UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
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November 30, 2004
Date of Report
(Date of earliest event reported)
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia 0-9881 54-1162807
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
500 Shentel Way
P.O. Box 459
Edinburg, VA 22824
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (540) 984-4141
1.01 Entry into a Material Definitive Agreement.
Shenandoah Telecommunications Company Incentive Plan
Effective on April 12, 2004, the board of directors of Shenandoah
Telecommunications Company (the "Company") adopted a cash incentive plan.
Participants in the plan include all full-time employees of the Company and its
subsidiaries.
For each fiscal year, each participant in the incentive plan will be
assigned a "target bonus" expressed as a percentage of the participant's regular
salary or, in the case of hourly and sales employees, as a percentage of the
employee's total wages, commissions, paid time off and holiday pay for the year,
but excluding overtime, incentives and other payments. For fiscal 2004, the
target bonus for the chief executive officer of the Company will be 30% of
salary, the target bonus for the executive vice president of the Company will be
25% of salary, and the target bonus for other executive officers will be 20% of
salary. The maximum cash bonus payable to any participant in any fiscal year
will be 2 times the target bonus for all salaried employees and 2.4 times the
target bonus for hourly and sales employees.
The bonus amount payable to salaried employees is based 60% on the degree of
achievement of company-wide performance goals relating to net income and service
measures (which may include customer turnover or "churn," bad debt expense and
service complaints) and 40% based upon individual objectives established by
management and, in the case of the chief executive officer and chief financial
officer, by the Board of Directors. The bonus amount payable to hourly and sales
employee participants in the plan is based on the degree of achievement of
company-wide performance goals relating to net income and such service measures.
The Company expects to pay bonuses in early March, following the close of the
applicable fiscal year. Bonus payments will be conditional upon the
participant's continued employment by the Company or its subsidiaries through
the last day of such fiscal year.
Acquisition of NTC Communications LLC.
As previously reported under Item 7.01 of a Form 8-K dated December 2,
2004, the information under which Item is incorporated by reference herein,
Shenandoah Converged Services, Inc., a newly formed wholly owned subsidiary of
the Company, acquired the 83.88% of the outstanding equity interests of NTC
Communications LLC that it did not previously own pursuant to an Interest
Purchase Agreement dated November 30, 2004 among such subsidiary, NTC
Communications LLC and certain holders of NTC interests. Christopher French,
President and a director of the Company, Harold Morrison, Jr., a director of the
Company, and an investment entity owned by members of the French family; owned
approximately 0.35%, 0.18% and 1.66%, respectively, of interests in NTC
Communications LLC and were paid $34,577, $17,324, and $182,951, respectively,
for their interests. These holders may receive additional payments of up to
$3,786, $1,914, and $9,169, respectively, if there are no purchase price
adjustments and the escrowed portion of the purchase price is paid out in full.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
As previously reported under Item 1.01 of a Form 8-K Report dated December
2, 2004, the information under which Item is incorporated by reference herein,
the Company on November 30, 2004 amended the terms of its Master Loan Agreement
with CoBank, ACB to provide for a $15 million revolving reducing credit
facility. A copy of the Master Loan Agreement and related documents were filed
as exhibits to the December 2, 2004 Form 8-K.
Upon the consummation of the Company's acquisition of NTC Communications
LLC, on November 30, 2004, the Company drew down approximately $13.2 million
under the credit facility for the purposes of refinancing NTC's existing debt
and capital leases. This new direct financial obligation will constitute
long-term debt of the Company.
The repayment of principal amounts outstanding under the credit facility
may be accelerated, and all such outstanding principal amounts will become due
and fully payable, upon the occurrence of an event of default under the Master
Loan Agreement. The Master Loan Agreement contains customary events of default,
including failure by the Company to make the loan repayments and other payments
when due under the Master Loan Agreement, the failure by the Company to comply
with covenants, conditions or agreements specified in the Master Loan Agreement,
any event of the default under specified other indebtedness, failure to
discharge specified judgments, or specified events of bankruptcy, insolvency,
reorganization or similar events affecting the Company.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits The Company herewith files the following exhibits:
10.22 Interest Purchase Agreement dated November 30, 2004 by and among
Shentel Converged Services, Inc., NTC Communications LLC and the
Interestholders named therein.
10.23 Form of Incentive Stock Option Agreement under the 1996 Shenandoah
Telecommunications Company Stock Incentive Plan (for routine formula
grants).
10.24 Forms of Incentive Stock Option Agreement under the 1996 Shenandoah
Telecommunications Company Stock Incentive Plan (for newly hired
executive employees).
10.25 Description of the Shenandoah Telecommunications Company Incentive
Plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
/s/ Earle A. MacKenzie
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Earle A. MacKenzie
Chief Financial Officer
January 20, 2005