11.

Long-Term Debt

Credit Arrangements

The Company's credit arrangements include a senior secured credit agreement providing (i) a $200 million Term Loan A facility, (ii) a $550 million Term Loan B facility and (iii) a $125 million revolving credit facility (collectively the "Credit Agreement") and $325 million aggregate principal amount of 11.5% Senior Notes due 2018 (the "Senior Notes").

On March 9, 2011, the Company entered into a First Refinancing Amendment to the Credit Agreement (the "Amendment"), which provided for, among other things, (i) refinancing of the outstanding indebtedness under the Company's senior secured Term Loan A and Term Loan B facilities, (ii) elimination of the requirement to hedge a certain portion of the Company's variable rate debt, (iii) a reduction in the minimum Base Rate from 2.75 percent to 2.25 percent, (iv) a reduction in the minimum Eurodollar Rate from 1.75 percent to 1.25 percent, (v) reductions in Term Loan B Applicable Rates to 3.50 percent for Eurodollar Rate Loans and 2.50 percent for Base Rate Loans as compared to 5.00 percent and 4.00 percent, respectively, under the previous arrangement and (vi) reductions in the Applicable Rate for Term Loan A and revolving credit borrowings as reflected in the table below.


	Previous Applicable Rate						Amended Applicable Rate
Consolidated Leverage Ratio	Eurodollar Rate Term A Facility			Base Rate Term A Facility			Eurodollar Rate Term A Facility			Base Rate Term A Facility
³ 3.0:1		5.00	%		4.00	%		3.25	%		2.25	%
³ 2.0:1 and < 3.0:1		4.50	%		3.50	%		3.00	%		2.00	%
< 2.0:1		4.00	%		3.00	%		2.75	%		1.75	%

In addition, the Amendment provided for a reduction in the Company's minimum consolidated interest coverage ratio to a ratio of 2.25 to 1.00 from the previous ratios of 2.75 to 1.00 through December 31, 2012 and 3.00 to 1.00, thereafter.

In connection with the refinancing, the Company paid a two percent prepayment penalty on its Term Loan B facility of approximately $10.9 million which was recorded as deferred debt issuance costs. In accordance with applicable guidance, due to changes in some of the participating lenders, the Company recorded a write-off of a portion of its deferred debt issuance costs of approximately $3.5 million, which is reflected in interest expense and other in the Company's consolidated statement of income for the six months ended June 30, 2011.

As of June 30, 2011 and December 31, 2010, the Company's long-term debt consisted of the following (in thousands):


	June 30, 2011			December 31, 2010
Credit Agreement:
Term Loan A, maturing August 17, 2015	$	163,437		$	180,000
Term Loan B, maturing August 17, 2016		539,688			546,563
11.5% Senior Notes due 2018		325,000			325,000

Total debt		1,028,125			1,051,563
Less: current portion of long-term debt		(20,938	)		(25,000	)

Total long-term debt	$	1,007,187		$	1,026,563

As of June 30, 2011, the aggregate principal payments of long-term debt are $6.9 million in 2011, $33.4 million in 2012 and $38.8 million in each of the years 2013 and 2014, $107.5 million in 2015 and $802.7 million thereafter. The weighted average cash interest rate on outstanding borrowings was 6.8 percent per annum at June 30, 2011 and 8.2 percent per annum at December 31, 2010.

Outstanding letters of credit were $41.8 million at June 30, 2011 and $54.6 million at December 31, 2010. The letters of credit were issued to guarantee payments under the Company's workers' compensation program and for certain other commitments. As of June 30, 2011, the Company's unused and available borrowing capacity under the Credit Agreement was $83.2 million.

Credit Agreement

The Credit Agreement provides senior secured financing consisting of term loan facilities and a revolving credit facility. The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as swing line loans.

