiva delivered its initial due
diligence request to Odyssey, and, on May 5, 2010, Gentiva
delivered a prioritized due diligence request to Odyssey.
On May 6, 2010, our board of directors held its regular
quarterly meeting, at which members of our senior management and
representatives of Goldman Sachs, K&L Gates and Richards,
Layton & Finger, P.A. (RLF),
Odysseys outside Delaware counsel, were also in
attendance. Initially, representatives of K&L Gates and RLF
discussed with our board of directors, and responded to
questions regarding, its fiduciary duties under Delaware law in
relation to the acquisition proposals by Gentiva and Company B.
Thereafter, representatives of Goldman Sachs joined the meeting,
and our board of directors then received an update from Goldman
Sachs and senior management as to the status of discussions with
Gentiva and Company B and then considered and discussed the
acquisition proposals by Gentiva and Company B with senior
management and representatives of K&L Gates and RLF. Our
board of directors found it to be in the best interests of
Odyssey and its stockholders to continue to explore and evaluate
the transactions proposed by Gentiva and Company B.
Late in the day on May 6, 2010, Company Bs outside
legal counsel distributed to Odyssey an initial draft of a
proposed merger agreement structured as a two-step transaction,
with a cash tender offer followed by a merger.
On May 10, 2010 and May 11, 2010, representatives of
Goldman Sachs contacted both Gentiva and Company B to request
that they deliver, by no later than May 21, 2010, a final
proposal for the acquisition of Odyssey, which would include a
price per share and marked up merger agreement in the form that
they would be prepared to sign.
On May 12, 2010, K&L Gates distributed a draft of a
merger agreement to both Gentiva and Company B, and their
respective legal counsel. The draft merger agreement
contemplated a two-step transaction, with a cash tender offer
followed by a merger, and included, among other things: a
30 day go-shop period during which Odyssey
would be permitted to solicit alternative acquisition proposals;
a termination fee of 2% of Odysseys equity value, unless
the merger agreement were terminated during the
go-shop period or
24
thereafter, in connection with a party who made a proposal
during the go-shop period, an excluded
party, in which case the termination fee would be 1% of
Odysseys equity value; a lack of any financing condition
or other financing contingency; and the right of either party to
seek specific performance if the other were to breach the merger
agreement.
On May 14, 2010, Mr. Allison received a call from the
Chief Development Officer of Company B to inform Odyssey that
Company B remained very interested in a potential acquisition of
Odyssey, but that it had additional due diligence to perform.
Company B requested a one week extension to the
May 21
st
deadline
for submitting proposals, and stated that it would likely cease
negotiations if the extension were not granted. Although not
willing to submit a final proposal by
May 21
st
,
Company B stated that it would be prepared to provide an updated
pricing proposal by
May 21
st
,
subject to completion of its due diligence.
On May 15, 2010, Mr. Strange called Mr. Lefton to
advise that Gentiva would submit its final proposal by the
May 21
st
deadline.
Mr. Strange also communicated that the proposed tender
offer structure created financing issues for Gentivas
lenders because they would not have time to arrange the
financing prior to the close of the tender offer and would not
be willing to provide bridge financing for a tender offer.
On May 16, 2010, Greenberg Traurig, P.A. (GT),
Gentivas outside legal counsel, circulated a revised draft
of the merger agreement in which Gentiva proposed a single-step
merger structure rather than a two-step cash tender offer. The
proposed merger agreement also provided for a termination fee of
3% of Odysseys equity value and a limited go-shop process
to be completed within 20 days, restricted to one
designated potential buyer and requiring that the designated
potential buyer make a superior proposal during the
go-shop period in order for Odyssey to be permitted
to continue discussions with such person after the
go-shop period. Other relevant revisions related to
the allocation of substantial risk to Odyssey if Gentiva failed
to obtain financing, including a reverse
break-up
fee
of 4% of Odysseys equity value if Gentiva terminated the
merger agreement, limitations on Gentivas potential
liability if the acquisition were not completed, a definition of
Company Material Adverse Effect that allocated
significantly more execution risk to Odyssey, and limitations on
the availability of specific performance.
On May 17, 2010, Company Bs financial advisor called
a representative of Goldman Sachs and informed him that Company
B would not be ready to discuss pricing by May 21st as
it had previously indicated.
On the morning of May 18, 2010, Mr. Bickham,
Mr. Strange, Gentivas Chief Compliance Officer,
Gentivas Senior Vice President of Finance, and
representatives of K&L Gates, GT, Goldman Sachs and EHP
held a conference call to discuss the draft merger agreement
proposed by Gentiva. On the conference call, representatives of
Gentiva informed the representatives of Odyssey about the status
of Gentivas proposed financing for the transaction and the
reluctance of Gentivas financing sources to finance the
acquisition if it were structured as a two-step cash tender
offer transaction. Representatives of Odyssey then discussed the
significant issues for Odyssey that were raised by
Gentivas draft merger agreement, including (1) the
uncertainties created by Gentivas proposed allocation of
financing and execution risk to Odyssey via Gentivas
proposed changes to the definition of Company Material
Adverse Effect, Gentivas proposed reverse
break-up
fee
and other limitations on Gentivas potential liability if
the merger were not completed, and Gentivas proposed
limitations on Odysseys right to specific performance,
(2) Gentivas proposed limits on the
go-shop provisions, and (3) Gentivas
proposed termination fee equal to 3% of Odysseys equity
value. Representatives of Odyssey informed Gentivas
representatives that Odyssey would consider entering into a
transaction with Gentiva only if completion of the transaction
was reasonably certain to occur, including certainty of
financing with any financing risk being allocated to Gentiva.
Later on May 18, 2010, after meeting with Gentivas
senior management, representatives of GT advised representatives
of K&L Gates that Gentiva was prepared to move forward with
no financing condition to Gentivas obligation to close the
merger, no reverse
break-up
fee, a
30-day
go-shop period with unlimited potential parties, full specific
performance, and a mutually satisfactory definition of
Company Material Adverse Effect.
On the evening of May 18, 2010, GT delivered a revised
draft of the merger agreement.
On May 19, 2010, after the terms of the draft merger
agreement were discussed among members of our senior management,
and representatives of Goldman Sachs, K&L Gates and RLF,
K&L Gates delivered a
25
revised draft of the merger agreement to Gentiva seeking to
address the remaining issues. During the period extending from
May 19, 2010 through May 23, 2010, representatives of
Odyssey and Gentiva continued to exchange drafts of the merger
agreement and negotiate the terms thereof.
On May 20, 2010, Gentivas board of directors held a
meeting at which Gentivas management and financial and
legal advisors provided reports regarding the terms of the
potential transaction, the results to date of the due diligence
investigation, the status of negotiations with Odyssey and the
draft merger agreement, as well as the status of the transaction
financing. As a result, Gentivas board of directors
unanimously approved the merger agreement substantially in the
form presented at the meeting and directed Gentivas
management to present to Odyssey an all cash merger offer of
$27.00 per share.
On May 21, 2010, the deadline set by Odyssey for final
transaction proposals to be received from Gentiva and Company B,
Gentiva delivered an updated non-binding written proposal letter
to acquire Odyssey for $27.00 per share in cash. Included with
the proposal letter were a revised merger agreement and a draft
financing commitment letter with financing commitments from Bank
of America, N.A., Barclays Bank PLC, General Electric Capital
Corporation, SunTrust Bank and certain of their respective
affiliates.
After receiving Gentivas proposal on May 21, 2010,
representatives of Goldman Sachs contacted Company Bs
financial advisor to notify Company B that another party had
delivered a final proposal on May 21st and to request
that Company B advise Odyssey of the status of its interest in
acquiring Odyssey. Company Bs financial advisor sent an
email later that day in response to Goldman Sachs request,
expressing that Company B continued to have a serious interest
in acquiring Odyssey, but did not mention the price that Company
B might be willing to pay or a specific timeline by which
Company B would proceed, and Company B did not subsequently
deliver a proposal.
On the morning of May 22, 2010, our board of directors
convened a special meeting to discuss the status of negotiations
with Gentiva. Members of our senior management, representatives
of K&L Gates, and representatives of Goldman Sachs were
also present. Initially, representatives of K&L Gates
reviewed and discussed with our board of directors its fiduciary
duties under Delaware law in regard to the transactions proposed
by Gentiva and Company B. Thereafter, Mr. Lefton provided
our board of directors with an update of the status of the
negotiations with Gentiva and Company B. Mr. Lefton advised
our board of directors of Goldman Sachs communications
with Company Bs financial advisor the previous day and
Company Bs failure to provide a specific proposal as to
price or timing despite its expression of a continuing interest
in acquiring Odyssey. Mr. Bickham and representatives of
K&L Gates then provided a summary of the terms of, and
remaining material business issues relating to, the latest
drafts of the merger agreement, including conditions to closing,
the interim operating covenants, the definition of Company
Material Adverse Effect, the solicitation provisions, including
the go-shop provisions, the termination fee payable
by Odyssey under specified circumstances and the termination
rights of the parties. Mr. Bickham and representatives of
K&L Gates also provided a summary of the terms of, and
remaining material business issues relating to, the draft
financing commitment letter, the amendment to Odysseys
rights agreement to render any rights granted under the rights
agreement inapplicable to the acquisition by Gentiva, the change
of control severance program, and a retention bonus program that
would grant bonuses to selected employees, other than senior
management, in order to ensure that these employees remain
employed during the pendency of the change of control
transaction. After a thorough discussion by our board of
directors, our board of directors instructed senior management,
Goldman Sachs and K&L Gates to negotiate the remaining
issues relating to the terms of the merger agreement in
accordance with its instructions and to minimize the
conditionality of Gentivas financing commitment.
Representatives of Goldman Sachs then reviewed for our board of
directors its updated financial analysis of the $27.00 per share
price offered by Gentiva, and indicated that Goldman Sachs would
be prepared to deliver a fairness opinion if requested by our
board of directors to do so.
During the evening of May 21, 2010 and throughout
May 22, 2010 and May 23, 2010, representatives of
Odyssey and K&L Gates and representatives of Gentiva and GT
held numerous discussions and negotiated the remaining
unresolved issues in the merger agreement and the financing
commitment letter and exchanged drafts of such documents.
On the evening of May 23, 2010, our board of directors
convened a special meeting to review and consider the final
proposal from Gentiva. Members of our senior management and
representatives of K&L
26
Gates and Goldman Sachs were also present. Mr. Lefton
provided an update on the status of the negotiations with
Gentiva and Company B. Mr. Bickham and representatives of
K&L Gates then updated our board of directors on the
material changes to the terms and conditions of the merger
agreement and the financing commitment letter since the last
board meeting on May 22, 2010. Our board of directors was
informed that the remaining issues with the merger agreement had
been resolved satisfactorily in accordance with its previous
instructions and that the conditionality of the financing
commitment letter had been substantially removed. Next,
representatives of Goldman Sachs reviewed for our board of
directors its updated financial analysis of the $27.00 per share
of Odyssey common stock offered by Gentiva. Following questions
and discussion by our board of directors, at the request of our
board of directors, representatives of Goldman Sachs delivered
an oral opinion, which was subsequently confirmed in writing, to
the effect that, as of May 23, 2010 and based upon and
subject to the factors and assumptions set forth in Goldman
Sachs written opinion, the $27.00 per share in cash to be
paid to the holders (other than Gentiva and its affiliates) of
Odyssey common stock pursuant to the Merger Agreement was fair
from a financial point of view to such holders. The full text of
the written opinion of Goldman Sachs is attached to this proxy
statement as Annex B.
Our board of directors then considered the merger from a
business, financial and legal perspective and the current
conditions in the healthcare industry and also considered the
reasons for the merger described in The Merger
The Recommendation of our Board of Directors and the Reasons for
the Merger. After careful consideration and deliberation,
our board of directors unanimously (a) determined that the
Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement were advisable, fair to and
in the best interests of Odyssey and its stockholders,
(b) approved and authorized the execution of the Merger
Agreement and the consummation of the Merger and the other
transactions contemplated by the Merger Agreement,
(c) directed that the adoption of the Merger Agreement be
submitted to the Odyssey stockholders for consideration, and
(d) resolved to recommend that the Odyssey stockholders
approve the Merger and adopt the Merger Agreement.
Goldman Sachs and our board of directors then engaged in a
discussion of the go-shop process to be conducted
after the signing of the Merger Agreement.
Late in the evening on May 23, 2010, Odyssey and Gentiva
executed the Merger Agreement and Gentiva delivered the fully
executed Commitment Letter.
On the morning of May 24, 2010, prior to the open of the
financial markets, Gentiva issued a press release announcing the
Merger Agreement and the Merger.
The Merger Agreement provides that, until 11:59 p.m.
(Central Time) on June 22, 2010, Odyssey was permitted to
initiate, solicit and encourage the submission of Acquisition
Proposals. Commencing on May 24, 2010, Odyssey, with the
assistance of Goldman Sachs, began soliciting and encouraging
alternative acquisition proposals from third parties. During the
process, Goldman Sachs contacted 12 potential strategic and
financial buyers that were identified as potential acquirers of
Odyssey, including Company A and Company B. These parties were
selected by our board of directors in consultation with our
management and Goldman Sachs. None of these potential acquirers
submitted an Acquisition Proposal or otherwise expressed an
interest in evaluating the acquisition opportunity. In addition,
two unsolicited potential acquirers contacted Goldman Sachs
before June 22, 2010, but neither decided to evaluate the
acquisition opportunity.
The
Recommendation of our Board of Directors and the Reasons for the
Merger
Our board of directors, acting with the advice and assistance of
independent legal and financial advisors, evaluated and
negotiated the Merger, including the terms and conditions of the
Merger Agreement, with Gentiva. Our board of directors
unanimously (i) determined that the Merger Agreement, the
Merger and the other transactions contemplated by the Merger
Agreement are advisable, fair to and in the best interests of
Odyssey and its stockholders, (ii) approved and authorized
to be taken all corporate action required to authorize the
execution of the Merger Agreement and the consummation of the
Merger and the other transactions contemplated by the Merger
Agreement and (iii) resolved to recommend that the
stockholders approve the Merger and adopt the Merger Agreement.
27
In the course of reaching its determination, our board of
directors consulted with management and its financial and legal
advisors and considered a number of factors, including, among
others, the following:
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The current and historical market prices of our common stock and
the fact that the proposed per share merger consideration of
$27.00 represents (1) a premium for our common stock of
approximately 40% to the closing price of our common stock on
May 21, 2010, the last trading day before the public
announcement of the Merger and the Merger Agreement, (2) a
premium for our common stock of approximately 26.8% to the
52-week high price of our common stock, (3) a 34.3% premium
to the average price per share of our common stock during the
1-month
period ending May 21, 2010, (4) a 42.4% premium to the
average price per share of our common stock during the
three-month period ending May 21, 2010, (5) a 56.3%
premium to the average price per share of our common stock
during the six-month period ending May 21, 2010, and
(6) a 85.4% premium to the average price per share of our
common stock during the
1-year
period ending May 21, 2010.
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The fact that the proposed per share merger consideration of
$27.00 substantially exceeded the per share price proposed by
Company B.
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The fact that the proposed merger consideration will be paid in
cash, allowing Odysseys stockholders to immediately
realize a fair value for their investment, while also providing
the stockholders certainty of value for their shares and
avoiding long-term business risk.
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Odysseys current and historical financial condition and
results of operations and its financial plan and prospects if it
were to remain an independent company, including the following
specific factors:
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notwithstanding that Odyssey has been successful in closing and
integrating the VistaCare acquisition and numerous smaller
acquisitions and has actively solicited and considered business
combinations as a means of growth, given the fragmented hospice
industry, the high purchase price multiples based on earnings
before interest, taxes, depreciation and amortization, or
EBITDA, that are required to acquire existing hospice programs
of significant size and the lack of availability of sizable
hospice providers, the fact that Odyssey has limited
opportunities in the near term to achieve significant growth as
an independent company through any significant acquisitions or
merger transactions in the hospice industry;
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the belief that Odyssey is unlikely to achieve significant
organic growth in the near term as an independent company by
establishing new hospices in new locations or, in light of
increasing competition for patient referrals, materially
increasing census at its existing hospice locations;
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the belief that the price per share for our common stock was not
expected to significantly appreciate in the near term to levels
comparable to the price offered by Gentiva;
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the fact that over 90% of our net patient service revenue is
derived from Medicare payments, which are adjusted annually by a
market basket index determined by the Medicare program, and, in
light of current and anticipated budget pressures on Medicare
reimbursements, the likelihood that our net patient service
revenue and profitability may be significantly reduced as a
result of numerous recent initiatives on the federal and state
government level that affect the payment for hospice services,
including the phase-out of the budget neutrality adjustment
factor used in computing the hospice wage index that will result
in a reduction in the annual market basket rate, the further
reduction of the annual market basket rate increase by a
productivity adjustment factor pursuant to recent health care
reform legislation, the enactment pursuant to recent health care
reform legislation of certain recommendations by the Medicare
Payment Advisory Commission that may result in increased
operating costs in the future, and the uncertainty of
reimbursement following discussions of payment changes at the
federal and state government levels; and
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trends in the hospice industry and the possible strategic
alternatives to the sale of Odyssey to Gentiva, including
continuing to operate Odyssey independently (whether on a
stand-alone basis or following one or more significant
acquisitions), growth through acquisitions of or mergers with
other companies in the hospice industry or complementary
industries, leveraged buyouts, stock repurchases and organic
growth, and the risks and uncertainties associated with such
strategic alternatives, each of which our board of directors
determined not to pursue in light of its belief, and the belief
of our
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senior management, that the merger with Gentiva maximized
stockholder value and was more favorable to the stockholders
than other alternatives reasonably available to Odyssey and its
stockholders.
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The availability of dissenters appraisal rights for
Odyssey stockholders who properly exercise and perfect their
rights under Delaware law, which would give these stockholders
the ability to seek and be paid a judicially determined
appraisal of the fair value of their shares of
common stock at the completion of the Merger.
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The opinion rendered by Goldman Sachs to our board of directors,
to the effect that, as of May 23, 2010, and based upon and
subject to the factors and assumptions set forth in Goldman
Sachs written opinion, the $27.00 per share in cash to be
paid to the holders (other than Gentiva and its affiliates) of
our common stock pursuant to the Merger Agreement was fair from
a financial point of view to such holders, and the financial
analyses presented by Goldman Sachs to our board of directors in
connection with the rendering of its opinion, as more fully
described in the section entitled The Merger
Opinion of Financial Advisor.
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The belief by our board of directors that the competitive
process by which the Merger was negotiated with Gentiva and
Company B led to more favorable terms, including an increase in
the per share purchase price and lower termination fees, as
compared to the offer price and termination fees originally
offered by Gentiva. The belief by our board of directors that
based on the negotiations with Gentiva, it was unlikely that
additional discussions with Gentiva would yield a higher price.
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The belief by our board of directors (after consulting with its
outside financial advisor and outside legal counsel) that the
termination fee of $24,100,000 in the case of a Superior
Proposal by an Excluded Party (as defined in The Merger
Agreement Restrictions on Solicitations of Other
Offers) or $28,900,000 in the case of a Superior Proposal
by any other third party was reasonable and proportionate and
comparable to similar fees in transactions of a similar size.
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The business reputation and capabilities of Gentiva, its
management and its financial resources, and the likelihood that
the Merger could be completed relatively quickly and in an
orderly manner.
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The fact that Gentivas obligation to consummate the Merger
is not subject to any financing condition or other financing
contingency in the Merger Agreement and is supported by the
financing commitments of the Lenders provided reasonable
certainty of consummation.
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In addition to the items highlighted above, the other terms and
conditions contained in the Merger Agreement, the Commitment
Letter and other related agreements, including, among others:
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the representations, warranties and covenants of the parties
contained in the Merger Agreement;
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the limited number and nature of the conditions to
Gentivas obligations to consummate the Merger and the
limited risk of non-satisfaction of such conditions provide
reasonable certainty of completion of the Merger;
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the provisions of the Merger Agreement that permit our board of
directors, under certain circumstances, to withdraw, modify or
change in a manner adverse to Gentiva, the board of
directors recommendation to Odyssey stockholders that they
vote their shares in favor of adoption of the Merger Agreement
and to terminate the Merger Agreement if certain conditions are
satisfied, including in response to a Superior Proposal;
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the provisions of the Merger Agreement that grant Odyssey
(1) a
30-day
period during which we are permitted to actively seek and
negotiate competing Acquisition Proposals (as defined in
The Merger Agreement Restrictions on
Solicitations of Other Offers) for a business combination
or acquisition, (2) the right, even after the end of the
30-day
solicitation period, subject to certain conditions, for us to
continue to explore Acquisition Proposals made by any interested
party during the
30-day
solicitation period, and (3) the right, even after the end
of the
30-day
solicitation period, subject to certain conditions, for us to
explore unsolicited Acquisition Proposals and to terminate the
Merger Agreement and accept a Superior Proposal (as defined in
The Merger Agreement Restrictions on
Solicitations of Other Offers) as determined by our board
of directors prior to the adoption of the
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Merger Agreement by our stockholders at the special meeting
contemplated by this proxy statement, subject to payment to
Gentiva of what our board of directors believed (after
consulting with its outside financial advisor and outside legal
counsel) was a reasonable termination fee of $24,100,000 in the
case of a Superior Proposal by an Excluded Party (as defined in
The Merger Agreement Restrictions on
Solicitations of Other Offers) or $28,900,000 in the case
of a Superior Proposal by any other third party;
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the provisions of the Merger Agreement that entitle Odyssey to
enforce specifically the terms and provisions of the Merger
Agreement if Gentiva were unwilling or unable to complete the
Merger when required to do so under the terms of the Merger
Agreement or, in certain circumstances, to seek damages,
including damages based on the consideration that would have
otherwise been payable to the Odyssey stockholders if the Merger
were completed, from Gentiva; and
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the fact that the financing commitments set forth in the
Commitment Letter (i) provide for financing in an aggregate
amount sufficient to enable Gentiva to consummate the Merger and
refinance in full its existing debt and that of Odyssey,
(ii) are fully underwritten by major, creditworthy
financial institutions, (iii) are not subject to a
pre-closing marketing period (other than, with respect to the
unsecured senior notes portion of the financing commitments, a
30-day
period, not including any days between August 23 and
September 5, following delivery by Gentiva to its
investment bank of a preliminary offering memorandum for the
senior notes), and (iv) constitute binding agreements
subject to limited conditionality.
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The fact that the terms and conditions of the Merger Agreement
were the product of arms-length negotiation between the
parties.
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The likelihood that federal capital gains tax rates will
increase in 2011.
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Our board of directors also considered a variety of risks and
other potentially negative factors concerning the Merger
Agreement and the Merger, including, among others, the following:
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The possibility that the Merger may not be consummated and the
potential risks and costs to Odyssey and its stockholders if the
Merger is not consummated, including the diversion of management
and employee attention, significant transactions costs incurred
by Odyssey, potential employee attrition and the potential
effect on Odysseys continuing business and its
relationships with customers, business partners, suppliers and
employees.
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The risk of a material decline in Odysseys share price if
the Merger is not consummated, particularly in light of the
significant increase in Odysseys share price that occurred
subsequent to the public announcement of the Merger.
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The fact that Odysseys stockholders will not participate
in any future earnings or growth of Odyssey and will not benefit
from any appreciation in value of Odyssey, including any
appreciation in value that could be realized as a result of
improvements to Odysseys operations.
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The restrictions on the conduct of Odysseys business prior
to the completion of the Merger, requiring Odyssey to conduct
its business only in the ordinary course, subject to specific
limitations, and to use its commercially reasonable efforts to
preserve intact its business organizations which may delay or
prevent Odyssey from undertaking business opportunities that may
arise pending completion of the Merger or preclude actions that
would be advisable if Odyssey were to remain an independent
company.
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Other than discussions with Company A and Company B, the fact
that Odyssey did not conduct an auction or market check before
entering into the Merger Agreement.
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The termination fee payable under specified circumstances to
Gentiva if the Merger Agreement is terminated, and the potential
effect that such termination fee may have in deterring other
potential acquirors from making competing proposals that could
be more advantageous to Odysseys stockholders.
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30
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The fact that, for U.S. federal income tax purposes, the
Merger would be taxable to Odysseys stockholders that are
U.S. stockholders (as defined in Material
U.S. Federal Income Tax Consequences of the Merger to Our
Stockholders beginning on page 43).
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The potential conflicts of interest of Odysseys directors
and executive officers, as described in the section entitled
Interests of Our Directors and Officers in the
Merger.
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This discussion summarizes the material factors considered by
our board of directors in its consideration of the Merger. After
considering these factors, our board of directors concluded that
the positive factors relating to the Merger Agreement and the
Merger significantly outweighed the potential negative factors.
In view of the wide variety of factors considered by our board
of directors, and the complexity of these matters, our board of
directors did not find it practicable to quantify or otherwise
assign relative weights to the foregoing factors. In addition,
individual members of our board of directors may have assigned
different weights to various factors. Our board of directors
unanimously approved and recommended the Merger Agreement and
the Merger based upon the totality of the information presented
to and considered by it. Our board of directors believes that
the Merger is in the best interests of Odyssey and its
stockholders.
Opinion
of Financial Advisor
Goldman Sachs rendered its opinion to Odysseys board of
directors that, as of May 23, 2010 and based upon and
subject to the factors and assumptions set forth therein, the
$27.00 per share in cash to be paid to the holders (other than
Gentiva and its affiliates) of Odyssey common stock pursuant to
the Merger Agreement was fair from a financial point of view to
such holders.
The full text of the written opinion of Goldman Sachs, dated
May 23, 2010, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as
Annex B. Goldman Sachs provided its opinion for the
information and assistance of Odysseys board of directors
in connection with its consideration of the Merger. The Goldman
Sachs opinion is not a recommendation as to how any holder of
Odyssey common stock should vote with respect to the Merger or
any other matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
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the Merger Agreement;
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annual reports to stockholders and Annual Reports on
Form 10-K
of Odyssey for the five fiscal years ended December 31,
2009;
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certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of Odyssey;
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certain publicly available research analyst reports for Odyssey;
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certain other communications from Odyssey to its
stockholders; and
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certain internal financial analyses and forecasts for Odyssey
prepared by its management, as approved for Goldman Sachs
use by Odyssey.
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Goldman Sachs also held discussions with members of the senior
management of Odyssey regarding their assessment of the past and
current business operations, financial condition and future
prospects of Odyssey; reviewed the reported price and trading
activity for Odyssey common stock; compared certain financial
and stock market information for Odyssey with similar
information for certain other companies the securities of which
are publicly traded; reviewed the financial terms of certain
recent business combinations in the home health and hospice
industry specifically and in other industries generally; and
performed such other studies and analyses and considered such
other factors, as it deemed appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it and it did not assume any responsibility for any
such information. In that regard, Goldman Sachs assumed with
Odysseys consent that the forecasts for Odyssey had been
reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the management of Odyssey.
In addition, Goldman Sachs did
31
not make an independent evaluation or appraisal of the assets
and liabilities (including any contingent, derivative or other
off-balance-sheet assets and liabilities) of Odyssey or any of
its subsidiaries, nor was any such evaluation or appraisal
furnished to Goldman Sachs. Goldman Sachs assumed that all
governmental, regulatory or other consents and approvals
necessary for the consummation of the Merger will be obtained
without any adverse effect on the expected benefits of the
Merger in any way meaningful to its analysis. Goldman Sachs also
assumed that the Merger will be consummated on the terms set
forth in the Merger Agreement, without the waiver or
modification of any term or condition the effect of which would
be in any way meaningful to its analysis.
Goldman Sachs opinion does not address the underlying
business decision of Odyssey to engage in the Merger or the
relative merits of the Merger as compared to any strategic
alternatives that may be available to Odyssey; nor does its
address any legal, regulatory, tax or accounting matters.
Goldman Sachs opinion addresses only the fairness from a
financial point of view, as of May 23, 2010, of the $27.00
per share in cash to be paid to the holders (other than Gentiva
and its affiliates) of Odyssey common stock pursuant to the
Merger Agreement. Goldman Sachs opinion does not express
any view on, and does not address, any other term or aspect of
the Merger Agreement or the Merger or any term or aspect of any
other agreement or instrument contemplated by the Merger
Agreement or entered into or amended in connection with the
Merger, including, without limitation, the fairness of the
Merger to, or any consideration received in connection therewith
by, the holders of any other class of securities, creditors, or
other constituencies of Odyssey; nor as to the fairness of the
amount or nature of any compensation to be paid or payable to
any of the officers, directors or employees of Odyssey, or class
of such persons, in connection with the Merger, whether relative
to the $27.00 per share in cash to be paid to the holders (other
than Gentiva and its affiliates) of Odyssey common stock
pursuant to the Merger Agreement or otherwise. Goldman Sachs
does not express any opinion as to the impact of the Merger on
the solvency or viability of Odyssey or Gentiva or the ability
of Odyssey or Gentiva to pay its obligations when they come due.
In addition, Goldman Sachs opinion was necessarily based
on economic, monetary, market and other conditions, as in effect
on, and the information made available to it as of, May 23,
2010 and Goldman Sachs assumed no responsibility for updating,
revising or reaffirming its opinion based on circumstances,
developments or events occurring after May 23, 2010.
Goldman Sachs opinion was approved by a fairness committee
of Goldman Sachs.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to the board of directors of Odyssey
in connection with rendering the opinion described above. The
following summary, however, does not purport to be a complete
description of the financial analyses performed by Goldman
Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman
Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a
complete description of Goldman Sachs financial analyses.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed on or before May 21,
2010 and is not necessarily indicative of current market
conditions.
Historical Stock Trading Analysis.
Goldman
Sachs reviewed the historical trading prices for Odyssey common
stock for the period beginning on October 31, 2001 (the
date of the initial public offering of Odyssey common stock) and
ended on May 21, 2010 (the last trading day before the
Merger Agreement was announced). In addition, Goldman Sachs
analyzed the $27.00 per share in cash to be paid to holders
(other than Gentiva and its affiliates) of Odyssey common stock
pursuant to the Merger Agreement in relation to the closing
price of Odyssey common stock on May 21, 2010, the average
closing prices of Odyssey common stock during the one-month,
three-month, six-month, one-year, three-year and five-year
periods ended May 21, 2010, the average closing price of
the Odyssey common stock during the period from the initial
public offering of Odyssey common stock on October 31, 2001
until May 21, 2010, and the highest closing price of the
Odyssey common stock during the 52-week period ended
May 21, 2010 and during the five-year period ended
May 21, 2010.
This analysis indicated that the price per share to be paid to
Odyssey stockholders pursuant to the Merger Agreement
represented premia of:
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40.0% to the closing price of $19.29 per share on May 21,
2010;
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34.3% to the average closing price of $20.11 per share for the
one-month period ended May 21, 2010;
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42.4% to the average closing price of $18.97 per share for the
three-month period ended May 21, 2010;
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56.3% to the average closing price of $17.27 per share for the
six-month period ended May 21, 2010;
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85.4% to the average closing price of $14.56 per share for the
one-year period ended May 21, 2010;
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136.6% to the average closing price of $11.41 per share for the
three-year period ended May 21, 2010;
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106.0% to the average closing price of $13.10 per share for the
five-year period ended May 21, 2010;
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81.6% to the average closing price of $14.87 per share from the
initial public offering of Odyssey common stock on
October 31, 2001 until May 21, 2010;
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26.8% to the highest closing price of $21.29 per share during
the one-year period ended May 21, 2010; and
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26.8% to the highest closing price of $21.29 during the
five-year period ended May 21, 2010.
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Selected Companies Analysis.
Goldman Sachs
reviewed and compared certain financial information for Odyssey
to corresponding financial information for the following
publicly traded corporations in the hospice and home care
industry:
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Almost Family, Inc.
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Amedisys, Inc.
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Chemed Corporation
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Gentiva
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LHC Group, Inc.
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Although none of the selected companies is directly comparable
to Odyssey, the companies included were chosen because they are
publicly traded companies with operations that for purposes of
analysis may be considered similar to certain operations of
Odyssey.
With respect to Odyssey and each of the selected companies,
Goldman Sachs calculated:
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enterprise value as a multiple of estimated earnings before
interest, taxes, depreciation and amortization, or EBITDA, for
each of 2010 and 2011;
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share price as a multiple of estimated earnings per share, or
EPS (P/E multiple), for 2010 and 2011; and
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the ratio of 2010 and 2011 estimated P/E multiples to estimated
5-year
cumulative average EPS growth rate (P/E/G ratio).
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For purposes of these calculations, Goldman Sachs utilized an
equity value for each company derived by multiplying the number
of fully diluted outstanding shares of that company as reported
in its most recent SEC filings by the companys closing
share price on May 21, 2010. By adding the net debt amount
of each company as reported in its most recent SEC filings to
the equity value of such company derived from the foregoing
calculations, Goldman Sachs determined an enterprise value for
each company. The multiples and ratios for Odyssey and for the
selected companies were calculated using estimates published by
Institutional Brokers Estimate System, or IBES. The
results of these analyses are summarized as follows:
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Selected Companies
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EV as a Multiple of:
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Range
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Median
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Odyssey
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2010E EBITDA
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5.0x-7.4x
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5.5x
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6.3x
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2011E EBITDA
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5.2x-6.9x
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5.8x
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5.9x
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Selected Companies
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Price/Earnings Ratio:
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Range
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Median
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Odyssey
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2010E
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8.6x-14.5x
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10.8x
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12.5x
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2011E
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9.4x-13.4x
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11.3x
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11.4x
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Illustrative Discounted Cash Flow
Analysis.
Goldman Sachs performed an illustrative
discounted cash flow analysis based on Odyssey managements
estimate of Odysseys unlevered free cash flows to derive
ranges of illustrative present values per share of Odyssey
common stock.
In conducting its discounted cash flow analysis, Goldman Sachs
used a range of discount rates from 9.5% to 11.0%, derived from
utilizing a weighted average cost of capital analysis based on
the capital asset pricing model and taking into account certain
financial metrics, including betas, for Odyssey and the selected
companies, as well as certain financial metrics for the United
States equity markets generally. Goldman Sachs derived
illustrative ranges of implied enterprise values for Odyssey by
discounting to present value as of July 1, 2010
(a) estimates of Odysseys unlevered free cash flows
for the second half of 2010 and for 2011 through 2014 and
(b) illustrative terminal values for Odyssey as of
December 31, 2014 derived by applying illustrative
perpetuity growth rates ranging from 1.0% to 3.0% to estimated
unlevered free cash flow for Odyssey for 2014. Unlevered free
cash flow for each period was calculated as Odysseys
projected EBITDA, minus projected taxes (calculated by
multiplying the tax rate contained in Odysseys forecasts
by Odysseys projected EBIT), minus its projected capital
expenditures and minus the projected increase in net working
capital. In addition, stock based compensation expense was
treated as a cash expense for purposes of determining unlevered
free cash flow. The range of perpetuity growth rates was
estimated by Goldman Sachs utilizing its professional judgment
and experience, taking into account the forecasts for Odyssey
prepared by its management and market expectations regarding
long-term growth of gross domestic product and inflation. This
analysis resulted in an illustrative range of implied terminal
EBITDA multiples of 5.9x to 9.2x.
To calculate the illustrative ranges of present values per share
of Odyssey common stock, Goldman Sachs subtracted Odysseys
net debt amount as of June 30, 2010 from the illustrative
ranges of implied enterprise values it derived for Odyssey and
divided the result by the number of shares of Odyssey common
stock, Options (using the weighted average exercise price) and
Restricted Stock Units outstanding as of May 19, 2010.
This analysis resulted in an illustrative range of present
values per share of Odyssey common stock of $20.23 to $28.64.
Illustrative Present Value of Future Stock Price
Analysis.
Goldman Sachs calculated illustrative
ranges of implied present values per share of Odyssey common
stock based on hypothetical future share prices for Odyssey
common stock for each of 2010 through 2014. For purposes of this
analysis, Goldman Sachs derived hypothetical future share prices
for Odyssey common stock by applying forward P/E multiples
ranging from 11.0x to 15.0x to Odysseys managements
estimate of EPS for Odyssey for each of 2010 through 2014. The
illustrative P/E multiples were derived by Goldman Sachs
utilizing its professional judgment and experience, taking into
account historical average P/E multiples for Odyssey common
stock during the three-year period ended May 21, 2010. By
applying illustrative discount rates of 11.0% and 13.5%,
reflecting estimates of Odysseys cost of equity based on
the capital asset pricing model (taking into account certain
financial metrics, including betas, for Odyssey and the selected
companies, as well as certain financial metrics for the
United States equity markets generally) and adding a size
premium to the cost of equity for Odyssey consistent with
statistics from Ibbotson Associates, to these hypothetical
future share prices, Goldman Sachs derived implied present
values per share of Odyssey common stock ranging from $14.52 to
$23.55 when applying an 11.0% discount rate, and $13.28 to
$23.55, when applying a 13.5% discount rate.
Using the same forecasts, Goldman Sachs analyzed the potential
impact of a share repurchase on the implied present value of
future share prices. For purposes of the analysis, Goldman Sachs
assumed a $50 million share repurchase in 2010, share
repurchases of $30 million in each of 2011 through 2014, a
constant P/E ratio of 12.4x and a share repurchase premium of
5%. The sensitivity analysis indicated implied present values
per share of Odyssey common stock ranging from $17.64 to $25.19
when applying an 11.0% discount rate, and $16.14 to $25.19 when
applying a 13.5% discount rate.
34
Illustrative Leveraged Buyout
Analysis.
Goldman Sachs performed an illustrative
leveraged buyout analysis using projections provided by
Odysseys management. Goldman Sachs calculated the implied
value per share that would generate an internal rate of return
of 20% assuming the following: (i) a range of exit EBITDA
multiples of 7.0x to 9.0x for the assumed exit at the end of
2014, and (ii) leverage ratios of debt over EBITDA for the
last twelve months ended March 31, 2010, or LTM, between
4.0x and 5.0x and an assumed interest rate range on the
buyers debt in connection with the transaction of 7.0% to
12.5%, derived by Goldman Sachs utilizing its professional
judgment and experience. The exit EBITDA multiples reflect
illustrative implied prices at which a hypothetical buyer might
exit its investment through a sale transaction and were derived
by Goldman Sachs utilizing its professional judgment and
experience, taking into account historical average EV to EBITDA
multiples for Odyssey common stock during the three-year period
ended May 21, 2010. This analysis resulted in illustrative
purchase prices per share of Odyssey common stock ranging from
$19.06 and $22.83.
Goldman Sachs also derived illustrative equity returns to a
hypothetical financial buyer assuming an exit year of 2014, a
total leverage ratio of debt over LTM EBITDA of 4.5x and an
assumed interest rate range on the buyers debt in
connection with the transaction of 7.0% to 12.5%. Goldman Sachs
assumed, for purposes of this analysis, a purchase price for
Odyssey common stock ranging from $19.29 per share to $26.00 per
share, or a premium ranging from 0.0% to 34.8% over the market
price of Odyssey as of May 21, 2010, and a range of
estimated exit EBITDA multiples of 7.0x to 9.0x for the assumed
exit at the end of 2014. This analysis resulted in illustrative
equity returns to a hypothetical financial buyer ranging from
5.8% to 28.8%.
General.
The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to
partial analysis or summary description. Selecting portions of
the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete
view of the processes underlying Goldman Sachs opinion. In
arriving at its fairness determination, Goldman Sachs considered
the results of all of its analyses and did not attribute any
particular weight to any factor or analysis considered by it.
Rather, Goldman Sachs made its determination as to fairness on
the basis of its experience and professional judgment after
considering the results of all of its analyses. No company or
transaction used in the above analyses as a comparison is
directly comparable to Odyssey or the contemplated Merger.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to Odysseys board of directors
that, as of May 23, 2010 and based upon and subject to the
factors and assumptions set forth therein, the $27.00 per share
in cash to be paid to the holders (other than Gentiva and its
affiliates) of Odyssey common stock pursuant to the Merger
Agreement was fair from a financial point of view to such
holders. These analyses do not purport to be appraisals nor do
they necessarily reflect the prices at which businesses or
securities actually may be sold. Analyses based upon forecasts
of future results are not necessarily indicative of actual
future results, which may be significantly more or less
favorable than suggested by these analyses. Because these
analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or
their respective advisors, none of Odyssey, Gentiva, Goldman
Sachs or any other person assumes responsibility if future
results are materially different from those forecast.
The Merger Consideration was determined through
arms-length negotiations between Odyssey and Gentiva and
was approved by Odysseys board of directors. Goldman Sachs
provided advice to Odyssey during these negotiations. Goldman
Sachs did not, however, recommend any specific amount of
consideration to Odyssey or its board of directors or that any
specific amount of consideration constituted the only
appropriate consideration for the Merger.
As described above, Goldman Sachs opinion to
Odysseys board of directors was one of many factors taken
into consideration by Odysseys board of directors in
making its determination to approve the Merger Agreement. The
foregoing summary does not purport to be a complete description
of the analyses performed by Goldman Sachs in connection with
the fairness opinion and is qualified in its entirety by
reference to the written opinion of Goldman Sachs attached as
Annex B.
Goldman Sachs and its affiliates are engaged in investment
banking and financial advisory services, commercial banking,
securities trading, investment management, principal investment,
financial planning,
35
benefits counseling, risk management, hedging, financing,
brokerage activities and other financial and non-financial
activities and services for various persons and entities. In the
ordinary course of these activities and services, Goldman Sachs
and its affiliates may at any time make or hold long or short
positions and investments, as well as actively trade or effect
transactions, in the equity, debt and other securities (or
related derivative securities) and financial instruments
(including bank loans and other obligations) of third parties,
Odyssey, Gentiva and any of their respective affiliates or any
currency or commodity that may be involved in the Merger for
their own account and for the accounts of their customers.
Goldman Sachs has acted as financial advisor to Odyssey in
connection with, and participated in certain of the negotiations
leading to, the Merger. In addition, Goldman Sachs has provided
certain investment banking and other financial services to
Odyssey and its affiliates from time to time for which the
investment banking division of Goldman Sachs has received, and
may receive, compensation. Goldman Sachs also has provided
certain investment banking and other financial services to
Gentiva and its affiliates from time to time for which the
investment banking division of Goldman Sachs has received, and
may receive, compensation, including having acted as
Gentivas financial advisor in connection with the sale of
a majority of interest in Gentiva CareCentrix, Inc. to Water
Street Healthcare Partners II, L.P. in August 2008. Goldman
Sachs also may provide investment banking and other financial
services to Odyssey and Gentiva and their respective affiliates
in the future for which the investment banking division of
Goldman Sachs may receive compensation.
The board of directors of Odyssey selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the Merger. Pursuant to a letter
agreement dated April 21, 2010, Odyssey engaged Goldman
Sachs to act as its financial advisor in connection with the
contemplated Merger. Pursuant to the terms of this engagement
letter, Odyssey has agreed to pay Goldman Sachs a transaction
fee of approximately $12 million, the principal portion of
which is contingent upon consummation of the Merger. In
addition, Odyssey has agreed to reimburse Goldman Sachs for its
expenses, including attorneys fees and disbursements, and
to indemnify Goldman Sachs and related persons against various
liabilities, including certain liabilities under the federal
securities laws.
Financial
Projections
Odyssey generally does not make public projections as to future
performance, earnings or other results. However, senior
management of Odyssey did make available to Company B and
Gentiva and their respective financial advisors, certain
non-public financial projections (as described below) originally
prepared for Odysseys internal use and responded to
questions regarding such financial projections.
In April 2010, management prepared projections of Odysseys
standalone financial performance for fiscal years 2010 through
2014 (the Projections), which take into account,
among other things, our financial results for 2009 and the
quarter ended March 31, 2010 and managements
judgments with respect to the impact of recent health care
reform legislation on our business. The projections are
summarized below and were approved for use by Goldman Sachs in
connection with its rendering of its fairness opinion to our
board of directors and performing its related financial
analyses, as described in the section entitled The
Merger Opinion of Financial Advisor.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
FY 2010
|
|
FY 2011
|
|
FY 2012
|
|
FY 2013
|
|
FY 2014
|
|
|
($ in millions)
|
|
|
(Unaudited)
|
|
Net Revenue
|
|
$
|
704
|
|
|
$
|
737
|
|
|
$
|
775
|
|
|
$
|
806
|
|
|
$
|
844
|
|
Operating Expenses
|
|
|
609
|
|
|
|
635
|
|
|
|
665
|
|
|
|
693
|
|
|
|
723
|
|
EBITDA
|
|
|
96
|
|
|
|
101
|
|
|
|
110
|
|
|
|
113
|
|
|
|
120
|
|
Net income (to Odyssey stockholders)
|
|
|
53
|
|
|
|
56
|
|
|
|
62
|
|
|
|
65
|
|
|
|
71
|
|
Net cash provided by operating activities
|
|
|
69
|
|
|
|
69
|
|
|
|
76
|
|
|
|
77
|
|
|
|
84
|
|
Cash and Cash Equivalents at December 31
|
|
$
|
196
|
|
|
$
|
235
|
|
|
$
|
265
|
|
|
$
|
306
|
|
|
$
|
353
|
|
36
The assumptions upon which the Projections were based
necessarily involve judgments with respect to, among other
things, future economic and competitive conditions and financial
market conditions, which are difficult to predict accurately and
many of which are beyond Odysseys control.
We cannot assure you that the Projections will be realized and
actual results may vary materially from those shown. Important
factors that may affect actual results and result in the
Projections not being achieved include, but are not limited to,
the risks described in Odysseys most recent annual and
quarterly reports filed with the SEC on
Forms 10-K
and
10-Q,
respectively, and in this proxy statement under the heading
Cautionary Statement Concerning Forward-Looking
Information. The Projections also cover multiple years and
by their nature become subject to greater uncertainty with each
successive year. Furthermore, and for the same reasons, the
Projections should not be construed as commentary by
Odysseys management as to how management expects
Odysseys actual results to compare to research
analysts estimates.
The Projections included in this proxy statement have been
prepared by, and are the responsibility of, Odysseys
management. The Projections were not prepared with a view toward
public disclosure and, accordingly, do not necessarily comply
with published guidelines of the SEC, the guidelines established
by the American Institute of Certified Public Accountants for
preparation and presentation of financial forecasts, or
generally accepted accounting principles. Ernst &
Young LLP, Odysseys independent registered public
accounting firm, has not audited, reviewed, compiled or
performed any procedures with respect to the Projections and
does not express an opinion or any form of assurance with
respect thereto. The summary of the Projections is not being
included in this proxy statement to influence a
stockholders decision whether to vote in favor of the
proposal to approve the Merger and adopt the Merger Agreement,
but because the Projections were made available to Gentiva and
represent an assessment by Odysseys management of future
cash flows and were approved by us for use by Goldman Sachs in
connection with its rendering of its fairness opinion to our
board of directors, and performing its related financial
analyses, as described in the section entitled The
Merger Opinion of Financial Advisor.
The inclusion of the Projections in this proxy statement should
not be regarded as an indication that Odyssey or any of its
affiliates, advisors or representatives considered or considers
the Projections to be predictive of actual future events, and
the Projections should not be relied on as such. Neither Odyssey
nor any of its affiliates, advisors, officers, directors or
representatives can give any assurance that actual results will
not differ from these Projections, and none of them undertakes
any obligation to update or otherwise revise or reconcile the
Projections to reflect circumstances existing or arising after
the date such Projections were generated or to reflect the
occurrence of future events even if any or all of the
assumptions underlying the Projections are shown to be in error.
