Exhibit 10.43
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NOTE PURCHASE AGREEMENT
BY AND AMONG
THE CHILLICOTHE TELEPHONE COMPANY
AND
NORTHERN LIFE INSURANCE COMPANY
AND
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
DATED AS OF NOVEMBER 1, 1993
THE CHILLICOTHE TELEPHONE COMPANY
$10,000,000 6.47% SENIOR NOTES
DUE NOVEMBER 1, 2005
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TABLE OF CONTENTS
1. Purchase and Sale of Notes..............................................1
(a) The Notes......................................................1
(b) Purchases to be Several........................................2
(c) Late Payment...................................................2
(d) Manner of Payment..............................................2
(e) Payment on Non-Business Days...................................2
2. Prepayments of the Notes................................................2
(a) Voluntary Prepayments With Premium.............................2
(b) Voluntary Prepayments upon Merger, Consolidation, etc..........2
(c) Manner of Effecting Voluntary Prepayment.......................3
3. Representations and Warranties..........................................3
(a) Corporate Organization.........................................3
(b) Conflicting Agreements and Other Matters.......................3
(c) Due Authorization..............................................4
(d) Legal Proceedings..............................................4
(e) Financial Statements...........................................4
(f) Title to Assets................................................4
(g) Securities Matters.............................................4
(h) Licenses and Permits...........................................5
(i) No Defaults on Indebtedness....................................5
(j) Tax Returns....................................................5
(k) No Margin Stock................................................5
(l) ERISA Matters..................................................5
(m) Brokers and Finders............................................6
(n) Use of Proceeds................................................6
(o) Investment Company Act.........................................6
(p) Public Utility Holding Company Act, Federal Power Act..........6
(q) Full Disclosure................................................6
4. Affirmative Covenants...................................................7
(a) Payment........................................................7
(b) Maintenance of Books and Records...............................7
(c) Inspection of Books and Records................................7
(d) Financial Information..........................................7
(e) Quarterly Financial Statements.................................7
(f) Annual Financial Statements....................................8
(g) Financial Certification........................................8
(h) Copies of Management Letters, Etc..............................8
(i) Copies of Regulatory Reports...................................8
(j) Corporate Existence............................................9
(k) Payment of Taxes and Claims....................................9
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(l) Maintenance of Properties and Licenses.........................9
(m) Insurance......................................................9
(n) Net Worth......................................................9
(o) Notice of Default..............................................9
(p) Exchange of Notes.............................................10
(q) Qualified Retirement Plans....................................10
5. Negative Covenants.....................................................10
(a) Limitations on Funded Debt....................................10
(b) Limitations on Funded Debt of Subsidiaries....................10
(c) Subordination of Claims.......................................11
(d) Sale of Assets................................................11
(e) Merger and Consolidation......................................11
(f) Maintenance of Present Business...............................11
(g) Transactions with Affiliates..................................11
(h) Permitted Liens...............................................12
(i) Restricted Payments and Restricted Investments................13
(j) Fixed Charges.................................................13
6. Conditions Precedent...................................................13
7. Defaults...............................................................14
8. Payments on and Registration and Transfer of Notes.....................16
9. Expenses...............................................................16
10. Delivery of Documents, Pro Rata Payments, Amendments and Consents......17
(a) Delivery of Documents.........................................17
(b) Pro Rata Payments.............................................17
(c) Amendments and Consents.......................................17
11. Investment Purpose.....................................................17
12. Definitions............................................................17
13. Survival of Representations and Warranties.............................22
14. Successors and Assigns.................................................22
15. Notices................................................................22
16. Governing Law..........................................................23
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17. Counterparts...........................................................23
18. Captions...............................................................23
APPENDIX I........Purchasers
APPENDIX II.......Allocation of Notes
SCHEDULE 3(D).....Legal Proceedings
EXHIBIT A.........Form of Note
EXHIBIT B.........Subsidiaries
EXHIBIT C.........Existing Debts and Liens
EXHIBIT D.... ....Existing Restricted Investments
EXHIBIT E.........Form of Opinion of Counsel to the Company
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NOTE PURCHASE AGREEMENT
RE: THE CHILLICOTHE TELEPHONE COMPANY
$10,000,000 6.47% SENIOR NOTES
DUE NOVEMBER 1, 2005
DATED AS OF NOVEMBER 1, 1993
TO THE PURCHASERS NAMED IN APPENDIX I HERETO:
Dear Sirs:
The undersigned, The Chillicothe Telephone Company, an Ohio corporation
(herein called the "Company"), hereby confirms its agreements set forth below
with the parties listed on Appendix I hereto (herein called the "Purchasers").
Reference is made to paragraph 12 hereof for definitions of capitalized terms
used herein and not otherwise defined.
1. PURCHASE AND SALE OF NOTES.
(a) The Notes. Subject to the terms and conditions herein, the Company
will sell to each of the Purchasers on such date on or prior to November 16,
1993, as may be fixed by the Purchasers on at least three days' prior written
notice to the Company, or as may be mutually agreed upon with the Purchasers
(the date of sale being herein called the "Closing Date"), and each of the
Purchasers will purchase from the Company on the Closing Date, at 100% of the
principal amount thereof, a promissory note of the Company (which, together with
any note or notes issued in substitution therefor, are herein collectively
called the "Notes" and individually a "Note"), in the principal amount specified
on Appendix II hereto, dated the Closing Date. The principal amount of the Notes
shall be due in five consecutive equal annual installments, each in an aggregate
amount equal to $2,000,000 payable on the lst day of November in each of the
years 2001 through 2005, inclusive. The Notes shall bear interest from the
Closing Date until payment in full of the principal amount thereof at the rate
of 6.47 % per annum (provided that solely for the purpose of determining the
portion of annual interest allocable to any interest payment period, it shall be
assumed that a year is comprised of 360 days and 12 30-day months), payable
semi-annually on the 1st day of November and May, commencing May 1, 1994, and
continuing until payment in full of the principal amount of the Notes. The Notes
shall be subject to optional and mandatory prepayment as hereinafter provided,
shall in all respects be subject to the terms of this Agreement, and shall be
substantially in the form of Exhibit A hereto.
(b) Purchases to be Several. The purchase of each of the Notes by the
respective Purchasers shall be separate and several, but the purchase of each
Note shall be a condition concurrent to the purchase of each other Note.
(c) Late Payment. Any payment of principal or (to the extent permitted
by applicable law) interest on the Notes not paid when due, whether at stated
maturity, by acceleration or otherwise, shall thereafter bear interest at a rate
per annum equal to 8.47% (provided that in no event shall such rate exceed the
maximum rate permitted by law).
(d) Manner of Payment. The Purchasers will pay the purchase price of
the Notes by wire transfer of immediately available Federal funds to such
accounts as shall be specified by the Company, or in such other funds or in such
other manner as may be mutually agreed upon by the Purchasers and the Company,
against delivery to the Purchasers of the Notes.
(e) Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a Saturday, Sunday or
holiday for banks under the laws of the State of Minnesota or Ohio, such payment
may be made on the next succeeding business day.
2. PREPAYMENTS OF THE NOTES.
(a) Voluntary Prepayments With Premium. The Company may, at its
option, on any interest payment date on or after November 1, 1996., prepay the
Notes in whole or in part (but if in part only in the aggregate amount of
$1,000,000 or integral multiples thereof), upon 30 days' prior written notice to
the holders of the Notes, and upon payment of a prepayment premium equal to the
excess, if any, of (i) the amount equal to the present value of all installments
of principal and interest which are avoided by such prepayment, determined by
discounting such payments of principal and interest at a rate per annum equal to
.50% plus the Treasury Yield Percentage, over (ii) the principal amount to be
prepaid. In no event shall such prepayment premium be less than zero.
(b) Voluntary Prepayments upon Merger, Consolidation, etc. In the
event the holders of the Notes do not consent to any merger, consolidation,
acquisition, investment, recapitalization or reorganization, the result of which
would violate any covenant of this Agreement (a "Prohibited Transaction"),
within 90 days after written request from the Company for such consent, then on
or before the earlier of (i) the date the Company consummates the Prohibited
Transaction, or (ii) a date 150 days after the date the Company has requested
such consent, the Company may, at its option, prepay all Notes held by the
non-consenting Noteholders in whole, but not in part, upon 30 days prior written
notice to the holders of the Notes, and upon payment of a premium equal to the
excess, if any, of (i) the amount equal to the present value of all installments
of principal and interest which are avoided by such prepayment, determined by
discounting such payments of principal and interest at a rate per annum equal to
.25 % plus the Treasury Yield Percentage, over (ii) the principal amount to be
prepaid. In no event shall such prepayment premium be less than zero.
