SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 22, 1995 (August 10, 1995)
MERCOM, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-17750 38-2728175
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
105 Carnegie Center, Princeton, NJ 08540
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(609) 734-3700
N/A
(Former name or former address, if changed since last report).
ITEM 1. Changes in Control of Registrant
On July 13, 1995, the Company commenced a rights offering (the
"Rights Offering") of 2,393,530 shares of its common stock, par value $1.00
per share (the "Common Stock"). Immediately prior to the Rights Offering,
C-TEC Corporation, a Pennsylvania corporation ("C-TEC"), owned 1,044,194
shares of Common Stock (representing approximately 43.63% of the shares of
Common Stock then outstanding) through its wholly owned subsidiary, C-TEC
Properties, Inc., a Delaware corporation ("Properties"). On July 13, 1995,
C-TEC and the Company entered into a Rights Exercise Agreement (the "Rights
Exercise Agreement") in which C-TEC agreed, subject to the terms and
conditions set forth therein, to cause Properties to exercise all of the rights
it received in the Rights Offering and to "oversubscribe" for all other
available shares of Common Stock being offered for sale in the Rights Offering.
On August 10, 1995, pursuant to the Rights Exercise Agreement,
Properties exercised the rights it received and oversubscribed for all other
available shares of Common Stock being offered. Properties purchased a total
of 1,920,056 shares of Common Stock in the Rights Offering (including 875,862
shares allocated to it in respect of its oversubscription) for an aggregate
consideration of $6,912,201.60. These purchases were funded through
internally generated funds of C-TEC. Following such purchase, C-TEC
beneficially owns, as of the date of this Report on Form 8-K, an aggregate of
2,964,250 shares of Common Stock (including shares purchased prior to the
Rights Offering), representing 61.92% of the outstanding Common Stock of the
Company.
ITEM 5. Other Events
On August 10, 1995 the Company completed the Rights Offering of
2,393,530 shares of its Common Stock. Shareholders of record at the close of
business on July 20, 1995 received one right for every share of Common Stock
held. Rights holders were permitted to purchase one share of Common Stock for
each right held at a subscription price of $3.60 in cash per share. Each
right also carried the right to "oversubscribe" for shares of Common Stock that
were not otherwise purchased pursuant to the exercise of rights. The Rights
Offering was fully subscribed for by the Company's shareholders.
Net proceeds from the Rights Offering, after deducting issuance
costs, were approximately $8.1 million. The Company used such net proceeds to
repay approximately $5.1 million of outstanding indebtedness to Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") under an Amended Credit
Agreement (defined below) and to repay approximately $2.3 million of
outstanding indebtedness to C-TEC under demand notes held by C-TEC. The
remaining proceeds will be used for general corporate purposes including
capital expenditures.
The text of the press release issued by the Company upon completion
of the Rights Offering is set forth as Exhibit 99.1 and is incorporated herein
by reference.
The Company and Morgan Guaranty were parties to a Credit Agreement
dated November 26, 1989 (as amended in April 1990, and December 1992, 1993,
1994 and March 1995) (as amended through March 1995, the "Credit Agreement").
On June 13, 1995 the Company and Morgan Guaranty signed a Commitment Letter
which contemplated amendment of the Credit Agreement. Such Commitment Letter
was filed as an exhibit to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 14, 1995. On August 16, 1995, the
Company and Morgan Guaranty amended and restated the Credit Agreement
effective as of August 18, 1995 (as amended and restated, the "Amended and
Restated Credit Agreement"). Set forth below is a summary of certain
amendments to the Credit Agreement that resulted from the effectiveness of the
Amended and Restated Credit Agreement and certain related transactions. Such
summary is not necessarily complete and is qualified in its entirety by
reference to the Amended and Restated Credit Agreement, which is included
herewith as Exhibit 10.1 and is incorporated herein by reference:
The Amended and Restated Credit Agreement consists of: (i) a
7.5-year amortizing term loan of approximately $24,692,667 with a final
maturity of December 31, 2002 (the "Term Loan"); and (ii) a 364-day revolving
credit facility of $2,000,000 maturing on August 14, 1996 (the "364-Day
Facility"). In connection with the effectiveness of the Amended and Restated
Credit Agreement, outstanding indebtedness of $5,000,000 evidenced by a demand
note held by Morgan Guaranty was refinanced by canceling such note and
increasing the amount outstanding under the Term Loan by $5,000,000 from
$19,692,667 to $24,692,667.
On August 18, 1995, the Company repaid $5,070,025 of the Term Loan.
The Company is required to repay the remaining indebtedness under the Term
Loan of $19,622,642 in equal quarterly installments aggregating the following
amounts for the following years:
Year Aggregate
---------------------- --------------
Amount
--------------
1995 $ 692,667(1)
1996 $ 1,500,000
1997 $ 1,750,000
1998 $ 2,100,000
1999 $ 2,600,000
2000 $ 3,750,000
2001 $ 4,300,000
2002 $ 2,929,975
___________________________
This amount consists of: (i) $346,333 to be paid on September 30 and (ii)
$346,334 to be paid on December 31.
Under the Amended and Restated Credit Agreement, the Company is
required to make prepayments (first to the Term Loan) from the following
sources: (i) 25% of the net proceeds of any future equity offerings (excluding
equity placements, if any, with C-TEC); (ii) 100% of the net proceeds of any
debt offerings; (iii) 75% of the net cash proceeds of any permitted asset
sales; and (iv) 75% of certain excess cash generated by the Company.
The Company has previously pledged the common stock of its operating
subsidiaries to secure its obligations under the Credit Agreement. Such
pledge continues and secures the obligations under both the Term Loan and the
364-Day Facility. The Company has supplemented this pledge by granting to
Morgan Guaranty a first lien on certain assets of the Company and its
subsidiaries including certain inventory, equipment and receivables.
Item 7. Exhibits
(c) Exhibits
2.1 Rights Exercise Agreement dated July 13, 1995 between Mercom, Inc.
and C-Tec Corporation (incorporated by reference to Exhibit 1 to
Mercom, Inc.'s Registration Statement on Form S-3, as amended, as
filed with the Commission on July 13, 1995).
10.1 Amended and Restated Credit Agreement dated August 16, 1995 between
Mercom, Inc. and Morgan Guaranty Trust Company of New York.
99.1 Press Release of Mercom, Inc. dated as of August 10, 1995 announcing
expiration of the Rights Offering.
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 hereunto duly authorized.
MERCOM, INC.