Odyssey does not intend to make publicly available any update or
other revision to the Projections, except as required by law.
Neither Odyssey nor any of its affiliates, advisors, officers,
directors or representatives has made or makes any
representation to any stockholder or other person regarding the
ultimate performance of Odyssey compared to the information
contained in the Projections or that projected results will be
achieved. Odyssey has made no representation to Gentiva, in the
Merger Agreement or otherwise, concerning the Projections.
Odysseys stockholders are cautioned not to place undue
reliance on the projected financial information included in this
proxy statement.
Financing
of the Merger
Gentiva has received a commitment letter (the Commitment
Letter), dated as of May 23, 2010 from Bank of
America, N.A., Banc of America Bridge LLC, Banc of America
Securities LLC, Barclays Bank PLC, Barclays Capital, General
Electric Capital Corporation, GE Capital Markets, Inc., SunTrust
Bank and Sun Trust Robinson Humphrey, Inc. (collectively,
the Lenders) to provide, subject to the conditions
set forth in the Commitment Letter, debt financing for the
purposes of paying the Merger Consideration and other costs and
expenses related to the Merger, repaying certain existing
indebtedness of Odyssey and Gentiva and their respective
subsidiaries, and financing of the ongoing working capital and
other general corporate needs of Gentiva and its subsidiaries
after the consummation of the Merger in the following amounts:
(i) $925 million in senior secured credit facilities
of Gentiva (the Senior Credit Facilities),
comprising (a) term loan facilities
37
aggregating $800 million and (b) a revolving credit
facility of $125 million; and (ii) $305 million
in gross proceeds from the issuance and sale by Gentiva of
senior unsecured notes (the Senior Notes), or, if
and to the extent that, less than $305 million in Senior
Notes are issued and sold on or prior to the closing date of the
Merger, $305 million of unsecured loans under a bridge
facility (the Bridge Facility, and collectively with
the Senior Credit Facilities and the Senior Notes, the
Financing).
The commitments of the Lenders under the Commitment Letter
expire on October 29, 2010 unless the Merger is consummated
prior to such date.
The commitments of the Lenders under the Commitment Letter are
subject to the negotiation, execution and delivery of definitive
documentation with respect to the Financing, and the
satisfaction of certain other conditions, including, among
others:
|
|
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|
|
consummation of the Merger in accordance with the Merger
Agreement (without giving effect to any amendments, waivers or
other modifications to the Merger Agreement that alter the
definition of Company Material Adverse Effect, that result in a
reduction of the purchase price, or that otherwise are
materially adverse to the Lenders in their capacities as
Lenders);
|
|
|
|
since December 31, 2009, no facts, changes, events,
developments or circumstances have occurred, arisen, come into
existence or become known, which have had or would be reasonably
expected to have, individually or in the aggregate, a
Combined Material Adverse Effect (defined as a
Company Material Adverse Effect on both Odyssey and Gentiva and
their subsidiaries taken as a whole);
|
|
|
|
with respect to the perfection of security interests (in the
case of the Senior Credit Facilities), the filing of Uniform
Commercial Code financing statements, the delivery of
certificated securities comprising a part of the pledged
collateral, and the use of commercially reasonable efforts to
deliver to the agents for the Lenders of all other documents and
instruments required to perfect such security interests;
|
|
|
|
Gentiva will have engaged one or more investment banks
satisfactory to certain of the Lenders to sell or privately
place the Senior Notes, who will have had at least 30
consecutive days (not including any days between August 23,
2010 and September 5, 2010) from the date of delivery
by Gentiva of a customary preliminary offering memorandum
relating to the Senior Notes to seek to offer and sell or
privately place the Senior Notes; and
|
|
|
|
after giving effect to the consummation of the Merger and the
Financing, Gentiva and its subsidiaries will not have
outstanding preferred equity, debt, or capitalized lease
obligations, except for (i) debt incurred pursuant to the
Senior Notes
and/or
the
Bridge Facility and the Senior Credit Facilities and
(ii) such other existing debt and capitalized lease
obligations in an aggregate amount not to exceed an amount to be
agreed.
|
The Commitment Letter requires that the definitive documentation
with respect to the Financing must be negotiated by the Lenders
in good faith and must contain only terms consistent with the
Commitment Letter or as otherwise mutually agreed by Gentiva and
the Lenders to be reasonable and customary. The closing of the
Financing under the definitive documentation cannot be
conditioned upon the accuracy of any representations and
warranties other than (i) representations and warranties
made by Odyssey in the Merger Agreement as are material to the
interests of the Lenders, but only to the extent Gentiva has a
right to terminate its obligations under the Merger Agreement as
a result of a breach of such representations and warranties, and
(ii) certain specified and limited representations and
warranties made by Gentiva and its subsidiaries under the
definitive documentation with respect to the Financing,
including power and authority, due execution, and solvency of
Gentiva and its subsidiaries on the closing date of the Merger
(after giving effect to the Merger).
Gentivas obligations under the Merger Agreement are not
conditioned in any manner upon Gentiva obtaining the Financing,
or any other financing. The existence of any conditions
contained in the Commitment Letter does not constitute a
condition to the consummation of the Merger. The failure, for
any reason, of Gentiva to consummate the Merger as required
under the Merger Agreement would constitute a knowing or
intentional breach by Gentiva of the Merger Agreement for which
Odyssey would be entitled to seek damages, including damages
based on the consideration that would have otherwise been
payable to Odysseys
38
stockholders if the Merger was consummated. Although obtaining
financing is not a condition to the completion of the Merger,
the failure of Gentiva to obtain sufficient financing is likely
to result in the failure of the Merger to be consummated.
Interests
of Our Directors and Executive Officers in the Merger
In considering the recommendation of our board of directors in
favor of the approval of the Merger and adoption of the Merger
Agreement, you should be aware that the consummation of the
Merger will result in certain benefits to our directors and
executive officers that are not available to our stockholders
generally. Individual executive officers also have specific
benefits that are different from other executive officers as
described in more detail below. Our board of directors was aware
of these interests and considered them, among other matters, in
approving the Merger Agreement and recommending that our
stockholders approve the Merger and adopt the Merger Agreement.
Stockholders should take these benefits into account in deciding
whether to vote for the approval of the Merger and adoption of
the Merger Agreement. These interests relate to or arise from:
|
|
|
|
|
the acceleration of vesting of all unvested equity awards and
the cash-out of equity awards, including those held by executive
officers and directors;
|
|
|
|
existing employment agreements between Odyssey and certain
executive officers providing for severance payments under
certain circumstances; and
|
|
|
|
the continuation of certain indemnification and insurance
arrangements.
|
Acceleration
of Vesting and Cash-Out of Outstanding Equity
Awards
Under the terms of the Merger Agreement, each outstanding Option
issued by Odyssey under an equity incentive plan or otherwise
that is held by an executive officer or director (as well as
those Options held by our other employees), to the extent not
previously vested, will accelerate and vest in full immediately
before the Effective Time and will be cancelled and converted
into the right to receive, from the Surviving Corporation, an
amount in cash determined by multiplying (i) the excess, if
any, of the Merger Consideration over the applicable exercise
price of the Option; by (ii) the number of shares subject
to such Option (subject to any applicable withholding of taxes).
Options with an exercise price greater than or equal to the
Merger Consideration will be cancelled immediately prior to the
Effective Time for no consideration.
Each outstanding Restricted Stock Unit that was issued by
Odyssey under an equity incentive plan or otherwise that is held
by an executive officer or director (as well as those Restricted
Stock Units held by our other employees), to the extent not
previously vested, will accelerate and vest in full immediately
before the Effective Time and will be cancelled and converted
into the right to receive, from the Surviving Corporation, an
amount in cash determined by multiplying (i) the Merger
Consideration; by (ii) the number of shares subject to such
Restricted Stock Unit (subject to any applicable withholding of
taxes).
In addition, each share of Restricted Stock, to the extent not
previously vested, will accelerate and vest in full immediately
prior to the Effective Time and will be treated in connection
with the Merger as a share of common stock, including the right
to receive the Merger Consideration (subject to any applicable
withholding of taxes).
39
The table below sets forth, as of July 2, 2010, the total
number of Options, Restricted Stock Units and shares of
Restricted Stock held by Odysseys executive officers and
directors that are expected to be cashed out as a result of the
Merger and the amounts expected to be received by such
individuals in connection with the cash-out. All dollar amounts
are gross amounts and do not reflect deductions for income taxes
and other withholdings. The Options have exercise prices ranging
between $1.38 and $22.33 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash-Out
|
|
Number of
|
|
Cash-Out
|
|
|
|
|
|
|
Cash-Out
|
|
Number of
|
|
Value of
|
|
Shares of
|
|
Value of
|
|
|
|
|
Number of
|
|
Value of
|
|
Restricted
|
|
Restricted
|
|
Restricted
|
|
Restricted
|
|
|
Name
|
|
Options
|
|
Options(1)
|
|
Stock Units
|
|
Stock Units(2)
|
|
Stock
|
|
Stock(3)
|
|
Total
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Lefton
|
|
|
|
|
|
|
|
|
|
|
505,237
|
|
|
$
|
13,641,399
|
|
|
|
|
|
|
|
|
|
|
$
|
13,641,399
|
|
R. Dirk Allison
|
|
|
|
|
|
|
|
|
|
|
226,180
|
|
|
$
|
6,106,860
|
|
|
|
|
|
|
|
|
|
|
$
|
6,106,860
|
|
Craig P. Goguen
|
|
|
225,000
|
|
|
$
|
3,840,750
|
|
|
|
211,429
|
|
|
$
|
5,708,583
|
|
|
|
|
|
|
|
|
|
|
$
|
9,549,333
|
|
Brenda A. Belger
|
|
|
166,875
|
(4)
|
|
$
|
1,044,437
|
|
|
|
82,538
|
|
|
$
|
2,228,526
|
|
|
|
|
|
|
|
|
|
|
$
|
3,272,963
|
|
Sally A. Parnell
|
|
|
|
|
|
|
|
|
|
|
53,218
|
|
|
$
|
1,436,886
|
|
|
|
|
|
|
|
|
|
|
$
|
1,436,886
|
|
W. Bradley Bickham
|
|
|
|
|
|
|
|
|
|
|
128,983
|
|
|
$
|
3,482,541
|
|
|
|
|
|
|
|
|
|
|
$
|
3,482,541
|
|
Frank W. Anastasio
|
|
|
6,250
|
|
|
$
|
91,625
|
|
|
|
69,058
|
|
|
$
|
1,864,566
|
|
|
|
|
|
|
|
|
|
|
$
|
1,956,191
|
|
Non-employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard R. Burnham
|
|
|
238,818
|
(5)
|
|
$
|
2,236,870
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
2,307,070
|
|
James E. Buncher
|
|
|
20,000
|
|
|
$
|
275,600
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
345,800
|
|
John K. Carlyle
|
|
|
18,045
|
|
|
$
|
169,027
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
239,227
|
|
David W. Cross
|
|
|
26,448
|
|
|
$
|
295,913
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
366,113
|
|
Paul J. Feldstein
|
|
|
61,448
|
|
|
$
|
846,346
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
916,546
|
|
Robert A. Ortenzio
|
|
|
20,000
|
|
|
$
|
193,000
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
263,200
|
|
Shawn S. Schabel
|
|
|
65,148
|
|
|
$
|
454,300
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
524,500
|
|
David L. Steffy
|
|
|
43,322
|
|
|
$
|
644,773
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
$
|
70,200
|
|
|
$
|
714,973
|
|
|
|
|
(1)
|
|
Represents the aggregate intrinsic value of each
individuals Options, based on the per share Merger
Consideration of $27.00, less the applicable exercise price.
|
|
(2)
|
|
Represents the aggregate intrinsic value of each
individuals Restricted Stock Units, based on the per share
Merger Consideration of $27.00.
|
|
(3)
|
|
Represents the aggregate value of each individuals shares
of Restricted Stock, based on the per share Merger Consideration
of $27.00.
|
|
(4)
|
|
25,000 of the Options held by Ms. Belger have an exercise
price greater than the Merger Consideration of $27.00.
|
|
(5)
|
|
50,000 of the Options held by Mr. Burnham have an exercise
price greater than the Merger Consideration of $27.00.
|
Employment
Agreements
Each of our executive officers has an employment agreement with
us that provides for special severance payments and benefits in
the event of certain terminations of the officers
employment on or within two years following a change in
control (as defined in the employment agreements).
Consummation of the Merger would constitute a change in
control. Accordingly, if an executive officers
employment is terminated by the Surviving Corporation without
cause, by the officer for good reason,
or due to a non-renewal election by the Surviving
Corporation upon or within two years following the Merger, then
the officer will be entitled to the following severance benefits:
|
|
|
|
|
a lump sum cash severance payment equal to the officers
annual base salary at its highest rate during the 24 month
period preceding the date of termination or, if greater, the
officers annual base salary, at its highest rate during
the preceding 24 month period, that would have been payable
if he or she had
|
40
|
|
|
|
|
remained employed through the second anniversary of the change
in control (in Mr. Leftons case, the lump sum cash
severance payment in connection with a change in control will
equal two times his highest annual base salary during the
preceding
24-month
period);
|
|
|
|
|
|
the pro-rata portion of the officers annual bonus for the
year of termination; and
|
|
|
|
healthcare continuation coverage under our medical and dental
plans in which the officer and his or her dependents were
participating at the date of termination for a period ending on
the first anniversary of the officers date of termination
(second anniversary, in Mr. Leftons case).
|
For purposes of the employment agreements, the terms
cause and good reason have the following
meanings:
|
|
|
|
|
Cause means the executives (i) failure to
substantially perform the executives material obligations
and duties under the employment agreement, (ii) fraud,
embezzlement, misappropriation, willful misconduct, bad faith,
dishonesty, breach of trust, or breach of fiduciary duty against
us, (iii) breach of the non-competition, non-disclosure or
confidentiality provisions of the employment agreement,
(iv) conviction of or plea of no contest to any felony or
any crime involving moral turpitude, (v) failure to carry
out, or comply with, any lawful directive of the board of
directors or a reporting officer, (vi) violation of our
substance abuse policy, or (vii) suspension or termination
from participation in the Medicare or Medicaid programs.
|
|
|
|
Good Reason means (i) removal of the executive
from the office designated in the employment agreement, except
after a non-renewal notice has been given,
(ii) reduction of the executives base salary,
(iii) any termination or material reduction of a material
benefit, (iv) relocation of the executives place of
employment by more than 50 miles, (v) our failure to
provide the salary, benefits and other compensation promised in
the employment agreement, (vi) our failure to require a
successor to expressly assume the employment agreement,
(vii) our breach of any agreement between us, or any of our
subsidiaries or affiliates, and the executive, or (viii) in
the case of Messrs. Allison, Bickham and Goguen, a change
in reporting relationship that results in the executive not
reporting to the Chief Executive Officer.
|
The employment agreements contain non-disparagement and
confidentiality provisions, as well as covenants not to compete
or solicit during the employment term and continuing until the
first anniversary (second anniversary, in the case of
Mr. Lefton) of the date of termination. In addition, the
employment agreements also condition payment of severance
payments, healthcare continuation coverage, and exercisability
of Options upon the executive officers execution of a
release within 45 days of termination of employment (and
nonrevocation thereafter).
On July 7, 2010, the board of directors approved amendments
to the employment agreements to increase the post-termination
period during which the covenants not to compete and solicit
would apply from one year to two years (and from two years to
three years in the case of Mr. Lefton and from one year to
three years in the case of Ms. Parnell). The amendments to
the employment agreements are subject to approval by Gentiva and
also the consent of each executive officer. The amendments are
expected to (i) enhance the security of Odysseys
business interests and (ii) increase the value of the
covenants not to compete and solicit, which may be offset
against potential excess parachute payments (as
defined under Section 280G of the Internal Revenue Code of
1986, as amended (the Code)) to the executive
officers, which payments would otherwise be nondeductible by
Odyssey.
41
The table below sets forth the potential severance payments and
benefits the executive officers would be entitled to on an
eligible termination within two years of the consummation of the
Merger (equity compensation for the executive officers related
to the Merger is set forth in the table above under the heading
Acceleration of Vesting and Cash-Out of Outstanding
Equity Awards
). As we do not expect that any of our
executive officers will remain employed by the Surviving
Corporation after the consummation of the Merger, we anticipate
that our executive officers will receive the severance payments
and benefits set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
Name
|
|
Salary
|
|
Bonus(1)
|
|
Continuation
|
|
Total
|
|
Robert A. Lefton
|
|
$
|
1,300,000
|
|
|
$
|
812,500
|
|
|
$
|
38,520
|
|
|
$
|
2,151,020
|
|
R. Dirk Allison
|
|
$
|
740,000
|
|
|
$
|
370,000
|
|
|
$
|
14,373
|
|
|
$
|
1,124,373
|
|
Craig P. Goguen
|
|
$
|
740,000
|
|
|
$
|
370,000
|
|
|
$
|
19,528
|
|
|
$
|
1,129,528
|
|
Brenda A. Belger
|
|
$
|
450,000
|
|
|
$
|
90,000
|
|
|
$
|
14,125
|
|
|
$
|
554,125
|
|
Sally A. Parnell
|
|
$
|
400,000
|
|
|
$
|
80,000
|
|
|
$
|
14,551
|
|
|
$
|
494,551
|
|
W. Bradley Bickham
|
|
$
|
640,000
|
|
|
$
|
320,000
|
|
|
$
|
19,528
|
|
|
$
|
979,528
|
|
Frank W. Anastasio
|
|
$
|
400,000
|
|
|
$
|
100,000
|
|
|
$
|
14,551
|
|
|
$
|
514,551
|
|
|
|
|
(1)
|
|
The table lists the maximum amount of the bonus that may be
earned by each officer for the entire 2010 year. In the event of
certain terminations of an officers employment (as
described above), the amount of such officers bonus would
be pro-rated based on the portion of the year he or she was
employed.
|
Indemnification
of Directors and Executive Officers and Insurance
The Merger Agreement provides that for a period of six years
from the Effective Time, the Surviving Corporation will
indemnify and hold harmless those persons who were directors or
officers of Odyssey at any time before the Effective Time
against all claims, losses, liabilities, damages, judgments,
inquiries, fines and reasonable fees, costs and expenses,
including attorneys fees and disbursements incurred in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to the fact that
such person is or was an officer, director, employee, fiduciary
or agent of Odyssey or any of its subsidiaries, for matters
existing or occurring at or prior to the Effective Time
(including the Merger) to the fullest extent permitted by
applicable law. In this regard, the Surviving Corporation will
also be required to advance expenses as incurred to an
indemnified officer or director to the fullest extent permitted
by law. Persons who were directors or officers of Odyssey have
the right, as contemplated by Delaware law, to require that a
determination of whether such former director or officer is
entitled to indemnification by the Surviving Corporation be made
by special, independent legal counsel selected by such former
director or officer and approved by the Surviving Corporation
(which approval must not be unreasonably withheld, conditioned
or delayed), and who has not otherwise performed material
services for Odyssey or the Surviving Corporation within the
last three years.
The Merger Agreement also provides that the indemnification or
advancement of expenses provisions in the respective certificate
of incorporation and bylaws or similar organizational or
governing documents of the Surviving Corporation and its
subsidiaries will contain provisions no less favorable with
respect to indemnification, advancement of expenses and
exculpation of directors and officers than the provisions that
are currently included in such governing documents of Odyssey
and its subsidiaries.
In addition, the Merger Agreement provides that Gentiva will
maintain or cause to be maintained Odysseys existing
policies of directors and officers liability
insurance for a period of six years from the Effective Time (or
policies of substantially equivalent coverage and amounts);
provided that Gentiva is not required to pay aggregate premiums
for such insurance in excess of 300% of the aggregate premiums
paid by Odyssey in 2009 for such insurance coverage.
Alternatively, at our option, we may obtain, before the
Effective Time, a six-year run-off policy for our
directors and officers liability insurance; provided
that the premium for such policy does not exceed 300% of the
aggregate premiums paid by Odyssey in 2009 for its
directors and officers liability insurance policies.
42
We have also entered into agreements to indemnify our directors
and executive officers. Under these agreements, we are obligated
to indemnify our directors and officers to the fullest extent
permitted under Delaware law for expenses, including
attorneys fees, judgments, fines and settlement amounts
incurred by them in any action or proceeding arising out of
their service as a director or officer. The indemnification
provided for by the Merger Agreement is in addition to, and will
not limit, the rights of our executive officers and directors to
be indemnified pursuant to the indemnification agreements.
Material
U.S. Federal Income Tax Consequences of the Merger to Our
Stockholders
The following is a discussion of the material U.S. federal
income tax consequences related to the exchange of shares of
Odysseys common stock for cash pursuant to the Merger.
Unless otherwise indicated, this summary deals only with
stockholders of the Company who are United States
persons (each as defined below) and who hold their shares
of common stock as capital assets. This discussion is based on
the Code, the proposed, temporary and final Treasury regulations
promulgated thereunder, and any relevant administrative rulings
or pronouncements or judicial decisions, all as in effect on the
date of this proxy statement and all of which are subject to
change, possibly with retroactive effect. This discussion does
not address all of the tax consequences that may be relevant to
a particular Company stockholder in light of that
stockholders specific circumstances, nor does it discuss
the U.S. federal income tax consequences that may be
applicable to certain types of Company stockholders, such as
stockholders of the Company who are dealers in securities,
financial institutions, tax-exempt entities, life insurance
companies, or who are holding their shares of common stock as a
part of a hedging, integrated, conversion or constructive sale
transaction or as part of a straddle, or whose functional
currency is not the U.S. dollar, all of whom may be subject
to special rules
and/or
limitations under the Code that are not discussed below. In
addition, the following discussion does not discuss the
alternative minimum tax consequences, if any, of an exchange of
shares of common stock pursuant to the Merger, or the state,
local or foreign tax consequences of such exchange.
Consequently, each stockholder of the Company is urged to
consult its own tax advisor in determining the federal, state,
local and foreign income and any other tax consequences of the
Merger.
For purposes of this discussion, (i) the terms
Company stockholder or stockholder of the
Company refer to a beneficial owner of shares of Odyssey
common stock, (ii) the term United States
person means a person who is (a) a citizen or
resident of the United States, (b) a corporation or
partnership created or organized in the United States or under
the laws of the United States or any political subdivision
thereof, (c) an estate the income of which is subject to
United States federal income taxation regardless of its source
or (d) a trust which is subject to the supervision of a
court within the United States and the control of one or more
United States persons (as defined in Section 7701)(a)(30)
of the Code), (iii) the term
U.S. stockholder means a stockholder of the
Company who is a United States person, and (iv) the term
Non-U.S. stockholder
means a stockholder of the Company who is not a United States
person.
Taxation of U.S. Stockholders.
An
exchange of shares of common stock for cash pursuant to the
Merger will be a taxable transaction for U.S. federal
income tax purposes. Consequently, an exchanging
U.S. stockholder will recognize gain or loss in an amount
equal to the difference between (i) the amount of cash
received in the Merger, and (ii) the aggregate tax basis in
the shares of common stock exchanged therefor. Such gain or loss
generally will be (i) calculated separately for each block
of shares of common stock (i.e., shares of common stock that
were acquired at the same cost in a single transaction)
exchanged pursuant to the Merger, (ii) capital gain or loss
and (iii) long-term capital gain or loss if the relevant
U.S. stockholder held the shares of common stock being
exchanged in the Merger for more than one year as of the
Effective Time. The long-term capital gains of individuals,
estates and certain trusts generally are eligible for reduced
rates of taxation. Capital losses generally must be used only to
offset capital gains.
Taxation of
Non-U.S. Stockholders.
Any
gain realized by a
Non-U.S. stockholder
upon an exchange of shares of common stock pursuant to the
Merger generally will not be subject to U.S. federal income
or withholding tax unless (i) such gain is effectively
connected with a U.S. trade or business conducted by the
Non-U.S. stockholder
within the United States, (ii) in the case of a
Non-U.S. stockholder
who is an individual, such individual is present in the United
States for 183 days or more in the taxable year during
which the Merger occurs and certain other conditions are met, or
(iii) in the case of a
Non-U.S. stockholder
who held,
43
directly or indirectly, more than 5% of the shares of common
stock at any time during the five-year period ending on the date
of the exchange of such shares in the Merger, the Company is or
has been a U.S. real property holding corporation within
the meaning of Section 897(c)(2) of the Code (which the
Company does not believe to be the case).
Individual
Non-U.S. stockholders
who are subject to U.S. federal income tax because they
were present in the United States for 183 days or more
during the year of the Merger are subject to U.S. federal
income tax on their net gains (the total gain
realized by them from sales or other taxable exchanges of
U.S. capital assets, including any gains realized by them
from the sale of shares of common stock pursuant to the Merger,
minus any losses from sales or taxable exchanges of other
U.S. capital assets recognized by them for
U.S. federal income tax purposes during the year) at a flat
rate of 30% or such lower rate as may be specified by an
applicable United States income tax treaty. If a
Non-U.S. stockholder
is engaged in a trade or business within the United States and
such gain is effectively connected with such trade
or business (and attributable to a permanent establishment of
such
Non-U.S. stockholder
in the case of a
Non-U.S. stockholder
who can claim the benefit of an applicable United States income
tax treaty) then the
Non-U.S. stockholder
generally will be taxed on such gain in the same manner as if it
was a U.S. stockholder and, in the case of
non-U.S. corporations,
such gain also may be subject to an additional U.S. branch
profits tax at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty).
Backup Withholding Tax and Information
Reporting.
The receipt of cash in exchange for
shares of Odyssey common stock pursuant to the Merger by a
U.S. stockholder may be subject to information reporting
and backup withholding tax at the applicable rate (currently
28%), unless the U.S. stockholder (i) timely furnishes
an accurate taxpayer identification number and otherwise
complies with applicable U.S. information reporting or
certification requirements (typically by completing and signing
an IRS
Form W-9,
a copy of which will be included as part of the letter of
transmittal to be timely returned to the paying agent) or
(ii) is a corporation or other exempt recipient and, when
required, establishes such fact. Backup withholding is not an
additional tax and any amounts withheld under the backup
withholding rules may be refunded or credited against a
U.S. stockholders U.S. federal income tax
liability, if any, provided that the required information is
furnished to the IRS in a timely manner.
In general,
Non-U.S. stockholders
will not be subject to U.S. backup withholding and
information reporting with respect to the receipt of cash in
exchange for their shares of common stock pursuant to the Merger
if they provide the paying agent with an IRS
Form W-8BEN
(or an IRS
Form W-8ECI
if the gain is effectively connected with the conduct of a
U.S. trade or business by such
Non-U.S. stockholder)
and neither the Company nor the Paying Agent have actual
knowledge (or reason to know) that the relevant
Non-U.S. stockholder
is a U.S. stockholder. If the shares of common stock are
held through a
non-U.S. partnership
or other flow-through entity, certain documentation requirements
also may apply to the partnership or other flow-through entity.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be refunded or
credited against a
Non-U.S. stockholders
U.S. federal income tax liability, if any, provided that
the required information is furnished to the IRS in a timely
manner.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES DESCRIBED ABOVE
ARE NOT INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL OF
THE TAX CONSEQUENCES RELATING TO THE MERGER. EACH STOCKHOLDER
SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR TAX
CONSEQUENCES (INCLUDING THE STATE, LOCAL OR
NON-U.S. TAX
CONSEQUENCES) OF THE MERGER TO IT IN LIGHT OF ITS OWN PARTICULAR
CIRCUMSTANCES.
Regulatory
Approvals
Under the HSR Act, and the rules promulgated thereunder by the
FTC, the Merger cannot be consummated until Odyssey and Gentiva
file a notification and report form under the HSR Act and the
applicable waiting period has expired or been terminated.
Odyssey and Gentiva each filed notification and report forms
under the HSR Act with the FTC and the Antitrust Division of the
Department of Justice (the DOJ) on June 4, 2010
and the applicable waiting period expired on July 6, 2010.
At any time before or after
44
consummation of the Merger, the DOJ or the FTC may challenge the
Merger on antitrust grounds. Private parties could also take
antitrust action under the antitrust laws, including seeking an
injunction prohibiting or delaying the Merger, divestiture or
damages under certain circumstances. Additionally, at any time
before or after consummation of the Merger, notwithstanding the
expiration or termination of the applicable waiting period, any
state could take action under its antitrust laws as it deems
necessary or desirable in the public interest. We cannot assure
you that a challenge to the Merger will not be made or that, if
a challenge is made, we will prevail.
Under the Merger Agreement, both Odyssey and Gentiva have each
agreed to use reasonable best efforts to obtain all regulatory
and governmental approvals required to be obtained in connection
with the consummation of the Merger. Notwithstanding that
agreement, the Merger Agreement does not require Odyssey or
Gentiva to enter into any consent decree, to make any
divestiture or accept any operational restriction, or take or
commit to take any action (i) the effectiveness or
consummation of which is not conditional on the consummation of
the Merger or (ii) that may have a materially detrimental
effect or impact on the current or future business models, plans
or structures of Odyssey, Gentiva or any of their respective
subsidiaries, or which would be prohibited by the Financing,
except that Gentiva must use its reasonable best efforts to
obtain the consent of the Lenders.
Amendment
to Rights Agreement
On May 23, 2010, Odyssey and Computershare
Trust Company, N.A. (successor to U.S. Stock Transfer
Corporation) (the Rights Agent) entered into First
Amendment to Rights Agreement between Odyssey and the Rights
Agent dated as of November 5, 2001 pursuant to which
(i) none of Gentiva, Merger Sub or any other subsidiary of
Gentiva will be considered an Acquiring Person (as
defined in the Rights Agreement), (ii) neither a
Distribution Date nor a
Shares Acquisition Date (as such terms are
defined in the Rights Agreement) will be deemed to occur, and
(iii) the rights to purchase Series A Junior
Participating Preferred Stock of Odyssey issued under the Rights
Agreement do not become exercisable, in the case of clauses (i),
(ii), and (iii), in connection with the Merger Agreement and the
Merger. The First Amendment to Rights Agreement also provides
that the Final Expiration Date (as defined in the
Rights Agreement) will occur immediately before the Effective
Time. The First Amendment to Rights Agreement terminates if,
prior to the Effective Time, (i) other than as permitted or
contemplated by the Merger Agreement or the transactions
contemplated thereby, including the Merger, or related thereto,
Gentiva
and/or
Merger Sub breach Gentivas agreement in the
Confidentiality Agreement dated April 23, 2010, between
Gentiva and Odyssey to not directly or indirectly acquire
securities of Odyssey or otherwise seek to influence or control
the management or policies of Odyssey or (ii) the Merger
Agreement is terminated in accordance with its terms, including
a termination by Odyssey in order to accept a Superior Proposal.
If the Merger Agreement were terminated by Odyssey in order to
accept a Superior Proposal, the Rights Agreement could be
amended to permit a transaction with another buyer in the same
manner that the First Amendment to Rights Agreement permits the
pending transaction with Gentiva.
Litigation
Related to the Merger
Three lawsuits have been filed in connection with the Merger.
The first, filed on May 27, 2010, is captioned
Pompano
Beach Police & Firefighters Retirement
System v. Odyssey Healthcare, Inc., et al.
, Cause
No. CC-10-03561-E
in the County Court at Law No. 5 in Dallas County, Texas.
The second, filed on June 9, 2010, is captioned
Eric
Hemminger, et al. v. Richard Burnham, et al.,
Cause
No. DC-10-06982,
in the 14th Judicial District Court, Dallas County, Texas.
The third, filed on July 7, 2010, is captioned
Hansen v. Odyssey Healthcare, Inc., et al.
, Case
3:10-cv-01305-G in the United States District Court for the
Northern District of Texas. All three suits name Odyssey, the
members of Odysseys board of directors, Gentiva, and
Merger Sub as defendants.
All three lawsuits are brought by purported stockholders of
Odyssey, both individually and on behalf of a putative class of
stockholders, alleging that our board of directors breached its
fiduciary duties in connection with the Merger by failing to
maximize stockholder value, and that Odyssey and Gentiva aided
and abetted the
45
purported breaches. The
Pompano Beach Police and
Firefighters
suit seeks additional proxy disclosures
regarding the Merger.
The petitions each seek equitable relief, including, among other
things, to enjoin consummation of the Merger, rescission of the
Merger Agreement, and an award of all costs of the action,
including reasonable attorneys fees. Odyssey believes none
of the suits has merit.
Delisting
and Deregistration of Common Stock
If the Merger is consummated, Odysseys common stock will
be delisted from The Nasdaq Global Select Market and
deregistered under the Exchange Act and will cease to be
publicly traded.
THE
MERGER AGREEMENT
This summary of the Merger Agreement set forth in this
section of the proxy statement describes the material provisions
of the Merger Agreement but does not purport to describe all of
the terms of the Merger Agreement. The following summary is
qualified in its entirety by reference to the complete text of
the Merger Agreement, which is attached as Annex A to this
proxy statement and incorporated into this proxy statement by
reference. We urge you to read the full text of the Merger
Agreement because it, and not this summary, is the legal
document that governs the Merger and may contain important
qualifications or details not set forth in this summary. It is
not intended to provide you with any other factual information
about us. Such information can be found elsewhere in this proxy
statement and in the public filings we make with the SEC, as
described in the section entitled Where You Can Find More
Information below.
The
Merger
The Merger Agreement provides for the Merger of Merger Sub with
and into Odyssey upon the terms, and subject to the conditions,
of the Merger Agreement. Odyssey will be the Surviving
Corporation in the Merger and will become a direct wholly-owned
subsidiary of Gentiva.
Closing
and Effective Time of the Merger
The Merger will be effective at the time the certificate of
merger is filed with the Secretary of State of the State of
Delaware (or at a later date and time, if agreed in writing by
the parties and specified in the certificate of merger) (the
Effective Time). The parties are required to close
the Merger no later than the second business day after the
satisfaction or waiver of the last of the conditions described
under The Merger Agreement Conditions to the
Merger beginning on page 57 (other than those
conditions that by their nature are to be satisfied at the
closing, but subject to the fulfillment or waiver of those
conditions at closing), or on such other date as the parties may
agree in writing; provided, that the closing of the Merger may
not occur from August 23, 2010 to September 5, 2010
(the Blackout Period), and if the last to be
satisfied of the closing conditions (other than those conditions
that by their nature are to be satisfied at closing, but subject
to the fulfillment or waiver of those conditions at closing) is
satisfied or waived (to the extent permitted by applicable laws)
during or less than two business days prior to the Blackout
Period, then the closing will take place at 9:00 a.m.,
local time, on the later to occur of (x) the second
business day after such satisfaction or waiver or (y) the
first business day following the expiration of the Blackout
Period, unless another date is agreed to in writing by the
parties.
Merger
Consideration
In the Merger, each share of Odyssey common stock (other than
shares owned directly or indirectly by Odyssey, Gentiva, Merger
Sub or any other subsidiary of Gentiva, or shares held by
stockholders who have properly exercised dissenters
appraisal rights under Delaware law) issued and outstanding
immediately prior to the Effective Time will be converted into
the right to receive the Merger Consideration of $27.00 in cash,
without interest and subject to any applicable withholding of
taxes.
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After the Effective Time, each holder of a certificate
representing shares of Odyssey common stock (other than shares
for which dissenters appraisal rights under Delaware law
have been properly demanded and perfected) will no longer have
any rights with respect to the shares, except the right to
receive the Merger Consideration.
Treatment
of Options, Restricted Stock and other Equity Awards
Options.
Each Option, whether vested or
unvested, that is outstanding immediately before the Effective
Time will be cancelled and converted into the right to receive,
from the Surviving Corporation, an amount in cash (subject to
any applicable withholding of taxes) determined by multiplying:
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the excess, if any, of the Merger Consideration over the
applicable exercise price of the Option; by
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the number of shares subject to such Option.
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Options with an exercise price greater than or equal to the
Merger Consideration will be cancelled immediately prior to the
Effective Time for no consideration.
Restricted Stock.
Each share of Restricted
Stock, whether vested or unvested, that is outstanding
immediately before the Effective Time will be converted into the
right to receive the Merger Consideration (subject to any
applicable withholding of taxes).
Restricted Stock Units.
Each Restricted Stock
Unit, whether vested or unvested, that is outstanding
immediately before the Effective Time will be cancelled and
converted into the right to receive from the Surviving
Corporation an amount in cash determined by multiplying the
Merger Consideration by the number of shares subject to such
Restricted Stock Unit (subject to any applicable withholding of
taxes).
The effect of the Merger on our other employee benefit plans is
described under Employee Matters
beginning on page 65.
Procedure
for Receiving Merger Consideration
Merger Sub will designate a paying agent reasonably acceptable
to us as agent for our stockholders in connection with the
Merger in order to make payment of the Merger Consideration
described above. At the closing of the Merger, Gentiva or Merger
Sub will deposit with the paying agent funds sufficient to pay
the Merger Consideration for the benefit of the stockholders
whose shares will be converted at the Effective Time into the
right to receive the Merger Consideration.
Following the Effective Time, our stock transfer books will be
closed. After that time, there will be no further transfer of
shares of our common stock, other than transfers that occurred
before the Effective Time.
As soon as reasonably practicable after the Effective Time, and
in any event by no later than five business days after the
Effective Time, Gentiva will cause the paying agent to send you
a letter of transmittal and instructions advising you how to
surrender your certificates in exchange for the Merger
Consideration. The paying agent will pay you your Merger
Consideration after you have (i) surrendered your
certificates to the paying agent and (ii) provided to the
paying agent your signed letter of transmittal and any other
items specified by the letter of transmittal, or in the case of
book-entry or other uncertificated securities, upon the entry
through a book-entry transfer agent of the surrender of the
shares on a book-entry account. The paying agent will pay or
mail you your Merger Consideration (subject to any applicable
withholding of taxes) within two business days after the paying
agent receives such documents and your surrendered certificates
will be cancelled.
YOU SHOULD NOT FORWARD YOUR STOCK
CERTIFICATES TO THE PAYING AGENT WITHOUT A LETTER OF TRANSMITTAL
AND YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH THE
ENCLOSED PROXY.
Any cash funds deposited with the paying agent that are not
claimed by former Odyssey stockholders within nine months
following the Effective Time will be returned to the Surviving
Corporation upon demand. Thereafter, any holders of shares of
Odyssey common stock who have not surrendered their shares may
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solely to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws, as general creditors of
the Surviving Corporation) for payment of the Merger
Consideration.
If the paying agent is to pay some or all of your Merger
Consideration to a person other than you, as the registered
owner of Odyssey common stock, you must have your certificates
properly endorsed or otherwise in proper form for surrender and
transfer, and you must pay any transfer or other taxes payable
by reason of the transfer or establish to the paying
agents satisfaction that the taxes have been paid or are
not required to be paid.
If you have lost your certificate, or if it has been stolen or
destroyed, before receiving the Merger Consideration for the
shares of common stock represented by such lost, stolen or
destroyed certificate, you will have to provide an affidavit to
that fact and, if reasonably required by the Surviving
Corporation, post a bond in an amount that the Surviving
Corporation directs as indemnity against any claim that may be
made against the Surviving Corporation in respect of the lost,
stolen or destroyed certificate.
Representations
and Warranties
The Merger Agreement contains representations and warranties
made by Odyssey to Gentiva and Merger Sub and representations
and warranties made by Gentiva and Merger Sub to Odyssey. The
assertions embodied in those representations and warranties were
made solely for purposes of the Merger Agreement and may be
subject to important qualifications and limitations agreed by
the parties in connection with negotiating its terms. Moreover,
the assertions embodied in Odysseys representations and
warranties are qualified by information contained in a
confidential disclosure schedule that Odyssey provided to
Gentiva in connection with the Merger Agreement. Furthermore,
some of those representations and warranties may not be accurate
or complete as of any particular date because they are subject
to a contractual standard of materiality or Company Material
Adverse Effect (described below) different from that generally
applicable to public disclosures to stockholders or used for the
purpose of allocating risk between the parties to the Merger
Agreement rather than establishing matters of fact. Finally,
information concerning the subject matter of the representations
and warranties may change after the date of the Merger
Agreement, and such subsequent information may or may not be
fully reflected in Odysseys or Gentivas public
disclosures. For the foregoing reasons, you should not rely on
the representations and warranties contained in the Merger
Agreement as statements of factual information. This description
of the representations and warranties is included to provide our
stockholders with information regarding the terms of the Merger
Agreement. The representations and warranties in the Merger
Agreement and the description of them in this proxy statement
should be read in conjunction with the other information
contained in the reports, statements and filings we publicly
file with the SEC. For instructions on how to obtain such public
filings, see Where You Can Find More Information on
page 72.
In the Merger Agreement, Odyssey, Gentiva and Merger Sub made a
number of representations and warranties to each other. The
parties reciprocal representations and warranties relate
to, among other things:
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due organization, valid existence and good standing;
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corporate power and authority to execute and deliver the Merger
Agreement and to consummate the transactions contemplated by the
Merger Agreement;
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the absence of conflicts with or violations of such partys
organizational documents or applicable laws as a result of
entering into and complying with the Merger Agreement or
consummating the transactions contemplated by the Merger
Agreement;
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required regulatory filings and consents and approvals of
governmental entities in connection with the Merger Agreement
and the consummation of the transactions contemplated by the
Merger Agreement;
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the accuracy and completeness of each partys filings with
the SEC, including related financial statements, since
December 31, 2007, and the compliance of such documents
with applicable requirements under the Securities Act, the
Exchange Act, Sarbanes-Oxley Act of 2002 and other applicable
rules and regulations;
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the proxy statement to be filed with the SEC under the Exchange
Act and the accuracy of the information contained in such
document as provided by such party, and
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threatened or pending litigation.
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In addition to the foregoing, the Merger Agreement contains
representations and warranties made by Gentiva and Merger Sub to
Odyssey, including representations and warranties relating to:
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the Commitment Letter regarding the Financing to be provided by
certain banks to Gentiva and Merger Sub in connection with
Merger;
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the capitalization and operations of Merger Sub;
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the absence of need for a vote of Gentivas stockholders to
approve the Merger and adopt the Merger Agreement;
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the expected solvency of the Surviving Corporation after the
Merger;
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the absence of contracts, commitments, or other similar
arrangements between Gentiva or Merger Sub or their affiliates
and any member of our management or board of directors relating
to Odyssey, the transactions contemplated by the Merger
Agreement or the operations of the Surviving
Corporation; and
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Gentivas ownership of shares of Odyssey common stock.
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Odyssey also made representations and warranties to Gentiva,
including representations and warranties relating to:
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the identity and legal good standing of its subsidiaries;
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its current capitalization;
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the approval of the Merger and the Merger Agreement by our board
of directors and the resolution to recommend that our
stockholders approve the Merger and adopt the Merger Agreement;
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the design, maintenance and effectiveness of our system of
internal control over financial reporting and disclosure
controls and procedures;
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the absence since December 31, 2009 to the date of the
Merger Agreement of facts, changes, events, developments or
circumstances that have had or would be reasonably expected to
have a Company Material Adverse Effect;
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the absence since March 31, 2010 to the date of the Merger
Agreement of any actions that, if taken after the date of the
Merger Agreement would constitute a breach of the limitations on
Odysseys conduct of business prior to the Effective Time;
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matters involving employee benefit plans and ERISA
considerations;
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tax matters, including the filing of tax returns and the payment
of taxes;
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disclosure of material contracts to which Odyssey is a party and
the existence, if any, of any defaults or restrictions under
such material contracts;
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real property matters, including title and encumbrances;
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intellectual property matters;
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labor and employment matters;
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use and existence of healthcare permits and the participation in
governmental programs and private programs;
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compliance with healthcare laws;
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compliance with Odysseys Corporate Integrity Agreement
entered into with the Office of Inspector General of the
Department of Health and Human Services;
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compliance with the Health Insurance Portability and
Accountability Act of 1996 and the Health Information Technology
for Economic and Clinical Heath Act;
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the receipt by our board of directors of a fairness opinion from
Goldman Sachs;
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maintenance and effectiveness of insurance policies;
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compliance with environmental laws and regulations;
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absence of brokers, other than Goldman Sachs, and fees and
expenses related thereto;
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the modification of the Rights Agreement (poison pill) to permit
the Merger;
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state takeover statutes;
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the stockholder vote required to approve the Merger and adopt
the Merger Agreement; and
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the absence of interested party transactions.
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Many of Odysseys representations and warranties are
qualified by a Company Material Adverse Effect standard. For
purposes of the Merger Agreement, Company Material Adverse
Effect is defined to mean any event, circumstance, change
or effect that, individually or in the aggregate, (i) is
materially adverse to the business, financial condition or
results of our operations and the operations of our
subsidiaries, taken as a whole, or (ii) would prevent or
materially impair our ability to consummate the transactions
contemplated by the Merger Agreement or otherwise prevent us
from performing our obligations under the Merger Agreement.
However, none of the following, alone or in combination, will be
deemed to be, or taken into account in determining whether there
has been or would reasonably be expected to be, a Company
Material Adverse Effect (except, to the extent any of the
matters referred to in the first four
sub-bullets
under the first bullet below has had or would reasonably be
expected to have a disproportionately adverse effect on us or
our subsidiaries, taken as a whole, as compared to other
for-profit and comparable or similar companies operating in the
industries in which we and our subsidiaries operate, after
taking into account our size relative to such other for-profit
companies):
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any event, circumstance, change or effect resulting from or
relating to:
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a change in general economic, political or financial market
conditions, including interest or exchange rates;
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a change generally affecting the industries in which we and our
subsidiaries operate (including seasonal fluctuations) or
general economic conditions that generally affect the industries
in which we and our subsidiaries operate;
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any change in accounting requirements or principles required by
Generally Accepted Accounting Principles (GAAP) (or
any interpretations thereof) or required by any change in
applicable laws (or any interpretations thereof);
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any adoption, implementation, promulgation, repeal,
modification, reinterpretation or proposal of any law after the
date of the Merger Agreement;
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any action, investigation review or examination undertaken by a
governmental authority, or any sanction, fine, operating
restriction or other similar penalty arising as a result
thereof, with respect to the healthcare business operated by us
and our subsidiaries (a Regulatory Condition), that
was pending as of the date of the Merger Agreement or arises
after the date of the Merger Agreement, to the extent such
Regulatory Condition is consistent in nature, scope and impact
on us and our subsidiaries, taken as a whole, with Regulatory
Conditions arising and fully resolved from time to time in the
conduct of our business or our subsidiaries businesses on
or before December 31, 2009;
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any acts of terrorism or war or any weather-related event, fire
or natural disaster or any escalation thereof;
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the announcement of the execution of the Merger Agreement or the
pendency or consummation of the transactions contemplated by the
Merger Agreement, including any actions, challenges or
investigations to the extent relating to the Merger Agreement or
the consummation of the transactions contemplated by the Merger
Agreement made or brought by any of our current or former
stockholders (on their own behalf or on our behalf);
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the identity of Gentiva or any of its affiliates as the acquiror
of Odyssey or any facts or circumstances concerning Gentiva or
any of its affiliates; or
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compliance with the terms of, the taking of any action required
or the failure to take any action prohibited by, the Merger
Agreement or the taking of any action consented to or requested
by Gentiva; or
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any failure by Odyssey to meet internal or published
projections, forecasts, performance measures, operating
statistics or revenue or earnings predictions for any period or
a decline in the price or trading volume of our common stock
(provided that, except as otherwise provided in this definition,
the underlying causes of such failure or decline may be taken
into account in determining whether there is a Company Material
Adverse Effect).