The Term Loan A facility is subject to mandatory principal payments of $25 million per year, payable in equal quarterly installments, with the remaining balance of the original $200 million loan payable on August 17, 2015. During the six months ended June 30, 2011, the Company made prepayments totaling $16.6 million on its Term Loan A facility. There are no required payments on the Company's Term Loan A facility until the end of the first quarter of 2012, at which time a principal payment of $0.9 million is required and $6.3 million per quarter, thereafter. The Term Loan B facility is subject to mandatory principal payments of $13.8 million per year, payable in equal quarterly installments, with the remaining balance of the original $550 million loan payable on August 17, 2016. Advances under the revolving credit facility may be made, and letters of credit may be issued, up to the $125 million borrowing capacity of the facility at any time prior to the facility expiration date of August 17, 2015.

Gentiva may voluntarily repay outstanding loans under the revolving credit facility or Term Loan A at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. For the period from March 9, 2011 to September 9, 2011, the Company is subject to a prepayment premium equal to 1.0 percent of the aggregate principal amount of Term Loan B. Prepayment and commitment reductions will be required in connection with (i) certain asset sales, (ii) certain extraordinary receipts such as certain insurance proceeds, (iii) cash proceeds from the issuance of debt, (iv) 50 percent of the proceeds from the issuance of equity with step-downs based on leverage, with certain exceptions, and (v) 75 percent of "Excess Cash Flow" (as defined in the Credit Agreement) with two step-downs based on the Company's leverage ratio.

The interest rate per annum on borrowings under the Credit Agreement is based on, at the option of the Company, (i) the Eurodollar Rate or (ii) the Base Rate, plus an Applicable Rate. The Base Rate represents the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50 percent and (z) the Eurodollar Rate plus 1.00 percent. In connection with determining the interest rates on the Term Loan A and Term Loan B facilities, in no event shall the Eurodollar Rate be less than 1.25 percent and the Base Rate be less than 2.25 percent. Effective with the First Refinancing Amendment to the Credit Agreement, the Applicable Rate for Term Loan B borrowings through maturity is 3.50 percent for Eurodollar Rate loans and letter of credit fees and 2.50 percent for Base Rate loans. The Applicable Rate component of the interest rate for Term Loan A and revolving credit borrowings is based on the Company's consolidated leverage ratio as follows:


Consolidated Leverage Ratio	Eurodollar Rate Term A Facility			Base Rate Term A Facility
³ 3.0:1		3.25	%		2.25	%
³ 2.0:1 and < 3.0:1		3.00	%		2.00	%
< 2.0:1		2.75	%		1.75	%

The Company may select interest periods of one, two, three or six months for Eurodollar Rate loans. Interest is payable at the end of the selected interest period. From August 17, 2010 through March 9, 2011, the interest rate on borrowings under the Credit Agreement was 6.75 percent per annum. Subsequent to March 9, 2011, the interest rate on Term Loan A borrowings was 4.50 percent and Term Loan B borrowings was 4.75 percent. The Company must also pay a fee of 0.50 percent per annum on unused commitments under the revolving credit facility.

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company's and its subsidiaries' ability to incur additional indebtedness or issue certain preferred stock, create liens on assets, enter into sale and leaseback transactions, engage in mergers or consolidations with other companies, sell assets, pay dividends, repurchase capital stock, make investments, loans and advances, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements, repay certain indebtedness, change the nature of the Company's business, change accounting policies and practices, grant negative pledges and incur capital expenditures. In addition, the Credit Agreement requires the Company to maintain a maximum consolidated leverage ratio as shown in the table below and a minimum interest coverage ratio of 2.25 to 1.00 and also contains certain customary affirmative covenants and events of default.

The maximum consolidated leverage ratio is as follows:


For the period		Maximum Consolidated Leverage Ratio
August 17, 2010 to September 30, 2011		£4.75:1
October 1, 2011 to September 30, 2012		£4.50:1
October 1, 2012 to September 30, 2013		£3.75:1
Thereafter		£3.00:1

As of June 30, 2011, the Company's consolidated leverage ratio was 3.93x and the Company's interest coverage ratio was 2.86x.