By: /s/ Raymond B. Ostroski
------------------------
Name: Raymond B. Ostroski
Title: Executive Vice
President and
General Counsel
Date: August 22, 1995
EXHIBIT 10.1
______________________________________________________________________________
______________________________________________________________________________
TERM CREDIT AGREEMENT
BETWEEN
MERCOM, INC.
AND
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
_____________________________
U.S. $24,692,667
_____________________________
Dated as of November 26, 1989
and
Amended and Restated as of August 16, 1995
______________________________________________________________________________
______________________________________________________________________________
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 1
SECTION 1.02. Accounting Terms and Determinations.......... 12
ARTICLE II
THE CREDITS
SECTION 2.01. Commitment to Lend........................... 13
SECTION 2.02. Refunding Loans.............................. 13
SECTION 2.03. Method of Borrowing.......................... 14
SECTION 2.04. The Note..................................... 14
SECTION 2.05. Maturity of Loans............................ 15
SECTION 2.06. Interest Rates............................... 15
SECTION 2.07. Mandatory Termination or Reduction of
Commitment................................. 18
SECTION 2.08. Mandatory Prepayments........................ 20
SECTION 2.09. Optional Prepayments......................... 20
SECTION 2.10. General Provisions as to Payments............ 21
SECTION 2.11. Computation of Interest...................... 21
SECTION 2.12. Funding Losses............................... 21
SECTION 2.13. Pledge of Subsidiaries' Stock................ 21
SECTION 2.14. Subsidiary Guaranty.......................... 22
SECTION 2.15. Security Agreement........................... 22
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness................................ 22
SECTION 3.02. Loans........................................ 23
ARTICLE IV
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
SECTION 4.01. Basis for Determining Interest Rate
Unavailable................................ 24
SECTION 4.02. Illegality................................... 24
SECTION 4.03. Increased Costs and Reduced Returns.......... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Corporate Existence and Power................ 27
SECTION 5.02. Corporate and Governmental Authorization; No
Contravention.............................. 27
SECTION 5.03. Binding Effect............................... 27
SECTION 5.04. Financial Information........................ 27
SECTION 5.05. Litigation................................... 28
SECTION 5.06. Compliance with ERISA........................ 28
SECTION 5.07. Taxes........................................ 29
SECTION 5.08. Subsidiaries................................. 29
SECTION 5.09. Approval of Regulatory Authorities........... 29
SECTION 5.10. Franchises................................... 29
SECTION 5.11. Environmental Matters........................ 29
SECTION 5.12. Full Disclosure.............................. 30
ARTICLE VI
COVENANTS
SECTION 6.01. Information.................................. 30
SECTION 6.02. Maintenance of Property; Insurance........... 33
SECTION 6.03. Conduct of Business and Maintenance of
Existence.................................. 34
SECTION 6.04. Compliance with Laws; Notice of Proceedings.. 34
SECTION 6.05. Inspection of Property, Books and Records.... 34
SECTION 6.06. Restricted Payments.......................... 35
SECTION 6.07. Debt......................................... 35
SECTION 6.08. Negative Pledge.............................. 35
SECTION 6.09. Consolidations, Mergers and Sales of Assets.. 36
SECTION 6.10. Use of Proceeds.............................. 37
SECTION 6.11. Interest Coverage Ratio...................... 37
SECTION 6.12. Debt to Operating Cash Flow Ratio............ 37
SECTION 6.13. Lines of Business............................ 38
SECTION 6.14. Investments.................................. 38
SECTION 6.15. Fixed Charge Coverage Ratio.................. 38
SECTION 6.16. Consolidated Capital Expenditures............ 39
SECTION 6.17. Management Fees.............................. 40
SECTION 6.18. Transactions with Affiliates................. 40
SECTION 6.19. Certain Obligations Respecting Subsidiaries.. 41
ARTICLE VII
EVENTS OF DEFAULTS
SECTION 7.01. Events of Default............................ 41
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices...................................... 44
SECTION 8.02. Amendments and Waivers; Cumulative Remedies.. 45
SECTION 8.03. Successors and Assigns....................... 45
SECTION 8.04. Expenses; Documentary Taxes; Indemnification. 46
SECTION 8.05. Counterparts; Integration.................... 47
SECTION 8.06. Headings; Table of Contents.................. 47
SECTION 8.07. Governing Law................................ 47
SECTION 8.08. WAIVER OF JURY TRIAL......................... 47
Exhibit A Note
Exhibit B Pledge Agreement
Exhibit C Opinion of Counsel for the Borrower
and the Guarantors
Exhibit D Material Litigation Disclosure
Exhibit E Borrower and Subsidiary Franchises
Exhibit F Subsidiary Guaranty
Exhibit G Security Agreement
TERM CREDIT AGREEMENT
AGREEMENT dated as of November 26, 1989 and amended and
restated as of August 16, 1995 between MERCOM, INC., a Delaware corporation
(the "Borrower"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York
State banking corporation (the "Bank").
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, shall have the following respective meanings:
"ACC" means Allegan County Cablevision, Inc., a Michigan
corporation, with its successors.
"Adjusted CD Rate" has the meaning set forth in Section 2.06(b)
hereof.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.06(c) hereof.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Applicable Lending Office" means, with respect to the Bank,
(i) in the case of Domestic Loans, its Domestic Lending Office and (ii) in the
case of Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.06(b)
hereof.
"Asset Sale" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Borrower or any of its Subsidiaries of any asset, including without
limitation any sale-leaseback transaction, whether or not involving a capital
lease, but excluding (i) dispositions of inventory, cash, cash equivalents and
other cash management investments and obsolete, unused or unnecessary
equipment and undeveloped real estate, in each case in the ordinary course of
business and (ii) dispositions to the Borrower or a Subsidiary of the Borrower.
"Assignee" has the meaning set forth in Section 8.03.
"Available Excess Cash Flow" means, for any fiscal year, 25% of
the amount by which Excess Cash Flow exceeds $350,000.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
Federal Funds Rate for such day.
"Base Rate Loan" means a Loan which the Borrower specifies
pursuant to Section 2.03 hereof shall be a Base Rate Loan.
"CCI" means Coldwater Cablevision, Inc., a Michigan
corporation, and its successors.
"CCV" means Communications and Cablevision, Inc., a Michigan
corporation, and its successors.
"CCS" means C-TEC Cable Systems, Inc., a Delaware corporation.
"CD Base Rate" has the meaning set forth in Section 2.06(b)
hereof.
"CD Loan" means a Loan which the Borrower specifies pursuant to
Section 2.03 hereof shall be a CD Loan.