(c) Manner of Effecting Voluntary Prepayment. In the event the Company
shall give notice of any prepayment in accordance with paragraph 2(a) or 2(b)
above, such notice shall specify the principal amount of the Notes to be prepaid
(or, in the case of any prepayment pursuant to paragraph 2(b), the Noteholders
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whose Notes are to be prepaid), the paragraph pursuant to which prepayment is
being made, and the date of proposed prepayment, and thereupon such principal
amount, together with accrued and unpaid interest thereon to the prepayment date
and together with the applicable premium, if any, shall become due and payable
on the prepayment date. In the event any prepayment pursuant to paragraph 2(a)
shall be less than the entire unpaid principal amount of the Notes, the amount
of such prepayment shall be applied pro rata on all Notes on the last maturing
required installment or installments of principal in inverse order of their
maturity.
3. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
the Purchasers as follows:
(a) Corporate Organization. The Company and its Subsidiaries are
corporations organized and existing and in good standing under the laws of the
State of Ohio, and are duly qualified to do business and are in good standing
under the laws of each state where the nature of the business done or property
owned require such qualification. The Company is organized under the laws of the
State of Ohio. Exhibit B hereto correctly sets forth the name of each
Subsidiary, its state of incorporation and the percentage of the outstanding
capital stock of such Subsidiary owned by the Company or another Subsidiary. The
Company does not own, directly or indirectly, more than 1% of the total
outstanding capital stock of any class of any other corporation.
(b) Conflicting Agreements and Other Matters. Neither the execution
and delivery by the Company of this Agreement and the Notes, nor the performance
or observance by the Company or any Subsidiary of any of the terms or conditions
of this Agreement or the Notes, will (i) conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or result
in any violation of, or result in the creation of any lien upon any of the
properties or assets of the Company or any Subsidiary pursuant to, the
Certificate of Incorporation or Code of Regulations of the Company or any
Subsidiary, any award of any arbitrator, or any indenture, contract or agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company or any Subsidiary
is subject, or (ii) require any registration or filing with, or any consent or
approval of, any Federal, state or local governmental agency or authority,
except for the Application for Consent and Authority to issue and sell
$10,000,000 of Senior Unsecured Notes to the Public Utilities Commission of Ohio
which was filed August 25, 1993 and the approval thereof by such Commission
which was obtained by the Company on October 7, 1993.
(c) Due Authorization. The execution and delivery of this Agreement
and the Notes have been duly authorized by all necessary corporate action of the
Company and its Subsidiaries.
(d) Legal Proceedings. Except as listed on Schedule 3(d) hereto, there
are no actions, suits, or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries or any
property of the Company or any of its Subsidiaries in any court or before any
Federal, state, municipal or other governmental agency, which, if decided
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adversely to the Company or any of its Subsidiaries, would have a materially
adverse effect upon the Company or any of its Subsidiaries or upon the business
or properties of the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is in default with respect to any order of any court or
governmental agency.
(e) Financial Statements. The Company has furnished to the Purchasers
a consolidated balance sheet, statement of income and retained earnings and
statement of cash flows of the Company and its Subsidiaries for the year ended
December 31, 1992, certified by Arthur Andersen & Co., independent certified
public accountants, and unaudited consolidated and consolidating balance sheets,
statements of income and retained earnings of the Company and its Subsidiaries
for the six months ended June 30, 1993. Said financial statements fairly present
the financial condition of the Company and its Subsidiaries at the date(s)
thereof and the results of operations of the Company and its Subsidiaries for
the period(s) indicated, all in conformity with generally accepted accounting
principles consistently followed through the period(s) involved. There have been
no material adverse changes in the condition, financial or otherwise, of the
Company and its Subsidiaries since the latest balance sheet referred to.
(f) Title to Assets. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good title to all
personal property they purport to own, including (except as they have been
affected by transactions in the ordinary course of business) all properties and
assets reflected in the most recent balance sheet referred to in paragraph 3(e)
hereof. In the case of property used in their trades or businesses but not owned
by them, the Company and its Subsidiaries have a valid, binding and enforceable
right to use such property pursuant to a written lease, license or other
agreement. All of the assets of the Company and its Subsidiaries are free and
clear of all mortgages, liens, pledges, charges and encumbrances (other than
liens permitted by paragraph 5(h) hereof).
(g) Securities Matters. Neither the Company nor any of its
Subsidiaries nor any agent acting on the behalf of the Company or any of its
Subsidiaries has offered the Notes or any part thereof, or any similar
obligation for sale to, or solicited any offers to buy such Notes, or any part
thereof, or any similar obligation from, any person or persons so as to bring
the issue or sale of the Notes within the provisions of Section 5 of the
Securities Act of 1933, as amended, and neither the Company nor any of its
Subsidiaries will sell or offer for sale any note or any similar obligation of
the Company or any Subsidiary to, or solicit any offer to buy any similar
obligation of the Company or any Subsidiary from, any person or persons so as to
bring the issue or sale of the Notes within the provisions of Section 5 of the
Securities Act of 1933, as amended.
(h) Licenses and Permits. The Company and its Subsidiaries have
procured and are now in possession of all licenses or permits required by
federal, state or local laws for the operation of the business of the Company
and its Subsidiaries in each jurisdiction wherein the Company or any Subsidiary
is now conducting or proposes to conduct business.
(i) No Defaults on Indebtedness. Neither the Company nor any of its
Subsidiaries is in default in the payment of the principal of or interest on any
indebtedness for borrowed money nor is in default under any instrument or
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agreement under and subject to which any indebtedness for borrowed money has
been issued, and no event has occurred under the provisions of any such
instrument or agreement which with or without the passing of time or the giving
of notice, or both, constitutes or would constitute an event of default
thereunder.
(j) Tax Returns. The Company and its Subsidiaries have filed all
federal and state income tax returns which, to the knowledge of the officers of
the Company, are required to be filed, and have paid all taxes shown on said
returns and all assessments received by them to the extent that they have become
due. The federal income tax returns of the Company have been finally determined
by the Internal Revenue Service to be satisfactory (or have been closed by the
applicable statute of limitations) for all years prior to and including the year
ended 1989. No claims have been asserted against the Company in respect of
Federal income tax returns for any subsequent year.
(k) No Margin Stock. Neither the Company nor any of its Subsidiaries
owns any Margin Stock and none of the proceeds received by the Company or any
Subsidiary from the sale of the Notes will be used for the purpose of purchasing
or carrying a Margin Stock or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase a Margin Stock or for any
other purpose not permitted by Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System, as amended from time to time.
(l) ERISA Matters. Each Plan of the Company and each ERISA Affiliate
in which any employees of the Company or any ERISA Affiliate participate that is
subject to any provisions of ERISA is being administered in accordance with the
documents and instruments governing such Plan, and such documents and
instruments are consistent with those provisions of ERISA and the Internal
Revenue Code which have become effective and operative with respect to such Plan
as of the date of this Agreement. No such Plan has incurred any material
accumulated funding deficiency within the meaning of Section 302 of ERISA
(whether or not waived), and neither the Company nor any ERISA Affiliate has
incurred any material liability (including any material contingent liability) to
the PBGC in connection with any such Plan. No such Plan nor any trust created
thereunder nor any trustee or administrator thereof has engaged in a "prohibited
transaction" within the meaning of ERISA or Section 4975 of the Internal Revenue
Code and the issuance and sale of the Notes as contemplated hereby will not
constitute a "prohibited transaction". No such Plan nor any trust created
thereunder has been terminated, nor have there been any "reportable events"
within the meaning of Section 4043 of ERISA with respect to any such Plan.
Neither the Company nor any ERISA Affiliate contributes to or has any employees
who are covered by any "multiemployer plan," as such term is defined in Section
3(37) of ERISA, and neither the Company nor any ERISA Affiliate has incurred any
withdrawal liability with respect to any such multiemployer plan.
(m) Brokers and Finders. Neither the Company, any agent acting on its
behalf nor any person controlling, controlled by or under common control with
the Company has taken any action the effect of which would be to cause the
Purchasers to be liable for any broker's, finder's or agent's fee or commission
in connection with the placement of the Notes or any other transactions
contemplated by this Agreement. The Company has retained National City
Investments Corporation as its agent for placement of the Notes and is solely
responsible for any fees and expenses payable to such agent.
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(n) Use of Proceeds. The Company will use the net proceeds from the
sale of the Notes (i) to prepay on the Closing Date all Debt of the Company,
other than the Debt listed on Exhibit C hereto as remaining outstanding after
the Closing Date, and (ii) for general corporate purposes.
(o) Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
(p) Public Utility Holding Company Act, Federal Power Act. The Company
is an operating public telephone utility subject to the jurisdiction of the
Public Utilities Commission of Ohio and the Federal Communications Commission.
