EXHIBIT 10.11
CONFORMED COPY
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TERM CREDIT AGREEMENT
BETWEEN
MERCOM, INC.
AND
CABLE MICHIGAN, INC.
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U.S. $14,150,725
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Originally Dated as of November 26, 1989,
Amended and Restated as of August 16, 1995
and
Further Amended and Restated as of September 29, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................ 1
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SECTION 1.02. Accounting Terms and Determinations........................ 8
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ARTICLE II
THE CREDITS
SECTION 2.01. Loans Outstanding.......................................... 8
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............................................................................ 8
SECTION 2.02. The Note................................................... 8
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SECTION 2.03. Maturity of Loans.......................................... 9
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SECTION 2.04. Interest Rates............................................. 9
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SECTION 2.05. Optional Prepayments....................................... 10
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SECTION 2.06. General Provisions as to Payments.......................... 10
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SECTION 2.07. Computation of Interest.................................... 11
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SECTION 2.08. Security Documents......................................... 11
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ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness.............................................. 11
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ARTICLE IV
Intentionally omitted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Corporate Existence and Power.............................. 12
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SECTION 5.02. Corporate and Governmental Authorization; No Contravention. 12
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SECTION 5.03. Binding Effect............................................. 12
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............................................................................ 12
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SECTION 5.04. Approval of Regulatory Authorities......................... 12
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ARTICLE VI
COVENANTS
SECTION 6.01. Information................................................ 13
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SECTION 6.02. Maintenance of Property; Insurance......................... 14
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SECTION 6.03. Conduct of Business and Maintenance of Existence........... 14
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SECTION 6.04. Compliance with Laws; Notice of Proceedings................ 14
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SECTION 6.05. Inspection of Property, Books and Records.................. 14
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SECTION 6.06. Debt....................................................... 15
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SECTION 6.07. Negative Pledge............................................ 15
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SECTION 6.08. Consolidations, Mergers and Sales of Assets................ 16
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SECTION 6.09. Use of Proceeds............................................ 16
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SECTION 6.10. Interest Coverage Ratio.................................... 17
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SECTION 6.11. Debt to Operating Cash Flow Ratio.......................... 17
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SECTION 6.12. Lines of Business.......................................... 17
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SECTION 6.13. Investments................................................ 17
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SECTION 6.14. Certain Obligations Respecting Subsidiaries................ 17
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ARTICLE VII
EVENTS OF DEFAULTS
SECTION 7.01. Events of Default.......................................... 18
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices.................................................... 20
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SECTION 8.02. Amendments and Waivers; Cumulative Remedies................ 21
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SECTION 8.03. Successors and Assigns..................................... 21
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SECTION 8.04. Expenses; Documentary Taxes; Indemnification............... 21
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SECTION 8.05. Counterparts; Integration.................................. 22
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SECTION 8.06. Headings; Table of Contents................................ 22
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SECTION 8.07. Governing Law.............................................. 22
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SECTION 8.08. WAIVER OF JURY TRIAL....................................... 22
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Exhibit A Note
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TERM CREDIT AGREEMENT
AGREEMENT dated as of September 29, 1997 between MERCOM, INC., a
Delaware corporation (the "Borrower"), and CABLE MICHIGAN, INC., a Pennsylvania
corporation (the "Lender").
WHEREAS the Borrower and Xxxxxx Guaranty Trust Company of New York
("Xxxxxx") entered into a Term Credit Agreement dated as of November 26, 1989
and amended and restated as of August 16, 1995 (as the same may have been
amended prior to the date hereof, the "Original Agreement");
WHEREAS on September 29, 1997 the Lender purchased all of Xxxxxx'x interest
in the Original Agreement and the loans made thereunder;
WHEREAS the parties hereto wish, upon satisfaction of the conditions set
forth in Section 3.01 hereof, to amend and restate the Original Agreement as set
forth herein (such amendment and restatement, the "Amendment"; and the Original
Agreement, as in effect from time to time prior to the Effective Date (as
defined below), as amended and restated by the Amendment as of the Effective
Date and as further amended from time to time thereafter, this "Agreement".
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
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shall have the following respective meanings:
"ACC" means Allegan County Cablevision, Inc., a Michigan corporation,
with its successors.
