AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 2004
REGISTRATION NO. (333- )
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
CHEMED CORPORATION
(FORMERLY ROTO-ROOTER, INC.)
(Exact name of Registrant as specified in its charter)
DELAWARE 7699 31-0791746
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2600 CHEMED CENTER
255 EAST FIFTH STREET
CINCINNATI, OHIO 45202-4726
(513) 762-6900
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive office)
NAOMI C. DALLOB
Vice President and Secretary
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
(513) 762-6900
(Name, address, including zip code, and telephone number, including
area code, of agent for service for Registrant)
____________________
COPY TO:
THOMAS E. DUNN
Cravath, Swaine & Moore LLP
Worldwide Plaza, 825 Eighth Avenue
New York, New York 10019
(212) 474-1000
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective time of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
____________________
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT(1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
--------------------------- -------------- -------------------------- --------------------------- ----------------
8 3/4% Senior Notes due 2011 $150,000,000 100% $150,000,000 $19,005
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(f)(2) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek an offer to
buy these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, dated May 20, 2004
PROSPECTUS
CHEMED CORPORATION
(FORMERLY ROTO-ROOTER, INC.)
OFFER TO EXCHANGE
UP TO $150,000,000 PRINCIPAL AMOUNT OUTSTANDING OF
8 3/4% SENIOR NOTES DUE 2011
FOR
A LIKE PRINCIPAL AMOUNT OF NEW 8 3/4% SENIOR NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
______________
We are offering to exchange registered new 8 3/4% Senior Notes due 2011
(the "New Notes") for all of our outstanding unregistered 8 3/4% Senior Notes
due 2011 (the "Original Notes"). The New Notes will be free of the transfer
restrictions that apply to our outstanding unregistered Original Notes that
you currently hold, but will otherwise have substantially the same terms of
such outstanding Original Notes. This offer will expire at 5:00 p.m., New York
City time, on [ ], 2004, unless we extend it. The New Notes will not trade on
any established exchange.
Each broker-dealer that receives New Notes for its own account pursuant
to this exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The letter of transmittal
accompanying this prospectus states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
outstanding Original Notes where such Original Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the expiration
of this exchange offer, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
______________
SEE "RISK FACTORS" BEGINNING ON PAGE 10 TO READ ABOUT IMPORTANT FACTORS
YOU SHOULD CONSIDER BEFORE TENDERING YOUR ORIGINAL NOTES IN THIS EXCHANGE
OFFER.
______________
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
______________
Prospectus dated , 2004
______________
TABLE OF CONTENTS
PAGE
----
WHERE YOU CAN FIND MORE INFORMATION......................................i
INCORPORATION BY REFERENCE...............................................i
FORWARD-LOOKING STATEMENTS...............................................iv
SUMMARY..................................................................1
RISK FACTORS.............................................................10
THE EXCHANGE OFFER.......................................................15
USE OF PROCEEDS..........................................................24
RATIOS OF EARNINGS TO FIXED CHARGES......................................24
DESCRIPTION OF THE NEW NOTES.............................................25
EXCHANGE OFFER AND REGISTRATION RIGHTS...................................80
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS..................83
PLAN OF DISTRIBUTION.....................................................84
BOOK-ENTRY; DELIVERY AND FORM............................................85
LEGAL MATTERS............................................................88
EXPERTS..................................................................88
______________
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 with respect to the New Notes offered in
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits to that registration
statement. For further information with respect to us and the New Notes, we
refer you to the registration statement and its exhibits. We also file annual,
quarterly and special reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the Public Reference Room
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's website at
http://www.sec.gov and on our website at http://www.chemed.com. Reports
and other information concerning us can also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, phone
(212) 656-5060. Our capital stock is listed and traded on the New York Stock
Exchange under the trading symbol "CHE." With the exception of the documents
we file with the SEC, the information contained on our website is not
incorporated by reference in this prospectus and you should not consider it a
part of this prospectus.
INCORPORATION BY REFERENCE
We are incorporating by reference the information that we file with the
SEC, which means that we are disclosing important information to you in those
documents. The information incorporated by reference is an important part of
this prospectus, and the information that we subsequently file with the SEC
will automatically update and supercede information in this prospectus and in
our other filings with
i
the SEC. We incorporate by reference into this prospectus the documents listed
below, as amended and supplemented, and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus and prior to the time the exchange
offer made hereby is completed; we are not, however, incorporating by
reference any documents or portions thereof, whether specifically listed below
or filed in the future, that are not deemed "filed" with the SEC, including
any information furnished pursuant to Items 9 or 12 of Form 8-K:
o Annual Report on Form 10-K for the year ended December 31, 2003, filed on
March 12, 2004;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed
on May 10, 2004; and
o Amended Current Report on Form 8-K/A filed on February 23, 2004, Current
Report on Form 8-K filed on February 24, 2004, Current Report on Form 8-K
filed on April 7, 2004 and Current Report on Form 8-K filed on May 18,
2004.
Any statement contained in this prospectus, or in a document all or a
portion of which is incorporated by reference in this prospectus, will be
deemed to be modified or superceded for purposes of this prospectus to the
extent that a statement contained in this prospectus modifies or supercedes
the statement. Any such statement or document so modified or superceded will
not be deemed, except as so modified or superceded, to constitute a part of
this prospectus.
You may request a copy of any of our filings with the SEC, or any of the
agreements or other documents that constitute exhibits to those filings, at no
cost, by writing or telephoning us at the following address or phone number:
Chemed Corporation
c/o Investor Relations
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
Telephone: (800) 224-3622 or (513) 762-6463
TO OBTAIN TIMELY DELIVERY OF ANY OF OUR FILINGS, AGREEMENTS OR OTHER
DOCUMENTS, YOU MUST MAKE YOUR REQUEST TO US NO LATER THAN FIVE BUSINESS DAYS
BEFORE THE EXPIRATION DATE OF THE EXCHANGE OFFER. THE EXCHANGE OFFER WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON [ ], 2004. THE EXCHANGE OFFER CAN
BE EXTENDED BY US IN OUR SOLE DISCRETION. SEE THE SECTION ENTITLED "THE
EXCHANGE OFFER" FOR MORE DETAILED INFORMATION.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE
YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE
ON THE FRONT COVER OF THIS PROSPECTUS.
MARKET DATA
The market data and certain industry forecasts contained or incorporated
by reference in this prospectus are based on internal surveys, market
research, publicly available information, industry publications or good faith
estimates of our management. Industry publications generally state that the
information contained therein has been obtained from sources believed to be
reliable, but that the
ii
accuracy and completeness of such information is not guaranteed.
Similarly, internal surveys, industry forecasts and market research, while
believed to be reliable, have not been independently verified, and we make no
representation as to the accuracy of such information.
______________
"Chemed," "Roto-Rooter," "Service America" and "Vitas" are trademarks of
Chemed Corporation. All other trademarks, service marks or trade names
referred to in this prospectus are the property of their respective owners.
iii
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
the federal securities laws. These forward-looking statements generally can be
identified by use of statements that include words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe" and other words
and terms of similar meaning, although not all forward-looking statements
contain such words. Statements that describe our objectives, plans or goals
are also forward-looking statements. These forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. Factors that could materially
affect these forward-looking statements can be found in our periodic reports
filed with the SEC and herein under the heading "Risk Factors." Potential
investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on these forward-looking statements. The forward-looking statements
included in this prospectus are made only as of the date of this prospectus,
and we undertake no obligation to publicly update these forward-looking
statements to reflect new information, future events or otherwise. In light of
these risks, uncertainties and assumptions, the forward-looking events might
or might not occur. We cannot assure you that projected results or events will
be achieved.
iv
SUMMARY
This summary highlights some of the information included in other parts
of this prospectus and the documents we incorporate by reference herein. This
summary may not contain all the information that may be important to you. You
should carefully read the entire prospectus, including the "Risk Factors"
section and the financial data and related notes, and the documents
incorporated by reference herein, before investing in New Notes. As used in
this prospectus, unless otherwise indicated or the context otherwise requires,
the terms "Chemed," "we," "the Company," "us" and "our" refer to Chemed
Corporation together with its subsidiaries.
BUSINESS
We are involved in three lines of business: plumbing and drain cleaning
services, heating/air-conditioning repair, and hospice care. We entered the
hospice care business when we acquired the remaining 63% of Vitas Healthcare
Corporation ("Vitas") that we did not previously own on February 24, 2004.
We believe our Roto-Rooter business is the largest provider of plumbing
and drain cleaning services in North America, providing repair and maintenance
services to residential and commercial accounts. We operate through more than
100 company-owned branches and independent contractors and 500 franchisees. We
offer services to more than 90% of the U.S. population and approximately 55%
of the Canadian population. We also have licensed master franchisees in
Australia, China, Indonesia, Japan, Mexico, the Philippines and the United
Kingdom.
Our Service America business provides residential and commercial
appliance and heating/air-conditioning repair, maintenance and replacement
services. Service America also sells air conditioning equipment and duct
cleaning services.
Vitas is the nation's largest provider of hospice services for patients
with severe, life-limiting illnesses. This type of care is aimed at making the
terminally ill patient's final days as comfortable and pain free as possible.
Hospice care is typically available to patients who have been initially
certified as terminally ill (i.e., a prognosis of six months or less).
Vitas' hospice operations began in South Florida in 1978 and Vitas was
incorporated as a for-profit corporation in 1983. Today, Vitas provides a
comprehensive range of hospice services through 26 operating programs covering
many of the large population areas in the U.S., including Florida, California,
Texas and Illinois. Vitas has over 6,000 employees including approximately
2,400 nurses and 1,500 home health aides.
We are a holding company and derive all of our operating income from our
subsidiaries.
The Company's name was Roto-Rooter, Inc. until May 17, 2004, when its
name became Chemed Corporation.
OUR ADDRESS
Our executive offices are located at 225 E. Fifth Street, Cincinnati,
Ohio 45202 and our telephone number is (513) 762-6900. Our website is located
at http://www.chemed.com. The information on our website is not part of
this prospectus.
1
EXCHANGE OFFER
Background.....................On February 24, 2004, we completed a private placement of the Original Notes.
In connection with that private placement, we entered into a registration rights
agreement in which we agreed, among other things, to complete an exchange offer.
The Exchange Offer.............We are offering to exchange our New Notes which have been registered under the
Securities Act of 1933 (the "Securities Act") for a like principal amount of our
outstanding, unregistered Original Notes.
As of the date of this prospectus, $150,000,000 in aggregate principal amount of
our Original Notes are outstanding.
Resale of New Notes............We believe that New Notes issued pursuant to the exchange offer in exchange for
Original Notes may be offered for resale, resold and otherwise transferred by you
without compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that:
o you are acquiring the New Notes in the ordinary course of your business;
o you have not engaged in, do not intend to engage in, and have no arrangement
or understanding with any person to participate in the distribution of the New Notes;
and
o you are not our affiliate as defined under Rule 405 of the Securities Act.
Each participating broker-dealer that receives New Notes for its own account pursuant
to the exchange offer in exchange for Original Notes, where such Original Notes were
acquired as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
Any holder of Original Notes who:
o is our affiliate;
o does not acquire New Notes in the ordinary course of its business;
o tenders in the exchange offer with the intention to participate, or for the purpose
of participating, in a distribution of New Notes; or
o is a broker-dealer that acquired the Original Notes directly from us, must comply
with the registration and prospectus delivery requirements of the Securities Act in
connection with the resale of New Notes.
2
Consequences If You
Do Not Exchange Your
Original Notes.................Original Notes that are not tendered in the exchange offer or are not accepted for
exchange will continue to bear legends restricting their transfer. You will not be
able to offer or sell the Original Notes unless:
o pursuant to an exemption from the requirements of the Securities Act;
o the Original Notes are registered under the Securities Act; or
o the transaction requires neither such an exemption nor registration.
After the exchange offer is closed, we will no longer have an obligation to register
the Original Notes, except for some limited exceptions. See "Risk Factors--Failure
to Exchange Your Original Notes."
Expiration Date................5:00 p.m., New York City time, on [ ], 2004, unless we extend the exchange offer.
Certain Conditions to
the Exchange Offer.............The exchange offer is subject to certain customary conditions, which we may waive.
Special Procedures for
Beneficial Holders.............If you beneficially own Original Notes that are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and you wish to tender in the
exchange offer, you should contact such registered holder promptly and instruct such person
to tender on your behalf. If you wish to tender in the exchange offer on your own
behalf, you must, prior to completing and executing the letter of transmittal and delivering your
Original Notes, either arrange to have the Original Notes registered in your name or obtain a
properly completed bond power from the registered holder. The transfer of registered ownership
may take a considerable time.
Withdrawal Rights..............You may withdraw your tender of Original Notes at any time before the offer expires.
Accounting Treatment...........We will not recognize any gain or loss for accounting purposes upon the completion of the
exchange offer. The expenses of the exchange offer that we pay will increase our deferred
financing costs in accordance with generally accepted accounting principles. See "The
Exchange Offer--Accounting Treatment."
Certain Tax Consequences.......The exchange pursuant to the exchange offer generally should not be a taxable event for
U.S. Federal income tax purposes.
3
Use of Proceeds................We will not receive any proceeds from the exchange or the issuance of New Notes in
connection with the exchange offer.
Exchange Agent.................LaSalle Bank National Association is serving as exchange agent with respect to the
New Notes in connection with the exchange offer.
4
SUMMARY DESCRIPTION OF THE NEW NOTES
The New Notes have the same financial terms and covenants as the Original
Notes, which are as follows below. For a more complete description of the New
Notes, please refer to the section of this prospectus entitled "Description of
the New Notes."
Issuer.........................Chemed Corporation.
New Notes Offered..............$150,000,000 aggregate principal amount of 8 3/4% Senior Notes due 2011.
Maturity Date..................February 24, 2011.
Issue Price....................100% plus accrued interest, if any, from the issue date.
Interest.......................8-3/4% per year, payable semi-annually in arrears on February 15 and August 15 of each
year, beginning on August 15, 2004.
Optional Redemption............On or after February 24, 2007, we may redeem some or all of the New Notes at the
redemption prices listed in the "Description of the New Notes--Optional Redemption"
section of this prospectus, plus accrued but unpaid interest to the redemption date.
At any time prior to February 24, 2007, we may redeem all, but not less than all, the
New Notes at a redemption price equal to 100% of the principal amount plus a make-whole
premium described in the "Description of the New Notes--Optional Redemption" section
of this prospectus.
At any time prior to February 24, 2007, we may, on any one or more occasions, redeem up
to 35% of the aggregate principal amount of New Notes issued at a redemption price equal
to 108.750% of the principal amount thereof, plus accrued but unpaid interest to the
redemption date, with the net cash proceeds of one or more equity offerings of
Chemed, provided that:
(1) at least 65% of the aggregate principal amount of New Notes issued remains
outstanding immediately after the occurrence of that redemption; and
(2) the redemption occurs within 60 days of the date of the closing of the
equity offering.
In addition, to the extent that we have not redeemed up to 35% of the New Notes with
the net cash proceeds of sales of our equity as described in the previous sentence, we
may also use the net cash proceeds of a Qualifying Subsidiary Stock Sale to redeem such
principal amount of New Notes on the same terms as provided above. A Qualifying Subsidiary
Stock Sale is a sale of the capital stock of, at our option, either Vitas or
5
Roto-Rooter Management Company (but not both), provided such sale meets certain conditions. See
"Description of the New Notes--Certain Definitions--Qualifying Subsidiary Stock Sale."
Change of Control..............If a Change of Control (as defined in "Description of the New Notes - Change of Control")
occurs, subject to certain conditions, we must offer to purchase the New Notes at a
purchase price in cash equal to 101% of each New Note, plus accrued but unpaid interest
to the redemption date.
Ranking........................The New Notes will rank:
o equal in right of payment with our existing and future senior debt; and
o senior in right of payment to our existing and future debt subordinated to the
New Notes.
The New Notes will not be secured by our assets or those of any of our subsidiaries.
As a result, the New Notes will be effectively subordinated to our existing and future
secured debt to the extent of the value of the collateral securing such debt.
The New Notes will not be guaranteed by any of our existing or future subsidiaries.
As a result, the New Notes will be effectively subordinated to the liabilities and
preferred stock of our subsidiaries with respect to the assets and earnings of such
subsidiaries.
As of March 31, 2004, we had approximately $335.6 million of indebtedness, of which
$170.0 million was secured indebtedness and $1.6 million was indebtedness of our
subsidiaries. At such date, our subsidiaries had total indebtedness and other liabilities
of $294.0 million, including $170.0 million of guarantees of indebtedness under our
senior secured credit facilities governed by the Credit Agreement dated February 24, 2004,
among us, certain of our subsidiaries, and Bank One, NA, as Administrative Agent (the
"Credit Agreement"), which document is filed as an exhibit hereto and incorporated by
reference herein, and $110,000,000 principal amount of our Floating Rate Senior
Secured Notes due 2010 (the "Floating Rate Notes") issued pursuant to the Indenture dated
February 24, 2004, among us, certain of our subsidiaries, and Wells Fargo Bank N.A., as
Trustee, which document is filed as an exhibit hereto and incorporated by reference herein.
Certain Covenants..............The indenture governing the New Notes contains covenants that, among other things, limit
our and certain of our subsidiaries' ability to:
6
o incur additional debt;
o pay dividends, make redemptions and purchases of capital stock and make other restricted
payments;
o issue and sell capital stock of subsidiaries;
o sell assets;
o engage in transactions with affiliates;
o restrict distributions from subsidiaries;
o incur liens;
o engage in businesses other than permitted businesses;
o engage in sale/leaseback transactions; and
o engage in mergers or consolidations.
All of these covenants are subject to a number of important exceptions and qualifications
described under "Description of the New Notes & Certain Covenants."
Designation of
Subsidiaries as Unrestricted
Subsidiaries...................We have the right to designate Vitas and its subsidiaries or Roto-Rooter Management
Company and its subsidiaries (but not both) as unrestricted subsidiaries if certain
conditions are met, including that we meet an adjusted leverage ratio excluding the
indebtedness and EBITDA of the subsidiaries to be so designated. We may also, in certain
circumstances, sell the capital stock of Vitas or Roto-Rooter Management Company, or
permit Vitas or Roto-Rooter Management Company to sell its capital stock, or distribute
the capital stock of Roto-Rooter Management Company to our stockholders. If we designate
Vitas and its subsidiaries or Roto-Rooter Management Company and its subsidiaries as
unrestricted subsidiaries, they would not be required to comply with the restrictive
covenants in the indenture governing the New Notes, except in very limited instances.
See "Risk Factors & Under the indenture for the New Notes, we may, in certain
circumstances, designate either Vitas and its subsidiaries or Roto-Rooter Management
Company and its subsidiaries as unrestricted subsidiaries of ours, allowing them not to
comply with many restrictive covenants contained in the indenture for the New Notes"
and "Description of the New Notes--Certain Covenants--Limitation on Designation of
Subsidiaries as Unrestricted Subsidiaries."
7
Exchange Offer and
Registration Rights............Under a registration rights agreement, we agreed to:
o file a registration statement within 90 days after the issue date of the Original
Notes enabling the holders of the Original Notes to exchange the Original Notes
for publicly registered notes with substantially the same terms;
o use our reasonable best efforts to cause the registration statement to become
effective within 180 days after the issue date of the Original Notes;
o use our reasonable best efforts to consummate the exchange offer by the earlier of
210 days after the issue date of the Original Notes and 60 days after the registration
statement becomes effective, subject to certain exceptions;
o file a shelf registration statement for the resale of the Original Notes if we cannot
effect an exchange offer within the time period listed above and in some other
circumstances; and
o if a shelf registration statement is required, use our reasonable best efforts to cause
the shelf registration statement to be declared effective and to keep the shelf registration
statement effective until the earlier of two years from the date of the effectiveness of the
shelf registration statement or the time when all the Original Notes covered by the shelf
registration statement have been sold or when they may be sold pursuant to Rule 144 under
the Securities Act, subject to certain exceptions.
See "Exchange Offer and Registration Rights."
Book-Entry; Delivery and Form..Initially, the New Notes will be represented by one or more permanent global certificates
in definitive, fully registered form deposited with a custodian for, and registered in the
name of, a nominee of The Depository Trust Company. See "Book-Entry; Delivery and Form."
Absence of a Public Market
for the New Notes..............There is no public trading market for the New Notes and we do not intend to apply for
listing of the New Notes on any national securities exchange or for quotation of the
New Notes on any automated dealer quotation system. See "Risk Factors--Risks Related to
the New Notes--An active trading market may not develop for the New Notes, which could
reduce their value."
8
RISK FACTORS
Prior to acquiring any of the New Notes or exchanging any of the Original
Notes, you should consider carefully all the information contained and
incorporated by reference in this prospectus and, in particular, should
evaluate the specific factors under the section "Risk Factors" beginning on
page 10.
9
RISK FACTORS
You should carefully consider the following risk factors and all the
information and risk factors set forth in this prospectus and incorporated
herein before deciding to acquire any of the New Notes or to exchange any of
the Original Notes.
RISKS RELATED TO THE NEW NOTES
IF YOU FAIL TO EXCHANGE YOUR ORIGINAL NOTES, THEY WILL CONTINUE TO BE
RESTRICTED SECURITIES AND MAY BECOME LESS LIQUID.
Original Notes which you do not tender or we do not accept will,
following the exchange offer, continue to be restricted securities, and you
may not offer to sell them except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
law. We will issue New Notes in exchange for the Original Notes pursuant to
the exchange offer only following the satisfaction of the procedures and
conditions set forth in "The Exchange Offer - Procedures for Tendering." Such
procedures and conditions include timely receipt by the exchange agent of such
Original Notes and of a properly completed and duly executed letter of
transmittal.