Neither the Company nor any of its Subsidiaries is a "holding company", nor a
"subsidiary company" of a "holding company", nor an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", nor a "public
utility", within the meaning of the Public Utility Holding Company Act of 1935,
as amended, nor a "public utility" within the meaning of the Federal Power Act,
as amended.
(q) Full Disclosure. Neither this Agreement, the financial statements
referred to in paragraph 3(e) hereof, nor any other document, certificate or
instrument delivered to the Purchasers on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not misleading.
4. AFFIRMATIVE COVENANTS. The Company covenants and agrees that, so long as
any amount shall remain unpaid on any of the Notes, it will:
(a) Payment. Duly and punctually pay or cause to be paid the principal
of and interest on the Notes and will duly and punctually perform or cause to be
performed all things on its part or on the part of any Subsidiary to be done or
performed under this Agreement and the Notes.
(b) Maintenance of Books and Records. At all times keep and cause each
Subsidiary to keep proper books of record and account in which full, true and
correct entries will be made of their transactions in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved.
(c) Inspection of Books and Records. At all reasonable times permit
and cause each Subsidiary to permit the holders of the Notes and their
representatives to inspect its books and records and to make extracts therefrom
and to inspect its properties and operations.
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(d) Financial Information. From time to time furnish and cause each
Subsidiary to furnish the holders of the Notes with such information and
statements as the holders of the Notes may reasonably request concerning
performance by it of the covenants and agreements contained in this Agreement
and the Notes, and with copies of all financial statements and reports that it
shall send or make available to its stockholders; and in the event that written
notice of the occurrence of an Event of Default shall have been given to the
Company, and the Company shall have notified the holders of the Notes that such
Event of Default has been corrected, the Company shall, upon request of the
holders of at least 66 2/3% of the unpaid principal amount of the Notes at the
time outstanding, for the purpose of showing that such Event of Default has been
corrected, furnish to the holders of the Notes a signed copy of an audit report
or, if such matter may be covered in a special report, a special report prepared
and certified by an independent certified public accountant selected by the
Company and satisfactory to the holders of the Notes, confirming that such Event
of Default has been corrected. All expenses incurred in connection with such
report shall be borne by the Company. Nothing in this paragraph 4(d), however,
shall diminish, defer, postpone or otherwise limit the right of the holders of
the Notes to take any action permitted by paragraph 7 hereof.
(e) Quarterly Financial Statements. Furnish to the holders of the
Notes, within 60 days after the close of each quarterly accounting period in
each fiscal year of the Company and its Subsidiaries, (i) a consolidated balance
sheet and consolidated statement of income and retained earnings reflecting the
financial condition of the Company and its Subsidiaries at the end of each such
quarterly period and the results of operations during such period, all in
reasonable detail, and setting forth comparable figures for the same accounting
period in the preceding fiscal year, and (ii) a separate balance sheet,
statement of income and retained earnings for each Subsidiary reflecting the
financial condition of each Subsidiary at the end of such quarterly period and
the results of operation during such period, all in reasonable detail, and
setting forth comparable figures for the same accounting period in the preceding
fiscal year.
(f) Annual Financial Statements. Furnish to the holders of the Notes,
as soon as available, but in any event within 120 days after the close of each
fiscal year of the Company, duplicate signed copies of an audit report prepared
and certified (without qualification as to the scope of the audit) by Arthur
Andersen & Company or another firm of independent certified public accountants
of national standing selected by the Company and satisfactory to the holders of
the Notes, which report shall include a consolidated and consolidating balance
sheet of the Company and its Subsidiaries as at the end of such year,
consolidated and consolidating statements of income and retained earnings of the
Company and its Subsidiaries and consolidated and consolidating statements of
cash flows of the Company and its Subsidiaries reflecting the operations during
said year, all in reasonable detail and setting forth comparable figures for the
preceding fiscal year, which report shall be accompanied by a statement by such
accounting firm certifying that in making the examination upon which such report
was based, no information came to its attention which to its knowledge indicated
a default under this Agreement had occurred or specifying any such default.
(g) Financial Certification. At the time of the delivery to the
holders of the Notes of the reports referred to in paragraphs 4(e) and 4(f)
hereof, deliver to the holders of the Notes a certificate signed by its chief
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financial officer, certifying that (s)he has reviewed the provisions of this
Agreement and stating, in his or her opinion, if such be the fact, that the
Company and its Subsidiaries have not been and are not in default as to any of
the provisions contained in this Agreement, or, in the event the Company or its
Subsidiaries is or was in default, setting forth the details of such default.
Such certificate shall set forth the computations upon which such officer based
the conclusion that the Company and its Subsidiaries are and have been in
compliance with paragraphs 4(n) and 5(a), (b), (d), (h), (i) and (j) hereof.
(h) Copies of Management Letters, Etc. Furnish to the holders of the
Notes, promptly after the receipt thereof by the Company, copies of all
management letters or similar documents submitted to the Company by independent
certified public accountants in connection with each annual and any interim
audit of the accounts of the Company or its Subsidiaries.
(i) Copies of Regulatory Reports. Furnish to the holders of the Notes,
promptly after transmittal or filing thereof by the Company, copies of all proxy
statements, notices and reports as it shall send to its stockholders, copies of
all registration statements (without exhibits) and all reports which it files
with the Securities and Exchange Commission or any other regulatory agency,
other than routine reports filed with respect to employee benefit plans
(excepting those annual reports with respect to each such plan requested by the
holders of the Notes in writing pursuant to paragraph 4(q) hereof).
(j) Corporate Existence. Maintain and cause each Subsidiary to
maintain its corporate existence in good standing (except that the corporate
existence of any Subsidiary may be terminated pursuant to a merger or
consolidation permitted under paragraph 5(e) of this Agreement) and comply with
all applicable laws and regulations of the United States and of each state
thereof and of each political subdivision thereof and of any and all other
governmental authorities.
(k) Payment of Taxes and Claims. Pay and cause each Subsidiary to pay
before they become delinquent (a) all taxes, assessments and governmental
charges or levies imposed on the Company, any Subsidiary or upon the property of
the Company or any Subsidiary, (b) all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like persons which, if
unpaid, might result in the creation of a lien or charge upon any property of
the Company or any Subsidiary; and (c) all claims, assessments or levies
required to be paid by the Company or any Subsidiary pursuant to any agreement,
contract, law, ordinance or governmental rule or regulation governing any
pension, retirement, profit-sharing or any similar plan of the Company or any
Subsidiary, provided that the Company or such Subsidiary shall have the right to
contest in good faith, by appropriate proceedings promptly initiated and
diligently conducted which will prevent the forfeiture or sale of any property
of the Company or such Subsidiary or any material interference with the use
thereof by the Company or such Subsidiary, the validity, amount or imposition of
any of the foregoing items and upon such good faith contest to delay or refuse
payment thereof, if such reserve or other appropriate provision, if any, as
shall be required by generally accepted accounting principles shall have been
made therefor.
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(l) Maintenance of Properties and Licenses. Maintain and cause its
Subsidiary to maintain and keep its properties in good repair, working order and
condition, and from time to time make all needful and proper repairs, renewals
and replacements so that the business carried on in connection therewith may be
properly and advantageously conducted at all times. The Company will do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect the rights, licenses, permits, agency agreements, and trade names
material to the conduct of its business and maintain and operate such business
properly and efficiently and in substantially the manner in which they are
presently conducted and operated.
(m) Insurance. Maintain and cause each Subsidiary to maintain, in
insurance companies of recognized standing, insurance of types and in amounts
usually maintained by similar companies in similar businesses.
(n) Net Worth. At all times maintain Consolidated Adjusted Net Worth
in an amount at least equal to $20,000,000.
(o) Notice of Default. Give the holders of Notes prompt notice in
writing of any condition or event which constitutes an Event of Default under
paragraph 7 hereof, or which, after notice or lapse of time, or both, would
constitute such an Event of Default.
(p) Exchange of Notes. At any time, at its expense upon written
request of the holder of a Note and surrender of the Note for such purpose,
issue new Notes in exchange therefor in such denominations of at least
$1,000,000 as shall be specified by the holder of such Note, in an aggregate
principal amount equal to the then unpaid principal amount of the Note
surrendered and substantially in the form of Exhibit A, with appropriate
insertions and variations, and bearing interest from the date to which interest
has been paid on the Note surrendered.
