Exhibit 10.43.1
AMENDMENT
Dated as of January 1, 1997
Northern Life Insurance Company
ReliaStar Life Insurance Company
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South
Suite 800
Minneapolis, Minnesota 55402
Reference is made to the Note Purchase Agreement (the "Note Purchase
Agreement") among The Chillicothe Telephone Company (the "Company"), Northern
Life Insurance Company and Northwestern National Life Insurance Company (n/k/a
ReliaStar Life Insurance Company) (collectively, the "Purchasers") dated as of
November 1, 1993, pursuant to which the Purchasers purchased the Senior Notes
(collectively, the "Notes") of the Company dated November 16, 1993 in the
aggregate original principal amount of $10,000,000. The Purchasers are the
registered holders of 100% of the outstanding principal amount of the Notes as
reflected in the Note Register required to be maintained by the Company pursuant
to paragraph 8 of the Note Purchase Agreement. Capitalized terms used herein and
not otherwise defined shall have the meaning set forth in the Note Purchase
Agreement.
The purpose of this letter is to request the Purchasers to amend certain
provisions of the Note Purchase Agreement and the Notes. Accordingly, the
Company requests the Purchasers' consent to the following:
1. Interest on Notes. Notwithstanding anything to the contrary contained in
paragraph 1(a) of the Note Purchase Agreement or in the Notes, from and after
January 1, 1997 and continuing until the Notes are paid in full, the outstanding
principal amount of the Notes shall bear interest at the rate of 6.72% per annum
(provided that solely for 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). Interest shall continue to be
payable semi-annually on the first day of May and November. To evidence the
foregoing amendment, the Company and the Purchasers shall execute an Addendum to
each of the Notes in the form of Exhibit A hereto (the "Addenda to Notes").
2. Quarterly Financial Statements. The following provision shall be added
to the end of paragraph 4(e) of the Note Purchase Agreement:
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The Company shall also furnish to the holders of the Notes, within 60 days
after the close of each quarterly accounting period in each fiscal year of
Horizon Telcom, Inc. ("Telcom"), a consolidated balance sheet and
consolidated statement of income and retained earnings reflecting the
financial condition of Telcom and its subsidiaries at the end of each
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.
3. Annual Financial Statements. Paragraph 4(f) of the Note Purchase
Agreement shall be amended by adding the following provision at the end thereof:
The Company shall also 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 Telcom, 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 Telcom and satisfactory to the
holders of the Notes, which report shall include a consolidated and
accompanying supplementary consolidating balance sheet of Telcom and its
subsidiaries as at the end of such year, consolidated and accompanying
supplementary consolidating statements of income and retained earnings of
Telcom and its subsidiaries and consolidated and accompanying supplementary
consolidating statements of cash flows of Telcom and its subsidiaries
reflecting the operations during said year, all in reasonable detail and
setting forth comparable figures for the preceding fiscal year.
4. Net Worth. Paragraph 4(n) of the Note Purchase Agreement shall be
amended and restated in its entirety to read as follows:
(n) Net Worth. Maintain Consolidated Adjusted Net Worth in an amount
at an amount at least equal to:
(i) $20,000,000 at all times before March 31, 1998; and
(ii) at all times during each twelve-month period ending on March
31 in each year, commencing with the twelve-month period ending on
March 31, 1999, $20,000,000, plus 25% of Consolidated Net Income, if
any, determined on a cumulative basis for each fiscal year of the
Company ending on or after December 31, 1997 and prior to the
twelve-month period for which such determination is being made
(without reduction for any Consolidated Net Loss incurred in any such
fiscal year).
5. Transactions with Affiliates. Paragraph 5(g) of the Note Purchase
Agreement shall be amended and restated in its entirety to read as follows:
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(g) Transactions with Affiliates. Enter into or be a party to any
transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except in the ordinary
course of and pursuant to the reasonable requirements of the business of
the Company or its Subsidiaries and upon fair and reasonable terms no less
favorable to the Company or any of its Subsidiaries than would be obtained
in a comparable arm's-length transaction with a Person other than an
Affiliate.
6. Restricted Payments and Restricted Investments. Paragraph 5(i) of the
Note Purchase Agreement shall be amended and restated in its entirety to read as
follows:
(i) Restricted Payments and Restricted Investments.
