UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
May 14, 2007
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8351 31-0791746
-------- ------ ----------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
2600 Chemed Center, 255 East 5th Street, Cincinnati, OH 45202
------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(513) 762-6900
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 230.425)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under
Exchange Act (17 CFR 230.425)
[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under
Exchange Act (17 CFR 230.425)
Page 1 of 5
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
PURCHASE AGREEMENT
On May 8, 2007 Chemed Corporation ("We") entered into a Purchase Agreement
with J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. (the "Initial
Purchasers") for our issuance and sale of $180 million in aggregate principal
amount of our 1.875% Senior Convertible Notes due 2014 (the "Notes"). On May 9,
2007, the Initial Purchasers exercised an over-allotment option to purchase an
additional $20 million in aggregate principal amount of Notes. On May 14, 2007 a
total of $200 million in aggregate principal amount of the Notes were sold to
the Initial Purchasers at a price of $1,000 per Note, less an initial purchaser
discount of $27.50 per Note. The Notes are to be resold by the Initial
Purchasers pursuant to Rule 144A of the Securities Act of 1933, as amended (the
"Securities Act").
The Purchase Agreement includes customary representations, warranties and
covenants. Under the terms of the Purchase Agreement, we have agreed to
indemnify the Initial Purchasers against certain liabilities.
This description of the Purchase Agreement is qualified by reference to its
filing as Exhibit 1.1, and incorporated herein by reference.
CONVERTIBLE NOTE HEDGE AND WARRANT TRANSACTIONS
On May 8, 2007 we entered into convertible note hedge transactions and
warrant transactions with JPMorgan Chase, National Association and Citibank,
N.A. (the "Counterparties"). These transactions included purchased call options
and sale of warrants. Our net cost for these transactions was approximately
$27.3 million.
The purchased call options cover approximately 2,477,000 shares of our
Capital Stock, par value $1 per share, which under most circumstances represents
the maximum number of shares of Capital Stock that underlie the Notes.
Concurrently with entering into the purchased call options, we entered into
warrant transactions with each of the Counterparties. Pursuant to the warrant
transactions, we sold to the Counterparties warrants to purchase in the
aggregate approximately 2,477,000 shares of Capital Stock. In most cases, the
warrants may not be exercised prior to the maturity of the Notes.
The purchased call options and sold warrants are separate contracts with
the Counterparties, are not part of the terms of the Notes and do not affect the
rights of holders under the Notes. A holder of the Notes will not have any
rights with respect to the purchased call options or the sold warrants. The
purchased call options are expected to reduce the potential dilution upon
conversion of the Notes if the market value per share of the Capital Stock at
the time of exercise is greater than approximately $80.73, which corresponds to
the initial conversion price of the Notes. The sold warrants have an exercise
price of $105.44 and are expected to result in some dilution should the price of
our Capital Stock exceed this exercise price.
This description of the convertible note hedge transaction documents and
warrant transaction documents are qualified by reference to the documents filed
as Exhibits 10.1, 10.2, 10.3 and 10.4, which are incorporated herein by
reference.
Page 2 of 5
INDENTURE
We issued the $200 million of Notes pursuant to an Indenture dated May 14,
2007 by and among us, as issuer, the subsidiary guarantors named therein, and
LaSalle National Bank National Association, as trustee (the "Indenture"). We
received approximately $194 million in net proceeds from the sale of the Notes
after paying initial purchaser discounts, legal and other expenses.
We will pay interest on the Notes on May 15 and November 15 of each year,
beginning on November 15, 2007. The Notes will mature on May 15, 2014. The Notes
are guaranteed on an unsecured senior basis by each of our subsidiaries that is
a borrower or a guarantor under any senior credit facility, as defined in the
Indenture.
The Notes are convertible, under certain circumstances, into Capital Stock
at a conversion rate of 12.3874 shares per $1,000 principal amount of Notes.