(q) Qualified Retirement Plans. Cause each Plan of the Company and any
ERISA Affiliate in which any employees of the Company or any ERISA Affiliate
participate that is subject to any provisions of ERISA and the documents and
instruments governing each such Plan to be conformed to when necessary, and to
be administered in a manner consistent with those provisions of ERISA and the
Internal Revenue Code which may, from time to time, become effective and
operative with respect to such Plans; and if requested by the holders of the
Notes in writing from time to time, furnish to the holders of the Notes a copy
of any annual report with respect to each such plan that the Company files with
the Internal Revenue Service pursuant to ERISA. The Company will not, and will
not permit any ERISA Affiliate to (i) engage in any "prohibited transaction",
(ii) incur any "accumulated funding deficiency", whether or not waived, (iii)
terminate any Plan in a manner which could result in the imposition of a lien on
any property of the Company or any ERISA Affiliate, or (iv) incur any withdrawal
liability in connection with any " multiemployer plan."
5. Negative Covenants. The Company covenants and agrees that so long as any
amount shall remain unpaid on the Notes, it will not and will not permit any
Subsidiary to:
9
(a) Limitations on Funded Debt. Create, assume, incur, guarantee or
otherwise become liable in respect of any Funded Debt other than (i) the Notes,
(ii) Funded Debt existing on the Closing Date and listed on Exhibit C hereto
(other than such Funded Debt which is to be repaid with the proceeds of the
Notes), and (iii) Funded Debt of the Company to any Subsidiary or Funded Debt of
any Subsidiary to the Company or another Subsidiary, unless at the time such
Funded Debt is incurred, and after giving effect thereto and application of the
proceeds thereof, Consolidated Funded Debt would not exceed 55% of Consolidated
Total Capitalization.
(b) Limitations on Funded Debt of Subsidiaries. In the case of any
Subsidiary, create, assume, incur, guarantee or otherwise become liable in
respect of any Funded Debt (other than Funded Debt to the Company or another
Subsidiary), unless at the time such Funded Debt is incurred, and after giving
effect thereto and the application of the proceeds thereof, the aggregate amount
of all such Funded Debt of Subsidiaries, plus the aggregate amount of all other
Debt secured by liens permitted by paragraph 5(h)(vii) hereof, would not exceed
20% of Consolidated Adjusted Net Worth.
(c) Subordination of Claims. Subordinate or permit to be subordinated
any claim against, or obligation of another person, firm or corporation held or
owned by it to any other claim against, or obligation of, such other person,
firm or corporation.
(d) Sale of Assets. Sell, lease, transfer or otherwise dispose of
(collectively, a "Disposition"), all or any part of its assets (other than sales
or dispositions in the ordinary course of business) if either (i) the aggregate
amount of all Dispositions in any fiscal year exceeds 10% of Consolidated Total
Assets, or (ii) the aggregate amount of all Dispositions from and after the date
of this Agreement exceed 25% of Consolidated Total Assets, except: (i) any
Subsidiary may sell, lease or otherwise dispose of, all or a substantial part of
its assets to the Company or another Subsidiary; (ii) the Company may sell,
lease, transfer or otherwise dispose of, all or a substantial part of its assets
if the net proceeds of such sales are used to purchase other property of a
similar nature of at least equivalent value within one year of such sale; (iii)
the Company may sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets if the net proceeds of such sale are used to
prepay Senior Debt (including the Notes) on a pro rata basis; and (iv) the
Company may sell, lease, transfer or otherwise dispose of a substantial part of
its assets pursuant to a final order by the Public Utilities Commission of Ohio
or the Federal Communications Commission.
(e) Merger and Consolidation. Merge or consolidate with any
corporation provided that (i) any Subsidiary may be merged or consolidated with
the Company (if the Company is the surviving corporation) or with another
Subsidiary and (ii) the Company may merge or consolidate with another
corporation if (A) the surviving corporation would be organized under the laws
of the United States or any state thereof, (B) the surviving corporation
expressly assumes the obligations of the Company under this Agreement and the
Notes, and (C) immediately following the merger or consolidation and after
giving effect thereto (1) no event or condition would exist which, with or
without the lapse of time or the giving of notice, or both, would constitute an
Event of Default, (2) the Company and it Subsidiaries would be permitted
10
pursuant to paragraph 5(a) hereof to incur at least $1.00 of additional Funded
Debt, and (3) the Consolidated Adjusted Net Worth of the Company and its
Subsidiaries would be no less than the Consolidated Adjusted Net Worth of the
Company and its Subsidiaries immediately prior to the merger or consolidation.
(f) Maintenance of Present Business. Engage in any business other than
Existing Lines of Business, nor purchase or invest, directly or indirectly, in
any substantial amount of assets or property other than assets or property
useful and to be used in Existing Lines of Business.
(g) Transactions with Affiliates. Except on terms no less favorable to
the Company than would be obtainable if no such relationship existed, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
loan or advance money to, or otherwise deal with (i) any director, officer or
employee of the Company or any Subsidiary or (ii) any person who, directly or
indirectly either individually or together with his spouse, his lineal
descendants and ascendants and brothers and sisters by blood or adoption or
spouses of such descendants, ascendants, brothers and sisters, beneficially owns
5% or more of the voting stock of the Company or (iii) any spouse, lineal
descendant or ascendant, brother or sister, by blood, adoption or marriage, of
any person listed in clause (i) or (ii) above, and spouses of such ascendants,
descendants, brothers and sisters or (iv) any company in which any person
described in clause (i), (ii) or (iii) above owns a 5% or greater equity
interest.
(h) Permitted Liens. Create, assume, or suffer to exist any mortgage,
pledge, encumbrance, lien, security interest or charge of any kind whether
presently effective, springing, conditional or contingent (including any charge
upon property purchased under conditional sales contracts, title retention
agreements or other purchase money security interests or under leases which
constitute Capitalized Lease Obligations) upon any of its property or assets,
whether now owned or hereafter acquired, except:
(i) liens for taxes or assessments or other governmental charges
or levies not yet due or which are being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted,
if such reserve or other appropriate provision, if any, as shall be
required by generally accepted accounting principles shall have been
made therefor;
(ii) other liens, charges, or encumbrances incidental to the
conduct of their business or the ownership of their respective
properties which were not incurred in connection with borrowing of
money or the obtaining of advances or credit and which do not in the
aggregate materially detract from the value of their properties or
materially impair the use thereof in the operation of the business;
(iii) liens on assets of any Subsidiary securing Debt of such
Subsidiary to the Company;
11
(iv) liens (i) on property of the Company or any Subsidiary
securing all or any part of the purchase price or cost of construction
of such property created contemporaneously with, or within 270 days
after, the acquisition or completion of construction, (ii) on any
property existing at the time of acquisition thereof by the Company or
any Subsidiary, (iii) existing on the property of any Person at the
time such Person is acquired (whether by purchase of stock or assets,
by merger or consolidation, or otherwise) by the Company or any
Subsidiary; provided that (A) none of such liens shall encumber any
other property or assets of the Company and its Subsidiaries, and (B)
the principal amount of the Debt secured by any such lien shall not
exceed 100% of the fair market value of the property subject thereto
at the time such lien was created;
(v) presently existing liens described in Exhibit C hereto
securing existing Debt described in Exhibit C, and any replacements,
extensions or renewals of such Debt; provided that no such
replacement, extension or renewal shall increase the principal amount
thereof;
(vi) liens on any property of the Company; provided that the
Company shall have granted to the holders of the Notes a pari passu
lien on the same property, and the holders of any such lien and the
holders of the Notes shall have entered into an intercreditor
agreement in form and substance reasonably satisfactory to the holders
of the Notes providing for such pari passu ranking; and
(vii) liens in addition to those permitted by clauses (i) through
(vi) above, Securing Debt of the Company or any Subsidiary, provided
that at the time of the incurrence of any such lien the sum of (i) the
aggregate principal amount of all Debt secured by liens permitted by
this clause (vii), plus (ii) the aggregate amount of Funded Debt of
Subsidiaries incurred within the limitations of paragraph 5(b), shall
not exceed 20% of Consolidated Adjusted Net Worth.
(i) Restricted Payments and Restricted Investments. Declare or make,
or incur any liability to make any Restricted Payments or Restricted
Investments, except:
(i) a Subsidiary may pay dividends to the Company; and
(ii) the Company and its Subsidiaries may make Restricted
Payments and Restricted Investments, provided that immediately after
giving effect to any such Restricted Payment or Restricted Investment,
(A) no Event of Default or event which with the passing of time or the
giving of notice, or both, would constitute an Event of Default shall
exist, (B) the Company would be able to incur at least $1.00 of
additional Funded Debt pursuant to paragraph 5(a), and (C) the
aggregate amount of all Restricted Payments and Restricted Investments
from and after December 31, 1992 to and including the date of such
Restricted Payment or Restricted Investment would not exceed the sum
of (1) $3,000,000, plus (2) 60% of any Cumulative Consolidated Net
Income, minus (3) 100% of any Cumulative Consolidated Net Loss, plus
(4) the net proceeds to the Company from any issuance of capital stock
after the Closing Date.