The Company's Credit Agreement, in effect prior to the adoption of the Amendment, included a requirement that the Company enter into and maintain interest rate swap contracts covering a notional value of not less than 50 percent of the Company's aggregate consolidated outstanding indebtedness (other than total revolving credit outstanding) including the Senior Notes for a period of not less than three years. On November 15, 2010, the Company entered into derivative instruments consisting of (i) a one year interest rate cap with a notional value of $220.0 million and (ii) two year forward starting interest rate swaps with notional value of $300.0 million. Under the interest rate cap, the Company would pay a fixed rate of 1.75 percent per annum plus an applicable rate (an aggregate of 6.75 percent per annum for the period beginning November 15, 2010 through December 30, 2011) on the $220 million rather than a variable rate plus an applicable rate should the variable rate plus applicable rate exceed 6.75 percent. In connection with the refinancing, the Company terminated the two year forward starting interest rate swaps and paid a termination fee of approximately $0.3 million, which is reflected in interest expense and other in the Company's consolidated statement of income for the six months ended June 30, 2011. As of June 30, 2011, the Company was in compliance with all covenants in the Credit Agreement.

Guaranty Agreement and Security Agreement

Gentiva and substantially all of its subsidiaries (the "Guarantor Subsidiaries") entered into a guaranty agreement pursuant to which the Guarantor Subsidiaries have agreed, jointly and severally, to guarantee all of the Company's obligations under the Credit Agreement. Additionally, Gentiva and its Guarantor Subsidiaries entered into a security agreement pursuant to which a first-priority security interest was granted in substantially all of the Company's and its Guarantor Subsidiaries' present and future real, personal and intangible assets, including the pledge of 100 percent of all outstanding capital stock of substantially all of the Company's domestic subsidiaries to secure full payment of all of the Company's obligations for the ratable benefit of the lenders.

Senior Notes

The Senior Notes are unsecured, senior subordinated obligations of the Company. The Senior Notes are guaranteed by all of Gentiva's subsidiaries that are guarantors under the Credit Agreement. Interest on the Senior Notes accrues at a rate of 11.5 percent per annum and is payable semi-annually in arrears on March 1 and September 1. Gentiva will make each interest payment to the holders of record on the immediately preceding February 15 and August 15.

The Senior Notes mature on September 1, 2018 and are generally free to be transferred. Gentiva may redeem the Senior Notes, in whole or in part, at any time prior to the first interest payment of 2014, at a price equal to 100 percent of the principal amount of the Senior Notes redeemed plus an applicable make-whole premium based on the present value of the remaining payments discounted at the treasury rate plus 50 basis points plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to September 1, 2013, Gentiva may redeem up to 35 percent of the aggregate principal amount of the Senior Notes with the net cash proceeds of a qualified equity offering at a redemption price equal to 111.5 percent of the aggregate principal amount, provided that (i) at least 65 percent of the aggregate principal amount of Senior Notes originally issued remain outstanding after the occurrence of such redemption and (ii) such redemption occurs within 180 days after the closing of a qualified equity offering.

On or after September 1, 2014, Gentiva may redeem all or part of the Senior Notes at redemption prices set forth below plus accrued and unpaid interest and Additional Interest, if any, as defined in the indenture relating to the Senior Notes during the twelve month period beginning on September 1 of the years indicated below:


Year	Percentage
2014		105.750	%
2015		102.875	%
2016 and thereafter		100.000	%

Other

The Company has equipment capitalized under capital lease obligations. At June 30, 2011 and December 31, 2010, long-term capital lease obligations were $0.1 million and $0.2 million, respectively, and were recorded in other liabilities on the Company's consolidated balance sheets. The current portion of obligations under capital leases was $0.2 million and $0.3 million at June 30, 2011 and December 31, 2010, respectively, and was recorded in other accrued expenses on the Company's consolidated balance sheets.