"Collateral" has the meaning set forth in Section 3 of the
Security Agreement.
"Commitment" means the obligation of the Bank to lend the
amount set forth in Section 2.01 hereof, as such amount may be reduced from
time to time pursuant to Sections 2.07 and 2.08 hereof.
"Commitment Reduction Date" means each March 31, June 30,
September 30 and December 31, from and including September 30, 1995, to and
including December 31, 2002.
"Consolidated Capital Expenditures" means, for any period, the
additions to property, plant and equipment and other capital expenditures of
the Borrower and its Consolidated Subsidiaries for such period, as the same are
or would be set forth in a consolidated statement of cash flows of the
Borrower and its Consolidated Subsidiaries for such period.
"Consolidated Current Assets" means at any date the
consolidated current assets of the Borrower and its Consolidated Subsidiaries
determined as of such date.
"Consolidated Current Liabilities" means at any date (i) the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries plus (ii) the current liabilities of any Person (other than the
Borrower or any of its Consolidated Subsidiaries), all determined as of such
date.
"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 Net Working Investment" means at any date
Consolidated Current Assets (exclusive of cash and cash equivalents) minus
Consolidated Current Liabilities (exclusive of Debt).
"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.
"C-TEC" means C-TEC Corporation, a Pennsylvania corporation,
and its successors.
"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.
"Domestic Lending Office" means the principal office of the
Bank located at 60 Wall Street, New York, New York 10260, or such other branch
(or affiliate) as the Bank may hereafter designate as its Domestic Lending
Office; provided that the Bank may designate separate Domestic Lending Offices
for its Base Rate Loans, on the one hand, and its CD Loans, on the other hand,
in which case all references herein to the Domestic Lending Office shall be
deemed to refer to either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.06(b) hereof.
"Effective Date" means the date this Agreement 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 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.
"Equity Rights Offering" means the distribution by the Borrower
to the holders of the Borrower's common stock of non-transferable subscription
rights to purchase up to 2,393,530 additional shares of the Borrower's common
stock pursuant to a registration statement filed with the Securities and
Exchange Commission on July 13, 1995.
"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 Lending Office" means the office of the Bank
located at Nassau, The Bahamas or such other branch (or affiliate) of the Bank
as it may hereafter designate as its Euro-Dollar Lending Office.
"Euro-Dollar Loan" means a Loan which the Borrower specifies
pursuant to Section 2.03 hereof shall be a Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.06(c) hereof.
"Event of Default" has the meaning set forth in Article VII
hereof.
"Excess Cash Flow" means, for any fiscal year of the Borrower,
the excess (if any) of:
(A) the sum of (i) Operating Cash Flow for such year
and (ii) any decrease in Consolidated Net Working Investment between
the beginning and the end of such year;
over
(B) the sum of (without duplication) (i) Consolidated
Capital Expenditures for such year, (ii) any increase in Consolidated
Net Working Investment between the beginning and the end of such
year, (iii) mandatory reductions of long-term Debt of the Borrower
and its Consolidated Subsidiaries during such year and (iv) to the
extent not already deducted in calculating Operating Cash Flow, Lahey
Payments made in cash during such year.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Bank on
such day on such transactions as determined by the Bank.
"Fixed Charge Coverage Ratio" means, as of the last day of any
fiscal quarter of the Borrower, the ratio of (i) Operating Cash Flow for the
four consecutive fiscal quarters ending on such date to (ii) the sum of (A)
Interest Expense for such period plus (B) Consolidated Capital Expenditures
for such period plus (C) the aggregate principal amount of scheduled
amortization of long term Debt of the Borrower and its Consolidated
Subsidiaries during such period.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
"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 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 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, MFI, 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: (1) with respect to each CD Loan, at
the Borrower's option, the period commencing on the date of such Loan and
ending 30, 60, 90 or 180 days thereafter, (2) with respect to each Euro-Dollar
Loan, at the Borrower's option, the period commencing on the date of such Loan
and ending 1, 2, 3, 6 or 12 months thereafter and (3) with respect to each
Base Rate Loan, the period commencing on the date of such Loan and ending 30
days thereafter, 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) with respect to a Euro-Dollar Loan, 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 Period) shall,
subject to clauses (c) and (d) below, end on the last Euro-Dollar
Business Day of a calendar month;
(c) any Interest Period which would otherwise end after the
Termination Date shall end on such Date; and
(d) if any Interest Period includes a date on which a payment
of principal of a Loan is required to be made under Section 2.07 but
does not begin or end on such date, then (i) the principal amount (if
any) of each Loan required to be repaid on such date and (ii) the
remainder (if any) of each such Loan shall have an Interest Period
determined as set forth above;
provided further, however, that if any such Interest Period shall be less than
30 days, the Loan for such Interest Period shall be a Base Rate Loan; provided
further, that upon the request of the Borrower the Bank may, in its sole
discretion, make Fixed Rate Loans with such other Interest Periods and at such
interest rates as the Borrower and the Bank may agree and provided further,
that no more than five Fixed Rate Loans may be outstanding at any time.
"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.
"Lahey Payments" means payments made by CCV pursuant to the
April 18, 1995 Settlement Agreement and Mutual Release between CCV and Kenneth
E. Lahey.
"Lending Office" means the Domestic Lending Office or the
Euro-Dollar Lending Office, as the context may require.
"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 Domestic Loan or a Euro-Dollar Loan,
or both, as the context may require.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c) hereof.
"Management Fees" means payments made by the Borrower to CCS or
its affiliates or subsidiaries pursuant to the Management Agreement dated as
of January 1, 1992, as such may be amended from time to time, between the
Borrower and CCS.
"Material Debt" means (i) 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 and
(ii) Debt of the Borrower under the Revolving Credit Agreement.
"Material Subsidiary" has the meaning assigned to "significant
subsidiary" in Regulation S-X of the Securities Exchange Commission as of the
date hereof, provided that the percentage set forth in such definition shall
be 5% rather than 10%.
"MFI" means Mercom of Florida, Inc., a Florida corporation,
with its successors.
"Net Cash Proceeds" means, with respect to any event specified
in Section 2.07(d), an amount equal to the cash proceeds received by the
Borrower or any of its Subsidiaries from or in respect of such event
(including any cash proceeds received as income or other proceeds of any
noncash proceeds of any Asset Sale), less (x) any expenses reasonably incurred
by such Person in respect of such event and (y) if such event is an Asset
Sale, (I) the amount of any Debt secured by a Lien on any asset disposed of in
such Asset Sale and discharged from the proceeds thereof and (II) any taxes
actually paid or to be payable by such Person (as estimated by a senior
financial or accounting officer of the Borrower, giving effect to the overall
tax position of the Borrower) in respect of such Asset Sale.