12
(j) Fixed Charges. Permit, as of the end of each fiscal quarter,
Consolidated Net Income Available for Fixed Charges for the immediately
preceding twelve-month period to be less than 250% of Fixed Charges for such
twelve-month period.
6. CONDITIONS PRECEDENT. The obligations of the Purchasers to purchase the
Notes, as provided in paragraph 1 hereof, shall be subject to the satisfaction,
on or before the Closing Date, of the following conditions.
(a) The representations and warranties contained in paragraph 3 hereof
shall be true and correct as of the Closing Date; the Company shall not be in
default with respect to any of the provisions hereof, and there shall exist no
event which, with the passage of time or the giving of notice, or both, would
constitute such a default; and the Company shall have delivered to the
Purchasers a certificate signed by a responsible officer of the Company to such
effects.
(b) The Purchasers shall have received from Squire, Sanders & Dempsey,
counsel for the Company, a favorable opinion in form and substance satisfactory
to the Purchasers as to all matters specified in Exhibit E hereto and such other
matters incident to the transaction herein contemplated as the Purchasers may
reasonably request.
(c) The Purchasers shall have received from their special counsel,
Faegre & Benson, a favorable opinion in form and substance satisfactory to the
Purchasers, as to such matters incident to the transaction herein contemplated
as the Purchasers may reasonably request.
(d) The Purchasers shall have received a Uniform Commercial Code
Search and judgment and tax lien searches against the Company and each
Subsidiary from the States of Ohio and every other state as the Purchasers may
reasonably request, dated as of a date no more than fifteen days prior to the
Closing Date, certified by a reporting service satisfactory to the Purchasers,
and disclosing no liens other than those permitted under paragraph 5(h) of this
Agreement.
(e) The Company shall have provided the Purchasers with copies of all
approvals from the Public Utilities Commission of Ohio and any other state or
federal governmental agency or agencies from whom regulatory approvals are
necessary for the consummation of all of the transactions contemplated hereby.
(f) Neither the Company nor any Subsidiary shall have suffered a
material adverse change in financial condition, nor shall there exist any
material action, suit or proceeding pending, or to the knowledge of the Company
threatened, against the Company nor any Subsidiary which, if decided adversely
to the Company or any Subsidiary, would have a materially adverse effect upon
the Company or any Subsidiary or upon any of their businesses or properties.
(g) All proceedings to be taken in connection with the transaction
contemplated by this Agreement and all documents incident thereto shall be
satisfactory in form and substance to the Purchasers and their counsel and the
13
Purchasers shall have received copies of all documents which the Purchasers may
reasonably request.
7. DEFAULTS. If one or more Events of Default shall occur, that is to say,
if
(a) default shall be made in the punctual payment of the principal of
or premium, if any, on any of the Notes when due, whether by regular
installment, upon prepayment, by acceleration, at maturity or otherwise; or
(b) default shall have been made in the punctual payment of any
interest on any of the Notes when due, whether by regular installment, upon
prepayment, by acceleration at maturity or otherwise, and such default shall
have continued for a period of five days; or
(c) the Company or any Subsidiary defaults in any payment of principal
of or interest on any other obligation for borrowed money beyond any period of
grace provided with respect thereto or in the performance of any other
agreement, term or condition contained in any agreement under which any such
obligation is created if the effect of such default is to cause, or permit the
holder or holders of any obligation of the Company or any Subsidiary in excess
of $1,000,000 (or a trustee on behalf of such holder or holders) to cause, such
obligation to become due prior to its stated maturity; or
(d) an order for relief shall be entered in any Federal Bankruptcy
proceeding in which the Company or any Subsidiary is the debtor; or bankruptcy,
receivership, insolvency, reorganization, relief, dissolution, liquidation or
other similar proceedings shall be instituted by or against the Company or any
Subsidiary or all or any part of the property of the Company or any Subsidiary
under the Federal Bankruptcy Code or any other law of the United States or any
bankruptcy or insolvency law of any state of competent jurisdiction; or
(e) the Company or any Subsidiary shall have become insolvent or
unable to pay its debts as they mature, cease doing business as a going concern,
make an assignment for the benefit of creditors, admit in writing its inability
to pay its debts as they become due, or if a trustee, receiver or liquidator
shall be appointed for the Company or any Subsidiary or for any substantial
portion of the assets of the Company or any Subsidiary; or
(f) default shall be made in the performance or observance of any
covenant contained in paragraph 5 of this Agreement; or
(g) default shall be made in the performance or observance of any
other of the terms, covenants or conditions of this Agreement and such default
shall continue for a period of thirty days after written notice thereof shall
have been given by the holders of Notes to the Company; or
(h) final judgments or orders for the payment of money in excess of
$1,000,000 in the aggregate shall be rendered against the Company or any
Subsidiary and such judgments or orders shall remain unsatisfied, unstayed and
14
unbonded for a period of 30 days after the date such judgments or orders are
required to be paid; or
(i) if any representation or warranty contained in this Agreement or
in any other document supplied to the holders of Notes by the Company or its
Subsidiary in connection with this transaction proves to be false as of the time
this Agreement was made (provided that, if the Company shall have given the
holders of the Notes written notice that any such representation or warranty was
false at the time this Agreement was made, which notice shall describe the facts
giving rise to the breach of any such representation or warranty, and the
holders of the Notes shall not have declared an Event of Default under this
clause (i) based on the information contained in the notice from the Company
within sixty (60) days of such notice, then the holders of the Notes shall be
deemed to have waived any Event of Default under this clause (i) based on the
information contained in the notice from the Company),
then the holder of the Note if only one Note shall be outstanding, or the
holders of at least two-thirds of the principal amount of the Notes, if more
than one Note shall be outstanding, may at its or their option, by notice in
writing to the Company, declare the Note or all of the Notes, as the case may
be, to be forthwith due and payable and thereupon the Note, or all of the Notes,
shall be and become due and payable, together with interest accrued thereon and
the premium specified in paragraph 2(a) hereof (whether or not prepayment would
then be permitted by said paragraph 2(a)) (provided that if an Event of Default
results from the filing of a voluntary or involuntary petition in any bankruptcy
proceeding in which the Company or any Subsidiary is the debtor, the Notes
thereupon shall immediately become due and payable, with interest accrued
thereon and the premium specified in paragraph 2(a) hereof (whether or not
prepayment would then be permitted by said paragraph 2(a)), without any notice
from the holders of the Notes or otherwise), and the holder or holders of the
Note or Notes may take any action or proceeding at law or in equity which it or
they deem advisable for the protection of its or their interests to collect and
enforce payment, and the Company shall pay all expenses, court costs and
reasonable attorneys' fees incurred in connection with or arising out of any
default hereunder.
8. PAYMENTS ON AND REGISTRATION AND TRANSFER OF NOTES. The Company agrees
that it will make payment of the principal of, premium, if any and interest on
the Notes by wire transfer of immediately available federal funds with
sufficient information to identify the source and application of funds to each
of the Purchasers in accordance with the wire transfer instructions set forth in
Appendix I hereto, or to such other accounts or in such other manner as may from
time to time be designated by the holder of a Note, without presentment of the
Notes and without the rendering of any bills therefor. The Company shall keep at
its principal office a register in which the Company shall provide for the
registration of the Notes and of transfers of the Notes (the "Note Register").
Upon surrender of any Note for transfer at the office of the Company, the
Company shall execute and deliver, in the name of the designated transferee a
new Note in a principal amount equal to the unpaid principal amount of, and
dated the date to which interest has been paid on, the Note so surrendered. When
a Note shall be presented or surrendered for transfer it shall be duly endorsed,
or be accompanied by a written instrument of transfer duly executed, by the
holder thereof or his attorney duly authorized in writing. The Company may treat
the person in whose name the Note is registered on the Note Register as the
15
owner of the Note for the purpose of receiving payment of principal of and
interest on the Note and for all other purposes and the Company shall not be
affected by notice to the contrary.
9. EXPENSES. The Company agrees, whether or not the purchase of the Notes
herein contemplated shall be consummated, to pay and save the Purchasers
harmless against liability for the payment of all out-of-pocket expenses arising
in connection with this transaction including any documentary stamp taxes (and
including interest and penalties, if any), which may be determined to be due and
payable with respect to the execution and delivery of the Notes, and the
reasonable fees and expenses of counsel to the Purchasers. The Company also
agrees to pay, and to save the Purchasers harmless against liability for the
payment of, the reasonable fees and expenses of counsel to the Purchasers in
connection with any documentation and related services arising after the Closing
Date in connection with the preparation of waivers or amendments of any
provisions of this Agreement and the Notes. In addition, the Company agrees to
pay, and to save the holders of the Notes harmless against, all brokerage or
finders fees incurred in the transaction contemplated by this Agreement.