Because we anticipate that most holders of Original Notes will elect to
exchange such Original Notes, we expect that the liquidity of the market for
any Original Notes remaining after the completion of the exchange offer may be
substantially limited. Any Original Notes tendered and exchanged in the
exchange offer will reduce the aggregate principal amount at maturity of the
Original Notes outstanding. Following the exchange offer, if you did not
tender your Original Notes you generally will not have any further
registration rights, and such Original Notes will continue to be subject to
certain transfer restrictions. Accordingly, the liquidity of the market for
such Original Notes could be adversely affected. The Original Notes are
currently eligible for sale pursuant to Rule 144A through the Private
Offerings, Resale and Trading through Automated Linkages market of the
National Association of Securities Dealers, Inc. ("PORTAL").
THE NEW NOTES WILL BE EFFECTIVELY SUBORDINATED TO OUR SECURED DEBT TO THE
EXTENT OF THE VALUE OF THE COLLATERAL SECURING THAT DEBT.
Although the New Notes will be our general obligations that rank equal in
right of payment with all of our existing and future senior indebtedness, they
will not be secured. Debt outstanding under our Credit Agreement and the
Floating Rate Notes will be secured by a first priority security interest
(subject to certain exceptions) in substantially all of our assets and,
through secured guarantees, the assets of our subsidiaries. As of March 31,
2004, the total amount of our secured debt was $170.0 million excluding $43.6
million in revolving credit availability and $31.4 million in outstanding
letters of credit. In addition, we may in the future incur additional debt
which may be secured. Therefore, the New Notes will be effectively
subordinated to all of our secured debt, including indebtedness under our
Credit Agreement and the Floating Rate Notes, to the extent of the value of
the collateral securing that debt. Because the New Notes will be unsecured
obligations, your right of payment may be compromised if any of the following
were to occur:
o a bankruptcy, liquidation, reorganization or other winding up involving
us or any of our subsidiaries;
10
o a default in the payment under our Credit Agreement, the Floating Rate
Notes or other secured debt; or
o an acceleration of any debt under our Credit Agreement, the Floating Rate
Notes or other secured debt.
If any of these events were to occur, the holders of the secured debt could
have the right to foreclose on their collateral. Upon the occurrence of any of
these events, there may not be sufficient funds to pay amounts due on the New
Notes.
WE ARE A HOLDING COMPANY, AND WE MAY NOT HAVE ACCESS TO SUFFICIENT CASH TO MAKE
PAYMENTS ON THE NEW NOTES. IN ADDITION, THE NEW NOTES WILL BE EFFECTIVELY
SUBORDINATED TO THE LIABILITIES AND ANY PREFERRED STOCK OF OUR SUBSIDIARIES
BECAUSE THEY WILL NOT BE GUARANTEED BY OUR SUBSIDIARIES.
We are a holding company with no direct operations. Our principal assets
are the equity interests we hold in our operating subsidiaries. As a result,
we are dependent upon dividends and other payments from our subsidiaries to
generate the funds necessary to meet our outstanding debt and other
obligations. Our subsidiaries are legally distinct from us and have no
obligation to pay amounts due on our debt or to make funds available to us for
such payment. Our subsidiaries may not generate sufficient cash from
operations to enable us to make principal and interest payments on our
indebtedness, including the New Notes. Our subsidiaries are permitted under
the terms of our indebtedness to incur additional indebtedness that may
restrict payments from our subsidiaries to us. We cannot assure you that
agreements governing current and future indebtedness of our subsidiaries will
permit those subsidiaries to provide us with sufficient cash to fund payments
on the New Notes when due.
In addition, the New Notes will not be guaranteed by our subsidiaries.
Our Credit Agreement and the Floating Rate Notes will be guaranteed by our
subsidiaries. The ability of the holders of the New Notes to participate in
any distribution of assets of any of our subsidiaries upon liquidation or
bankruptcy will be subject to the prior claims of that subsidiary's creditors,
including trade creditors, secured creditors and creditors holding
indebtedness, preferred stock or guarantees issued by those subsidiaries,
including guarantees under our Credit Agreement and the Floating Rate Notes.
The New Notes, therefore, will be effectively subordinated to all existing and
future indebtedness and other liabilities, including trade payables and
preferred stock of our subsidiaries. As of March 31, 2004, our subsidiaries
had total indebtedness and other liabilities of $294.0 million, including
guarantees of indebtedness of $170.0 million, and no preferred stock
outstanding.
UNDER THE INDENTURE FOR THE NEW NOTES, WE MAY, IN CERTAIN CIRCUMSTANCES,
DESIGNATE EITHER VITAS AND ITS SUBSIDIARIES OR ROTO-ROOTER MANAGEMENT COMPANY
AND ITS SUBSIDIARIES AS UNRESTRICTED SUBSIDIARIES OF OURS, ALLOWING THEM NOT TO
COMPLY WITH MANY RESTRICTIVE COVENANTS CONTAINED IN SUCH INDENTURE.
Under the indenture governing the New Notes, we may designate either
Vitas and its subsidiaries or Roto-Rooter Management Company and its
subsidiaries (but not both) as unrestricted subsidiaries of ours if certain
conditions are met, including that we meet an adjusted leverage ratio
excluding the indebtedness and EBITDA of the subsidiaries to be so designated.
We may also, in certain circumstances, sell the capital stock of Vitas or
Roto-Rooter Management Company, or permit Vitas or Roto-Rooter Management
Company to sell its capital stock, or distribute the capital stock of
Roto-Rooter Management Company to our stockholders. If we
11
designate Vitas or Roto-Rooter Management Company and its respective
subsidiaries as unrestricted subsidiaries, they would not be required to
comply in general with the restrictive covenants in the indenture governing
the New Notes, including the following:
o the limit on debt, which means that these subsidiaries could incur an
unlimited amount of debt, provided such debt is non-recourse to us and
our restricted subsidiaries;
o the limit on restricted payments, except with respect to dividends or
distributions of the capital stock of Vitas by the Company;
o the limit on restrictions on distributions from restricted subsidiaries,
which means that there could be restrictions, for example, in the
agreements governing the debt of those subsidiaries that could restrict
the ability of these subsidiaries to pay dividends to us;
o the limit on sales of assets and capital stock, except with respect to
certain sales by us of capital stock of Vitas or its subsidiaries (but
not including any subsequent sales by Vitas of its own capital stock);
o the limit on transactions with affiliates;
o the limit of the sale or issuance of capital stock of restricted
subsidiaries;
o the limit on liens;
o the limit on sale/leaseback transactions; and
o the limit on mergers and consolidations.
We cannot assure you that sufficient funds will be available to pay
amounts due on the New Notes if Vitas or Roto-Rooter Management Company and
its respective subsidiaries become unrestricted subsidiaries.
HOLDERS OF THE NEW NOTES WILL FACE ADDITIONAL RISKS THAN HOLDERS OF THE
FLOATING RATE NOTES.
Although the New Notes will each be our contractually senior obligations
and will benefit from similar restrictive covenants, holders of the New Notes
will face additional risks than holders of the Floating Rate Notes. For
example:
o The New Notes will be structurally subordinated to the liabilities and
preferred stock of our subsidiaries, whereas the Floating Rate Notes will
be guaranteed on a senior, secured basis by our subsidiaries.
o The New Notes will have a maturity date that is one year longer than the
Floating Rate Notes.
o The New Notes will be effectively subordinated to the extent of the value
of the collateral securing borrowings under our Credit Agreement and the
Floating Rate Notes and any other permitted secured indebtedness, whereas
the Floating Rate Notes will be secured, subject to permitted liens, on a
first priority basis with our Credit Agreement, subject to certain
exceptions.
12
liens, on a first priority basis with our Credit Agreement, subject to
certain exceptions.
o Under the indenture for the New Notes, we are permitted if certain
conditions are met to designate Vitas and its subsidiaries or Roto-Rooter
Management Company and its subsidiaries as unrestricted subsidiaries, in
which case they would not be subject to most of the restrictive covenants
under such indenture, whereas the indenture for the Floating Rate Notes
does not contain these provisions. In addition, under the New Notes, we
will have a greater ability to sell the capital stock of Vitas or
Roto-Rooter Management Company or make a distribution of capital stock of
Roto-Rooter Management Company.
WE MAY BE UNABLE TO PURCHASE THE NEW NOTES UPON A CHANGE OF CONTROL OR TO RAISE
THE FUNDS NECESSARY TO FINANCE SUCH PURCHASES.
Upon a change of control event, holders of the New Notes may require us
to purchase the New Notes for cash at a price equal to 101% of their aggregate
principal amount, plus accrued and unpaid interest, if any.
Our Credit Agreement provide that the occurrence of certain events that
would constitute a change in control for the purposes of the indenture
governing the New Notes will constitute a default under such facilities. Other
future debt may contain prohibitions of events that would constitute a change
in control or would require such debt to be repurchased upon a change in
control. Moreover, the exercise by holders of New Notes of their right to
require us to repurchase their New Notes could cause a default under our
existing or future debt, even if the change in control itself does not result
in a default under existing or future debt, due to the financial effect of
such repurchase on us. Finally, our ability to pay cash to holders of New
Notes upon a repurchase may be limited by our financial resources at the time
of such repurchase. Therefore, we cannot assure you that we will be permitted
to comply with the change of control or that sufficient funds will be
available when necessary to make any required repurchases. Our failure to
purchase New Notes in connection with a change in control would result in a
default under the indentures governing the New Notes. Such a default may, in
turn, constitute a default under future debt as well.
AN ACTIVE TRADING MARKET MAY NOT DEVELOP FOR THE NEW NOTES, WHICH COULD REDUCE
THEIR VALUE.
There is no existing trading market for the New Notes. We do not intend
to apply for listing of the New Notes on a securities exchange or for
inclusion of the New Notes in any automated quotation system. The Original
Notes currently trade in the PORTAL market. However, there can be no assurance
that an active trading market will develop for the New Notes. If an active
trading market does not develop or is not maintained, the market prices of the
New Notes may decline and you may not be able to sell your New Notes.
UNDER UNITED STATES FEDERAL AND STATE FRAUDULENT TRANSFER OR CONVEYANCE
STATUTES, A COURT COULD VOID OUR OBLIGATIONS OR TAKE OTHER ACTIONS DETRIMENTAL
TO THE HOLDERS OF THE NEW NOTES.
The issuance of the New Notes may be subject to review under U.S.
bankruptcy law and comparable provisions of state fraudulent transfer or
conveyance laws if a bankruptcy case or lawsuit is commenced by or against us
or if a lawsuit is commenced against us by unpaid
13
creditors. Under these laws, if a court were to find in such a bankruptcy
or reorganization case or lawsuit that, at the time the Company issued
the New Notes:
(1) it issued the New Notes with the intent to delay, hinder or defraud
present or future creditors; or
(2) (a) it received less than reasonably equivalent value or fair
consideration for issuing the New Notes; and
(b) at the time it issued the New Notes:
(i) it was insolvent or rendered insolvent by reason of
issuing the New Notes;
(ii) it was engaged, or about to engage, in a business or
transaction for which its remaining assets constituted
unreasonably small capital to carry on its businesses; or
(iii) it intended to incur, or believed or reasonably should
have believed that it would incur, debts beyond its
ability to pay such debts as they matured or became due;
then, in either case, a court of competent jurisdiction could (1) void, in
whole or in part, the New Notes and direct the repayment of any amounts paid
thereunder to our other creditors, (2) subordinate the New Notes to our other
debt or (3) take other actions detrimental to the holders of the New Notes.
The measure of insolvency will vary depending upon the law applied in the
case. Generally, however, a person would be considered insolvent if the sum of
its debts, including contingent liabilities, was greater than all of its
assets at fair valuation or if the present fair saleable value of its assets
was less than the amount that would be required to pay the probable liability
on its existing debts, including contingent liabilities, as they become
absolute and matured. An entity may be presumed to be insolvent if it is not
paying its debts as they became due.
We cannot predict:
o what standard a court would apply in order to determine whether we
were insolvent as of the date we issued the New Notes or that
regardless of the method of valuation, a court would determine that
we were insolvent on that date; or
o whether a court would determine that the payments constituted
fraudulent transfers or conveyances on other grounds.
In addition, under U.S. federal bankruptcy law, if a bankruptcy case were
initiated by or against us within 90 days after a payment by us with respect
to the New Notes, if we were insolvent at the time of such payment, and if
certain other conditions were met, all or a portion of such payment could be
avoided as a preferential transfer and the recipient of such payment could be
required to return such payment to us for distribution to other creditors.
Certain states have enacted similar insolvency statutes with varying periods
and other provisions.
14
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original Notes, we entered into a
registration rights agreement with the purchasers, under which we agreed to
use our best efforts to file and have declared effective an exchange offer
registration statement under the Securities Act.
We are making the exchange offer in reliance on the position of the SEC
as set forth in certain no-action letters. However, we have not sought our own
no-action letter. Based upon these interpretations by the SEC, we believe that
a holder of New Notes, but not a holder who is our "affiliate" within the
meaning of Rule 405 of the Securities Act, who exchanges Original Notes for
New Notes in the exchange offer, generally may offer the New Notes for resale,
sell the New Notes and otherwise transfer the New Notes without further
registration under the Securities Act and without delivery of a prospectus
that satisfies the requirements of Section 10 of the Securities Act. We also
believe that a holder may offer, sell or transfer the New Notes only if the
holder acquires the New Notes in the ordinary course of its business and is
not participating, does not intend to participate and has no arrangement or
understanding with any person to participate in a distribution of the New
Notes.
Any holder of the Original Notes using the exchange offer to participate
in a distribution of New Notes cannot rely on the no-action letters referred
to above. A broker-dealer that acquired Original Notes directly from us, but
not as a result of market-making activities or other trading activities must
comply with the registration and prospectus delivery requirements of the
Securities Act in the absence of an exemption from such requirements.
Each broker-dealer that receives New Notes for its own account in
exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Original Notes where such
Original Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The letter of
transmittal states that by acknowledging and delivering a prospectus, a
broker-dealer will not be considered to admit that it is an "underwriter"
within the meaning of the Securities Act. We have agreed that for a period of
180 days after the expiration date, we will make this prospectus available to
broker-dealers for use in connection with any such resale. See "Plan of
Distribution."
Except as described above, this prospectus may not be used for an offer
to resell, resale or other transfer of New Notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of Original Notes in any jurisdiction in which the
exchange offer or the acceptance of it would not be in compliance with the
securities or blue sky laws of such jurisdiction.
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions of the exchange offer, we
will accept any and all Original Notes validly tendered prior to 5:00 p.m.,
New York City time, on the expiration date. The date of acceptance for
exchange of the Original Notes, and completion of the exchange
15
offer, is the exchange date, which will be the first business day following
the expiration date (unless extended as described in this document). We will
issue, on or promptly after the exchange date, an aggregate principal amount
of up to $150,000,000 of New Notes for a like principal amount of outstanding
Original Notes tendered and accepted in connection with the exchange offer.
The New Notes issued in connection with the exchange offer will be delivered
on the earliest practicable date following the exchange date. Holders may
tender some or all of their Original Notes in connection with the exchange
offer, but only in $1,000 increments of principal amount at maturity.
The terms of the New Notes are identical in all material respects to the
terms of the Original Notes, except that the New Notes have been registered
under the Securities Act and are issued free from any covenant regarding
registration, including the payment of liquidated damages upon a failure to
file or have declared effective an exchange offer registration statement or to
complete the exchange offer by certain dates. The New Notes will evidence the
same debt as the Original Notes and will be issued under the same indenture
and entitled to the same benefits under that indenture as the Original Notes
being exchanged. As of the date of this prospectus, $150,000,000 in aggregate
principal amount of Original Notes are outstanding.
In connection with the issuance of the Original Notes, we arranged for
the Original Notes originally purchased by qualified institutional buyers
under the Securities Act to be issued and transferable in book-entry form
through the facilities of The Depository Trust Company ("DTC"), acting as
depositary. Except as described under "Book-Entry, Delivery and Form," the New
Notes will be issued in the form of global notes registered in the name of DTC
or its nominee and each beneficial owner's interest in it will be transferable
in book-entry form through DTC. See "Book-Entry, Delivery and Form."
Holders of Original Notes do not have any appraisal or dissenters' rights
in connection with the exchange offer. Original Notes which are not tendered
for exchange or are tendered but not accepted in connection with the exchange
offer will remain outstanding and be entitled to the benefits of the indenture
under which they were issued, but will not be entitled to any registration
rights under the registration rights agreement.
We shall be considered to have accepted validly tendered Original Notes
if and when we have given oral or written notice to the exchange agent. The
exchange agent will act as agent for the tendering holders for the purposes of
receiving the New Notes from us.
If any tendered old Original Notes are not accepted for exchange because
of an invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, we will return the Original Notes, without expense,
to the tendering holder as quickly as possible after the expiration date.
Holders who tender Original Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes on exchange of Original Notes in connection with
the exchange offer. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. See
"--Fees and Expenses."
16
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City
time, on [ ], 2004, unless extended by us in our sole discretion (but in no
event to a date later than [ ], 2004), in which case the term "expiration
date" shall mean the latest date and time to which the exchange offer is
extended.
We reserve the right, in our sole discretion:
o to delay accepting any Original Notes, to extend the offer or to
terminate the exchange offer if, in our reasonable judgment, any of
the conditions described below shall not have been satisfied, by
giving oral or written notice of the delay, extension or termination
to the exchange agent, or
o to amend the terms of the exchange offer in any manner.
If we amend the exchange offer in a manner that we consider material, we
will disclose such amendment by means of a prospectus supplement, and we will
extend the exchange offer for a period of five to ten business days.
If we determine to make a public announcement of any delay, extension,
amendment or termination of the exchange offer, we will do so by making a
timely release through an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange New Notes for, any Original Notes and may
terminate the exchange offer as provided in this prospectus before the
acceptance of the Original Notes, if:
o any action or proceeding is instituted or threatened in any court or
by or before any governmental agency relating to the exchange offer
which, in our reasonable judgment, might materially impair our
ability to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us, or any material
adverse development has occurred in any existing action or
proceeding relating to us or any of our subsidiaries;
o any change, or any development involving a prospective change, in
our business or financial affairs or any of our subsidiaries has
occurred which, in our reasonable judgment, might materially impair
our ability to proceed with the exchange offer or materially impair
the contemplated benefits of the exchange offer to us;
o any law, statue, rule or regulation is proposed, adopted or enacted,
which in our reasonable judgment, might materially impair our
ability to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us; or
17
o any governmental approval has not been obtained, which approval we,
in our reasonable discretion, consider necessary for the completion
of the exchange offer as contemplated by this prospectus.
The conditions listed above are for our sole benefit and may be asserted
by us regardless of the circumstances giving rise to any of these conditions.
We may waive these conditions in our reasonable discretion in whole or in part
at any time and from time to time. The failure by us at any time to exercise
any of the above rights shall not be considered a waiver of such right, and
such right shall be considered an ongoing right which may be asserted at any
time and from time to time.
If we determine in our reasonable discretion that any of the conditions
are not satisfied, we may:
o refuse to accept any Original Notes and return all tendered Original
Notes to the tendering holders;
o extend the exchange offer and retain all Original Notes tendered
before the expiration of the exchange offer, subject, however, to
the rights of holders to withdraw these Original Notes (see "-
Withdrawal of Tenders" below); or
o waive unsatisfied conditions relating to the exchange offer and
accept all properly tendered Original Notes which have not been
withdrawn.
PROCEDURES FOR TENDERING
Unless the tender is being made in book-entry form, to tender in the
exchange offer, a holder must
o complete, sign and date the letter of transmittal, or a facsimile of
it,
o have the signatures guaranteed if required by the letter of
transmittal, and
o mail or otherwise deliver the letter of transmittal or the
facsimile, the Original Notes and any other required documents to
the exchange agent prior to 5:00 p.m., New York City time, on the
expiration date.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Original Notes by
causing DTC to transfer the Original Notes into the exchange agent's account.
Although delivery of Original Notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal
(or facsimile), with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received or confirmed by
the exchange agent at its address set forth under the caption "Exchange Agent"
below, prior to 5:00 p.m., New York City time, on the expiration date.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
The tender by a holder of Original Notes will constitute an agreement
between us and the holder in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal.
18
The method of delivery of Original Notes and the letter of transmittal
and all other required documents to the exchange agent is at the election and
risk of the holders. Instead of delivery by mail, we recommend that holders
use an overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. No letter of transmittal of Original Notes should be sent to us. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the tenders for such holders.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on behalf of the beneficial owner. If the
beneficial owner wishes to tender on that owner's own behalf, the owner must,
prior to completing and executing the letter of transmittal and delivery of
such owner's Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in the owners' name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signature on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible guarantor institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, unless the Original Notes
tendered pursuant thereto are tendered:
o by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions"
on the letter of transmittal, or
o for the account of an eligible guarantor institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, such guarantee must be by:
o a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.,
o a commercial bank or trust company having an office or correspondent
in the United States, or
o an "eligible guarantor institution."
If the letter of transmittal is signed by a person other than the
registered holder of any Original Notes, the Original Notes must be endorsed
by the registered holder or accompanied by a properly completed bond power, in
each case signed or endorsed in blank by the registered holder.
If the letter of transmittal or any Original Notes or bond powers are
signed or endorsed by trustees, executors, administrators, guardians,
attorney-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by us, submit evidence satisfactory to us of their authority to
act in that capacity with the letter of transmittal.