"Base Rate Loan" means a Loan which is treated as a Base Rate Loan in
accordance with the definition of Interest Period.
"CCI" means Coldwater Cablevision, Inc., a Michigan corporation, and
its successors.
"CCV" means Communications and Cablevision, Inc., a Michigan
corporation, and its successors.
"Collateral" has the meaning set forth in Section 3 of the Security
Agreement.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, including, without limitation,
reimbursement obligations related to letters of credit, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, and (vi) all Debt of others Guaranteed by
such Person.
"Debt to Operating Cash Flow Ratio" means, as of any date of
determination thereof, the ratio of Consolidated Debt as of such date to
Operating Cash Flow for the four consecutive fiscal quarters most recently
completed.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time, or both, would
unless cured or waived become an Event of Default.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Effective Date" means the date the Amendment becomes effective in
accordance with Section 3.01 hereof.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the
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environment on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Euro-Dollar Loan" means each Loan outstanding hereunder other than
any Loan that is treated as a Base Rate Loan in accordance with the definition
of Interest Period.
"Event of Default" has the meaning set forth in Article VII hereof.
"Franchise" means a franchise, license, authorization or right by
contract or otherwise, to construct, own, operate, promote, extend and/or
otherwise exploit any cable television system operated or to be operated by the
Borrower or any Subsidiary granted by any state, county, city, town, village or
any other local, state or federal governmental authority.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the
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obligee of such Debt or other obligation of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part), provided
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that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantors" means CCV, ACC and CCI.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Interest Coverage Ratio" means as of the last day of any fiscal
quarter of the Borrower, the ratio of (i) Operating Cash Flow to (ii) Interest
Expense in each case for the four consecutive fiscal quarters ending on such
date.
"Interest Expense" means, for any period, all interest accrued on Debt
of the Borrower and its Consolidated Subsidiaries for such period.
"Interest Income" means, for any period, all interest earned by the
Borrower or Consolidated Subsidiaries in respect of Debt to the Borrower or
Consolidated Subsidiaries, as implied or actual interest, however designated,
and including, without limitation, all preferred stock dividends.
"Interest Period" means with respect to each Euro-Dollar Loan (i)
initially, the period commencing on the Effective Date and ending three months
thereafter and (ii) thereafter, each successive period of three months, provided
that
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless with respect to a Euro-Dollar Loan such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of the calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
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Period) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on such Date;
provided further, however, that if any such Interest Period shall be less than
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30 days, the Loan for such Interest Period shall be a Base Rate Loan; provided
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further, that upon the request of the Borrower the Lender may, in its sole
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discretion, make Euro-Dollar Loans with such other Interest Periods and at such
interest rates as the Borrower and the Lender may agree.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan" and "Loans" means a Base Rate Loan or a Euro-Dollar Loan, or
both, as the context may require.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(b) hereof.
"Material Debt" means Debt of the Borrower and/or one or more of its
Subsidiaries arising in one or more related or unrelated transactions, in the
aggregate principal or face amount exceeding $100,000.
"Note" means the promissory note of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans.
"Operating Cash Flow" means for any period, pretax income (or deficit,
as the case may be) of the Borrower and its Consolidated Subsidiaries for such
period, excluding (to the extent included in pretax income (or pretax deficit,
as the case may be) above) (i) Interest Expense, (ii) Interest Income, (iii)
depreciation, depletion and amortization of
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properties and other non-cash charges, (iv) extraordinary gains on sales of
assets, (v) earnings or income of unconsolidated Subsidiaries or Persons (other
than the Borrower) who are not Subsidiaries (other than cash dividends received
by the Borrower or a Consolidated Subsidiary) and (vi) that portion of the
earnings or income of Consolidated Subsidiaries attributable to minority
interests therein for such period, all determined on a consolidated basis in
accordance with generally accepted accounting principles; provided that, for
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purposes of calculating Operating Cash Flow for any period, (x) any Person who
was not a Consolidated Subsidiary at the beginning of such period but was a
Consolidated Subsidiary at the end of such period shall be deemed to have been a
Consolidated Subsidiary for the entire period, and (y) any Person who was a
Consolidated Subsidiary at the beginning of such period but was not a
Consolidated Subsidiary at the end of such period shall be deemed to have not
been a Consolidated Subsidiary for the entire period.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a business trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by a
member of the ERISA Group for employees of a member of the ERISA Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.