10. DELIVERY OF DOCUMENTS, PRO RATA PAYMENTS, AMENDMENTS AND CONSENTS.
(a) Delivery of Documents. All notices, certificates, requests,
statements and other documents required or permitted to be delivered to the
Purchasers or the holders of Notes by any provision hereof shall also be
delivered to each holder of a Note.
(b) Pro Rata Payments. All interest payments and payments or
prepayments of principal shall be made and applied pro rata on all Notes
outstanding in accordance with the respective unpaid principal amounts thereof;
provided that any prepayment pursuant to paragraph 2(b) hereof shall be applied
in accordance with the provision thereof.
(c) Amendments and Consents. The registered holder or holders of at
least two-thirds of the unpaid principal amount of the Notes at the time
outstanding may by agreement with the Company amend this Agreement, and any
consent, notice, request or demand required or permitted to be given by the
Purchasers or the holders of the Notes by any provision hereof shall be
sufficient if given by the holder or holders of at least two-thirds of the
unpaid principal amount of Notes at the time outstanding except that, without
the written consent of the holders of all Notes at the time outstanding, no
amendment to this Agreement shall extend the maturity of any Note, or alter the
rate of interest or any premium payable with respect to any Note, or affect the
amount of any required prepayments, or reduce the proportion of the principal
amount of the Notes required with respect to any consent.
11. INVESTMENT PURPOSE. Each Purchaser represents that its acquisition of
the Notes by it will be for investment and not with a view to resale in
connection with any distribution thereof, it being understood, however, that the
disposition of the property of each Purchaser shall at all times be within its
control.
16
12. DEFINITIONS. For purposes of this Agreement the following terms shall
have the following meanings:
"Capitalized Lease Obligations" shall mean lease payment obligations under
leases that are required to be capitalized under generally accepted accounting
principles.
"Closing Date" shall have the meaning set forth in paragraph l(a).
"Consolidated Adjusted Net Worth" shall mean Consolidated Stockholders'
Equity less goodwill and other intangible assets created after the Closing Date.
"Consolidated Funded Debt" shall mean, as of any date, the aggregate amount
of all Funded Debt of the Company and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles
consistent with those followed in preparation of the financial statements
referred to in paragraph 3(e).
"Consolidated Net Income (Net Loss)" shall mean, for any period, the net
after-tax income (or net loss) of the Company and its Subsidiaries on a
consolidated basis determined in accordance with generally accepted accounting
principles consistent with those followed in preparation of the financial
statements referred to in paragraph 3(e), excluding (i) extraordinary gains and
losses (including the annual charges to earnings required by FASB 106 in
connection with the recognition of post-retirement benefits), and (ii) any
equity interest of the Company in the unremitted earnings of any corporation
which is not a Subsidiary.
"Consolidated Net Income Available for Fixed Charges" shall mean, for any
period, Consolidated Net Income for such period, plus (i) all deductions for
taxes levied in respect of income deducted in computing Consolidated Net Income
for such period, and (ii) Fixed Charges deducted in computing Consolidated Net
Income for such period.
"Consolidated Stockholders' Equity" shall mean Consolidated Stockholders'
Equity of the Company and its Subsidiary determined in accordance with generally
accepted accounting principles, plus the one time charge to earnings (net of any
tax benefits) associated with the recognition of post-retirement benefit
obligations pursuant to FASB 106.
"Consolidated Total Assets" shall mean, as of any date, the total amount of
all assets of the Company and its Subsidiaries determined on a consolidated
basis in accordance with generally accept accounting principles consistent with
those followed in preparation of the financial statements referred to in
paragraph 3(e).
"Consolidated Total Capitalization" shall mean the sum of Consolidated
Adjusted Net Worth and Funded Debt.
"Cumulative Consolidated Net Income" shall mean the excess, if any, of:
17
(i) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1992 and (B) Consolidated Net Income, if any, for any completed
quarter ending after the end of the most recently completed fiscal
year of the Company; over
(ii) the sum of (A) Consolidated Net Loss, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1992 and (B) Consolidated Net Loss, if any, for any completed
quarter ending after the end of the most recently completed fiscal
year of the Company.
"Cumulative Consolidated Net Loss" shall mean the excess, if any, of:
(i) the sum of (A) Consolidated Net Loss, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1992 and (B) Consolidated Net Loss, if any, for any completed
quarter ending after the end of the most recently completed fiscal
year of the Company; over
(ii) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1992 and (B) Consolidated Net Income, if any, for any completed
quarter ending after the end of the most recently completed fiscal
year of the Company.
"Debt" shall mean (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, including without limitation Capitalized
Lease Obligations, but excluding trade accounts payable and accrued liabilities
arising in the ordinary course of business, (ii) any other indebtedness
evidenced by a promissory note or other instrument, (iii) the face amount of all
letters of credit issued for the account of any Person and, without duplication
all drafts drawn thereunder, (iv) any indebtedness for borrowed money or the
deferred purchase price of property or services secured by a lien on any
property of any Person, whether or not such indebtedness has been assumed, and
(v) guaranties or other contingent obligations for any indebtedness described in
clauses (i) through (iv).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
the regulations adopted pursuant thereto.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with the Company, would be deemed to be a single
employer within the meaning of Section 4001(b)(1) of ERISA.
"Event of Default" shall have the meaning set forth in paragraph 7.
"Existing Lines of Business" shall mean operations in the voice, video and
data communications industry.
18
"Fair Market Value" shall mean, as of any date, the average of the high and
low prices of the sales on all exchanges on which the Company's Voting Stock may
at the time be listed, or, if there shall have been no sales on any such
exchange on any such day, the average of the bid and asked prices at the end of
such day, or, if the Voting Stock shall not be so listed, the average of the bid
and asked prices at the end of the day in the over-the-counter market in each
case averaged over a period of 20 consecutive business days prior to the date as
of which "Fair Market Value" is being determined. If at any time the Voting
Stock of the Company is not listed on any exchange or quoted in the
over-the-counter market, the "Fair Market Value" shall be deemed to be the book
value thereof as determined by reference to the most recent audited financial
statements delivered to the holders of the Notes pursuant to paragraph 4(f).
"Fixed Charges" shall mean, for any period, all consolidated interest
expense on all Debt and all rental expense on all operating leases deducted in
computing Consolidated Net Income for such period, determined in accordance with
generally accepted accounting principles consistent with those followed in
preparation of the financial statements referred to in paragraph 3(e).
"Funded Debt" shall mean any Debt payable more than one year from the date
of its creation (or which is renewable at the option of the obligor to a date
more than one year from the date of its creation), including the current portion
thereof, which under generally accepted accounting principles is shown on the
balance sheet as a liability, including but not limited to the Notes, any
Capitalized Lease Obligations, and any guarantee with respect to Funded Debt of
another person.
"Margin Stock" shall have the meaning ascribed to that term in Section
207.2(i) of Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve Board.
"Note Register" shall have the meaning set forth in paragraph 8.
"Note" or "Notes" shall have the meaning set forth in paragraph l(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permitted Investments" shall mean (i) investments in direct obligations of
the United States government maturing within one year from the date of purchase
thereof; (ii) certificates of deposit, repurchase agreements, and bankers
acceptances with final maturities of one year or less issued by U.S. commercial
banks having capital and surplus aggregating not less than $100,000,000; (iii)
if so permitted by law, savings deposits in national banks and federal savings
and loan associations having capital stock and surplus aggregating not less than
$100,000,000, provided that the aggregate of all such savings deposits at any
one bank or savings and loan association shall not exceed $150,000 at any time;
(iv) commercial paper rated A-1 or P-1 by recognized rating services; (v) money
market preferred stock rated "A" or above by recognized rating services; (vi)
tax exempt, floating rate option tender bonds, backed by a letter of credit
issued by a bank rated AA by Standard & Poor's or Aa by Moody's Investors
19
Service, (vii) loans by the Company to Subsidiaries engaged in businesses
similar to the Company's Existing Lines of Business constituting general
obligations of such Subsidiaries, provided such obligations shall not be
subordinated to any other obligations of any Subsidiary; (viii) loans by any
Subsidiary to the Company; (ix) equity investments in Subsidiaries engaged in
businesses similar to the Company's Existing Lines of Business; (x) investments
in assets related to the Company's Existing Lines of Business; (xi) subject to
compliance by the Company with the requirements of paragraph 4(n), investments
by the Company in its capital stock in a maximum aggregate amount (exclusive of
investments permitted by clause (xiii)) of $5,000,000; (xiv) repurchases by the
Company of its capital stock owned by the estate of a deceased shareholder with
the proceeds of life insurance on the life of such deceased shareholder; (xv)
travel and expense advances of the Company and its Subsidiaries to their
respective officers and employees in the ordinary course of business; and (xvi)
other existing investments set forth in Exhibit D hereto.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit or other plan within the
meaning of Section 3(2) of ERISA that is subject to Title IV of ERISA, other
than any "multiemployer plan" within the meaning of Section 3(37) of ERISA.