19
We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance and withdrawal of tendered Original
Notes in our sole discretion. We reserve the absolute right to reject any and
all Original Notes not properly tendered or any Original Notes whose
acceptance by us would, in the opinion of our U.S. counsel, be unlawful. We
also reserve the right to waive any defects, irregularities or conditions of
tender as to any particular Original Notes either before or after the
expiration date. Our interpretation of the terms and conditions of the
exchange offer (including the instructions in the letter of transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes must be cured
within a time period we will determine. Although we intend to request the
exchange agent to notify holders of defects or irregularities relating to
tenders of Original Notes, neither we, the exchange agent nor any other person
will have any duty or incur any liability for failure to give such
notification. Tenders of Original Notes will not be considered to have been
made until such defects or irregularities have been cured or waived. Any
Original Notes received by the exchange agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived
will be returned by the exchange agent to the tendering holders, unless
otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In addition, we reserve the right, as set forth above under the caption
"Conditions to the Exchange Offer," to terminate the exchange offer.
By tendering, each holder represents to us, among other things, that:
o the New Notes acquired in connection with the exchange offer are
being obtained in the ordinary course of business of the person
receiving the New Notes, whether or not such person is the holder;
o neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of
such New Notes; and
o neither the holder nor any such other person is our "affiliate" (as
defined in Rule 405 under the Securities Act).
If the holder is a broker-dealer which will receive New Notes for its own
account in exchange for Original Notes, it will acknowledge that it acquired
such Original Notes as the result of market-making activities or other trading
activities and it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
GUARANTEED DELIVERY PROCEDURES
A holder who wishes to tender its Original Notes and:
o whose Original Notes are not immediately available;
o who cannot deliver the holder's Original Notes, the letter of
transmittal or any other required documents to the exchange agent
prior to the expiration date; or
o who cannot complete the procedures for book-entry transfer before
the expiration date
20
may effect a tender if
o the tender is made through an eligible guarantor institution;
o before the expiration date, the exchange agent receives from the
eligible guarantor institution:
o a properly completed and duly executed notice of guaranteed delivery
by facsimile transmission, mail or hand delivery,
o the name and address of the holder, and
o the certificate number(s) of the Original Notes and the principal
amount at maturity of Original Notes tendered, stating that the
tender is being made and guaranteeing that, within three New York
Stock Exchange trading days after the expiration date, the letter of
transmittal and the certificate(s) representing the Original Notes
(or a confirmation of book-entry transfer), and any other documents
required by the letter of transmittal will be deposited by the
eligible guarantor institution with the exchange agent; and
o the exchange agent receives, within three New York Stock Exchange
trading days after the expiration date, a properly completed and
executed letter of transmittal or facsimile, as well as the
certificate(s) representing all tendered Original Notes in proper
form for transfer or a confirmation of book-entry transfer, and all
other documents required by the letter of transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date.
To withdraw a tender of Original Notes in connection with the exchange
offer, a written facsimile transmission notice of withdrawal must be received
by the exchange agent at its address set forth herein prior to 5:00 p.m., New
York City time, on the expiration date. Any such notice of withdrawal must:
o specify the name of the person who deposited the Original Notes to
be withdrawn,
o identify the Original Notes to be withdrawn (including the
certificate number or numbers and principal amount at maturity of
such Original Notes),
o be signed by the depositor in the same manner as the original
signature on the letter of transmittal by which such Original Notes
were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the trustee
register the transfer of such Original Notes into the name of the
person withdrawing the tender, and
21
o specify the name in which any such Original Notes are to be
registered, if different from that of the depositor.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices. Any Original Notes so
withdrawn will be considered not to have been validly tendered for purposes of
the exchange offer, and no New Notes will be issued unless the Original Notes
withdrawn are validly re-tendered. Any Original Notes which have been tendered
but which are not accepted for exchange or which are withdrawn will be
returned to the holder without cost to such holder as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn Original Notes may be re-tendered by following one of the
procedures described above under the caption "Procedures for Tendering" at any
time prior to the expiration date.
EXCHANGE AGENT
LaSalle Bank National Association has been appointed as exchange agent
for the New Notes. Questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to LaSalle Bank National Association, at its offices at 135 South
LaSalle Street, Suite 1960, Chicago, IL 60603, Attention: Erik R. Benson.
LaSalle Bank National Association's telephone number is (312) 904-2970 and
facsimile number is (312) 904-2236.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay certain other expenses to be
incurred in connection with the exchange offer, including the fees and
expenses of the exchange agent and certain accounting and legal fees.
Holders who tender their Original Notes for exchange will not be
obligated to pay transfer taxes. If, however:
o New Notes are to be delivered to, or issued in the name of, any
person other than the registered holder of the Original Notes
tendered, or
o if tendered Original Notes are registered in the name of any person
other than the person signing the letter of transmittal, or
o if a transfer tax is imposed for any reason other than the exchange
of Original Notes in connection with the exchange offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption from them is not
submitted with the letter of transmittal, the amount of such transfer taxes
will be billed directly to the tendering holder.
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ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Original
Notes as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes
upon the completion of the exchange offer. The expenses of the exchange offer
that we pay will increase our deferred financing costs in accordance with
generally accepted accounting principles.
CONSEQUENCES OF FAILURES TO PROPERLY TENDER ORIGINAL NOTES IN THE EXCHANGE
Issuance of the New Notes in exchange for the Original Notes under the
exchange offer will be made only after timely receipt by the exchange agent of
such Original Notes, a properly completed and duly executed letter of
transmittal and all other required documents. Therefore, holders of the
Original Notes desiring to tender such Original Notes in exchange for New
Notes should allow sufficient time to ensure timely delivery. We are under no
duty to give notification of defects or irregularities of tenders of Original
Notes for exchange. Original Notes that are not tendered or that are tendered
but not accepted by us will, following completion of the exchange offer,
continue to be subject to the existing restrictions upon transfer thereof
under the Securities Act, and, upon completion of the exchange offer, certain
registered rights under the registration rights agreement will terminate.
In the event the exchange offer is completed, we will not be required to
register the remaining Original Notes. Remaining Original Notes will continue
to be subject to the following restrictions on transfer:
o the remaining Original Notes may be resold only if registered
pursuant to the Securities Act, if any exemption from registration
is available, or if neither such registration nor such exemption is
required by law, and
o the remaining Original Notes will bear a legend restricting transfer
in the absence of registration or an exemption.
We do not currently anticipate that we will register the remaining
Original Notes under the Securities Act. To the extent that Original Notes are
tendered and accepted in connection with the exchange offer, any trading
market for remaining Original Notes could be adversely affected.
23
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement entered into in connection with the issuance of
the Original Notes. We will not receive any cash proceeds from the issuance of
the New Notes in the exchange offer.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the periods indicated:
For the Years Ended December 31,
------------------------------------------------------------- For the Three Months Ended
2003 March 31, 2004
------------------------ --------------------------
1999 2000 2001 2002 Historical Pro Forma Historical Pro Forma
---- ---- ---- ---- ---------- --------- ------------- ----------
Ratio of Earnings to Fixed Charges 3.4x 3.7x - 0.6x 1.1x 1.2x 0.1x 0.7x
For purposes of computing the above ratios: (1) earnings consist of
income/(loss) from continuing operations before income taxes plus fixed
charges plus amortization of deferred financing costs less capitalized
interest; and (2) fixed charges consist of interest expense (excluding
amortization of deferred financing costs), the interest component of rent
expense and capitalized interest. In the years ended December 31, 2001 and
2002, and the three months ended March 31, 2004 (historical and pro forma),
our earnings were insufficient to cover fixed charges by $15,727,000,
$2,403,000, $3,284,000 and $2,170,000, respectively.
24
DESCRIPTION OF THE NEW NOTES
Definitions of certain terms used in this Description of the New Notes
may be found under the heading "Certain Definitions." For purposes of this
section, the term "Company" refers only to Chemed Corporation (or any
successor thereto) and not to any of its Subsidiaries.
The Company issued the Original Notes under an Indenture dated as of
February 24, 2004 (the "Indenture"), between the Company and LaSalle Bank
National Association, as trustee (the "Trustee"). The terms of the Original
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the TIA. The New Notes will be issued under the same
Indenture and will be identical in all material respects to the Original
Notes, except that the New Notes will be registered under the Securities Act
and will be free of any obligation regarding registration, including the
payments of liquidated damages upon failure to file or have declared effective
an exchange offer registration statements or to consummate an exchange offer
by certain dates. Unless specifically stated to the contrary, the following
description applies equally to the New Notes and the Original Notes.
The Indenture contains provisions which define your rights under the New
Notes. In addition, the Indenture governs the obligations of the Company
regarding the New Notes. The terms of the New Notes include those stated in
the Indenture and those made part of the Indenture by reference to the TIA.
The following description is meant to be only a summary of certain
provisions of the Indenture. It does not restate the terms of the Indenture in
their entirety. We urge that you carefully read the Indenture as it, and not
this description, governs your rights as Holders.
OVERVIEW OF THE NEW NOTES
The New Notes:
o will be general unsecured obligations of the Company;
o will rank equally in right of payment with all existing and future
Senior Indebtedness of the Company;
o will be senior in right of payment to all existing and future
Subordinated Obligations of the Company;
o will be effectively subordinated to any Secured Indebtedness of the
Company and its Subsidiaries, including Indebtedness under the
Credit Agreement and the Floating Rate Notes, to the extent of the
value of the assets securing such Indebtedness; and
o will be effectively subordinated to all liabilities (including Trade
Payables) and Preferred Stock of each Subsidiary of the Company.
PRINCIPAL, MATURITY AND INTEREST
We will initially issue New Notes in an aggregate principal amount of
$150.0 million. The New Notes will mature on February 24, 2011. We will issue
the New Notes in fully
25
registered form, without coupons, in denominations of $1,000 and any integral
multiple of $1,000.
Each New Note we issue will bear interest at a rate of 8 3/4% per annum
beginning on February 24, 2004, or from the most recent date to which interest
has been paid or provided for. We will pay interest semiannually to Holders of
record at the close of business on the February 1 or August 1 immediately
preceding the interest payment date on February 15 and August 15 of each year
(each an "Interest Payment Date"). We will begin paying interest to Holders on
August 15, 2004. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. We will pay interest on overdue principal
at 1% per annum in excess of such rate, and we will pay interest on overdue
installments of interest at such higher rate to the extent lawful.
We will also pay additional interest on the Original Notes to holders of
the Original Notes if we fail to file a registration statement relating to the
New Notes or if the registration statement is not declared effective on a
timely basis or if certain other conditions are not satisfied. These
provisions are more fully explained under the heading "Exchange and
Registration Rights Agreement." References to "interest" in this description
include any such additional interest.
INDENTURE MAY BE USED FOR FUTURE ISSUANCES
We may issue up to $150.0 million aggregate principal amount of
additional New Notes having identical terms and conditions to the New Notes we
are currently offering (the "Additional New Notes"). We will only be permitted
to issue such Additional New Notes if at the time of such issuance we are in
compliance with the covenants contained in the Indenture and any other
agreements governing the Company's debt, such as the Credit Agreement and the
indenture governing the Floating Rate Notes. Any Additional Notes will be part
of the same issue as the New Notes that we are currently offering and will
vote on all matters with such New Notes.
PAYING AGENT AND REGISTRAR
We will pay the principal of, premium, if any and interest on the New
Notes at any office of ours or any agency designated by us which is located in
the Borough of Manhattan, The City of New York. We have initially designated
the corporate trust office of the Trustee to act as the agent of the Company
in such matters. We, however, reserve the right to pay interest to Holders by
check mailed directly to Holders at their registered addresses.
Holders may exchange or transfer their New Notes at the same location
given in the preceding paragraph. No service charge will be made for any
registration of transfer or exchange of New Notes. We, however, may require
Holders to pay any transfer tax or other similar governmental charge payable
in connection with any such transfer or exchange.
OPTIONAL REDEMPTION
Except as set forth in the following paragraphs, we may not redeem the
New Notes prior to February 24, 2007. After this date, we may redeem the New
Notes, in whole or in part, on not less than 30 nor more than 60 days' prior
notice, at the following redemption prices (expressed as percentages of
principal amount), plus accrued and unpaid interest to, but excluding, the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest, if any, due on the relevant Interest Payment
Date), if redeemed during the 12-month period commencing on February 24 of the
years set forth below:
26
Redemption
Year Price
---- ----------
2007 104.375%
2008 102.917%
2009 101.458%
2010 AND THEREAFTER 100.000%
In addition, prior to February 24, 2007, we may, on one or more
occasions, redeem up to a maximum of 35% of the original aggregate principal
amount of the New Notes (calculated after giving effect to any issuance of
Additional New Notes), on not less than 30 nor more than 60 days' prior
notice, with the Net Cash Proceeds of one or more Equity Offerings by the
Company or Qualifying Subsidiary Stock Sales, at a redemption price equal to
108.750% of the principal amount thereof, plus accrued and unpaid interest,
to, but excluding, the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date); provided, however, that after giving effect to any
such redemption:
(1) at least 65% of the original aggregate principal amount of the New
Notes (calculated giving effect to any issuance of Additional New
Notes) remains outstanding; and
(2) any such redemption by the Company must be made within 60 days of
such Equity Offering or Qualifying Subsidiary Stock Sale and must be
made in accordance with certain procedures set forth in the
Indenture.
In addition, prior to February 24, 2007, the Company may redeem all, but
not less than all, the New Notes, on not less than 30 nor more than 60 days'
prior notice, at a redemption price equal to 100% of the principal amount of
the New Notes to be redeemed plus the Applicable Premium as of, and accrued
and unpaid interest to, but excluding, the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date). Any notice to Holders of such
redemption must include the appropriate calculation of the redemption price,
but does not need to include the redemption price itself. The actual
redemption price must be set forth in an Officers' Certificate delivered to
the Trustee no later than two Business Days prior to the redemption date.
"Applicable Premium" means, with respect to any New Note on any
redemption date, the excess (but not less than zero) of (i) the present value
at such redemption date of all remaining scheduled payments of interest
(excluding accrued interest) and principal on such New Note (discounted at the
equivalent of the on Treasury Rate plus 50 basis points over (ii) the then
outstanding principal amount of such New Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two Business Days prior to the
date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the then remaining average life to February 24, 2007, provided,
however, that if the average life to February 24, 2007 of the New Notes is not
equal to the constant maturity of a United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the
27
average life to February 24, 2007, of the New Notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
Any notice of an optional redemption may provide that the redemption will
be subject to specified conditions, provided, that such conditions are not
solely within our control, such as the consummation of other transactions.
MANDATORY REDEMPTION; OFFERS TO PURCHASE; OPEN MARKET PURCHASES
We are not required to make any mandatory redemption or sinking fund
payments with respect to the New Notes. However, under certain circumstances,
we may be required to offer to purchase New Notes as described under the
captions "Change of Control" and "Certain Covenants - Limitation on Sales of
Assets and Subsidiary Stock." We may at any time and from time to time
purchase New Notes in the open market or otherwise.
SELECTION
If we partially redeem New Notes, the Trustee will select the New Notes
to be redeemed on a pro rata basis, by lot or by such other method as the
Trustee in its sole discretion shall deem to be fair and appropriate, although
no New Note of $1,000 in original principal amount or less will be redeemed in
part. If we redeem any New Note in part only, the notice of redemption
relating to such New Note shall state the portion of the principal amount
thereof to be redeemed. A New Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancelation of the original New Note. On and after the redemption date,
interest will cease to accrue on New Notes or portions thereof called for
redemption so long as we have deposited with the Paying Agent funds sufficient
to pay the principal of, plus accrued and unpaid interest and any premium on,
the New Notes to be redeemed.
RANKING
The New Notes will be unsecured Senior Indebtedness of the Company, will
rank equally in right of payment with all existing and future Senior
Indebtedness of the Company and will be senior in right of payment to all
existing and future Subordinated Obligations of the Company. The New Notes
will be effectively subordinated to any Secured Indebtedness of the Company,
including Indebtedness under the Credit Agreement and the Floating Rate Notes,
to the extent of the value of the assets securing such Indebtedness.
As of March 31, 2004, the Company had $320.0 million of Senior
Indebtedness, of which $170.0 million was Secured Indebtedness (exclusive of
unused commitments of $43.6 million and $31.4 million in outstanding letters
of credit under the Credit Agreement). The Indebtedness under the Credit
Agreement and the Floating Rate Notes represented all of such Secured
Indebtedness. The foregoing amounts do not include Indebtedness of
Subsidiaries of the Company.
The New Notes will not be guaranteed by our Subsidiaries. We currently
conduct all our operations through our Subsidiaries. Creditors of such
Subsidiaries, including trade creditors, and preferred stockholders (if any)
of such Subsidiaries generally will have priority with respect to the assets
and earnings of such Subsidiaries over the claims of the Company's creditors,
including Holders. The Indebtedness under the Credit Agreement and the
Floating Rate Notes are
28
guaranteed by all our Domestic Subsidiaries other than VNF and Chemed Capital
Trust. The New Notes, therefore, will be effectively subordinated to the
claims of creditors, including the holders of Indebtedness under the Credit
Agreement and the Floating Rate Notes, as well as trade creditors and
preferred stockholders (if any) of the Company's Subsidiaries. As of and for
the twelve months ended March 31, 2004, after eliminating intercompany
activity, our Subsidiaries:
o had total liabilities of approximately $124.0 million,
including Trade Payables but excluding the guarantees of
Indebtedness under the Credit Agreement and the Floating Rate
Notes,
o had approximately 89% of the Company's Consolidated assets; and
o generated approximately 100% of the Company's Consolidated
revenues and 100% of its EBITDA.
Although the Indenture will limit the Incurrence of Indebtedness by and the
issuance of preferred stock of our Subsidiaries, such limitation is subject to
a number of significant qualifications. See "Certain Covenants--Limitation on
Indebtedness."
We will have the right if certain conditions are met to designate either
VHC and its Subsidiaries, or RRM and its Subsidiaries, as Unrestricted
Subsidiaries. Such a designation would result in such Subsidiaries no longer
being subject to the restrictive covenants of the Indenture in practically all
respects. One of these conditions is that our Adjusted Consolidated Leverage
Ratio, which is our Consolidated Leverage Ratio excluding the Indebtedness and
EBITDA of the Subsidiaries to be designated as Unrestricted Subsidiaries, be
not more than 5.0 to 1 with respect to our ability to designate VHC and its
Subsidiaries as Unrestricted Subsidiaries and 4.0 to 1 with respect to our
ability to designate RRM and its Subsidiaries as Unrestricted Subsidiaries. As
of and for the twelve months ended March 31, 2004, we had an Adjusted
Consolidated Leverage Ratio of 12.7 to 1 (excluding VHC and its Subsidiaries)
and of 9.1 to 1 (excluding RRM and its Subsidiaries). See "--Limitation on
Designation of Subsidiaries as Unrestricted Subsidiaries."
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to purchase
all or any part of such Holder's New Notes at a purchase price in cash equal
to 101% of the principal amount thereof plus accrued and unpaid interest to
(but excluding) the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest, if any, due on the
relevant Interest Payment Date); provided, however, that notwithstanding the
occurrence of a Change of Control, the Company shall not be obligated to
purchase the New Notes pursuant to this section in the event that it has
exercised its right to redeem all the New Notes under the terms of the section
titled "Optional Redemption":
(1) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that, for purposes of this clause, such person or group shall be
deemed to have "beneficial ownership" of all shares that any such
person or group has the right to acquire, whether such right is
exercisable immediately or
29
only after the passage of time), directly or indirectly, of more than
50% of the total voting power of the Voting Stock of the Company;
(2) the Company ceasing to be the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that, for purposes of
this clause, the Company shall be deemed to have "beneficial
ownership" of all shares that the Company or any Restricted
Subsidiary has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of more than 50% of the total voting power of the
Voting Stock of Vitas; or
(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by the Board
of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of 66 2/3% of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the applicable board of directors then in
office;
(4) the adoption of a plan relating to the liquidation or dissolution of
the Company; or
(5) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or
the sale, lease, transfer, conveyance or other disposition of all or
substantially all the assets of the Company, to another Person and,
in the case of any such merger or consolidation, other than a
transaction following which holders of securities that represented
100% of the Voting Stock of the Company outstanding immediately
prior to such transaction (or other securities into which such
securities are converted as part of such merger or consolidation
transaction) own directly or indirectly at least a majority of the
voting power of the Voting Stock of the surviving Person in such
merger or consolidation transaction immediately after such
transaction and in substantially the same proportion as before the
transaction.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase all or any part of such
Holder's New Notes at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any,
to, but excluding, the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on
the relevant Interest Payment Date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
30
(3) the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions, determined by the Company, consistent with this
covenant, that a Holder must follow in order to have its New Notes
purchased.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all New Notes validly tendered and not withdrawn under
such Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the purchase of New Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of negotiations
between the Company, the Placement Agent and the initial holders of the New
Notes. Management has no present intention to engage in a transaction
involving a Change of Control, although it is possible that the Company would
decide to do so in the future. Subject to the limitations discussed below, the
Company could, in the future, enter into certain transactions, including
acquisitions, refinancings or recapitalizations, that would not constitute a
Change of Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect the Company's
capital structure, credit worthiness or credit ratings. Restrictions on the
ability of the Company to Incur additional Indebtedness are contained in the
covenants described under "Certain Covenants - Limitation on Indebtedness", "-
Limitation on Liens" and "- Limitation on Sale/Leaseback Transactions." Such
restrictions can only be waived with the consent of the Holders of a majority
in principal amount of the New Notes then outstanding. Except for the
limitations contained in such covenants, however, the Indenture will not
contain any covenants or provisions that may afford Holders protection in the
event of a highly leveraged transaction.
The occurrence of certain of the events which would constitute a Change
of Control would constitute a default under the Credit Agreement. Upon the
occurrence of a Change of Control, the Company would also be required, under
the terms of the Floating Rate Notes, to offer to repurchase the Floating Rate
Notes at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued but unpaid interest. Future Senior Indebtedness of the
Company may contain prohibitions of certain events which would constitute a
Change of Control or require such Senior Indebtedness to be repurchased or
repaid upon a Change of Control. Moreover, the exercise by the Holders of
their right to require the Company to purchase the New Notes could cause a
default under such Senior Indebtedness, even if the Change of Control itself
does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the Holders upon a purchase may
be limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required purchases. The provisions under the Indenture relative to the
Company's obligation to make an offer to purchase the New Notes as a result of
a Change of Control may be waived or modified with the written consent of the
Holders of a majority in principal amount of the New Notes.