"Pledge Agreement" means the Pledge Agreement among the Borrower, CCV
and Xxxxxx originally dated as of November 26, 1989 and amended and restated
August 16, 1995, as the same may be amended, modified or supplemented from time
to time (including as of the Effective Date).
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by First Union National Bank as its prime rate.
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"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Security Agreement" means the Security Agreement among the Borrower,
CCV, ACC, CCI and Xxxxxx originally dated as of November 26, 1989 and amended
and restated August 16, 1995, as the same may be amended, modified or
supplemented from time to time (including as of the Effective Date).
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions is at the
time directly or indirectly owned by the Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of the Guarantors
originally dated of November 26, 1989 and amended and restated as of August 16,
1995, as the same may be amended, modified or supplemented from time to time
(including as of the Effective Date).
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-2 by Standard & Poor's Corporation and P-2 by Xxxxx'x Investors
Service, Inc., (iii) time deposits with, including certificates of deposit
issued by, any office located in the United States of any bank or trust company
which is organized under the laws of the United States or any state thereof and
has capital, surplus and undivided profits aggregating at least $3,000,000,000
or (iv) repurchase agreements with respect to securities described in clause (i)
above entered into with an office of a bank or trust company meeting the
criteria specified in clause (iii) above, provided in each case that such
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Investment matures within one year from the date of acquisition thereof by the
Borrower or a Subsidiary.
"Termination Date" means December 31, 2002, or, if such day is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan determined on a
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plan termination basis using the assumptions prescribed by the PBGC for purposes
of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets
allocable to such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
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specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Lender.
ARTICLE II
THE CREDITS
SECTION 2.01. Loans Outstanding. On the date hereof there are Loans
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outstanding to the Borrower under the Agreement in the aggregate principal
amount of $14,150,725. The credit facility evidenced by the Agreement is not
revolving in nature, and amounts repaid or prepaid prior to the Termination Date
may not be reborrowed. On the Effective Date, the Lender purchased from Xxxxxx
the Loans outstanding on such date.
SECTION 2.02. The Note.
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(a) The Loans shall be evidenced by a single Note payable to the
order of the Lender for it account. Such Note shall be dated on or before the
Effective Date and shall set forth the outstanding principal amount of the
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Loans on the Effective Date as the maximum principal amount thereof.
(b) The Lender shall record the date and amount of each payment of
principal made by the Borrower with respect to the Loans and, prior to any
transfer of the Note, shall endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
Loan then outstanding; provided that the failure of the Lender to make any such
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recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Note. The Lender is hereby irrevocably authorized by the
Borrower so to endorse the Note and to attach to and make a part of the Note a
continuation of any such schedule as and when required.
SECTION 2.03. Maturity of Loans. Each Loan shall mature, and the
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principal amount thereof shall be due and payable, on the Termination Date.
SECTION 2.04. Interest Rates.
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(a) Each Loan that is treated as a Base Rate shall bear interest on
the outstanding principal amount thereof, for each day from the date such Loan
becomes treated as a Base Rate Loan until it becomes due or ceases to be treated
as a Base Rate Loan, at a rate per annum equal to the Prime Rate. Such interest
shall be payable on the last day of each month. Any overdue principal of and,
to the extent permitted by law, overdue interest on the Base Rate Loans shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 1% plus the rate otherwise applicable to Base Rate Loans for
such day.
(b) Each Euro-Dollar Loan shall bear interest on the unpaid principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of 1.00% plus the applicable London Interbank Offered Rate.
Such interest shall be payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by law, overdue interest
on the Euro-Dollar Loans shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 1% plus the higher of (i) the
rate of interest applicable to such Loan and (ii) the rate applicable to Base
Rate Loans for such day.