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Conduct
of Business Prior to Closing
Except as required by applicable law, as otherwise contemplated
or permitted by the Merger Agreement, or as agreed in writing by
Gentiva (which consent may not be unreasonably withheld,
conditioned or delayed) and subject to certain other exceptions,
from the date of the Merger Agreement until the earlier of the
valid termination of the Merger Agreement and the Effective
Time, we have agreed that we will, and that we will cause our
subsidiaries to:
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conduct our businesses in all material respects in the ordinary
course consistent with past practice;
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use commercially reasonable efforts to preserve intact our
present business organizations, consistent with past practice;
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use commercially reasonable efforts to maintain satisfactory
relations with and keep available the services of our current
officers and other key employees, consistent with past practice;
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maintain in effect all material foreign, federal, state and
local licenses, approvals and authorizations, including all
material licenses and permits that are required for us or our
subsidiaries to carry on our business as currently conducted;
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use commercially reasonable efforts to preserve existing
relationships with material customers, lenders, suppliers,
distributors, referral sources and others having material
business relationships with us and our subsidiaries, consistent
with past practice; and
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use commercially reasonable efforts to comply in all material
respects with applicable laws, consistent with past practice and
policies.
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We have also agreed that, except as otherwise contemplated or
required by the Merger Agreement, or as agreed in writing by
Gentiva (which consent may not be unreasonably withheld,
conditioned or delayed) from the date of the Merger Agreement
until the earlier of the valid termination of the Merger
Agreement and the Effective Time, we will not, and we will not
permit any of our subsidiaries or hospices to, directly or
indirectly:
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amend our governing documents or any equivalent documents of our
subsidiaries, or amend the terms of any outstanding security of
our or of our subsidiaries;
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split, combine, subdivide or reclassify any shares of capital
stock of ours or of our subsidiaries;
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declare, set aside or pay any dividend or other distribution
payable in cash, stock or property (or any combination thereof)
with respect to our capital stock (except that a wholly-owned
subsidiary may declare, set aside and pay dividends or
distribution to Odyssey or another wholly-owned subsidiary);
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redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any equity interests in us or in
our subsidiaries (except for acquisitions of equity interests in
accordance with our stock plans and the agreements underlying
awards of equity interests pursuant to our stock plans);
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with limited exceptions, issue, sell, pledge, deliver, transfer,
dispose of or encumber any shares of, or securities convertible
into or exchangeable for, or grant any stock rights, restricted
stock or warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class, or grant to
any person any right the value of which is based on the value of
our common stock or other capital stock;
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acquire in one transaction or any series of related
transactions, except in the ordinary course of business
consistent with past practice, any assets or any equity
interests in any person or any business or division of any
person or all or substantially all of the assets of any person
(or business or division thereof) for cash consideration in
excess of $5 million in the aggregate, except to the extent
we are obligated pursuant to any agreement as of the date of the
Merger Agreement, a copy of which has previously been made
available to Gentiva, or the agreement is solely among or
between us and our wholly-owned subsidiaries;
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transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any of our assets (except for sales in the ordinary
course of business consistent with past practice, dispositions
of equipment and property no longer used in the operation of our
business, dispositions of assets related to discontinued
operations as reflected in our SEC filings filed prior to the
date of the Merger Agreement and assets with a fair market value
of less than $10 million in the aggregate);
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incur or assume any long-term or short-term indebtedness (except
for borrowings under our current credit facilities in the
ordinary course of business consistent with past practice, for
the acquisition or assumption of indebtedness in connection with
acquisitions permitted under the Merger Agreement, or take any
of the foregoing actions in respect of indebtedness owing by any
wholly-owned subsidiary or other affiliates), or make any
material modification or amendment to the terms thereof or
assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for
the obligations of any other person (other than ourselves or our
subsidiaries), or make any loans, advances or capital
contributions to, or investments in, any other person other than
loans, advances or capital contributions to, or investments in,
wholly-owned subsidiaries, loans, advances, capital
contributions or investments not in excess of $2.5 million,
and expense advances to employees of ours in the ordinary course
of business consistent with past practice;
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except as required under a benefit plan or by law, increase the
compensation or fringe benefits of any of our directors,
officers or employees (except for increases made in the ordinary
course of business), grant any severance or termination pay not
provided for under any benefit plan, or enter into any
employment, consulting or severance agreement or arrangement
with any of our present or former directors, officers or other
employees, except for at will offers of employment in the
ordinary course of business, or establish, adopt, enter into or
amend in any material respect or terminate any benefit plan;
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hire or terminate (other than for cause) any employee who is, or
would upon hire be, a director, executive officer, senior vice
president or regional vice president of Odyssey or any of its
subsidiaries without consulting with Gentiva prior to such hire
or termination (it being understood that consent of Gentiva is
not required for such hire or termination);
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except as publicly announced prior to the date of the Merger
Agreement, effect or permit a plant closing or
mass layoff as those terms are defined in the
Workers Adjustment and Retraining Notification Act without
complying with the notice requirements and all other provisions
of such act;
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incur any capital expenditures or any obligations or liabilities
in respect thereof in excess of $5 million, in the
aggregate, except those contemplated in our current capital
expenditures budgets;
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enter into any agreement or arrangement that materially limits
or otherwise materially restricts us, our subsidiaries, or any
present or future affiliates or successors from engaging or
competing in any line of business or in any location;
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enter into, amend, modify or terminate any material contract,
Odysseys headquarters lease for the premises leased at
717 N. Harwood Street, Dallas, Texas, or real property
leases for sites at which Odysseys inpatient units are
located, or otherwise waive, release or assign any material
rights, claims or benefits under such a document; however, we
may amend, modify or terminate contracts in the ordinary course
of business consistent with past practice;
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settle, pay, discharge or propose to settle, pay or discharge,
any litigation, investigation, arbitration, proceeding or other
claim, liability or obligation (whether absolute, accrued,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with
past practice, of such claims, liabilities or obligations
expressly disclosed or reserved against in our most recent
financial statements in amounts no greater than the amount
reserved with respect to the relevant liability therein or that
involve only the payment of monetary damages not in excess of
$10 million in the aggregate or the imposition of
nonmaterial equitable relief on our business and operations, or
that are immaterial to us and our subsidiaries, taken as a
whole, and in respect of which no liability or reserve in
respect thereof has been reflected or accrued on our most recent
financial statements;
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change any of our accounting methods that materially affect our
assets, liabilities or business, except for such changes that
are required by GAAP or
Regulation S-X
promulgated under the Exchange Act or as otherwise specifically
disclosed in documents filed by us with the SEC (as they may
have been amended) since December 31, 2007;
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revalue in any material respect any of our assets, including
writing down the value of our inventory or writing down notes or
accounts receivable, other than in the ordinary course of
business consistent with past practice or as required by GAAP;
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other than as required by applicable laws, make or change any
material tax election or change an annual accounting period,
file any amendment to a material tax return, enter into any
closing agreement, settle or consent to any material tax claim,
take any affirmative action to surrender any right to claim a
refund of material taxes, or consent to any extension or waiver
of the limitation period applicable to any material tax claim;
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adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of us or our subsidiaries; or
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agree, authorize or commit to do any of the foregoing.
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In light of the operating restrictions described above, we
disclosed to Gentiva that, as of the date of the Merger
Agreement, we were considering developing or expanding inpatient
units at eight of our current operating locations. Each
development is currently in the planning stages. Some limited
agreements have been entered into for two locations and
additional agreements are being considered for developing or
expanding the other inpatient units.
Additionally, we disclosed an outstanding offer of employment
for a regional vice president that was made on May 19,
2010. Our board of directors is also evaluating alternatives for
amending the restrictions under the noncompetition provisions of
certain executive employment agreements to strengthen the
restrictions and enhance enforceability of those provisions.
Such amendments could include, without limitation,
(i) increasing the length of the post-termination
noncompetition period beyond 12 months, (ii) expanding
the scope of the term Competing Business to include
businesses that indirectly compete with us, and
(iii) expanding the coverage of the term Geographic
Scope beyond the cities or regions where we currently
conduct our business.
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We also disclosed to Gentiva that our board of directors has
adopted a retention bonus program for a selected group of our
corporate officers who do not have employment agreements with
us, management at the vice president level and below and our
support center employees. The individual bonus amount will vary
for each grantee with a maximum aggregate bonus amount payable
under the retention program of $1,500,000. The retention bonus
will be earned by eligible employees on the sixtieth day
following the consummation of the Merger if the employee remains
employed as of such date. The bonus also is payable if the
grantee is terminated by without cause. The bonus
will be paid in a lump sum within 30 days of the applicable
payout event.
In addition, we disclosed to Gentiva that our board of directors
has adopted a change of control severance program for corporate
officers who do not have employment agreements with Odyssey and
certain other key corporate and regional level employees. All
arrangements will require a double trigger based on an eligible
termination of employment within one year following a change of
control of Odyssey. Eligible employees will be entitled to
between three months and one year of severance, and the payments
will be due if an employee is terminated by us without
cause or if the employee resigns for good
reason. Severance payments will become due and payable in
a cash lump sum within 30 days following an eligible
termination. The maximum aggregate cost of the severance
program, assuming all severance benefits are paid out, is
approximately $8.7 million.
Reasonable
Best Efforts; Other Agreements
Reasonable Best Efforts.
Subject to the terms
and conditions of the Merger Agreement, Odyssey, Gentiva and
Merger Sub have agreed to use their reasonable best efforts to
take, or cause to be taken, all actions or to do, or cause to be
done, all things reasonably necessary, proper or advisable under
applicable laws to consummate the Merger as promptly as
practicable. Additionally, Odyssey, Gentiva and Merger Sub have
agreed to use their reasonable best efforts to obtain in a
timely manner all necessary waivers, consents and approvals and
to effect all necessary registrations and filings, but are not
required to waive or exercise any right under the Merger
Agreement that is waivable or exercisable in the sole discretion
of such party.
Proxy Statement; Stockholders
Meeting.
We have agreed to prepare and file with
the SEC this proxy statement and any other proxy materials
seeking stockholder approval of the Merger and adoption of the
Merger Agreement and to respond promptly to any comments made by
the SEC with respect to this proxy statement. The Merger
Agreement also provides that, as promptly as reasonably
practicable after the date of the Merger Agreement, we will hold
the stockholders special meeting, cause this proxy
statement to be mailed to our stockholders and use reasonable
best efforts to solicit our stockholder proxies in favor of the
approval of the Merger and adoption of the Merger Agreement.
Access.
We have agreed that we and our
subsidiaries will (i) upon reasonable prior written notice,
give Gentiva and Merger Sub, their officers and a reasonable
number of their employees and authorized representatives,
reasonable access during normal business hours to our and our
subsidiaries officers, properties, offices and other
facilities and to their books and records, and (ii) furnish
Gentiva and Merger Sub with financial and operating data and
other information with respect to our and our subsidiaries
business, properties and specified agreements as may be
reasonably requested from time to time. We are not required to
grant these access rights if such access would cause a violation
of any agreement to which we or our subsidiaries is a party, or
would cause a loss of attorney/client privilege or trade secret
protection, or violate applicable laws. Such access must also
not interfere unreasonably with our or our subsidiaries
business or operations or result in significant interference
with the prompt and timely discharge of our officers
normal duties.
Other Agreements.
The Merger Agreement
contains specified other agreements, including agreements
relating to notifications of certain matters, confidentiality
and publicity.
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Financing
Obtaining
the Financing
Gentiva and Merger Sub have agreed to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and obtain the
Financing on the terms and conditions described in the
Commitment Letter, including to:
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maintain in effect the Commitment Letter;
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satisfy on a timely basis all conditions applicable to Gentiva
and Merger Sub to obtaining the Financing;
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negotiate definitive agreements with respect to the Commitment
Letter on the terms and conditions contained in the Commitment
Letter;
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consummate the Financing at or prior to the closing date of the
Merger; and
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enforce their rights under the Commitment Letter in the event of
a breach by the Lenders of their obligations under the
Commitment Letter.
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Gentiva and Merger Sub have also agreed not to permit any
material amendment or modification to be made to, or waiver of
any material provision or remedy under, the Commitment Letter or
the fee letter referred to in the Commitment Letter without our
prior written consent (which consent cannot be unreasonably
withheld, delayed or conditioned).
In the event any portion of the Financing becomes unavailable on
the terms and conditions described in or contemplated by the
Commitment Letter for any reason and that portion of the
Financing is reasonably required to fund Gentivas and
Merger Subs obligations under the Merger Agreement, each
of Gentiva and Merger Sub must arrange to obtain, as promptly as
practicable following the occurrence of such event (but by no
later than October 20, 2010), alternative Financing from
alternative sources in an amount sufficient to pay all funds
necessary for the satisfaction of all of Gentivas and
Merger Subs obligations under the Merger Agreement,
including the payment of all amounts required to be paid
pursuant to the Merger and the payment of any debt required to
be repaid or otherwise satisfied, including any breakage costs,
in connection with the Merger and of all fees and expenses
reasonably expected to be incurred in connection with
consummating the Merger and the Financing.
Gentiva is required to give us prompt written notice of any
material breach by any party to, or any condition not likely to
be satisfied in, the Commitment Letter (or any alternative
financing) of which Gentiva becomes aware or any termination (or
threat of termination) of the Commitment Letter (or commitments
for alternative financing). Gentiva is required to keep us
informed on a reasonably current basis in reasonable detail of
the status of its efforts to arrange and consummate the
Financing (or alternative financing). In the event that the
Commitment Letter is amended, replaced, supplemented or modified
or alternative financing is obtained, Gentiva is required to
promptly notify us and provide us with copies of any definitive
agreements related thereto.
Obtaining the Financing or any alternative financing is not a
condition to the obligations of Gentiva and Merger Sub under the
Merger Agreement.
Cooperation
of Odyssey
We have agreed to, and have agreed to cause our subsidiaries to
(and to use our reasonable best efforts to cause our and their
respective representatives to), use reasonable best efforts to
provide such cooperation as may be reasonably requested by
Gentiva
and/or
the
Lenders in connection with the Financing (so long as such
requested cooperation does not unreasonably interfere with our
ongoing operations and the ongoing operations of our
subsidiaries), including:
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providing information relating to us and our subsidiaries to
Gentiva and the Lenders to be used in the preparation of an
information package regarding the business, operations,
financial projections and
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prospects of Gentiva, us and Gentivas and our respective
subsidiaries, customary for such financing or reasonably
necessary for the completion of the Financing, to the extent
reasonably requested by Gentiva to assist Gentiva in preparation
of customary offering or information documents to be used for
the completion of the Financing as contemplated by the
Commitment Letter or the definitive financing documents;
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participating in a reasonable number of meetings, presentations,
road shows, drafting sessions, due diligence sessions and
sessions with the rating agencies, in each case as are
reasonably necessary for the completion of the Financing by the
Lenders;
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assisting in Gentivas preparation of documents and
materials, including any customary offering documents and bank
information memoranda for the Financing, and materials for
rating agency presentations, in each case as are reasonably
necessary for the completion of the Financing by the Lenders;
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cooperating with Gentivas marketing efforts for the
Financing;
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providing reasonable assistance in the preparation of and
executing and delivering (or using reasonable best efforts to
obtain from its advisors), and causing our subsidiaries to
execute and deliver, customary certificates, other documents and
instruments relating to guarantees and other matters ancillary
to the Financing as may be reasonably requested by Gentiva as
necessary and customary in connection with the Financing;
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providing reasonable assistance in connection with
Gentivas preparation of and entering into one or more
credit agreements, currency or interest hedging agreements, or
other agreements; provided that no obligation of us or any of
our subsidiaries under any such agreements or amendments will be
effective until the Effective Time;
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as promptly as practicable, furnishing Gentiva and the Lenders
with financial and other information regarding us as may be
reasonably requested by Gentiva
and/or
the
Lenders to assist in preparation of customary offering or
information documents to be used for the completion of the
Financing as contemplated by the Commitment Letter or the
definitive financing documents;
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using our reasonable best efforts, as appropriate, to have our
independent accountants provide their reasonable cooperation and
assistance, including participation in due diligence sessions;
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using our reasonable best efforts to permit any cash and cash
equivalents of ours and our subsidiaries to be made available to
Gentiva
and/or
Merger Sub at the Effective Time;
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providing authorization letters to the Lenders authorizing the
distribution of information to prospective Lenders and
containing, if true, a representation to the Lenders that the
public side versions of such documents, if any, do not include
material non-public information about us or our affiliates or
securities;
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using our reasonable best efforts to ensure that the Lenders
benefit materially from the existing lending and banking
relationships of ours and our subsidiaries and that the Lenders
have the benefit of clear market provisions in the
Commitment Letter relating to us and our subsidiaries; and
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cooperating reasonably with the Lenders due diligence and
with their efforts to obtain guarantees from us and our
subsidiaries and obtain and perfect security interests in our
assets and the assets of our subsidiaries intended to constitute
collateral securing the Financing, with such cooperation
occurring prior to or simultaneously with the consummation of
the Merger, but the execution of any guarantees or security
arrangements not taking effect until the Effective Time, in each
case, to the extent customary and reasonable.
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The parties have further agreed that we are not required to take
any actions that would encumber any of our assets or that would
constitute a breach of any of our material contracts or our
material leases prior to consummation of the Merger. Also, prior
to the Effective Time, we are not (A) required to pay any
commitment or other similar fee relating to the Financing or
(B) have any liability or any obligation under any
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credit agreement or any related document or any other agreement
or document related to the Financing or any alternative
financing that Gentiva may raise in connection with the Merger,
other than the Merger Agreement. Furthermore, (i) all
non-public or other confidential information provided by us or
our representatives must be kept confidential in accordance with
the confidentiality agreement between us and Gentiva, except
that Gentiva and Merger Sub are permitted to disclose such
information in accordance with the Commitment Letter, and
(ii) we will be permitted a reasonable period to comment on
those portions of the confidential information memoranda
circulated to potential financing sources that contain or are
based upon any such non-public or other confidential
information. Gentiva has acknowledged and agreed that neither we
nor our subsidiaries will incur any liability to any person
prior to the Effective Time in connection with any Financing (or
any alternative financing). Gentiva is required to promptly,
upon our request, reimburse us for all
out-of-pocket
costs (including reasonable attorneys fees) incurred by us
or our subsidiaries in connection with our cooperation described
above and Gentiva and Merger Sub will jointly and severally
indemnify and hold harmless us, our subsidiaries and our and our
subsidiaries respective directors, officers and
representatives from and against any and all liabilities,
losses, damages, claims, costs, expenses, interest, awards,
judgments, and penalties suffered or incurred by any of us in
connection with the arrangement of the Financing (or any
alternative financing) and any information used in connection
therewith. The foregoing indemnification obligation survives the
consummation of the Merger and any termination of the Merger
Agreement.
Conditions
to the Merger
Conditions to Each Partys
Obligations.
Each partys obligations to
consummate the Merger are subject to the satisfaction or waiver
of specified conditions on or prior to the Effective Time,
including:
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the Merger must have been approved and the Merger Agreement
adopted by the affirmative vote of the holders of a majority of
the issued and outstanding shares of our common stock entitled
to vote at the special meeting;
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no governmental authority of competent jurisdiction will have
enacted any law or issued any order that has the effect of
making the Merger illegal or which has the effect of prohibiting
or otherwise preventing the Merger; and
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any applicable waiting period (and any extension thereof) under
the HSR Act will have been terminated or expired, and no
restrictive order or other requirements will have been placed on
Odyssey, Gentiva or Merger Sub or the Surviving Corporation
under the HSR Act.
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Conditions to Gentivas and Merger Subs
Obligations.
The obligations of Gentiva and
Merger Sub to consummate the Merger are subject to the
satisfaction or waiver by Gentiva and Merger Sub on or before
the Effective Time of the following additional conditions:
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our representations and warranties set forth in the Merger
Agreement must be true and correct as of the date of the Merger
Agreement and as of the Effective Time (unless the
representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty must be true
and correct only as of such earlier date), except where the
failure of such representation and warranty to be true and
correct (without giving effect to any qualification as to
materiality or Company Material Adverse Effect set forth
therein), individually or in aggregate, would not have a Company
Material Adverse Effect; provided that (i) our
representations and warranties relating to capitalization
(subject to de minimis exceptions) must be true in correct in
all respects as of the date of the Merger Agreement and as of
the Effective Time (unless the representation and warranty
expressly speaks as of an earlier date, in which case such
representation and warrant must be true and correct only as of
such date earlier date), and (ii) our representations and
warranties relating to (x) authorization of the Merger
Agreement and the Merger and (y) the opinion of our
financial advisor must be true and correct in all material
respects as of the date of the Merger Agreement and as of the
Effective Time;
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we must have performed in all material respects all obligations
required to be performed by us under the Merger Agreement at or
prior to the Effective Time;
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since the date of the Merger Agreement, no event, circumstance,
change or effect will have occurred or been discovered and be
continuing that has had, or is reasonably likely to have, a
Company Material Adverse Effect; and
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Gentiva must have received from us a certificate attesting to
the accuracy of our representations and warranties and the
performance of our obligations under the Merger Agreement.
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Conditions to Odysseys Obligations.
Our
obligations to consummate the Merger are subject to the
satisfaction or waiver by us on or prior to the Effective Time
of the following conditions:
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the representations and warranties made by Gentiva and Merger
Sub in the Merger Agreement (i) that are qualified by
materiality must be true and correct as of the date of the
Merger Agreement and as of the Effective Time (unless the
representation and warranty expressly speaks as of an earlier
date, in which case such representation or warranty must be true
and correct as of such earlier date) and (ii) that are not
qualified by materiality must be true and correct in all
material respects as of the date of the Merger Agreement and as
of the Effective Time (unless the representation and warranty
expressly speaks as of an earlier date, in which case such
representation or warranty must be true and correct as of such
earlier date); provided that the representations and warranties
relating to (x) authorization of the Merger Agreement and
the Merger and (y) capitalization and operation of Merger
Sub, must be true in all respects as the date of the Merger
Agreement and as of the Effective Time;
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Gentiva and Merger Sub must have performed in all material
respects all obligations required to be performed by them under
the Merger Agreement at or prior to the Effective Time; and
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we must receive from Gentiva and Merger Sub a certificate
attesting to the accuracy of their representations and
warranties and the performance of their obligations under the
Merger Agreement.
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The waiver of any condition described above by the relevant
party is subject to, and limited to the extent of, applicable
laws.
Restrictions
on Solicitations of Other Offers
The Merger Agreement provides that, until 11:59 p.m.
(Central Time) on June 22, 2010, we and our representatives
had the right, under the direction of our board of directors, to
directly or indirectly:
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initiate, solicit and encourage the submission of Acquisition
Proposals (as defined below) from one or more persons, including
by way of contacting third parties or public disclosure, and
providing access to non-public information pursuant to (but only
pursuant to) an acceptable confidentiality agreement with any
such person, provided that we must promptly (any in any event
within 24 hours) provide to Gentiva any material non-public
information concerning us or our subsidiaries that is provided
to any such person that was not previously provided to
Gentiva; and
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enter into, participate in and maintain discussions or
negotiations regarding, and take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or
would be reasonably likely to lead to, an Acquisition Proposal.
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After 11:59 p.m. (Central Time) on June 22, 2010 until
the earlier to occur of the Effective Time or the termination of
the Merger Agreement, we have agreed to, and to cause our
subsidiaries to, and will direct our and our subsidiaries
representatives to immediately cease and terminate any existing
solicitation, encouragement, discussion or negotiation with any
third party with respect to an Acquisition Proposal. We have
also agreed that we will not, nor will we permit our
subsidiaries to, nor will we authorize our representatives to,
and we will not publicly propose to, directly or indirectly
(other than with respect to Gentiva and Merger Sub):
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solicit, initiate, knowingly facilitate or knowingly encourage
(provided that supplying non-public information in the ordinary
course of business is not prohibited) any inquiries, proposals
or offers that constitute, or that would reasonably be expected
to lead to, an Acquisition Proposal;
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knowingly engage in, continue or otherwise participate in any
discussions or negotiations with any person, other than Gentiva
and its subsidiaries and representatives, regarding, or furnish
to any third party information in connection with or for the
purpose of encouraging or facilitating, an Acquisition
Proposal; or
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enter into any letter of intent, agreement, contract, commitment
or agreement in principle with respect to an Acquisition
Proposal or enter into any agreement, contract or commitment
requiring us to abandon, terminate or fail to consummate the
Merger.
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provided, that notwithstanding any of these restrictions, after
11:59 p.m. (Central Time) on June 22, 2010 until the
earlier to occur of the approval of the Merger and adoption of
the Merger Agreement by our stockholders or the termination of
the Merger Agreement, we and our representatives may continue to
engage in discussions and negotiations with and not request the
return or destruction of non-public information from any person
who submits an Acquisition Proposal by 11:59 p.m. (Central
Time) on June 22, 2010 (which has not been rejected or
withdrawn by such date and time) that on or prior to
June 22, 2010, our board of directors determines in good
faith (after consultation with Goldman Sachs or another
financial advisor and outside legal counsel) constitutes or is
reasonably likely to lead to a Superior Proposal (as defined
below). We refer to such person as an Excluded Party.
Commencing on May 24, 2010, Odyssey, with the assistance of
Goldman Sachs, began soliciting and encouraging alternative
acquisition proposals from third parties. During the process,
Goldman Sachs contacted 12 potential strategic and financial
buyers that were identified as potential acquirers of Odyssey.
The parties were selected by our board of directors in
consultation with our management and Goldman Sachs. None of
these potential acquirers submitted an Acquisition Proposal or
otherwise expressed an interest in evaluating the acquisition
opportunity. In addition, two unsolicited potential acquirers
contacted Goldman Sachs before June 22, 2010, but neither
decided to evaluate the acquisition opportunity.
Notwithstanding any of these restrictions, if at any time after
11:59 p.m. (Central Time) on June 22, 2010 and prior
to the approval of the Merger and adoption of the Merger
Agreement by our stockholders, (i) we receive a written
Acquisition Proposal from a third party, (ii) such
Acquisition Proposal did not result from a material breach of
our agreement not to solicit such proposals (as described
above), (iii) our board of directors determines in good
faith (after consultation with Goldman Sachs or another
independent financial advisor of nationally recognized
reputation and outside legal counsel) that such Acquisition
Proposal constitutes or would be reasonably likely to lead to a
Superior Proposal, and (iv) our board of directors
determines in good faith (after consultation with Goldman Sachs
or another independent financial advisor of nationally
recognized reputation and outside legal counsel) that the
failure to furnish information to and enter into, maintain and
participate in discussions with such party would be reasonably
likely to be inconsistent with its fiduciary duties to our
stockholders under applicable laws, then we are permitted to
furnish information and data to the third party making the
Acquisition Proposal and enter into, maintain and participate in
discussions or negotiations with the third party making the
Acquisition Proposal; provided that we have agreed not to
furnish any non-public information except pursuant to an
acceptable confidentiality agreement and we must promptly
provide to Gentiva any material non-public information
concerning us that is provided to such third party and was not
previously provided to Gentiva. In addition, we may
(x) following the receipt of an Acquisition Proposal,
contact the third party making such Acquisition Proposal in
order to clarify and understand the terms and conditions of such
proposal so as to determine whether such Acquisition Proposal
constitutes or would be reasonably likely to lead to a Superior
Proposal or (y) direct any person to the Merger Agreement.
An Acquisition Proposal means any inquiry (in
writing or otherwise), proposal, indication of interest or offer
by any third party (other than an offer or proposal by Gentiva
or Merger Sub) that relates to:
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the direct or indirect acquisition or purchase (whether in a
single transaction or a series of related transactions) of our
and our subsidiaries assets (including securities of our
subsidiaries) equal to 25% or more of our consolidated assets or
to which 25% or more of our consolidated net patient service
revenue are attributable;
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the direct or indirect acquisition (whether in a single
transaction or a series of related transactions and whether from
us, our subsidiaries or any of our stockholders) of 25% or more
of our common stock (or securities or instruments convertible
into or exercisable or exchangeable for such securities);
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a tender offer or exchange offer that if consummated would
result in any third party beneficially owning 25% or more of our
common stock; or
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a merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving us or any of our subsidiaries that, if
consummated, would have the effect set forth in the first two
bullet points above, other than the transactions contemplated by
the Merger Agreement.
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A Superior Proposal is any bona fide written
Acquisition Proposal that our board of directors determines in
good faith (after consultation with Goldman Sachs or another
financial advisor and outside legal counsel ), taking into
account, among other things, all legal, financial, regulatory,
and other aspects of the Acquisition Proposal and the third
party making the Acquisition Proposal, including the financing
terms (and certainty of financing) thereof and the likelihood of
consummation, if consummated, would result in a transaction that
is more favorable to our stockholders from a financial point of
view than the transactions contemplated by the Merger Agreement
(taking into account any adjustment to the terms and conditions
proposed by Gentiva in an offer that is in writing in response
to such Acquisition Proposal and not revocable during the time
period that Odyssey cannot accept the Acquisition Proposal, and
any termination fees); provided that, for purposes of the
definition of Superior Proposal, references in the
definition of Acquisition Proposal to 25% or
more means more than 50%.
We are required, as promptly as practicable (and in any event
within 24 hours), to notify and advise Gentiva of any
Acquisition Proposal, which notification must include a copy of
the applicable written Acquisition Proposal (or, if oral, the
material terms and conditions of such Acquisition Proposal) and
the identity of the third party making such Acquisition
Proposal. We are required thereafter to keep Gentiva reasonably
informed on a reasonably current basis of the status of any
material developments, discussions or negotiations regarding any
such Acquisition Proposal, and the material terms and conditions
thereof (including any change in price, structure or form of
consideration), including by providing a copy of material
documentation or correspondence relating thereto that is
exchanged between the person making such Acquisition Proposal
and us within 24 hours after the exchange thereof.
We have also agreed not to release or permit the release of any
person from, or to waive or permit the waiver or termination of
any provision of, any confidentiality, standstill or
similar agreement to which any of we or any of our subsidiaries
is a party and to use our reasonable best efforts to enforce or
cause to be enforced to the fullest extent permitted by law each
such agreement at the request of Gentiva. Nothing in the Merger
Agreement, however, prohibits us from rendering inapplicable,
exempting or taking any action to render inapplicable or exempt
any third party from any standstill agreement or similar
arrangement to permit such third party to make an Acquisition
Proposal.
Gentiva and Merger Sub have agreed that neither they nor any of
their respective subsidiaries or other affiliates may, and that
each will use its reasonable best efforts to cause their
respective representatives not to, intentionally enter into, or
seek to enter into any agreement, arrangement or understanding
with a potential bidding third party (or any financing sources
or representatives of such third party) that has the purpose or
effect of interfering with our ability to seek and obtain a
Superior Proposal from such third party (including interfering
with the ability of Gentiva to hold discussions and negotiations
with such third party in connection therewith) in accordance
with our rights under the Merger Agreement.
Recommendation
Change and Termination in Connection with a Superior
Proposal
At any time before the approval of the Merger and adoption of
the Merger Agreement by our stockholders, our board of directors
may, if our board of directors or any such committee determines
in good faith (after consultation with Goldman Sachs or another
financial advisor and outside legal counsel), that the
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failure to do so would be reasonably likely to be inconsistent
with the directors fiduciary duties to our stockholders
under applicable laws:
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make a Company Change in Recommendation (described
below) in response to either a Superior Proposal received after
the date of the Merger Agreement that does not result from a
material breach of our non-solicitation obligations discussed
previously, or any fact, event, change, development or
circumstances not known by our board of directors as of the date
of the Merger Agreement and not relating to any Acquisition
Proposal (such change, an Intervening Event); or
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terminate the Merger Agreement in response to a Superior
Proposal received after the date of the Merger Agreement;
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provided that in the case of a Superior Proposal, no Company
Change in Recommendation may be made and no termination of the
Merger Agreement may be made, in either case:
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until after the fifth business day following Gentivas
receipt of written notice from us advising Gentiva that our
board of directors intends to make a Company Change in
Recommendation or terminate the Merger Agreement and specifying
the reasons for the action, including, if applicable, the
material terms and conditions of, and the identity of the person
making the Superior Proposal, and a copy of any alternative
acquisition agreement and other relevant transaction documents
(it being understood and agreed that any amendment to the
financial terms or any other material term of such Superior
Proposal will require a new notice and an additional three
business day period with respect to such new notice);
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unless during such five business day period (or any additional
three business day period), we, to the extent requested by
Gentiva, negotiate with Gentiva in good faith to make such
adjustments to the terms and conditions of the Merger Agreement
as would enable our board of directors to proceed with making
the recommendation that our stockholders approve the Merger and
adopt the Merger Agreement and not make such a Company Change in
Recommendation or terminate the Merger Agreement; and
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unless, prior to the expiration of such five business day period
(or any additional three business day period), Gentiva does not
make a proposal to adjust the terms and conditions of the Merger
Agreement that our board of directors determines in good faith
(after consultation with Goldman Sachs or another financial
advisor and outside legal counsel) to be at least as favorable
as the Superior Proposal;
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and provided that in the case of an Intervening Event, no
Company Change in Recommendation may be made:
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until after the fifth business day following Gentivas
receipt of written notice from us advising Gentiva that our
board of directors intends to take such action and specifying
the facts underlying our board of directors determination
that an Intervening Event has occurred and the reasons for the
Company Change in Recommendation;
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unless during such five business period, we, to the extent
requested by Gentiva, negotiate with Gentiva in good faith to
enable Gentiva to amend the Merger Agreement in such a manner
that obviates the need for a Company Change in
Recommendation; and
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unless, by the expiration of such five business day period, our
board of directors determines in good faith, taking into
consideration any amendments to the Merger Agreement proposed by
Gentiva (after consultation with Goldman Sachs or another
financial advisor and outside legal counsel), that the failure
to effect a Company Change in Recommendation would be
inconsistent with the directors fiduciary duties to our
stockholders under applicable laws.
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A Company Change in Recommendation is an action by
our board of directors to:
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withdraw, qualify, modify, change or amend in any manner adverse
to the Merger, Gentiva or Merger Sub, or publicly propose to
withdraw, qualify, modify, change or amend in any manner adverse
to the Merger, Gentiva or Merger Sub, our board of
directors recommendation that our stockholders approve the
Merger and adopt the Merger Agreement;
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adopt or recommend an Acquisition Proposal (it being understood
that a neutral position or no position, other than in a
communication made in compliance with Rule
14d-9(f)
under the Exchange Act or a similar stop, look and
listen communication, with respect to any Acquisition
Proposal will be considered a violation);
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fail to make or reaffirm the recommendation that our
stockholders approve the Merger and adopt the Merger Agreement;
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approve or recommend, or publicly propose to approve or
recommend, or cause or permit us or any of our subsidiaries to
execute or enter into any agreement (other than an acceptable
confidentiality agreement pursuant to the Merger Agreement),
arrangement or understanding, including any letter of intent,
memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other similar
agreement with respect to an Acquisition Proposal; or
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resolve or publicly propose to take any action described in the
preceding 4 bullet points.
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We are not prohibited under the Merger Agreement from
(i) taking and disclosing a position contemplated by
Rule 14d-9,
Rule 14e-2(a)
or Item 1012(a) of
Regulation M-A
under the Exchange Act or (ii) making any disclosure to our
stockholders if, in the good faith judgment of the our board of
directors, after consultation with outside legal counsel, the
failure to do so would be inconsistent with the our board of
directors fiduciary duties to our stockholders under
applicable laws or any disclosure requirements under applicable
laws.
Termination
of the Merger Agreement
The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time:
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by the mutual consent of Gentiva and us;
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by either Gentiva or us if:
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a court of competent jurisdiction or other governmental
authority has issued a final, non-appealable order, decree or
ruling or will have taken any other action (which order, decree,
judgment, injunction or other action the terminating party will
have used its reasonable best efforts to lift or avoid), in each
case permanently restraining, enjoining or otherwise prohibiting
the Merger;
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prior to the effective time of the Merger, the other party
materially breaches any representation, warranty, covenant or
agreement set forth in the Merger Agreement, which breach
(i) in the case of a breach by us, would give rise to the
failure of certain conditions to the consummation of the Merger
and is incapable of being cured or, if capable of being cured,
is not cured prior to the earlier of (x) one business day
prior to October 29, 2010 or (y) the date that is
30 days from the date that we are notified by Gentiva of
such breach and (ii) in the case of a breach by Gentiva or
Merger Sub, would prevent Gentiva or Merger Sub from
consummating the Merger or give rise to the failure of certain
conditions to the consummation of the Merger and is incapable of
being cured or, if capable of being cured, is not cured prior to
the earlier of (x) one business day prior to
October 29, 2010 or (y) the date that is 30 days
from the date that Gentiva is notified by us of such breach (no
prior notice of breach is required with respect to a breach of
any covenants or agreements to be performed on the closing date
of the Merger); provided, however, that (a) the right to
terminate the Merger Agreement pursuant to this provision will
not be available to any party who is then in material breach of
any of its (including, in the case of Gentiva, any breach by
Merger Sub) representations, warranties, covenants or agreements
set forth in the Merger Agreement and (b) the right to
terminate the Merger Agreement pursuant to this provision will
not be available to Gentiva during the pendency of a legal
proceeding by us for specific performance of the Merger
Agreement;
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the closing date of the Merger has not occurred by
October 29, 2010; provided that the right to terminate the
Merger Agreement pursuant to this provision will not be
available to any party whose failure to fulfill any obligation
or whose breach of any representation, warranty, or covenant
under
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62
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the Merger Agreement has been the primary cause of, or primarily
resulted in, the failure of the closing date to have occurred by
October 29, 2010 (including in the case of Gentiva, any
breach by Merger Sub); or
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our stockholders do not approve the Merger and adopt the Merger
Agreement at the special meeting or any adjournment or
postponement thereof; or
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by Gentiva, at any time prior to the approval of the Merger and
adoption of the Merger Agreement by our stockholders, if:
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our board of directors makes a Company Change in Recommendation;
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our board of directors publicly approves, endorses or recommends
an Acquisition Proposal to our stockholders or we enter into a
contract or agreement relating to an Acquisition Proposal (other
than a confidentiality agreement or standstill agreement in
compliance with the Merger Agreement);
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a tender offer or exchange offer that constitutes an Acquisition
Proposal (other than by Gentiva or its affiliates) is commenced
prior to the approval of the Merger and adoption of the Merger
Agreement by our stockholders and our board of directors fails
to recommend against acceptance of such tender offer or exchange
offer by our stockholders (including, for these purposes, by
taking no position or a neutral position with respect to the
acceptance of such tender offer or exchange offer by our
stockholders, which will constitute a failure to recommend
against acceptance of such tender offer or exchange offer)
within ten business days after commencement;
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our board of directors fails to reaffirm its recommendation to
our stockholders to approve the Merger and adopt the Merger
Agreement within ten business days after a request to so
reaffirm by Gentiva; or
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we or our board of directors publicly announce the intention to
do any of the foregoing; or
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by us, at any time prior to the approval of the Merger and
adoption of the Merger Agreement by our stockholders in order to
accept a Superior Proposal, provided that such termination will
not be effective until Gentiva has received the applicable
termination fee (as described below), and unless we have
complied in all material respects with specified obligations
under the Merger Agreement.
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Termination
Fees
We have agreed to pay Gentiva a termination fee of $24,100,000
if the Merger Agreement is terminated by us in order to accept a
Superior Proposal by an Excluded Party.
We have agreed to pay Gentiva a termination fee of $28,900,000
in cash if the Merger Agreement is terminated:
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by Gentiva, pursuant to the third bullet point in The
Merger Agreement Termination of the Merger
Agreement beginning on page 62 above;
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by us, prior to the approval of the Merger and adoption of the
Merger Agreement by our stockholders in order to accept a
Superior Proposal by a third party other than an Excluded
Party; or
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by us or Gentiva, if:
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prior to the approval of the Merger and adoption of the Merger
Agreement by our stockholders, an Acquisition Proposal is
(a) communicated directly to our stockholders,
(b) communicated to senior management or our board of
directors and senior management or our board of directors failed
to keep such Acquisition Proposal confidential, or
(c) otherwise publicly disclosed;
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thereafter, the Merger Agreement is terminated by Gentiva
because of a material breach of our representations, warranties
or covenants, or by us or Gentiva because the Merger has not
been consummated by October 29, 2010 or our stockholders do
not approve the Merger and adopt the Merger Agreement at the
special meeting; and
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63
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within 180 days of the termination, we enter into a
definitive agreement relating to a transaction contemplated by
any Acquisition Proposal or any transaction contemplated by an
Acquisition Proposal is consummated (using more than
50% instead of 25% or more in the definition
of Acquisition Proposal).
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If Gentiva receives full payment of the fees described above,
subject to limited exceptions, the receipt of the fees described
above will be deemed to be liquidated damages for any and all
losses or damages suffered or incurred by Gentiva, Merger Sub,
any of their respective affiliates or any other person in
connection with the Merger Agreement (and the termination
hereof), the Merger (and the abandonment thereof) or any matter
forming the basis for such termination, and none of Gentiva,
Merger Sub, any of their respective affiliates or any other
person will be entitled to bring or maintain any claim, action
or proceeding against us or any of our affiliates for damages or
any equitable relief arising out of or in connection with the
Merger Agreement, the Merger or any matters forming the basis
for such termination.
Except as described above, in the event of termination of the
Merger Agreement in accordance with its terms, it will become
void and there will be no liability or obligation on the part of
any party thereto except with respect to certain matters
involving confidentiality, payment of the termination fees
described above, the payment of our costs related to the
financing for the Merger, and certain miscellaneous provisions
of the Merger Agreement, which provisions will survive such
termination; provided, however, that no such termination will
relieve any party from liability for any damages, including
(i) in the case (and for the benefit) of us, damages based
on the consideration that would have otherwise been payable to
our stockholders if the Merger were consummated and (ii) in
the case (and for the benefit) of Gentiva, damages based on the
operating and financial synergies and other economic benefits
that would have otherwise accrued to Gentiva if the Merger were
consummated, in the case of each of the foregoing
clauses (i) and (ii), for a knowing or intentional material
breach of a representation or warranty or a knowing or
intentional material breach of any obligation under the Merger
Agreement made or allowed to occur or fraud. The failure, for
any reason, of Gentiva to consummate the Merger as required
under the Merger Agreement would constitute a knowing or
intentional breach by Gentiva of the Merger Agreement for which
Odyssey would be entitled to seek damages, including damages
based on the consideration that would have otherwise been
payable to Odysseys stockholders if the Merger was
consummated.
Indemnification
and Insurance
The Merger Agreement provides that for a period of six years
from the Effective Time, the Surviving Corporation will
indemnify and hold harmless those persons who were directors or
officers of Odyssey at any time before the Effective Time
against all claims, losses, liabilities, damages, judgments,
inquiries, fines and reasonable fess costs and expenses,
including attorneys fees and disbursements incurred in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to the fact that
such person is or was an officer, director, employee, fiduciary
or agent of Odyssey or any of its subsidiaries, for matters
existing or occurring at or prior to the Effective Time
(including the Merger) to the fullest extent permitted by law.
In this regard, the Surviving Corporation will also be required
to advance expenses as incurred to an indemnified officer or
director to the fullest extent permitted by law. Persons who
were directors or officers of Odyssey have the right, as
contemplated by Delaware law, to require that a determination of
whether such former director or officer is entitled to
indemnification by the Surviving Corporation be made by special,
independent legal counsel selected by such former director or
officer and approved by the Surviving Corporation (which
approval should not be unreasonably withheld, conditioned or
delayed), and who has not otherwise performed material services
for Odyssey or the Surviving Company within the last three years.
The Merger Agreement also provides that, for a period of six
years after the Effective Time, the indemnification or
advancement of expenses provisions in the respective certificate
of incorporation and bylaws or similar organizational or
governing documents of the Surviving Corporation and its
subsidiaries will contain provisions no less favorable with
respect to indemnification, advancement of expenses and
exculpation of directors and officers than the provisions that
are currently included in such documents.
In addition, the Merger Agreement provides that Gentiva will
maintain or cause to be maintained Odysseys existing
policies of directors and officers liability
insurance for a period of six years from the
64
Effective Time (or policies of substantially equivalent coverage
and amounts); provided that Gentiva is not required to pay
aggregate premiums for such insurance in excess of 300% of the
aggregate premiums paid by Odyssey in 2009 for such insurance
coverage. Alternatively, at our option, we may obtain, before
the Effective Time, a six-year run-off policy for our
directors and officers liability insurance; provided
that the premium for such policy does not exceed 300% of the
aggregate premiums paid by Odyssey in 2009 for its
directors and officers liability insurance policies.
Employee
Matters
Gentiva will act to ensure that each employee of Odyssey who is
employed by Gentiva or one of its subsidiaries after the
Effective Time receives full credit (for all purposes, including
eligibility to participate, vesting, vacation entitlement and
severance benefits, but excluding benefit accrual under any
defined benefit plan) for service with us or any of our
subsidiaries under each of the comparable employee benefit
plans, programs and policies of Gentiva, the Surviving
Corporation or the relevant subsidiary, as applicable, in which
such continuing employee becomes or may become a participant
without allowing such service recognition to result in any
duplication of benefits. Each health or welfare benefit plan
maintained by Gentiva, the Surviving Corporation or the relevant
subsidiary for the benefit of any continuing employees will
waive any eligibility waiting periods, any evidence of
insurability requirements and the application of any
pre-existing condition limitations under such plan and grant
each continuing employee credit under such plan for all amounts
paid by such continuing employee under any similar benefit plan
for the plan year that includes the closing date of the Merger
for purposes of applying deductibles, co-payments and
out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the applicable plan maintained by
Gentiva, the Surviving Corporation or the relevant subsidiary,
as applicable, for the plan year in which the closing date of
the Merger occurs. Gentiva will assume all employment-related
claims, liabilities and obligations with respect to each of the
continuing employees, whether known or unknown, and any other
claims, liabilities or obligations arising out of the employment
of or termination of employment of any of the continuing
employees whether or not such claims, liabilities
and/or
obligations are related to periods before, on or after the
closing date of the Merger. On and after the closing date of the
Merger, Gentiva and its affiliates will retain and indemnify,
defend and hold harmless us and our subsidiaries and their
employees and former employees against any and all claims,
liabilities
and/or
obligations assumed by Gentiva or its affiliates pursuant to the
Merger Agreement.
Amendment,
Extension and Waiver
The Merger Agreement may be amended or waived by a signed
writing by Odyssey, Gentiva and Merger Sub (or in the case of a
waiver, by the party against whom the waiver is to be
effective). If any amendment or waiver after the approval of the
Merger and adoption of the Merger Agreement by our stockholders
will require further approval of our stockholders under
applicable laws or in accordance with the Nasdaq Marketplace
Rules, the effectiveness of such amendment or waiver will be
subject to the approval of our stockholders.
Specific
Performance
Odyssey, Gentiva and Merger Sub have agreed that irreparable
damage would occur and that the parties would not have any
adequate remedy at law if any of the provisions of the Merger
Agreement were not performed in accordance with their specific
terms or were otherwise breached, except for the specific
performance remedy described below. Each party is entitled to an
injunction or injunctions to prevent breaches of the Merger
Agreement and to enforce specifically the terms and provisions
of the Merger Agreement in any court of the State of Delaware or
any federal court sitting in the State of Delaware, without
proof of actual damages, and to waive any requirement for the
securing or posting of any bond in connection with such remedy,
this being in addition to any other remedy to which they are
entitled at law or in equity (subject to the limitations set
forth in the Merger Agreement), other than as limited hereunder.