31
The definition of Change of Control includes a phrase relating to the
sale, lease or transfer of "all or substantially all" of the assets of the
Company. Although there is a developing body of case law interpreting the
phrase "substantially all," there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a Holder to require
the Company to purchase such New Notes as a result of a sale, lease or
transfer of less than all of the assets of the Company may be uncertain.
CERTAIN COVENANTS
The Indenture will contain covenants applicable to the Company and
certain of its Subsidiaries including, among others, those described below.
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that the Company and its Restricted Subsidiaries may Incur
Indebtedness if on the date of such Incurrence and after giving effect thereto
the Consolidated Leverage Ratio would be no greater than (i), prior to any
designation of the Specified Subsidiary Group as Unrestricted Subsidiaries,
(x) 5.75 to 1, if such Incurrence occurs on or prior to December 31, 2004 and
(y) 5.5 to 1, if such Incurrence occurs after December 31, 2004 and (ii) on or
following any designation of the Specified Subsidiary Group as Unrestricted
Subsidiaries, (x) 5.0 to 1, if the Specified Subsidiary is VHC and (y) 4.0 to
1, if the Specified Subsidiary is RRM.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(1) Indebtedness Incurred pursuant to the Credit Agreement in an
aggregate principal amount not to exceed $135.0 million less the
aggregate amount of all Net Available Cash applied by the Company or
any of its Restricted Subsidiaries to repay Indebtedness under the
Credit Agreement pursuant to clause (A) of the covenant described
under "--Limitation on Sales of Assets and Subsidiary Stock" solely
to the extent the corresponding commitments relating to such
Indebtedness are permanently reduced;
(2) Indebtedness of the Company owed to and held by any Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and
held by the Company or any Restricted Subsidiary; provided, however,
that (A) any subsequent issuance or transfer of any Capital Stock or
any other event that results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of
any such Indebtedness (except to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof and (B) if the
Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the New Notes;
(3) Indebtedness represented by (A) the New Notes (not including any
Additional New Notes) and any Exchange Notes and (B) the Floating
Rate Notes and the Guarantees of the Floating Rate Notes by
Subsidiaries of the Company (but not including any additional
Floating
32
Rate Notes but including any exchange notes under the indenture for
the Floating Rate Notes);
(4) Indebtedness outstanding on the Closing Date (other than the
Indebtedness described in clauses (1), (2) or (3) above);
(5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on
or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred in
contemplation of, in connection with, as consideration in, or to
provide all or any portion of the funds or credit support utilized
to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Subsidiary of
or was otherwise acquired by the Company); provided, however, that
on the date that such Restricted Subsidiary is acquired by the
Company, either (x) the Company would have been able to incur $1.00
of additional indebtedness pursuant to the foregoing paragraph (a)
after giving effect to such acquisition or (y) the Consolidated
Leverage Ratio after giving effect to such acquisition and any
related transactions would be no greater than the Consolidated
Leverage Ratio as of such date without giving effect to such
acquisition and any related transactions;
(6) Refinancing Indebtedness in respect of any Indebtedness Incurred
pursuant to paragraph (a) or clause (3), (4), this clause (6) or
clause (9) of this paragraph (b);
(7) Indebtedness (A) in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided
by the Company and the Restricted Subsidiaries in the ordinary
course of their business, and (B) under Interest Rate Agreements
entered into for bona fide hedging purposes of the Company in the
ordinary course of business; provided, however, that such Interest
Rate Agreements do not increase the Indebtedness of the Company
outstanding at any time other than as a result of fluctuations in
interest rates or by reason of fees, indemnities and compensation
payable thereunder;
(8) Purchase Money Indebtedness, mortgage financings and Capitalized
Lease Obligations in an aggregate principal amount not in excess of
$3.0 million at any time outstanding;
(9) Indebtedness Incurred at a Restricted Subsidiary, to the extent the
proceeds of such Indebtedness are used to repay Indebtedness under
the Credit Agreement and/or the Floating Rate Notes;
(10) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that
such Indebtedness is extinguished within five Business Days of its
Incurrence;
(11) the Incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness constituting reimbursement obligations with respect
to
33
letters of credit issued in the ordinary course of business;
provided, however, that upon the drawing of such letters of credit,
such obligations are reimbursed within 30 days following such
drawing;
(12) obligations arising from or representing deferred compensation to
employees of the Company or its Subsidiaries that constitute or are
deemed to be Indebtedness under GAAP and that are Incurred in the
ordinary course of business; or
(13) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to the foregoing paragraph (a) or any other clause of this
paragraph (b)) in an aggregate principal amount on the date of
Incurrence that, when added to all other Indebtedness Incurred
pursuant to this clause (13) and then outstanding, will not exceed
$5.0 million.
(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness pursuant to paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness will be
subordinated to the New Notes to at least the same extent as such Subordinated
Obligations.
(d) Notwithstanding any other provision of this covenant, the maximum
amount of Indebtedness that the Company or any Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this covenant:
(1) Indebtedness Incurred pursuant to the Credit Agreement prior to or
on the Closing Date shall be treated as Incurred pursuant to clause
(1) of paragraph (b) above,
(2) Indebtedness permitted by this covenant need not be permitted solely
by reference to one provision permitting such Indebtedness but may
be permitted in part by one such provision and in part by one or
more other provisions of this covenant permitting such Indebtedness,
and
(3) in the event that Indebtedness meets the criteria of more than one
of the types of Indebtedness described in this covenant, the
Company, in its sole discretion, shall classify such Indebtedness
and only be required to include the amount of such Indebtedness in
one of such clauses.
(e) In addition, the Company will not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness other than Non-Recourse Debt (or issue
any shares of Disqualified Stock that is either mandatorily redeemable by the
Company or convertible or exchangeable for Indebtedness other than
Non-Recourse Debt). If at any time an Unrestricted Subsidiary becomes a
Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to
be Incurred by a Restricted Subsidiary of the Company as of such date (and, if
such Indebtedness is not permitted to be Incurred as of such date under this
clause (e), the Company shall be in Default of this covenant).
34
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(1) declare or pay any dividend, make any distribution on or in respect
of its Capital Stock or make any similar payment (including any
payment in connection with any merger or consolidation involving the
Company or any Subsidiary of the Company) to the direct or indirect
holders of its Capital Stock, except (x) dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock
or Preferred Stock) and (y) dividends or distributions payable to
the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary has shareholders other than the Company or other
Restricted Subsidiaries, to its other shareholders on a pro rata
basis),
(2) purchase, repurchase, redeem, retire or otherwise acquire for value
any Capital Stock of the Company or any Restricted Subsidiary held
by Persons other than the Company or a Restricted Subsidiary,
(3) purchase, repurchase, redeem, retire, defease or otherwise acquire
for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other
than the purchase, repurchase, redemption, retirement, defeasance or
other acquisition for value of Subordinated Obligations acquired in
anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of
the date of acquisition), or
(4) make any Investment (other than a Permitted Investment) in any
Person;
(any such dividend, distribution, payment, purchase, redemption, repurchase,
defeasance, retirement, or other acquisition or Investment described in
clauses (1) through (4) above being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(A) a Default will have occurred and be continuing (or would result
therefrom);
(B) after giving effect, on a pro forma basis, to such Restricted
Payment, the Company could not Incur at least $1.00 of
additional Indebtedness under paragraph (a) of the covenant
described under "--Limitation on Indebtedness"; or
(C) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in
cash, shall be the Fair Market Value of the property or other
non-cash assets that constitute such Restricted Payment)
declared or made subsequent to the Closing Date would exceed
the sum, without duplication, of:
(i) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the
35
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Closing Date occurs to the
end of the most recent fiscal quarter ending at least 45
days prior to the date of such Restricted Payment (or, in
case such Consolidated Net Income will be a deficit, minus
100% of such deficit);
(ii) the aggregate Net Cash Proceeds received by the Company
from the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Closing Date (other
than an issuance or sale to (x) a Subsidiary of the
Company or (y) an employee stock ownership plan or other
trust established by the Company or any of its
Subsidiaries);
(iii) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's
balance sheet upon the conversion or exchange (other than
by a Subsidiary of the Company) subsequent to the Closing
Date of any Indebtedness of the Company or its Restricted
Subsidiaries issued after the Closing Date which is
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any
cash or the Fair Market Value of other property
distributed by the Company or any Restricted Subsidiary
upon such conversion or exchange); and
(iv) an amount equal to the sum of (x) the net reduction in any
Investments (excluding Permitted Investments, except as
provided in the next sentence) made by the Company or any
Restricted Subsidiary in any Person resulting from
repurchases, repayments or redemptions of such Investments
by such Person, net cash proceeds realized on the sale of
such Investment and net cash proceeds representing the
return of capital (excluding dividends and distributions),
in each case received by the Company or any Restricted
Subsidiary, and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Unrestricted
Subsidiary if such Unrestricted Subsidiary is designated a
Restricted Subsidiary, with such Fair Market Value
measured at the time of any such designation; provided,
however, that the foregoing sum shall not exceed, in the
case of any such Person or Unrestricted Subsidiary, the
amount of Investments (excluding Permitted Investments,
except as provided in the next sentence) previously made
by the Company or any Restricted Subsidiary in such Person
or Unrestricted Subsidiary and included in the calculation
of the amount of Restricted Payments.
36
After any designation of the Specified Subsidiary Group as Unrestricted
Subsidiaries in accordance with the covenant described under "--Limitation on
Designation of Subsidiaries as Unrestricted Subsidiaries," the remaining
Investment of the Company and its Restricted Subsidiaries in the Specified
Subsidiary Group shall be included in the calculation of the amount available
for Restricted Payments as provided in clause (C) above as if it were not a
Permitted Investment; provided, that, if RRM is the Specified Subsidiary, such
inclusion shall only be made if at the time of such designation the amount
available for Restricted Payments under clause (C) above is greater than zero,
in which case the amount otherwise available for Restricted Payments shall be
reduced by the amount of such Investment but not below zero. For the avoidance
of doubt, the inclusion of the Investment in the Specified Subsidiary Group
after designation of the Specified Subsidiary Group as Unrestricted
Subsidiaries shall not be taken into account in determining whether the
Company is permitted to designate such Subsidiaries as Unrestricted
Subsidiaries under the covenant described under "--Limitation on Designation
of Subsidiaries as Unrestricted Subsidiaries."
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(1) any purchase, repurchase, redemption, retirement or other
acquisition for value of Capital Stock of the Company made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the
Company or an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries); provided,
however, that:
(A) such purchase, repurchase, redemption, retirement or other
acquisition for value will be excluded in the calculation of
the amount of Restricted Payments, and
(B) the Net Cash Proceeds from such sale applied in the manner set
forth in this clause (1) will be excluded from the calculation
of amounts under clause (4)(C)(ii) of paragraph (a) above;
(2) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of
Subordinated Obligations of the Company made by exchange for, or out
of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company that is permitted to be Incurred
pursuant to paragraph (b) of the covenant described under
"--Limitation on Indebtedness"; provided, however, that such
prepayment, repayment, purchase, repurchase, redemption, retirement,
defeasance or other acquisition for value will be excluded in the
calculation of the amount of Restricted Payments;
(3) any prepayment, repayment, purchase, repurchase, redemption,
retirement, defeasance or other acquisition for value of
Subordinated Obligations from Net Available Cash to the extent
permitted by the covenant described under "--Limitation on Sales of
Assets and Subsidiary Stock"; provided, however, that such
prepayment, repayment, purchase, repurchase, redemption, retirement,
defeasance or other acquisition for value will be excluded in the
calculation of the amount of Restricted Payments;
37
(4) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividends would have complied
with this covenant; provided, however, that such dividends will be
included in the calculation of the amount of Restricted Payments;
(5) any purchase, repurchase, redemption, retirement or other
acquisition for value of shares of, or options to purchase shares
of, Capital Stock of the Company or any of its Subsidiaries from
employees, former employees, directors or former directors of the
Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors),
pursuant to the terms of agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board
of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital
Stock; provided, however, that the aggregate amount of such
purchases, repurchases, redemptions, retirements and other
acquisitions for value will not exceed $2.0 million in any calendar
year; provided further, however, that such purchases, repurchases,
redemptions, retirements and other acquisitions for value shall be
excluded in the calculation of the amount of Restricted Payments;
(6) repurchases of Capital Stock deemed to occur upon exercise of stock
options if such Capital Stock represents a portion of the exercise
price of such options and repurchases of Capital Stock of
Subsidiaries consisting of directors' qualifying shares or shares
issued to third parties in the ordinary course to the extent
necessary to satisfy any licensing requirements under applicable law
with respect to the Company's or any of its Subsidiary's business;
provided, however, that such Restricted Payments shall be excluded
in the calculation of the amount of Restricted Payments;
(7) cash payments in lieu of the issuance of fractional shares in
connection with the exercise of warrants, options or other
securities convertible into or exchangeable for Capital Stock of the
Company; provided, however, that any such cash payment shall not be
for the purpose of evading the limitation of the covenant described
under this subheading (as determined in good faith by the Board of
Directors); provided further, however, that such payments shall be
included in the calculation of the amount of Restricted Payments;
(8) payments of intercompany subordinated Indebtedness, the Incurrence
of which was permitted under clause (2) of paragraph (b) of the
covenant described under "--Limitation on Indebtedness; provided,
however, that no Default has occurred and is continuing or would
otherwise result therefrom; provided further, however, that such
payments shall be excluded in the calculation of the amount of
Restricted Payment;
(9) a Qualifying Subsidiary Stock Distribution to the extent permitted
by the covenant described under "--Limitation on Designation of
Subsidiaries as Unrestricted Subsidiaries"; provided, however, that
the amount of
38
such distribution shall not be included in the calculation of the
amount of Restricted Payments;
(10) the payment of cash dividends on the Capital Stock of the Company in
an amount not to exceed (x) $0.48 per share per fiscal year and (y)
$7.0 million in the aggregate for such dividends in any fiscal year;
provided that, after a designation of the Specified Subsidiary Group
as Unrestricted Subsidiaries, no such dividend shall be declared or
paid unless, for the most recently ended four full fiscal quarters
for which internal financial statements are available preceding the
date of declaration of any such dividend or distribution after
giving effect to such dividend or distribution as a fixed charge on
a pro forma basis, the Company and its Restricted Subsidiaries would
have had a Consolidated Fixed Charge Coverage Ratio of at least 1.35
to 1; provided further that if (x) the Specified Subsidiary is VHC,
(y) the Specified Subsidiary Group has been designated as
Unrestricted Subsidiaries and (z) the Company may not otherwise pay
such dividends because of a failure to satisfy the Consolidated
Fixed Charge Coverage Ratio described in the preceding proviso, the
Company may pay cash dividends from cash proceeds of a Qualifying
Subsidiary Stock Sale, in an amount not to exceed $7.0 million; and
provided further that dividends paid under this clause (10) shall be
included in the amount of Restricted Payments;
(11) the payment of scheduled, quarterly cash dividends on the
Chemed Preferred Securities declared on or prior to December
31, 2004 in an amount not to exceed $2.00 per share per year,
and the redemption of the Chemed Preferred Securities and the
Subordinated Chemed Debentures at the applicable scheduled
redemption prices on or prior to December 31, 2004; provided
that such dividends and redemption amounts shall not be
included in the amount of Restricted Payments;
(12) dividends or distributions of Capital Stock subject to the
Closing Date Stock Award Plan, so long as the aggregate amount
of such dividends or distributions made pursuant to this clause
12 does not exceed $2.8 million; provided, that such dividends
or distributions shall be excluded in the amount of Restricted
Payments; and
(13) other Restricted Payments in an aggregate amount not to exceed
$5.0 million; provided, however, that such Restricted Payments
shall be included in the calculation of the amount of
Restricted Payments.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the
Company;
(2) make any loans or advances to the Company; or
39
(3) transfer any of its property or assets to the Company, except:
(A) with respect to clauses (1), (2) or (3):
(i) any encumbrance or restriction pursuant to applicable
law or an agreement in effect at or entered into on
the Closing Date;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such
Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration
in, in contemplation of, or to provide all or any
portion of the funds or credit support utilized to
consummate the transaction or series of related
transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was
otherwise acquired by the Company) and outstanding on
such date;
(iii) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing of Indebtedness
Incurred pursuant to an agreement referred to in
clause (i) or (ii) of this covenant or this clause
(iii) or contained in any amendment to an agreement
referred to in clause (i) or (ii) of this covenant or
this clause (iii); provided, however, that the
encumbrances and restrictions contained in any such
Refinancing agreement or amendment, taken as a whole,
are not materially more disadvantageous to the
Holders than the encumbrances and restrictions
contained in such predecessor agreements (as
determined by the Company in good faith);
(iv) any encumbrance or restriction contained in the terms
of any Indebtedness Incurred pursuant to clause
(b)(9) of the covenant described under "--Limitation
on Indebtedness" or any agreement pursuant to which
such Indebtedness was Incurred; provided, however,
that the encumbrances and restrictions contained in
such Indebtedness, taken as a whole, are not
materially more disadvantageous to the holders of the
New Notes than the encumbrances and restrictions
contained in the agreements for the Indebtedness
being repaid (as determined by the Company in good
faith);
(v) with respect to a Restricted Subsidiary, any
encumbrance or restriction imposed pursuant to an
agreement entered into in connection with the sale or
disposition of all or substantially all the Capital
Stock or
40
assets of such Restricted Subsidiary or in
addition, in the case of the Specified Subsidiary
Group, any encumbrance or restriction imposed
pursuant to a purchase and sale, underwriting or
other disposition agreement in connection with a
Qualifying Subsidiary Stock Sale or Qualifying
Subsidiary Stock Distribution; provided that in any
such case such encumbrance or restriction is in
effect only for the period pending the closing of
such sale, disposition or distribution; and
(B) in the case of clause (3), any encumbrance or restriction
(i) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that
is subject to a lease, license or similar contract,
or
(ii) contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent
such encumbrance or restriction restricts the
transfer of the property subject to such security
agreements.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise)
at the time of such Asset Disposition at least equal to the Fair
Market Value of the shares and assets subject to such Asset
Disposition,
(2) at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or cash
equivalents, and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)
(A) first, to the extent the Company elects (or is required by the
terms of any Indebtedness), to prepay, repay, purchase,
repurchase, redeem, retire, defease or otherwise acquire for
value Senior Indebtedness of the Company or Indebtedness (other
than obligations in respect of Preferred Stock) of a Restricted
Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company and other than
obligations in respect of Disqualified Stock) within one year
from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) second, to the extent of the balance of Net Available Cash
after application in accordance with clause (A), to the extent
the Company or such Restricted Subsidiary elects, to reinvest
in
41
Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary)
within one year from the later of such Asset Disposition or the
receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B), to
make an Offer (as defined in paragraph (b) of this covenant
below) to purchase New Notes pursuant to and subject to the
conditions set forth in paragraph (b) of this covenant;
provided, however, that if the Company so elects (or is
required by the terms of any other Senior Indebtedness), such
Offer may be made ratably to purchase the New Notes and other
Senior Indebtedness of the Company; and
(D) fourth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B) and (C),
for any general corporate purpose permitted by the terms of the
Indenture;
provided, however that in connection with any prepayment, repayment,
purchase, repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness pursuant to clause (A) or (C)
above, the Company or such Restricted Subsidiary will retire such
Indebtedness and will cause the related loan commitment (if any) to
be permanently reduced in an amount equal to the principal amount so
prepaid, repaid, purchased, repurchased, redeemed, retired, defeased
or otherwise acquired for value.
Notwithstanding the foregoing provisions of this covenant, the Company
and the Restricted Subsidiaries will not be required to apply any Net
Available Cash in accordance with the preceding paragraph of this covenant
except to the extent that the aggregate Net Available Cash from Asset
Dispositions that is not otherwise applied in accordance with the preceding
paragraph exceeds (i) $25.0 million, in the case of Net Available Cash that
constitutes Net Cash Proceeds from Qualifying Subsidiary Stock Sales (not
including the initial Qualifying Subsidiary Stock Sale) or (ii) $5.0 million,
in the case of Net Available Cash from all other Asset Dispositions.
For the purposes of this covenant, the following are deemed to be cash or
cash equivalents:
o the assumption of Indebtedness of the Company (other than
obligations in respect of Disqualified Stock of the Company) or
any Restricted Subsidiary and the release of the Company or
such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition and
o securities received by the Company or any Restricted Subsidiary
from the transferee that within 90 days are converted by the
Company or such Restricted Subsidiary into cash.