"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 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 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 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.
"Parent" means, with respect to the Bank, any Person
controlling the Bank.
"Participant" has the meaning set forth in Section 8.03.
"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" has the meaning set forth in Section 2.13.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time
as its Prime Rate.
"Refunding Loan" means a Loan which, after application of the
proceeds thereof, results in no net increase in the outstanding principal
amount of Loans made by the Bank.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its capital stock) or (ii) any payment on account
of the purchase, redemption, retirement or acquisition of (a) any shares of
the Borrower's capital stock or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Revolving Credit Agreement" means the Revolving Credit
Agreement between the Borrower and the Bank, dated as of August 16, 1995, as
the same may be amended from time to time.
"Security Agreement" means the Security Agreement among the
Borrower, CCV, ACC, CCI and the Bank dated as of August 16, 1995.
"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 dated as of August 16, 1995.
"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 Moody's
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 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 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.
"Voting Securities" means any stock or similar interests, of
any class or classes (however designated), the holders of which are at the
time entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the corporation,
association or other business entity involved, whether or not the right so to
vote exists by reason of the happening of a contingency.
"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 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 Bank.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitment to Lend. On the Effective Date,
the Bank agrees, on the terms and conditions set forth in this Agreement, to
make one or more Loans to the Borrower in the aggregate principal amount of
$24,692,667 (the "Commitment"). Except as set forth in Section 2.02, the
Commitment is not revolving in nature, and amounts repaid or prepaid prior to
the Termination Date may be reborrowed only under Section 2.02.
SECTION 2.02. Refunding Loans. Prior to the Termination
Date the Bank agrees, on the terms and conditions set forth in this Agreement,
to make a new Loan to the Borrower concurrently with any repayment of the
outstanding Loans pursuant to Section 2.05 hereof or any optional prepayment
of the outstanding Loans pursuant to Section 2.09 hereof for the purpose of
refunding all or a portion of such outstanding Loans; provided that the
principal amount of the Bank's new Loan shall not exceed the principal amount
of its outstanding Loans being repaid or prepaid; and provided further that
the principal amount of the Bank's outstanding Loans shall at no time exceed
its Commitment as reduced from time to time pursuant to Section 2.07 hereof.
Amounts required to be repaid pursuant to Section 2.08 hereof shall not be
reborrowed, and amounts repaid pursuant to Section 4.02 hereof shall not be
reborrowed except as provided therein.
SECTION 2.03. Method of Borrowing.
(a) With respect to each Loan made pursuant to Sections 2.01
and 2.02 hereof, the Borrower shall give the Bank notice not later than 10:00
a.m. (New York City time) on (x) the date of each Base Rate Loan, (y) the
second Domestic Business Day before each CD Loan and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Loan, specifying:
(i) the date of such Loan, which shall be a Domestic Business
Day in the case of a Domestic Loan and a Euro-Dollar Business Day in
the case of a Euro-Dollar Loan;
(ii) the principal amount of such Loan, which shall be
$100,000 or any larger multiple thereof if it is a Base Rate Loan and
$1,000,000 or any larger multiple thereof if it is a Fixed Rate Loan
(except that any Loan may be in the amount of the unused Commitment);
(iii) whether the Loan is to be a Base Rate Loan, a CD Loan or
a Euro-Dollar Loan; and
(iv) in the case of a Fixed Rate Loan, the duration of the
Interest Period applicable thereto, subject to the definition of
Interest Period.
(b) On the date of each Loan the Bank will make the proceeds
thereof available to the Borrower at the Domestic Lending Office.
(c) If the Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan, the Bank
shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by the Bank to the Borrower as
provided in subsection (b) of this Section or remitted by the Borrower to the
Bank as provided in Section 2.09 hereof, as the case may be.
SECTION 2.04. The Note.
(a) The Loans shall be evidenced by a single Note payable to
the order of the Bank for the account of its Applicable Lending Office. Such
Note shall be dated on or before the date of the first Loan and shall set
forth the Bank's Commitment as the maximum principal amount thereof.
(b) The Bank may, by notice to the Borrower, request that
Loans of a particular type be evidenced by a separate Note in an amount equal
to the Loans of that type. Each such Note shall be substantially in the form
of Exhibit A hereto with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference in this Agreement
to the "Note" shall be deemed to refer to and include any or all of the Notes
delivered under this Agreement, as the context may require.
(c) The Bank shall record the date, the amount and the
maturity of each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto 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 Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Note. The Bank 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 2.05. Maturity of Loans. Each Loan shall mature,
and the principal amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Loan.
SECTION 2.06. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until
it becomes due, at a rate per annum equal to the Base 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 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 CD Loan shall bear interest on the outstanding
principal amount thereof, for each Interst Period applicable thereto, at a
rate per annum equal to the sum of 1.125% plus the applicable Adjusted CD
Rate. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 90 days, at intervals of
90 days after the first day thereof. Any overdue principal of and, to the
extent permitted by law, overdue interest on the CD 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 "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [---------] + AR
[ 1 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
AR = Assessment Rate
DRP = Domestic Reserve Percentage
----------
* The amount in brackets being rounded
upwards, if necessary, to the next higher
1/100 of 1%.
The "CD Base Rate" means for any Interest Period the prevailing
per annum rate of interest (rounded upward, if necessary, to the next higher
1/100 of 1%) bid at 10:00 a.m. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing selected by the Bank for
the purchase at face value from the Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan to which such
Interest Period applies and with a maturity comparable to such Interest Period.
The "Domestic Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any basic, supplemental or emergency reserves) for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion Dollars in respect of new non-personal time deposits in Dollars in New
York City having a maturity comparable to the related Interest Period and in
an amount of $100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Domestic
Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Assessment Rate.
(c) 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 Adjusted London
Interbank Offered Rate. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first 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 "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the rate per annum at which deposits in Dollars are offered to
the Bank in the London interbank market at approximately 11:00 a.m. (London
time) two Euro-Dollar Business Days prior to the first day of such Interest
Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
The "Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank
of the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of the Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
SECTION 2.07. Mandatory Termination or Reduction of
Commitment.