"Prohibited Transaction" shall have the meaning set forth in paragraph
2(b).
"Purchaser" or "Purchasers" shall have the meaning set forth in the
preamble.
"Restricted Investments" shall mean (i) any investments in the stock or
securities of any Person, (ii) any loans or advances to or investments in any
Person, (iii) any guaranty of the obligations of any Person, or (iv) any
investment in or acquisition of any assets, other than any of the foregoing
which constitute Permitted Investments.
"Restricted Payments" shall mean (i) payment or declaration of any dividend
or any other distribution on account of any class of stock (including in the
term "stock" any warrant or option or other right to purchase such stock of the
Company or any Subsidiary) of the Company or any Subsidiary, excluding any
distribution which may be payable solely in common stock of the corporation
making the distribution, (ii) direct or indirect redemptions, purchases, or
other acquisitions of shares of stock except for any such redemptions
constituting Permitted Investments, and (iii) any optional prepayment by the
Company or any Subsidiary of any Subordinated Debt of the Company or any
Subsidiary.
"Senior Debt" shall mean all Funded Debt which does not constitute
Subordinated Debt.
20
"Subordinated Debt" shall mean all Debt which is expressly subordinate in
right of payment pursuant to its terms to the Notes, whether or not it is
subordinated to other indebtedness of the Company.
"Subsidiary" or "Subsidiaries" shall mean the corporations listed on
Exhibit B hereto, and any other corporation or corporations more than 50% of the
outstanding capital stock of every class of which is hereafter owned, directly
or indirectly, by the Company.
"Total Capitalization" shall mean, as of any date, the sum of Consolidated
Adjusted Net Worth and Funded Debt.
"Treasury Yield Percentage" shall mean, as of any date, (i) the most recent
weekly average yield on actively traded U.S. Treasury obligations having a
constant maturity equal to the average life of the payments of principal and
interest that are avoided by any prepayment as determined by reference to the
week-ending figures published in the most recent Statistical Release which shall
have become available at least two business days prior to the date fixed for
prepayment, or (ii) if a Statistical Release is not then published, the
arithmetic average (rounded to the nearest .01%) of the per annum yields to
maturity for each business day during the week ending at least two business days
prior to the date as of which such determination is made, of all the issues of
actively traded marketable United States Treasury fixed interest rate securities
with a constant maturity equal to, or not more than 30 days longer or 30 days
shorter than the average life of the payments of principal and interest that are
avoided by any prepayment (excluding all such securities which can be
surrendered at the option of the holder at face value in payment of any Federal
estate tax, which provide for tax benefits to the holder or which were issued at
substantial discount) as published in The Wall Street Journal or, if The Wall
Street Journal shall cease such publication, based on average asked prices (or
yields) as quoted by each of three United States government securities dealers
of recognized national standing selected by the holders of the Notes. If the
average life of the payments of principal and interest that are avoided by any
prepayment is not equal to the constant maturity of a U.S. Treasury obligation
for which a weekly average yield is published or quoted, the Treasury Yield
Percentage shall be calculated by linear interpolation (to the nearest
one-twelfth of a year) from the most recent weekly average yields of actively
traded U.S. Treasury obligations for which such yields are published or quoted;
provided, however, that if the average life of the payments of principal and
interest that are avoided by any prepayment is less than one year, the Treasury
Yield Percentage shall equal the most recent weekly average yield published or
quoted on actively traded U.S. Treasury obligations with a constant maturity of
one year.
"Voting Stock" shall mean capital stock of any class or classes of a
corporation having power under ordinary circumstances to vote for election of
members of the board of directors of such corporation, or persons performing
similar functions.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein or made in writing by the Company in connection
herewith shall survive the execution and delivery of this Agreement and of the
Notes.
21
14. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement
contained by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
15. NOTICES. All communications provided for hereunder shall be sent by
first class mail and, if to the Purchasers, addressed to the Purchasers at the
notice address listed on Appendix I hereto, and if to the Company, addressed to
The Chillicothe Telephone Company, 68 East Main Street, Chillicothe, Ohio 45601,
Attention: Mr. Jack E. Thompson, or to such other address with respect to any
party as such shall notify the other parties in writing.
16. GOVERNING LAW. This Agreement is being delivered and is intended to be
performed in the State of Minnesota, and shall be construed and enforced in
accordance with the laws of such State.
17. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
18. CAPTIONS. The captions in this Agreement are for convenience only and
shall not be considered in the interpretation of any of the provisions hereof.
THE BALANCE OF THIS PAGE
INTENTIONALLY LEFT BLANK
22
If the Purchasers are in agreement with the foregoing, please sign the form
of acceptance on the enclosed counterpart of this letter and return the same to
the undersigned. Upon acceptance by all the Purchasers, this letter shall become
a binding agreement between the Purchasers and the undersigned.
Very truly yours,
THE CHILLICOTHE TELEPHONE COMPANY
By: /s/ Thomas McKell
-----------------------------
Its: President
-----------------------------
The foregoing Agreement is accepted
as of the date first above written
NORTHERN LIFE INSURANCE COMPANY
By: /s/ Mark S. Jordahl
-----------------------------
Its: Assistant Treasurer
-----------------------------
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By: /s/ Mark S. Jordahl
------------------------------
Its: Authorized Representative
------------------------------
23
APPENDIX I
PURCHASERS
NAME AND NOTICE ADDRESS WIRE TRANSFER INSTRUCTIONS
- ----------------------- --------------------------
NORTHERN LIFE INSURANCE COMPANY First National Bank, N.A./Mpls.
c/o Washington Square Capital, Inc. 601 2nd Avenue South
100 Washington Square Acct. #1602-3237-6105
Suite 800 Bank ABA #091000022
Minneapolis, Minnesota 55401-2147 ATTN: Securities Accounting
Attention: Private Placements Ref: Issuer, Cusip, Coupon & Maturity
NORTHWESTERN NATIONAL LIFE. First National Bank, N.A./Mpls.
INSURANCE COMPANY 601 2nd Avenue South
c/o Washington Square Capital, Inc. Acct. #1102-4001-4461
100 Washington Square Bank ABA #091000022
Suite 800 ATTN: Securities Accounting
Minneapolis, Minnesota 55401-2147 Ref: Issuer, Cusip, Coupon & Maturity
Attention: Private Placements
APPENDIX II
ALLOCATION OF NOTES
PURCHASER PRINCIPAL AMOUNT
- --------- ----------------
Northern Life Insurance Company $6,000,000
Northwestern National Life Insurance Company $4,000,000
----------
$10,000,000
SCHEDULE 3(d)
LEGAL PROCEEDINGS
On January 3, 1989, the Company received a "PRP" notice letter from the
U.S. EPA under Section 104(e) of CERCLA requesting information regarding the
United Scrap Lead Site in Troy, Ohio (the "Site"). The Company's response
indicated that its only indirect involvement with the Site was that it had sold
a small amount of scrap material to an identified scrap dealer over a several
year period. The Company is aware that in July, 1991, the U.S. EPA filed a suit
to recover response costs at the Site against ten PRPs. The Company was not
named as a defendant and has not received any further notices or requests for
information from the U.S. EPA since 1989.
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMIENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
THE CHILLICOTHE TELEPHONE COMPANY
6.47% SENIOR NOTE
$________________ November __, 19__
FOR VALUE RECEIVED, the undersigned, THE CHIILLICOTHE TELEPHONE COMPANY, an
Ohio corporation (the "Company"), hereby promises to pay to
_____________________ or registered assigns by wire transfer of immediately
available Federal funds to ______________________ with sufficient information to
identify the source and application of funds, or to such other account or in
such other manner as the holder of this Note shall specify by notice in writing
to the Company, in lawful money of the United States, the principal sum of
_______________________ DOLLARS ($__________) in five consecutive equal annual
installments in the amount of $_________________ each on the 1st day of November
in each of the years 2001 through 2005, inclusive, and to pay interest in like
money on the unpaid principal balance hereof at the rate of 6.47% per annum
(provided that solely for the purpose of determining the portion of annual
interest allocable to any interest payment period, it shall be assumed that a
year is comprised of 360 days and twelve 30-day months) from the date hereof,
payable semi-annually on the 1st day of November and May in each year,
commencing May 1, 1994, and continuing until payment in full of the principal
amount of this Note.