42
(b) In the event of an Asset Disposition that requires the purchase of
New Notes pursuant to clause (a)(3)(C) of this covenant, the Company will be
required (i) to purchase New Notes tendered pursuant to an offer by the
Company for the New Notes (the "Offer") at a purchase price of 100% of their
principal amount plus accrued and unpaid interest to the date of purchase
(subject to the right of Holders of record on the relevant date to receive
interest due on the relevant Interest Payment Date) in accordance with the
procedures (including prorating in the event of oversubscription), set forth
in the Indenture and (ii) to purchase other Senior Indebtedness of the Company
on the terms and to the extent contemplated thereby (provided that in no event
shall the Company offer to purchase such other Senior Indebtedness of the
Company at a purchase price in excess of 100% of its principal amount (without
premium), plus accrued and unpaid interest thereon). If the aggregate purchase
price of New Notes (and other Senior Indebtedness) tendered pursuant to the
Offer is less than the Net Available Cash allotted to the purchase of the New
Notes (and other Senior Indebtedness), the Company will apply the remaining
Net Available Cash in accordance with clause (a)(3)(D) of this covenant. The
Company will not be required to make an Offer for New Notes (and other Senior
Indebtedness) pursuant to this covenant if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (a)(3)(A)
and (B)) is less than $5.0 million for any particular Asset Disposition or
related series of Asset Dispositions (which lesser amount will be carried
forward for purposes of determining whether an Offer is required with respect
to the Net Available Cash from any subsequent Asset Disposition). Upon
completion of such an offer to purchase, Net Available Cash will be deemed to
be reduced by the aggregate amount of such offer.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of New Notes pursuant to
this covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into or conduct any transaction or series of related transactions (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
such transaction is on terms that:
(1) are no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not
such an Affiliate;
(2) in the event such Affiliate Transaction involves an aggregate amount
in excess of $5.0 million,
(A) are set forth in writing, and
(B) have been approved by a majority of the members of the Board of
Directors and by a majority of the members of such Board of
Directors having no personal stake in such transaction, if any
(and such majority or majorities, as the case may be,
determines
43
that such Affiliate Transaction satisfies the
criteria in clause (1) above); and
(3) in the event such Affiliate Transaction involves an amount in excess
of $20.0 million, have been determined by a nationally recognized
appraisal or investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries or is not
less favorable to the Company and its Restricted Subsidiaries than
could reasonably be expected to be obtained at the time in an arms
length transaction with a Person who is not an Affiliate.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(1) any Investment or other Restricted Payment permitted to be made
pursuant to the covenant described under "--Limitation on
Restricted Payments,"
(2) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership
plans approved by the Board of Directors,
(3) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the
Board of Directors,
(4) loans or advances to employees in the ordinary course of
business of the Company or its Restricted Subsidiaries and
consistent with prudent practices and applicable law, not to
exceed $2.0 million outstanding at any one time,
(5) the payment of reasonable and customary fees, compensation or
employee benefit arrangements to and any indemnity provided for
the benefit of directors, officers or employees of the Company
and its Subsidiaries in the ordinary course of business,
(6) any transaction with a Restricted Subsidiary which would
constitute an Affiliate Transaction solely because the Company
or a Restricted Subsidiary owns an equity interest in, or
otherwise controls, such Restricted Subsidiary,
(7) transactions reasonably contemplated by any Customary
Transition Agreement,
(8) the Transactions, or
(9) the making of severance payments to directors, officers or
employees of Vitas that are required pursuant to arrangements
in effect prior to the date that the Company acquired Vitas, in
an aggregate amount not to exceed $14.5 million (which
arrangements may be modified so long as such aggregate amount
is not exceeded).
44
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary to any Person (other than the Company
or a Wholly Owned Subsidiary), and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any shares of
its Capital Stock (other than directors' qualifying shares or shares issued to
third parties in the ordinary course to the extent necessary to satisfy any
licensing requirements under applicable law with respect to the Company's or
any of its Subsidiary's business) to any Person (other than the Company or a
Wholly Owned Subsidiary), except, in each case, with respect to dispositions
in connection with a Qualifying Subsidiary Stock Sale or Qualifying Subsidiary
Stock Distribution; provided, however, that the foregoing shall not prohibit
any such issuance, sale or disposition if:
(1) immediately after giving effect to such issuance, sale or other
disposition, neither the Company nor any of its Restricted
Subsidiaries owns any Capital Stock of such Restricted Subsidiary;
or
(2) immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment in such Person remaining after giving
effect thereto would have been permitted to be made under the
covenant described under "--Limitation on Restricted Payments" if
made on the date of such issuance, sale or other disposition (and
such Investment shall be deemed to be an Investment for the purposes
of such covenant as of the effective date of the applicable
transaction).
The proceeds of any sale of such Capital Stock permitted under clause (1)
or (2) above will be treated as Net Available Cash from an Asset Disposition
and must be applied in accordance with the terms of the covenant described
under "--Limitation on Sales of Assets and Subsidiary Stock."
For avoidance of doubt, the Company will not be permitted to issue,
directly or indirectly, any of its Capital Stock that is exchangeable or
convertible, with or without conditions, into any Capital Stock of any
Restricted Subsidiary without complying with this covenant.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any
Lien (the "Initial Lien") of any nature whatsoever on any of its property or
assets (including Capital Stock of a Restricted Subsidiary, but excluding
Capital Stock of an Unrestricted Subsidiary), whether owned at the Closing
Date or thereafter acquired, other than Permitted Liens, without effectively
providing that the New Notes shall be secured equally and ratably with (or
prior to) the obligations so secured for so long as such obligations are so
secured. Any Lien created for the benefit of the Holders of the New Notes
pursuant to the foregoing sentence shall provide by its terms that such Lien
will be automatically and unconditionally released upon the release and
discharge of the Initial Lien.
SEC Reports. Whether or not required by the SEC's rules and regulations,
so long as any New Notes are outstanding, the Company will furnish to the
Holders, within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual reports that would be required to be filed
with the SEC on Forms 10-Q and 10-K if the Company was required to
file such reports; and
45
(2) all current reports that would be required to be filed with the SEC
on Form 8-K if the Company was required to file such reports.
All such reports will be prepared in all material respects in accordance with
all of the SEC's rules and regulations applicable to such reports, and each
annual report on Form 10-K will include a report on the Company's consolidated
financial statements by the Company's certified independent accountants. The
Company's reporting obligations with respect to clauses (1) and (2) above shall
be deemed satisfied in the event the Company files these reports with the SEC
on EDGAR.
If, at any time, the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company will
nevertheless be required to continue to file the reports specified in the
preceding paragraph with the SEC within the time periods specified above
unless the SEC will not accept such a filing. The Company agrees that it will
not take any action for the sole purpose of causing the SEC not to accept any
such filings (it being understood and agreed that, if the Company is entitled
to suspend its reporting obligations under the Exchange Act, the Company shall
not be prevented from making any filings necessary to suspend such
obligations). If, notwithstanding the foregoing, the SEC will not accept the
Company's filings for any reason, the Company will post the reports referred
to in the preceding paragraph on its website within the time periods that
would apply if the Company was required to file those reports with the SEC.
In addition, the Company agrees that, for so long as any New Notes remain
outstanding, at any time they are not required to file the reports required by
the preceding paragraphs with the SEC, they will furnish to the Holders and to
securities analysts and prospective investors, upon their written request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Limitation on Lines of Business. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business, other than a
Permitted Business.
Limitation on Sale/Leaseback Transactions. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless:
(1) the Company or such Restricted Subsidiary would be entitled to:
(A) Incur Indebtedness in an amount equal to the Attributable Debt
with respect to such Sale/Leaseback Transaction pursuant to the
covenant described under "--Limitation on Indebtedness" and
(B) create a Lien on such property securing such Attributable Debt
without equally and ratably securing the New Notes pursuant to
the covenant described under "Limitation on Liens",
(2) the net proceeds received by the Company or such Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at
least equal to the Fair Market Value of such property and
46
(3) the transfer of such property is permitted by, and the Company
applies the proceeds of such transaction in compliance with, the
covenant described under "Limitation on Sale of Assets and
Subsidiary Stock."
Limitation on Designation of Subsidiaries as Unrestricted Subsidiaries.
(a) Except as set forth below, the Company shall not designate any Subsidiary
as an Unrestricted Subsidiary at any time; provided, however, that the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary if:
(1) such Subsidiary and its Subsidiaries do not own any Capital Stock or
Indebtedness of, and do not own or hold any Lien on any property of,
the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated, and either:
(2) (A) with respect to the Specified Subsidiary Group, such
designation is permitted under clause (b) below; or
(B) with respect to any other Subsidiary, the Subsidiary
to be so designated has total Consolidated assets of
$1,000 or less, or if such Subsidiary has
Consolidated assets greater than $1,000, then such
designation would be permitted under the covenant
entitled "Certain Covenants - Limitation on
Restricted Payments", with the aggregate Fair Market
Value of all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation
and either reducing the amount available for
Restricted Payments under the first paragraph of
clause (a)(4)(c)(iv) of the covenant described above
under the caption "- Limitation on Restricted
Payments" or reducing the amount available for
future Investments under one or more clauses of the
definition of Permitted Investments, as the Company
shall determine.
(b) (1) The Company may designate all Subsidiaries that constitute part
of the Specified Subsidiary Group as Unrestricted Subsidiaries for all
purposes under the Indenture except as set forth below in clause (b)(2) below
at any time after or in connection with a Qualifying Subsidiary Stock Sale or
a Qualifying Subsidiary Stock Distribution if at such time, after giving
effect thereto and to any transactions (including any refinancings of
Indebtedness) occurring concurrently with such designation, the criteria in
clause (a)(1) above is satisfied and the following additional conditions are
met:
(A) the Adjusted Consolidated Leverage Ratio shall be not more than
(x) 5.0 to 1 if the Specified Subsidiary is VHC and (y) 4.0 to
1 if the Specified Subsidiary is RRM;
(B) no Default has occurred and is continuing;
47
(C) all the Indebtedness of such Subsidiary and its Subsidiaries
shall, at the date of designation, and will at all times
thereafter, consist of Non- Recourse Debt;
(D) such Subsidiary, either alone or in the aggregate with all
other Unrestricted Subsidiaries, does not operate, directly or
indirectly, all or substantially all of the business of the
Company and its Subsidiaries;
(E) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation:
(i) to subscribe for additional Capital Stock of such Person;
or
(ii) to maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of
operating results; and
(F) on the date such Subsidiary is designated an Unrestricted
Subsidiary any agreement or transaction between such Subsidiary
and the Company or any Restricted Subsidiary is permitted under
the covenant described under "--Limitation on Transactions with
Affiliates."
For the avoidance of doubt, the designation of the Specified Subsidiary
Group as Unrestricted Subsidiaries shall not require compliance with the
covenant described under "--Limitation on Restricted Payments" with respect to
the Investment of the Company and its Restricted Subsidiaries in the Specified
Subsidiary Group at the time of designation, but such Investment shall be
included in the calculation of the amount available for Restricted Payments
thereafter as provided in such covenant.
(2) The Company shall not be entitled to revoke the designation of the
Specified Subsidiary Group as Unrestricted Subsidiaries after its
effectiveness. Immediately upon the effectiveness of such
designation and for all purposes thereafter under the Indenture, the
covenants, events of defaults and other terms of the Indenture
applicable to the Restricted Subsidiaries of the Company will not
apply to the Specified Subsidiary Group except as follows:
(A) the covenant described under "--Limitations on Restricted
Payments" will continue to apply to the making by the Company
or any Restricted Subsidiary of any dividend, distribution or
any similar payment to the holders of its Capital Stock that is
payable in the Capital Stock of VHC, and
(B) the covenant described under "--Limitation on Sales of Assets
and Subsidiary Stock" will continue to apply, to the extent
provided therein, to any Asset Disposition by the Company or
48
any Restricted Subsidiary of any Capital Stock of VHC or its
Subsidiaries.
(c) The Company shall have the right, on one occasion at any time, to
designate either (but not both) of VHC or RRM as the "Specified Subsidiary."
Such designation shall be made by action of the Board of Directors and shall
be effective upon notification in writing to the Trustee. The designation of
VHC or RRM as the Specified Subsidiary may be made at any time prior to
designating the Specified Subsidiary Group as Unrestricted Subsidiaries, and
it shall not obligate the Company thereafter to designate the Specified
Subsidiary Group as Unrestricted Subsidiaries; provided that the designation
of the Specified Subsidiary shall be irrevocable and must be made prior to or
concurrently with the designation of the Specified Subsidiary Group as
Unrestricted Subsidiaries.
(d) The Board of Directors may designate any Unrestricted Subsidiary
(other than a member of the Specified Subsidiary Group that has been
designated an Unrestricted Subsidiary) to be a Restricted Subsidiary;
provided, however, that:
(x) such designation shall be deemed to be an incurrence of Indebtedness
by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if such Indebtedness is permitted under the
covenant described under "--Limitation on Indebtedness," calculated
on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and
(y) immediately after giving effect to such designation, no Default
shall have occurred and be continuing.
(e) Any designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary, any designation of the Specified Subsidiary, and any
designation of the Specified Subsidiary Group as Unrestricted Subsidiaries
shall be made by the Board of Directors, shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions, and
shall be effective upon such filing.
COVENANT TO OBTAIN RATINGS
As promptly as reasonably practicable after the Closing Date, the Company
will use its reasonable efforts to obtain a rating of the New Notes from
either Standard & Poor's Ratings Group, Inc. or Moody's Investors Service,
Inc.
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") will be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) will
expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form
49
satisfactory to the Trustee, all the obligations of the Company
under the New Notes and the Indenture;
(2) immediately after giving pro forma effect to such transaction (and
treating any Indebtedness which becomes an obligation of the
Successor Company or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default
shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness under paragraph (a) of the covenant described under
"Certain Covenants--Limitation on Indebtedness";
(4) immediately after giving pro forma effect to such transaction, the
Successor Company will have Consolidated Net Worth in an amount
which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction (or, in the event that,
concurrently with such merger or consolidation, the Specified
Subsidiary Group is designated as Unrestricted Subsidiaries in
accordance with and subject to the conditions set forth under
"Certain Covenants--Limitation on Designation of Subsidiaries as
Unrestricted Subsidiaries", the Successor Company will have
Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company, excluding the Specified
Subsidiary Group, immediately prior to such transaction); and
(5) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture
(if any) comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, and the
predecessor Company, except in the case of a lease, shall be released from the
obligation to pay the principal of and interest on the New Notes.
Notwithstanding the foregoing:
(A) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the
Company; and
(B) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits; and
(C) nothing herein shall limit any conveyance, transfer or lease of
assets between or among any of the Company and its Restricted
Subsidiaries.
50
DEFAULTS
Each of the following is an Event of Default:
(1) a default in any payment of interest on any New Note when due and
payable continued for 30 days,
(2) a default in the payment of principal of or any premium on any New
Note when due and payable at its Stated Maturity, upon optional
redemption, upon declaration or acceleration or otherwise or a
failure to repurchase New Notes when required pursuant to the
Indenture or the New Notes,
(3) the failure by the Company or any Restricted Subsidiary to comply
with its obligations under the covenant described under "Merger and
Consolidation" above,
(4) a failure by the Company to comply, in any material respect, for 60
days after notice with any of its obligations under the covenants
described under "Change of Control" or "Certain Covenants" above
(other than a failure to purchase the New Notes),
(5) the Company fails to comply with any covenant set forth in the New
Notes or described under "Certain Covenants" above (other than under
clause (1), (2), (3) or (4)) and such failure continues for 90 days
after the notice specified below,
(6) certain events of bankruptcy, insolvency or reorganization of the
Company or a Significant Subsidiary (the "bankruptcy provisions"),
(7) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5.0
million or its foreign currency equivalent at the time, or
(8) the rendering of any judgment or decree for the payment of money in
excess of $5.0 million or its foreign currency equivalent against
the Company or any Significant Subsidiary if:
(A) an enforcement proceeding thereon is commenced by any creditor
or
(B) such judgment or decree remains outstanding for a period of 60
days following such judgment or decree and is not discharged,
waived or stayed (the "judgment default provision").
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
51
However, a default under clause (4), (5) or (6) will not constitute an
Event of Default until the Trustee notifies the Company or the Holders of at
least 25% in principal amount of the outstanding New Notes notify the Company
and the Trustee of the default and the Company does not cure such default
within the time specified in clause (4), (5) or (6) hereof after receipt of
such notice.
If an Event of Default (other than an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding New Notes by notice to the Company may
declare the principal of and accrued but unpaid interest on all the New Notes
to be due and payable. Upon such a declaration, such principal, interest and
any premium will be due and payable immediately. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs, the principal of and interest and any premium on all the New
Notes will become immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders. Under certain circumstances,
the Holders of a majority in principal amount of the outstanding New Notes may
rescind any such acceleration with respect to the New Notes and its
consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such
Holders have offered to the Trustee reasonable indemnity or security against
any loss, liability or expense. Except to enforce the right to receive payment
of principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the New Notes unless:
(1) such Holder has previously given the Trustee notice that an Event of
Default is continuing,
(2) Holders of at least 25% in principal amount of the outstanding New
Notes have requested the Trustee in writing to pursue the remedy,
(3) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense,
(4) the Trustee has not complied with such request within 60 days after
the receipt of the request and the offer of security or indemnity
and
(5) the Holders of a majority in principal amount of the outstanding New
Notes have not given the Trustee a direction inconsistent with such
request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding New Notes will be given the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
The Trustee, however, may refuse to follow any direction that conflicts with
law or the Indenture or that the Trustee determines is unduly prejudicial to
the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee will be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
52
If a Default occurs and is continuing and is known to the Trustee, the
Trustee must mail to each Holder notice of the Default within the earlier of
90 days after it occurs or 30 days after it is known to a Trust Officer or
written notice of it is received by the Trustee. Except in the case of a
Default in the payment of principal of, premium (if any) or interest on any
New Note (including payments pursuant to the redemption provisions of such New
Note), the Trustee may withhold notice if and so long as a committee of its
Trust Officers in good faith determines that withholding notice is in the
interests of the Holders. In addition, the Company will be required to deliver
to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Company will also be required to
deliver to the Trustee, within 30 days after the occurrence thereof, written
notice of any event which would constitute certain Events of Default, their
status and what action the Company is taking or proposes to take in respect
thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture or the New Notes may be
amended with the written consent of the Holders of a majority in principal
amount of the New Notes then outstanding and any past default or compliance
with any provisions may be waived with the consent of the Holders of a
majority in principal amount of the New Notes then outstanding. However,
without the consent of each Holder of an outstanding New Note affected, no
amendment may, among other things:
(1) reduce the amount of New Notes whose Holders must consent to an
amendment,
(2) reduce the rate of or extend the time for payment of interest on any
New Note,
(3) reduce the principal of or extend the Stated Maturity of any New
Note,
(4) reduce the premium payable upon the redemption of any New Note or
change the time at which any New Note may be redeemed as described
under "Optional Redemption" above,
(5) make any New Note payable in money other than that stated in the New
Note,
(6) impair the right of any Holder to receive payment of principal of
and interest or any premium on such Holder's New Notes on or after
the due dates therefore or to institute suit for the enforcement of
any payment on or with respect to such Holder's New Notes,
(7) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions, or
(8) waive any default or event of default in the payment of principal of
or interest or any premium on any New Note.
53
Without the consent of any Holder, the Company and the Trustee may amend
the Indenture to:
o cure any ambiguity, omission, defect or inconsistency,
o provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture,
o provide for uncertificated New Notes in addition to or in place of
certificated New Notes (provided, however, that the uncertificated
New Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated New
Notes are described in Section 163(f)(2)(B) of the Code),
o add Guarantees with respect to the New Notes,
o secure the New Notes,
o add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power conferred upon the Company,
o make any change that does not adversely affect the rights of any
Holder, subject to the provisions of the Indenture,
o provide for the issuance of the Exchange Notes or Additional New
Notes or
o comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA.
The consent of the Holders will not be necessary to approve the
particular form of any proposed amendment. It will be sufficient if such
consent approves the substance of the proposed amendment.
After an amendment becomes effective, the Company is required to mail to
Holders a notice briefly describing such amendment. However, the failure to
give such notice to all Holders, or any defect therein, will not impair or
affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Holder will be able to transfer or exchange New Notes in accordance
with the Indenture. Upon any transfer or exchange, the registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to
pay any taxes required by law or permitted by the Indenture. The Company will
not be required to transfer or exchange any New Note selected for redemption
or to transfer or exchange any New Note for a period of 15 days prior to a
selection of New Notes to be redeemed. The New Notes will be issued in
registered form and the Holder will be treated as the owner of such New Note
for all purposes.
54
DEFEASANCE
The Company may at any time terminate all its obligations under the New
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register
the transfer or exchange of the New Notes, to replace mutilated, destroyed,
lost or stolen New Notes and to maintain a registrar and paying agent in
respect of the New Notes.
In addition, the Company may at any time terminate:
(1) its obligations under the covenants described under "Certain
Covenants,"
(2) the operation of the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision
described under "Defaults" above and the limitations contained in
clauses (3) and (4) under the first paragraph of "Merger and
Consolidation" above ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the New Notes may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the New Notes may not be
accelerated because of an Event of Default specified in clause (3), (4), (5),
(6) (with respect only to Significant Subsidiaries), (6), (7) and (8) under
"Defaults" above or because of the failure of the Company to comply with
clause (3) or (4) under the first paragraph of "Merger and Consolidation"
above.
In order to exercise either defeasance option, the Company must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money
in an amount sufficient or U.S. Government Obligations, the principal of and
interest on which will be sufficient, or a combination thereof sufficient, to
pay the principal, premium (if any) and interest on the New Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be subject to
Federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law).
CONCERNING THE TRUSTEE
The Trustee under the Indenture shall be appointed by the Company as
Registrar and Paying Agent with regard to the New Notes.
GOVERNING LAW
The Indenture and the New Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
55
CERTAIN DEFINITIONS
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by the Company or a Restricted Subsidiary in a Permitted
Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Permitted Business.