The "London Interbank Offered Rate" applicable to any Interest Period
means the rate per annum for three-month deposits in Dollars that appears on the
Telerate Page 3750
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at approximately 11:00 a.m. London time two (2) Business Days prior to the
commencement of such Interest Period. If, for any reason, such rate is not
available, then "London Interbank Offered Rate" shall mean the rate per annum at
which, as quoted to the Lender by First Union National Bank (of such other
leading bank in the City of New York selected by the Lender), deposits in
Dollars in the amount of $5,000,000 are being offered to leading banks at
approximately 11:00 a.m. London time two (2) Business Days prior to the
commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a three-
month period.
SECTION 2.05. Optional Prepayments.
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(a) The Borrower may, upon at least one Domestic Business Day's notice
to the Lender, prepay the Base Rate Loans without premium or penalty in whole at
any time or from time to time in part in amounts aggregating $l,000,000 or any
multiple thereof by paying the principal amount being prepaid together with
accrued interest thereon to the date of prepayment.
(b) The Borrower may, upon three Euro-Dollar Days' notice, prepay the
Euro-Dollar Loans without premium or penalty in whole at any time or from time
to time in part in amounts aggregating $l,000,000 or any multiple thereof by
paying the principal amount being prepaid together with accrued interest thereon
to the date of prepayment; provided that such prepayment shall occur at the end
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of the Interest Period applicable to any such Loans.
SECTION 2.06. General Provisions as to Payments. The Borrower shall
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make each payment of principal of, and interest on, the Loans hereunder not
later than 11:00 a.m. (New York City time) on the date when due by wire transfer
of immediately available funds to the account designated on the signature page
hereof, or to such other account as the Lender may designate from time to time
by notice to the Borrower. Whenever any payment of principal of, or interest
on, the Base Rate Loans shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on,
the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding Euro-
Dollar Business Day unless as a result thereof it would fall in the next
calendar month, in which case it shall be advanced to the next preceding Euro-
Dollar Business Day. If the date for
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any payment of principal is extended by operation of law or otherwise, interest
shall be payable for such extended time.
SECTION 2.07. Computation of Interest. Interest based on the Prime
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Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year) and paid for actual days elapsed (including the first day but excluding
the last day). All other interest shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed (including the first day
but excluding the last day).
SECTION 2.08. Security Documents. The obligations of the Borrower to
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the Lender shall continue to be entitled to the benefits of the Pledge
Agreement, the Subsidiary Guaranty and the Security Agreement.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. The Amendment shall become effective on
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the date that each of the following conditions shall have been satisfied:
(a) receipt of the Lender of counterparts hereof signed by each of
the parties hereto;
(b) receipt by the Lender of a duly executed Note dated on or before
the Effective Date complying with the provisions of Section 2.03 hereof;
(c) receipt by the Lender of payment of accrued interest through (but
not including) the Effective Date; and
(d) receipt by the Lender of fully executed amendments to the Pledge
Agreement, Security Agreement and Subsidiary Guaranty, each in form and
substance satisfactory to the Lender in its sole discretion.
ARTICLE IV
Intentionally omitted.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Lender that:
SECTION 5.01. Corporate Existence and Power. The Borrower and each
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Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of its incorporation, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 5.02. Corporate and Governmental Authorization; No
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Contravention. The execution, delivery and performance by the Borrower of this
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Agreement, the Note, the Pledge Agreement and the Security Agreement, by CCV of
the Pledge Agreement, the Security Agreement and the Subsidiary Guaranty, by
each of ACC and CCI of the Security Agreement and the Subsidiary Guaranty are
within such Person's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or by-laws of such Person or of any agreement,
judgment, injunction, order, decree or other instrument binding upon such Person
or result in the creation or imposition of any Lien on any asset of such Person
or any of its Subsidiaries other than in favor of the Lender as provided for in
the Pledge Agreement and the Security Agreement.
SECTION 5.03. Binding Effect. This Agreement, the Pledge Agreement
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and the Security Agreement constitute valid and binding agreements of the
Borrower, the Pledge Agreement, the Subsidiary Guaranty and the Security
Agreement constitute valid and binding agreements of CCV, the Security Agreement
and the Subsidiary Guaranty constitute valid and binding agreements of each of
ACC and CCI and the Note, when executed and delivered in accordance with this
Agreement, will constitute a valid and binding obligation of the Borrower.