(i) Declare or make, or incur any liability to make any
Restricted Payments or Restricted Investments, except:
(A) a Subsidiary may pay dividends to the Company; and
(B) subject to the limitations in clauses (ii) and (iii) below,
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, (1) 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, (2)
the Company would be able to incur at least $1.00 of additional Funded
Debt pursuant to paragraph 5(a), and (3) the aggregate amount of all
Restricted Payments and Restricted Investments from and after December
31, 1996 to and including the date of such Restricted Payment or
Restricted Investment would not exceed the sum of (i) $3,000,000, plus
(ii) 60% of any Cumulative Consolidated Net Income, minus (iii) 100%
of any Cumulative Consolidated Net Loss, plus (iv) the net proceeds to
the Company from any issuance of capital stock after December 31,
1996.
(ii) In addition to the limitations contained in clause (i)
above, from January 1, 1997 through December 31, 1998, the Company
shall not increase the aggregate quarterly dividend on its common
stock above $710,000.
(iii) In addition to the limitations contained in clause (i)
above, the aggregate amount of all additional Restricted Investments
made by the Company and its Subsidiaries in Horizon Infotech, Inc.
after December 31, 1996 shall at no time exceed $1,000,000.
7. Additional Negative Covenants. Paragraph 5 of the Note Purchase
Agreement shall be amended by adding the following new paragraphs (k) and (1):
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(k) Sale of Accounts. Sell with recourse, discount or otherwise sell
to an Affiliate any notes receivable or accounts receivable for an amount
less than the face amount thereof, less a reserve factor for credit losses
adjusted from time to time to reflect actual credit loss experience.
(l) Guaranties, Etc. Be or become liable in respect of any Guaranty of
any obligation of any Affiliate, or grant any security interest in or
otherwise pledge any of its assets to secure any obligation of any
Affiliate.
8. Definitions.
(a) The definitions of "Consolidated Adjusted Net Worth," "Cumulative
Consolidated Net Income," "Cumulative Consolidated Net Loss," and
"Restricted Payments" in paragraph 12 of the Note Purchase Agreement shall
be amended and restated in their entirety to read as follows:
"Consolidated Adjusted Net Worth" shall mean Consolidated
Stockholders' Equity less (i) goodwill and other intangible assets
created after the Closing Date, and (ii) all advances to or other
investments in Affiliates.
"Cumulative Consolidated Net Income" shall mean the excess, if
any, of:
(i) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1996 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, 1996 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, 1996 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
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(ii) the sum of (A) Consolidated Net Income, if any, for each
completed fiscal year of the Company commencing on or after December
31, 1996 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.
"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 (A) any distribution which may be
payable solely in common stock of the corporation making the
distribution, (B) dividends by the Company to Telcom in an amount
equal to the capital gains taxes payable by Telcom as a result to the
sale by Horizon Infotech of its Direct Broadcast Satellite Business,
(C) dividends by the Company to Telcom during the fiscal year ending
December 31, 1997 in an aggregate amount up to $3,800,000, provided
that all such dividends are reinvested by Telcom in Horizon Infotech,
and (D) dividends by the Company to Telcom during the fiscal year
ending December 31, 1998 in an aggregate amount up to $3,900,000 plus
an amount equal to the excess, if any, of $3,800,000 over the amount
of dividends paid pursuant to clause (C) above, provided that all such
dividends are reinvested by Telcom in Horizon Infotech, (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.
(b) The following new definitions of "Affiliate" and "Guaranty" shall
be added to paragraph 12 of the Note Purchase Agreement:
"Affiliate" shall mean any Person (i) which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii)
which beneficially owns or holds 5% or more of any class of the voting
stock of the Company, (iii) 5% or more of any class of the voting
stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or held by
the Company or a Subsidiary, (iv) any director, officer of employee of
the Company or any Subsidiary or other Person described in clauses
(i), (ii) and (iii) hereof, and (v) any spouse, lineal descendant or
ascendant, brother or sister, by blood, adoption or marriage, of any
Person listed in clauses (i) through (iv) hereof, and spouses of such
ascendants, descendants, brothers and sisters. The term "control"
means the possession, directly or indirectly, of the power or cause
the direction of the management and policies of a Person, whether
through the ownership of voting stock, by contract or otherwise.