"Adjusted Consolidated Leverage Ratio" as of any date of determination
means the Consolidated Leverage Ratio, calculated on a pro forma basis after
giving effect to the designation of the Specified Subsidiary Group as
Unrestricted Subsidiaries (including for purposes of calculating Consolidated
Indebtedness and EBITDA) and to any sales of Capital Stock, refinancings of
Indebtedness or other transactions consummated concurrently with such
designation.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the provisions described under "Certain Covenants--
Limitation on Transactions with Affiliates" and "Certain Covenants--
Limitation on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall
also mean any beneficial owner of Capital Stock representing 5% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of
this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted
Subsidiary)
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary or
56
(3) any other assets of the Company or any Restricted Subsidiary (other
than Capital Stock of Unrestricted Subsidiaries) outside of the
ordinary course of business of the Company or such Restricted
Subsidiary
(4) other than, in the case of (1), (2) and (3) above,
(A) disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary,
(B) a disposition of directors' qualifying shares or shares
required by applicable law to be held by a Person other than
the Company or a Restricted Subsidiary,
(C) a disposition of Capital Stock of the Specified Subsidiary
pursuant to a Qualifying Subsidiary Stock Sale or Qualifying
Subsidiary Stock Distribution if (x) the Net Cash Proceeds
thereof are used to redeem New Notes pursuant to the second
paragraph of "Optional Redemption" or (y) the Specified
Subsidiary Group is then or has been designated as Unrestricted
Subsidiaries in accordance with the covenant described under
"Certain Covenants--Limitation on Designation of Subsidiaries
as Unrestricted Subsidiaries"; provided that, notwithstanding
the foregoing, if VHC is the Specified Subsidiary, any sale of
Capital Stock of VHC following an initial Qualifying Subsidiary
Stock Sale shall constitute an Asset Disposition to the extent
that the aggregate Net Cash Proceeds of all such sales of
Capital Stock of VHC (following such initial sale) exceed $25.0
million, unless at such time (x) the Company owns less than 50%
of the Voting Stock of VHC or (y) the Company would own less
than 50% of the Voting Stock as a result of such sale and the
provisions set forth under "Change of Control" are complied
with,
(D) for purposes of the provisions described under "Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock"
only, a disposition subject to the covenant described under
"Certain Covenants--Limitation on Restricted Payments", and
(E) a disposition of assets with a Fair Market Value of less than
$100,000.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as
at the time of determination, the present value (discounted at the interest
rate borne by the New Notes, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing:
57
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal
payment of such Indebtedness or scheduled redemption or similar
payment with respect to such Preferred Stock multiplied by the
amount of such payment by
(2) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors
of the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Company and its
Consolidated Restricted Subsidiaries prepared in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Capitalized Lease Obligations" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented
by such obligation shall be the capitalized amount of such obligation
determined in accordance with GAAP; and the Stated Maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.
"Chemed Capital Trust" means Chemed Capital Trust, a Delaware statutory
business trust.
"Chemed Preferred Securities" means the convertible trust preferred
securities of Chemed Capital Trust issued in exchange for shares of Company
capital stock pursuant to an exchange offer completed on February 1, 2000. As
of May 18, 2004, no Chemed Preferred Securities were outstanding.
"Closing Date" means the date of the Indenture.
"Closing Date Stock Award Plan" means the Company's employee stock award
plan in existence on the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Company and its Consolidated Restricted
Subsidiaries calculated on a consolidated basis for such period.
58
"Consolidated Current Maturities" means, with reference to any period,
all payments of principal due within twelve (12) calendar months on and after
the last day of such period with respect to all Consolidated Indebtedness of
the Company.
"Consolidated Fixed Charge Coverage Ratio" for any period shall mean the
ratio of (i) EBITDA minus Consolidated Capital Expenditures to (ii)
Consolidated Interest Expense plus Consolidated Current Maturities during such
period plus cash dividends paid on the equity interests of the Company during
such period plus expenses for taxes paid or taxes accrued during such period,
all calculated for the Company and its Consolidated Restricted Subsidiaries on
a consolidated basis.
"Consolidated Indebtedness" means, as of any date of determination, the
total Indebtedness of the Company and its Consolidated Restricted
Subsidiaries, without duplication, other than, at any time prior to January 1,
2005, the Trust Securities.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Restricted Subsidiaries, plus, to
the extent Incurred by the Company and its Consolidated Restricted
Subsidiaries in such period but not included in such interest expense, without
duplication:
(1) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction,
(2) amortization of debt discount and debt issuance costs, provided that
the fees paid by the Company to the lenders under the Credit
Agreement and to the placement agent in connection with the offering
and sale, on the Closing Date, of the New Notes and the Floating
Rate Notes shall not be included,
(3) capitalized interest,
(4) noncash interest expense,
(5) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing,
(6) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by the Company or any
Restricted Subsidiary,
(7) net costs associated with Hedging Obligations (including
amortization of fees),
(8) dividends in respect of all Disqualified Stock of the Company and
all Preferred Stock of any of the Subsidiaries of the Company, to
the extent held by Persons other than the Company or a Wholly Owned
Subsidiary; provided that regular, scheduled dividends on the Trust
Securities declared or paid prior to January 1, 2005, shall not be
included, and
59
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust.
Notwithstanding anything to the contrary herein, any premium paid in
connection with the repayment of Indebtedness of the Company in connection
with the Transactions and interest on the Trust Securities paid on or prior to
January 1, 2005 shall not be included in Consolidated Interest Expense.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of:
(1) Consolidated Indebtedness at such time to
(2) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to
the date of such determination;
provided, however, that:
(A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Leverage
Ratio is an Incurrence of Indebtedness, EBITDA for such period
shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if
such discharge had occurred on the first day of such period,
(B) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is to
be repaid, repurchased, defeased or otherwise discharged (in
each case other than Indebtedness Incurred under any revolving
credit facility unless such Indebtedness has been permanently
repaid and has not been replaced) on the date of the
transaction giving rise to the need to calculate the
Consolidated Leverage Ratio, EBITDA for such period shall be
calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company
or such Restricted Subsidiary has not earned the interest
income actually earned during such period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease
or otherwise discharge such Indebtedness,
(C) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition,
the EBITDA for such period shall be reduced by an amount equal
to the EBITDA (if positive) directly attributable to the assets
that
60
are the subject of such Asset Disposition for such period or
increased by an amount equal to the EBITDA (if negative)
directly attributable thereto for such period,
(D) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made
an Investment in any Restricted Subsidiary (or any Person that
becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit
of a business, EBITDA for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred
on the first day of such period,
(E) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the
beginning of such period) shall have Incurred any Indebtedness
or discharged any Indebtedness or made any Asset Disposition or
any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (C) or (D) above if
made by the Company or a Restricted Subsidiary during such
period, EBITDA for such period shall be calculated after giving
pro forma effect thereto as if such Incurrence, discharge,
Asset Disposition, Investment or acquisition of assets occurred
on the first day of such period, and
(F) if since the beginning of such period, the Specified Subsidiary
Group has been designated as Unrestricted Subsidiaries, EBITDA
for such period shall be calculated after giving pro forma
effect thereto as if such designation occurred on the first day
of such period.
For purposes of this definition, whenever pro forma effect is to be given
to any calculation under this definition, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer of
the Company and (i) shall comply, to the extent not inconsistent with the
provisions of the Indenture, with the requirements of Rule 11-02 of Regulation
S-X of the SEC and (ii) may include adjustments for operating expense
reductions that would be permitted by such Rule.
If any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has
a remaining term as at the date of determination in excess of 12 months).
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its Consolidated Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income:
26
(1) any net income of any Person (other than the Company) if such Person
is not a Restricted Subsidiary, except that:
(A) subject to the limitations contained in clause (4) below, the
Company's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to
the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution made to a Restricted
Subsidiary, to the limitations contained in clause (3) below)
and
(B) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by the Company or a
Subsidiary of the Company in a pooling of interests transaction for
any period prior to the date of such acquisition;
(3) any net income (or loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly,
to the Company, except that:
(A) subject to the limitations contained in clause (4) below, the
Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash
permitted to be distributed by such Restricted Subsidiary
during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution made to another
Restricted Subsidiary, to the limitation contained in this
clause) and
(B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other disposition
of any asset of the Company or its Consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) that is not
sold or otherwise disposed of in the ordinary course of business and
any gain (but not loss) realized upon the sale or other disposition
of any Capital Stock of any Person;
(5) the net after tax effect of any extraordinary gain or loss
(including all fees and expenses related to such extraordinary gain
or loss) or of any impairment loss on or writedown of goodwill; and
(6) the cumulative effect of a change in accounting principles.
62
Notwithstanding the foregoing, for the purpose of the covenant described
under "Certain Covenants--Limitation on Restricted Payments" and
"--Limitations on Designating Subsidiaries as Unrestricted Subsidiaries" only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (a)(4)(C)(iv) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as
(1) the par or stated value of all outstanding Capital Stock of the
Company plus
(2) paid-in capital or capital surplus relating to such Capital Stock
plus
(3) any retained earnings or earned surplus less
(A) any accumulated deficit and
(B) any amounts attributable to Disqualified Stock.
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of February 24,
2004, among the Company, Bank One, NA and others, together with any
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case, as amended, restated, supplemented,
waived, replaced (whether or not upon termination, and whether with the
original lenders or otherwise), refinanced, restructured or otherwise modified
from time to time (except to the extent that any such amendment, restatement,
supplement, waiver, replacement, refinancing, restructuring or other
modification thereto would be prohibited by the terms of the Indenture, unless
otherwise agreed to by the Holders of at least a majority in aggregate
principal amount of New Notes at the time outstanding).
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.
"Customary Transition Agreement" means any agreement to which both (x)
the Company or any of its Restricted Subsidiaries and (y) any Person that is
part of the Specified Subsidiary Group (or any director or officer of any such
Person) is a party, which is entered into in connection with the carve out,
spin off or split off of the Specified Subsidiary Group from the Company,
including any agreement that provides for the sale, transfer, disposition or
allocation of assets and liabilities (including contingent and tax liabilities
and including indemnification
63
arrangements in connection therewith), the sale or disposition of capital
stock of the Specified Subsidiary Group (including underwriting agreements),
the provision of transition services (including administrative, tax,
accounting and insurance services) or the licensing or leasing of property
(such as intellectual property or real property); provided that:
(1) the Specified Subsidiary Group is (or has been) designated as
Unrestricted Subsidiaries as permitted by the covenant entitled
"--Limitation on Designation of Subsidiaries as Unrestricted
Subsidiaries";
(2) such agreements are customary in carve out, spin off or split off
transactions; and
(3) the terms of such agreements, taken as a whole, are fair to the
Company and its Restricted Subsidiaries.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise,
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock convertible or exchangeable solely at
the option of the Company or a Restricted Subsidiary; provided,
however, that any such conversion or exchange shall be deemed an
Incurrence of Indebtedness or Disqualified Stock, as applicable) or
(3) is redeemable at the option of the holder thereof, in whole or in
part,
in the case of each of clauses (1), (2) and (3), on or prior to the first
anniversary of the Stated Maturity of the New Notes; provided, however, that
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the first anniversary of the Stated
Maturity of the New Notes shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital
Stock are not more favorable to the holders of such Capital Stock than the
provisions of the covenants described under "Change of Control" and "Certain
Covenants--Limitation on Sale of Assets and Subsidiary Stock."
"EBITDA" for any period means the Consolidated Net Income for such
period, plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income:
(1) income tax expense of the Company and its Consolidated Restricted
Subsidiaries,
64
(2) Consolidated Interest Expense,
(3) depreciation expense of the Company and its Consolidated Restricted
Subsidiaries,
(4) amortization expense of the Company and its Consolidated Restricted
Subsidiaries (including amortization recorded in connection with the
application of Financial Accounting Standard No. 142 (Goodwill and
Other Intangibles)),
(5) payments made in connection with the Non-Competition and Consulting
Agreement dated as of December 18, 2003, between the Company and
Hugh Westbrook (the "Westbrook Agreement") in the amount of $25.0
million and transaction fees and expenses paid in connection with
the Transactions,
(6) any severance payments related to the acquisition of Vitas, not to
exceed $14.5 million plus any related employment taxes and employee
benefit charges,
(7) dividends, distributions and payments not in excess of $2.8 million
under the Closing Date Stock Award Plan, and
(8) all other noncash charges of the Company and its Consolidated
Restricted Subsidiaries (excluding any such noncash charge to the
extent it represents an accrual of or reserve for cash expenditures
in any future period) less all non-cash items of income of the
Company and its Consolidated Restricted Subsidiaries,
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and noncash
charges of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income (loss) of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not
been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted Subsidiary or its stockholders.
"Equity Offering" means a public or private offering of Capital Stock of
the Company pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption to the registration requirements
under the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the debt securities of the Company issued pursuant
to the Indenture in exchange for, and in an aggregate principal amount equal
to, the New Notes, in compliance with the terms of the Registration Rights
Agreement.
65
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. For
all purposes of the Indenture, the Fair Market Value of property or assets
which involve an aggregate amount in excess of $25.0 million shall be set
forth in a resolution approved by the Board of Directors in good faith;
provided that for property or assets, other than cash, Indebtedness or readily
marketable securities, in an aggregate amount in excess of $50.0 million, Fair
Market Value shall be determined in writing by a nationally recognized
appraisal or investment banking firm.
"Floating Rate Notes" means the Floating Rate Senior Secured Notes due
2010 of the Company issued under the Indenture dated as of February 24, 2004,
between the Company, certain of its subsidiaries and Wells Fargo, N.A., as
trustee, and any exchange notes issued under such indenture.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set
forth in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants,
(2) statements and pronouncements of the Financial Accounting Standards
Board,
(3) such other statements by such other entities as approved by a
significant segment of the accounting profession, and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
All ratios and computations based on GAAP contained in the Indenture
shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of
any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or
services, to take- or-pay, or to maintain financial statement
conditions or otherwise) or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof
(in whole or in part);
66
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean
any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a New Note is registered on the
Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by
such Person at the time it becomes a Subsidiary. The term "Incurrence" when
used as a noun shall have a correlative meaning. Solely for purposes of
determining compliance with "Certain Covenants--Limitation of Indebtedness":
(1) amortization of debt discount or the accretion of principal with
respect to a non-interest bearing or other discount security;
(2) the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of
regularly scheduled dividends on Capital Stock (other than
Disqualified Stock) in the form of additional Capital Stock of the
same class and with the same terms; and
(3) the obligation to pay a premium in respect of Indebtedness arising
in connection with the issuance of a notice of redemption or the
making of a mandatory offer to purchase such Indebtedness
will not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination, without duplication:
(1) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
(2) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with
respect thereto but excluding obligations in respect of letters of
credit securing obligations (other than obligations in clauses (1),
(2), (4) or (5) hereof) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment on
the letter of credit);
67
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables or
other obligations arising in the ordinary course of business), which
purchase price is due more than six months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of such
Person;
(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of:
(A) the Fair Market Value of such asset at such date of
determination and
(B) the amount of such Indebtedness of such other Persons;
(8) all net obligations of such person in respect of Interest Rate
Agreements or Currency Agreements; and
(9) all obligations of the type referred to in clauses (1) through (8)
of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise,
including by means of any Guarantee.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Interest Payment Date" has the meaning assigned to it under "Principal,
Maturity and Interest."
"Interest Period" means, for any Interest Payment Date, a period from and
including the preceding Interest Payment Date to but excluding such Interest
Payment Date, provided, however, that the initial Interest Period will be the
period from and including the series issuance date to but excluding the August
15, 2004 Interest Payment Date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate
option agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedge agreement or other similar
agreement or arrangement to which such Person is party or of which it is a
beneficiary.
68
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person. Except as otherwise provided
for the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of "Unrestricted Subsidiary" and the covenant
described under "Certain Covenants--Limitation on Restricted Payments":
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market
Value of the net assets of any Subsidiary of the Company at the time
that such Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to
have a permanent "Investment" in an Unrestricted Subsidiary in an
amount (if positive) equal to:
(A) the Company's "Investment" in such Subsidiary at the time of
such redesignation less
(B) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its Fair Market Value at the time of such transfer.
"Legal Holiday" means a Saturday, Sunday or other day on which banking
institutions are not required by law or regulation to be open in the State of
New York.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and
proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any other noncash
form) therefrom, in each case net of:
(1) all legal, accounting, investment, banking, title and recording tax
expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be
paid or accrued as a liability under GAAP, as a consequence of such
Asset Disposition,
69
(2) all payments made on any Indebtedness other than Indebtedness under
the indenture for the Floating Rate Notes and the Credit Agreement
which is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by
its terms, or in order to obtain a consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from
such Asset Disposition,
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and
(4) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such
Asset Disposition or liabilities under indemnification obligations
associated with such Asset Disposition or any purchase price
adjustments.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Debt" means Indebtedness as to which neither the Company
nor any Restricted Subsidiary (a) provides any Guarantee or credit support of
any kind (including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as guarantor or otherwise); and (c) as to which there is no
recourse against any of the assets of the Company or its Restricted
Subsidiaries (other than assets or Capital Stock of Unrestricted Subsidiaries,
provided however, that Indebtedness of an Unrestricted Subsidiary which
consists of a Guarantee of Indebtedness of the Company or a Restricted
Subsidiary to a Person other than an Unrestricted Subsidiary, or a lien on
property or stock of an Unrestricted Subsidiary that secures Indebtedness of
the Company or a Restricted Subsidiary to a Person other than an Unrestricted
Subsidiary, shall be deemed to constitute Non-Recourse Debt as long as the
Unrestricted Subsidiary does not have recourse against the Company or a
Restricted Subsidiary under such Indebtedness.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the Chief Financial Officer, the President, any Vice President, the Treasurer
or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Business" means any business engaged in by the Company or any
Restricted Subsidiary on the Closing Date and any related, ancillary or
complementary business.
70
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is
a Permitted Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business
is a Permitted Business;
(3) Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course of
business consistent with prudent practices and applicable law and
not exceeding $2.0 million at any time outstanding;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the noncash
portion of the consideration received for an Asset Disposition that
was made pursuant to and in compliance with the covenant described
under "Certain Covenants--Limitation on Sale of Assets and
Subsidiary Stock";
(9) the Specified Subsidiary Group following any designation of the
Specified Subsidiary Group as Unrestricted Subsidiaries pursuant to
the covenant described under "Certain Covenants--Limitation on
Designation of Subsidiaries as Unrestricted Subsidiaries";
(10) any Person; provided, that the payment for such Investments consists
solely of Capital Stock of the Company (other than Disqualified
Stock);
71
(11) any Person consisting of the licensing of intellectual property
pursuant to joint ventures, strategic alliances or joint marketing
arrangements with such Person, in each case made in the ordinary
course of business;
(12) a vendor or supplier consisting of loans or advances to such vendor
or supplier in connection with any guarantees to the Company or any
Restricted Subsidiary of supply by, or to fund the supply capacity
of, such vendor or supplier, in any case not to exceed $2.0 million
at any one time outstanding;
(13) loans and other Investments in independent contractors and
subcontractors of the Company or its Restricted Subsidiaries, not to
exceed $4.0 million at any one time outstanding; or
(14) any other Investments to the extent such Investments, when taken
together with all other Investments made pursuant to this clause
(14) outstanding on the date such Investment is made, do not exceed
$5.0 million.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to
secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of
business;
(2) Liens imposed by law, such as landlords', carriers', warehousemen's
and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect
to which such Person shall then be proceeding with an appeal or
other proceedings for review;
(3) Liens for taxes, assessments or governmental charges or levies
either not yet due or payable or subject to penalties for
non-payment or which are being contested in good faith by
appropriate proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person
in the ordinary course of its business; provided, however, that such
letters of credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of
real property or Liens
72
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection
with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person;
(6) Liens securing Indebtedness permitted to be Incurred pursuant to
clause (8) of the covenant described under "Certain Covenants--
Limitation on Indebtedness"; provided, however, that the Lien may
not extend to any other property owned by such Person or any of its
Subsidiaries at the time the Lien is Incurred;
(7) Liens to secure Indebtedness permitted pursuant to paragraph (a) or
clauses (1), (3)(B), (9) or (13) of paragraph (b) of the covenant
described under "Certain Covenants--Limitation on Indebtedness" and
other Credit Agreement Obligations;
(8) Liens existing on the Closing Date;
(9) Liens on property or shares of stock of another Person at the time
such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, Incurred or assumed in
connection with, or in contemplation of, such other Person becoming
such a Subsidiary; provided further, however, that such Liens do not
extend to any other property owned by such Person or any of its
Subsidiaries;
(10) Liens on property at the time such Person or any of its Subsidiaries
acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or any Subsidiary
of such Person; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens do not extend
to any other property owned by such Person or any of its
Subsidiaries;
(11) Liens securing obligations under Hedging Obligations so long as such
obligations relate to Indebtedness permitted to be Incurred pursuant
to the covenant described under "Certain Covenants--Limitation on
Indebtedness" that is, and is permitted under the Indenture to be,
secured by a Lien on the same property securing such obligations;
(12) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred
to in the foregoing clauses (6), (7), (8), (9) or (10); provided,
however, that:
(A) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements to
or on such property) and
(B) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of:
73
(x) the outstanding principal amount or, if greater, committed
amount of the Indebtedness secured by Liens described
under clauses (6), (7), (8), (9) or (10) at the time the
original Lien became a Permitted Lien under the Indenture
and
(y) an amount necessary to pay any fees and expenses,
including premiums, related to such Refinancings; and
(13) Liens to secure Indebtedness permitted to be Incurred pursuant to
the covenant described under "Certain Covenants - Limitation on
Indebtedness" or other obligations in an aggregate principal amount
which, when taken together with all other Indebtedness and
obligations secured by Liens pursuant to this clause (13) and
remaining outstanding, does not exceed $10.0 million at any time.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over
shares of Capital Stock of any other class of such Person.
"principal" of a New Note means the principal of the New Note plus the
premium, if any, payable on the New Note which is due or overdue or is to
become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of property, conditional
sale obligations, obligations under any title retention agreement,
other purchase money obligations and obligations in respect of
industrial revenue bonds, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the
property being financed, and
(2) Incurred to finance the acquisition, construction or lease by the
Company or a Restricted Subsidiary of the property, including
additions and improvements thereto;
provided, however, that the Indebtedness is Incurred within 180 days
after the acquisition, construction or lease of the property by the Company or
Restricted Subsidiary.