This conversion rate is equivalent to an initial conversion price of
approximately $80.73 per share. Prior to March 1, 2014, holders may convert
their Notes under certain circumstances. On and after March 1, 2014, the Notes
will be convertible at any time prior to the close of business on the business
day before the stated maturity date of the Notes. Upon conversion of a Note, if
the conversion value is $1,000 or less, holders will receive cash equal to the
lesser of $1,000 or the conversion value of the number of shares of Capital
Stock. If the conversion value exceeds $1,000, in addition to this, holders will
receive Capital Stock for the excess amount.
The Indenture contains customary terms and covenants that upon certain
events of default, including without limitation, failure to pay when due any
principal amount or a fundamental change or certain cross defaults in other
agreements or instruments, occurring and continuing, either the trustee or the
holders of 25% in aggregate principal amount of the Notes may declare the
principal of the Notes and any accrued and unpaid interest through the date of
such declaration immediately due and payable. In the case of certain events of
bankruptcy or insolvency relating to any significant subsidiary, or us the
principal amount of the Notes and accrued interest automatically becomes due and
payable.
This description of the Indenture is qualified in its entirety by
reference to Exhibit 4.1, incorporated herein by reference.
Page 3 of 5
REGISTRATION RIGHTS AGREEMENT
We, our subsidiary guarantors and the Initial Purchasers entered into a
Registration Rights Agreement (the "RRA") dated May 14, 2007. Pursuant to the
RRA, we and our subsidiary guarantors agreed for the benefit of the holders of
the Notes and the Capital Stock issuable upon conversion of the Notes that we
will, no later than the 120th day after May 14, 2007, file a shelf registration
statement covering resales of the Notes and the Capital Stock issuable upon
conversion pursuant to Rule 415 under the Securities Act. We will also cause the
shelf registration statement to be declared effective under the Securities Act
no later than the 180th day after May 14, 2007.
This description of the RRA is qualified by reference to the RRA filed
as Exhibit 10.5, incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The description of the Indenture in Item 1.01, above is incorporated
herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On May 8, 2007 in connection with the warrant transactions described in
Item 1.01, above, we sold to the Counterparties warrants for approximately
2,477,000 shares of Capital Stock. We sold these warrants in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act.
The description of the warrant transaction documents in Item 1.01 above
is incorporated herein by reference.
ITEM 8.01 OTHER EVENTS.
On May 14, 2007, we issued a press release, filed herewith as Exhibit
99.1 and incorporated herein by reference.
Page 4 of 5
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
c) Exhibits
(1.1) Purchase Agreement dated May 8, 2007, by and among Chemed
Corporation, J.P. Morgan Securities Inc. and Citigroup Global Markets
Inc.
(4.1) Convertible Senior Note Indenture dated May 14, 2007 for the
1.875% Convertible Senior Notes due 2014 by and among Chemed
Corporation, the Subsidiary Guarantors and LaSalle Bank National
Association, as Trustee.
(10.1) Confirmation of Convertible Note Hedge, dated May 8, 2007,
between Chemed Corporation and JPMorgan Chase Bank, National
Association.
(10.2) Confirmation of Convertible Note Hedge, dated May 8, 2007,
between Chemed Corporation and Citibank, N.A.
(10.3) Confirmation of Convertible Note Warrant Transaction, dated May
8, 2007, between Chemed Corporation and JPMorgan Chase Bank, National
Association.
(10.4) Confirmation of Convertible Note Warrant Transaction, dated May
8, 2007, between Chemed Corporation and Citibank, N.A.
(10.5) Registration Rights Agreement, dated May 14, 2007, by and among
Chemed Corporation, J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc.
(99.1) Registrant's press release dated May 14, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
CHEMED CORPORATION
Dated: MAY 17, 2007 By: /S/ ARTHUR V. TUCKER, JR.
-------------- --------------------------
Arthur V. Tucker, Jr.
Vice President and Controller
Page 5 of 5