The parties also agreed that (i) by seeking specific
performance, a party does not in any respect waive its right to
seek any other form of relief that may be available to a party
under the Merger Agreement (including monetary damages) if the
65
Merger Agreement is terminated or if specific performance is not
available or otherwise is not granted, and (ii) the parties
are not required to institute any proceeding for (or limit any
partys right to institute any proceeding for) specific
performance prior or as a condition to exercising any
termination right under the Merger Agreement (and pursuing
damages after such termination), nor does the commencement of
any legal proceeding for specific performance restrict or limit
any partys right to terminate the Merger Agreement or
pursue any other remedies under the Merger Agreement that may be
available then or thereafter. All costs of Odyssey, Gentiva and
Merger Sub incurred in connection with any action brought by
Odyssey, Gentiva or Merger Sub relating to the terms and
provisions of the Merger Agreement will be paid by Odyssey if
Gentiva is successful on the merits in such action and will be
paid by Gentiva if Odyssey is successful on the merits in such
action. None of the Lenders will have any liability to us or any
of our controlling persons, directors, officers, employees,
agents, attorneys, affiliates, members, managers, general or
limited partners, stockholders, and will not be obligated to any
of them, or anyone claiming by or through them, to pay
consequential, special, multiple, punitive or exemplary damages
including, but not limited to, damages arising from loss of
profits, business opportunities or goodwill in respect of any
breach or failure to comply with the Merger Agreement or in
respect of any of the transactions contemplated by the Merger
Agreement (including the Financing and the Commitment Letter).
CURRENT
MARKET PRICE OF COMMON STOCK
Odyssey common stock is traded on The Nasdaq Global Select
Market under the symbol ODSY. The following table
sets forth the high and low sales prices of Odyssey common stock
for the periods indicated as reported by The Nasdaq Global
Select Market:
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Common Stock Price
|
Fiscal Period
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High
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Low
|
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Fiscal Year Ended December 31, 2007
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|
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First Quarter
|
|
$
|
14.40
|
|
|
$
|
11.85
|
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Second Quarter
|
|
$
|
13.96
|
|
|
$
|
11.81
|
|
Third Quarter
|
|
$
|
12.50
|
|
|
$
|
9.23
|
|
Fourth Quarter
|
|
$
|
10.10
|
|
|
$
|
9.06
|
|
Fiscal Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
11.10
|
|
|
$
|
8.27
|
|
Second Quarter
|
|
$
|
11.28
|
|
|
$
|
9.15
|
|
Third Quarter
|
|
$
|
10.99
|
|
|
$
|
9.42
|
|
Fourth Quarter
|
|
$
|
10.47
|
|
|
$
|
6.76
|
|
Fiscal Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
12.27
|
|
|
$
|
8.61
|
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Second Quarter
|
|
$
|
11.50
|
|
|
$
|
8.11
|
|
Third Quarter
|
|
$
|
13.52
|
|
|
$
|
9.58
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|
Fourth Quarter
|
|
$
|
15.98
|
|
|
$
|
11.69
|
|
Fiscal Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
19.43
|
|
|
$
|
14.68
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Second Quarter (through July 7, 2010)
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|
$
|
26.91
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|
|
$
|
18.03
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The closing price of our common stock, as reported on The Nasdaq
Global Select Market on May 21, 2010, the last full trading
day before we publicly announced the signed Merger Agreement
with Gentiva, was $19.29 per share. The closing price of our
common stock on The Nasdaq Global Select Market on
July 7, 2010 was $26.73 per share. You are encouraged
to obtain current market quotations for Odyssey common stock in
connection with voting your shares. Following the Merger, there
will be no further market for our common stock.
We have never declared or paid any cash dividends on our common
stock and do not anticipate paying cash dividends in the
foreseeable future.
66
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of July 2, 2010 certain
information regarding the amount of our common stock
beneficially owned (as defined by the SECs rules and
regulations) by:
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each person known to us to beneficially own more than 5% of our
common stock;
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each of our directors;
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each of our named executive officers; and
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all current executive officers and directors as a group.
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Unless otherwise indicated, all stockholders set forth below
have our same principal business address. We have determined
beneficial ownership in accordance with the rules of the SEC.
Unless otherwise indicated, to our knowledge, the persons
included in this table have sole voting and investment power
with respect to all the shares of our common stock beneficially
owned by them, subject to applicable community property laws.
The number of shares beneficially owned by a person includes
shares of common stock that are subject to Options or Restricted
Stock Units that are either currently exercisable or exercisable
within 60 days of July 2, 2010. These shares are also
deemed outstanding for the purpose of computing the percentage
of outstanding shares owned by the person. These shares are not
deemed outstanding, however, for the purpose of computing the
percentage ownership of any other person. On July 2, 2010,
33,685,292 shares of common stock were outstanding.
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Shares Beneficially
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Percent of
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Name of Beneficial Owner
|
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Owned
|
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Class
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BlackRock, Inc.(1)
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2,779,875
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|
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8.3
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%
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Pentwater Capital Management, LP(2)
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1,815,000
|
|
|
|
5.4
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%
|
R. Dirk Allison(3)
|
|
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88,587
|
|
|
|
*
|
|
Brenda A. Belger(4)
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|
|
162,653
|
|
|
|
*
|
|
W. Bradley Bickham(5)
|
|
|
42,591
|
|
|
|
*
|
|
James E. Buncher(6)
|
|
|
35,100
|
|
|
|
*
|
|
Richard R. Burnham(7)
|
|
|
436,344
|
|
|
|
1.3
|
%
|
John K. Carlyle(8)
|
|
|
33,145
|
|
|
|
*
|
|
David W. Cross(9)
|
|
|
59,548
|
|
|
|
*
|
|
Paul J. Feldstein(10)
|
|
|
76,548
|
|
|
|
*
|
|
Craig P. Goguen(11)
|
|
|
203,123
|
|
|
|
*
|
|
Robert A. Lefton(12)
|
|
|
108,432
|
|
|
|
*
|
|
Robert A. Ortenzio(13)
|
|
|
35,100
|
|
|
|
*
|
|
Shawn S. Schabel(14)
|
|
|
80,248
|
|
|
|
*
|
|
David L. Steffy(15)
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|
|
253,388
|
|
|
|
*
|
|
Current Directors and Executive Officers as a Group
(15 persons)
|
|
|
1,624,190
|
|
|
|
4.7
|
%
|
|
|
|
*
|
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Represents beneficial ownership of less than 1%
|
|
|
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(1)
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|
Based on information contained in Schedule 13G filed with
the SEC on January 29, 2010, filed by BlackRock, Inc. whose
address is 40 East 52nd Street, New York, NY 10022. BlackRock
has sole voting power and sole investment power with respect to
all 2,779,875 shares.
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|
|
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(2)
|
|
Based on information contained in a Schedule 13G filed with the
SEC on July 7, 2010 by Pentwater Capital Management, LP,
whose address is 227 W. Monroe Suite 4000, Chicago, IL
60606. Pentwater Capital, LP has shared voting power and shared
investment power with respect to all 1,815,000 shares.
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|
|
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(3)
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|
Consists of 88,587 shares held of record.
|
|
|
|
(4)
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|
Consists of (i) 5,778 shares held of record and
(ii) 156,875 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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|
|
|
(5)
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|
Consists of 42,591 shares held of record.
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|
|
(6)
|
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Consists of (i) 15,100 shares held of record of which
2,600 are unvested shares of restricted stock which cannot be
disposed of until the restrictions on the shares lapse and
(ii) 20,000 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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67
|
|
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(7)
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Consists of (i) 197,526 shares held of record jointly
with his wife of which 2,600 are unvested shares of restricted
stock which cannot be disposed of until the restrictions on the
shares lapse and (ii) 238,818 shares issuable upon
exercise of stock options that have already vested or will vest
within 60 days following July 2, 2010.
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|
|
|
(8)
|
|
Consists of (i) 15,100 shares held of record of which
2,600 are unvested shares of restricted stock which cannot be
disposed of until the restrictions on the shares lapse and
(ii) 18,045 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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|
(9)
|
|
Consists of (i) 1,125 shares held of record by spouse,
(ii) 31,975 shares held of record of which 2,600 are
unvested shares of restricted stock which cannot be disposed of
until the restrictions on the shares lapse and
(ii) 26,448 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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|
|
|
(10)
|
|
Consists of (i) 15,100 shares held of record of which
2,600 are unvested shares of restricted stock which cannot be
disposed of until the restrictions on the shares lapse and
(ii) 61,448 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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|
|
(11)
|
|
Consists of (i) 34,373 shares held of record and
(ii) 168,750 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
|
|
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(12)
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Consists of 108,432 shares held of record.
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(13)
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Consists of (i) 15,100 shares held of record of which
2,600 are unvested shares of restricted stock which cannot be
disposed of until the restrictions on the shares lapse and
(ii) 20,000 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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(14)
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Consists of (i) 15,100 shares held of record of which
2,600 are unvested shares of restricted stock which cannot be
disposed of until the restrictions on the shares lapse and
(ii) 65,148 shares issuable upon exercise of stock
options that have already vested or will vest within
60 days following July 2, 2010.
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(15)
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Consists of (i) 170,650 shares held of record by The
Steffy Family Trust, a revocable grantor trust established by
Mr. Steffy and his spouse, (ii) 39,416 shares
held of record of which 2,600 are unvested shares of restricted
stock which cannot be disposed of until the restrictions on the
shares lapse and (ii) 43,322 shares issuable upon
exercise of stock options that have already vested or will vest
within 60 days following July 2, 2010.
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DISSENTERS
RIGHTS OF APPRAISAL
Under the DGCL, you have the right to dissent from the Merger
and to receive payment in cash for the fair value of your shares
of Odyssey common stock as determined by the Delaware Court of
Chancery, together with interest, if any, as determined by the
court, in lieu of the consideration you would otherwise be
entitled to pursuant to the Merger Agreement. These rights are
known as appraisal rights. Stockholders electing to exercise
appraisal rights must comply with the provisions of
Section 262 of the DGCL in order to perfect their rights.
We will require strict compliance with these statutory
provisions.
The following is intended as a brief summary of the material
provisions of the Delaware statutory procedures required to be
followed by a stockholder in order to dissent from the Merger
and perfect appraisal rights.
This summary, however, is not a complete statement of all
applicable requirements and is qualified in its entirety by
reference to Section 262 of the DGCL, the full text of
which appears in Annex C attached to this proxy statement.
Failure to precisely follow any of the statutory procedures set
forth in Section 262 the DGCL may result in a termination
or waiver of your appraisal rights. All references in this
summary to a stockholder are to the record holder of
shares of Odyssey common stock unless otherwise indicated.
Section 262 of the DGCL requires that stockholders for whom
appraisal rights are available be notified not less than
20 days before the stockholders meeting to vote on
the Merger that appraisal rights will be available. A copy of
Section 262 of the DGCL must be included with such notice.
This proxy statement constitutes our notice to Odysseys
stockholders of the availability of appraisal rights in
connection with the Merger in compliance with the requirements
of Section 262 of the DGCL. If you wish to consider
exercising your appraisal rights, you should carefully review
the text of Section 262 of the DGCL contained in
Annex C
68
to this proxy statement since failure to timely and properly
comply with the requirements of Section 262 of the DGCL
will result in the loss of your appraisal rights under Delaware
law.
If you elect to demand appraisal of your shares, you must
satisfy each of the following conditions:
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you must deliver to us a written demand for appraisal of your
shares before the vote with respect to the Merger Agreement is
taken. This written demand for appraisal must be in addition to
and separate from any proxy or vote abstaining from or voting
against the approval of the Merger and adoption of the Merger
Agreement. Voting against or failing to vote for the approval of
the Merger and adoption of the Merger Agreement by itself does
not constitute a demand for appraisal within the meaning of
Section 262 of the DGCL;
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you must not vote in favor of, or consent in writing to, the
approval of the Merger and adoption of the Merger Agreement. A
vote in favor of the approval of the Merger and adoption of the
Merger Agreement in person, by proxy, by telephone or via the
Internet will constitute a waiver of your appraisal rights in
respect of the shares so voted and will nullify any previously
filed written demands for appraisal. A proxy which does not
contain voting instructions will, unless revoked, be voted in
favor of the approval of the Merger and adoption of the Merger
Agreement. Therefore, a stockholder who votes by proxy and who
wishes to exercise appraisal rights must vote against the
approval of the Merger and adoption of the Merger Agreement or
abstain from voting on the approval of the Merger and adoption
of the Merger Agreement; and
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you must continue to hold your shares of Odyssey common stock
through the effective date of the Merger. Therefore, a
stockholder who is the record holder of shares of Odyssey common
stock on the date the written demand for appraisal is made but
who thereafter transfers the shares before the effective date of
the Merger will lose any right to appraisal with respect to such
shares.
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If you fail to comply with any of these conditions and the
Merger is consummated, you will be entitled to receive the
Merger Consideration, but you will have no appraisal rights with
respect to your shares of Odyssey common stock.
All demands for appraisal should be addressed to Odyssey
HealthCare, Inc., 717 North Harwood Street, Suite 1500,
Dallas, Texas 75201, Attention: Secretary, and must be delivered
before the vote on the Merger Agreement is taken at the special
meeting and should be executed by, or on behalf of, the record
holder of the shares of common stock. The demand must reasonably
inform us of the identity of the stockholder and the intention
of the stockholder to demand appraisal of his, her or its shares.
To be effective, a demand for appraisal by a holder of common
stock must be made by, or in the name of, such registered
stockholder, fully and correctly, as the stockholders name
appears on his or her stock certificate(s). Beneficial owners
who do not also hold the shares of record may not directly make
appraisal demands to us. The beneficial holder must, in such
cases, have the registered owner, such as a brokerage firm,
bank, trust or other nominee, submit the required demand in
respect of those shares. If shares are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
execution of a demand for appraisal should be made by or for the
fiduciary; and if the shares are owned of record by more than
one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or for all joint owners. An
authorized agent, including an authorized agent for two or more
joint owners, may execute the demand for appraisal for a
stockholder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in
executing the demand, he or she is acting as agent for the
record owner. A record owner, such as a broker, who holds shares
as a nominee for others, may exercise his or her right of
appraisal with respect to the shares held for one or more
beneficial owners, while not exercising this right for other
beneficial owners. In that case, the written demand should state
the number of shares as to which appraisal is sought. Where no
number of shares is expressly mentioned, the demand will be
presumed to cover all shares held in the name of the record
owner.
If you hold your shares of common stock in a brokerage account
or in other nominee form and you wish to exercise appraisal
rights, you should consult with your broker or the other nominee
to determine the appropriate procedures for the making of a
demand for appraisal by the nominee.
69
Within 10 days after the effective date of the Merger, the
surviving corporation must give written notice that the Merger
has become effective to each stockholder who has properly
delivered a written demand for appraisal as described above and
who did not vote in favor of the Merger Agreement and the
Merger. At any time within 60 days after the effective date
of the Merger, any stockholder who has demanded an appraisal,
and who has not commenced an appraisal proceeding or joined that
proceeding as a named party, has the right to withdraw the
demand and to accept the cash payment specified by the Merger
Agreement for his or her shares of common stock; after this
period, the stockholder may withdraw such demand for appraisal
only with the consent of the surviving corporation. Within
120 days after the effective date of the Merger, any
stockholder who has complied with Section 262 of the DGCL
will, upon written request to Odyssey as the surviving
corporation, be entitled to receive a written statement setting
forth the aggregate number of shares not voted in favor of the
Merger Agreement and the Merger and with respect to which
demands for appraisal rights have been received and the
aggregate number of holders of such shares. A person who is the
beneficial owner of shares of common stock held in a voting
trust or by a nominee on behalf of such person may, in such
persons own name, request from the corporation the
statement described in the previous sentence. Such written
statement will be mailed to the requesting stockholder within
10 days after such written request is received by the
surviving corporation or within 10 days after expiration of
the period for delivery of demands for appraisal, whichever is
later. Within 120 days after the effective time, either the
surviving corporation or any stockholder who has complied with
the requirements of Section 262 of the DGCL and who is
otherwise entitled to appraisal rights may file a petition in
the Delaware Court of Chancery demanding a determination of the
fair value of the shares held by all stockholders entitled to
appraisal. A person who is the beneficial owner of shares of
Odyssey common stock held in a voting trust or by a nominee on
behalf of such person may, in such persons own name, file
the petition described in the previous sentence. Upon the filing
of the petition by a stockholder, service of a copy of such
petition will be made upon Odyssey, as the surviving
corporation. The surviving corporation has no obligation to file
such a petition in the event there are dissenting stockholders.
Accordingly, the failure of a stockholder to file such a
petition within the period specified could nullify the
stockholders previously written demand for appraisal.
There is no present intent on the part of Odyssey to file an
appraisal petition, and stockholders seeking to exercise
appraisal rights should not assume that Odyssey will file such a
petition or that Odyssey will initiate any negotiations with
respect to the fair value of such shares. Accordingly,
stockholders who desire to have their shares appraised should
initiate any petitions necessary for the perfection of their
appraisal rights within the time periods and in the manner
prescribed in Section 262 of the DGCL.
If a petition for appraisal is duly filed by a stockholder and a
copy of the petition is delivered to Odyssey as the surviving
corporation, Odyssey as the surviving corporation will then be
obligated, within 20 days after receiving service of a copy
of the petition, to provide the Delaware Court of Chancery with
a duly verified list containing the names and addresses of all
stockholders who have demanded an appraisal of their shares and
with whom agreements as to the value of their shares have not
been reached by the surviving corporation. The Delaware Court of
Chancery is empowered to conduct a hearing upon the petition,
and to determine those stockholders who have complied with
Section 262 of the DGCL and who have become entitled to the
appraisal rights provided thereby. The Delaware Court of
Chancery may require the stockholders who have demanded
appraisal for their shares to submit their stock certificates to
the Register in Chancery for notation thereon of the pendency of
the appraisal proceedings; and if any stockholder fails to
comply with that direction, the Delaware Court of Chancery may
dismiss the proceedings as to that stockholder.
After determination of the stockholders entitled to appraisal of
their shares of common stock, the Delaware Court of Chancery
will appraise the shares, determining their fair value exclusive
of any element of value arising from the accomplishment or
expectation of the Merger, together with interest, if any.
Unless the Delaware Court of Chancery in its discretion
determines otherwise for good cause shown, interest from the
effective date of the Merger through the date of payment of the
judgment will be compounded quarterly and will accrue at 5% over
the Federal Reserve discount rate (including any surcharge) as
established from time to time during the period between the
effective date of the Merger and the date of payment of the
judgment. When the value is determined, the Delaware Court of
Chancery will direct the payment of such value, with interest
thereon accrued during the pendency of the proceeding, if the
Delaware Court of Chancery so determines, to the stockholders
entitled to receive the same, upon surrender to the surviving
corporation of the certificates representing those shares.
70
In determining fair value, the Delaware Court of Chancery is
required to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court
discussed the factors that could be considered in determining
fair value in an appraisal proceeding, stating that proof
of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise
admissible in court should be considered, and that
fair price obviously requires consideration of all
relevant factors involving the value of a company.
Section 262 of the DGCL provides that fair value is to be
exclusive of any element of value arising from the
accomplishment or expectation of the Merger. In
Cede & Co. v. Technicolor, Inc., the Delaware
Supreme Court stated that such exclusion is a narrow
exclusion [that] does not encompass known elements of
value, but which rather applies only to the speculative
elements of value arising from such accomplishment or
expectation. In Weinberger, the Delaware Supreme Court construed
Section 262 of the DGCL to mean that elements of
future value, including the nature of the enterprise, which are
known or susceptible of proof as of the date of the Merger and
not the product of speculation, may be considered.
You should be aware that the fair value of your shares as
determined under Section 262 of the DGCL could be more
than, the same as, or less than the value that you are entitled
to receive under the terms of the Merger Agreement.
Costs of the appraisal proceeding may be imposed upon the
surviving corporation and the stockholders participating in the
appraisal proceeding by the Delaware Court of Chancery as the
Court deems equitable in the circumstances. Upon the application
of a stockholder, the Delaware Court of Chancery may order all
or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without
limitation, reasonable attorneys fees and the fees and
expenses of experts, to be charged pro rata against the value of
all shares entitled to appraisal. Any stockholder who had
demanded appraisal rights will not, after the effective date of
the Merger, be entitled to vote shares subject to that demand
for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with
respect to payment as of a record date before the effective date
of the Merger however, if no petition for appraisal is filed
within 120 days after the effective date of the Merger, or
if the stockholder delivers a written withdrawal of his or her
demand for appraisal and an acceptance of the Merger within
60 days after the effective date of the Merger or
thereafter with the written approval of the surviving
corporation, then the right of that stockholder to appraisal
will cease and that stockholder will be entitled to receive the
cash payment for shares of his, her or its shares of Odyssey
common stock pursuant to the Merger Agreement. No appraisal
proceeding in the Delaware Court of Chancery will be dismissed
as to any stockholder without the prior approval of the Court,
and such approval may be conditioned upon such terms as the
Delaware Court of Chancery deems just; provided, however, that
any stockholder who has not commenced an appraisal proceeding or
joined that proceeding as a named party will maintain the right
to withdraw its demand for appraisal and to accept the cash that
such holder would have received pursuant to the Merger Agreement
within 60 days after the effective date of the Merger.
In view of the complexity of Section 262 of the DGCL,
stockholders who may wish to dissent from the Merger and pursue
appraisal rights should consult their legal advisors.
SUBMISSION
OF STOCKHOLDER PROPOSALS
If the Merger is consummated, Odyssey will not have public
stockholders and there will be no public participation in any
future meetings of stockholders. However, if the Merger is not
consummated, Odyssey expects to hold the 2011 Annual Meeting of
Stockholders.
A stockholder proposal submitted pursuant to
Rule 14a-8
of Exchange Act must be received by our Secretary at 717 North
Harwood Street, Suite 1500, Dallas, Texas 75201, no later
than December 6, 2010, to be included in our board of
directors solicitation of proxies relating to the 2011
Annual Meeting of Stockholders.
Pursuant to our bylaws, a stockholder must deliver notice, in
the form specified in our bylaws, to our principal executive
offices not less than 90 days nor more than 120 days
prior to the first anniversary of the Annual Meeting in order to
(1) nominate persons for election to the board of directors
at the 2011 Annual Meeting or (2) bring business before the
2011 Annual Meeting. However, if the date of our 2011 Annual
Meeting is changed by more than 30 days from the
anniversary date of the 2010 Annual Meeting, notice must be
delivered to our principal
71
executive offices not later than the close of business on the
10th day following the earlier of (1) the day on which
notice of the date of the meeting is mailed or (2) public
disclosure of the meeting date is made.
With respect to proxies submitted for the 2011 Annual Meeting,
our management will have discretionary authority to vote on any
matter for which we do not receive notice by the date specified
in the advance notice provisions of our bylaws described above,
pursuant to
Rule 14a-4(c)(1)
of the Exchange Act.
HOUSEHOLDING
OF SPECIAL MEETING MATERIALS
Some brokers, banks, trusts and other nominees may be
participating in the practice of householding proxy
statements. This means that only one copy of this notice and
proxy statement may have been sent to multiple stockholders in
your household. If you would prefer to receive separate copies
of a proxy statement either now or in the future, please
(1) mail your request to Odyssey HealthCare, Inc., 717
North Harwood Street, Suite 1500, Dallas, Texas 75201,
Attention: Investor Relations, or (2) call our Investor
Relations department at (+1)
214-922-9711.
Upon written or oral request, we will provide a separate copy of
the proxy statement. In addition, security holders sharing an
address can request delivery of a single copy of a proxy
statement if you are receiving multiple copies upon written or
oral request at the address and telephone number stated above.
WHERE YOU
CAN FIND MORE INFORMATION
Odyssey files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy this information at the SECs public reference room
located at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public at the SECs
website at
http://www.sec.gov.
You also may obtain free copies of the documents we file with
the SEC by going to our Investor Relations page on our corporate
web site at www.odsyhealth.com (click on Investor
Relations, then on SEC Filings). Our website
address is provided as an inactive textual reference only. The
information provided on our website is not part of this proxy
statement, and therefore is not incorporated herein by reference.
Odysseys annual, quarterly and current reports are not
incorporated by reference in this proxy statement or delivered
with it, but are available, without exhibits, to any person,
including any beneficial owner, to whom this proxy statement is
delivered, without charge, by contacting Investor Relations by
telephone
at (+1) 214-922-9711
or by mail at Odyssey HealthCare, Inc., 717 North Harwood
Street, Suite 1500, Dallas, Texas 75201,
Attention: Investor Relations.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS DATED JULY 9, 2010. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE
CONTRARY.
72
ANNEX
A
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
among
GENTIVA HEALTH SERVICES, INC.,
GTO ACQUISITION CORP.
and
ODYSSEY HEALTHCARE, INC.
Dated as of May 23, 2010
TABLE OF
CONTENTS
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Page
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ARTICLE I THE MERGER
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A-1
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Section
1.1.
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The Merger
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A-1
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Section
1.2.
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Effective Time
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A-2
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Section
1.3.
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Closing
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A-2
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Section
1.4.
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Directors and Officers of the Surviving Corporation
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A-2
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Section
1.5.
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Subsequent Actions
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A-2
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ARTICLE II CONVERSION OF SECURITIES BY MERGER
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A-3
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Section
2.1.
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Conversion of Capital Stock
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A-3
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Section
2.2.
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Exchange of Certificates
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A-3
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Section
2.3.
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Dissenting Shares
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A-5
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Section
2.4.
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Treatment of Options, Restricted Stock and other Equity Awards
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A-5
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-6
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Section
3.1.
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Organization
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A-6
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Section
3.2.
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Capitalization
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A-6
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Section
3.3.
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Authorization; Validity of Agreement; Company Action
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A-7
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Section
3.4.
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Company Approvals
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A-8
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Section
3.5.
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Consents and Approvals; No Violations
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A-8
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Section
3.6.
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Company SEC Documents and Financial Statements
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A-8
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Section
3.7.
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Internal Controls
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A-9
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Section
3.8.
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Absence of Certain Changes
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A-9
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Section
3.9.
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No Undisclosed Liabilities
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A-10
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Section
3.10.
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Litigation
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A-10
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Section
3.11.
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Employee Benefit Plans; ERISA
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A-10
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Section
3.12.
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Taxes
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A-12
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Section
3.13.
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Contracts
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A-13
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Section
3.14.
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Title to Properties; Encumbrances; Real Property
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A-14
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Section
3.15.
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Intellectual Property
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A-15
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Section
3.16.
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Labor Relations and Other Employment Matters
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A-16
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Section
3.17.
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Healthcare Permits; Participation in Governmental Programs and
Private Programs
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A-17
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Section
3.18.
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Healthcare Laws
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A-17
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Section
3.19.
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Corporate Integrity Agreement and Pending Investigations
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A-18
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Section
3.20.
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HIPAA and HITECH Act Compliance
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A-18
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Section
3.21.
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Information in the Proxy Statement
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A-19
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Section
3.22.
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Opinion of Financial Advisor
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A-19
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Section
3.23.
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Insurance
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A-19
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Section
3.24.
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Environmental Laws and Regulations
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A-19
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Section
3.25.
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Brokers; Expenses
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A-19
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Section
3.26.
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Rights Agreement
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A-20
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Section
3.27.
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Takeover Statutes
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A-20
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Section
3.28.
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Voting Requirements
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A-20
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Section
3.29.
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Interested Party Transactions
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A-20
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Page
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
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A-20
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Section
4.1.
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Organization
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A-20
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Section
4.2.
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Authorization; Validity of Agreement; Necessary Action
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A-20
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Section
4.3.
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Consents and Approvals; No Violations
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A-21
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Section
4.4.
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Litigation
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A-21
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Section
4.5.
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Information in the Proxy Statement
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A-21
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Section
4.6.
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Financing
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A-21
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Section
4.7.
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Capitalization and Operation of Merger Sub
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A-22
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Section
4.8.
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No Vote of Parent Stockholders; Required Approval
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A-22
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Section
4.9.
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Solvency; Surviving Corporation
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A-22
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Section
4.10.
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Parent SEC Documents; and Financial Statements
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A-22
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Section
4.11.
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Certain Arrangements
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A-23
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Section
4.12.
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Ownership of Shares
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A-23
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ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER
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A-23
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Section
5.1.
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Interim Operations of the Company; Interim Operations of the
Parent and Merger Sub
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A-23
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Section
5.2.
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Solicitation; Unsolicited Proposals
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A-26
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Section
5.3.
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Board Recommendation
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A-28
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Section 5.4.
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Notification
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A-29
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ARTICLE VI ADDITIONAL AGREEMENTS
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A-29
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Section
6.1.
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Proxy Statement; Stockholders Meeting
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A-29
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Section
6.2.
|
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Additional Agreements
|
|
|
A-30
|
|
Section
6.3.
|
|
Notification of Certain Matters
|
|
|
A-30
|
|
Section
6.4.
|
|
Access; Confidentiality
|
|
|
A-31
|
|
Section
6.5.
|
|
Consents and Approvals
|
|
|
A-31
|
|
Section
6.6.
|
|
Publicity
|
|
|
A-33
|
|
Section
6.7.
|
|
Directors and Officers Insurance and Indemnification
|
|
|
A-33
|
|
Section
6.8.
|
|
State Takeover Laws
|
|
|
A-35
|
|
Section
6.9.
|
|
Fees and Expenses
|
|
|
A-35
|
|
Section
6.10.
|
|
Section 16 of the Exchange Act
|
|
|
A-36
|
|
Section
6.11.
|
|
Stockholder Litigation
|
|
|
A-36
|
|
Section
6.12.
|
|
Financing
|
|
|
A-36
|
|
Section
6.13.
|
|
Rights Agreement
|
|
|
A-38
|
|
Section
6.14.
|
|
Cooperation Regarding Pending Investigations and Corporate
Integrity Agreement
|
|
|
A-38
|
|
Section
6.15.
|
|
Employee Matters
|
|
|
A-38
|
|
Section
6.16.
|
|
Termination of Credit Agreement
|
|
|
A-39
|
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ARTICLE VII CONDITIONS
|
|
|
A-39
|
|
Section
7.1.
|
|
Conditions to Each Partys Obligations to Effect the Merger
|
|
|
A-39
|
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Section
7.2.
|
|
Conditions to the Obligations of Parent and Merger Sub
|
|
|
A-40
|
|
Section
7.3.
|
|
Conditions to the Obligations of the Company
|
|
|
A-40
|
|
ARTICLE VIII TERMINATION
|
|
|
A-41
|
|
Section
8.1.
|
|
Termination
|
|
|
A-41
|
|
Section
8.2.
|
|
Effect of Termination
|
|
|
A-42
|
|
ii
|
|
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|
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Page
|
|
|
ARTICLE IX MISCELLANEOUS
|
|
|
A-42
|
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Section
9.1.
|
|
Amendment and Modification
|
|
|
A-42
|
|
Section
9.2.
|
|
Non-survival of Representations and Warranties
|
|
|
A-43
|
|
Section
9.3.
|
|
Expenses
|
|
|
A-43
|
|
Section
9.4.
|
|
Notices
|
|
|
A-43
|
|
Section
9.5.
|
|
Certain Definitions
|
|
|
A-44
|
|
Section
9.6.
|
|
Terms Defined Elsewhere
|
|
|
A-51
|
|
Section
9.7.
|
|
Interpretation; Disclosure Schedules
|
|
|
A-53
|
|
Section
9.8.
|
|
Counterparts
|
|
|
A-53
|
|
Section
9.9.
|
|
Entire Agreement; No Reliance
|
|
|
A-53
|
|
Section
9.10.
|
|
Severability
|
|
|
A-53
|
|
Section
9.11.
|
|
Governing Law; Jurisdiction
|
|
|
A-54
|
|
Section
9.12.
|
|
Waiver of Jury Trial
|
|
|
A-54
|
|
Section
9.13.
|
|
Assignment; Benefit
|
|
|
A-54
|
|
Section
9.14.
|
|
Parent Guarantee
|
|
|
A-55
|
|
Section
9.15.
|
|
Specific Performance; Remedies
|
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A-55
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|
EXHIBITS
|
|
|
|
|
|
|
Exhibit A
|
|
Form of Amended and Restated Certificate of Incorporation of the
Surviving Corporation
|
|
|
A-1
|
|
Exhibit B
|
|
Form of Amended and Restated Bylaws of the Surviving Corporation
|
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|
B-1
|
|
iii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
(hereinafter referred to as
this
Agreement
), dated May 23, 2010,
among Gentiva Health Services, Inc., a Delaware corporation
(
Parent
), GTO Acquisition Corp., a Delaware
corporation and a direct wholly-owned subsidiary of Parent
(
Merger Sub
), and Odyssey HealthCare, Inc., a
Delaware corporation (the
Company
).
WHEREAS
, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the merger of Merger
Sub with and into the Company with the Company as the survivor,
as set forth below (the
Merger,
and together
with the other transactions contemplated by this Agreement, the
Transactions
), in accordance with the General
Corporation Law of the State of Delaware, as amended (the
DGCL
), and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and
outstanding share of Common Stock of the Company (together with
the associated Company Right (as defined in
Section 3.26
) unless the context suggests otherwise,
a
Share
) not owned directly or indirectly by
Parent, Merger Sub or the Company will be converted into the
right to receive
$
27.00 in cash (the
Merger
Consideration
), subject to any required withholding of
Taxes;
WHEREAS
, the Board of Directors of the Company (the
Company Board of Directors
), on the terms and
subject to the conditions set forth herein, has unanimously
(i) approved this Agreement, (ii) determined that the
Transactions are fair to, advisable and in the best interests of
the Company and its stockholders (the
Company
Stockholders
) and (iii) determined to recommend
that the Company Stockholders adopt this Agreement;
WHEREAS
, the respective Boards of Directors of Parent and
Merger Sub have unanimously (i) approved this Agreement and
(ii) determined that the Transactions are fair to,
advisable and in the best interests of their respective
corporations; and
WHEREAS
, Parent, Merger Sub and the Company desire to
(i) make certain representations and warranties,
(ii) enter into certain covenants and agreements in
connection with the Merger and (iii) prescribe various
conditions to the Merger.
NOW, THEREFORE
, in consideration of the mutual covenants
and promises contained in this Agreement and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties to this Agreement agree as
follows:
ARTICLE I
THE MERGER
Section
1.1.
The
Merger
.
(a) Subject to the terms and conditions of this Agreement,
and in accordance with the DGCL, at the Effective Time, the
Company and Merger Sub shall consummate the Merger pursuant to
which (i) Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall
thereupon cease, (ii) the Company shall be the surviving
corporation in the Merger and shall continue to be governed by
the applicable Laws of the State of Delaware and (iii) the
separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The corporation surviving the Merger
is sometimes hereinafter referred to as the
Surviving
Corporation.
The Merger shall have the effects set
forth in applicable provisions of the DGCL.
(b) At the Effective Time, subject to
Section 6.7(b)
, (i) the certificate of
incorporation of the Company shall be amended to read as set
forth in Exhibit A and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by
applicable Laws; and (ii) the bylaws of the Company shall
be amended to read as set forth in Exhibit B and, as so
amended, shall be the bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein, in the
certificate of incorporation of the Surviving Corporation, or by
applicable Laws.
A-1
Section
1.2.
Effective
Time
.
Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company shall cause a
certificate of merger (the
Certificate of
Merger
) to be executed and filed on the Closing Date
(or on such other date as Parent and the Company may agree) with
the Secretary of State of the State of Delaware in accordance
with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL to give
effect to the Merger as contemplated hereby. The Merger shall
become effective at the time such Certificate of Merger has been
duly filed with the Secretary of State of the State of Delaware
or such later date and time as is agreed upon by the parties and
specified in the Certificate of Merger, such date and time
hereinafter referred to as the
Effective Time
.
Section
1.3.
Closing
.
Subject
to the provisions of
Article VII
, the closing of the
Merger (the
Closing
) will take place at
9:00 a.m., local time, on a date to be specified by the
parties to be no later than the second business day after
satisfaction or waiver (to the extent permitted by applicable
Laws) of the last to be satisfied of the conditions set forth in
Article VII
(other than those conditions that by
their nature are to be satisfied at the Closing, but subject to
the fulfillment or waiver of those conditions at the Closing),
at the offices of Greenberg Traurig, LLP, 3290 Northside
Parkway, Suite 400, Atlanta, Georgia 30327 unless another
date or place is agreed to in writing by the parties hereto. The
date on which the Closing occurs is hereinafter referred to as
the
Closing Date
;
provided
,
however
, that notwithstanding anything to the contrary
contained in this Agreement, the Closing shall not be on a date
during the period beginning on August 23, 2010 and ending
on September 5, 2010 (the
Blackout
Period
), and if the last to be satisfied of the
conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those
conditions at the Closing) is satisfied or waived (to the extent
permitted by applicable Laws) during or less than two business
days prior to the Blackout Period, then the Closing will take
place at 9:00 a.m., local time, on the later to occur of
(x) the second business day after such satisfaction or
waiver or (y) the first business day following the
expiration of the Blackout Period, unless another date is agreed
to in writing by the parties hereto.
Section
1.4.
Directors
and Officers of the Surviving
Corporation
.
Subject to applicable Laws, the
directors of Merger Sub immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of
the Surviving Corporation, and the officers of Merger Sub
immediately prior to the Effective Time shall, from and after
the Effective Time, be the officers of the Surviving
Corporation, in each case until their respective successors
shall have been duly elected, designated or qualified, or until
their earlier death, resignation or removal in accordance with
the Surviving Corporations certificate of incorporation
and bylaws.
Section
1.5.
Subsequent
Actions
.
If, at any time after the Effective
Time, the Surviving Corporation shall determine, in its sole
discretion, or shall be advised, that any deeds, bills of sale,
instruments of conveyance, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub
acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to
carry out this Agreement, then the officers and directors of the
Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or
Merger Sub, all such deeds, bills of sale, instruments of
conveyance, assignments and assurances and to take and do, in
the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right,
title or interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out
this Agreement.
A-2
ARTICLE II
CONVERSION
OF SECURITIES BY MERGER
Section
2.1.
Conversion
of Capital Stock
.
As of the Effective Time,
by virtue of the Merger and without any action on the part of
the holders of any securities of the Company or holders of
common stock, par value $0.001 per share, of Merger Sub (the
Merger Sub Common Stock
):
(a)
Merger Sub Common Stock
.
Each
issued and outstanding share of Merger Sub Common Stock shall be
converted into and become one fully paid and nonassessable share
of common stock, par value $0.001 per share, of the Surviving
Corporation.
(b)
Cancellation of Treasury Stock and Parent-Owned
Stock
.
All Shares that are owned by the
Company as treasury stock and any Shares owned by Parent, Merger
Sub or any other direct or indirect wholly-owned Subsidiary of
Parent shall be cancelled and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c)
Conversion of Common
Stock
.
Each issued and outstanding Share
(other than Shares to be cancelled in accordance with
Section 2.1(b)
and other than Dissenting Shares)
shall be converted automatically into and thereafter represent
the right to receive the Merger Consideration, payable to the
holder thereof in cash, without interest. For the avoidance of
doubt, no additional consideration shall be paid for any Company
Rights. From and after the Effective Time, all such Shares shall
no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and each holder of a certificate
formerly representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration.
(d)
Adjustment of Merger
Consideration
.
The Merger Consideration shall
be adjusted to reflect any change in the number of Shares issued
and outstanding as of the Effective Time by reason of any stock
dividend, stock split, recapitalization, combination, exchange
of shares, merger, consolidation, reorganization or the like or
any other change in the corporate or capital structure;
provided
,
however
, that nothing in this
Section 2.1(d)
shall be construed as permitting the
Company to take any action or enter into any transaction
otherwise prohibited by this Agreement.
Section
2.2.
Exchange
of Certificates
.
(a)
Paying Agent
.
Merger Sub shall
(i) designate a bank or trust company reasonably acceptable
to the Company to act as agent for the Company Stockholders in
connection with the Merger (the
Paying Agent
)
and to receive the funds to which the Company Stockholders shall
become entitled pursuant to
Section 2.1 and
(ii)
enter into a paying agent agreement, in form and
substance reasonably acceptable to the Company, with such Paying
Agent for the payment of the Merger Consideration in accordance
with this Article II. At the Closing, Parent or Merger Sub
shall deposit, or cause to be deposited, with the Paying Agent
the aggregate Merger Consideration for the benefit of the
Company Stockholders whose Shares will be converted at the
Effective Time into the right to receive the Merger
Consideration. Such funds shall be invested by the Paying Agent
as directed by Merger Sub or the Surviving Corporation, pending
payment thereof by the Paying Agent to the Company Stockholders;
provided
,
however
, that such investments shall be
in obligations of or guaranteed by the United States of America
or any agency or instrumentality thereof and backed by the full
faith and credit of the United States of America, in commercial
paper obligations rated
A-1
or
P-1
or
better by Moodys Investors Service, Inc. or
Standard & Poors Corporation, respectively, or
in certificates of deposit, bank repurchase agreements, or
bankers acceptances of commercial banks with capital
exceeding $1 billion (based on the most recent financial
statements of such bank that are then publicly available). To
the extent such fund diminishes for any reason below the level
required to make prompt payment of the Merger Consideration,
Parent and the Surviving Corporation shall promptly replace or
restore the lost portion of such fund so as to ensure that it
is, at all times, maintained at a level sufficient to make such
payments. Earnings from such investments shall be the sole and
exclusive property of the Surviving Corporation, and no part of
such earnings shall accrue to the benefit of the Company
Stockholders.
A-3
(b)
Exchange Procedures
.
As soon
as reasonably practicable after the Effective Time and in any
event by no later than five (5) business days after the
Effective Time, Parent shall cause the Paying Agent to mail to
each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
Shares (the
Certificates
) and whose Shares
were converted pursuant to
Section 2.1
into the
right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent
and shall be in such form and have such other provisions as are
reasonably acceptable to the Company) and (ii) instructions
for effecting the surrender of the Certificates in exchange for
payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly executed (or, if such Shares
are held in book-entry or other uncertificated form, upon the
entry through a book-entry transfer agent of the surrender of
such Shares on a book-entry account statement; it being
understood that any references herein to
Certificates
shall be deemed to include
references to book-entry account statements relating to the
ownership of Shares), the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such
Certificate, which Merger Consideration shall be paid or mailed
within two (2) business days after the Paying Agents
receipt of such documents, and the Certificate so surrendered
shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a Person other than the Person in
whose name the surrendered Certificate is registered, then it
shall be a condition precedent of payment that (x) the
Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer, and (y) the
Person requesting such payment shall have paid any transfer and
other taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of
the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either
has been paid or is not required to be paid. Until surrendered
as contemplated by this
Section 2.2
, each
Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive the Merger Consideration
in cash as contemplated by
Section 2.1
and this
Section 2.2
, without interest thereon.
(c)
Transfer Books; No Further Ownership Rights in
Shares
.
At the Effective Time, the stock
transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of Shares on
the records of the Company, other than transfers that occurred
before the Effective Time. From and after the Effective Time,
the holders of Certificates outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to
such Shares except as otherwise provided for herein or by
applicable Laws. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this
Article II
.
(d)
Termination of Fund; No
Liability
.
At any time following nine
(9) months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any interest received with
respect thereto) made available to the Paying Agent and not
disbursed (or for which disbursement is pending subject only to
the Paying Agents routine administrative procedures) to
holders of Certificates, and thereafter such holders shall be
entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws, as general
creditors thereof) for the Merger Consideration, without any
interest thereon. Notwithstanding the foregoing, none of Parent,
Merger Sub, the Company or the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Certificate for
Merger Consideration properly delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar Laws.
(e)
Withholding Rights
.
Parent,
Merger Sub, the Surviving Corporation and the Paying Agent, as
the case may be, shall be entitled to deduct and withhold from
the relevant Merger Consideration otherwise payable pursuant to
this Agreement to any holder of Shares such amounts that Parent,
Merger Sub, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended
(the
Code
), the rules and regulations
promulgated thereunder or any provision of applicable state,
local or foreign law. To the extent that amounts are so withheld
by Parent, Merger Sub, the Surviving Corporation or the Paying
Agent, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Shares in respect
of which
A-4
such deduction and withholding was made by Parent, Merger Sub,
the Surviving Corporation or the Paying Agent.
(f)
Lost, Stolen or Destroyed
Certificates
.
In the case of any Certificate
claimed to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such
Person of a bond in such customary amount as the Surviving
Corporation may direct, as indemnity against any claim that may
be made against it with respect to such Certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
Certificate a check in the amount of the number of Shares
represented by such lost, stolen or destroyed Certificate
multiplied by the Merger Consideration.
Section
2.3.
Dissenting
Shares
.
(a) Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who is entitled to demand and properly
demands appraisal of such Shares (
Dissenting
Shares
) pursuant to, and who complies in all respects
with, Section 262 of the DGCL (the
Dissenters
Provisions
) shall not be converted into the right to
receive Merger Consideration as provided in
Section 2.1(c)
but rather the holders of such
Dissenting Shares shall be entitled to payment of the fair value
of such Dissenting Shares in accordance with the Dissenters
Provisions;
provided
,
however
, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw
or lose the right to an appraisal of such holders Shares
under the Dissenters Provisions, then the right of such holder
to be paid the fair value of such holders Dissenting
Shares shall cease and such Dissenting Shares shall be deemed to
have been converted into the right to receive the Merger
Consideration as of the Effective Time as provided in
Section 2.1(c)
.
(b) The Company shall give prompt notice to Merger Sub of
any demands received by the Company for appraisal rights in
respect of any Shares, and Merger Sub shall have the opportunity
to participate in all negotiations and proceedings with respect
to such demands. Prior to the Effective Time, other than
pursuant to a court order, the Company shall not, without the
prior written consent of Merger Sub, make any payment with
respect to, or settle or compromise or offer to settle or
compromise, any such demand, or agree to do any of the foregoing.
Section
2.4.
Treatment
of Options, Restricted Stock and other Equity
Awards
.
(a) At the Effective Time, each outstanding option to
purchase Shares issued by the Company under the Company Stock
Plans or otherwise (each, a
Company Option
)
shall become or otherwise be deemed fully vested effective
immediately prior to the Effective Time. Immediately prior to
the Effective Time, each Company Option which remains issued and
outstanding (including those Company Options with respect to
which the accelerated vesting described in the preceding
sentence applies) shall be cancelled and converted into the
right to receive from the Surviving Corporation an amount in
cash determined by multiplying (i) the excess, if any, of
the Merger Consideration over the applicable exercise price of
the Option by (ii) the number of Shares subject to such
Option, less any amounts required to be withheld under
applicable Laws (the
Option Consideration
).
In the event that the product obtained by such calculation with
respect to a Company Option is zero or a negative number, then
such Company Option shall, immediately prior to the Effective
Time, be cancelled for no consideration.
(b) At the Effective Time, each Share subject to
restrictions on transfer
and/or
forfeiture issued by the Company under the Company Stock Plans
or otherwise, including those Shares subject to
performance-based conditions (
Restricted
Stock
), shall become or otherwise be deemed fully
vested effective immediately prior to the Effective Time. At the
Effective Time, each vested, issued and outstanding Share of
Restricted Stock shall be converted into the right to receive
the Merger Consideration in accordance with
Section 2.1(c)
hereof, less any amounts required to
be withheld under applicable Laws.