SECTION 5.04. Approval of Regulatory Authorities. No approval or
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consent of, or filing or registration with, any state or federal commission or
other federal, state or local regulatory authority is required in connection
with
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the execution, delivery and performance by the Borrower of this Agreement, the
Note, the Pledge Agreement, the Subsidiary Guaranty and the Security Agreement.
ARTICLE VI
COVENANTS
So long as any Loan is outstanding, unless compliance shall have been
waived in writing by the Lender, the Borrower agrees that:
SECTION 6.01. Information. The Borrower will deliver to the Lender:
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(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, a consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at the end of such year,
and the related consolidated statements of operations, shareholders'
capital deficiency or retained earnings and cash flows of the Borrower and
its Consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the preceding fiscal year, all reported on
in a manner acceptable to the Lender by Coopers & Xxxxxxx L.L.P. or other
independent certified public accountants of nationally recognized standing,
together with unaudited balance sheets and statements of the Borrower and
its Consolidated Subsidiaries for that period;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such quarter and the related consolidated
statements of operations, shareholders' capital deficiency or retained
earnings and cash flows of the Borrower and its Consolidated Subsidiaries
for such quarter and for the portion of the Borrower's fiscal year ended at
the end of such quarter setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Borrower;
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(c) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Lender may reasonably request.
SECTION 6.02. Maintenance of Property; Insurance. (a) The Borrower
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will keep, and will cause each Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted; and
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, (i) physical damage insurance on all real and personal property on an
all risks basis (including the perils of flood and quake), covering the repair
and replacement cost of all such property and consequential loss coverage for
business interruption and extra expense, (ii) public liability insurance
(including products/completed operations liability coverage) in an amount not
less than $1,000,000, and (iii) such other insurance coverage in such amounts
and with respect to such risks as the Lender may reasonably request. All such
insurance shall be provided by insurers having an A.M. Best policyholders rating
of not less than B+ or such other insurers as the Lender may approve in writing.
SECTION 6.03. Conduct of Business and Maintenance of Existence. The
------------------------------------------------
Borrower will continue, and will cause each Subsidiary to continue, to engage in
business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
Franchises necessary or desirable in the normal conduct of business.
SECTION 6.04. Compliance with Laws; Notice of Proceedings. The
-------------------------------------------
Borrower will comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
SECTION 6.05. Inspection of Property, Books and Records. The
-----------------------------------------
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
14
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of the Lender
at the Lender's expense to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such reasonable
times and as often as may reasonably be desired.
SECTION 6.06. Debt. The Borrower will not permit any Subsidiary to
----
create or allow to exist any Debt other than Debt to the Borrower and other than
capital lease obligations which shall not exceed $100,000 in the aggregate. The
Borrower will not create or allow to exist any Debt in excess of $100,000 in the
aggregate other than Debt to the Lender, whether hereunder or otherwise.
SECTION 6.07. Negative Pledge. Neither the Borrower nor any
---------------
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except for:
(a) Liens existing on the date hereof securing Debt outstanding on
the date of this Agreement (including Liens securing Debt under this
Agreement) or Liens securing any other Debt permitted by Section 6.06;
(b) any Lien existing on any asset of any corporation at the time
such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within
--------
90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged into or consolidated with the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
15
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is
--------
not secured by any additional assets; and
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt and (ii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof in the
operation of its business.
SECTION 6.08. Consolidations, Mergers and Sales of Assets. The
-------------------------------------------
Borrower will not, without the prior written approval of the Lender, (i)
consolidate or merge with or into any other Person, (ii) participate in, or
contribute or assign any assets or funds to, any partnership or joint venture,
(iii) sell, lease or otherwise transfer all or any substantial part of its
assets to any other Person or (iv) transfer any Collateral other than in
accordance with the Pledge Agreement and the Security Agreement. The Borrower
will not permit any Subsidiary to consolidate with, merge with or into or
transfer all or any substantial part of its assets to any Person other than the
Borrower or a Wholly-Owned Consolidated Subsidiary.
SECTION 6.09. Use of Proceeds. No part of the proceeds of any Loan
---------------
hereunder will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate of buying or carrying any "margin stock"
within the meaning of Regulation U. If requested by the Lender, the Borrower
will furnish to the Lender in connection with any Loan hereunder a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U.