Any payment of principal or (to the extent permitted by applicable law)
interest on this Note not paid when due, whether at stated maturity, by
acceleration or otherwise, shall thereafter bear interest at a rate per annum
equal to 8.47% (provided that in no event shall such rate exceed the maximum
rate permitted by law).
This Note is issued pursuant to a Note Purchase Agreement (the "Agreement")
entered into among the Company, Northern Life Insurance Company and Northwestern
National Life Insurance Company dated as of November 1, 1993 and is subject to
optional and mandatory prepayment, in whole or in part, in the amounts, upon the
notice, with the premium, and subject to the conditions specified in the
Agreement.
As provided in the Agreement, this Note is transferable only on the Note
Register of the Company, upon surrender of this Note for transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed by
the registered holder hereof or his attorney duly authorized in writing. The
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur, the
principal of this Note may be declared due and payable in the manner and with
the effect provided in the Agreement.
This Note shall be governed by and construed in accordance with the laws of
the State of Minnesota.
THE CHILLICOTHE TELEPHONE COMPANY
By:
----------------------------------
Its:
---------------------------------
EXHIBIT B
SUBSIDIARIES
% of Capital stock
Corporation State of Incorporation owned by Company
- ----------- ---------------------- ------------------
Chillicothe Telephone Company -- Ohio 100%
Communications, Inc.
EXHIBIT C
EXISTING DEBTS AND LIENS
AS OF NOVEMBER 16, 1993
-----------------------
Short-Term Debt (1)(2)
- ---------------
Note Payable - National City Bank $3,500,000
Long-Term Debt (l)(3)
- --------------
First Mortgage Bonds Series B $1,250,000
First Mortgage Bonds Series C $1,250,000
First Mortgage Bonds Series D $1,500,000
First Mortgage Bonds Series E $1,000,000
Note Payable - Vendor (1)(2) $ 758,400
Industrial Revenue Bonds (2) $ 100,000
(1) Will be repaid from proceeds of Senior Notes issuance.
(2) Unsecured indebtedness.
(3) Secured by First Mortgage liens and filed UCC financing statements.
Additional Liens
- ----------------
NEC America, Inc. - secures equipment purchased from NEC Corporation for
resale
NYNEX Credit Company - secures Lease of AS400 Computer System
EXHIBIT D
EXISTING RESTRICTED INVESTMENTS
AS OF NOVEMBER 16, 1993
-----------------------
Chillicothe Long Distance (49%) Owned $48,379
Communications Satellite $1,000
Independent Telecommunications Network $250,000
Direct Broadcast Satellite $1,801,169
Guarantee of Chillicothe Long Distance Bank Loans $451,200
EXHIBIT E
[Squire, Sanders & Dempsey Letterhead]
November 16, 1993
To the Purchasers listed
on Schedule I hereto
Ladies and Gentlemen:
This Letter is furnished to you pursuant to paragraph 6(b) of the Note
Purchase Agreement dated as of November 1, 1993 (the "Agreement") among The
Chillicothe Telephone Company, an Ohio corporation (the "Company"), Northern
Life Insurance Company and Northwestern National Life Insurance Company (each
individually a "Purchaser" and, collectively, the "Purchasers") relating to the
issue and sale by the Company, and the purchase by the Purchasers, of
$10,000,000 in aggregate principal amount of the Company's 6.47% Senior Notes,
due November 1, 2005 (the "Notes"), and is delivered to each Purchaser in
connection with its purchase of its Notes at the closing being held this day
under the Agreement. Capitalized terms used herein and not otherwise defined
herein which are defined in the Agreement shall have the same meaning as in the
Agreement. We have acted as counsel to the Company in connection with its
execution and delivery of the Agreement and the authorization, issue and
delivery of the Notes.
The opinions expressed herein are limited to the laws of the State of Ohio
and the federal laws of the United States of America.
Our opinion expressed in paragraph (iv) below as it relates to the
enforceability of the Note Purchase Agreement and the Notes assumes, with your
consent that the laws of the State of Minnesota are identical in all respects
with the laws of the State of Ohio.
Our opinion expressed in paragraph (viii) below is based upon each
Purchaser's continuing representation that its acquisition of its Notes is for
its own account for investment and not with a view to the public distribution
thereof, as set forth in paragraph 11 of the Agreement.
In rendering the opinions expressed herein we have examined such documents
and records and have obtained such certificates of officers of the Company and
have made such
November 16, 1993
Page 2
investigations of fact and law as we have deemed necessary and relevant as a
basis for the opinions expressed herein and we have assumed (i) the genuineness
of all signatures (except for the signatures of officers of the Company); (ii)
the completeness and authenticity of all documents submitted to us as originals
and conformity with authentic originals of all documents submitted to us as
copies; and (iii) the due authorization, execution and delivery by each
Purchaser of the Agreement. The phrase "to our knowledge" and "known to us"
refers to the knowledge of Squire, Sanders & Dempsey attorneys who have given
substantive attention to such matters during the course of the representation
described in the preceding paragraph and which knowledge has been obtained in
that capacity.
Based upon the foregoing and subject to the limitations contained herein,
we are of the opinion that:
(i) The Company is duly organized, validly existing and in good
standing under the laws of the State of Ohio and has the corporate power to own
and operate its properties and to carry on its business and to execute, deliver
and perform the Note Purchase Agreement and the Notes.
(ii) The Chillicothe Telephone Company - Communications, Inc. (the
"Subsidiary") is duly organized, validly existing and in good standing under the
laws of the State of Ohio and has the corporate power to own and operate its
properties and to carry on its business.
(iii) The Company and its Subsidiary are each duly qualified to do
business and are in good standing in each jurisdiction where the nature of the
business conducted or property owned by it require such qualification, and the
Company and its Subsidiary have all necessary licenses and permits to carry on
their businesses in each such jurisdiction.
(iv) The Note Purchase Agreement and the Notes have been duly
authorized by all necessary corporate action of the Company, have been duly
executed and delivered, and are the legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws of general application
affecting the rights and remedies of creditors and the obligations of debtors,
and by equitable principles of general application (regardless of whether such
equitable principles are considered in an action at law or in equity),
including, without limitation (A) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (B) concepts of
reasonableness, good faith and fair dealing.
(v) The loans evidenced by the Notes are not usurious under Ohio law.
November 16, 1993
Page 3
(vi) The execution and delivery by the Company of the Note Purchase
Agreement and the Notes, or the performance or observance by the Company and its
Subsidiary or any of the terms or conditions of the Note Purchase Agreement or
the Notes will not, (A) conflict with, or result in a breach of the terms,
covenants or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any lien upon any of the properties
or assets of the Company or its Subsidiary pursuant to, the Certificate of
Incorporation or Code of Regulations of the Company or its Subsidiary, any award
of any arbitrator, or any indenture, contract or agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule, or regulations known to us after reasonable investigation to which the
Company or its Subsidiary is subject, or (B) require any filing or registration
with, or any consent or approval of, any Federal, state or local governmental
agency or authority, except for the Application for Consent and Authority to
issue and sell $10,000,000 of Senior Unsecured Notes to the Public Utilities
Commission of Ohio which was filed August 25, 1993 and the approval thereof by
such Commission which was obtained by the Company on October 7, 1993.
(vii) To our knowledge after reasonable investigation, and except as
set forth on Section 3(d) to the Agreement, there are no actions, suits or
proceedings pending or threatened against or affecting the Company or its
Subsidiary, or any property of the Company or its Subsidiary, in any court or
before any governmental authority or arbitration board or tribunal which, if
decided adversely to the Company or its Subsidiary, would involve the
possibility of materially and adversely affecting, the properties, business,
prospects, profits or condition (financial or otherwise) of the Company or its
Subsidiary.
(viii) The issuance sale and delivery of the Notes are exempt
transactions under the Securities Act of 1933, as amended, and do not require
registration under the Securities Act of 1933, as amended, or the qualification
of an indenture in respect thereof under the Trust Indenture Act of 1939, as
amended.
(ix) No taxes, including, without limitation, intangible or
documentary stamp taxes, mortgage taxes, transfer taxes or similar charges, are
payable to the State of Ohio (or any political subdivision thereof) on account
of the execution and delivery of the Note Purchase Agreement, or the Notes, or
the creation of the indebtedness evidenced thereby.
This opinion letter may not be relied upon by any other person, other than
the Purchasers and their respective successors, assigns and transferees, or for
any purpose other than in connection with the transactions contemplated by the
Agreement without our prior written consent in each instance.
Respectfully submitted,
/s/ Squire, Sanders & Dempsey
Schedule 1 to Opinion of
Squire, Sanders & Dempsey
LIST OF PURCHASERS
------------------
Northern Life Insurance Company
Northwestern National Life Insurance Company
1352765