(c) At the Effective Time, each right to receive Shares in
the future based on the satisfaction of service or
performance-based conditions or otherwise, including, but not
limited to, restricted stock units and performance shares (but
excluding Company Options), issued by the Company under the
Company Stock Plans or otherwise (collectively,
Restricted Stock Units
) shall become or
otherwise be deemed fully vested effective immediately prior to
the Effective Time. Immediately prior to the Effective Time,
each vested
A-5
Restricted Stock Unit (including those Restricted Stock Units
with respect to which the accelerated vesting described in the
preceding sentence applies) which remains issued and outstanding
shall be cancelled and converted into the right to receive from
the Surviving Corporation an amount in cash determined by
multiplying (i) the Merger Consideration by (ii) the
number of Shares subject to such Restricted Stock Unit, less any
amounts required to be withheld under applicable Laws (the
RSU Consideration
).
(d) Prior to the Effective time, the Company shall take all
actions reasonably necessary and appropriate to reflect the
transactions contemplated by this
Section 2.4
,
including the acceleration of vesting of outstanding awards
under the Company Stock Plans and the cancellation and
conversion of Company Options and Restricted Stock Units,
subject to and effective on and as of the Effective Time.
(e) Parent shall cause the Surviving Corporation to pay the
Option Consideration as contemplated in
Section 2.4(a)
and the RSU Consideration as
contemplated in
Section 2.4(c)
, in each case, within
five (5) business days following the Closing Date.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Designated SEC Reports or
(ii) as set forth in the corresponding section of the
Companys disclosure schedule (and subject to
Section 9.7(b)
) delivered to Parent upon execution
of this Agreement (the
Company Disclosure
Schedule
), the Company represents and warrants to
Parent and Merger Sub as set forth below.
Section
3.1.
Organization
.
(a) Each of the Company and the Company Subsidiaries is a
corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions
which recognize such concept) under the Laws of the jurisdiction
in which it is organized and has the requisite corporate or
other power, as the case may be, and authority to carry on its
business as now being conducted, except where any such failure
to have such power or authority would not have or be reasonably
likely to have a Company Material Adverse Effect. Each of the
Company and the Company Subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction
in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing
would not have or be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect. The Company
has delivered to or made available to Parent and Merger Sub,
prior to the execution of this Agreement, true and complete
copies of any amendments to the Company Governing Documents not
filed as of the date hereof with the Securities and Exchange
Commission (
SEC
). The Company is in
compliance in all material respects with the terms of the
Company Governing Documents.
(b)
Section 3.1(b)
of the Company Disclosure
Schedule lists, as of the date hereof, each Company Subsidiary
(including its state of incorporation or formation). All of the
outstanding capital stock of, or other equity interests in, each
Company Subsidiary is, directly or indirectly, owned by the
Company. All the issued and outstanding shares of capital stock
of, or other equity interests in, each such Company Subsidiary
owned by the Company, to the extent applicable, have been
validly issued and are fully paid and nonassessable and are
owned directly or indirectly by the Company free and clear of
all Liens, and free of any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other equity
or similar interests. The Company does not own, directly or
indirectly, as of the date hereof, any capital stock of, or
other voting securities or equity or similar interests in, any
corporation, partnership, joint venture, association, limited
liability company or other entity or Person.
Section
3.2.
Capitalization
.
(a) The authorized capital stock of the Company consists of
(i) 75,000,000 shares of Common Stock, $0.001 par
value per share (the
Common Stock
),
(ii) 50,000,000 shares of preferred stock,
$0.001 par value per share (the
Preferred
Stock
), of which a total of 250,000 shares of
Preferred Stock have been designated
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in a series of Series A Junior Participating Preferred
Stock. As of the date hereof, no other shares of the Preferred
Stock bear any designation. As of May 19, 2010,
(i) 33,665,813 shares of Common Stock were issued and
outstanding (of which 20,800 shares were Restricted Stock),
(ii) no shares of Preferred Stock were issued and
outstanding, (iii) 5,347,072 shares of Common Stock
were issued and held in the treasury of the Company or otherwise
owned by the Company, (iv) an aggregate of
2,776,854 shares of Common Stock were subject to and
reserved for issuance upon (A) exercise of outstanding
Company Options or (B) lapse of restrictions on Restricted
Stock Units (collectively, the
Company Stock
Rights
), and (v) all 250,000 shares of
Series A Junior Participating Preferred Stock have been
reserved for issuance upon exercise of the Company Rights. All
of the outstanding shares of the Companys capital stock
are, and all Shares which may be issued pursuant to the exercise
or vesting of outstanding Company Stock Rights will be, when
issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such
rights) (
Voting Debt
) of the Company or any
Company Subsidiary issued and outstanding. Except for Company
Stock Rights described in this
Section 3.2(a)
and
the Company Rights, there are no (x) options, warrants,
calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any kind, including
any stockholder rights plan, relating to, or the value of which
is determined in reference to, the issued or unissued capital
stock of the Company or any Company Subsidiary, obligating the
Company or any Company Subsidiary to issue, transfer or sell, or
cause to be issued, transferred or sold, any shares of capital
stock or Voting Debt of, or other equity interest in, the
Company or any Company Subsidiary or securities convertible into
or exchangeable for such shares or equity interests, or
obligating the Company or any Company Subsidiary to grant,
extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or
commitment (collectively,
Equity Interests
)
or (y) outstanding contractual obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise
acquire any Shares or any capital stock of, or other Equity
Interests in, the Company or any Company Subsidiary or any
affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or
otherwise) in the Company or any Company Subsidiary. No Company
Subsidiary owns any Shares.
(b) As of May 19, 2010, the Company had outstanding
Company Options to purchase 1,277,344 shares of Common
Stock, 1,499,510 shares of Common Stock subject to
Restricted Stock Units, and 20,800 shares of Restricted
Stock granted under Company Stock Plans. All of Company Stock
Rights and Restricted Stock have been granted to eligible
employees, consultants or directors of the Company and the
Company Subsidiaries in the ordinary course of business
consistent with past practice pursuant to the Company Stock
Plans. Since May 19, 2010 to the date hereof, the Company
has not granted any Company Stock Rights or shares of Restricted
Stock.
Section 3.2(b)
of the Company Disclosure
Schedule sets forth a listing of all outstanding Company Stock
Rights and shares of Restricted Stock as of May 19, 2010
and (i) the date of their grant and the portion thereof
that is vested as of May 19, 2010 and if applicable, the
exercise price therefor, (ii) the date upon which each
Company Stock Right would normally be expected to expire absent
termination of employment or other acceleration, and
(iii) whether or not such Company Option is intended to
qualify as an
incentive stock option
within
the meaning of Section 422 of the Code.
(c) There are no voting trusts or other agreements or
understandings to which the Company or any Company Subsidiary is
a party with respect to the voting of the Companys Common
Stock or any capital stock of, or other equity interest of the
Company or any of the Company Subsidiaries.
(d) Except as may be incurred after the date hereof in
accordance with
Section 5.1
, as of the date hereof,
there is not any material indebtedness for borrowed money, or
material guarantees of indebtedness for borrowed money of any
Person, by the Company or any of the Company Subsidiaries.
Section
3.3.
Authorization;
Validity of Agreement; Company Action
.
The
Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Transactions (subject to the
receipt of the Company Stockholder Approval). The execution,
delivery and performance by the Company of this Agreement, and
the consummation by it of the Transactions, have been duly and
validly authorized by the Company Board of Directors and no
other corporate action on the part of the Company is necessary
to authorize the execution and delivery by the Company of this
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Agreement and the consummation by it of the Transactions, except
for, in the case of the Merger, the Company Stockholder Approval
and the filing of the Certificate of Merger with the Delaware
Secretary of State. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by Parent and
Merger Sub, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar Laws, now or
hereafter in effect, affecting creditors rights generally
and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section
3.4.
Company
Approvals
.
The Company Board of Directors, at
a meeting duly called and held, by resolutions duly adopted,
unanimously (i) determined that this Agreement, the Merger
and other Transactions are advisable, fair to and in the best
interests of the Company and the Company Stockholders,
(ii) duly and validly approved and taken all corporate
action required to be taken by the Company Board of Directors to
authorize the execution of this Agreement and consummation of
the Merger and the other Transactions, (iii) resolved to
recommend that the Company Stockholders approve the Merger and
adopt this Agreement (the actions in clause (iii), the
Company Recommendation
). No further corporate
action is required, pursuant to the DGCL or otherwise, in order
for the Company to approve this Agreement or the Transactions,
except for the filing of the Certificate of Merger with the
Delaware Secretary of State and the Company Stockholder
Approval, which is the only Company Stockholder vote that is
required for adoption of this Agreement and the consummation of
the Merger by the Company. As of the date hereof, the Company
Board of Directors has not rescinded, modified or withdrawn such
resolutions in any way.
Section
3.5.
Consents
and Approvals; No Violations
.
None of the
execution, delivery or performance of this Agreement by the
Company, the consummation by the Company of Transactions or
compliance by the Company with any of the provisions of this
Agreement will (i) conflict with or result in any breach of
any provision of the Company Governing Documents or the
organizational documents of any Company Subsidiary,
(ii) require any filing by the Company or any Company
Subsidiary with, or the permit, authorization, consent or
approval of, any Governmental Authority (except for
(A) compliance with applicable requirements of the
Securities Exchange Act of 1934, as amended (including the rules
and regulations promulgated thereunder, the
Exchange
Act
), or state securities, takeover and
blue
sky laws,
(B) compliance with applicable
requirements of the Marketplace Rules of NASDAQ (the
Nasdaq Marketplace Rules
), (C) filings
as may be required under the DGCL in connection with the Merger,
(D) filings, permits, authorizations, consents and
approvals as may be required under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR
Act
), (E) the filing with the SEC and NASDAQ of
(1) a Proxy Statement in respect of the Company Stockholder
Approval and (2) such reports under Section 13(a) of
the Exchange Act as may be required in connection with this
Agreement and the Merger, or (F) any such filing, permit,
authorization, consent or approval, the failure of which to make
or obtain would not have or be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect), (iii) result in a modification, violation or
breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right, including,
but not limited to, any right of termination, amendment,
cancellation or acceleration) under, any of the terms,
conditions or provisions of any Company Material Contract,
(iv) assuming compliance with the matters referred to in
the foregoing clause (ii), violate any Order, writ, injunction,
decree, or Laws applicable to the Company, any Company
Subsidiary or any of their respective properties or assets or
(v) result in the creation of any Lien in or upon any of
the properties or other assets of the Company or any of the
Company Subsidiaries, except, in the case of clauses (iii),
(iv), and (v), for any such modification, violation, breach,
default, Lien, or other occurrence that would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section
3.6.
Company
SEC Documents and Financial Statements
.
(a) The Company has filed with the SEC all forms, reports,
schedules, statements and other documents required by it to be
filed under the Exchange Act or the Securities Act of 1933, as
amended (the
Securities Act
) (such documents
and any other documents filed by the Company and each Company
Subsidiary with the SEC, as have been amended since the time of
their filing, collectively, the
Company SEC
Documents
), since
A-8
December 31, 2007. As of their respective dates, the
Company SEC Documents (i) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading and (ii) complied as
to form in all material respects with the applicable
requirements of the Exchange Act or the Securities Act, as the
case may be, the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act
) and the applicable rules
and regulations of the SEC thereunder. None of the Company
Subsidiaries is currently required to file any forms, reports or
other documents with the SEC. As of the date hereof, the Company
does not have any unresolved comments from the SEC with respect
to the Company SEC Documents. Each of the audited consolidated
financial statements and unaudited consolidated interim
financial statements of the Company and its consolidated
Subsidiaries included in the Company SEC Documents, as amended
or supplemented prior to the date hereof (collectively, together
with all notes and schedules thereto, the
Financial
Statements
), was prepared in accordance with United
States generally accepted accounting principles
(
GAAP
) applied on a consistent basis during
the periods involved (except as may be indicated in the notes
thereto and subject, in the case of unaudited consolidated
interim financial statements, to normal year-end audit
adjustments and the absence of notes not required by GAAP) and
applicable SEC rules and regulations, and fairly present in all
material respects in accordance with GAAP the consolidated
financial position and the consolidated results of operations
and cash flows of the Company and its consolidated Subsidiaries
as of the times and for the periods referred to therein
(subject, in the case of unaudited consolidated interim
Financial Statements to normal year end adjustments).
(b) Without limiting the generality of
Section 3.6(a)
, as of the date hereof,
(i) Ernst & Young LLP has not resigned or been
dismissed as the independent public accountant of the Company as
a result of or in connection with any disagreement with the
Company on a matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure,
(ii) no executive officer of the Company has failed in any
respect to make, without qualification, the certifications
required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act with respect to the Company SEC Documents and
(iii) to the knowledge of the Company, no enforcement
action has been initiated or threatened against the Company by
the SEC relating to disclosures contained in any Company SEC
Document.
(c) The Company is in compliance in all material respects
with all applicable Nasdaq Marketplace Rules.
Section
3.7.
Internal
Controls
.
The Company has designed and
maintains a system of internal control over financial reporting
(as defined in
Rules 13a-15(f)
and
15d-15(f)
of
the Exchange Act) sufficient to provide reasonable assurances
regarding the reliability of financial reporting including that
(i) transactions are executed in accordance with
managements general or specific authorizations;
(ii) access to assets is permitted only in accordance with
managements general or specific authorizations; and
(iii) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company has
designed and maintains disclosure controls and procedures (as
defined in
Rules 13a-15(e)
and
15d-15(e)
of
the Exchange Act) to ensure that material information required
to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms and is accumulated and communicated
to the Companys management as appropriate to allow timely
decisions regarding required disclosure. To the knowledge of the
Company, there is no fraud, whether or not material, that
involves any of the senior financial officers of the Company.
Since December 31, 2009 to the date hereof, the Company has
not identified any material weaknesses in the design or
operation of its internal control over financial reporting
except as disclosed in the Company SEC Documents filed prior to
the date hereof. Neither the Company nor any of the Company
Subsidiaries has outstanding, or has arranged any outstanding,
extensions of credit
to directors or
executive officers of the Company within the meaning of
Section 402 of the Sarbanes-Oxley Act.
Section
3.8.
Absence
of Certain Changes
.
(a) Except (i) as expressly set forth in the
Designated SEC Reports (other than any disclosures set forth in
any section of a Designated SEC Report entitled
Risk
Factors
or
Forward-Looking
Statements
or any other disclosures included in such
document that are general cautionary, predicative or
forward-looking in
A-9
nature) or (ii) in connection with the execution and
delivery of this Agreement and the consummation of the
Transactions, since March 31, 2010 (the
Balance
Sheet Date
) to the date hereof, each of the Company
and each Company Subsidiary has conducted its respective
business in all material respects in the ordinary course of
business consistent with past practice.
(b) Since December 31, 2009 to the date hereof, no
fact(s), change(s), event(s), development(s) or circumstances
have occurred, arisen, come into existence or become known,
which have had or would be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. Since the Balance Sheet Date to the date hereof, no
action has been taken by the Company or any Company Subsidiary
that, if taken during the period from the date hereof to the
Effective Time, would constitute a breach of
Section 5.1
.
Section
3.9.
No
Undisclosed Liabilities
.
Except (a) as
disclosed in the Financial Statements, (b) for liabilities
and obligations incurred since the Balance Sheet Date in the
ordinary course of business and consistent with past practice,
(c) for liabilities or obligations that have been
discharged or paid in full, (d) for liabilities and
obligations other than those incurred in the ordinary course of
business that would not have or be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect, (e) for liabilities and obligations incurred under
this Agreement or in connection with the Transactions and
(f) for liabilities and obligations incurred under any
Company Agreement other than liabilities or obligations due to
breaches thereunder, neither the Company nor any Company
Subsidiary has incurred any liabilities or obligations of any
nature that would be required by GAAP to be recognized or
disclosed on a consolidated balance sheet of the Company or any
Company Subsidiary or in the notes thereto.
Section
3.10.
Litigation
.
Except
for the Pending Investigations, (i) there is no Legal
Proceeding pending against (or, to the Companys knowledge,
threatened against or naming as a party thereto), the Company or
any Company Subsidiary (or any of their respective rights or
properties) or any executive officer or director (or any former
executive officer or director in their capacity as such) of the
Company or any Company Subsidiary (in their capacity as such),
which would have or be reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect,
(ii) there is no Legal Proceeding pending against (or, to
the Companys knowledge, threatened against or naming as a
party thereto), the Company or any Company Subsidiary (or any of
their respective rights or properties) or any executive officer
or director (or any former executive officer or director) of the
Company or any Company Subsidiary (in their capacity as such)
involving the actual or alleged violation of any Healthcare Law
or Healthcare Permits that would have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect, and (iii) except as would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, none of the Company or any
Company Subsidiary is subject to any outstanding order, writ,
injunction, decree or arbitration ruling, judgment, award or
other finding that restricts the way in which the Company and
the Company Subsidiaries conduct their business.
Section
3.11.
Employee
Benefit Plans; ERISA
.
(a)
Section 3.11(a)
of the Company Disclosure
Schedule sets forth a correct and complete list of all material
employee benefit plans, programs, agreements or arrangements,
including pension, retirement, profit sharing, deferred
compensation, stock option, employment, change in control,
retention, equity or equity-based compensation, stock purchase,
employee stock ownership, severance pay, vacation, bonus or
other incentive plans, all medical, vision, dental or other
health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including
employee benefit plans
as that term is
defined in Section 3(3) of ERISA, in each case, whether
oral or written, funded or unfunded, or insured or self-insured,
maintained by the Company or any Company Subsidiary, or to which
the Company or any Company Subsidiary contributed or is
obligated to contribute thereunder, or with respect to which the
Company or any Company Subsidiary has or may have any material
liability (contingent or otherwise), in each case, for or to any
current or former employees, directors, officers or consultants
of the Company
and/or
their
dependents (collectively, the
Benefit Plans
).
Neither the Company nor any Company Subsidiary maintains or
contributed to any such Benefit Plans for any current or former
employees, directors, officers or consultants of the Company or
any Company Subsidiary not located primarily in the United
States
and/or
their
dependents.
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(b) All Benefit Plans that are intended to qualify under
Code Section 401(a) and any trust agreement that is
intended to be tax exempt under Code Section 501(a) have
been determined by the Internal Revenue Service to be qualified
under Code Section 401(a) and exempt from taxation under
Code Section 501(a) (or there remains a period of time
under the applicable remedial amendment period with respect to
such a Benefit Plan to request such a determination), and, to
the knowledge of the Company, nothing has occurred that would
adversely affect the qualification of any such plan. Each
Benefit Plan, the Company and the Company Subsidiaries have
complied in all material respects with the applicable
requirements of ERISA, the Code, applicable state or federal
securities laws, and all other applicable Laws (including but
not limited to any requirements with respect to reports, returns
and similar documents with respect to any Benefit Plan required
to be filed by the Company or any Company Subsidiary with any
Governmental Authority or distributed to any Benefit Plan
participant), and its terms and the terms of any applicable
collective bargaining or collective labor agreements. As of the
date hereof, no litigation has been commenced with respect to
any Benefit Plan and, to the knowledge of the Company, no such
litigation is threatened (other than routine claims for benefits
in the normal course). As of the date hereof, there are no
governmental audits or investigations pending or, to the
knowledge of the Company, threatened in connection with any
Benefit Plan. To the knowledge of the Company, there are not any
facts that would reasonably be expected to give rise to any
material liability with respect to any Benefit Plan in the event
of any governmental audit or investigation. All material
payments due from the Company or any Company Subsidiary with
respect to the Benefit Plans have been timely made or have been
properly accrued as liabilities of the Company and properly
reflected in the Financial Statements of the Company in
accordance with the terms of the Benefit Plan or any applicable
collective bargaining agreement and applicable Laws. To the
knowledge of the Company, no
prohibited
transaction
or
reportable event
has
occurred within the meaning of the applicable provisions of
ERISA or the Code with respect to any Benefit Plan.
(c) The Company and its ERISA Affiliates do not, and have
not, within six (6) years prior to the date hereof,
(i) sponsored or contributed to a Benefit Plan that is a
defined benefit plan
(as defined in ERISA
Section 3(35) and Code Section 414(j)); (ii) had
an
obligation to contribute
(as defined in
ERISA Section 4212) to a Benefit Plan that is a
multiemployer plan
(as defined in ERISA
Sections 4001(a)(3) and 3(37)(A)); (iii) sponsored or
contributed to a Benefit Plan that is a
multiple
employer plan
(meaning a plan sponsored by more than
one employer within the meaning of ERISA Sections 4063 or
4064 or Code Section 413(c)); or (iv) had any material
liability, contingent or otherwise, under Title IV of ERISA
with respect to a Benefit Plan, either directly or through any
ERISA Affiliate. The Company and its ERISA Affiliates do not
have any liability with respect to any plan, program or
arrangement that provides for
post-retirement
or other post-employment medical or life insurance benefits
(other than health care continuation coverage as required by
applicable Laws). The Company and each ERISA Affiliate has
complied in all material respects with the notice and
continuation coverage requirements, and all other requirements,
of Section 4980B of the Code and Parts 6 and 7 of
Title I of ERISA, and the regulations thereunder.
(d) Each Benefit Plan that is an employee welfare benefit
plan may be amended or terminated (including with respect to
benefits provided to former employees) without material
liability (other than benefits then payable under such plan
without regard to such amendment or termination) to the Company
or any Company Subsidiary at any time.
(e) Except as may be required by applicable Laws, or as
contemplated under this Agreement, neither the Company nor any
Company Subsidiary has any plan or commitment to create any
additional Benefit Plans.
(f) No Benefit Plan exists that would result in the payment
to any employee, director, officer or consultant of the Company
or any Company Subsidiary of any money or other property or
accelerate or provide any other rights or benefits to any such
Person as a result of the execution of this Agreement or the
consummation of the Merger or the other Transactions (whether
alone or in connection with any other event). No payment or
benefit which has been, will be or may be made by the Company or
any Company Subsidiary with respect to any current or former
employee located in the United States in connection with the
execution and delivery of this Agreement or the consummation of
the Transactions would be characterized as an
excess
parachute payment
within the meaning of
Section 280G(b)(1) of the Code or fail to be deductible
under Section 162(m) of the Code.
A-11
(g) Correct and complete copies have been delivered or made
available to Parent by the Company of (A) all Benefit Plans
(including all amendments and material attachments thereto),
(B) written summaries of any Benefit Plan not in writing
and all related trust documents, (C) all material insurance
contracts or other funding arrangements to the degree
applicable, (D) the two (2) most recent annual
information filings (Form 5500) (and associated annual
financial reports for those Benefit Plans, where required) and
the summary plan description for each Benefit Plan required to
file such description, and (E) the most recent
determination letter from the Internal Revenue Service (where
applicable).
(h) The Company Employee Stock Purchase Plan, as amended
(
ESPP
), was frozen as of December 31,
2007 and there are no options or purchase rights currently
outstanding under the ESPP. In addition, following the date
hereof, (i) no new options shall be issued under the ESPP,
and (ii) no new option periods shall commence thereunder.
Section
3.12.
Taxes
.
(a) The Company and the Company Subsidiaries have prepared
and duly and timely filed (taking into account any extension of
time within which to file) all material Tax Returns required to
be filed by any of them, and all such filed Tax Returns are
complete and accurate in all material respects;
(b) the Company and each the Company Subsidiaries have duly
and timely paid all material Taxes that are required to be paid
by any of them (whether or not shown as due on such Tax Return),
and any material liability for Taxes of the Company and the
Company Subsidiaries for Taxes not yet due and payable, or which
are being contested in good faith have been provided for in the
financial statements of the Company in accordance with GAAP;
(c) there are not pending, outstanding or threatened in
writing, any claims, audits, examinations, investigations,
actions or other proceedings in respect of Taxes of the Company
or any of the Company Subsidiaries and no claim has been made in
writing by any taxing authority in a jurisdiction where the
Company or any of the Company Subsidiaries has not filed a Tax
Return that it is or may be subject to material Tax in that
jurisdiction;
(d) as of the date hereof, no material deficiency with
respect to Taxes has been proposed, asserted or assessed in each
case, in writing, against the Company or any of the Company
Subsidiaries;
(e) there is no outstanding request for extension of time
for the Company or any Company Subsidiary to pay any income
Taxes or any other material Taxes, or file any income Tax
Returns or any other material Tax Returns, and there are no
requests for rulings or determinations in respect of any
material Taxes or material Tax Returns pending between the
Company or any of the Company Subsidiaries on the one hand and
any authority responsible for such Taxes or Tax Returns on the
other;
(f) each of the Company and each of the Company
Subsidiaries has timely withheld and paid all material Taxes
required to be withheld and paid in connection with amounts paid
or owing to any employee, creditor, independent contractor,
shareholder or other third party and is in compliance in all
material respects with all applicable Laws regarding the
solicitation, collection and maintenance of any forms,
certifications and other information required in connection
therewith;
(g) neither the Company nor any of the Company Subsidiaries
has any material liability as a result of being a party to any
Tax sharing, Tax indemnity or other agreement or arrangement
relating to Taxes (other than an agreement or arrangement solely
among members of an affiliated, consolidated or unitary group
the common parent of which is the Company or which includes only
the Company
and/or
the
Company Subsidiaries);
(h) neither the Company nor any of the Company Subsidiaries
has any material liability for Taxes as a result of having been
a member of any affiliated group within the meaning of
Section 1504(a) of the Code, or any similar affiliated or
consolidated group for Tax purposes under state, local or
foreign Law (other than a group the common parent of which is
the Company or which includes only the Company
and/or
the
Company Subsidiaries), or has any liability for the Taxes of any
Person (other than the Company and the Company
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Subsidiaries) under Treasury Regulations
Section 1.1502-6
or any similar provision of state, local or foreign Law, or as a
transferee or successor, or otherwise;
(i) there are no material Liens for any Taxes upon the
assets of the Company or any of the Company Subsidiaries, other
than Permitted Liens;
(j) there has been no waiver or extension of time for any
applicable statue of limitations for assessment or collection of
Taxes for the Company or any of the Company Subsidiaries that is
currently in force; and
(k) the Company has delivered or made available and will
continue to make available to Merger Sub or Parent complete and
accurate copies of all material Tax Returns relating to any Tax
periods of the Company or any Company Subsidiary for the last
five (5) applicable Tax periods.
Section
3.13.
Contracts
.
(a) For purposes of this Agreement, a
Company
Material Contract
is any Company Agreement, whether or
not set forth in
Section 3.13
of the Company
Disclosure Schedule, which, as of the date hereof, (i) is a
material contract
(as such term is defined in
Item 601(b)(10) of
Regulation S-K
of the SEC); (ii) that involves aggregate revenues or
expenditures in excess of $1,000,000 per year; (iii) that
involves revenues or expenditures in excess of $500,000 per year
and was not entered into in the ordinary course of business;
(iv) that contains any non-compete or exclusivity
provisions with respect to any line of business or geographic
area with respect to the Company or any Company Subsidiary, or
which restricts the conduct of any line of business by the
Company or any Company Subsidiary, or any geographic area in
which the Company or any Company Subsidiary may conduct
business, in each case in any material respect; (v) that is
a Clinical Contract that involves aggregate expenditures in
excess of $1,000,000 per year; (vi) with any vendor that
provides billing and reimbursement services valued in excess of
$500,000 during any year; (vii) is with any payor from
which the Company, any Company Subsidiary or any Hospice has
received payments in 2009 in excess of $500,000; (viii) is
with any supplier to which the Company, any Company Subsidiary
or any Hospice has made payments in 2009 in excess of
$1,000,000; (ix) which would prohibit or materially delay
the consummation of the Merger or any of the other Transactions;
(x) is with any current or former Key Personnel;
(xi) is with any labor union or association representing
any employee of the Company or any of the Company Subsidiaries
and any collective bargaining agreement (of which there are
none), (xii) that is a partnership or joint-venture
agreement; (xiii) relating to the borrowing of money
(including any guarantee thereto) or that is a mortgage,
security agreement, capital lease or similar agreements, in each
case in excess of $500,000 or that creates a Lien on any
material asset of the Company or any of the Company
Subsidiaries; (xiv) for the license or sublicense (whether
as a licensor or a licensee) of any Intellectual Property or
other intangible asset (excluding commercial
off-the-shelf
or shrink wrap software than has not been modified or
customized), that provides for payment or receipt of $500,000 or
more per year; (xv) relating to the sale of any of the
material assets or properties of the Company or any of the
Company Subsidiaries other than in the ordinary course of
business or for the grant to any Person of any options, rights
of first refusal, or preferential or similar rights to purchase
any of such assets or properties; (xvi) relating to the
acquisition by the Company or any of the Company Subsidiaries of
any operating business or the capital stock of any other Person;
(xvii) requiring the payment to any Person of a material
commission or fee, except in the ordinary course of business
consistent with past practice; (xviii) that, in the case of
a Company Benefit Plan, any of the benefits of which would be
increased, or the vesting of the benefits of which would be
accelerated, by the occurrence of any of the Transactions, or
the value of any benefits which would be calculated on the basis
of any of the Transactions; or (xix) that is an insurance
policy providing for indemnification of any officer or director
of the Company or any of the Company Subsidiaries, other than
the Company Governing Documents;
provided
,
however
, that the foregoing definition of Company
Material Contract shall not include any leases, subleases and
other occupancy or use agreements concerning the real property
leased by the Company or any of the Company Subsidiaries,
including the Material Company Leases (collectively, the
Company Leases
).
(b) As of the date hereof, there is no Company Agreement
(other than the Company Leases), any of the benefits to any
party of which will be increased, or the vesting of the benefits
to any party of which will be accelerated, by the occurrence of
any of the Transactions or the value of the benefits to any
party of which will be calculated on the basis of any of the
Transactions (except as disclosed pursuant to
Section 3.11
). As of
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the date hereof, each Company Material Contract is valid and
binding on the Company and each Company Subsidiary party thereto
and, to the Companys knowledge, as of the date hereof,
each other party thereto, as applicable, and in full force and
effect, and the Company and each Company Subsidiary has
performed in all respects all obligations required to be
performed by it under each Company Material Contract, except any
failure of performance that would not have or be reasonably
likely to have, individually or in the aggregate, a Company
Material Adverse Effect and, to the Companys knowledge, as
of the date hereof, each other party to each Company Material
Contract has performed in all material respects all obligations
required to be performed by it under such Company Material
Contract, except as would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect. As of the date hereof, none of the Company or
any Company Subsidiary knows of, or has received notice of, any
violation or default under (or any condition which with the
passage of time or the giving of notice would cause such a
violation of or default under) any Company Material Contract
except for violations or defaults that would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
The Company has delivered to Parent or provided or made
available to Parent for review, prior to the execution of this
Agreement, true and complete copies of all of the Company
Material Contracts required to be disclosed in
Section 3.13
of the Company Disclosure Schedule,
which are not filed as exhibits to the Company SEC Documents,
and the Company Material Contracts required to be disclosed in
Section 3.13
of the Company Disclosure Schedule
filed as exhibits to the Company SEC Documents are true and
complete copies of such contracts.
(c) As of the date hereof, none of the Company, any Company
Subsidiary or any Hospice has received any written notice from
any Person supplying products, materials or drugs to the
Company, any Company Subsidiary or any Hospice that such Person
intends to (i) cease selling such products, materials or
drugs to the Company, any Company Subsidiary or any Hospice,
(ii) limit or reduce such sales to the Company, any Company
Subsidiary or any Hospice, or (iii) increase the prices at
which such sales are made to the Company, any Company Subsidiary
or any Hospice, except for any such cessation, limitation,
reduction or increase that would not have or be reasonably
likely to have, individually or in the aggregate, a Company
Material Adverse Effect. As of the date hereof, none of the
Company, any Company Subsidiary or any Hospice has received any
written notice from any third-party payor that it intends to
terminate, limit or reduce its business relations with the
Company, any Company Subsidiary or any Hospice in the event of a
sale of the Company or otherwise except as would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section
3.14.
Title
to Properties; Encumbrances; Real Property
.
(a) Except for the Company Real Property, each of the
Company and the Company Subsidiaries has good and valid title
to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its material tangible properties
and assets, except where the absence thereof would not have or
be reasonably likely to have, individually or in the aggregate,
a Company Material Adverse Effect. Except for Permitted Liens,
and except for the Company Real Property, all of the
Companys and each of the Company Subsidiaries
material tangible properties and assets are free and clear of
any Lien, except for Liens specifically set forth on
Section 3.14(a)
of the Company Disclosure Schedule
and such Liens that would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect.
(b)
Section 3.14(b)
of the Company Disclosure
Schedule sets forth a complete list of all real property owned
in fee by the Company and the Company Subsidiaries and sets
forth all real property leased by the Company
and/or
the
Company Subsidiaries as lessee as of the date hereof that are
material to the Company and the Company Subsidiaries, taken as a
whole (such owned and leased material real property, including
all improvements thereon, referred to collectively as the
Company Real Property
), including whether any
Company Real Property is currently on the market for sale. The
Company has furnished or made available to Parent and Merger Sub
true and correct copies of (i) the Companys
headquarters lease for premises leased in the building located
at 717 N. Harwood Street, Dallas, Texas, and
(ii) real property leases for sites at which the
Companys inpatient units are located (collectively, the
Material Company Leases
). The real property
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that is owned in fee by the Company or a Company Subsidiary and
the Material Company Leases are referred to collectively as the
Material Company Real Property
.
(c) Except as would not have or be reasonably likely to
have a Material Adverse Effect, all Material Company Leases are
in full force and effect (except to the extent they have expired
or been terminated in accordance with their terms) and are valid
and binding obligations of the Company or the Company
Subsidiaries and enforceable against the Company or the Company
Subsidiaries in accordance with their respective terms except
that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar Laws, now or hereafter
in effect, affecting creditors rights generally, and
(ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as would not have or
be reasonably likely to have, individually or in the aggregate,
a Company Material Adverse Effect, neither the Company nor any
of the Company Subsidiaries nor, to the knowledge of the
Company, any other party to any Material Company Lease is in
material breach of or in material default under any of the
Material Company Leases. The Company Real Property set forth in
Section 3.14(c)
of the Company Disclosure Schedule
comprises all of the material real property currently used in
the operations of the business of the Company and the Company
Subsidiaries as of the date hereof.
(d) The Company and the Company Subsidiaries have good and
valid title to, or, as to Material Company Real Property
designated as leased, a valid leasehold interest in, all of the
Material Company Real Property except where the absence thereof
would not have or be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect. Each
Material Company Real Property is free and clear of any Lien,
except for (i) Liens specifically set forth for such
Material Company Real Property on
Section 3.14(d)
of
the Company Disclosure Schedule and such Liens do not and would
not materially interfere with the current and currently intended
use of such Material Company Real Property, (ii) Permitted
Liens and (iii) Liens that would not have or be reasonably
likely to have, individually or in the aggregate, a Company
Material Adverse Effect. The consummation of the Transactions
will not create any Lien on any of the Material Company Real
Property.
(e)
Section 3.14(e)
of the Company Disclosure
Schedule sets forth, as of the date hereof, a true and complete
list of all leases, subleases or similar agreements under which
the Company or any of the Company Subsidiaries is the landlord
or the sublandlord other than leases, subleases and similar
agreements that do not provide for annual rent in excess of
$250,000 (such leases, subleases and similar agreements,
collectively, the
Real Property Subleases
).
Each Real Property Sublease is valid and binding on the Company
or the Company Subsidiaries party thereto.
(f) As of the date hereof, there is no material tax
assessment pending or, to the knowledge of the Company,
threatened with respect to any portion of the Material Company
Real Property (other than assessments for taxes for the current
year that are not delinquent and assessments for taxes being
contested in good faith for which appropriate reserves have been
included on the balance sheet of the applicable Person). As of
the date hereof, there are no condemnation or compulsory
purchase proceedings pending or, to the knowledge of the
Company, threatened with respect to any portion of the Material
Company Real Property that would reasonably be likely to
materially impair or materially interfere with the continued use
and operation of Material Company Real Property in the business
of the Company and the Company Subsidiaries as currently
conducted, or materially detract from the value or marketability
of the Material Company Real Property for substantially similar
uses and operations.
Section
3.15.
Intellectual
Property
.
Except as would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, and except for Permitted Liens,
the Company or a Company Subsidiary owns free and clear of all
Liens or has the defensible right to use, whether through
ownership, licensing or otherwise, all material Intellectual
Property used in the businesses of the Company or any Company
Subsidiary (
Company Intellectual Property
) in
each case in the same form and substantially the same manner as
such Company Intellectual Property is used in connection with
such businesses as conducted on the date hereof. Except as would
not have or be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, (a) as of the
date hereof, no written
A-15
claim of invalidity or conflicting ownership rights has been
made or, to the Companys knowledge, threatened by a third
party with respect to any Company Intellectual Property owned by
the Company or a Company Subsidiary (
Company-owned
Intellectual Property
) and no Company-owned
Intellectual Property is the subject of any pending or, to the
Companys knowledge, threatened action, suit, claim,
investigation, arbitration or other proceeding challenging the
Companys ownership rights in such Company-owned
Intellectual Property, (b) as of the date hereof, to the
knowledge of the Company, no registration for any Company-owned
Intellectual Property has been cancelled, abandoned or
adjudicated invalid, (c) as of the date hereof, no Person
has given written notice to the Company or any Company
Subsidiary that the use of any Company Intellectual Property by
the Company, any Company Subsidiary or, in the case of
Company-owned Intellectual Property, any licensee, is infringing
or has infringed any third partys domestic or foreign
rights in or to any Intellectual Property, or that the Company,
any Company Subsidiary or any licensee of Company-owned
Intellectual Property has misappropriated or improperly used or
disclosed any trade secret, confidential or proprietary
information or know-how, (d) to the Companys
knowledge, none of the Company-owned Intellectual Property has
been or is currently being infringed, misappropriated or
otherwise violated by any third party, (e) to the
Companys knowledge, there exists no prior act or current
conduct or use by the Company, any Company Subsidiary or any
third party that would void or invalidate any Company-owned
Intellectual Property, (f) the Company and each Company
Subsidiary have taken reasonable measures to safeguard the
confidentiality and value of all Company-owned Intellectual
Property comprising trade secrets or other confidential
information, (g) no third party has any joint ownership
interest in or to any Company-owned Intellectual Property and
(h) the execution, delivery and performance of this
Agreement and each ancillary agreement by the Company and the
consummation of the Transactions will not breach, violate or
conflict with any instrument or agreement concerning the
Companys or a Company Subsidiarys use of any Company
Intellectual Property, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination
of any rights in or to the Company Intellectual Property or
impair the right of Parent or the Surviving Corporation to
(i) use any Company Intellectual Property and
(ii) make, use, sell, license or dispose of, or to bring
any action for the infringement of, any Company-owned
Intellectual Property, all in the same form and manner as the
Company or a Company Subsidiary has prior to the date hereof.
Section
3.16.
Labor
Relations and Other Employment Matters
.
(a) Since December 31, 2006, none of the employees of
the Company or any of the Company Subsidiaries are represented
or have been represented by any union with respect to their
employment by the Company or such Company Subsidiary, and no
labor organization or group of employees of the Company or any
of the Company Subsidiaries has made a demand for recognition or
certification to the Company or any of the Company Subsidiaries
and, to the knowledge of the Company, there are no
representation or certification proceedings or petitions seeking
a representation proceeding presently pending or threatened to
be brought or filed with the National Labor Relations Board or
any other Governmental Authority. To the knowledge of the
Company, since December 31, 2006, neither the Company nor
any of the Company Subsidiaries has experienced any labor
disputes, union organization attempts or work stoppages,
slowdowns or lockouts due to disputes with any labor
organizations.
(b) Neither the Company nor any of the Company Subsidiaries
is delinquent in payments of any material amount to any of its
employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it or amounts
required to be reimbursed to such employees. As of the date
hereof, no employee of the Company at the officer level of vice
president or above has given written notice to the Company that
any such employee intends to terminate his or her employment
with the Company or any of the Company Subsidiaries.
(c) Except as would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect, each of the Company and the Company Subsidiaries
is in compliance with all applicable Laws respecting employment
and employment practices, terms and conditions of employment,
immigration, wages and hours, and occupational safety and
health. To the knowledge of the Company, each individual who
renders services to the Company or any of the Company
Subsidiaries who is classified by the Company or such Company
Subsidiaries, as applicable, as having the status of an
independent contractor or other non-employee status for any
purpose (including for purposes of taxation and tax reporting
and under
A-16
Benefit Plans) is properly so characterized. To the knowledge of
the Company, each employee who is classified by the Company or a
Company Subsidiary, as applicable, as being exempt from the
minimum wage
and/or
overtime requirements of applicable Laws is properly so
characterized.
Section
3.17.
Healthcare
Permits; Participation in Governmental Programs and Private
Programs
.
(a) Except as would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect, all Healthcare Permits applicable to the
Company, each Company Subsidiary and each Hospice, which are
required for the operation of the Company, each Company
Subsidiary and each Hospice: (i) have been obtained, are in
effect and are set forth in
Section 3.17(a)
of the
Company Disclosure Schedule; (ii) are valid and in good
standing in each jurisdiction in which such Healthcare Permits
were issued or are operable; and (iii) have not been
subject to revocation or forfeiture.
(b) Except as would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect, (i) the Company, each Company Subsidiary,
and each Hospice are in compliance with applicable standards for
Healthcare Permits and (ii) none of the Company, any
Company Subsidiary or any Hospice is in default or violation of
any material Healthcare Permit. As of the date hereof, there are
no Legal Proceedings pending or, to the knowledge of the
Company, threatened, relating to the suspension, revocation or
modification of any Healthcare Permit, which if suspended,
revoked or modified would have or be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(c) As required by applicable Healthcare Laws, the Company,
Company Subsidiary or Hospice have (i) verified that all
employees providing clinical services have valid and current
licenses, permits and credentials, (ii) conducted criminal
background checks on all applicable employees and independent
contractors, and (iii) screened all officers, directors,
employees and independent contractors under the HHS/OIG List of
Excluded Individuals/Entities.
(d) The Company Subsidiaries and Hospices, as applicable,
are certified for participation in the Governmental Programs set
forth in
Section 3.17(e)
of the Company Disclosure
Schedule. No Company Subsidiary or Hospice, as applicable, has
been terminated, or, to the knowledge of the Company, has been
threatened with termination from, participation in Governmental
Programs, nor does the Company have any reason to believe that
such actions may occur.
(e)
Section 3.17(e)
of the Company Disclosure
Schedule sets forth a correct and complete list of all
Government Programs and Private Programs with which the Company,
Company Subsidiaries and Hospices are contracted. No event has
occurred, to the knowledge of the Company, which, with the
giving of notice, the passage of time, or both, would constitute
grounds to terminate, modify or not renew the participation of
the Company, any Company Subsidiary or any Hospice in any
Private Program, except for such termination, modification or
non-renewal as would not have or be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.18.
Healthcare
Laws
.
(a) Except for such noncompliance as would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, the Company, Company
Subsidiaries and Hospices are in compliance with all applicable
Healthcare Laws. The Company maintains a compliance program in
all material respects in accordance with the criteria
established by the Office of Inspector General of the Department
of Health and Human Services. A copy of the Companys
compliance program has been made available to Parent for review
and examination.
(b) None of the Company, any Company Subsidiary nor any
Hospice, to the knowledge of the Company, has engaged in any
activities which are prohibited under the Federal Controlled
Substances Act, 21 U.S.C. §§ 801 et seq.,
the Federal Food, Drug and Cosmetic Act, 21 U.S.C.
§§ 301 et seq., or the regulations promulgated
pursuant to such statutes or any related state or local statutes
or regulations concerning the dispensing and sale of controlled
substances.
A-17
(c) The Company, each Company Subsidiary and each Hospice
has timely filed all cost reports required to be filed on or
prior to the date hereof in accordance with the Government
Programs and Private Programs, all fiscal intermediaries, and
other insurance carriers. All cost reports submitted by the
Company, Company Subsidiaries and Hospices to Government
Programs and Private Programs have been complete and accurate in
all material respects when filed and have been prepared in
material compliance with Healthcare Laws. Each of the Company
Subsidiaries and Hospices has paid or caused to be paid all
known and undisputed refunds, overpayments or adjustments,
including but not limited to any Hospice Medicare cap liability,
which have become due, except as would not have or be reasonably
likely to have, individually or in the aggregate, a Company
Material Adverse Effect. Each of the Company Subsidiaries has
paid or caused to be paid all known and undisputed refunds,
overpayments or adjustments which have become due to any Private
Programs for any undisputed refund, overpayment or adjustment,
except where such failure would not have or be reasonably likely
to have, individually or in the aggregate, a Company Material
Adverse Effect. As of the date hereof, none of the Company,
Company Subsidiaries or Hospices has reimbursement or payment
rate appeals, disputes or contested positions pending before any
Governmental Authority or Private Program. As of the date
hereof, none of the Company, Company Subsidiaries or Hospices
has received any notice of denial of material payment,
recoupment, or overpayment from any Governmental Program or
Private Program.
(d) As of the date hereof, no officer, director, current
employee or former employee (either before or during the course
of such former employees employment) of the Company, any
Company Subsidiary or any Hospice, or any third party vendor or
independent contractor who furnishes services or supplies which
may be reimbursed in whole or in part under any Governmental
Program, to the knowledge of the Company, is excluded, suspended
or debarred from participation, or is otherwise ineligible to
participate in any Government Program or any other Governmental
Program, or has been convicted of or charged with any violation
of Laws related to Medicare, Medicaid, or any other Government
Program that is reasonably likely to serve as the basis for any
such exclusion, suspension, debarment or other ineligibility.
Section
3.19.
Corporate
Integrity Agreement and Pending
Investigations
.
(a) The Company, each Company Subsidiary and each Hospice
are and have been in compliance in all material respects with
the Corporate Integrity Agreement and the Settlement Agreement.
The Company has performed all material actions and timely
submitted all reports required under the Corporate Integrity
Agreement, all of which were, at the time of submittal, true and
complete in all material respects and were accepted by the HHS
Office of Inspector General.
(b) Except for routine state licensure and Governmental
Program participation and certification surveys, and except as
identified elsewhere in this
Section 3.19
, and
except as would not have or be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect, neither the Company nor any Company Subsidiary nor any
Hospice currently is subject to or has received written notice
of any program integrity review or any other investigation
conducted by any Governmental Authority in connection with any
Governmental Programs.
Section
3.20.
HIPAA
and HITECH Act Compliance
.
(a) The Company, each Company Subsidiary and each Hospice
are in material compliance with the applicable privacy,
security, transaction standards, breach notification, and other
provisions and requirements of HIPAA, the HITECH Act and any
comparable state Laws, in effect as of the date hereof. The
Company, each Company Subsidiary and each Hospice have
established and implemented such policies, programs, procedures,
contracts and systems as are necessary to comply with HIPAA and
the HITECH Act as in effect as of the date hereof except as
would not have or be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect.
(b) As of the date hereof, neither the Company nor any
Company Subsidiary nor any Hospice has received any written
communication from any Governmental Authority that alleges that
the Company, any Company Subsidiary or any Hospice is not in
material compliance with the HIPAA Privacy and Security
Standards or the HITECH Act.
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(c) As of the date hereof, to the knowledge of the Company,
(i) except as would not have or be reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect, no Breach has occurred with respect to any
unsecured Protected Health Information maintained by or for the
Company, Company Subsidiaries or Hospices that is subject to the
notification requirements of 45 C.F.R. Part 164,
Subpart D, and (ii) no information security or privacy
breach event has occurred that would require notification under
any comparable state Laws. For the purposes of this
Section 3.20
,
Breach
means a
breach of unsecured Protected Health Information as defined in
45 C.F.R. § 164. 402, and
Protected
Health Information
means individually identifiable
health information defined as
protected health
information
under 45 C.F.R. § 160.103.