(a) The Commitment shall terminate on December 31, 2002, and
any Loans then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
(b) On any date on or after the Effective Date on which the
Commitment shall be greater than the principal amount of the Loan or Loans
outstanding on such date (after giving effect to any repayment, prepayment and
borrowing on such date), the Commitment shall be automatically reduced to an
amount equal to such outstanding principal amount.
(c) The Commitment shall be further reduced automatically, on
the Effective Date and on each Commitment Reduction Date, according to the
following table:
COMMITMENT REDUCTION AMOUNT BY WHICH
DATE COMMITMENT TO BE REDUCED
----------------------------------- --------------------------
The Effective Date $ 5,070,025
September 30, 1995 $ 346,333
December 31, 1995 $ 346,334
March 31, 1996 $ 375,000
June 30, 1996 $ 375,000
September 30, 1996 $ 375,000
December 31, 1996 $ 375,000
March 31, 1997 $ 437,500
June 30, 1997 $ 437,500
September 31, 1997 $ 437,500
December 31, 1997 $ 437,500
March 31, 1998 $ 525,000
June 30, 1998 $ 525,000
September 31, 1998 $ 525,000
December 31, 1998 $ 525,000
March 31, 1999 $ 650,000
June 30, 1999 $ 650,000
September 31, 1999 $ 650,000
December 31, 1999 $ 650,000
March 31, 2000 $ 937,500
June 30, 2000 $ 937,500
September 30, 2000 $ 937,500
December 31, 2000 $ 937,500
March 31, 2001 $ 1,075,000
June 30, 2001 $ 1,075,000
September 31, 2001 $ 1,075,000
December 31, 2001 $ 1,075,000
March 31, 2002 $ 750,000
June 30, 2002 $ 750,000
September 30, 2002 $ 750,000
December 31, 2002 $ 679,975
(d) In addition, the Commitment shall be reduced in the
following amounts:
(i) immediately upon receipt of the proceeds of the
issue of any capital stock or rights by the Borrower, the
Commitment shall be reduced by (A) $5,070,025 in Net Cash
Proceeds thereof, in the case of the Equity Rights Offering,
and (B) 25% of the Net Cash Proceeds thereof, in the case of any
issue other than an issue after the date hereof all of which is
purchased by an Affiliate of the Borrower;
(ii) immediately upon receipt of the proceeds of any
incurrence of any Debt by the Borrower or its Subsidiaries not
otherwise permitted under Section 6.07 to which the Bank has
consented, the Commitment shall be reduced by 100% of the Net
Cash Proceeds thereof;
(iii) immediately upon receipt of the proceeds of any
Asset Sale, the Commitment shall be reduced by 75% of the Net
Cash Proceeds thereof; and
(iv) on the last Euro-Dollar Business Day in March of
each year, beginning in March 1996, the Commitment shall be
reduced by 75% of the amount by which Excess Cash Flow exceeds
$350,000.
(e) Commitment reductions pursuant to clause (i)(A) of
subsection (d) above shall be applied in chronological order to reduce the
amount of subsequent scheduled reductions of the Commitment pursuant to
subsection (c) above. All other Commitment reductions pursuant to subsection
(b) or (d) above shall be applied in inverse chronological order to reduce
such subsequent scheduled reductions.
SECTION 2.08. Mandatory Prepayments. (a) On the date of
each Commitment reduction pursuant to Section 2.07, the Borrower shall prepay
Loans, together with accrued interest on the principal amount prepaid, to the
extent (if any) required so that the aggregate principal amount of Loans
remaining outstanding immediately after such prepayment will not exceed the
aggregate amount of the Commitment after giving effect to such reduction.
(b) At least three Euro-Dollar Business Days before the date
of each mandatory prepayment pursuant to subsection (a) above, the Borrower
shall select which outstanding Loans are to be prepaid and shall notify the
Bank thereof; provided that such prepayments shall be applied first to Base
Rate Loans until all Base Rate Loans outstanding are repaid and only then to
Euro-Dollar Loans.
SECTION 2.09. Optional Prepayments.
(a) The Borrower may, upon at least one Domestic Business Day's
notice to the Bank, 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 Fixed 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; provided that such prepayment
shall occur at the end of the Interest Period applicable to any such Loans.
SECTION 2.10. General Provisions as to Payments. The
Borrower shall 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
in funds immediately available in New York City at the principal office of the
Bank in New York for the account of (i) the Domestic Lending Office in the
case of Domestic Loans or (ii) the Euro-Dollar Lending Office in the case of
Euro-Dollar Loans. Whenever any payment of principal of, or interest on, the
Domestic 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 any payment of principal is
extended by operation of law or otherwise, interest shall be payable for such
extended time.
SECTION 2.11. Computation of Interest. Interest based on
the Prime 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 2.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to Section
2.08(a), Article IV or Article VII or otherwise) on any day other than the
last day of an Interest Period applicable to such Loan, or if the Borrower
fails to borrow any Fixed Rate Loan after notice has been given to the Bank in
accordance with Section 2.03 hereof, the Borrower shall reimburse the Bank
within 15 days after demand for any resulting loss or expense incurred by it
(or by any existing or prospective Participant in the related Loan) including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties; provided that the Bank shall have delivered to
the Borrower a certificate as to the amount of such loss, which certificate
shall be conclusive in the absence of manifest error.
SECTION 2.13. Pledge of Subsidiaries' Stock. The Borrower
and CCV agree to deliver to the Bank and pledge (or cause to be delivered to
the Bank and pledged) from time to time, pursuant to a Pledge Agreement
substantially in the form of Exhibit B hereto annexed (the "Pledge Agreement")
all of the issued and outstanding Voting Securities of each Subsidiary. The
Borrower and CCV shall deliver to the Bank with each Pledge Agreement a legal
opinion with regard thereto in such form and of such content as the Bank may
require.
SECTION 2.14. Subsidiary Guaranty. The Guarantors agree to
deliver to the Bank a Subsidiary Guaranty substantially in the form of Exhibit
F hereto.