16
SECTION 6.10. Interest Coverage Ratio. The Borrower will not permit
-----------------------
the Interest Coverage Ratio as of the last day of any fiscal quarter to be less
than 3.5 to 1.
SECTION 6.11. Debt to Operating Cash Flow Ratio. The Borrower will
---------------------------------
not permit the ratio of Debt to Operating Cash Flow at any time to be greater
than 3.5 to 1.
SECTION 6.12. Lines of Business. The Borrower will not, and will not
-----------------
permit any Subsidiary to, enter into any new lines of business (which are
materially different from and unrelated to the lines of business respectively
conducted by them) or change materially the nature of the business respectively
conducted by them on the date hereof.
SECTION 6.13. Investments. Neither the Borrower nor any Subsidiary
-----------
will make or acquire any Investment in any Person other than:
(a) Investments in Subsidiaries existing on the date hereof;
(b) Temporary Cash Investments; and
(c) any Investment not otherwise permitted by the foregoing clauses of
this Section if, immediately after such Investment is made or acquired, the
aggregate net book value of all Investments permitted by this clause (c)
does not exceed $250,000.
SECTION 6.14. Certain Obligations Respecting Subsidiaries. The
-------------------------------------------
Lender shall have the right from time to time to require the Borrower, pursuant
to a written request from the Lender, (i) to cause such Subsidiaries as may be
specified in such request to become parties to the Subsidiary Guaranty or to
execute and deliver such other guaranties, in form and substance satisfactory to
the Lender, guaranteeing payment of the Borrower's obligations hereunder and
(ii) to cause such Material Subsidiaries as may be specified in such request to
become parties to the Security Agreement or to execute and deliver such other
security agreements, in form and substance satisfactory to the Lender, securing
payment of the Borrower's obligations hereunder. Any such request shall be made
by the Lender in the good faith exercise of its discretion. Within thirty days
after any such request, the Borrower shall, and shall cause the appropriate
Subsidiaries or Material Subsidiaries of the Borrower to (i) execute and deliver
to the Lender such number of copies as the Lender may specify of documents
creating such guaranties and security interests and (ii) do all other things
which may be necessary or which the Lender
17
may reasonably request in order to confer upon and confirm to the Lender the
benefits of such security interests.
ARTICLE VII
EVENTS OF DEFAULTS
SECTION 7.01. Events of Default. If any one or more of the following
-----------------
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of or
interest on any Loan, or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 6.06 to 6.14 (inclusive) hereof; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Lender; or
(d) any representation, warranty, certification or statement made by
the Borrower or any Subsidiary in this Agreement, the Pledge Agreement, the
Security Agreement or the Subsidiary Guaranty or in any certificate,
financial statement or other document delivered pursuant to this Agreement
shall prove to have been incorrect in any material respect upon the date
when made or deemed made; or
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt (other than the Note) when due or within any
applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such
Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof; or
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in
18
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(i) any member of the ERISA Group shall fail to pay when due any
amount or amounts aggregating in excess of $200,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $200,000 (collectively, a "Material Plan") shall
be filed under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any Material Plan;
or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default,
within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $200,000; or
(j) judgments or orders for the payment of money in excess of
$200,000 in the aggregate shall be
19
rendered against the Borrower or any Subsidiary and such judgments or
orders shall continue unsatisfied and unstayed for a period of 20 days; or
(k) the Subsidiary Guaranty, for any reason other than payment in
full of all amounts due hereunder, ceases to be in full force and effect,
is revoked or is declared null and void, or the Guarantors deny that they
have or contest any further liability under the Subsidiary Guaranty, or
give notice to that effect; or
(l) the Lien created by the Security Agreement shall at any time and
for any reason not constitute a valid and perfected Lien subject to no
prior or equal Lien;
then, and in every such event, (1) in the case of any of the Events of Default
specified in paragraphs (g) or (h) above, the principal of and accrued interest
on the Note shall automatically become due and payable without presentment,
demand, protest or other notice or formality of any kind, all of which are
hereby expressly waived and (2) in the case of any other Event of Default
specified above, the Lender may, by notice in writing to the Borrower, declare
the Note and all other sums payable under this Agreement to be, and the same
shall thereupon forthwith become, due and payable without presentment, demand,
protest or other notice or formality of any kind, all of which are hereby
expressly waived.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other
-------
communications hereunder shall be in writing (including bankwire, telex,
facsimile transmission or similar writing). Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and oral
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as specified in this Section or (iv) if given by any other means, when
delivered at the address specified in this Section; provided that notices to the
Lender pursuant to Section 2.06 hereof which are given otherwise than by telex
or facsimile
20
transmission shall not be effective until received by the Lender. Any such
notice, request, demand or communication shall be delivered or addressed as
follows:
(i) if to the Borrower, to it at Mercom, Inc., 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000; Attention: Treasurer (if by facsimile
---------
transmission, to facsimile no: 609-734-3875);
(ii) if to the Lender, to it at Cable Michigan, Inc., 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Treasurer (if by
---------
facsimile transmision, to facsimile no. 609-734-3875);
or at such other address, telex or facsimile transmission number as any party
hereto may designate by written notice to the other party hereto.