Section
3.21.
Information
in the Proxy Statement
.
The Proxy Statement
(and any amendment thereof or supplement thereto), at the date
mailed or otherwise provided to the Company Stockholders and at
the time of the Special Meeting, will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation or
warranty is made by the Company with respect to statements made
therein based on information supplied by Parent or Merger Sub
for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder.
Section
3.22.
Opinion
of Financial Advisor
.
The Company Board of
Directors has received the opinion of Goldman, Sachs &
Co. (the
Company Financial Advisor
), to the
effect that, as of the date of the opinion and subject to the
factors and assumptions set forth in such opinion, the $27.00
per Share to be paid to the holders of the Shares (other than
Parent and its affiliates) pursuant to this Agreement is fair
from a financial point of view to such holders, and such opinion
has not been modified or withdrawn as of the date hereof.
Section
3.23.
Insurance
.
The
Company maintains insurance coverage with reputable and
financially sound insurers, or maintains self-insurance
practices, in such amounts and covering such risks as the
Company reasonably believes are in accordance with normal
industry practice for companies engaged in businesses similar to
that of the Company and the Company Subsidiaries. As of the date
hereof, to the knowledge of the Company, all material insurance
policies of the Company are in full force and effect, all
premiums due and payable have been paid, and no written notice
of cancellation or termination has been received with respect to
any such policy.
Section
3.24.
Environmental
Laws and Regulations
.
Except as set forth
expressly in the Company SEC Documents (excluding any
disclosures set forth in any section of a Company SEC Document
entitled
Risk Factors
or
Forward-Looking Statements
or any other
disclosures included in such document that are general
cautionary, predicative or forward-looking in nature), to the
Companys knowledge, except as would not have or be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, (i) the Company and the
Company Subsidiaries have not generated, used, treated or stored
on, transported to or from or Released or disposed of Hazardous
Materials on any Company Property in any manner that could
reasonably be expected to give rise to a remedial obligation or
corrective action required under Environmental Laws,
(ii) the Company and each of the Company Subsidiaries are
in compliance with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental
Laws, (iii) there are no past, pending or threatened
Environmental Claims against the Company or any of the Company
Subsidiaries, and (iv) there are no facts or circumstances,
conditions or occurrences regarding the business, assets or
operations of the Company that could reasonably be anticipated
to form the basis of an Environmental Claim against the Company
or any of the Company Subsidiaries.
Section
3.25.
Brokers;
Expenses
.
(a) No broker, investment banker, financial advisor or
other Person, other than the Company Financial Advisor, the fees
and expenses of which will be paid by the Company, is entitled
to any brokers, finders, financial advisors or
other similar fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Company.
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(b) True and correct copies of all agreements between the
Company and the Company Financial Advisor concerning this
Agreement and the Transactions, including any fee arrangements,
have been previously provided to Parent.
Section
3.26.
Rights
Agreement
.
The Company has taken all actions
necessary to (a) provide that (i) none of Parent,
Merger Sub or any other Subsidiary of Parent is an
Acquiring Person
(as defined in the Rights
Agreement) pursuant to the Rights Agreement, (ii) neither a
Distribution Date
nor a
Shares Acquisition Date
(as such terms
are defined in the Rights Agreement) shall be deemed to occur
and (iii) the rights to purchase Series A Junior
Participating Preferred Stock of the Company issued under the
Rights Agreement (the
Company Rights
) do not
become exercisable, in the case of clauses (i), (ii) and
(iii), in connection with this Agreement and the Transactions,
and (b) provide that the
Final Expiration
Date
(as defined in the Rights Agreement) shall occur
immediately prior to the Effective Time.
Section
3.27.
Takeover
Statutes
.
Assuming the accuracy of the
representations in
Section 4.12
, the Company has
taken all such actions as are necessary such that the
restrictions on
business combinations
between
the Company and an
interested stockholder
(as
such terms are defined in Section 203 of the DGCL
(
Section 203
)) set forth in
Section 203 do not apply to this Agreement, the Merger or
the other Transactions. No other
fair price,
business combination
or
control
share acquisition
state takeover statute or other
similar statute or regulation applies to this Agreement, the
Merger or the other Transactions.
Section
3.28.
Voting
Requirements
.
The affirmative vote of holders
of a majority of the issued and outstanding Shares at the
Special Meeting (the
Company Stockholder
Approval
) is the only vote of the holders of any class
or series of capital stock of the Company necessary to adopt
this Agreement and approve the Merger.
Section
3.29.
Interested
Party Transactions
.
Since the Balance Sheet
Date to the date hereof, no event has occurred that would be
required to be reported by the Company pursuant to Item 404
of
Regulation S-K,
except as disclosed in the Company SEC Documents.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the corresponding section of
Parents and Merger Subs disclosure schedule (and
subject to
Section 9.7(b)
) delivered to the Company
upon execution of this Agreement (the
Parent Disclosure
Schedule
and, together with the Company Disclosure
Schedule, the
Disclosure Schedules
), Parent
and Merger Sub jointly and severally represent and warrant to
the Company as follows:
Section
4.1.
Organization
.
Each
of Parent and Merger Sub is a corporation or other legal entity
duly organized, validly existing and in good standing (with
respect to jurisdictions which recognize such concept) under the
Laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and
authority to carry on its business as now being conducted,
except, for those jurisdictions where the failure to be so
organized, existing or in good standing, individually or in the
aggregate, would not impair in any material respect the ability
of each of Parent and Merger Sub, as the case may be, to perform
its obligations under this Agreement or prevent or materially
delay the consummation of the Transactions. The certificate of
incorporation, bylaws or equivalent organizational or governing
documents of each of Parent and Merger Sub, as previously
provided to the Company or filed with the SEC, are in full force
and effect and have not been amended or modified. Neither Parent
nor Merger Sub is in material violation of any provision of its
certificate of incorporation, bylaws or equivalent
organizational or governing documents.
Section
4.2.
Authorization;
Validity of Agreement; Necessary Action
.
Each
of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the
consummation of the Transactions have been duly authorized by
all necessary corporate action on the part of Parent and Merger
Sub and will be adopted by the sole stockholder of Merger Sub.
This Agreement has been duly executed and delivered by Parent
and Merger Sub and, assuming due and valid authorization,
execution
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and delivery hereof by the Company, is the valid and binding
obligation of each of Parent and Merger Sub enforceable against
each of them in accordance with its terms, except that
(i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar Laws, now or hereafter
in effect, affecting creditors rights generally and
(ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section
4.3.
Consents
and Approvals; No Violations
.
None of the
execution, delivery or performance of this Agreement by Parent
and Merger Sub, the consummation by Parent and Merger Sub of the
Transactions or compliance by Parent or Merger Sub with any of
the provisions of this Agreement will (i) conflict with or
result in any breach of any provision of the organizational
documents of Parent or Merger Sub, (ii) require any filing
by Parent or Merger Sub with, or the permit, authorization,
consent or approval of, any Governmental Authority (except for
(A) compliance with any applicable requirements of the
Exchange Act or state securities, takeover and
blue sky
laws,
(B) compliance with any applicable Nasdaq
Marketplace Rules, (C) any filings as may be required under
the DGCL in connection with the Merger, (D) filings,
permits, authorizations, consents and approvals as may be
required under the HSR Act or (E) the filing with the SEC
of the Proxy Statement or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to
Parent or Merger Sub, any of their Subsidiaries, or any of their
properties or assets, except in the case of clauses (ii) or
(iii), such violations, breaches or defaults which would not,
individually or in the aggregate, impair in any material respect
the ability of each Parent or Merger Sub to perform its
obligations under this Agreement, as the case may be, or prevent
the consummation of the Transactions.
Section
4.4.
Litigation
.
There
is no Legal Proceeding pending against (or, to the knowledge of
Parent, threatened against or naming as a party thereto) Parent,
Merger Sub or any of their respective Subsidiaries, nor, to the
knowledge of Parent, is there any investigation pending or
threatened against Parent, Merger Sub or any of their respective
Subsidiaries, and none of Parent or any of their respective
Subsidiaries is subject to any outstanding order, writ,
injunction or decree, in each case, which would, individually or
in the aggregate, impair in any material respect the ability of
each of Parent and Merger Sub to perform its obligations under
this Agreement, as the case may be, or prevent the consummation
of any of the Transactions.
Section
4.5.
Information
in the Proxy Statement
.
The information
supplied by Parent or Merger Sub in writing expressly for
inclusion or incorporation by reference in the Proxy Statement
(or any amendment thereof or supplement thereto) will not, at
the date mailed to the Company Stockholders or at the time of
any meeting of the Company Stockholders to be held in connection
with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not
misleading.
Section
4.6.
Financing
.
Parent
has delivered to the Company a true and complete fully executed
copy of the commitment letter, dated as of May 23, 2010
among Parent, Merger Sub, Bank of America, N.A., Banc of America
Bridge LLC, Banc of America Securities LLC, Barclays Bank PLC,
Barclays Capital, the investment banking division of Barclays
Bank PLC, General Electric Capital Corporation, GE Capital
Markets, Inc., SunTrust Bank and Sun Trust Robinson
Humphrey, Inc., including all exhibits, schedules, annexes and
amendments to such letter in effect as of the date hereof and
excerpts of those portions of the fee letter and engagement
letter associated therewith that contain any conditions to
funding or flex provisions or other substantive
provisions (excluding only those provisions related solely to
fees and economic terms agreed to by the parties) regarding the
terms and conditions of the financing to be provided thereby
(together, the
Commitment Letter
), pursuant
to which, subject to the terms and conditions thereof, the
Financing Sources have severally agreed to lend the respective
amounts set forth therein (the provision of such funds as set
forth therein, the
Financing
) for the
purposes set forth in such Commitment Letter. Parent has fully
paid any and all commitment fees or other fees required by such
Commitment Letter to be paid by the date hereof. The Commitment
Letter (i) has not been amended, restated or otherwise
modified or waived prior to the date hereof, (ii) is valid
and in full force and effect, subject to applicable bankruptcy,
insolvency or other similar Laws, now or hereafter in effect,
affecting creditors rights generally and provided that the
remedy of specific performance and injunctive and other forms of
equitable relief may be limited by equitable defenses and the
discretion of the court before which any proceeding therefor may
be brought, (iii) does not contain any
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material misstatement by Parent or Merger Sub, and (iv) the
respective commitments contained in the Commitment Letter have
not been withdrawn, modified or rescinded in any respect prior
to the date hereof. There are no conditions precedent or other
contingencies related to the funding of the full amount of the
Financing, other than as set forth in or contemplated by the
Commitment Letter. Subject to the terms and conditions of the
Commitment Letter, assuming the accuracy of the Companys
representations and warranties in
Section 3.2(a)
and
Section 3.2(b)
and assuming compliance by the
Company with its covenants contained in
Section 5.1
,
the net proceeds contemplated from the Financing, together with
other financial resources of Parent and Merger Sub including
cash on hand and marketable securities of Parent and Merger Sub
on the Closing Date, will, in the aggregate, be sufficient for
the payment of the Required Amounts, including any amounts
required to be paid by Merger Sub pursuant to
Article I
and
Article II
and also
Parents and Merger Subs fees and expenses incurred
in connection with the Transactions. As of the date hereof, to
Parents knowledge, no event has occurred which, with or
without notice, lapse of time or both, would constitute a
default on the part of Parent under the Commitment Letter. As of
the date hereof, neither Parent nor Merger Sub has any reason to
believe that any of the conditions to the Financing will not be
satisfied or that the Financing will not be available to Parent
and Merger Sub on the Closing Date.
Section
4.7.
Capitalization
and Operation of Merger Sub
.
The authorized
capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $0.001 per share, all of which are
validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent. Merger Sub has been formed solely
for the purpose of engaging in the Transactions and prior to the
Effective Time will have engaged in no other business activities
and will have incurred no liabilities or obligations other than
as contemplated hereby.
Section
4.8.
No
Vote of Parent Stockholders; Required
Approval
.
No vote or consent of the holders
of any class or series of capital stock of Parent or the holders
of any other securities of Parent (equity or otherwise) is
necessary to adopt this Agreement, or to approve the Merger or
the other Transactions. The vote or consent of Parent as the
sole stockholder of Merger Sub is the only vote or consent of
the holders of any class or series of capital stock of Merger
Sub necessary to approve the Merger and adopt this Agreement,
which consent shall be given immediately following the execution
of this Agreement.
Section
4.9.
Solvency;
Surviving Corporation
.
Neither Parent nor
Merger Sub is entering into the Transactions with the actual
intent to hinder, delay or defraud either present or future
creditors. Assuming that the representations and warranties of
the Company contained in this Agreement are true and correct in
all material respects, and after giving effect to the Merger and
the other Transactions, at and immediately after the Effective
Time, the Surviving Corporation (i) will be solvent (in
that both the fair value of its assets will not be less than the
sum of its debts and that the present fair saleable value of its
assets will not be less than the amount required to pay its
probable liability on its recourse debts as they become absolute
and matured), (ii) will have adequate capital and liquidity
with which to engage in its business, and (iii) will not
have incurred and does not plan to incur debts beyond its
ability to pay as they become absolute and matured.
Section
4.10.
Parent
SEC Documents; and Financial Statements
.
(a) Parent has filed with the SEC all forms, reports,
schedules, statements and other documents required by it to be
filed under the Exchange Act or the Securities Act (such
documents and any other documents filed by Parent and each
Parent Subsidiary with the SEC, as have been amended since the
time of their filing, collectively, the
Parent SEC
Documents
) since December 31, 2007. As of their
respective dates, the Parent SEC Documents (i) did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and
(ii) complied as to form in all material respects with the
applicable requirements of the Exchange Act or the Securities
Act, as the case may be, the Sarbanes-Oxley Act and the
applicable rules and regulations of the SEC thereunder. None of
the Parent Subsidiaries is currently required to file any forms,
reports or other documents with the SEC. As of the date hereof,
Parent does not have any unresolved comments from the SEC with
respect to the Parent SEC Documents. Each of the audited
consolidated financial statements and unaudited consolidated
interim financial statements of Parent and its consolidated
Subsidiaries included in the Parent SEC Documents, as amended or
A-22
supplemented prior to the date hereof (collectively, together
with all notes and schedules thereto, the
Parent
Financial Statements
), was prepared in accordance GAAP
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and subject, in
the case of unaudited consolidated interim financial statements,
to normal year-end audit adjustments and the absence of notes
not required by GAAP) and applicable SEC rules and regulations,
and fairly present in all material respects in accordance with
GAAP the consolidated financial position and the consolidated
results of operations and cash flows of Parent and its
consolidated Subsidiaries as of the times and for the periods
referred to therein (subject, in the case of unaudited
(consolidated) interim Financial Statements to normal year end
adjustments).
(b) Without limiting the generality of
Section 4.10(a)
, as of the date hereof,
(i) PricewaterhouseCoopers LLP has not resigned or been
dismissed as the independent public accountant of Parent as a
result of or in connection with any disagreement with Parent on
a matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure,
(ii) no executive officer of Parent has failed in any
respect to make, without qualification, the certifications
required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act with respect to the Parent SEC Documents and
(iii) to the knowledge of Parent, no enforcement action has
been initiated or threatened Parent by the SEC relating to
disclosures contained in any Parent SEC Document.
(c) Parent is in compliance in all material respects with
all applicable provisions of the listing and corporate
governance requirements of the Nasdaq Marketplace Rules.
Section
4.11.
Certain
Arrangements
.
As of the date hereof, there
are no contracts, undertakings, commitments, agreements,
obligations or understandings, whether written or oral, between
Parent or Merger Sub or any of their affiliates, on the one
hand, and any member of the Companys management or the
Company Board of Directors, on the other hand, relating in any
way to the Company, the Transactions or to the operations of the
Company after the Effective Time.
Section
4.12.
Ownership
of Shares
.
As of the date hereof, none of
Parent, Merger Sub or any of their respective
affiliates
or
associates
owns
(as such terms are defined in
Section 203) any Shares. Each of Parent and Merger Sub
is not, and at no time during the last three (3) years has
been, an
interested stockholder
of the
Company as defined in Section 203.
ARTICLE V
CONDUCT OF
BUSINESS PENDING THE MERGER
Section
5.1.
Interim
Operations of the Company; Interim Operations of the Parent and
Merger Sub
.
Except as (a) expressly set
forth in
Section 5.1
of the Company Disclosure
Schedule, (b) required by applicable Laws,
(c) expressly required pursuant to this Agreement or
(d) as agreed in writing by Parent (which consent shall not
be unreasonably withheld, conditioned or delayed), from the date
hereof until the earlier of (A) the valid termination of
this Agreement in accordance with
Section 8.1
and
(B) the Effective Time, the Company shall, and shall cause
the Company Subsidiaries to, (i) conduct their businesses
in all material respects in the ordinary course consistent with
past practice, (ii) use commercially reasonable efforts to
preserve intact their present business organizations, consistent
with past practice, (iii) use commercially reasonable
efforts to maintain satisfactory relations with and keep
available the services of their current officers and other key
employees, consistent with past practice, (iv) maintain in
effect all material foreign, federal, state and local licenses,
approvals and authorizations, including all material licenses
and permits that are required for the Company or any Company
Subsidiary to carry on its business as currently conducted,
(v) use commercially reasonable efforts to preserve
existing relationships with material customers, lenders,
suppliers, distributors, referral sources and others having
material business relationships with the Company and the Company
Subsidiaries, consistent with past practice, and (vi) use
commercially reasonable efforts to comply in all material
respects with applicable Laws, consistent with past practice and
policies. Without limiting the generality of the foregoing,
except as expressly set forth in
Section 5.1
of the
Company Disclosure Schedule, as expressly required pursuant to
this Agreement or as agreed in writing by Parent (which consent
shall not be unreasonably withheld, conditioned or delayed),
from the date hereof until the earlier of (x) the
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valid termination of this Agreement in accordance with
Section 8.1
hereof and (y) the Effective Time,
the Company shall not, nor shall it permit any Company
Subsidiary or Hospice to, directly or indirectly:
(a) amend the Company Governing Documents or equivalent
documents of any Company Subsidiary or amend the terms of any
outstanding security of the Company or any Company Subsidiary;
(b) split, combine, subdivide or reclassify any shares of
capital stock of the Company or any Company Subsidiary;
(c) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property (or any
combination thereof) with respect to its capital stock, except
that a wholly-owned Company Subsidiary may declare, set aside
and pay dividends or distribution to the Company or another
wholly-owned Company Subsidiary;
(d) redeem, purchase or otherwise acquire, or offer to
redeem, purchase or otherwise acquire, any Equity Interests,
except for acquisitions of Equity Interests in accordance with
the Company Stock Plans and the agreements underlying awards of
Equity Interests pursuant to such Company Stock Plans;
(e) issue, sell, pledge, deliver, transfer, dispose of or
encumber any shares of, or securities convertible into or
exchangeable for, or grant any Company Stock Rights, Restricted
Stock or warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class, or grant to
any Person any right the value of which is based on the value of
Shares or other capital stock, other than (i) the issuance
of shares of Common Stock pursuant to the exercise or settlement
of stock options, warrants or other rights therefor outstanding
as of the date hereof and (ii) the issuance or grant of
Company Stock Rights or Restricted Stock under the Company Stock
Plans to employees of the Company who are employed as of the
date hereof or hired after the date of the date hereof in the
ordinary course of business consistent with past practice and
with a per share exercise price (if applicable) of no less than
the then-current market price of a share of Common Stock and
otherwise on terms and conditions that are consistent with the
Companys past practice in respect of the issuance and
grant thereof;
(f) acquire (whether pursuant to merger, stock or asset
purchase or otherwise) in one transaction or any series of
related transactions, except in the ordinary course of business
consistent with past practice, (i) any assets or
(ii) any equity interests in any Person or any business or
division of any Person or all or substantially all of the assets
of any Person (or business or division thereof), in the case of
the foregoing clauses (i) and (ii), for cash consideration
in excess of $5,000,000 in the aggregate, except, in the case of
either clause (i) or (ii), to the extent (A) otherwise
obligated pursuant to any agreement as of the date hereof, a
copy of which has previously been made available to Parent, or
(B) solely among or between the Company and wholly-owned
Company Subsidiaries;
(g) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any of its assets, other than
(i) sales in the ordinary course of business consistent
with past practice, (ii) dispositions of equipment and
property no longer used in the operation of the business,
(iii) dispositions of assets related to discontinued
operations as reflected in Company SEC Documents filed prior to
the date hereof and (iv) assets with a fair market value of
less than $10 million in the aggregate;
(h) (i) (A) incur or assume any long-term or
short-term indebtedness except (1) for borrowings under the
Companys current credit facilities in the ordinary course
of business consistent with past practice, (2) for the
acquisition or assumption of indebtedness in connection with
acquisitions permitted pursuant to
Section 5.1(f)
,
or (3) that the Company and the Company Subsidiaries may
take any of the foregoing actions in respect of indebtedness
owing by any wholly owned Company Subsidiary to the Company or
another wholly owned Company Subsidiary, or (B) make any
material modification or amendment to the terms thereof,
(ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person (other than the Company or a
Company Subsidiary), or (iii) make any loans, advances or
capital contributions to, or investments in, any other Person
other than loans, advances or capital contributions to, or
investments in, (a) wholly owned Company Subsidiaries,
(b) loans, advances, capital contributions or investments
not in
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excess of $2,500,000, and (c) expense advances to employees
of the Company or any Company Subsidiary in the ordinary course
of business consistent with past practice;
(i) except to the extent required under any Benefit Plan or
as required by applicable Laws, (i) increase the
compensation or fringe benefits of any of its directors,
officers or employees (except for increases made in the ordinary
course of business), (ii) grant any severance or
termination pay not provided for under any Benefit Plan, or
(iii) enter into any employment, consulting or severance
agreement or arrangement with any of its present or former
directors, officers or other employees, except for at will
offers of employment in the ordinary course of business, or
establish, adopt, enter into or amend in any material respect or
terminate any Benefit Plan;
(j) hire or terminate (other than for cause) any employee
who is, or would upon hire, be classified as a member of Key
Personnel without consulting with Parent prior to such hire or
termination (it being understood that consent of Parent is not
required for such hire or termination);
(k) except as publicly announced prior to the date hereof,
effect or permit a
plant closing
or
mass layoff
as those terms are defined in the
Workers Adjustment and Retraining Notification Act without
complying with the notice requirements and all other provisions
of such act;
(l) incur any capital expenditures or any obligations or
liabilities in respect thereof in excess of $5,000,000, in the
aggregate, except those contemplated in the current capital
expenditures budgets for the Company and the Company
Subsidiaries;
(m) enter into any agreement or arrangement that materially
limits or otherwise materially restricts the Company, any
Company Subsidiary or any of their present or future affiliates
or any successor thereto from engaging or competing in any line
of business or in any location;
(n) enter into, amend, modify or terminate any Company
Material Contract or Material Company Lease or otherwise waive,
release or assign any material rights, claims or benefits
thereunder;
provided
,
however
, that nothing herein
will prevent the Company from entering into, amending, modifying
or terminating contracts in the ordinary course of business
consistent with past practice;
(o) settle, pay, discharge or propose to settle, pay or
discharge, any litigation, investigation, arbitration,
proceeding or other claim, liability or obligation (whether
absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice, of such claims,
liabilities or obligations (i) expressly disclosed or
reserved against in the most recent Financial Statements in
amounts no greater than the amount reserved with respect to the
relevant liability therein or (ii) that involve only the
payment of monetary damages not in excess of $10 million in
the aggregate (it being agreed that the amounts paid in respect
of any settlement, payment or discharge effected pursuant to
clause (i) shall not be applied toward the monetary
threshold set forth in clause (ii)) or the imposition of
nonmaterial equitable relief on the business and operations of
the Company or any of its Subsidiaries, or (iii) that are
immaterial to the Company and the Company Subsidiaries, taken as
a whole, and in respect of which no liability or reserve in
respect thereof has been reflected or accrued on the most recent
Financial Statements;
(p) change any of the accounting methods used by it
materially affecting its assets, liabilities or business, except
for such changes that are required by GAAP or
Regulation S-X
promulgated under the Exchange Act or as otherwise specifically
disclosed in the Company SEC Documents;
(q) revalue in any material respect any of its assets,
including writing down the value of inventory or writing down
notes or accounts receivable, other than in the ordinary course
of business consistent with past practice or as required by GAAP;
(r) other than as required by applicable Laws, make or
change any material Tax election or change an annual accounting
period, file any amendment to a material Tax Return, enter into
any closing agreement, settle or consent to any material Tax
Claim, take any affirmative action to surrender any right to
claim a refund of material Taxes, or consent to any extension or
waiver of the limitation period applicable to any material Tax
Claim;
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(s) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger); or
(t) agree, authorize or commit to do any of the foregoing.
Notwithstanding anything set forth in this Agreement, nothing
contained in this Agreement shall give Parent or Merger Sub,
directly or indirectly, the right to control or direct the
operations of the Company or any Company Subsidiaries prior to
the Effective Time. Prior to the Effective Time, the Company
shall exercise, consistent with the terms and conditions of this
Agreement, control and supervision over its and the Company
Subsidiaries business operations.
Each of Parent and Merger Sub agrees that, between the date
hereof and the Effective Time, it shall not, directly or
indirectly, take any action that would have, or would reasonably
be expected to result in, individually or in the aggregate, any
event, change, effect or occurrence that would reasonably be
expected to prevent, materially delay or materially impede the
consummation of the Merger or the other Transactions.
Section
5.2.
Solicitation;
Unsolicited Proposals
.
(a) Notwithstanding any provision in this Agreement to the
contrary, during the period beginning on the date hereof and
continuing until 11:59 p.m. Central Time, on the date that
is thirty (30) days after the date hereof (the
Go-Shop Period Termination Date
), the Company
and its Representatives shall have the right, under the
direction of the Company Board of Directors or any committee
thereof, to directly or indirectly: (i) initiate, solicit
and encourage the submission of Acquisition Proposals from one
or more Persons, including by way of contacting third parties or
public disclosure, and providing access to non-public
information pursuant to (but only pursuant to) an Acceptable
Confidentiality Agreement with any such Person; provided, that
the Company shall promptly (and in any event within twenty-four
(24) hours) provide to Parent any material non-public
information concerning the Company or any of its Subsidiaries
that is provided to any such Person or its Representatives given
such access that was not previously provided to Parent; and
(ii) enter into, participate in and maintain discussions or
negotiations regarding, and take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or
would be reasonably likely to lead to, an Acquisition Proposal.
(b) Subject to
Section 5.2(c)
,
Section 5.3(b)
and
Section 5.3(c)
and
except as permitted by this
Section 5.2
, from and
after the Go-Shop Period Termination Date until the earlier to
occur of the Effective Time or the termination of this Agreement
pursuant to
Section 8.1
,
(i) the Company shall not, nor shall the Company permit any
of the Company Subsidiaries to, nor shall the Company authorize
or knowingly permit any of its Representatives or any Company
Subsidiarys Representatives to, and the Company shall not
publicly propose to, directly or indirectly (other than with
respect to Parent and Merger Sub), (A) solicit, initiate,
knowingly facilitate or knowingly encourage (provided that
supplying non-public information in the ordinary course of
business shall not be prohibited) any inquiries, proposals or
offers that constitute, or that would reasonably be expected to
lead to, an Acquisition Proposal, (B) knowingly engage in,
continue or otherwise participate in any discussions or
negotiations with any Person (or
group
(as
defined in Section 13(d) of the Exchange Act) of Persons),
other than Parent and its Subsidiaries and Representatives (any
such Person and its Representatives (excluding the
Companys and Parents Representatives in their
capacity as such), a
Third Party
), regarding,
or furnish to any Third Party information in connection with or
for the purpose of encouraging or facilitating, an Acquisition
Proposal, or (C) enter into any letter of intent,
agreement, contract, commitment or agreement in principle with
respect to an Acquisition Proposal or enter into any agreement,
contract or commitment requiring the Company to abandon,
terminate or fail to consummate the Transactions; and
(ii) the Company shall, and shall cause the Company
Subsidiaries to, and shall direct the Companys and its
Subsidiaries Representatives to, immediately cease and
terminate any existing solicitation, encouragement, discussion
or negotiation with any Third Party heretofore conducted by the
Company, the Company Subsidiaries or their respective
Representatives with respect to an Acquisition Proposal, and the
Company shall request that all non-public information previously
provided by or on behalf of the Company or any of its
A-26
Subsidiaries to any such Third Party be returned or destroyed in
accordance with the applicable Acceptable Confidentiality
Agreement;
provided
,
however
, that notwithstanding anything
to the contrary herein, following the Go-Shop Period Termination
Date until the earlier to occur of the Company Stockholder
Approval or the termination of this Agreement pursuant to
Section 8.1
, the Company and its Representatives may
continue to engage in the activities described in
Section 5.2(a)
and not request the return or
destruction of non-public information from any Excluded Party.
(c) Notwithstanding anything to the contrary contained
herein, if at any time from and after the Go-Shop Period
Termination Date and prior to the Company Stockholder Approval,
(i) the Company receives a written Acquisition Proposal
from a Third Party made after the Go-Shop Period Termination
Date, (ii) such Acquisition Proposal did not result from a
material breach of
Section 5.2
, (iii) the
Company Board of Directors or any committee thereof determines
in good faith, after consultation with the Company Financial
Advisor or another independent financial advisor of nationally
recognized reputation and outside legal counsel, that such
Acquisition Proposal constitutes, or would be reasonably likely
to lead to, a Superior Proposal, and (iv) the Company Board
of Directors or any committee thereof determines in good faith,
after consultation with the Company Financial Advisor or another
independent financial advisor of nationally recognized
reputation and outside legal counsel, that the failure to take
the actions referred to in the following clause (A) or
(B) would be reasonably likely to be inconsistent with its
fiduciary duties to the Company Stockholders under applicable
Laws, then the Company may (A) furnish information and data
with respect to the Company and the Company Subsidiaries to the
Third Party making such Acquisition Proposal, and (B) enter
into, maintain and participate in discussions or negotiations
with the Third Party making such Acquisition Proposal regarding
such Acquisition Proposal or otherwise cooperate with or assist
or participate in, or facilitate, any such discussions or
negotiations; provided that the Company (x) will not, and
will not allow the Company Subsidiaries or its or their
Representatives to, furnish any non-public information except
pursuant to an Acceptable Confidentiality Agreement, and
(y) will promptly provide to Parent any material non-public
information concerning the Company or the Company Subsidiaries
provided to such Third Party and which was not previously
provided to Parent. Notwithstanding anything to the contrary
contained in this Agreement, (1) the Company shall be
permitted to take the actions described in the foregoing
clauses (A) and (B) with respect to any Excluded
Party, and (2) the Company and its Representatives may
(x) following the receipt of an Acquisition Proposal from a
Third Party, contact such Third Party in order to clarify and
understand the terms and conditions of an Acquisition Proposal
made by such Third Party so as to determine whether such
Acquisition Proposal constitutes or would be reasonably likely
to lead to a Superior Proposal or (y) direct any Persons to
this Agreement.
(d) From and after the execution of this Agreement by all
parties hereto, the Company shall as promptly as practicable
(and in any event within twenty-four (24) hours) notify and
advise Parent of any Acquisition Proposal, which notification
shall include (i) a copy of the applicable written
Acquisition Proposal (or, if oral, the material terms and
conditions of such Acquisition Proposal) and (ii) the
identity of the Third Party making such Acquisition Proposal.
The Company shall thereafter keep Parent reasonably informed on
a reasonably current basis of the status of any material
developments, discussions or negotiations regarding any such
Acquisition Proposal, and the material terms and conditions
thereof (including any change in price, structure or form of
consideration), including by providing a copy of material
documentation or correspondence relating thereto that is
exchanged between the Third Party (or its Representatives)
making such Acquisition Proposal and the Company (or its
Representatives) within twenty-four (24) hours after the
exchange thereof.
(e) Subject to the last sentence of this
Section 5.2(d)
, (i) the Company agrees not to
release or permit the release of any Person from, or to waive or
permit the waiver or termination of any provision of, any
confidentiality,
standstill
or similar
agreement to which any of the Company or any Company Subsidiary
is a party and (ii) the Company will use its reasonable
best efforts to enforce or cause to be enforced to the fullest
extent permitted by Law each such agreement at the request of
Parent. Notwithstanding anything to the contrary contained in
this
Section 5.2
or
Section 5.3
, nothing
in this Agreement shall prohibit the Company from rendering
inapplicable, exempting or taking any action to render
inapplicable or exempt any Third Party
A-27
from any standstill agreement or similar arrangement to permit
such Third Party to make an Acquisition Proposal.
(f) Each of Parent and Merger Sub agrees that neither it
nor any of their respective Subsidiaries or other affiliates
shall, and that each shall use its reasonable best efforts to
cause its and their respective Representatives not to,
intentionally enter into, or seek to enter into any agreement,
arrangement or understanding with a potential bidding Third
Party (or any financing sources or Representatives of such Third
Party) that has the purpose or effect of interfering with the
Companys ability to seek and obtain a Superior Proposal
from such Third Party (including interfering with the ability of
the Company to hold discussions and negotiations with such Third
Party in connection therewith) in accordance with the rights of
the Company under this Agreement;
provided
,
however
, that this
Section 5.2(f)
shall not
prevent Parent and Merger Sub from exercising their rights under
this Agreement.
Section
5.3.
Board
Recommendation
.
(a) Subject to
Section 5.3(b)
and
Section 5.3(c)
, neither the Company Board of
Directors nor any committee thereof shall (i) withdraw,
qualify, modify, change or amend in any manner adverse to the
Transactions, Parent or Merger Sub, or publicly propose to
withdraw, qualify, modify, change or amend in any manner adverse
to the Transactions, Parent or Merger Sub, the Company
Recommendation, (ii) adopt or recommend an Acquisition
Proposal (it being understood that taking a neutral position or
no position (other than in a communication made in compliance
with
Rule 14d-9(f)
under the Exchange Act or a similar
stop, look and
listen
communication) with respect to any Acquisition
Proposal shall be considered a violation of this clause (ii)),
(iii) fail to make or reaffirm the Company Recommendation,
(iv) approve or recommend, or publicly propose to approve
or recommend, or cause or permit the Company or any Company
Subsidiary to execute or enter into any agreement (other than an
Acceptable Confidentiality Agreement pursuant to
Section 5.2
)), arrangement or understanding,
including any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement,
option agreement, joint venture agreement, partnership agreement
or other similar agreement with respect to an Acquisition
Proposal (an
Alternative Acquisition
Agreement
), or (v) resolve or publicly propose to
take any action described in the foregoing clauses (i)
through (iv) (each of the foregoing actions described in
clauses (i) through (v) being referred to as a
Company Change in Recommendation
).
(b) Notwithstanding anything in this Agreement to the
contrary, including the foregoing
Section 5.3(a)
, at
any time prior to the Company Stockholder Approval (and subject
to compliance with
Section 6.9
), the Company Board
of Directors or any committee thereof may, if the Company Board
of Directors or any committee thereof determines in good faith
(after consultation with the Company Financial Advisor or
another financial advisor of nationally recognized reputation
and outside legal counsel), that the failure to do so would be
reasonably likely to be inconsistent with the directors
fiduciary duties to the Company Stockholders under applicable
Laws, (i) make a Company Change in Recommendation in
response to either (x) a Superior Proposal received after
the date hereof and that does not result from a material breach
of
Section 5.2
or (y) any fact, event, change,
development or circumstances not known by the Company Board of
Directors as of the date hereof and not relating to any
Acquisition Proposal (such fact, event, change, development or
circumstance, an
Intervening Event
) or
(ii) cause the Company to terminate this Agreement pursuant
to
Section 8.1(d)
in response to a Superior Proposal
received after the date hereof;
provided
,
however
,
that, in the case of a Superior Proposal, (A) no Company
Change in Recommendation pursuant to this
Section 5.3(b)
may be made and (B) no
termination of this Agreement pursuant to
Section 8.1(d)
may be made, in either case
(1) until after the fifth (5th) business day following
Parents receipt of written notice from the Company
advising Parent that the Company Board of Directors or any
committee thereof intends to make a Company Change in
Recommendation or terminate this Agreement pursuant to
Section 8.1(d)
(a
Notice of Superior
Proposal
) and specifying the reasons therefor,
including, if applicable, the material terms and conditions of,
and the identity of the Third Party making, such Superior
Proposal, and a copy of any Alternative Acquisition Agreement
and any other relevant transaction documents (it being
understood and agreed that any amendment to the financial terms
or any other material term of such Superior Proposal shall
require a new Notice of Superior Proposal and an additional
three (3) business day period and compliance with this
Section 5.3(b)
with respect to such new notice),
(2) unless during such five (5) business day period
(or any additional three
A-28
(3) business day period), the Company shall, and shall
cause its Representatives to, to the extent requested by Parent,
negotiate with Parent in good faith to make such adjustments to
the terms and conditions of this Agreement as would enable the
Company Board of Directors or any committee thereof to proceed
with making the Company Recommendation and not make such a
Company Change in Recommendation or terminate this Agreement,
and (3) unless, prior to the expiration of such five
(5) business day period (or any additional three
(3) business day period), Parent does not make a proposal
to adjust the terms and conditions of this Agreement that the
Company Board of Directors or any committee thereof determines
in good faith (after consultation with the Company Financial
Advisor or another financial advisor of nationally recognized
reputation and outside legal counsel) to be at least as
favorable as the Superior Proposal; provided further, however,
that, in the case of an Intervening Event, no Company Change in
Recommendation pursuant to this
Section 5.3(b)
may
be made (A) until after the fifth (5th) business day
following Parents receipt of written notice from the
Company advising Parent that the Company Board of Directors or
any committee thereof intends to take such action and specifying
the facts underlying the Company Board of Directors (or
any committee thereof) determination that an Intervening Event
has occurred, and the reason for the Company Change in
Recommendation, in reasonable detail, (B) unless during
such five (5) business period, the Company shall, and shall
cause its Representatives to, to the extent requested by Parent,
negotiate with Parent in good faith to enable Parent to amend
this Agreement in such a manner that obviates the need for a
Company Change in Recommendation, and (C) unless, by the
expiration of such five (5) business day period, the
Company Board of Directors or any committee thereof determines
in good faith, taking into consideration any amendments to this
Agreement proposed by Parent (after consultation with the
Company Financial Advisor or another financial advisor of
nationally recognized reputation and outside legal counsel),
that the failure to effect a Company Change in Recommendation
would be inconsistent with the directors fiduciary duties
to the Company Stockholders under applicable Laws.
(c) Nothing contained in
Section 5.2
or this
Section 5.3
or elsewhere in this Agreement shall
prohibit the Company from (i) taking and disclosing a
position contemplated by
Rule 14d-9,
Rule 14e-2(a)
or Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act or (ii) making any
disclosure to the Company Stockholders if, in the good faith
judgment of the Company Board of Directors or any committee
thereof, after consultation with outside legal counsel, the
failure to do so would be inconsistent with the Company Board of
Directors fiduciary duties to the Company Stockholders
under applicable Laws or any disclosure requirements under
applicable Laws;
provided
,
however
, that any
disclosure that constitutes a stop, look and listen
communication or similar communication of the type contemplated
by
Section 14d-9(f)
promulgated under the Exchange Act or similar communication to
the Company Stockholders, shall not constitute a Company Change
in Recommendation or an approval or recommendation with respect
to any Acquisition Proposal.
Section
5.4.
Notification
.
The
Company agrees that it will promptly inform its and the Company
Subsidiaries respective Representatives of the obligations
undertaken in this
Article V
.
ARTICLE VI
ADDITIONAL
AGREEMENTS
Section
6.1.
Proxy
Statement; Stockholders Meeting
.
(a) As soon as reasonably practicable following the date of
this Agreement, the Company shall prepare and file a proxy
statement for the Special Meeting (together with any amendments
thereof or supplements thereto and any other required proxy
materials, the
Proxy Statement
) seeking
stockholder approval of the Merger and adoption of this
Agreement; provided, that Parent, Merger Sub and their counsel
shall be given a reasonable opportunity to review the Proxy
Statement before it is filed with the SEC, and the Company shall
give reasonable and good faith consideration to all additions,
deletions or changes suggested thereto by Parent, Merger Sub and
their counsel. Subject to
Section 5.3
, the Company
shall include in the Proxy Statement the Company Recommendation.
The Company shall use its reasonable best efforts to obtain and
furnish the information required to be included by the SEC in
the Proxy Statement, and Parent and Merger Sub shall cooperate
with the Company in the preparation of the Proxy Statement and
shall furnish all information concerning Parent and Merger Sub
as is required to be included in the Proxy Statement.
A-29
(b) The Company shall provide Parent and Merger Sub and
their counsel with copies of any written comments, and shall
inform them of any oral comments, that the Company or its
Representatives may receive from time to time from the SEC or
its staff with respect to the Proxy Statement promptly after the
Companys receipt of such comments, and any written or oral
responses thereto. Parent, Merger Sub and their counsel shall be
given a reasonable opportunity to review any such written
responses, and the Company shall give reasonable and good faith
consideration to all additions, deletions or changes suggested
thereto by Parent, Merger Sub and their counsel. The Company
shall, after consultation with Parent and Merger Sub, respond
promptly to any comments made by the SEC with respect to the
Proxy Statement. The Company, on the one hand, and Parent and
Merger Sub, on the other hand, agree to promptly correct any
information provided by it for use in the Proxy Statement if and
to the extent that it shall have become false or misleading in
any material respect or as otherwise required by applicable
Laws, and the Company further agrees to take all steps necessary
to cause the Proxy Statement, as so corrected (if applicable),
to be filed with the SEC and, if any such correction is made
following the mailing of the Proxy Statement as provided in
Section 6.1(c)(ii)
, mailed to holders of Shares, in
each case as and to the extent required by applicable federal
securities Laws.
(c) As promptly as reasonably practicable after the date of
this Agreement, the Company will:
(i) in accordance with applicable Laws and the Company
Governing Documents, duly set a record date for, call, give
notice of, convene and hold a special meeting of the Company
Stockholders (including any adjournments and postponements
thereof, the
Special Meeting
) for the purpose
of considering and taking action upon this Agreement (with the
record date and meeting date set in consultation with Merger
Sub);
(ii) cause the definitive Proxy Statement to be mailed to
the Company Stockholders; and
(iii) use its reasonable best efforts to solicit from the
Company Stockholders proxies in favor of the adoption of this
Agreement.
Section
6.2.
Additional
Agreements
.
Subject to the terms and
conditions hereof, the Company, Parent and Merger Sub shall use
their reasonable best efforts to take, or cause to be taken, all
actions or to do, or cause to be done, all things necessary,
proper, or advisable under applicable Laws to achieve the
satisfaction of the conditions set forth in
Article VII
, and to consummate and make effective
the Merger and the other Transactions as promptly as
practicable. The Company, Parent and Merger Sub shall use their
reasonable best efforts to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to use their reasonable
best efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly
as practicable the Transactions; provided, that nothing
contained in this
Section 6.2
shall require any
party to waive or exercise any right hereunder which is waivable
or exercisable in the sole discretion of such party. In case at
any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the Company,
Parent and Merger Sub shall use their reasonable best efforts to
take, or cause to be taken, all such necessary actions. This
Section 6.2
shall not be applicable to the matters
addressed by
Section 6.5
.
Section
6.3.
Notification
of Certain Matters
.
The Company shall give
prompt notice to Parent and Merger Sub, and Parent and Merger
Sub shall give prompt notice to the Company, of (a) the
occurrence or non-occurrence of any event whose occurrence or
non-occurrence, as the case may be, would be likely to cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time from
the date hereof to the Effective Time and (b) any material
failure of the Company, Merger Sub or Parent, as the case may
be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder that would
reasonably be expected to result in any condition to the
obligations of any party to effect the Merger and the other
Transactions not to be satisfied;
provided
,
however
, that the delivery of any notice pursuant to this
Section 6.3
shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice
or the representations or warranties of the parties or the
conditions to the obligations of the parties hereto.
A-30
Section
6.4.
Access;
Confidentiality
.
(a) Subject to compliance with applicable Laws, from the
date hereof until the Effective Time, the Company shall, and
shall cause the Company Subsidiaries to, (i) upon
reasonable prior written notice, give Parent and Merger Sub,
their officers and a reasonable number of their employees and
their authorized representatives, reasonable access during
normal business hours to the Companys and the Company
Subsidiaries officers, properties, offices, and other
facilities and to the Companys and the Company
Subsidiaries books and records, and (ii) furnish
Parent and Merger Sub with such financial and operating data and
other information with respect to the business, properties and
Company Agreements of the Company and the Company Subsidiaries
as Parent and Merger Sub may from time to time reasonably
request. Notwithstanding the foregoing, (x) the Company
shall not be required to afford such access if it would cause a
violation of any agreement to which the Company or the Company
Subsidiaries is a party, would cause a loss of attorney/client
privilege or trade secret protection to the Company or the
Company Subsidiaries or would constitute a violation of any
applicable Laws and (y) any such investigation or
consultation shall be conducted in such a manner so as not to
interfere unreasonably with the business or operations of the
Company or any of the Company Subsidiaries or otherwise result
in any significant interference with the prompt and timely
discharge by such officers of their normal duties.
(b) Subject to prior consultation with the Company and
applicable antitrust Law, the Company shall provide Parent and
its Representatives reasonable access during normal business
hours upon prior notice, throughout the period prior to the
earlier of the valid termination of this Agreement in accordance
with
Section 8.1
and the Effective Time, to the
executive officers of the Company and its Subsidiaries and to
information reasonably required for the purpose of transition
planning and to enable Parent to make presentations to, and
discuss with, certain employees of the Company and its
Subsidiaries, as reasonably determined and agreed to by the
Company and Parent, Parents plans and strategies for
post-Closing operations subject to necessary antitrust
safeguards. The Company shall have the right to have a
representative present at all meetings between Parent and its
Representatives and any employees of the Company and its
Subsidiaries. Any such meetings will be conducted in such a
manner as not to interfere unreasonably with the business or
operations of the Company or its Subsidiaries or otherwise
interfere, other than in any immaterial respect, with the prompt
and timely discharge by such employees of the Company and its
Subsidiaries of their normal duties.
(c) The terms of the Confidentiality Agreement shall apply
to any information provided to Parent or Merger Sub pursuant to
Section 6.4(a)
.
(d) In the event of the termination of this Agreement in
accordance with
Section 8.1
, Parent and Merger Sub
shall, and shall use their reasonable best efforts to cause
their respective Representatives to, in accordance with the
Confidentiality Agreement, return promptly every document
furnished to them by the Company or any Representative of the
Company in connection with the Merger and all copies thereof in
their possession, and cause any other parties to whom such
documents may have been furnished promptly to return such
documents and all copies thereof.
Section
6.5.
Consents
and Approvals
.