SECTION 2.15. Security Agreement. The Borrower, CCV, ACC
and CCI agree to deliver to the Bank a Security Agreement substantially in the
form of Exhibit G hereto.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied:
(a) receipt of the Bank of counterparts hereof signed by each
of the parties hereto;
(b) receipt by the Bank of a duly executed Note dated on or
before the Effective Date complying with the provisions of Section
2.04 hereof;
(c) receipt by the Bank of an opinion of counsel for the
Borrower and the Guarantors, substantially in the form of Exhibit C
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) receipt by the Bank of a certificate signed by a duly
authorized officer of the Borrower, dated the Effective Date, to the
effect set forth in clauses (b) and (c) of Section 3.02 hereof;
(e) receipt by the Bank of a duly executed Pledge Agreement
accompanied by the certificates representing the Pledged Shares
referred to therein, together with duly executed instruments of
transfer or assignment, signed in blank, relating to the Pledged
Shares;
(f) receipt by the Bank of all documents it may reasonably
request relating to the existence of the Borrower, CCV, MFI, ACC and
CCI, the corporate authority for and the validity of this Agreement,
the Note, the Pledge Agreement, the Subsidiary Guaranty and the
Security Agreement and any other matters relevant hereto, all in form
and substance satisfactory to the Bank;
(g) the receipt by the Bank of a duly executed Subsidiary
Guaranty, substantially in the form of Exhibit F hereto;
(h) the receipt by the Bank of a duly executed Security
Agreement, substantially in the form of Exhibit G hereto; and
(i) the receipt by the Borrower of not less than $8,500,000 in
proceeds from the Equity Rights Offering.
SECTION 3.02. Loans. The obligation of any Bank to make a
Loan on the occasion of any borrowing is subject to the satisfaction of the
following conditions:
(a) receipt by the Bank of the notice from the Borrower
required by Section 2.03 hereof;
(b) the fact that, immediately after such Loan, no Default
shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement, the Pledge Agreement and the
Security Agreement (except, in the case of a Refunding Borrowing, the
representation and warranty set forth in Section 5.04(c) hereof as to
any material adverse change which has theretofore been disclosed in
writing by the Borrower to the Bank), the representations and
warranties of CCV contained in the Pledge Agreement, the Subsidiary
Guaranty and the Security Agreement, the representations and
warranties of each of ACC and CCI contained in the Subsidiary
Guaranty and the Security Agreement and the representations and
warranties of MFI contained in the Subsidiary Guaranty shall be true
on and as of the date of such Borrowing.
Each borrowing hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such borrowing as to the facts specified in
clauses (b) and (c) of this Section.
ARTICLE IV
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
SECTION 4.01. Basis for Determining Interest Rate
Unavailable. If on or prior to the first day of any Interest Period deposits
in Dollars (in the applicable amounts) are not being offered to the Bank in
the relevant market for such Interest Period, the Bank shall forthwith give
notice thereof to the Borrower, whereupon the obligations of the Bank to make
CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended until
the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist. Unless the Borrower notifies the Bank at least
two Domestic Business Days before the date of any Fixed Rate Loan for which a
notice of borrowing has previously been given that it elects not to borrow on
such date, such Loan shall instead be made as a Base Rate Loan.
SECTION 4.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by the Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for the Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans, the Bank shall
forthwith so notify the Borrower, whereupon the Bank's obligation to make
Euro-Dollar Loans shall be suspended. Before giving any notice to the Borrower
pursuant to this Section 4.02, the Bank will designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of the Bank, be otherwise disadvantageous to the
Bank. If the Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and
shall so specify in such notice, the Borrower shall immediately prepay in full
the then outstanding principal amount of each such Euro-Dollar Loan, together
with accrued interest thereon. Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount for an Interest Period coincident with the remaining term of
the Interest Period applicable to such Euro-Dollar Loan, and the Bank shall
make such a Base Rate Loan.
SECTION 4.03. Increased Costs and Reduced Returns. (a)
If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or
compliance by the Bank (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(1) shall subject the Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its
obligation to make Fixed Rate Loans, its Fixed Rate Loans, or
its Note, or shall change the basis of taxation of payments to
the Bank (or its Applicable Lending Office) of the principal of
or interest on its Fixed Rate Loans or in respect of any other
amounts due under this Agreement, in respect of its Fixed Rate
Loans or its obligation to make Fixed Rate Loans, (except for
changes in the rate of tax on the overall net income of the
Bank or its Applicable Lending Office imposed by the
jurisdiction in which the Bank's principal executive office or
Applicable Lending Office is located); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding (A) with
respect to any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage and (B) with respect to
any Euro-Dollar Loan any such requirement included in an
applicable Euro-Dollar Reserve Percentage), special deposit,
insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment
Rate) or similar requirement against assets of, deposits with
or for the account of, or credit extended by, the Bank (or its
Applicable Lending Office) or shall impose on the Bank (or its
Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its obligation to make or maintain Fixed
Rate Loans, its Fixed Rate Loans or its Note;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Applicable Lending Office) of making or maintaining any Fixed Rate Loan,
or to reduce the amount of any sum received or receivable by the Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by the Bank to be material, then, within 15 days
after demand by the Bank, the Borrower agrees to pay to the Bank such
additional amount or amounts as will compensate the Bank for such increased
cost or reduction.
(b) If the Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on the capital of
the Bank (or its Parent) as a consequence of the Bank's obligations hereunder
to a level below that which the Bank (or its Parent) could have achieved but
for such adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank to
be material, then from time to time, within 15 days after demand by the Bank,
the Borrower shall pay to the Bank (or its Parent) such additional amount or
amounts as will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle
the Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of the Bank, be otherwise disadvantageous to the Bank. A certificate of the
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank that:
SECTION 5.01. Corporate Existence and Power. The Borrower
and each 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
Contravention. The execution, delivery and performance by the Borrower of
this 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 and by MFI of 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 Bank as provided for in
the Pledge Agreement and the Security Agreement.
SECTION 5.03. Binding Effect. This Agreement, the Pledge
Agreement 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, the Subsidiary Guaranty
constitutes a valid and binding agreement of MFI 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. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at December 31, 1994 and the related consolidated
statements of shareholders' capital deficiency and cash flows of the Borrower
and its Consolidated Subsidiaries for the fiscal year then ended, certified by
Coopers & Lybrand L.L.P., certified public accountants, a copy of which has
been delivered to the Bank, fairly present in conformity with generally
accepted accounting principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries at such date and the consolidated
results of operations for such fiscal year.
(b) The unaudited Consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as at March 31, 1995 and the related
consolidated statements of operations, shareholders' capital deficiency and
cash flows of the Borrower and its Consolidated Subsidiaries for the three
months then ended, a copy of which has been delivered to the Bank, fairly
present in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries at such date and the consolidated results of operations for such
period (subject to normal year-end adjustments).
(c) Since March 31, 1995 there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 5.05. Litigation. Except as described in Exhibit D
hereto, there is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Borrower and
its Consolidated Subsidiaries or which in any manner draws into question the
validity of this Agreement, the Note, the Pledge Agreement, the Subsidiary
Guaranty or the Security Agreement.