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"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or
in effect guaranteeing, any indebtedness, dividend or other obligation
of any other Person (the "primary obligor") in any manner, whether
directly or indirectly including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such indebtedness or obligation or any
property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such indebtedness or
obligation or (y) to maintain working capital or other balance sheet
condition or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services
primarily for the purpose of payment of the indebtedness or
obligation, or (iv) otherwise to assure the owner of the indebtedness
or obligation of the primary obligor against loss in respect thereof.
9. Conditions Precedent. The effectiveness of the foregoing Amendment shall
be subject to the following documents and items:
(a) the receipt by the Purchasers of the Addenda to Notes, duly
executed by the Company,
(b) the receipt by the Purchasers of payment by Company of the fees
and expenses described in paragraph 10 hereof,
(c) Horizon Infotech and Horizon Services, Inc. shall have repaid the
intercompany payable from such Affiliates to the Company to the maximum
extent possible, but in any event in an amount at least equal to
$10,800,000, and the Company shall have used the proceeds of such repayment
to either repay indebtedness of the Company or make investments permitted
by clauses (i) through (vi) of the definition of Permitted Investments.
10. Expenses. The Company agrees to pay and save the Purchasers harmless
against the liability for the payment of all reasonable out-of-pocket expenses,
including the reasonable fees and expenses of counsel to the Purchasers, arising
in connection with the preparation, execution and delivery of this Amendment and
Addenda to Notes, and the consummation of the transactions contemplated hereby.
11. Miscellaneous. Except as specifically amended hereby, all terms and
provisions of the Note Purchase Agreement and all other documents and
instruments related thereto, including without limitation the Notes, shall
remain in full force and effect with no other modification or waiver. This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
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If you agree to amending the Note Purchase Agreement and the Notes in the
manner set forth above, please so indicate by executing the form of
acknowledgment set forth below. The amendments shall then take effect upon
satisfaction of the conditions set forth in paragraph 9 hereof.
THE CHILLICOTHE TELEPHONE COMPANY
By: /s/ Jack E. Thompson
--------------------------------------
Its: Secretary-Treasurer
--------------------------------------
Agreed to and accepted as of the date
first-above written.
NORTHERN LIFE INSURANCE COMPANY
By: /s/
--------------------------------------
Its: Assistant Treasurer
--------------------------------------
RELIASTAR LIFE INSURANCE COMPANY
(f/k/a Northwestern National Life Insurance Company)
By: /s/
--------------------------------------
Its: Authorized Representative
--------------------------------------
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EXHIBIT A
ADDENDUM
TO
$____________ SENIOR NOTE
OF
THE CHILLICOTHE TELEPHONE COMPANY
DATED NOVEMBER 16,1993
This Addendum to the above-referenced Senior Note (together with any note
or notes issued in exchange therefor, the "Note") of The Chillicothe Telephone
Company (the "Company") payable to ___________________ or registered assigns is
made as of the 1st day of January 1997. The Company agrees as follows:
1. The principal amount of the Note outstanding on the date of this
Addendum is $_________________.
2. Notwithstanding anything to the contrary contained in paragraph 1(a) of
the Note Purchase Agreement or in the Note, effective as of January 1, 1997 the
outstanding principal amount of the Note shall bear interest at the rate of
6.72% 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). Interest shall
continue to be payable semi-annually on the 1st day of May and November.
Upon execution and delivery by the Company and acceptance by the holder of
the Note of this Addendum, this Addendum shall become part of the Note. All
references to the Note in the Note, the Note Purchase Agreement, and this
Addendum shall hereinafter be deemed to references to the Note as amended by
this Addendum. Except as expressly set forth herein, the Note shall remain in
full force and effect without modification.
This Addendum shall be governed by the laws of the State of Minnesota.
THE CHILLICOTHE TELEPHONE COMPANY
By:_____________________________________
Its:____________________________________
Agreed to and accepted as of
the date first-above mentioned:
[_________________________________]
By:_______________________________
Its:______________________________
ADDENDUM
TO
$4,000,000 SENIOR NOTE
OF
THE CHILLICOTHE TELEPHONE COMPANY
DATED NOVEMBER 16,1993
This Addendum to the above-referenced Senior Note (together with any note
or notes issued in exchange therefor, the "Note") of The Chillicothe Telephone
Company (the "Company") payable to Northwestern National Life Insurance Company
(n/k/a ReliaStar Life Insurance Company) or registered assigns is made as of the
1st day of January 1997. The Company agrees as follows:
1. The principal amount of the Note outstanding on the date of this
Addendum is $4,000,000.