(a) Each of the Company, Parent and Merger Sub shall use
its reasonable best efforts to (i) obtain from any
Governmental Authority any consents, licenses, permits, waivers,
clearances approvals, authorizations or orders required to be
obtained or made by Parent, Merger Sub or the Company or any of
their respective Subsidiaries, or avoid any action or proceeding
by any Governmental Authority (including, without limitation,
those in connection with the HSR Act), in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Transactions, (ii) make or cause to be
made the applications or filings required to be made by Parent,
Merger Sub or the Company or any of their respective
Subsidiaries under or with respect to the HSR Act or any other
applicable Laws in connection with the authorization, execution
and delivery of this Agreement and the consummation of the
Transactions, and pay any fees due in connection with such
applications or filings, as promptly as is reasonably
practicable, and in any event within ten (10) business days
after the date hereof, (iii) comply at the earliest
practicable date with any request under or with respect to the
HSR Act and any such other applicable Laws for additional
information, documents or
A-31
other materials received by Parent or the Company or any of
their respective Subsidiaries from the Federal Trade Commission
or the Department of Justice or any other Governmental Authority
in connection with such applications or filings or the
Transactions and (iv) coordinate and cooperate with, and
give due consideration to all reasonable additions, deletions or
changes suggested by the other party in connection with, making
(A) any filing under or with respect to the HSR Act or any
such other applicable Laws and (B) any filings, conferences
or other submissions related to resolving any investigation or
other inquiry by any such Governmental Authority. Each of the
Company and Parent shall, and shall cause their respective
affiliates and Representatives to, furnish to the other party
all information necessary for any such application or other
filing to be made in connection with the Transactions. Each of
the Company and Parent shall promptly inform the other of any
material communication with, and any proposed understanding,
undertaking or agreement with, any Governmental Authority
regarding any such application or filing. If a party hereto
intends to independently participate in any meeting with any
Governmental Authority in respect of any such filings,
investigation or other inquiry, then such party shall give the
other party reasonable prior notice of such meeting and invite
Representatives of the other party to participate in the meeting
with the Governmental Authority unless prohibited by such
Governmental Authority. The parties shall coordinate and
cooperate with one another in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any
party in connection with all meetings, actions and proceedings
under or relating to any such application or filing.
(b) The Company shall give (or shall cause its Subsidiaries
to give) any notices to third parties, and use, and cause its
Subsidiaries to use, reasonable best efforts to obtain any third
party consents, (i) necessary to consummate the
Transactions or (ii) required to prevent a Company Material
Adverse Effect from occurring prior to or after the Effective
Time;
provided
,
however
, that the Company and
Parent shall coordinate and reasonably cooperate in determining
whether any actions, notices, consents, approvals or waivers are
required to be given or obtained, or should be given or
obtained, from parties to any Company Agreements in connection
with consummation of the Transactions and seeking any such
actions, notices, consents, approvals or waivers.
Notwithstanding the foregoing, neither Parent nor Merger Sub
shall be required to, and neither the Company nor any Company
Subsidiary shall be required to, prior to the Effective Time,
make or commit to make any material payment to any third party
or agree to any material amendment, waiver or modification to
any Company Agreement or any limitation on the conduct of its
business, in order to obtain any such consent, approval or
waiver unless Parent shall agree to reimburse the Company for
such payment, and any such amendment, waiver or modification
will not be effective if the Effective Time does not occur.
(c) From the date hereof until the Effective Time, each of
Parent, Merger Sub and the Company shall promptly notify the
other in writing of any pending or, to the knowledge of Parent,
Merger Sub or the Company (as the case may be), threatened
action, suit, arbitration or other proceeding or investigation
by any Governmental Authority or any other Person
(i) challenging or seeking material damages in connection
with the Transactions or (ii) seeking to restrain or
prohibit the consummation of the Transactions or otherwise limit
in any material respect the right of Merger Sub or any affiliate
of Merger Sub to own or operate all or any portion of the
businesses or assets of the Company or any Company Subsidiary.
(d) If any administrative or judicial action or proceeding
is instituted (or threatened to be instituted) by or before a
Governmental Authority challenging the Transactions as violating
any applicable Laws, each of the Company, Parent and Merger Sub
shall, and shall cause their respective affiliates to, cooperate
and use their reasonable best efforts to contest and resist,
except insofar as the Company, Parent and Merger Sub may
otherwise agree, any such action or proceeding, including any
action or proceeding that seeks a temporary restraining order or
preliminary injunction that would prohibit, prevent or restrict
consummation of, or impose a materially adverse condition upon,
the Transactions.
(e) If necessary to obtain from any Governmental Authority
any consents, licenses, permits, waivers, clearances approvals,
authorizations or orders required to be obtained or made by
Parent or the Company or any of their respective Subsidiaries,
under the HSR Act, each of Parent and the Company shall
cooperate with each other and use its reasonable best efforts to
resolve such objections as may be asserted by any Governmental
Authority. Notwithstanding anything to the contrary in this
Agreement, in connection with any filing or submission required
or action to be taken by either Parent and the Merger Sub, on
the one hand, or
A-32
the Company, on the other hand, to consummate the Transactions,
in no event shall Parent, Merger Sub or the Company or any of
their respective Subsidiaries or affiliates be obligated to
propose or agree to accept any undertaking or condition, to
enter into any consent decree, to make any divestiture or accept
any operational restriction, or take or commit to take any
action (i) the effectiveness or consummation of which is
not conditional on the consummation of the Merger or
(ii) that may have a materially detrimental effect or
impact on the current or future business models, plans or
structures of Parent, Merger Sub or the Company or any of their
respective Subsidiaries, or which would be prohibited by the
Financing, provided that Parent uses its reasonable best efforts
to obtain the consent of the Financing Sources thereto.
Section
6.6.
Publicity
.
Except
with respect to any Company Change in Recommendation or any
other action taken by the Company or the Company Board of
Directors (or duly constituted committee of the Board of
Directors) pursuant to, and in accordance with
Section 5.2
and
Section 5.3
, so long as
this Agreement is in effect, Company, Parent and their
respective controlled affiliates shall consult with each other
and, to the extent practicable, provide each other reasonable
opportunity to review and comment on any press release or other
public announcement with respect to the Merger or this Agreement
prior to issuance of such press release or public announcement,
and shall not issue or publish any such press release or other
public announcement prior to such consultation, except as may be
required by applicable Laws or by any listing agreement with or
the listing rules of a national securities exchange or trading
market, in which case reasonable best efforts to consult with
the other parties hereto shall be made prior to an such issuance
or publication.
Section
6.7.
Directors
and Officers Insurance and
Indemnification
.
(a) From the Effective Time through the sixth (6th)
anniversary of the date on which the Effective Time occurred,
the Company (and following the Effective Time, the Surviving
Corporation) shall indemnify and hold harmless each Covered
Person against all claims, losses, liabilities, damages,
judgments, inquiries, fines and reasonable fees, costs and
expenses, including attorneys fees and disbursements
(collectively,
Costs
), incurred in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative (an
Action
), arising out of or pertaining to
(i) the fact that a Covered Person is or was an officer,
director, employee, fiduciary or agent of the Company or any of
its Subsidiaries or (ii) matters existing or occurring at
or prior to the Effective Time (including this Agreement and the
Transactions and actions contemplated hereby), whether asserted
or claimed prior to, at or after the Effective Time, to the
fullest extent permitted under applicable Laws. In the event of
any such Action, (A) each Covered Person will be entitled
to advancement of expenses incurred in the defense of any claim,
action, suit, proceeding or investigation from the Surviving
Corporation within ten (10) Business Days of receipt by the
Surviving Corporation from the Covered Person of a request
therefor;
provided
,
however
, that any person to
whom expenses are advanced provides an undertaking, if and only
to the extent required by the DGCL or the Company Governing
Documents, to repay such advances if it is ultimately determined
that such person is not entitled to be indemnified by the
Surviving Corporation as authorized by the DGCL,
(B) without limiting the foregoing, each Covered Person may
retain the Companys regularly engaged independent legal
counsel (provided that such engagement would not create a
conflict of interest under applicable rules of ethics) or other
counsel satisfactory to them, and Parent and the Surviving
Corporation shall pay all reasonable fees and expenses of such
counsel for the Covered Person as promptly as statements
therefor are received, (C) the Surviving Corporation shall
not settle, compromise or consent to the entry of any judgment
in any proceeding or threatened action, suit, proceeding,
investigation or claim (and in which indemnification could be
sought by such Covered Person hereunder), unless such
settlement, compromise or consent includes an unconditional
release of such Covered Person from all liability arising out of
such action, suit, proceeding, investigation or claim or such
Covered Person otherwise consents, and (D) Parent and the
Surviving Corporation shall use their reasonable best efforts to
assist in the vigorous defense of any such matter. With respect
to any determination of whether a Covered Person is entitled to
indemnification by the Company (and following the Effective
Time, the Surviving Corporation) under this
Section 6.7
, the Covered Person shall have the
right, as contemplated by the DGCL, to require that such
determination be made by special, independent legal counsel
selected by the Covered Person and approved by the Company or
the Surviving Corporation, as applicable, (which approval shall
not be unreasonably withheld, conditioned or delayed), and who
has not otherwise performed material
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services for the Company or the Surviving Corporation within the
last three (3) years. For purposes of this Agreement, each
individual who is entitled to indemnification pursuant to the
Company Governing Documents, the DGCL or the indemnification
agreements listed in
Section 6.7(a)
of the Company
Disclosure Schedule at or at any time prior to the Effective
Time shall be deemed to be a
Covered Person
.
(b) For a period of six (6) years after the Effective
Time, the respective certificates of incorporation and bylaws or
similar organizational or governing documents of the Surviving
Corporation and the Company Subsidiaries shall contain
provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of Covered Persons for
periods prior to and including the Effective Time than are
currently set forth in the Company Governing Documents and the
certificates of incorporation, bylaws, or similar organizational
and governing documents of the Company Subsidiaries. From and
after the Effective Time, Parent shall cause the Surviving
Corporation and the Company Subsidiaries to honor, in accordance
with their respective terms, the covenants contained in this
Section 6.7
.
(c) The Parent shall, or shall cause the Surviving
Corporation to, maintain and extend all existing officers
and directors liability insurance of the Company
(
D&O Insurance
) for a period of not less
than six (6) years after the Effective Time with respect to
claims arising in whole or in part from facts or events that
actually or allegedly occurred on or before the Effective Time,
including in connection with the approval of the Merger and the
adoption of this Agreement;
provided
,
however
,
that Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less
favorable to the Covered Persons than the existing D&O
Insurance (so long as such policies are provided by the
Companys current insurance carrier or by a carrier with a
rating no lower than A.M. Best rating of A); provided,
further, that if the existing D&O Insurance expires or is
terminated or cancelled during such period through no fault of
Parent or the Surviving Corporation, the Parent shall, or shall
cause the Surviving Corporation to, obtain and maintain
substantially similar D&O Insurance (with such replacement
policies to be provided by the Companys current insurance
carrier or by a carrier with a rating no lower than
A.M. Best rating of A); provided further, however, that in
no event shall Parent be required to pay aggregate premiums for
insurance under this
Section 6.7(c)
in excess of
300% of the aggregate premiums paid by the Company in 2009 for
such purpose (the
Base Premium
), the true and
correct amount of which is set forth in
Section 6.7(c)
of the Company Disclosure Schedule;
and provided, further, that if Parent or the Surviving
Corporation is unable to obtain the amount of insurance required
by this
Section 6.7(c)
for such aggregate premium,
Parent shall, or shall cause the Surviving Corporation to,
obtain as much insurance as can be obtained for aggregate
premiums not in excess of 300% of the Base Premium. At the
Companys option, it may elect to obtain prepaid
tail
or
runoff policies prior to
the Effective Time covering a period of six (6) years from
and after the Effective Time with respect to acts and omissions
occurring on or prior to the Effective Time; provided that the
premium therefor does not exceed 300% of the Base Premium. In
the event the Company purchases a tail
or
runoff policy prior to the Effective Time, Parent
and the Surviving Corporation shall maintain such tail or runoff
policy in full force and effect in lieu of all other obligations
of Parent and the Surviving Corporation in the first sentence of
this
Section 6.7(c)
for so long as any such tail or
runoff policy remains in full force and effect.
(d) The rights of each Covered Person hereunder shall be in
addition to, and not in limitation of, any other rights such
Covered Person may have under the certificates of incorporation
or bylaws or other organization or governing documents of the
Company or any of its Subsidiaries or the Surviving Corporation,
any other indemnification arrangement, the DGCL or otherwise.
Subsequent amendment of the certificates of incorporation,
bylaws or other organizational or governing documents of the
Company or any of its Subsidiaries or of the Surviving
Corporation shall not diminish or impair the rights of any
Covered Person.
(e) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties
and assets to any Person, then and in each such case, proper
provision shall be made so that such continuing or surviving
corporation or entity or transferee of such assets, as the case
may be, shall assume all of the applicable obligations set forth
in this
Section 6.7
. In addition, the Surviving
Corporation shall not distribute, sell, transfer or otherwise
dispose of any of its assets in a manner that would reasonably
be expected to render the Surviving Corporation unable to
satisfy its obligations under this
Section 6.7
.
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(f) The provisions of this
Section 6.7
shall
survive the consummation of the Merger. The Covered Persons (and
their successors and heirs) are intended third party
beneficiaries of this
Section 6.7
, and this
Section 6.7
shall not be amended in a manner that is
adverse to the Covered Persons (including their successors and
heirs) or terminated without the consent of the Covered Persons
(including their successors and heirs) affected thereby.
Section
6.8.
State
Takeover Laws
.
If any
control share
acquisition,
fair price
or other
anti-takeover Laws or regulations enacted under state or federal
Laws becomes or is deemed to become applicable to the Company,
the Merger or any other Transaction, then the Company, Parent,
Merger Sub, and the members of their respective boards of
directors shall take all action reasonably necessary and
appropriate to render such statute inapplicable to the foregoing.
Section
6.9.
Fees
and Expenses
.
(a) Except as otherwise provided in this
Section 6.9
, all fees and expenses incurred in
connection with this Agreement, the Merger and the other
Transactions shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) In the event that:
(i) this Agreement is terminated by Parent pursuant to
Section 8.1(c)
;
(ii) this Agreement is terminated by the Company pursuant
to
Section 8.1(d)
; or
(iii) (A) after the date of this Agreement and prior
to the Company Stockholder Approval, an Acquisition Proposal
shall have been (1) communicated directly to the Company
Stockholders generally, (2) communicated to senior
management of the Company or the Company Board of Directors and
senior management or the Company Board of Directors shall have
failed to keep such Acquisition Proposal confidential (including
the fact that such Acquisition Proposal was made, the terms
thereof and the identity of the Third Party making such
Acquisition Proposal), or (3) otherwise publicly disclosed,
(B) thereafter, this Agreement is terminated by Parent
pursuant to
Section 8.1(b)(ii)
or by Parent or the
Company pursuant to
Section 8.1(b)(iii)
or
Section 8.1(b)(iv)
, and (C) within
180 days after the date of any such termination, the
Company enters into a definitive agreement relating to a
transaction contemplated by any Acquisition Proposal or any
transaction contemplated by any Acquisition Proposal is
consummated (provided, that for purposes of this
Section 6.9(b)(iii)
, the references to
25%
or more
in the definition of Acquisition Proposal
shall be deemed to be references to
more than
50%
then the Company shall pay Parent the Company Termination Fee by
wire transfer of
same-day
funds (i) in the case of the foregoing
Section 6.9(b)(i)
, within four (4) business
days after such termination, (ii) in the case of the
foregoing
Section 6.9(b)(ii)
, concurrently with, and
as a condition precedent to, the termination of this Agreement
pursuant to
Section 8.1(d)
, and (iii) in the
case of the foregoing
Section 6.9(b)(iii)
, within
two (2) business days after the earlier of
(x) execution of such definitive agreement and
(y) consummation of any such Acquisition Proposal described
in Section 6.9(b)(iii)(C); it being understood that in no
event shall the Company be required to pay the Company
Termination Fee on more than one (1) occasion.
Notwithstanding the foregoing, in the event that this Agreement
is terminated by the Company pursuant to
Section 8.1(d)
in order to enter into (I) prior
to the Go-Shop Period Termination Date, a definitive agreement
with respect to an Acquisition Proposal or (II) prior to
the Effective Time, a definitive agreement with respect to an
Acquisition Proposal with an Excluded Party, in either case, the
Company Termination Fee shall mean a cash amount equal to
$24,100,000 (the
Go-Shop Company Termination
Fee
). In the event that Parent shall receive full
payment pursuant to this
Section 6.9(b)
, subject to
the proviso at the end of
Section 8.2
, the receipt
of the Company Termination Fee or the Go-Shop Company
Termination Fee, as applicable, shall be deemed to be liquidated
damages for any and all losses or damages suffered or incurred
by Parent, Merger Sub, any of their respective affiliates or any
other Person in connection with this Agreement (and the
termination hereof), the Transactions (and the abandonment
thereof) or any matter forming the basis for such termination,
and none of Parent, Merger Sub, any of their respective
affiliates or any other Person shall be entitled to bring or
maintain any claim, action or proceeding against the Company or
any of its affiliates for damages or any equitable
A-35
relief arising out of or in connection with this Agreement, any
of the Transactions or any matters forming the basis for such
termination.
(c) For the avoidance of doubt, any payment made by the
Company under this
Section 6.9
shall be payable only
once with respect to this
Section 6.9
and not in
duplication even though such payment may be payable under one or
more provisions hereof.
Section
6.10.
Section 16
of the Exchange Act
.
Prior to the Effective
Time, the Company Board of Directors, or an appropriate
committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC
so that the disposition by any officer or director of the
Company who is a covered person of the Company for purposes of
Section 16 of the Exchange Act
(
Section 16
) of Common Stock, Company
Stock Rights (or Common Stock issued upon exercise or vesting of
the same), or Restricted Stock shall be an exempt transaction
for purposes of Section 16.
Section
6.11.
Stockholder
Litigation
.
The Company shall give Parent the
opportunity to participate in the defense or settlement of any
stockholder litigation against the Company
and/or
its
officers or directors relating to the Transactions.
Section
6.12.
Financing
.
(a) Each of Parent and Merger Sub shall take, or cause to
be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and obtain the
Financing on the terms and conditions described in the
Commitment Letter, including to (A) maintain in effect the
Commitment Letter, (B) satisfy on a timely basis all
conditions applicable to Parent and Merger Sub to obtaining the
Financing, (C) negotiate definitive agreements with respect
thereto on the terms and conditions contained in the Commitment
Letter (including any
flex
provisions),
(D) consummate the Financing at or prior to the Closing
Date, and (E) enforce their rights under the Commitment
Letter in the event of a breach by the Financing Sources of
their obligations under the Commitment Letter. In the event that
all the conditions to the Financing have been satisfied or
waived, each of Parent and Merger Sub shall cause the Financing
Sources to fund the Financing required to consummate the
Transactions at the Closing Date. Parent and Merger Sub shall
not permit any material amendment or modification to be made to,
or any waiver of any material provision or remedy under, the
Commitment Letter or the fee letter referred to in the
Commitment Letter without the prior written consent of the
Company (such consent not to be unreasonably withheld, delayed
or conditioned).
(b) In the event any portion of the Financing becomes
unavailable on the terms and conditions described in or
contemplated by the Commitment Letter for any reason and such
portion is reasonably required to fund the Required Amounts,
each of Parent and Merger Sub shall arrange to obtain, as
promptly as practicable following the occurrence of such event
but by no later than seven (7) business days prior to the
Outside Date, alternative financing from alternative sources
(the
Alternative Financing
) in an amount
sufficient to pay the Required Amounts. In the event that
Alternative Financing shall be obtained pursuant to this
Section 6.12(b)
, each of Parent and Merger Sub shall
comply with its covenants in
Section 6.12(a)
with
respect to such Alternative Financing.
(c) The Company shall, and shall cause its Subsidiaries to,
and shall use its reasonable best efforts to cause each of its
and their respective Representatives, including legal, tax,
regulatory and accounting, to, use its reasonable best efforts
to provide all cooperation reasonably requested by Parent
and/or
the
Financing Sources in connection with the Financing (provided
that such requested cooperation does not unreasonably interfere
with the ongoing operations of the Company and the Company
Subsidiaries), including (i) providing information relating
to the Company and its Subsidiaries to Parent and the Financing
Sources to be used in the preparation of an information package
regarding the business, operations, financial projections and
prospects of Parent, the Company and their respective
Subsidiaries customary for such financing or reasonably
necessary for the completion of the Financing by the Financing
Sources, to the extent reasonably requested by Parent to assist
Parent in preparation of customary offering or information
documents to be used for the completion of the Financing as
contemplated by the Commitment Letter (as adjusted by the agreed
marketing terms, if any) or the definitive financing agreements,
(ii) participating in a reasonable number of meetings
(including customary
one-on-one
meetings with the parties acting as lead arrangers for the
Financing and senior
A-36
management and Representatives, with appropriate seniority and
expertise, of the Company), presentations, road shows, drafting
sessions, due diligence sessions (including accounting due
diligence sessions) and sessions with the rating agencies, in
each case as are reasonably necessary for the completion of the
Financing by the Financing Sources, (iii) assisting in
Parents preparation of documents and materials, including
(A) any customary offering documents and bank information
memoranda (including public and private versions thereof) for
the Financing, and (B) materials for rating agency
presentations, in each case as are reasonably necessary for the
completion of the Financing by the Financing Sources,
(iv) cooperating with Parents marketing efforts for
the Financing (including consenting to the use of the
Companys and its Subsidiaries logos; provided that
such logos are used solely in a manner that is not intended to
or reasonably likely to harm or disparage the Company or its
Subsidiaries or the reputation or goodwill of the Company or any
of its Subsidiaries as reasonably determined by the Company),
(v) provide reasonable assistance in the preparation of and
executing and delivering (or using reasonable best efforts to
obtain from its advisors), and causing its Subsidiaries to
execute and deliver (or use reasonable best efforts to obtain
from their advisors), customary certificates (including a
certificate of the principal financial officer of the Company or
any Subsidiary with respect to solvency of the Company and the
Company Subsidiaries immediately before giving effect to the
Merger in substantially the same form as attached to the
Commitment Letter), other documents and instruments relating to
guarantees and other matters ancillary to the Financing as may
be reasonably requested by Parent as necessary and customary in
connection with the Financing, (vi) provide reasonable
assistance in connection with Parents preparation of and
entering into one or more credit agreements, currency or
interest hedging agreements, or other agreements; provided that
no obligation of the Company or any of its Subsidiaries under
any such agreements or amendments shall be effective until the
Effective Time, (vii) as promptly as practicable,
furnishing Parent and the Financing Sources with financial and
other information regarding the Company and its Subsidiaries as
may be reasonably requested by Parent
and/or
the
Financing Sources to assist in preparation of customary offering
or information documents to be used for the completion of the
Financing as contemplated by the Commitment Letter or the
definitive financing agreements, (viii) using its
reasonable best efforts, as appropriate, to have its independent
accountants provide their reasonable cooperation and assistance,
including participation in due diligence sessions,
(ix) using its reasonable best efforts to permit any cash
and cash equivalents of the Company and its Subsidiaries to be
made available to Parent
and/or
Merger Sub at the Effective Time, (x) providing
authorization letters to the Financing Sources authorizing the
distribution of information to prospective Financing Sources and
containing, if true, a representation to the Financing Sources
that the public side versions of such documents, if any, do not
include material non-public information about the Company or its
affiliates or securities, (xi) using its reasonable best
efforts to ensure that the Financing Sources benefit materially
from the existing lending and banking relationships of the
Company and its Subsidiaries and that the Financing Sources have
the benefit of clear market provisions in the
Commitment Letter relating to the Company and its Subsidiaries,
and (xii) cooperating reasonably with Parents
Financing Sources due diligence and with their efforts to
obtain guarantees from the Company and its Subsidiaries and
obtain and perfect security interests in the assets of the
Company and its Subsidiaries intended to constitute collateral
securing such financing, with such cooperation occurring prior
to or simultaneously with the Closing, but the execution of any
guarantees or security arrangements not taking effect until the
Effective Time, in each case, to the extent customary and
reasonable; provided that in no event shall the Company or any
of its Subsidiaries be required to take any actions that would
encumber any of its assets prior to the consummation of the
Merger or that would result in a breach of any Company Material
Contract or Material Company Lease prior to the consummation of
the Merger; and provided, further, until the Effective Time
occurs, neither the Company nor any of its Subsidiaries shall
(A) be required to pay any commitment or other similar fee
relating to the Financing or (B) prior to the Effective
Time have any liability or any obligation under any credit
agreement or any related document or any other agreement or
document related to the Financing (or Alternative Financing that
Parent may raise in connection with the Transactions), other
than this Agreement;
provided
, further, that (I) all
non-public or other confidential information provided by the
Company or any of its Representatives pursuant to this
Section 6.12
shall be kept confidential in
accordance with the Confidentiality Agreement, except that
Parent and Merger Sub shall be permitted to disclose such
information in accordance with the Commitment Letter, and
(II) the Company shall be permitted a reasonable period to
comment on those portions of the confidential information
memoranda circulated to potential financing sources that contain
or are based upon any such non-public or other confidential
A-37
information. Parent acknowledges and agrees that the Company and
the Company Subsidiaries shall not incur any liability to any
Person prior to the Effective Time in connection with any
Financing (or Alternative Financing). The effectiveness of any
documentation executed by the Company or any Company Subsidiary
shall in all cases be subject to the occurrence of the Effective
Time. Parent shall promptly, upon request by the Company,
reimburse the Company for all
out-of-pocket
costs (including reasonable attorneys fees) incurred by
the Company or any of the Company Subsidiaries in connection
with the cooperation of the Company and the Company Subsidiaries
contemplated by this
Section 6.12(c)
and Parent and
Merger Sub shall jointly and severally indemnify and hold
harmless the Company, the Company Subsidiaries and their
respective directors, officers and Representatives from and
against any and all liabilities, losses, damages, claims, costs,
expenses, interest, awards, judgments, and penalties suffered or
incurred by any of them in connection with the arrangement of
the Financing (or any Alternative Financing) and any information
used in connection therewith. The foregoing indemnification
obligation shall survive the Closing and any termination of this
Agreement.
(d) In the event that the Commitment Letter is amended,
replaced, supplemented or otherwise modified in accordance with
Section 6.12(a)
, including as a result of obtaining
Alternative Financing, or if Parent substitutes Alternative
Financing for all or a portion of the Financing as permitted by
Section 6.12(b)
, each of the Company, Parent and
Merger Sub shall comply with its covenants in this
Section 6.12
with respect to the Commitment Letter
as so amended, replaced, supplemented or otherwise modified and
with respect to such Alternative Financing to the same extent
that the Company, Parent and Merger Sub would have been
obligated to comply with respect to the Financing.
(e) Parent shall give the Company prompt written notice of
any material breach by any party to, or any condition not likely
to be satisfied in, the Commitment Letter (or any Alternative
Financing obtained in accordance with this
Section 6.12
) of which Parent becomes aware or any
termination (or threat of termination) of the Commitment Letter
(or commitments for Alternative Financing obtained in accordance
with this
Section 6.12
). Parent shall keep the
Company informed on a reasonably current basis in reasonable
detail of the status of its efforts to arrange and consummate
the Financing (or Alternative Financing). In the event that the
Commitment Letter is amended, replaced, supplemented or modified
in accordance with this
Section 6.12
or Alternative
Financing is obtained in accordance with this
Section 6.12
, Parent shall promptly notify the
Company thereof and promptly provide the Company with copies of
any definitive agreements related thereto. Parent and Merger Sub
acknowledge that obtaining the Financing or any Alternative
Financing is not a condition precedent to Parents and
Merger Subs obligations under this Agreement, including
Parents and Merger Subs obligations pursuant to
Article I
and
Article II
.
Section
6.13.
Rights
Agreement
.
The Company Board of Directors
shall take all further actions (in addition to those referred to
in
Section 3.26
) reasonably requested by Parent in
order to render the Company Rights inapplicable to this
Agreement and the Transactions, including the Merger.
Section
6.14.
Cooperation
Regarding Pending Investigations and Corporate Integrity
Agreement
.
From the date hereof until the
earlier of the valid termination of this Agreement in accordance
with Section 8.1 and the Effective Time, the Company shall
provide or make available to Parent, as promptly as practicable,
copies of any filings, notices, communications or other
documents sent to or received from the Investigating Entities
with respect to the Pending Investigations or to any
Governmental Authority with respect to compliance with the
Corporate Integrity Agreement. Notwithstanding the foregoing or
anything else in this Agreement to the contrary, the Company
shall not take any action, or make any disclosure to Parent or
any other Person, that, in the opinion of Companys
counsel, could jeopardize the protection of the attorney client
and work product privileges.
Section
6.15.
Employee
Matters
.
(a) Parent shall ensure that, as of the Closing Date, each
employee of the Company who is employed by the Parent or one of
its subsidiaries after the Effective Time (each such person, a
Continuing Employee
) receives full credit
(for all purposes, including eligibility to participate,
vesting, vacation entitlement and severance benefits, but
excluding benefit accrual under any defined benefit plan) for
service with the Company or any of its Subsidiaries (or
predecessor service credit under its employee benefit plans)
under each of the comparable employee benefit plans, programs
and policies of Parent, the Surviving Corporation or the
relevant
A-38
Subsidiary, as applicable, in which such Continuing Employee
becomes or may become a participant;
provided
,
however
, that no such service recognition shall result in
any duplication of benefits. As of the Closing Date, Parent
shall, or shall cause the Surviving Corporation or relevant
Subsidiary to, credit to Continuing Employees the amount of
vacation time that such employees had accrued under any
applicable Benefit Plan as of the Closing Date. With respect to
each health or welfare benefit plan maintained by Parent, the
Surviving Corporation or the relevant Subsidiary for the benefit
of any Continuing Employees, Parent shall (i) cause to be
waived any eligibility waiting periods, any evidence of
insurability requirements and the application of any
pre-existing condition limitations under such plan; and
(ii) cause each Continuing Employee to be given credit
under such plan for all amounts paid by such Continuing Employee
under any similar Benefit Plan for the plan year that includes
the Closing Date for purposes of applying deductibles,
co-payments and
out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the applicable plan maintained by
Parent, the Surviving Corporation or the relevant Subsidiary, as
applicable, for the plan year in which the Closing Date occurs.
Effective as of the Closing Date, Parent shall assume all
employment-related claims, liabilities and obligations with
respect to each of the Continuing Employees, whether known or
unknown, and any other claims, liabilities or obligations
arising out of the employment of or termination of employment of
any of the Continuing Employees, in each case, whether or not
such claims, liabilities
and/or
obligations are related to periods before, on or after the
Closing Date. On and after the Closing Date, the Parent and its
affiliates shall retain and indemnify, defend and hold harmless
the Company and its Subsidiaries and their employees and former
employees against any and all claims, liabilities
and/or
obligations assumed by the Parent or its affiliates pursuant to
this
Section 6.15
.
(b) Nothing contained in this Agreement (including this
Section 6.15
) shall (i) amend, or be deemed to
amend, any Benefit Plan, (ii) provide any Person not a
party to this Agreement with any right, benefit or remedy with
regard to any Benefit Plan or a right to enforce any provision
of this Agreement, or (iii) limit in any way the Surviving
Corporations ability to amend or terminate any Benefit
Plan at any time, subject to applicable Laws.
Section
6.16.
Termination
of Credit Agreement
.
On or prior to the
second business day prior to the Closing Date, the Company shall
use its reasonable best efforts to deliver to Parent copies of
payoff letters (subject to delivery of funds as arranged by
Parent and Merger Sub), in reasonable form, from the
administration agents under the Credit Agreement and shall use
its commercially reasonable efforts to make arrangements for the
release of all mortgages, liens and other security over the
Companys and the Company Subsidiaries properties and
assets securing such obligations (subject to delivery of funds
as arranged by Parent and Merger Sub, if necessary).
ARTICLE VII
CONDITIONS
Section
7.1.
Conditions
to Each Partys Obligations to Effect the
Merger
.
The respective obligations of each
party to effect the Merger shall be subject to the satisfaction
on or prior to the Effective Time of each of the following
conditions, any and all of which may be waived in whole or in
part by Parent, Merger Sub and the Company, as the case may be,
to the extent permitted by applicable Laws:
(a)
Stockholder Approval
.
The
Company Stockholder Approval shall have been obtained;
(b)
Statutes; Court Orders
.
No
Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law or
Order that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Merger or the other
Transactions; and
(c)
HSR Approval
.
The waiting
period (and any extension thereof) applicable to the Merger
under the HSR Act shall have been terminated or shall have
expired, and no restrictive order or other requirements shall
have been placed on the Company, Parent, Merger Sub or the
Surviving Corporation in connection therewith.
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Section
7.2.
Conditions
to the Obligations of Parent and Merger
Sub
.
The obligations of Parent and Merger Sub
to effect the Merger shall be subject to the satisfaction on or
prior to the Effective Time of each of the following conditions,
any and all of which may be waived in whole or in part by Parent
and Merger Sub to the extent permitted by applicable Laws:
(a)
Representations and
Warranties
.
The representations and
warranties of the Company set forth in this Agreement shall be
true and correct at and as of the date hereof and at and as of
the Effective Time as if made at and as of the Effective Time
(except to the extent that any such representation and warranty
expressly speaks as of an earlier date, in which case such
representation and warranty shall be true and correct only as of
such earlier date) except where the failure of such
representations and warranties to be so true and correct
(without giving effect to any qualification as to materiality or
Company Material Adverse Effect set forth therein) would not,
individually or in the aggregate, have a Company Material
Adverse Effect;
provided
,
however
, that
notwithstanding anything herein to the contrary, (i) the
representations and warranties of the Company contained in
Section 3.2
(Capitalization) (subject to
de minimus exceptions involving discrepancies of no more
than 20,000 shares of Common Stock or Company Options
covering in the aggregate no more than 20,000 shares of
Common Stock), shall be true and correct in all respects at and
as of the date hereof and at and as of the Effective Time as if
made at and as of the Effective Time (except to the extent that
any such representation and warranty expressly speaks as of an
earlier date, in which case such representation and warranty
shall be true and correct only as of such earlier date) and
(ii) the representations and warranties of the Company
contained in
Section 3.3
(Authorization; Validity of
Agreement; Company Action) and
Section 3.22
(Opinion
of Financial Advisor) shall be true and correct in all material
respects at and as of the date hereof and at and as of the
Effective Time as if made at and as of the Effective Time.
(b)
Performance of Obligations of the
Company
.
The Company shall have performed in
all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time.
(c)
No Material Adverse
Effect
.
Since the date of this Agreement,
there shall not have occurred or been discovered, and be
continuing, any event, circumstance, change or effect that has
had, or is reasonably likely to have, a Company Material Adverse
Effect; and
(d)
Company Closing
Certificate
.
Parent shall have received at
the Closing a certificate signed on behalf of the Company by the
Chief Executive Officer or the Chief Financial Officer of the
Company certifying that the conditions set forth in
Section 7.2(a)
and
Section 7.2(b)
have
been satisfied.
Section
7.3.
Conditions
to the Obligations of the Company
.
The
obligations of the Company to effect the Merger shall be subject
to the satisfaction on or prior to the Effective Time of each of
the following conditions, any and all of which may be waived in
whole or in part by the Company to the extent permitted by
applicable Laws:
(a)
Representations and
Warranties
.
The representations and
warranties of Parent and Merger Sub set forth in this Agreement
that are qualified by materiality shall be true and correct at
and as of the date hereof and at and as of the Effective Time as
if made at and as of the Effective Time (except to the extent
that any such representation and warranty expressly speaks as of
an earlier date, in which case such representation and warranty
shall be true and correct as of such earlier date) and
(ii) the representations and warranties of Parent and
Merger Sub set forth in this Agreement that are not qualified by
materiality shall be true and correct in all material respects
at and as of the date hereof and at and as of the Effective Time
as if made at and as of the Effective Time (except to the extent
that any such representation and warranty expressly speaks as of
an earlier date, in which case such representation and warranty
shall be true and correct only as of such earlier date);
provided
,
however
, that notwithstanding anything
herein to the contrary, the representations and warranties of
Parent and Merger Sub contained in
Section 4.2
(Authorization) and
Section 4.7
(Capitalization and
Operation of Merger Sub) shall be true and correct in all
respects at and as of the date hereof and at and as of the
Effective Time as if made at and as of the Effective Time.
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(b)
Performance of Obligations of Parent and Merger
Sub
.
Each of Parent and Merger Sub shall have
performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the
Effective Time; and
(c)
Parent and Merger Sub Closing
Certificate
.
The Company shall have received
at the Closing a certificate signed on behalf of each of Parent
and Merger Sub by its respective Chief Executive Officer or the
Chief Financial Officer certifying that the conditions set forth
in
Section 7.3(a)
and
Section 7.3(b)
have been satisfied.
ARTICLE VIII
TERMINATION
Section
8.1.
Termination
.
This
Agreement may be terminated and the Transactions may be
abandoned at any time before the Effective Time (in all cases by
action of the respective board of directors of the terminating
party or parties), whether before or after the Company
Stockholder Approval:
(a) By mutual written consent of Parent and the
Company; or
(b) By either Parent or the Company:
(i) if a court of competent jurisdiction or other
Governmental Authority shall have issued a final, non-appealable
order, decree or ruling or taken any other action (which order,
decree, judgment, injunction or other action the terminating
party shall have used its reasonable best efforts to lift or
avoid), in each case permanently restraining, enjoining or
otherwise prohibiting any of the Transactions;
(ii) if, prior to the Effective Time, there has been a
material breach by the other party of any representation,
warranty, covenant or agreement set forth in this Agreement,
which breach (A) in the case of a breach by the Company,
would give rise to the failure of any conditions set forth in
Section 7.1
or
Section 7.2
and is
incapable of being cured or, if capable of being cured, is not
cured prior to the earlier of (x) one (1) business day
prior to the Outside Date or (y) the date that is thirty
(30) days from the date that the Company is notified by
Parent of such breach; and (B) in the case of a breach by
Parent or Merger Sub, would prevent Parent or Merger Subs
ability to consummate the Merger or give rise to the failure of
any conditions set forth in
Section 7.1
or
Section 7.3
and is incapable of being cured or, if
capable of being cured, is not cured prior to the earlier of
(x) one (1) business day prior to the Outside Date or
(y) the date that is thirty (30) days from the date
that Parent is notified by Company of such breach (no prior
notice of breach shall be required with respect to a breach of
any covenants or agreements to be performed on the Closing
Date);
provided
,
however
, that (1) the right
to terminate this Agreement pursuant to this clause (ii)
shall not be available to any party who is then in material
breach of any of its (including, in the case of Parent, any
breach by Merger Sub) representations, warranties, covenants or
agreements set forth in this Agreement and (2) the right to
terminate this Agreement pursuant to this clause (ii) shall
not be available to Parent during the pendency of a Legal
Proceeding by the Company for specific performance of this
Agreement;
(iii) if the Closing Date has not occurred by the Outside
Date;
provided
,
however
, that the right to
terminate this Agreement pursuant to this clause (iii)
shall not be available to any party whose failure to fulfill any
obligation or whose breach of any representation, warranty, or
covenant under this Agreement has been the primary cause of, or
primarily resulted in, the failure of the Closing Date to have
occurred by the Outside Date (including, in the case of Parent,
any breach by Merger Sub);
(iv) the Company Stockholder Approval is not obtained at
the Special Meeting; or
(c) By Parent, at any time prior to Company Stockholder
Approval, if (i) the Company Board of Directors or any
committee thereof shall have made a Company Change in
Recommendation, (ii) (A) the
A-41
Company Board of Directors publicly approves, endorses or
recommends to the Company Stockholders an Acquisition Proposal,
(B) the Company enters into a contract or agreement
relating to an Acquisition Proposal (other than a
confidentiality agreement or standstill agreement entered into
in compliance with
Section 5.2
), (iii) a tender
offer or exchange offer that constitutes an Acquisition Proposal
(other than by the Parent or its affiliates) is commenced prior
to obtaining the Company Stockholder Approval and the Company
Board of Directors fails to recommend against acceptance of such
tender offer or exchange offer by the Company Stockholders
(including, for these purposes, by taking no position or a
neutral position with respect to the acceptance of such tender
offer or exchange offer by the Company Stockholders, which shall
constitute a failure to recommend against acceptance of such
tender offer or exchange offer) within ten (10) business
days after commencement, (iv) the Company Board of
Directors fails to reaffirm the Company Recommendation within
ten (10) business days after a request to so reaffirm by
Parent or (v) the Company or the Company Board of Directors
publicly announces its intention to do any of the
foregoing; or
(d) by the Company prior to the Company Stockholder
Approval in order to accept a Superior Proposal, provided that
such termination shall not be effective (i) until Parent
has received the Company Termination Fee or the Go-Shop Company
Termination Fee, as applicable, pursuant to
Section 6.9
and (ii) unless the Company has
complied in all material respects with its obligations under
Section 5.2
and
Section 5.3
; or
Section
8.2.
Effect
of Termination
.
In the event of termination
of this Agreement by any party hereto as provided in
Section 8.1
, written notice thereof shall forthwith
be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of any party hereto except
with respect to this
Section 8.2
,
Section 6.4(c)
,
Section 6.9
,
Section 6.12(c)
(solely with respect to the last two
sentences of such
Section 6.12(c)
) and
Section 9.3
through
Section 9.14
, which
provisions shall survive such termination;
provided
,
however
, that notwithstanding anything to the contrary
herein, no such termination shall relieve any party from
liability for any damages (including (i) in the case (and
for the benefit) of the Company, damages based on the
consideration that would have otherwise been payable to the
Company Stockholders if the Transactions were consummated and
(ii) in the case (and for the benefit) of Parent, damages
based on the operating and financial synergies and other
economic benefits that would have otherwise accrued to Parent if
the Transactions were consummated), in the case of each of the
foregoing clauses (i) and (ii), for a knowing or
intentional material breach of a representation or warranty or a
knowing or intentional material breach of any obligation
hereunder made or allowed to occur or fraud. Parent and Merger
Sub acknowledge that the failure of Parent and Merger Sub to
consummate the Merger on the date required by
Section 1.3
after the conditions set forth in
Article VII
(other than those conditions that by
their nature are to be satisfied at the Closing and which are
capable of being satisfied on the Closing Date, assuming for
purposes hereof that the date of termination is the Closing
Date) have been satisfied or waived shall constitute a knowing
and intentional material breach by Parent and Merger Sub.
ARTICLE IX
MISCELLANEOUS
Section
9.1.
Amendment
and Modification
.
At any time prior to the
Effective Time, any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company,
Parent and Merger Sub, or in the case of a waiver, by the party
against whom the waiver is to be effective;
provided
,
however
, that after the adoption of this Agreement by the
Company Stockholders, if any such amendment or waiver shall by
applicable Laws or in accordance with the Nasdaq Marketplace
Rules require further approval of the Company Stockholders, the
effectiveness of such amendment or waiver shall be subject to
the approval of the Company Stockholders. Notwithstanding the
foregoing, no failure or delay by the Company or Parent in
exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right hereunder.
A-42
Section
9.2.
Non-survival
of Representations and Warranties
.
None of
the representations and warranties in this Agreement or in any
schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Effective Time. This
Section 9.2
shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time.
Section
9.3.
Expenses
.
Except
as expressly set forth in
Section 6.9
or elsewhere
in this Agreement, all fees, costs and expenses incurred in
connection with this Agreement and the Merger shall be paid by
the party incurring such fees, costs and expenses.
Section
9.4.
Notices
.
All
notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally (notice deemed
given upon receipt), telecopied (notice deemed given upon
confirmation of receipt) or sent by a nationally recognized
overnight courier service, such as United Parcel Service (notice
deemed given upon receipt of proof of delivery), to the parties
at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Gentiva Health Services, Inc.
3350 Riverwood Parkway, Suite 1400
Atlanta, Georgia 30339
Attn: John Camperlengo
Telephone:
(631) 501-7214
Facsimile:
(913) 814-4066
with a copy (which shall not constitute notice) to:
Greenberg Traurig, LLP
3290 Northside Parkway
Suite 400
Atlanta, Georgia 30327
Attn: Gary E. Snyder
Telephone:
(678) 553-2121
Facsimile:
(678) 553-2120
and
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Ira N. Rosner
Telephone:
(305) 579-0844
Facsimile:
(305) 961-5844
(b) if to the Company, to:
Odyssey HealthCare, Inc.
717 North Harwood Street, Suite 1500
Dallas, Texas 75201
Attn: W. Bradley Bickham
Telephone:
(214) 245-3176
Facsimile:
(214) 245-3336
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with a copy (which shall not constitute notice) to:
K&L Gates LLP
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attention: P. Gregory Hidalgo and Soren Lindstrom
Telephone:
(214) 939-5500
Facsimile:
(214) 939-5849
Section
9.5.
Certain
Definitions
.
For the purposes of this
Agreement, the term:
Acceptable Confidentiality Agreement
means a customary confidentiality agreement containing terms not
materially less restrictive in the aggregate than the terms of
the Confidentiality Agreement; provided, that such
confidentiality agreement may contain provisions that permit the
Company to comply with the provisions of
Article V
;
provided further, that an Acceptable Confidentiality Agreement
must include standstill provisions that are no less restrictive
in the aggregate than the standstill terms of the
Confidentiality Agreement unless the Company offers to amend the
Confidentiality Agreement concurrently with the execution of
such Acceptable Confidentiality Agreement to include
substantially similar provisions for the benefit of the parties
thereto. Notwithstanding the foregoing, a Person who has
previously entered into a confidentiality agreement with the
Company relating to a purchase of, or business combination with,
the Company shall not be required to enter into a new or revised
confidentiality agreement, and such existing confidentiality
agreement shall be deemed to be an Acceptable Confidentiality
Agreement.
Acquisition Proposal
means any inquiry
(in writing or otherwise), proposal, indication of interest or
offer by any Third Party that relates to (i) the direct or
indirect acquisition or purchase (whether in a single
transaction or a series of related transactions) of assets of
the Company and its Subsidiaries (including securities of
Company Subsidiaries) equal to 25% or more of the Companys
consolidated assets or to which 25% or more of the
Companys consolidated net patient service revenue are
attributable, (ii) the direct or indirect acquisition
(whether in a single transaction or a series of related
transactions and whether from the Company, any Company
Subsidiary or any Company Stockholder) of 25% or more of the
Company Common Stock (or securities or instruments convertible
into or exercisable or exchangeable for such securities),
(iii) a tender offer or exchange offer that if consummated
would result in any Third Party beneficially owning 25% or more
of the Company Common Stock, or (iv) a merger,
consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries
that, if consummated, would have the effect set forth in either
the foregoing clause (i) or clause (ii), in each case,
other than the Transactions.
business days
means any day, other
than Saturday, Sunday or a United States federal holiday, and
shall consist of the time period from 12:01 a.m. through
12:00 midnight New York City time.
Company Agreements
means any note,
bond, mortgage, lien, indenture, lease, license, contract,
understanding or agreement, whether oral or written, or other
instrument or obligation to which the Company or any Company
Subsidiary is a party or by which any of them or any of their
respective properties or assets is bound.
Clinical Contracts
means any contract
(other than a Medical Director Contract) with a hospital,
nursing home, assisted living facility, consulting physician,
therapist, staffing company or hospice provider for the
provision of Hospice Services.
Company Bylaws
means the Second
Amended and Restated Bylaws of the Company, as amended to the
date hereof.
Company Certificate of Incorporation
means the Fifth Amended and Restated Certificate of
Incorporation of the Company, as amended to the date hereof.
A-44
Company Governing Documents
means the
Company Certificate of Incorporation and the Company Bylaws.