SECTION 5.06. Compliance with ERISA. Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards
of ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code, and has not (i) sought a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan or made any amendment to any Plan which has resulted or could result in
the imposition of a lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability to the PBGC
or a Plan under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 5.07. Taxes. United States Federal income tax
returns of the Borrower and its Subsidiaries have been examined and closed
through the fiscal year ended December 31, 1988. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
SECTION 5.08. Subsidiaries. Each of the Borrower's
corporate Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of 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 5.09. Approval of Regulatory Authorities. No
approval or 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 the execution, delivery and performance by the Borrower of
this Agreement, the Note, the Pledge Agreement, the Subsidiary Guaranty and
the Security Agreement.
SECTION 5.10. Franchises. Attached as Exhibit E hereto is
a complete listing of each Franchise owned by the Borrower or any Subsidiary.
Each Franchise is in full force and effect. No material default has occurred
which is continuing under or in respect of any of the provisions of any
Franchise. No approval, application, filing, registration, consent or other
action of any local, state or federal authority is required to enable the
Borrower or any Subsidiary to operate under any Franchise. The Borrower has
received no notice from the granting body or any other governmental authority
with respect to any breach of any covenant under, or any default with respect
to, any Franchise.
SECTION 5.11. Environmental Matters. None of the
Borrower's or any of its Subsidiaries' presently or previously owned or
operated properties or assets has ever been used by the Borrower or any such
Subsidiary or, to the best of the Borrower's knowledge, by previous owners or
operators in the disposal of, or to generate, store, handle, treat, release or
transport, any Hazardous Substances. None of the Borrower's or any of its
Subsidiaries' presently or previously owned or operated properties or assets
is or has ever been designated or identified in any manner pursuant to any
Environmental Law as a disposal site or as a candidate for investigation,
remediation, removal action or closure under any Environmental Law. No lien
arising under any Environmental Law has attached to any of the Borrower's or
any of its Subsidiaries' presently or previously owned or operated assets or
properties. No summons, citation, notice, request for information, order or
directive has been received from or, to the best of the Borrower's knowledge,
has been threatened by, any governmental agency or third party concerning any
act or omission which could lead to liability to the Borrower or any of its
Subsidiaries under or relating to any Environmental Law. Liabilities or costs
arising out of or relating to Environmental Laws have not had and are not
reasonably expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of the Borrower and
its Subsidiaries, considered as a whole.
SECTION 5.12. Full Disclosure. All information heretofore
furnished by the Borrower to the Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Borrower has disclosed to the Bank in writing any
and all facts which materially and adversely affect or may affect (to the
extent the Borrower can now reasonably foresee), the business, operations or
financial condition of the Borrower and its Consolidated Subsidiaries, taken
as a whole, or the ability of each of the Borrower or the Guarantors to
perform its obligations (if any) under this Agreement, the Pledge Agreement,
the Security Agreement, the Subsidiary Guaranty or the Note.
ARTICLE VI
COVENANTS
So long as the Commitment shall be in effect or the Note is
outstanding, unless compliance shall have been waived in writing by the Bank,
the Borrower agrees that:
SECTION 6.01. Information. The Borrower will deliver to
the Bank:
(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
Bank by Coopers & Lybrand 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;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 6.06, 6.11, 6.12, 6.16, 6.17 and 6.18 on the
date of such financial statements and to establish the Debt to Cash
Flow Ratio, the Interest Coverage Ratio and the Fixed Charge Coverage
Ratio at the end of the preceding fiscal quarter and the amount spent
on Consolidated Capital Expenditures and Management Fees during such
fiscal quarter and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm
of independent public accountants which reported on such statements
(i) to the effect that nothing has come to their attention to cause
them to believe that any Default existed on the date of such
statements and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;
(e) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(g) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any Plan has given
or is required to give notice of any such reportable event, a copy of
the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that a Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA
of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant
to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or makes any
amendment to any Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take;
(h) if at any time the value of all "margin stock" (as defined
in Regulation U) owned by the Borrower and its Consolidated
Subsidiaries exceeds (or would, following application of the proceeds
of an intended Loan hereunder, exceed) 25% of the value of the total
assets of the Borrower and its Consolidated Subsidiaries, in each
case as reasonably determined by the Borrower, prompt notice of such
fact;
(i) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a certificate specifying
(i) the amount of Excess Cash Flow for the fiscal year just ended,
(ii) the amount of Excess Cash Flow used to reduce the Commitment
pursuant to Section 2.07(d)(iv), (iii) aggregate Available Excess
Cash Flow for all fiscal years commencing on or after January 1,
1994, through the fiscal year immediately preceding the fiscal year
just ended and (iv) the amount of such aggregate Available Excess
Cash Flow expended by the Borrower, if any, through the end of the
most recently ended fiscal year for any purpose whatsoever; and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and its
Subsidiaries as the Bank may reasonably request.
SECTION 6.02. Maintenance of Property; Insurance. (a) The
Borrower 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 Bank 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 Bank
may approve in writing. The Borrower will deliver to the Bank (i) on the date
of the first Loan hereunder, a certificate dated such date showing the amount
of coverage as of such date, (ii) upon request of the Bank from time to time
full information as to the insurance carried, (iii) within five days of
receipt of notice from any insurer a copy of any notice of cancellation or
material change in coverage from that existing on the date of this Agreement
and (iv) forthwith, notice of any cancellation or nonrenewal of coverage by
the Borrower.
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.
(a) 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.
(b) The Borrower will promptly give notice in writing to
the Bank of all litigation, arbitral proceedings and regulatory proceedings
affecting the Borrower or any Subsidiary or the property of the Borrower or
any Subsidiary, except litigation or proceedings which, if adversely
determined, could not materially and adversely affect the consolidated
financial condition or the business taken as a whole of the Borrower and
its Subsidiaries.
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 dealings and transactions in relation to its business and activities; and
will permit, and will cause each Subsidiary to permit, representatives of the
Bank at the Bank'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. Restricted Payments. Neither the Borrower
nor any Subsidiary will declare or make any Restricted Payment so long as the
Debt to Operating Cash Flow Ratio shall be greater than 6.0 to 1. As long as
the Debt to Operating Cash Flow Ratio shall be 6.0 to 1 or less Restricted
Payments not exceeding in any fiscal year 50% of Excess Cash Flow for the
prior fiscal year may be made, provided that the aggregate amount of
Restricted Payments made from January 1, 1995 through the date of any such
payment shall not exceed the Maximum Amount.