2. Notwithstanding anything to the contrary contained in paragraph 1(a) of
the Note Purchase Agreement or in the Note, effective as of January 1, 1997 the
outstanding principal amount of the Note shall bear interest at the rate of
6.72% 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). Interest shall
continue to be payable semi-annually on the 1st clay of May and November.
Upon execution and delivery by the Company and acceptance by the holder of
the Note of this Addendum, this Addendum shall become part of the Note. All
references to the Note in the Note, the Note Purchase Agreement and this
Addendum shall hereinafter be deemed to references to the Note as amended by
this Addendum. Except as expressly set forth herein, the Note shall remain in
full force and effect without modification.
This Addendum shall be governed by the laws of the State of Minnesota.
THE CHILLICOTHE TELEPHONE COMPANY
By: /s/ Jack E. Thompson
--------------------------------------
Its: Secretary-Treasurer
--------------------------------------
Agreed to and accepted as of the date
first-above mentioned.
RELIASTAR LIFE INSURANCE COMPANY
(f/k/a Northwestern National Life Insurance Company)
By: /s/
--------------------------------------
Its: Assistant Treasurer
--------------------------------------
ADDENDUM
TO
$6,000,000 SENIOR NOTE
OF
THE CHILLICOTHE TELEPHONE COMPANY
DATED NOVEMBER 16,1993
This Addendum to the above-referenced Senior Note (together with any note
or notes issued in exchange therefor, the "Note") of The Chillicothe Telephone
Company (the "Company") payable to Northern Life Insurance Company or registered
assigns is made as of the 1st day of January 1997. The Company agrees as
follows:
1. The principal amount of the Note outstanding on the date of this
Addendum is $6,000,000.
2. Notwithstanding anything to the contrary contained in paragraph 1(a) of
the Note Purchase Agreement or `in the Note, effective as of January 1, 1997 the
outstanding principal amount of the Note shall bear interest at the rate of
6.72% 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). Interest shall
continue to be payable semi-annually on the 1st day of May and November.
Upon execution and delivery by the Company and acceptance by the holder of
the Note of this Addendum, this Addendum shall become part of the Note. All
references to the Note in the Note, the Note Purchase Agreement, and this
Addendum shall hereinafter be deemed to references to the Note as amended by
this Addendum. Except as expressly set forth herein, the Note shall remain in
full force and effect without modification.
This Addendum shall be governed by the laws of the State of Minnesota.
THE CHILLICOTHE TELEPHONE COMPANY
By: /s/ Jack E. Thompson
--------------------------------------
Its: Secretary-Treasurer
--------------------------------------
Agreed to and accepted as of the date
first-above mentioned.
NORTHERN LIFE INSURANCE COMPANY
By: /s/
--------------------------------------
Its: Assistant Treasurer
--------------------------------------
[Squire, Sanders & Dempsey Letterhead]
January 4, 1994
(614) 365-2728
Jack E. Thompson
The Chillicothe Telephone Company
68 East Main Street
P.O. Box 480
Chillicothe, Ohio 45601-0480
Dear Jack:
Enclosed please find a bound transcript for the $10,000,000 Senior Note
Financing dated November 16, 1993. Also enclosed are the file-stamped copies of
the UCC Termination Statements and mortgage releases.
Best regards,
/s/ James P. Mulroy
James P. Mulroy
JPM/bjk
Enclosures
THE CHILLICOTHE TELEPHONE COMPANY
$10,000,000 SENIOR NOTE FINANCING
NOVEMBER 16, 1993
TAB
---
Memorandum of Closing 1
Note Purchase Agreement 2
$6,000,000 6.47% Senior Note 3
$4,000,000 6.47% Senior Note 4
UCC Terminations 5
Articles of Incorporation of Chillicothe Telephone Company 6
Good Standing Certificate - The Chillicothe Telephone Company 7
Officers Certificate Regarding Closing Matters 8
Officers' Certificate 9
Articles of Incorporation of Business Telephone Systems, Inc. 10
Good Standing Certificate - Chillicothe Telephone Company
Communications, Inc. 11
PUCO Finding and Order 12
Chillicothe Telephone Notice of Redemption Order 13
PNC Bank Notice of Redemption 14
Wiring Instructions 15
National City Investments Corporation Confirmation 16
Opinion of Squire, Sanders & Dempsey 17
Acknowledgment of Payment 18
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