Company Material Adverse Effect
means
any event, circumstance, change or effect that, individually or
in the aggregate, (i) is materially adverse to the
business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, or
(ii) would prevent or materially impair the ability of the
Company to consummate the Transactions or otherwise prevent the
Company from performing its obligations under this Agreement;
provided
,
however
, that in no event shall any of
the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in
determining whether there has been or would reasonably be
expected to be, a Company Material Adverse Effect (except, in
the case of clauses (A)(1), (A)(2), (A)(3) or (A)(4) below, to
the extent any of the matters referred to therein has had or
would reasonably be expected to have a disproportionately
adverse effect on the Company and the Company Subsidiaries,
taken as a whole, as compared to other for-profit and comparable
or similar companies operating in the industries in which the
Company and the Company Subsidiaries operate, after taking into
account the size of the Company relative to such other
for-profit companies): (A) any event, circumstance, change
or effect resulting from or relating to (1) a change in
general economic, political or financial market conditions,
including interest or exchange rates, (2) a change
generally affecting the industries in which the Company and the
Company Subsidiaries operate (including seasonal fluctuations)
or general economic conditions that generally affect the
industries in which the Company and the Company Subsidiaries
operate, (3) any change in accounting requirements or
principles required by GAAP (or any interpretations thereof) or
required by any change in applicable Laws (or any
interpretations thereof), (4) any adoption, implementation,
promulgation, repeal, modification, reinterpretation or proposal
of any Law after the date hereof, (5) any Action,
investigation review or examination undertaken by a Governmental
Authority, or any sanction, fine, operating restriction or other
similar penalty arising as a result thereof, with respect to the
healthcare business operated by the Company and the Company
Subsidiaries or Hospice (a
Regulatory
Condition
), that is currently pending or arises after
the date of this Agreement, in each case to the extent such
Regulatory Condition is consistent in nature, scope and impact
on the Company and the Company Subsidiaries, taken as a whole,
with Regulatory Conditions arising and fully resolved from time
to time in the conduct of the business of the Company and the
Company Subsidiaries on or before December 31, 2009,
(6) any acts of terrorism or war or any weather-related
event, fire or natural disaster or any escalation thereof,
(7) the announcement of the execution of this Agreement or
the pendency or consummation of the Transactions, including any
Actions, challenges or investigations to the extent relating to
this Agreement or the Transactions made or brought by any of the
current or former stockholders of the Company (on their own
behalf or on behalf of the Company), (8) the identity of
Parent or any of its affiliates as the acquiror of the Company
or any facts or circumstances concerning Parent or any of its
affiliates, or (9) compliance with the terms of, the taking
of any action required or the failure to take any action
prohibited by, this Agreement or the taking of any action
consented to or requested by Parent or (B) any failure by
the Company to meet internal or published projections,
forecasts, performance measures, operating statistics or revenue
or earnings predictions for any period or a decline in the price
or trading volume of the Company Common Stock (provided that,
except as otherwise provided in this definition, the underlying
causes of such failure or decline may be taken into account in
determining whether there is a Company Material Adverse Effect).
Company Property
means any real
property and improvements while owned, leased or operated by the
Company or any of the Company Subsidiaries.
Company Stock Plans
mean collectively
(i) the Company Stock Option Plan, as amended,
(ii) the Companys 2001 Equity-Based Compensation
Plan, as amended, and (iii) the Company Employee Stock
Purchase Plan, as amended.
Company Subsidiary
means each Person
which is a direct or indirect Subsidiary of the Company.
Company Termination Fee
means an
amount equal to $28,900,000.
A-45
Confidentiality Agreement
means the
Confidentiality Agreement, dated April 20, 2010, between
Parent and the Company.
Corporate Integrity Agreement
means
the Corporate Integrity Agreement, dated July 6, 2006,
between the Office of Inspector General of the Department of
Health and Human Services and the Company.
Credit Agreement
means the Second
Amended and Restated Credit Agreement, dated February 28,
2008, by and among General Electric Capital Corporation, Odyssey
HealthCare Operating A, LP, Odyssey HealthCare Operating B, LP,
Hospice of the Palm Coast, Inc., OHC Investment Inc., and the
other parties thereto, as amended.
Designated SEC Reports
means the
Annual Reports on
Form 10-K
filed by the Company for the fiscal years ended
December 31, 2009 and December 31, 2008, the Quarterly
Report on
Form 10-Q
filed by the Company for the quarterly period ended
March 31, 2010, and each Current Report on
Form 8-K
filed by the Company after December 31, 2009 and prior to
the date hereof.
Environmental Claims
means any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, Liens, notices of noncompliance or
violation, investigations or proceedings under any Environmental
Law or any permit issued under any such Environmental Law,
including (A) any and all Environmental Claims by
Governmental Authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (B) any and all
Environmental Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials.
Environmental Law
means any Laws and
any judicial or administrative interpretation thereof binding on
the Company or its operations or property as of the date hereof
and Closing Date, including any judicial or administrative
order, consent decree or judgment, relating to the environment
or Hazardous Materials, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. sec. 9601 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. sec.
6901 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. sec. 1251 et seq.; the Toxic Substances
Control Act, 15 U.S.C. sec. 2601 et seq.; the Clean Air
Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of
1990, 33 U.S.C. sec. 2701 et seq.; the Safe Drinking Water
Act, 42 U.S.C. sec. 300f et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. sec. 1801 et seq.; the
Occupational Safety and Health Act of 1970, 29 U.S.C. sec.
651 et seq., and all similar or analogous foreign, state,
regional or local statutes, secondary and subordinate
legislation, and directives, and the rules and regulations
promulgated thereunder.
ERISA
means the Employee Retirement
Income Security Act of 1974, as amended.
ERISA Affiliate
means any trade or
business, whether or not incorporated, that together with the
Company would be deemed a single employer for purposes of
Section 4001 of ERISA or Sections 414(b), (c), (m),
(n) or (o) of the Code.
Excluded Party
means any Third Party
(including any group of Persons that includes among its members
one or more Persons that were members of the group prior to the
Go-Shop Period Termination Date) from whom the Company or any of
its Representatives receives an Acquisition Proposal prior to
the Go-Shop Period Termination Date that, on or before the
Go-Shop Period Termination Date, the Company Board of Directors
or any committee thereof determines in good faith (after
consultation with the Company Financial Advisor or another
independent financial advisor of nationally recognized
reputation and outside legal counsel) constitutes or is
reasonably likely to lead to a Superior Proposal, and which
Acquisition Proposal has not been rejected or withdrawn on or
before the Go-Shop Period Termination Date.
Financing Sources
means the Persons
that have committed to provide or otherwise entered into
agreements in connection with the Commitment Letter or
Alternative Financings in connection with the Transactions,
including the parties named in
Section 4.6
and any
joinder agreements, indentures or credit
A-46
agreements entered into pursuant thereto or relating thereto
together with their affiliates, officers, directors, employees
and representatives involved in the Financing and their
successors and assigns.
Governmental Authority
means any
government or governmental or regulatory body thereof, or
political subdivision thereof, whether foreign, federal, state,
local or supernational, or any agency commission,
instrumentality or authority thereof, or any court or arbitrator
(public or private) or the Centers for Medicare &
Medicaid Services.
Government Programs
means the Medicare
and Medicaid programs and such other similar federal, state or
local reimbursement or governmental programs for which the
Company and the Company Subsidiaries are eligible.
Hazardous Materials
means (A) any
petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, transformers or
other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; and (B) any
chemicals, materials or substances defined as or included in the
definition of
hazardous substances,
hazardous wastes,
hazardous
materials,
extremely hazardous
wastes,
extremely hazardous
substances,
restricted hazardous
wastes,
toxic substances,
pollutants
,
toxic
pollutants,
or words of similar import, under any
applicable Environmental Law.
Healthcare Laws
means Title XVIII
of the Social Security Act, 42 U.S.C.
§§ 1395-1395hhh
(the Medicare statute), including specifically, the Ethics in
Patient Referrals Act, as amended (the
Stark
Law
), 42 U.S.C. § 1395nn;
Title XIX of the Social Security Act, 42 U.S.C.
§§ 1396-1396v
(the Medicaid statute); the Federal Health Care Program
Anti-Kickback Statute, 42 U.S.C.
§ 1320a-7b(b);
the False Claims Act, 31 U.S.C.
§§ 3729-3733
(as amended); the Program Fraud Civil Remedies Act,
31 U.S.C.
§§ 3801-3812;
the Anti-Kickback Act of 1986, 41 U.S.C.
§§ 51-58;
the Civil Monetary Penalties Law, 42 U.S.C.
§§ 1320a-7a
and
1320a-7b;
the Exclusion Laws, 42 U.S.C.
§ 1320a-7;
HIPAA; the HITECH Act, all Laws relating to the provision of, or
billing or payment for health care items or services, or
relating to health care information; and all applicable
implementing regulations, rules, ordinances, judgments, and
orders; and any similar state and local statutes, regulations,
rules, ordinances, judgments, and orders; and all applicable
federal, state, and local licensing, certificate of need,
regulatory and reimbursement, corporate practice of medicine,
and physician fee splitting regulations, rules, ordinances,
orders, and judgments applicable to healthcare service providers
providing the items and services that the Company, Company
Subsidiaries and Hospices provide.
Healthcare Permits
means all permits,
licenses, registrations, certificates or Certificates of Need,
orders, qualifications, authorizations, consents, permits,
accreditations, rights, authorizations, approvals and other
rights required by any Governmental Authority or other Person
that are applicable to healthcare service providers providing
the items and services that the Company, Company Subsidiaries
and Hospices provide.
HIPAA
means the Health Insurance
Portability and Accountability Act of 1996, 42 U.S.C.
§§ 1320d-1329d-8.
HITECH Act
means the Health
Information Technology for Economic and Clinical Health Act,
42 U.S.C. §§ 3000 et seq. (Pub. Law
111-5,
Division A Title XIII and Division B,
Title IV).
Hospice
means any entity owned
and/or
operated by the Company or any of the Company Subsidiaries that
is primarily engaged in providing Hospice Services.
Hospice Services
means those
palliative care services furnished to terminally ill individuals
that are covered under the Medicare and Medicaid programs,
including nursing care, medical social services, services of
physicians or mid-level practitioners, counseling services,
short term inpatient care, medical appliances and supplies
(including drugs and biologicals), home health aid and homemaker
services, physical therapy, occupational therapy and
speech-language
pathology services, and any other services specified in a
patients plan of care as reasonable and necessary for the
palliation and management of the
A-47
patients terminal illness and related conditions and for
which payment may otherwise be made under the Medicare or
Medicaid program.
Intellectual Property
means all
intellectual property, confidential information, and proprietary
information, including, but not limited to, (a) patents and
patent applications (including all reissuances, continuations,
continuations-in-part,
revisions, extensions and reexaminations thereof) and patent
disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (b) trademarks,
service marks, trade dress, trade names, Internet domain names,
assumed names and corporate names, together with the goodwill of
the business associated with and symbolized by such trademarks,
service marks, trade dress, trade names and corporate names, in
each case whether or not registered; (c) published and
unpublished works of authorship, whether copyrightable or not,
including all statutory and common law copyrights associated
therewith; (d) all registrations, applications, extensions
and renewals for any of the items listed in clauses (b) and
(c); (e) trade secrets; (f) websites; (g) all
computer programs, including operating systems, applications,
routines, interfaces, all algorithms, whether in source code or
object code; and (h) lists of customers and potential
customers (including any lists of electronic mail addresses of
customers and potential customers); formulae; compositions; know
how; research and development information; artwork and graphic
design; manuscripts; drawings; specifications; lists of
suppliers and service providers; pricing and cost information
and records; test reports; manuals; financial, business, sales
and marketing proposals, research, data, and plans; technical
and computer data; databases; documentation; promotional
materials and related information; and other intellectual
property, confidential information and proprietary rights, in
each case in any medium, including digital, and in any
jurisdiction, together with all causes of action, judgments,
settlements, claims and demands of any nature related thereto,
including the right to prosecute any past infringements or other
violations thereof.
Investigating Entities
means the
federal and state agencies conducting the Pending Investigations
on behalf of the federal and state governments pursuing the
Pending Investigations.
Key Personnel
means any director,
executive officer, senior vice president or regional vice
president of the Company or any Company Subsidiary.
knowledge
means, with respect to any
matter in question, the actual knowledge, after making
reasonable inquiry within the party to this Agreement and its
Subsidiaries, of the Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer, General Counsel, Chief
Clinical Officer and Chief Compliance Officer (or persons
performing the equivalent functions) of the Company or Parent,
as the case may be.
Laws
means any applicable law,
statute, code, ordinance, rule, regulation, judgment, common law
or Order of a Governmental Authority.
Legal Proceeding
means any claim
(including any counterclaim), action, suit, mediation,
arbitration, investigation, inquiry, alternative dispute
resolution action or any other judicial, administrative or
arbitral proceeding, in law or equity, whether or not by or
before any Governmental Authority.
Lien
means any lien, claim, mortgage,
encumbrance, pledge, security interest, easement, covenant,
restriction, equity or charge of any kind.
Medical Director Contract
means any
Company Agreement that involves the provision of medical
direction services between a licensed physician and a Hospice,
including medical directors, program medical directors, team
medical directors and associated medical directors.
Medicare and Medicaid programs
means
Titles XVIII and XIX of the Social Security Act, as amended.
NASDAQ
means the Nasdaq Global Select
Market.
Order
means any order, injunction,
judgment, decree, ruling, writ, stipulation, assessment or
arbitration award of a Governmental Authority.
Outside Date
means October 29,
2010.
A-48
Pending Investigations
means each of
(i) the investigation of the Company by the Medicaid Fraud
Control Unit of the Texas Attorney Generals office by
initial notice received on February 14, 2008, (ii) the
investigation of the Company by the United States Department of
Justice by initial notice received on May 5, 2008, together
with the related qui tam action or state investigations,
(iii) the investigation of VistaCare, Inc. by the Georgia
State Health Care Fraud Control Unit by initial notice received
on January 5, 2009, (iv) the investigation of the
Company by the United States Office of Inspector General by
initial notice received on February 2, 2009, (v) the
investigation of the Company by the United States Office of
Inspector General by initial notice received on
February 23, 2010, in each case as such investigations are
underway as of the date hereof, and (vi) from the date
hereof until the earlier of the valid termination of this
Agreement in accordance with
Section 8.1
hereof and
the Effective Time, any other investigation by any Governmental
Authority of the Company or any Company Subsidiary for alleged
Governmental Program fraud, waste or abuse that is commenced,
orally or in writing, or of which the Company otherwise becomes
aware.
Permitted Liens
means (a) Liens
for utilities and current Taxes not yet delinquent,
(b) inchoate Liens, such as mechanics,
carriers, workers, repairers,
materialmens, warehousemens and similar Liens,
arising or incurred in the ordinary course of business of the
Person whose property is subject to any such Lien,
(c) Liens for Taxes being contested in good faith for which
appropriate reserves have been included on the balance sheet of
the applicable Person, (d) easements, restrictions,
covenants or rights of way currently of record against any of
the Company Property which do not interfere with, or increase
the cost of operation of, the business of the Company and the
Company Subsidiaries in any material respect or materially
affect the value of such Company Property, (e) minor
irregularities of title with respect to any of the Company
Property which do not interfere with, or increase the cost of
operation of, the business of the Company and the Company
Subsidiaries in any material respect or materially affect the
value of such Company Property, (f) Liens under the Credit
Agreement, and (g) any other Liens or imperfections that
are not material in amount, do not materially interfere with and
are not materially violated by, the consummation of the
Transactions, and do not impair the marketability of, or
materially detract from the value of or materially impair the
existing use of, the property affected by such Lien or
imperfection.
Person
means a natural person,
partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity or
organization.
Private Programs
means any private
non-governmental payor programs, including any private insurance
program, in each case, that is material to the conduct of the
business of the Company and the Company Subsidiaries, taken as a
whole.
Release
means disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying or seeping into or upon any land or water or
air, or otherwise entering into the environment.
Representatives
means, with respect to
any Person, such Persons officers, directors, employees,
investment bankers, legal counsel, accountants and other agents.
Required Amounts
means all funds
necessary for the satisfaction of all of Parents and
Merger Subs obligations under this Agreement, including
the payment of all amounts required to be paid pursuant to the
Merger (including the amounts to be paid to holders of Company
Options and Restricted Stock Units under
Section 2.4
), and the payment of any debt required
to be repaid, redeemed, retired, cancelled, terminated or
otherwise satisfied, including any breakage costs in respect
thereof, in connection with the Merger and of all fees and
expenses reasonably expected to be incurred in connection with
consummating the Merger and the Financing.
Rights Agreement
means the Rights
Agreement, dated November 5, 2001, between the Company and
American Stock Transfer and Trust Company (formerly
U.S. Stock Transfer Corporation).
A-49
Settlement Agreement
means the
Settlement Agreement, dated July 6, 2006, among the
United States of America acting through the entities named
therein, JoAnn Russell and the Company.
Subsidiary
means with respect to any
person, any corporation, limited liability company, partnership
or other organization, whether incorporated or unincorporated,
of which (i) at least a majority of the outstanding shares
of capital stock of, or other equity interests, having by their
terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its
Subsidiaries or (ii) such party or any other Subsidiary of
such party is a general partner; provided, that neither Odyssey
HealthCare YCCOM Employee Disaster Relief Fund, a Texas
non-member non-profit corporation, nor Odyssey VistaCare Hospice
Foundation, a Texas non-member non-profit corporation, shall be
considered a
Subsidiary
.
Superior Proposal
means any bona fide
written Acquisition Proposal that the Company Board of Directors
or any committee thereof determines in good faith (after
consultation with the Company Financial Advisor or another
financial advisor of nationally recognized reputation and
outside legal counsel), taking into account, among other things,
all legal, financial, regulatory, and other aspects of the
Acquisition Proposal and the Third Party making the Acquisition
Proposal, including the financing terms (and certainty of
financing) thereof and the likelihood of consummation, if
consummated, would result in a transaction that is more
favorable to the Company Stockholders from a financial point of
view than the Transactions (taking into account (A) any
adjustment to the terms and conditions proposed by Parent in an
offer that is (x) in writing in response to such
Acquisition Proposal pursuant to
Section 5.3
or
otherwise and (y) not revocable during the time period that
the Company cannot accept the Acquisition Proposal under
Section 5.3
, and (B) any termination fees);
provided that, for purposes of this definition of
Superior Proposal,
references in the term
Acquisition Proposal
to
25% or
more
shall be deemed to be references to more
than 50%.
Tax
or
Taxes
means
any (i) federal, state, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits,
windfall profits, gross receipts, value added, sales, use,
excise, custom duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, real and
personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance,
social security, disability, workers compensation,
payroll, health care, withholding or other tax, duty, assessment
or similar charge (including all interest and penalties thereon
and additions thereto) imposed by any Governmental Authority,
and (ii) any liability for the payment of any amounts
described in (i) as a result of being a member of an
affiliated, consolidated, combined, unitary or similar group, as
a result of transferor or successor Liability, or due pursuant
to contract.
Tax Claim
means any audit,
investigation, litigation or other proceeding conducted by or
with any Governmental Authority with respect to Taxes.
Tax Return
means any return, report,
certificate, form or similar statement or document or other
communication (including the attached schedules, supplements and
additional or supporting material) required or permitted to be
supplied to, or filed with, a Governmental Authority in
connection with the determination, assessment or collection of
any Tax or the administration of any Laws relating to any Tax
(and including any amendments with respect thereto).
A-50
Section
9.6.
Terms
Defined Elsewhere
.
The following terms are
defined elsewhere in this Agreement, as indicated below:
|
|
|
affiliates
|
|
Section 9.7(a)
|
Alternative Acquisition Agreement
|
|
Section 5.3(a)
|
Alternative Financing
|
|
Section 6.12(b)
|
Action
|
|
Section 6.7(a)
|
Agreement
|
|
Introduction
|
Balance Sheet Date
|
|
Section 3.8(a)
|
Base Premium
|
|
Section 6.7(c)
|
Benefit Plans
|
|
Section 3.11(a)
|
Blackout Period
|
|
Section 1.3
|
Breach
|
|
Section 3.20(c)
|
Certificate of Merger
|
|
Section 1.2
|
Certificates
|
|
Section 2.2(b)
|
Closing
|
|
Section 1.3
|
Closing Date
|
|
Section 1.3
|
Code
|
|
Section 2.2(e)
|
Commitment Letter
|
|
Section 4.6
|
Common Stock
|
|
Section 3.2(a)
|
Company
|
|
Introduction
|
Company Board of Directors
|
|
Recitals
|
Company Change in Recommendation
|
|
Section 5.3(a)
|
Company Disclosure Schedule
|
|
Article III
|
Company Financial Advisor
|
|
Section 3.22
|
Company Intellectual Property
|
|
Section 3.15
|
Company Leases
|
|
Section 3.13(a)
|
Company Material Contract
|
|
Section 3.13(a)
|
Company Option
|
|
Section 2.4(a)
|
Company Real Property
|
|
Section 3.14(b)
|
Company Recommendation
|
|
Section 3.4
|
Company Rights
|
|
Section 3.26
|
Company SEC Documents
|
|
Section 3.6(a)
|
Company Stockholder Approval
|
|
Section 3.28
|
Company Stockholders
|
|
Recitals
|
Company Stock Rights
|
|
Section 3.2(a)
|
Company Rights
|
|
Section 3.26
|
Company-owned Intellectual Property
|
|
Section 3.15
|
Continuing Employee
|
|
Section 6.15(a)
|
Costs
|
|
Section 6.7(a)
|
Covered Person
|
|
Section 6.7(a)
|
D&O Insurance
|
|
Section 6.7(c)
|
DGCL
|
|
Recitals
|
Disclosure Schedules
|
|
Article IV
|
Dissenters Provisions
|
|
Section 2.3(a)
|
Dissenting Shares
|
|
Section 2.3(a)
|
A-51
|
|
|
Effective Time
|
|
Section 1.2
|
Equity Interests
|
|
Section 3.2(a)
|
ESPP
|
|
Section 3.11(h)
|
Exchange Act
|
|
Section 3.5
|
Financial Statements
|
|
Section 3.6(a)
|
Financing
|
|
Section 4.6
|
GAAP
|
|
Section 3.6(a)
|
Go-Shop Company Termination Fee
|
|
Section 6.9
|
Go-Shop Period Termination Date
|
|
Section 5.2(a)
|
HSR Act
|
|
Section 3.5
|
Intervening Event
|
|
Section 5.3(b)
|
Material Company Leases
|
|
Section 3.14(b)
|
Material Company Real Property
|
|
Section 3.14(b)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Recitals
|
Merger Sub
|
|
Introduction
|
Merger Sub Common Stock
|
|
Section 2.1
|
Nasdaq Marketplace Rules
|
|
Section 3.5
|
Notice of Superior Proposal
|
|
Section 5.3(b)
|
Option Consideration
|
|
Section 2.4(a)
|
Parent
|
|
Introduction
|
Parent Disclosure Schedule
|
|
Article IV
|
Parent Financial Statements
|
|
Section 4.10(a)
|
Parent SEC Documents
|
|
Section 4.10(a)
|
Paying Agent
|
|
Section 2.2(a)
|
Preferred Stock
|
|
Section 3.2(a)
|
Protected Health Information
|
|
Section 3.20(c)
|
Proxy Statement
|
|
Section 6.1(a)
|
Real Property Subleases
|
|
Section 3.14(e)
|
Restricted Stock
|
|
Section 2.4(b)
|
Restricted Stock Unit
|
|
Section 2.4(c)
|
RSU Consideration
|
|
Section 2.4(c)
|
Sarbanes Oxley Act
|
|
Section 3.6(a)
|
SEC
|
|
Section 3.1(a)
|
Section 16
|
|
Section 6.10
|
Section 203
|
|
Section 3.27
|
Securities Act
|
|
Section 3.6(a)
|
Shares
|
|
Recitals
|
Special Meeting
|
|
Section 6.1(c)(i)
|
Surviving Corporation
|
|
Section 1.1(a)
|
Third Party
|
|
Section 5.2(b)(i)
|
Transactions
|
|
Recitals
|
Voting Debt
|
|
Section 3.2(a)
|
A-52
Section
9.7.
Interpretation;
Disclosure Schedules
.
(a) When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words
include,
includes
or
including
are used in this Agreement they
shall be deemed to be followed by the words
without
limitation
. As used in this Agreement, the term
affiliates
shall have the meaning set forth
in
Rule 12b-2
of the Exchange Act. All references to this Agreement shall be
deemed to include references to the
plan of
merger
contained herein (as such term is used in the
DGCL).
(b) The parties acknowledge and agree that (i) each
Disclosure Schedule may include certain items and information
solely for informational purposes for the convenience of the
party to which such Disclosure Schedule is delivered pursuant to
this Agreement, and (ii) the disclosure by the Company, on
the one hand, and Parent and Merger Sub on the other hand, of
any matter in its Disclosure Schedule shall not be deemed to
constitute an acknowledgment by the Company or Parent and Merger
Sub, as applicable, that the matter is required to be disclosed
by the terms of this Agreement or that the matter is material.
Each disclosure set forth in the Disclosure Schedules is
identified by reference to, or has been grouped under a heading
referring to a specific section of this Agreement.
Notwithstanding the foregoing, if the Company or Parent and
Merger Sub disclose in any section or schedule of its Disclosure
Schedule an item or information in such a way as to make its
relevance to the disclosure required by another section or
schedule thereof reasonably apparent, then the matter shall be
deemed to have been disclosed in such other section or schedule,
notwithstanding the omission of an appropriate cross-reference
to such other section or schedule.
Section
9.8.
Counterparts
.
This
Agreement may be executed manually or by facsimile (or other
electronically scanned and transmitted means) by the parties
hereto, in any number of counterparts, each of which shall be
considered one and the same agreement and shall become effective
when a counterpart hereof shall have been signed by each of the
parties and delivered to the other parties.
Section
9.9.
Entire
Agreement; No Reliance
.
(a) This Agreement, the Confidentiality Agreement, the
exhibits to this Agreement, the Company Disclosure Schedule and
any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the parties
with respect thereto.
(b) Each party hereto agrees that, except for the
representations and warranties contained in
Article III
and
Article IV
of this
Agreement, neither the Company, Parent or Merger Sub makes any
other representations or warranties and each hereby disclaims
any other representations or warranties made by itself or any of
its Representatives, with respect to the execution and delivery
of this Agreement or the Transactions, notwithstanding the
delivery or disclosure to any other party or any other
partys Representatives of any document or other
information with respect to any one or more of the foregoing.
Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and
warranties made by the parties in this Agreement, each of Parent
and Merger Sub agrees that neither the Company nor any Company
Subsidiary makes or has made any representation or warranty with
respect to (i) any projections, forecasts, estimates, plans
or budgets or future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash
flows (or any component thereof) or future financial condition
(or any component thereof) of the Company or any Company
Subsidiary or the future business, operations or affairs of the
Company or any Company Subsidiary heretofore or hereafter
delivered to or made available to it, or (ii) any other
information, statements or documents heretofore or hereafter
delivered to or made available to it, including the information
in the electronic data room of the Company, with respect to the
Company or any Company Subsidiary or the business, operations or
affairs of the Company or any Company Subsidiary, except to the
extent and as expressly covered by a representation and warranty
made in this Agreement.
Section
9.10.
Severability
.
If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by rule of law or public
policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as
the economic or legal substance of the Merger is not affected in
any manner adverse to any party. Upon such determination that
any term or other
A-53
provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the
Merger is fulfilled to the extent possible.
Section
9.11.
Governing
Law; Jurisdiction
.
(a) Except as required by the mandatory provisions of the
DGCL, this Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware, without
giving effect to conflicts of laws principles that would result
in the application of the law of any other state.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the
exclusive jurisdiction of any Delaware State court, or, if no
such state court has proper jurisdiction, the Federal court of
the United States of America, sitting in Delaware, and any
appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the agreements
delivered in connection herewith (including the Commitment
Letter) or the Transactions or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the
parties hereby irrevocably and unconditionally (i) agrees
not to commence any such action or proceeding except in such
courts, (ii) agrees that any claim in respect of any such
action or proceeding may be heard and determined in such
Delaware State court or, if no such state court has proper
jurisdiction, in such Federal court, (iii) waives, to the
fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of
venue of any such action or proceeding in any such Delaware
State or Federal court, and (iv) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such
Delaware State or Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in
Section 9.4
. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
Section
9.12.
Waiver
of Jury Trial
.
EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS
DELIVERED IN CONNECTION HEREWITH OR THE MERGER CONTEMPLATED
HEREBY OR THEREBY OR THE COMMITMENT LETTER. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(C) IT MAKES SUCH WAIVERS VOLUNTARILY, (D) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
Section 9.12,
AND (E) SUCH CERTIFICATIONS SHALL
EXTEND TO THE FINANCING SOURCES.
Section
9.13.
Assignment;
Benefit
.
This Agreement shall not be assigned
by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties
hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except for
(i) the provisions of
Section 6.7
hereof which
shall inure to the benefit of the Persons or entities benefiting
therefrom who are expressly intended to be third-party
beneficiaries thereof and who may enforce the covenants
contained therein, (ii) subject to the proviso at the end
of
Section 8.2
, for the right of the Company, on
behalf of the holders of equity interests in the Company, to
pursue damages (which the parties acknowledge and agree shall
not be limited to reimbursement of expenses or
out-of-pocket
costs, and may include claims for damages based on the
consideration that would have otherwise been payable to the
Company Stockholders and other relevant matters, including other
combination opportunities and the time value of money), which
shall be deemed in such event to be damages of holders of equity
interests in the Company, in the event of a failure by Parent or
Merger Sub to consummate the Transactions, which right is
A-54
hereby acknowledged and agreed by Parent and Merger Sub and
(iii)
Section 9.11
,
Section 9.12
, this
Section 9.13
and the last sentence of
Section 9.15
(which, in each case, will be for the
benefit of the Persons (including the Financing Sources) set
forth therein, and any such Person will have the rights provided
for therein). The Company disclaims any and all rights as a
third-party beneficiary or otherwise under or with respect to
the Commitment Letter and any and all definitive agreements in
respect of the Financing and any Alternative Financing arranged
by Parent in respect of the Transactions, including, without
limitation, any right to enforce any obligations of the
Financing Sources or to seek any damages against the Financing
Sources with respect thereto.
Section
9.14.
Parent
Guarantee
.
Parent shall cause Merger Sub to
comply in all respects with each of the representations,
warranties, covenants, obligations, agreements and undertakings
made or required to be performed by Merger Sub in accordance
with the terms of this Agreement, the Merger, and the other
Transactions. As a material inducement to the Companys
willingness to enter into this Agreement and perform its
obligations hereunder, Parent hereby unconditionally guarantees
full performance and payment by Merger Sub of each of the
covenants, obligations and undertakings required to be performed
by Merger Sub under this Agreement and the Transactions, subject
to all terms, conditions and limitations contained in this
Agreement, and hereby represents, acknowledges and agrees that
any such breach of any such representation and warranty or
default in the performance of any such covenant, obligation,
agreement or undertaking of Merger Sub shall also be deemed to
be a breach or default of Parent, and the Company shall have the
right, exercisable in its sole discretion, to pursue any and all
available remedies it may have arising out of any such breach or
nonperformance directly against either or both of Parent and
Merger Sub in the first instance. As applicable, references in
this
Section 9.14
to
Merger Sub
shall also include the Surviving Corporation following the
Effective Time.
Section
9.15.
Specific
Performance; Remedies
.
The parties agree that
irreparable damage would occur and that the parties would not
have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, except as
expressly provided in the following sentence. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
court of the State of Delaware or any Federal court sitting in
the State of Delaware, without proof of actual damages, and to
waive any requirement for the securing or posting of any bond in
connection with such remedy, this being in addition to any other
remedy to which they are entitled at law or in equity (subject
to the limitations set forth in this Agreement), other than as
limited hereunder. The parties hereto further agree that
(i) by seeking the remedies provided for in this
Section 9.15
, a party shall not in any respect waive
its right to seek any other form of relief that may be available
to a party under this Agreement (including monetary damages) in
the event that this Agreement has been terminated or in the
event that the remedies provided for in this
Section 9.15
are not available or otherwise are not
granted, and (ii) nothing set forth in this
Section 9.15
shall require any party hereto to
institute any proceeding for (or limit any partys right to
institute any proceeding for) specific performance under this
Section 9.15
prior or as a condition to exercising
any termination right under
Article VIII
(and
pursuing damages after such termination), nor shall the
commencement of any Legal Proceeding pursuant to this
Section 9.15
or anything set forth in this
Section 9.15
restrict or limit any partys
right to terminate this Agreement in accordance with the terms
of
Article VIII
or pursue any other remedies under
this Agreement that may be available then or thereafter.
Notwithstanding anything to the contrary in this Agreement, all
Costs of the Company, Parent and Merger Sub incurred in
connection with any action brought by the Company, Parent or
Merger Sub relating to the terms and provisions of this
Agreement provided for in the foregoing sentence shall be paid
by the Company in the event that Parent is successful on the
merits in such action and shall be paid by Parent in the event
that the Company is successful on the merits in such action.
Notwithstanding anything in this Agreement to the contrary, none
of the Financing Sources shall have any liability to the Company
or any of its controlling persons, directors, officers,
employees, agents, attorneys, affiliates, members, managers,
general or limited partners, stockholders, and shall not be
obligated to any of them, or anyone claiming by or through them,
to pay consequential, special, multiple, punitive or exemplary
damages including, but not limited to, damages arising from loss
of profits, business opportunities or goodwill in respect of any
breach or failure to comply with this Agreement or in respect of
any of the Transactions (including the Financing and the
Commitment Letter).
A-55
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
ODYSSEY HEALTHCARE, INC.
|
|
|
|
By:
|
/s/ W.
Bradley Bickham
|
Name: W. Bradley Bickham
|
|
|
|
Title:
|
SVP & General Counsel
|
GENTIVA HEALTH SERVICES, INC.
Name: Tony Strange
GTO ACQUISITION CORP.
Name: Tony Strange
[Signature
Page to Agreement and Plan of Merger]
A-56
ANNEX
B
PERSONAL
AND CONFIDENTIAL
May 23, 2010
Board of Directors
Odyssey HealthCare, Inc.
717 North Harwood Street, Suite 1500
Dallas, TX 75201
Gentlemen:
You have requested our opinion as to the fairness from a
financial point of view to the holders (other than Gentiva
Health Services, Inc. (Gentiva) and its affiliates)
of the outstanding shares of common stock, par value $0.001 per
share (together with the associated Company Rights, as defined
in the Agreement, the Shares), of Odyssey
HealthCare, Inc. (the Company) of the $27.00 per
Share in cash to be paid to such holders pursuant to the
Agreement and Plan of Merger, dated as of May 23, 2010 (the
Agreement), among Gentiva, GTO Acquisition Corp., a
wholly owned subsidiary of Gentiva, and the Company.
Goldman, Sachs & Co. and its affiliates are engaged in
investment banking and financial advisory services, commercial
banking, securities trading, investment management, principal
investment, financial planning, benefits counseling, risk
management, hedging, financing, brokerage activities and other
financial and non-financial activities and services for various
persons and entities. In the ordinary course of these activities
and services, Goldman, Sachs & Co. and its affiliates
may at any time make or hold long or short positions and
investments, as well as actively trade or effect transactions,
in the equity, debt and other securities (or related derivative
securities) and financial instruments (including bank loans and
other obligations) of third parties, the Company, Gentiva and
any of their respective affiliates or any currency or commodity
that may be involved in the transaction contemplated by the
Agreement (the Transaction) for their own account
and for the accounts of their customers. We have acted as
financial advisor to the Company in connection with, and have
participated in certain of the negotiations leading to, the
Transaction. We expect to receive fees for our services in
connection with the Transaction, the principal portion of which
is contingent upon consummation of the Transaction, and the
Company has agreed to reimburse our expenses arising, and
indemnify us against certain liabilities that may arise, out of
our engagement. In addition, we have provided certain investment
banking and other financial services to the Company and its
affiliates from time to time for which our investment banking
division has received, and may receive, compensation. We also
have provided certain investment banking and other financial
services to Gentiva and its affiliates from time to time for
which our investment banking division has received, and may
receive, compensation, including, having acted as Gentivas
financial advisor in connection with the sale of a majority
interest in Gentiva CareCentrix, Inc. to Water Street Healthcare
Partners II, L.P. in August 2008. We also may provide investment
banking and other financial services to the Company and Gentiva
and their respective affiliates in the future for which our
investment banking division may receive compensation.
In connection with this opinion, we have reviewed, among other
things, the Agreement; annual reports to stockholders and Annual
Reports on
Form 10-K
of the Company for the five fiscal years ended December 31,
2009; certain interim reports to stockholders and Quarterly
Reports on
Form 10-Q
of the Company; certain other communications from the Company to
its stockholders; certain publicly available research analyst
reports for the Company; and certain internal financial analyses
and forecasts for the Company prepared by its management, as
approved for our use by the Company (the Forecasts).
We have also held discussions with members of the senior
management of the Company regarding their assessment of the past
and current business operations, financial condition and future
prospects of the Company; reviewed the reported price and
trading activity for the Shares; compared certain financial and
stock market information for the Company with similar
information for certain other companies the securities of which
are publicly traded; reviewed the financial terms of certain
recent business combinations in the home health and hospice
industry specifically
B-1
and in other industries generally; and performed such other
studies and analyses, and considered such other factors, as we
deemed appropriate.
For purposes of rendering this opinion, we have relied upon and
assumed, without assuming any responsibility for independent
verification, the accuracy and completeness of all of the
financial, legal, regulatory, tax, accounting and other
information provided to, discussed with or reviewed by us, and
we do not assume any responsibility for any such information. In
that regard, we have assumed with your consent that the
Forecasts have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the
management of the Company. We have not made an independent
evaluation or appraisal of the assets and liabilities (including
any contingent, derivative or other off-balance-sheet assets and
liabilities) of the Company or any of its subsidiaries and we
have not been furnished with any such evaluation or appraisal.
We have assumed that all governmental, regulatory or other
consents and approvals necessary for the consummation of the
Transaction will be obtained without any adverse effect on the
expected benefits of the Transaction in any way meaningful to
our analysis. We also have assumed that the Transaction will be
consummated on the terms set forth in the Agreement, without the
waiver or modification of any term or condition the effect of
which would be in any way meaningful to our analysis.
Our opinion does not address the underlying business decision of
the Company to engage in the Transaction, or the relative merits
of the Transaction as compared to any strategic alternatives
that may be available to the Company; nor does it address any
legal, regulatory, tax or accounting matters. This opinion
addresses only the fairness from a financial point of view, as
of the date hereof, of the $27.00 per Share in cash to be paid
to the holders (other than Gentiva and its affiliates) of Shares
pursuant to the Agreement. We do not express any view on, and
our opinion does not address, any other term or aspect of the
Agreement or Transaction or any term or aspect of any other
agreement or instrument contemplated by the Agreement or entered
into or amended in connection with the Transaction, including,
without limitation, the fairness of the Transaction to, or any
consideration received in connection therewith by, the holders
of any other class of securities, creditors, or other
constituencies of the Company; nor as to the fairness of the
amount or nature of any compensation to be paid or payable to
any of the officers, directors or employees of the Company, or
class of such persons, in connection with the Transaction,
whether relative to the $27.00 per Share in cash to be paid to
the holders (other than Gentiva and its affiliates) of Shares
pursuant to the Agreement or otherwise. We are not expressing
any opinion as to the impact of the Transaction on the solvency
or viability of the Company or Gentiva or the ability of the
Company or Gentiva to pay its obligations when they come due.
Our opinion is necessarily based on economic, monetary, market
and other conditions as in effect on, and the information made
available to us as of, the date hereof and we assume no
responsibility for updating, revising or reaffirming this
opinion based on circumstances, developments or events occurring
after the date hereof. Our advisory services and the opinion
expressed herein are provided for the information and assistance
of the Board of Directors of the Company in connection with its
consideration of the Transaction and such opinion does not
constitute a recommendation as to how any holder of Shares
should vote with respect to such Transaction or any other
matter. This opinion has been approved by a fairness committee
of Goldman, Sachs & Co.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the $27.00 per Share in cash to be paid
to the holders (other than Gentiva and its affiliates) of Shares
pursuant to the Agreement is fair from a financial point of view
to such holders.
Very truly yours,
(GOLDMAN, SACHS & CO.)
B-2
ANNEX C
GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
§
262. Appraisal rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
stock corporation and also a member of record of a nonstock
corporation; the words stock and share
mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock
corporation; and the words depository receipt mean a
receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of the meeting of stockholders to act
upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote
of the stockholders of the surviving corporation as provided in
§ 251(f) of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale
C-1
of all or substantially all of the assets of the corporation. If
the certificate of incorporation contains such a provision, the
procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for notice of such meeting with respect to shares for which
appraisal rights are available pursuant to subsection (b)
or (c) hereof that appraisal rights are available for any
or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then either a
constituent corporation before the effective date of the merger
or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections (a)
and (d) of this section hereof and who is otherwise
entitled to appraisal rights, may commence an appraisal
proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders.
C-2
Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any
stockholder who has not commenced an appraisal proceeding or
joined that proceeding as a named party shall have the right to
withdraw such stockholders demand for appraisal and to
accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this
section hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) of this section hereof, whichever is
later. Notwithstanding subsection (a) of this section, a
person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or
request from the corporation the statement described in this
subsection.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After the Court determines the stockholders entitled to
an appraisal, the appraisal proceeding shall be conducted in
accordance with the rules of the Court of Chancery, including
any rules specifically governing appraisal proceedings. Through
such proceeding the Court shall determine the fair value of the
shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. Unless
the Court in its discretion determines otherwise for good cause
shown, interest from the effective date of the merger through
the date of payment of the judgment shall be compounded
quarterly and shall accrue at 5% over the Federal Reserve
discount rate (including any surcharge) as established from time
to time during the period between the effective date of the
merger and the date of payment of the judgment. Upon application
by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court
may, in its discretion, proceed to trial upon the appraisal
prior to the final determination of the stockholders entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such
stockholders certificates of
C-3
stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right
of any stockholder who has not commenced an appraisal proceeding
or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation within 60 days
after the effective date of the merger or consolidation, as set
forth in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
C-4
ODYSSEY HEALTHCARE, INC.
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Using
a
black ink
pen, mark your votes with an
X
as shown in
this example. Please do not write outside the designated areas.
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X
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Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the
two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be
received by 1 a.m. Central Time, on August 9, 2010.
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Vote by Internet
Log on to the Internet and go to
www.investorvote.com/ODSY
Follow the steps outlined on the secured website.
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Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is
NO CHARGE
to you for the call.
Follow the instructions provided by the recorded message.
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Special Meeting Proxy Card
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6
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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6
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A
Proposals THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2:
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For
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Against
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Abstain
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1. To (i) approve the merger (the Merger) of GTO Acquisition Corp., a wholly-owned
subsidiary of Gentiva Health Services, Inc. (Gentiva), with and into Odyssey, resulting in
Odyssey becoming a wholly-owned subsidiary of Gentiva, pursuant to the Agreement and
Plan of Merger, dated as of May 23, 2010 (as it may be amended from time to time, the
Merger Agreement), among Odyssey, Gentiva and GTO Acquisition Corp., and (ii) adopt
the Merger Agreement.
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o
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o
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o
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For
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Against
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Abstain
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2. To adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if
there are not sufficient votes at the time of the special meeting to approve the Merger and
adopt the Merger Agreement.
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o
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o
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o
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B
Non-Voting Items
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Change of Address
Please print new address below.
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Comments
Please print your comments below.
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C
Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign this Proxy exactly as your name appears on this card. Joint owners should each sign
personally. If you are signing as a representative of the named stockholder (e.g., as a trustee,
corporate officer or other agent on behalf of a trust, corporation or other entity) you should
indicate your title or the capacity in which you sign.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/ /
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6
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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6
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Proxy ODYSSEY HEALTHCARE, INC.
Proxy Solicited on Behalf of the Board of Directors of
Odyssey HealthCare, Inc. for the Special Meeting to be held on August 9, 2010
The undersigned, revoking any proxy previously given, hereby constitutes and appoints each of
Robert A. Lefton, R. Dirk Allison and W. Bradley Bickham his or her true and lawful agents and
proxies, with full power of substitution in each, to represent the undersigned, with all the powers
which the undersigned would possess if personally present, and to vote the Common Stock of Odyssey
HealthCare, Inc. held of record by the undersigned on the record date at the Special Meeting of
Stockholders of Odyssey HealthCare, Inc. to be held at the principal offices of Odyssey HealthCare,
Inc., located at 717 North Harwood Street, Suite 1600, Dallas, Texas 75201, on August 9, 2010, at
8:00 a.m., local time, and at any adjournment or postponement thereof on all matters coming before
said meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND A VOTE FOR PROPOSAL 2. The Proxies
will vote as specified on the reverse, or, if a choice is not specified, they will vote FOR
Proposal 1 and FOR Proposal 2. The proxies cannot vote your shares unless you sign and return
this card. Any Proxy may be revoked in writing at any time prior to the voting thereof.
If you vote by telephone or Internet, please do not mail your Proxy Card.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY. THANK YOU
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Using a
black ink
pen, mark your votes with an
X
as
shown in this example. Please do not write outside the
designated areas.
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x
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Special Meeting Proxy Card
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6
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
6
A
Proposals THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2:
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For
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Against
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Abstain
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1.
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To (i) approve the merger (the Merger) of GTO Acquisition Corp., a wholly-owned
subsidiary of Gentiva Health Services, Inc. (Gentiva), with and into Odyssey, resulting in
Odyssey becoming a wholly-owned subsidiary of Gentiva, pursuant to the Agreement and
Plan of Merger, dated as of May 23, 2010 (as it may be amended from time to time, the
Merger Agreement), among Odyssey, Gentiva and GTO Acquisition Corp., and (ii) adopt
the Merger Agreement.
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o
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o
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o
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For
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Against
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Abstain
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2.
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To adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if
there are not sufficient votes at the time of the special meeting to approve the Merger and
adopt the Merger Agreement.
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o
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o
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o
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B
Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign this Proxy exactly as your name appears on this card. Joint owners should each sign
personally. If you are signing as a representative of the named stockholder (e.g., as a trustee,
corporate officer or other agent on behalf of a trust, corporation or other entity) you should
indicate your title or the capacity in which you sign.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/ /
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n
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1 U P X
0 2 6 3 0 3 2
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+
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017TFB
6
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
6
Proxy ODYSSEY HEALTHCARE, INC.
Proxy Solicited on Behalf of the Board of Directors of
Odyssey HealthCare, Inc. for the Special Meeting to be held on August 9, 2010
The undersigned, revoking any proxy previously given, hereby constitutes and appoints each of
Robert A. Lefton, R. Dirk Allison and W. Bradley Bickham his or her true and lawful agents and
proxies, with full power of substitution in each, to represent the undersigned, with all the powers
which the undersigned would possess if personally present, and to vote the Common Stock of Odyssey
HealthCare, Inc. held of record by the undersigned on the record date at the Special Meeting of
Stockholders of Odyssey HealthCare, Inc. to be held at the principal offices of Odyssey HealthCare,
Inc., located at 717 North Harwood Street, Suite 1600, Dallas, Texas 75201, on August 9, 2010, at
8:00 a.m., local time, and at any adjournment or postponement thereof on all matters coming before
said meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND A VOTE FOR PROPOSAL 2. The Proxies
will vote as specified on the reverse, or, if a choice is not specified, they will vote FOR
Proposal 1 and FOR Proposal 2. The proxies cannot vote your shares unless you sign and return
this card. Any Proxy may be revoked in writing at any time prior to the voting thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY. THANK YOU