"Qualifying Subsidiary Stock Distribution" means a distribution by the
Company to its shareholders of the Capital Stock of RRM (if RRM is the
Specified Subsidiary) if after giving effect thereto (and to any transactions
consummated in connection therewith) (x) at least 10% of such Capital Stock
(calculated on a fully diluted basis) would be held by persons other than the
Company, any Subsidiary of the Company, any director or officer of any of the
foregoing or any employee stock ownership plan or other trust established by
the Company or any of its Subsidiaries; and (y) the Company has designated, or
would then be permitted to designate, the
74
Specified Subsidiary Group as Unrestricted Subsidiaries pursuant to the
conditions set forth in the covenant described under "Certain Covenants--
Limitation on Designation of Subsidiaries as Unrestricted Subsidiaries."
"Qualifying Subsidiary Stock Sale" means a sale of Capital Stock of the
Specified Subsidiary pursuant to an underwritten public offering or private
sale, whether by means of a primary offering or a sale by the Company or any
subsidiary thereof, after which at least 10% of such Capital Stock (calculated
on a fully diluted basis) is held by persons other than the Company, a
subsidiary of the Company, a director or officer of any of the foregoing or
any employee stock ownership plan or other trust established by the Company or
any of its Subsidiaries. The exercise of an underwriter's overallotment option
shall be construed as part of the same Qualifying Subsidiary Stock Sale with
respect to which such option was granted.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
Refinance any Indebtedness of the Company or any Restricted Subsidiary
existing on the Closing Date or Incurred in compliance with the Indenture
(including Indebtedness of the Company that Refinances Refinancing
Indebtedness); provided, however, that:
(1) the Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being Refinanced;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater
than the Average Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being
Refinanced; and
(4) if the Indebtedness being Refinanced is contractually subordinated
in right of payment to the New Notes, such Refinancing Indebtedness
is contractually subordinated in right of payment to the New Notes
at least to the same extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(A) Indebtedness of a Restricted Subsidiary that Refinances
Indebtedness of the Company or
(B) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of February 24, 2004, among the Company and the initial Holders, the
initial holders of the Floating Rate Notes and certain other Persons.
75
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"RRM" means Roto-Rooter Management Company or any successor thereto by
any merger or consolidation which is permitted under the Indenture ("RR
Management") or, at the election of the Company (which shall be specified in
writing to the Trustee) for purposes of the designation of the Specified
Subsidiary, RRM shall mean any Subsidiary of the Company of which RR
Management is a Wholly Owned Subsidiary and which owns no other assets other
than assets incidental to the ownership of RR Management.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired by the Company or a Restricted Subsidiary
whereby the Company or a Restricted Subsidiary transfers such property to a
Person and the Company or such Restricted Subsidiary leases it from such
Person, other than leases between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Indebtedness" of the Company or any Subsidiary means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or any Subsidiary, regardless of whether or not
a claim for post-filing interest is allowed in such proceedings), and fees and
other amounts owing in respect of, Indebtedness of the Company or any
Subsidiary, as applicable, whether outstanding on the Closing Date or
thereafter Incurred, unless in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is provided that such
obligations are subordinated in right of payment to the New Notes; provided,
however, that Senior Indebtedness of the Company or any Subsidiary shall not
include:
(1) any obligation of the Company to any Subsidiary of the Company or of
such Subsidiary to the Company or any other Subsidiary of the
Company;
(2) any liability for Federal, state, local or other taxes owed or owing
by the Company or such Subsidiary, as applicable;
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(4) any Indebtedness or obligation of the Company (and any accrued and
unpaid interest in respect thereof) that by its terms is subordinate
or junior in any respect to any other Indebtedness or obligation of
the Company or such Subsidiary, as applicable, including any Senior
Subordinated Indebtedness and any Subordinated Obligations of the
Company or such Subsidiary, as applicable;
(5) any obligations with respect to any Capital Stock; or
(6) any Indebtedness Incurred in violation of the Indenture.
76
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Specified Subsidiary" shall mean the Subsidiary of the Company that is
designated as the Specified Subsidiary pursuant to the covenant described
under "--Limitation on Designation of Subsidiaries as Unrestricted
Subsidiaries."
"Specified Subsidiary Group" shall mean the Subsidiary of the Company
that is designated as the Specified Subsidiary pursuant to the covenant
described under "--Limitation on Designation of Subsidiaries as Unrestricted
Subsidiaries", together with all Subsidiaries of such Person.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Chemed Debentures" means the Convertible Junior
Subordinated Debentures due 2030, issued by the Company pursuant to the
indenture dated as of February 7, 2000, between the Company and Firstar Bank,
National Association as trustee.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the New Notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by:
(1) such Person,
(2) such Person and one or more Subsidiaries of such Person or
(3) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America
or any agency thereof or obligations Guaranteed by the United States
of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of
America having capital,
78
surplus and undivided profits aggregating in excess of $250,000,000
(or the foreign currency equivalent thereof) and whose long-term
debt is rated "A" (or such similar equivalent rating) or higher by
at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act);
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. ("S&P") ; and
(5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at
least "A" by S&P or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. {section}{section}
77aaa-77bbbb) as in effect on the Closing Date.
"Trade Payables" means, with respect to any Person, any accounts payable
or any indebtedness or monetary obligation to trade creditors created, assumed
or Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Transactions" means, collectively, the following transactions, which
were consummated on or about the date of the closing of the offering of the
Original Notes: (i) the consummation of the merger of Vitas with and into an
indirect Wholly Owned Subsidiary of the Company pursuant to a merger agreement
dated as of December 18, 2003, among the Company, Vitas and Marlin Merger
Corp., (ii) the repayment of approximately $74.4 million of existing
indebtedness of Vitas, plus accrued interest thereon, (iii) the repayment of
approximately $29.4 million of existing indebtedness of the Company (including
a $3.0 million make whole premium), plus accrued interest thereon, (iv) the
assignment of the Westbrook Agreement by the Company to Vitas, the payment of
$25.0 million by Vitas to Hugh A. Westbrook pursuant to the Westbrook
Agreement and the performance of the other obligations under the Westbrook
Agreement, (v) the consummation of the offering and sale of the Floating Rate
Notes, New Notes and the Capital Stock of the Company and the execution and
delivery of notes, indentures and other agreements in connection therewith,
(vi) the Company and certain of its Subsidiaries entering into the Credit
Agreement and the borrowing on the Closing Date of $75.0 million thereunder
(vii) the issuance or deemed issuance of letters of credit under the Credit
Agreement to replace or backstop, or the cash collateralization of, letters of
credit issued for the account of the Company or any of its Subsidiaries or
Vitas or any of its Subsidiaries, (viii) the cancelation of a warrant held by
the
78
Company for shares of Vitas stock and (ix) the payment of fees and expenses in
connection with the foregoing.
"Trustee" means the party named as such in the Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trust Securities" means the Chemed Preferred Securities, the
Subordinated Chemed Debentures and the guarantee by the Company to the holders
of the Chemed Preferred Securities of amounts payable thereunder.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided in the covenant described under "-
Limitation on Designation of Subsidiaries as Unrestricted
Subsidiaries" and
(2) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
of America (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States of America is pledged
and which are not callable or redeemable at the issuer's option.
"Vitas" means Vitas Healthcare Corporation or any successor thereto by
any merger, consolidation or other transaction which is permitted hereunder.
"VHC" means Vitas or, at the election of the Company (which shall be
specified in writing to the Trustee) for purposes of the designation of the
Specified Subsidiary, VHC means any Wholly Owned Subsidiary of the Company of
which Vitas is a Subsidiary and which owns no other assets other than assets
incidental to the ownership of Vitas.
"VNF" means Vitas of North Florida, Inc. a Florida not-for-profit
corporation and a Wholly Owned Subsidiary of Vitas.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding
and normally entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof.
"Westbrook Agreement" has the meaning assigned to such term in the
definition of "EBITDA."
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company
all the Capital Stock of which (other than directors' qualifying shares or
shares issued to third parties to the extent necessary to satisfy any
licensing requirements under applicable law with respect to the Company's or
any of its Subsidiaries' business) is owned by the Company or another Wholly
Owned Subsidiary.
79
EXCHANGE OFFER AND REGISTRATION RIGHTS
We entered into a registration rights agreement relating in connection
with the issuance of the Original Notes. The following description is meant to
be only a summary of certain provisions of the registration rights agreement.
It does not restate the terms of the registration rights agreement in its
entirety.
EXCHANGE OFFER AND REGISTRATION RIGHTS RELATING TO THE ORIGINAL NOTES
Pursuant to the registration rights agreement, we agreed, for the benefit
of the holders of the Original Notes, that we would use our reasonable best
efforts, at our cost, to (i) file with the SEC on or prior to 90 days after
the date of issuance of the Original Notes a registration statement on Form
S-3 or Form S-4, if the use of such form is then available (the "Exchange
Offer Registration Statement"), and if not, on an appropriate form, relating
to a registered exchange offer for the Original Notes (such offer the
"Exchange Offer") under the Securities Act, (ii) use our reasonable best
efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act within 180 days after the date of issuance
of the Original Notes and (iii) use our reasonable best efforts to complete
the Exchange Offer by the earlier of 210 days after the date of issuance of
the Original Notes and 60 days after the Exchange Offer Registration Statement
is declared effective. We agreed to offer to the holders of the Original Notes
the opportunity to exchange their Original Notes for a new series of notes
(the "Exchange Notes") that are identical in all material respects to such
Original Notes (except that the Exchange Notes will not contain terms with
respect to transfer restrictions or additional interest) and that would be
registered under the Securities Act. We agreed to keep the Exchange Offer open
for not less than 20 business days (or longer, if required by applicable law)
after the date on which notice of the Exchange Offer is mailed to the holders
of the Original Notes.
With regard to the Original Notes, if (i) because of any change in law or
applicable interpretations thereof by the staff of the SEC, we are not
permitted to effect the Exchange Offer as contemplated hereby, (ii) the
Exchange Offer is not consummated within 210 days of the issuance of the
Original Notes, or (iii) any holder of Original Notes (other than holders who
are broker-dealers electing to exchange Original Notes, acquired for its own
account as a result of market-making activities or other trading activities,
for applicable Exchange Notes (an "Exchanging Dealer")) is not eligible to
participate in the Exchange Offer or, (iv) in the case of any holder of
Original Notes (other than an Exchanging Dealer) that participates in the
Exchange Offer, and such holder does not receive freely tradable Exchange
Notes on the date of the exchange, then we agreed to file with the SEC at our
expense a shelf registration statement to cover resales of the Original Notes
and/or Exchange Notes that are not freely tradable by holders who satisfy
certain conditions relating to the provision of information in connection with
the shelf registration statement (the "Notes Shelf Registration Statement").
We agreed to use our reasonable best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Notes Shelf Registration
Statement declared effective by the SEC within 180 days after the date of the
issuance of the Original Notes. Unless the Exchange Offer would not be
permitted by a policy of the SEC, we agreed to commence the Exchange Offer and
will use our reasonable best efforts to consummate the Exchange Offer as
promptly as practicable within 210 days after the date of issuance of the
Original Notes. If applicable, we will use our reasonable best efforts to keep
the Notes Shelf Registration Statement continuously effective for a period of
two years from the date of its effectiveness or such shorter period of time
that will terminate when all Original Notes covered by the Notes Shelf
Registration Statement (i) have
80
been sold pursuant thereto or (ii) are no longer restricted securities under
Rule 144 of the Securities Act, or any successor rule thereof.
If (i) the Exchange Offer Registration Statement is not filed with the
SEC within 90 days after the date of the issuance of the Original Notes, (ii)
the Exchange Offer is not commenced or the Notes Shelf Registration Statement
is not filed within 180 days after the date of the issuance of the Original
Notes, (iii) the Exchange Offer is not consummated or the Notes Shelf
Registration Statement is not declared effective within 210 days after the
date of the issuance of the Original Notes or (iv) after either the Exchange
Offer Registration Statement or the Notes Shelf Registration Statement is
declared effective, (a) such registration statement thereafter ceases to be
effective without being succeeded immediately by an additional registration
statement filed and declared effective by the SEC or (b) such registration
statement or the related prospectus ceases to be usable (subject to certain
exceptions in the case of the preceding clause (b)) (each such event referred
to in clauses (i) through (iv), a "Notes Registration Default"), we will be
obligated to pay additional interest to each holder of the Original Notes,
with respect to the first 90-day period immediately following the first Notes
Registration Default, in an amount equal to 0.25% per annum of the principal
amount of Original Notes held by such holder. The amount of additional
interest will increase by an additional 0.25% per annum with respect to each
subsequent 90-day period until all Notes Registration Defaults have been
cured, up to a maximum of 1.0% per annum. All additional interest will be paid
to holders in the same manner as interest payments on the Original Notes on
semi-annual or quarterly payment dates which correspond to interest payment
dates for the Original Notes. Following the cure of all Notes Registration
Defaults, the accrual of additional interest will cease. We believe the
likelihood that we will pay additional interest upon a Registration Default is
remote or incidental (within the meaning of the applicable U.S. Treasury
regulations). We therefore believe that the possible payment of additional
interest will not cause the Original Notes to be treated as having been issued
with original issue discount for U.S. federal income tax purposes and that a
holder will be required to treat the gross amount of any additional interest
as ordinary interest income at the time such amount is received or accrued in
accordance with such holder's method of accounting for U.S. federal income tax
purposes.
The registration rights agreement also provides that we will make
available for a period of 90 days after the consummation of the Exchange Offer
a prospectus meeting the requirements of the Securities Act to any broker-
dealer for use in connection with any resale of any such Exchange Notes.
Holders of Original Notes will be required to suspend their use of the
prospectus included in the Notes Shelf Registration Statement under certain
circumstances upon receipt of written notice to that effect from us.
Each holder of Original Notes who wishes to exchange such notes for
Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any such Exchange Notes to
be received by it will be acquired in the ordinary course of its business;
(ii) it has no arrangement or understanding with any person to participate in
the distribution of such Exchange Notes; and (iii) it is not our "affiliate"
(as defined in Rule 405 under the Securities Act), or if it is an affiliate,
that it will comply with the registration and prospectus delivery requirements
of the Securities Act to the extent applicable. In addition, if the holder is
not a broker-dealer, it will be required to represent that it is not engaged
in, and does not intend to engage in, the distribution of the Exchange Notes.
If the holder is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Original Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
81
Holders of Original Notes or Exchange Notes that are not freely tradable
will also be required to deliver information to be used in connection with any
Notes Shelf Registration Statement within certain time periods in order to
have such Original Notes or Exchange Notes included in the Notes Shelf
Registration Statement and benefit from the provisions regarding liquidated
damages set forth in the preceding paragraphs. A holder who sells such
Original Notes or Exchange Notes pursuant to the Notes Shelf Registration
Statement generally will be required to be named as a selling securityholder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
exchange and registration rights agreement which are applicable to such a
holder (including certain indemnification obligations).
Original Notes not tendered in the Exchange Offer shall bear interest at
the rate set forth on the cover page of this prospectus and be subject to all
the terms and conditions specified in the indentures governing the Original
Notes and, for a period of two years after their issue date, to certain
transfer restrictions.
82
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain U.S. Federal income tax
consequences of the exchange offer to holders of Original Notes, but is not a
complete analysis of all potential tax effects. The summary below is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), regulations
of the Treasury Department, administrative rulings and pronouncements of the
Internal Revenue Service and judicial decisions, all of which are subject to
change, possibly with retroactive effect. This summary does not address all of
the U.S. Federal income tax consequences that may be applicable to particular
holders, including dealers in securities, financial institutions, insurance
companies and tax-exempt organizations. In addition, this summary does not
consider the effect of any foreign, state, local, gift, estate or other tax
laws that may be applicable to a particular holder. This summary applies only
to a holder that acquired Original Notes at original issue for cash and holds
such Original Notes as a capital asset within the meaning of Section 1221 of
the Code.
An exchange of Original Notes for New Notes pursuant to the exchange
offer will not be treated as a taxable exchange or other taxable event for
U.S. Federal income tax purposes. Accordingly, there will be no U.S. Federal
income tax consequences to holders who exchange their Original Notes for New
Notes in connection with the exchange offer and any such holder will have the
same adjusted tax basis and holding period in the New Notes as it had in the
Original Notes immediately before the exchange.
The foregoing discussion of certain U.S. Federal income tax
considerations does not consider the facts and circumstances of any particular
holder's situation or status. Accordingly, each holder of Original Notes
considering this exchange offer should consult its own tax advisor regarding
the tax consequences of the exchange offer to it, including those under state,
foreign and other tax laws.
83
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Original Notes
where such Original Notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period of
180 days after the expiration date, we will make this prospectus, as amended
or supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until the expiration date, all dealers effecting
transactions in the New Notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of New Notes by broker-
dealers. New Notes received by broker-dealers for their own account pursuant
to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker- dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the Original Notes)
other than commissions of concessions of any brokers or dealers and will
indemnify the holders of the Original Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
84
BOOK-ENTRY; DELIVERY AND FORM
GENERAL
Except as provided below, the New Notes will be represented by one or
more fully registered global securities, in denominations of $1,000 and any
integral multiple thereof which will be deposited with, or on behalf of, DTC
and registered in the name of Cede & Co., or "Cede,'' the nominee of DTC.
Beneficial interests in the global securities will be represented through
book- entry accounts of financial institutions acting on behalf of beneficial
owners as direct or indirect participants in DTC. Unless and until physical
New Notes in definitive, fully registered form, or "Definitive Notes," are
issued under the limited circumstances described below, all references in this
prospectus to actions by holders of New Notes will refer to actions taken by
DTC upon instructions from DTC participants, and all references to
distributions, notices, reports and statements to holders of New Notes will
refer, as the case may be, to distributions, notices, reports and statements
to DTC or Cede, as the registered holder of the New Notes, or to DTC
participants for distribution to holders of New Notes in accordance with DTC
procedures. The general DTC rules applicable to its participants are on file
with the SEC. More information on DTC is available at http://www.dtcc.com.
Except in the limited circumstances described below, owners of beneficial
interests in global securities will not be entitled to receive physical
delivery of Definitive Notes. The New Notes will not be issuable in bearer
form.
DTC has advised us that DTC is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation'' within the meaning of the New York Uniform Commercial Code and
"clearing agency'' registered pursuant to Section 17A of the Securities
Exchange Act of 1934.
Under the New York Uniform Commercial Code, a "clearing corporation'' is
defined as:
o a person that is registered as a "clearing agency'' under the
federal securities laws;
o a federal reserve bank; or
o any other person that provides clearance or settlement services with
respect to financial assets that would require it to register as a
clearing agency under the federal securities laws but for an
exclusion or exemption from the registration requirement, if its
activities as a clearing corporation, including promulgation of
rules, are subject to regulation by a federal or state governmental
authority. A "clearing agency'' is an organization established for
the execution of trades by transferring funds, assigning deliveries
and guaranteeing the performance of the obligations of parties to
trades.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions among DTC participants
through electronic book-entry transfers between the accounts of DTC
participants. The ability to execute transactions through book-entry transfers
in accounts eliminates the need for transfer of physical certificates. DTC
participants include both U.S. and foreign securities brokers and dealers,
banks, clearing
85
corporations and certain other organizations. DTC is a wholly owned subsidiary
of the Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is
owned by a number of DTC participants and by the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers, Inc.
and certain clearing corporations. Banks, brokers, dealers, trust companies
and other entities that clear through or maintain a custodial relationship
with a DTC participant either directly or indirectly have indirect access to
the DTC system.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers of the New
Notes among DTC participants and to receive and transmit distributions of
principal, premium, if any, and interest with respect to the New Notes. DTC
participants and indirect DTC participants with which holders of New Notes
have accounts similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective customers. Holders of
New Notes that are not DTC participants or indirect DTC participants but
desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the New Notes may do so only through DTC participants and
indirect DTC participants. In addition, holders of New Notes will receive all
distributions of principal, premium, if any, and interest from us through DTC
participants or indirect DTC participants, as the case may be. Under a
book-entry format, holders of New Notes may experience some delay in their
receipt of payments because we will forward payments with respect to the New
Notes to Cede, as nominee for DTC. We expect DTC to forward payments in
same-day funds to each DTC participant who is credited with ownership of the
New Notes in an amount proportionate to the principal amount of that DTC
participant's holdings of beneficial interests in the New Notes, as shown on
the records of DTC or Cede. We also expect that DTC participants will forward
payments to indirect DTC participants or holders of New Notes, as the case may
be, in accordance with standing instructions and customary industry practices.
DTC participants will be responsible for forwarding distributions to holders
of New Notes. Accordingly, although holders of New Notes will not possess
physical certificates representing the New Notes, DTC's rules provide a
mechanism for holders of New Notes to receive payments on the New Notes and to
be able to transfer their interests.
Unless and until Definitive Notes are issued under the limited
circumstances described below, the only physical holder of a New Note will be
Cede, as nominee of DTC. Holders of New Notes will not be recognized by us as
registered owners of New Notes under the indentures governing the New Notes.
Holders of New Notes will be permitted to exercise the rights under the
indentures governing the New Notes only indirectly through DTC and DTC
participants. DTC has advised us that it will take any action permitted to be
taken by a holder of New Notes under the indentures governing the New Notes
only at the direction of one or more DTC participants to whose accounts with
DTC the New Notes are credited. Additionally, DTC has advised us that in the
event any action requires approval by holders of New Notes of a certain
percentage of ownership of the New Notes, DTC will take such action only at
the direction of and on behalf of DTC participants whose holdings include
undivided interests that satisfy any such percentage. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of DTC participants whose holdings include those
undivided interests. DTC will convey notices and other communications to DTC
participants, and DTC participants will convey notices and other
communications to indirect DTC participants and to holders of New Notes in
accordance with arrangements among them. Arrangements among DTC and its direct
and indirect participants are subject to any statutory or regulatory
requirements as may be in effect from time to time. DTC's rules applicable to
itself and DTC participants are on file with the SEC.