SECTION 8.02. Amendments and Waivers; Cumulative Remedies.
-------------------------------------------
(a) None of the terms of this Agreement may be waived, altered or
amended except by an instrument in writing duly executed by the Borrower and the
Lender.
(b) No failure or delay by the Lender in exercising any right, power
or privilege hereunder or the Note shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.03. Successors and Assigns. The provisions of this
----------------------
Agreement shall be binding upon and shall inure to the benefit of the Borrower
and the Lender and their respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of the Lender.
SECTION 8.04. Expenses; Documentary Taxes; Indemnification. (a) The
--------------------------------------------
Borrower shall pay all reasonable out-of-pocket expenses and internal charges of
the Lender (including reasonable fees and disbursements of special counsel for
the Lender and time charges of attorneys who may be employees of the Lender) in
connection with the preparation and administration of this Agreement, the Note,
the Pledge Agreements, the Subsidiary Guaranty and the Security Agreement, any
waiver or consent hereunder or
21
thereunder, any amendment hereof or thereof, or any Default or alleged Default
hereunder or thereunder and, if there is an Event of Default, in connection with
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify the Lender against any transfer taxes,
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement, the Note, any Pledge
Agreement, the Subsidiary Guaranty or the Security Agreement.
(b) The Borrower agrees to indemnify the Lender and hold the Lender
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by the Lender in connection with
any investigative, administrative or judicial proceeding (whether or not the
Lender shall be designated a party thereto) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans hereunder; provided
--------
that the Lender shall not have the right to be indemnified hereunder for its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 8.05. Counterparts; Integration. This Agreement may be
-------------------------
signed in any number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement constitutes the
entire agreement and understanding between the parties hereto and supersedes any
and all prior agreements and understandings, oral or written, relating to the
subject matter hereof.
SECTION 8.06. Headings; Table of Contents. The section and
---------------------------
subsection headings used herein and the Table of Contents have been inserted for
convenience of reference only and do not constitute matters to be considered in
interpreting this Agreement.
SECTION 8.07. Governing Law. This Agreement and the Note shall be
-------------
construed in accordance with and governed by the law of the State of New York.
SECTION 8.08. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
--------------------
LENDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PLEDGE AGREEMENT,
THE SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
MERCOM, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Vice President, Treasurer
CABLE MICHIGAN, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Senior Vice President,
Treasurer
23
EXHIBIT A
NOTE
U.S. $14,150,725 September 29, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, MERCOM, INC., Delaware corporation (the
"Borrower"), hereby unconditionally promises to pay to the order of CABLE
MICHIGAN, INC. (the "Lender") for its account, the unpaid principal amount of
each Loan outstanding under the Credit Agreement referred to below on the
maturity date provided for in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement.
All such payments of principal and interest shall be made in lawful
money of the United States of America in Federal or other immediately available
funds at the office of the Lender designated pursuant to Section 2.06 of the
Credit Agreement.
All Loans made by the Lender, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding shall be
endorsed by the Lender on the schedule attached hereto and made a part hereof;
provided that the failure of the Lender to make any such recordation or
--------
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is the Note referred to in the amended and restated Term
Credit Agreement between the Borrower and the Lender dated as of September 29,
1997 (as the same may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
MERCOM, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Title: Senior Vice President, Treasurer