86
The laws of some states require that certain purchasers of securities
take physical delivery of such securities. Such limits and such laws may limit
the market for beneficial interests in the global securities.
The ability of a holder of New Notes to pledge the New Notes to persons
or entities that do not participate in the DTC system, or otherwise to act
with respect to such New Notes, may be limited due to the lack of a physical
certificate to evidence ownership of the New Notes and because DTC can only
act on behalf of DTC participants, who in turn act on behalf of indirect DTC
participants.
We will have no liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the New Notes
held by Cede, as nominee for DTC, for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests or for the
performance by DTC, any DTC participant or any indirect DTC participant of
their respective obligations under the rules and procedures governing their
obligations.
DEFINITIVE NOTES
Definitive Notes will be issued in paper form to holders of New Notes or
their nominees, rather than to DTC or its nominee, only if we determine that
DTC is no longer willing or able to discharge properly its responsibilities as
depository with respect to the New Notes and we or the trustee are unable to
locate a qualified successor within 90 days of receipt of such notice.
If Definitive Notes are to be issued by us under the paragraph
immediately above, we will notify all holders of New Notes through DTC of the
availability of Definitive Notes. Upon surrender by DTC of the global
securities and receipt of instructions for re-registration, we will reissue
the New Notes as Definitive Notes to holders of Notes.
After Definitive Notes are issued, we or a paying agent will make
distributions of principal, premium, if any, and interest with respect to New
Notes directly to holders in whose names the New Notes were registered at the
close of business on the applicable record date. Except for the final payment
to be made with respect to a New Note, we or a paying agent will make
distributions by check mailed to the addresses of the registered holders as
they appear on the register maintained by us. We or a paying agent will make
the final payment with respect to any New Note only upon presentation and
surrender of the applicable New Note at the office or agency specified in the
notice of final distribution to holders of New Notes.
87
LEGAL MATTERS
Certain legal matters in connection with the New Notes offered hereby
will be passed upon for us by Naomi C. Dallob, Esq., our Vice President and
Secretary.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 2003 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Vitas as of September 30, 2003
and 2002, and for each of the three years in the period ended September 30,
2003, incorporated by reference from our Form 8-K/A filed on February 23, 2004
with the SEC, have been audited by Ernst & Young LLP, independent auditors, as
stated in their report thereon included therein and are included in reliance
upon such report given on the authority of such firm as experts in accounting
and auditing.
88
$150,000,000
8 3/4% SENIOR NOTES DUE 2011
CHEMED CORPORATION
(FORMERLY ROTO-ROOTER, INC.)
OFFER TO EXCHANGE
UP TO $150,000,000 PRINCIPAL AMOUNT OUTSTANDING OF
8 3/4% SENIOR NOTES DUE 2011
FOR
A LIKE PRINCIPAL AMOUNT OF NEW 8 3/4% SENIOR NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
________________
PROSPECTUS
________________
[ ], 2004
Until [ ], 2004, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that a corporation may indemnify any officer or
director who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that such
person is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of another
entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. Under Section 145(b) of the DGCL, such eligibility for
indemnification may be further subject to the adjudication of the Delaware
Court of Chancery.
The certificate of incorporation and by-laws, as amended, of Chemed
Corporation provide that Chemed Corporation indemnifies its officers and
directors to the maximum extent allowed by Delaware law.
Furthermore, Section 102(b)(7) of the DGCL provides that a corporation
may in its certificate of incorporation eliminate or limit the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director except for liability: for
any breach of the director's duty of loyalty to the corporation or its
stockholders; for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; under Section 174 of the
DGCL (pertaining to certain prohibited acts including unlawful payment of
dividends or unlawful purchase or redemption of the corporation's capital
stock); or for any transaction from which the director derived an improper
personal benefit. Chemed Corporation eliminates such personal liability of its
directors under such terms.
Chemed Corporation maintains liability insurance covering its directors
and officers.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
3.1 Certificate of Incorporation of Chemed Corporation Form S-3 4.1
Reg. No. 33-44177
3.2 Certificate of Amendment to Certificate of Incorporation Form S-8 E-1
Reg. No. 333- 109104
9/25/03
3.3 Certificate of Amendment to Certificate of Incorporation *
3.4 By-Laws of Chemed Corporation Form 10-K 2
3/28/89
4.4 Indenture, dated as of February 24, 2004, between Roto-Rooter, Inc.
and LaSalle Bank National Association Form 10-K 4.4
3/12/04
4.5 Indenture, dated as of February 24, 2004, among Roto-Rooter, Inc., Form 10-K 4.5
the subsidiary guarantors listed on Schedule I thereto and Wells 3/12/04
Fargo Bank, N.A.
4.6 Form of 8 3/4 Senior Note due 2011 (included in Exhibit 4.4)
5 Opinion of Naomi C. Dallob, Esq. *
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc., Form 8-K 1
D.C. Acquisition Inc., Chemed Corporation and DuBois Chemicals, 3/11/91
Inc., dated as of February 25, 1991
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed Form 10-K 5
Corporation dated as of August 5, 1992 3/25/93
10.3 Agreement and Plan of Merger among National Sanitary Supply Form 8-K 1
Company, Unisource Worldwide, Inc. and TFBD, Inc. 10/13/97
10.4 Stock Purchase Agreement dated as of May 8, 2002 by and between Form 8-K 2.1
PCI Holding Corp. and Chemed 10/11/02
II-2
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
Corporation
10.5 Amendment No. 1 to Stock Purchase Agreement dated as of October 11, Form 8-K 2.2.
2002 by and among PCI Holding Corp., PCI-A Holding Corp. and 10/11/02
Chemed Corporation
10.6 Senior Subordinated Promissory Note dated as of October 11, 2002 by Form 8-K 2.3
and among PCI Holding Corp. and Chemed Corporation 10/11/02
10.7 Common Stock Purchase Warrant dated as of October 11, 2002 by and Form 8-K 2.4
between PCI Holding Corp. and Chemed Corporation 10/11/02
10.8 1986 Stock Incentive Plan, as amended through May 20, 1991 Form 10-K 9
3/27/92, **
10.9 1986 Stock Incentive Plan, as amended through May 20, 1991 Form 10-K 10
3/27/92, **
10.10 1993 Stock Incentive Plan Form 10-K 10.8
3/29/94, **
10.11 1995 Stock Incentive Plan Form 10-K 10.14
3/28/96, **
10.12 1997 Stock Incentive Plan Form 10-K 10.10
3/27/98, **
10.13 1999 Stock Incentive Plan Form 10-K 10.11
3/29/00, **
10.14 1999 Long-Term Employee Incentive Plan as amended through May 20, Form 10-K 10.16
2002 3/28/03, **
10.15 2002 Stock Incentive Plan Form 10-K 10.17
3/28/03, **
10.16 2002 Executive Long-Term Incentive Plan Form 10-K 10.18
3/28/03, **
10.17 Employment Contracts with Executives Form 10-K 10.12
3/28/89, **
10.18 Amendment to Employment Agreements with Kevin J. McNamara, Thomas Form 10-K 10.20
C. Hutton and Sandra E. 3/28/03, **
II-3
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
Laney dated August 7, 2002
10.19 Amendment to Employment Agreements with Timothy S. O'Toole and Form 10-K 10.21
Arthur V. Tucker dated August 7, 2002 3/28/03, **
10.20 Amendment to Employment Agreement with Spencer S. Lee dated Form 10-K 10.20
May 19, 2003 3/12/04, **
10.21 Amendment to Employment Agreement with Executives dated Form 10-K 10.16
January 1, 2002 3/28/02, **
10.22 Consulting Agreement between Timothy S. O'Toole and PCI Holding Form 10-K 10.26
Corp. effective October 11, 2002 3/28/03, **
10.23 Amendment No. 16 to Employment Agreement with Sandra E. Laney Form 10-K 10.27
dated March 1, 2003 3/28/03, **
10.24 Excess Benefits Plan, as restated and amended, effective Form 10-K 10.24
June 1, 2001 3/12/03, **
10.25 Amendment No. 1 to Excess Benefits Plan, effective July 1, 2002 Form 10-K 10.27
3/12/03, **
10.26 Amendment No. 2 to Excess Benefits Plan, effective Form 10-K 10.26
November 7, 2003 3/12/03, **
10.27 Non-Employee Directors' Deferred Compensation Plan Form 10-K 10.10
3/24/88, **
10.28 Chemed/Roto-Rooter Savings & Retirement Plan, effective Form 10-K 10.25
January 1, 1999 3/25/99, **
10.29 First Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.22
effective September 6, 2000 3/28/02, **
10.30 Second Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.23
effective January 1, 2001 3/28/02, **
10.31 Third Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.24
effective December 12, 2001 3/28/02, **
II-4
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
10.32 Stock Purchase Plan by and among Banta Corporation, Chemed Form 8-K 10.21
Corporation and OCR Holding Company 10/13/97 **
10.33 Directors Emeriti Plan Form 10-Q 10.11
5/12/88, **
10.34 Second Amendment to Split Dollar Agreement with Executives Form 10-K 10.26
3/29/00, **
10.35 Split Dollar Agreement with Sandra E. Laney Form 10-K 10.27
3/25/99, **
10.37 Split Dollar Agreement with Edward L. Hutton Form 10-K 10.16
3/28/96, **
10.38 Split Dollar Agreement with Spencer S. Lee Form 10-K 10.33
3/29/00, **
10.39 Promissory Note under the Executive Stock Purchase Form 10-K 10.40
Plan with Edward L. Hutton 3/28/01, **
10.40 Promissory Note under the Executive Stock Purchase Plan with Form 10-K 10.41
Kevin J. McNamara 3/28/01, **
10.41 Schedule to Promissory Note under the Executive Stock Purchase Form 10-K 10.41
Plan with Edward L. Hutton 3/12/04, **
10.42 Schedule to Promissory Note under the Executive Stock Purchase Form 10-K 10.42
Plan with Kevin J. McNamara 3/12/04, **
10.43 Roto-Rooter Deferred Compensation Plan No. 1, as amended Form 10-K 10.37
January 1, 1998 3/28/01, **
10.44 Roto-Rooter Deferred Compensation Plan No. 2 Form 10-K 10.38
3/28/01, **
10.45 Agreement and Plan of Merger, dated as of December 18, 2003, Form 8-K 99.2
among Roto-Rooter, Inc., Marlin Merger Corp. and Vitas Healthcare 12/19/03
Corporation
10.46 Credit Agreement, dated as of February 24, 2004, among Form 10-K 10.46
Roto-Rooter, Inc., the lenders from time to 3/12/04
II-5
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
time parties thereto and Bank One, NA, as Administrative Agent.
10.47 Pledge and Security Agreement, dated as of February 24, 2004, From 10-K 10.47
among Roto-Rooter, Inc., the subsidiaries of Roto-Rooter, Inc. 3/12/04
listed on the signature pages thereto and Bank One, NA, as
Collateral Agent.
10.48 Guaranty Agreement, dated as of February 24, 2004, among the From 10-K 10.48
subsidiaries of Roto-Rooter, Inc. listed on the signature pages 3/12/04
thereto and Bank One, NA, as Administrative Agent.
12 Computation of Ratios of Earnings to Fixed Charges *
13 2003 Annual Report to Stockholders Form 10-K 13
3/12/04
21 Subsidiaries of Chemed Corporation Form 10-K 21
3/12/04
23.1 Consent of Pricewaterhouse Coopers LLP, Independent Accountants *
23.2 Consent of Ernst & Young LLP, Independent Auditors *
23.3 Consent of Counsel (included in Exhibit 5) *
24 Power of Attorney *
25 Statement of Eligibility of Trustee on Form T-1 *
99.1 Form of Letter of Transmittal *
99.2 Form of Notice of Guaranteed Delivery *
99.3 Form of Letter to Clients *
99.4 Form of Letter to Broker, Dealers and Other Nominees *
______________
* Filed herewith.
** Management contract or compensatory plan or arrangement.
II-6
ITEM 22. UNDERTAKINGS
Chemed Corporation hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of Chemed
Corporation's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day or receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions described in Item 20 above, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
11-7
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cincinnati, State of
Ohio, on May 20, 2004.
CHEMED CORPORATION
By: /s/ Kevin J. McNamara
-------------------------------------
Name: Kevin J. McNamara
Title: President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on May 20, 2004 by the following
persons in the capacities indicated.
SIGNATURE TITLE
/s/ Kevin J. McNamara President, Chief Executive Officer
----------------------------- and Director (principal executive officer)
Kevin J. McNamara
/s/ David P. Williams Vice President and Chief Financial
----------------------------- Officer (principal financial officer)
David P. Williams
/s/ Arthur V. Tucker, Jr. Vice President and Controller (principal
----------------------------- accounting officer)
Arthur V. Tucker, Jr.
* Director
-----------------------------
Edward L. Hutton
----------------------------- Director
Charles H. Erhart, Jr.
*
----------------------------- Director
Joel F. Gemunder
*
----------------------------- Director
Thomas C. Hutton
*
----------------------------- Director
Sandra E. Laney
*
----------------------------- Director
Timothy S. O'Toole
*
----------------------------- Director
Donald E. Saunders
*
----------------------------- Director
George J. Walsh III
*
----------------------------- Director
Frank E. Wood
*By: /s/ Naomi C. Dallob
----------------------------
Naomi C. Dallob
Attorney-in-Fact
EXHIBITS
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
3.1 Certificate of Incorporation of Chemed Corporation Form S-3 4.1
Reg. No. 33-44177
3.2 Certificate of Amendment to Certificate of Incorporation Form S-8 E-1
Reg. No. 333- 109104
9/25/03
3.3 Certificate of Amendment to Certificate of Incorporation *
3.4 By-Laws of Chemed Corporation Form 10-K 2
3/28/89
4.4 Indenture, dated as of February 24, 2004, between Roto-Rooter, Inc.
and LaSalle Bank National Association Form 10-K 4.4
3/12/04
4.5 Indenture, dated as of February 24, 2004, among Roto-Rooter, Inc., Form 10-K 4.5
the subsidiary guarantors listed on Schedule I thereto and Wells 3/12/04
Fargo Bank, N.A.
4.6 Form of 8 3/4 Senior Note due 2011 (included in Exhibit 4.4)
5 Opinion of Naomi C. Dallob, Esq. *
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc., Form 8-K 1
D.C. Acquisition Inc., Chemed Corporation and DuBois Chemicals, 3/11/91
Inc., dated as of February 25, 1991
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed Form 10-K 5
Corporation dated as of August 5, 1992 3/25/93
10.3 Agreement and Plan of Merger among National Sanitary Supply Form 8-K 1
Company, Unisource Worldwide, Inc. and TFBD, Inc. 10/13/97
10.4 Stock Purchase Agreement dated as of May 8, 2002 by and between Form 8-K 2.1
PCI Holding Corp. and Chemed 10/11/02
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
Corporation
10.5 Amendment No. 1 to Stock Purchase Agreement dated as of October 11, Form 8-K 2.2.
2002 by and among PCI Holding Corp., PCI-A Holding Corp. and 10/11/02
Chemed Corporation
10.6 Senior Subordinated Promissory Note dated as of October 11, 2002 by Form 8-K 2.3
and among PCI Holding Corp. and Chemed Corporation 10/11/02
10.7 Common Stock Purchase Warrant dated as of October 11, 2002 by and Form 8-K 2.4
between PCI Holding Corp. and Chemed Corporation 10/11/02
10.8 1986 Stock Incentive Plan, as amended through May 20, 1991 Form 10-K 9
3/27/92, **
10.9 1986 Stock Incentive Plan, as amended through May 20, 1991 Form 10-K 10
3/27/92, **
10.10 1993 Stock Incentive Plan Form 10-K 10.8
3/29/94, **
10.11 1995 Stock Incentive Plan Form 10-K 10.14
3/28/96, **
10.12 1997 Stock Incentive Plan Form 10-K 10.10
3/27/98, **
10.13 1999 Stock Incentive Plan Form 10-K 10.11
3/29/00, **
10.14 1999 Long-Term Employee Incentive Plan as amended through May 20, Form 10-K 10.16
2002 3/28/03, **
10.15 2002 Stock Incentive Plan Form 10-K 10.17
3/28/03, **
10.16 2002 Executive Long-Term Incentive Plan Form 10-K 10.18
3/28/03, **
10.17 Employment Contracts with Executives Form 10-K 10.12
3/28/89, **
10.18 Amendment to Employment Agreements with Kevin J. McNamara, Thomas Form 10-K 10.20
C. Hutton and Sandra E. 3/28/03, **
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
Laney dated August 7, 2002
10.19 Amendment to Employment Agreements with Timothy S. O'Toole and Form 10-K 10.21
Arthur V. Tucker dated August 7, 2002 3/28/03, **
10.20 Amendment to Employment Agreement with Spencer S. Lee dated Form 10-K 10.20
May 19, 2003 3/12/04, **
10.21 Amendment to Employment Agreement with Executives dated Form 10-K 10.16
January 1, 2002 3/28/02, **
10.22 Consulting Agreement between Timothy S. O'Toole and PCI Holding Form 10-K 10.26
Corp. effective October 11, 2002 3/28/03, **
10.23 Amendment No. 16 to Employment Agreement with Sandra E. Laney Form 10-K 10.27
dated March 1, 2003 3/28/03, **
10.24 Excess Benefits Plan, as restated and amended, effective Form 10-K 10.24
June 1, 2001 3/12/03, **
10.25 Amendment No. 1 to Excess Benefits Plan, effective July 1, 2002 Form 10-K 10.27
3/12/03, **
10.26 Amendment No. 2 to Excess Benefits Plan, effective Form 10-K 10.26
November 7, 2003 3/12/03, **
10.27 Non-Employee Directors' Deferred Compensation Plan Form 10-K 10.10
3/24/88, **
10.28 Chemed/Roto-Rooter Savings & Retirement Plan, effective Form 10-K 10.25
January 1, 1999 3/25/99, **
10.29 First Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.22
effective September 6, 2000 3/28/02, **
10.30 Second Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.23
effective January 1, 2001 3/28/02, **
10.31 Third Amendment to Chemed/Roto-Rooter Savings & Retirement Plan Form 10-K 10.24
effective December 12, 2001 3/28/02, **
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
10.32 Stock Purchase Plan by and among Banta Corporation, Chemed Form 8-K 10.21
Corporation and OCR Holding Company 10/13/97 **
10.33 Directors Emeriti Plan Form 10-Q 10.11
5/12/88, **
10.34 Second Amendment to Split Dollar Agreement with Executives Form 10-K 10.26
3/29/00, **
10.35 Split Dollar Agreement with Sandra E. Laney Form 10-K 10.27
3/25/99, **
10.37 Split Dollar Agreement with Edward L. Hutton Form 10-K 10.16
3/28/96, **
10.38 Split Dollar Agreement with Spencer S. Lee Form 10-K 10.33
3/29/00, **
10.39 Promissory Note under the Executive Stock Purchase Form 10-K 10.40
Plan with Edward L. Hutton 3/28/01, **
10.40 Promissory Note under the Executive Stock Purchase Plan with Form 10-K 10.41
Kevin J. McNamara 3/28/01, **
10.41 Schedule to Promissory Note under the Executive Stock Purchase Form 10-K 10.41
Plan with Edward L. Hutton 3/12/04, **
10.42 Schedule to Promissory Note under the Executive Stock Purchase Form 10-K 10.42
Plan with Kevin J. McNamara 3/12/04, **
10.43 Roto-Rooter Deferred Compensation Plan No. 1, as amended Form 10-K 10.37
January 1, 1998 3/28/01, **
10.44 Roto-Rooter Deferred Compensation Plan No. 2 Form 10-K 10.38
3/28/01, **
10.45 Agreement and Plan of Merger, dated as of December 18, 2003, Form 8-K 99.2
among Roto-Rooter, Inc., Marlin Merger Corp. and Vitas Healthcare 12/19/03
Corporation
10.46 Credit Agreement, dated as of February 24, 2004, among Form 10-K 10.46
Roto-Rooter, Inc., the lenders from time to 3/12/04
Page Number
or
Incorporation by Reference
------------------------------------------
Exhibit File No. and Previous
Number Exhibit Description Filing Date Exhibit No.
-------- -------------------------------------------------------------------- ------------------ ------------------
time parties thereto and Bank One, NA, as Administrative Agent.
10.47 Pledge and Security Agreement, dated as of February 24, 2004, From 10-K 10.47
among Roto-Rooter, Inc., the subsidiaries of Roto-Rooter, Inc. 3/12/04
listed on the signature pages thereto and Bank One, NA, as
Collateral Agent.
10.48 Guaranty Agreement, dated as of February 24, 2004, among the From 10-K 10.48
subsidiaries of Roto-Rooter, Inc. listed on the signature pages 3/12/04
thereto and Bank One, NA, as Administrative Agent.
12 Computation of Ratios of Earnings to Fixed Charges *
13 2003 Annual Report to Stockholders Form 10-K 13
3/12/04
21 Subsidiaries of Chemed Corporation Form 10-K 21
3/12/04
23.1 Consent of Pricewaterhouse Coopers LLP, Independent Accountants *
23.2 Consent of Ernst & Young LLP, Independent Auditors *
23.3 Consent of Counsel (included in Exhibit 5) *
24 Power of Attorney *
25 Statement of Eligibility of Trustee on Form T-1 *
99.1 Form of Letter of Transmittal *
99.2 Form of Notice of Guaranteed Delivery *
99.3 Form of Letter to Clients *
99.4 Form of Letter to Broker, Dealers and Other Nominees *
______________
* Filed herewith.
** Management contract or compensatory plan or arrangement.