For the purposes of this Section, "Maximum Amount" means the
sum of (A) $350,000 for each fiscal year previously ended starting with the
fiscal year commencing January 1, 1994 plus (B) aggregate Available Excess
Cash Flow for all fiscal years previously ended starting with the fiscal
year commencing January 1, 1994 minus (C) aggregate expenditures to date
out of aggregate Available Excess Cash Flow for all fiscal years previously
ended starting with the fiscal year commencing January 1, 1994.
SECTION 6.07. 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 (i) Debt to the Bank
hereunder, (ii) Debt incurred under the Revolving Credit Agreement or any
successor agreement which permits the Borrower to borrow an aggregate
principal amount not to exceed $2,000,000 at any time outstanding and (iii)
Debt to C-TEC in an aggregate principal amount of $2,287,000, which Debt to
C-TEC may be repaid from Net Cash Proceeds of the Equity Rights offering in
excess of the amounts necessary to meet the requirements of Section
2.07(d)(i).
SECTION 6.08. 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;
(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;
(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;
(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; and
(h) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any
time outstanding not to exceed $100,000.
SECTION 6.09. Consolidations, Mergers and Sales of Assets.
The Borrower will not, without the prior written approval of the Bank, (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, unless all the proceeds thereof, less any brokers'
or similar fees, are applied to reduce the obligations of Borrower hereunder
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 6.10. Use of Proceeds. The proceeds of the Loans
shall be used to refinance existing Debt of the Borrower and its Subsidiaries
and for general corporate purposes. 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 Bank, the Borrower
will furnish to the Bank in connection with any Loan hereunder a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U.
SECTION 6.11. Interest Coverage Ratio. The Borrower will
not permit the Interest Coverage Ratio as of the last day of any fiscal
quarter ending during a period set forth below to be less than the ratio set
forth opposite such period in the following table:
INTEREST
PERIOD COVERAGE RATIO
------ --------------
From Effective Date through
December 31, 1995 2.00 to 1
From January 1, 1996 through
December 31, 1996 3.00 to 1
From January 1, 1997 through
December 31, 1997 3.50 to 1
From January 1, 1998 through
December 31, 1998 4.00 to 1
Thereafter 4.50 to 1
SECTION 6.12. Debt to Operating Cash Flow Ratio. The
Borrower will not permit the ratio of Debt to Operating Cash Flow at any time
during a period set forth below to be greater than the ratio set forth
opposite such period in the following table:
RATIO OF DEBT TO
PERIOD OPERATING CASH FLOW
------ -------------------
From Effective Date through
December 31, 1995 5.0 to 1
From January 1, 1996 through
December 31, 1996 4.0 to 1
From January 1, 1997 through
December 31, 1997 3.5 to 1
From January 1, 1998 through
December 31, 1998 3.0 to 1
From January 1, 1999 through
December 31, 1999 2.5 to 1
Thereafter 2.0 to 1
SECTION 6.13. 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 6.14. 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 6.15. Fixed Charge Coverage Ratio. The Borrower
will not permit the Fixed Charge Coverage Ratio as of the last day of any
fiscal quarter ending during a period set forth below to be less than the
ratio set forth opposite such period in the following table:
FIXED CHARGE
PERIOD COVERAGE RATIO
------ --------------
From Effective Date through
September 30, 1995 0.75 to 1
From October 1, 1995 through
December 31, 1995 0.85 to 1
From January 1, 1996 through
March 31, 1996 0.80 to 1
From April 1, 1996 through
June 30, 1996 0.90 to 1
From July 1, 1996 through
September 30, 1996 0.95 to 1
From October 1, 1996 through
December 31, 1997 1.00 to 1
Thereafter 1.10 to 1
SECTION 6.16. Consolidated Capital Expenditures. The
Borrower will not permit its Consolidated Capital Expenditures to exceed, for
each period set forth below, the corresponding amount set forth in the
following table:
AMOUNT OF CONSOLIDATED
PERIOD OF EXPENDITURE CAPITAL EXPENDITURE
--------------------- ----------------------
From January 1, 1995
December 31, 1995 $2,149,000
From January 1, 1996 through
December 31, 1996 $2,084,000
From January 1, 1997 through
December 31, 1997 $1,731,000
From January 1, 1998 through
December 31, 1998 $1,756,000
From January 1, 1999 through
December 31, 1999 $1,661,000
From January 1, 2000 through
December 31, 2000 $1,637,000
From January 1, 2001 through
December 31, 2001 $1,670,000
From January 1, 2002 through
December 31, 2002 $1,714,000;
provided that the Borrower may expend, during each period set forth above, in
addition to the amount allocated for such period above, up to $600,000 of any
unused portion of the Consolidated Capital Expenditure allowance for the
preceding period.
SECTION 6.17. Management Fees. The Borrower will not,
during each period set forth below, make cash payments in respect of
Management Fees in excess of the amount set forth opposite such period in the
following table:
PERIOD AMOUNT OF MANAGEMENT FEES
------ -------------------------
From January 1, 1995 through
December 31, 1995 $1,231,000
From January 1, 1996 through
December 31, 1996 $1,292,000
From January 1, 1997 through
December 31, 1997 $1,357,000
From January 1, 1998 through
December 31, 1998 $1,424,000
From January 1, 1999 through
December 31, 1999 $1,496,000
From January 1, 2000 through
December 31, 2000 $1,570,000
From January 1, 2001 through
December 31, 2001 $1,649,000
From January 1, 2002 through
December 31, 2002 $1,731,000
SECTION 6.18. Transactions with Affiliates. The Borrower
will not, and will not permit any Subsidiary to, directly or indirectly, pay
any funds to or for the account of, make any investment (whether by
acquisition of stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate in, or
effect, any transaction with, any Affiliate except on an arms-length basis on
terms at least as favorable to the Borrower or such Subsidiary Affiliate than
could have been obtained from a third party who was not an Affiliate; provided
that the foregoing provisions of this Section shall not prohibit any such
Person from declaring or paying any lawful dividend or other payment ratably
in respect of all of its capital stock of the relevant class so long as, after
giving effect thereto, no Default shall have occurred and be continuing.
SECTION 6.19. Certain Obligations Respecting Subsidiaries.
The Bank shall have the right from time to time to require the Borrower,
pursuant to a written request from the Bank, (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 Bank, 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 Bank, securing payment of the Borrower's obligations hereunder. Any such
request shall be made by the Bank 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 Bank such number of copies as the
Bank may specify of documents creating such guaranties and security interests
and (ii) do all other things which may be necessary or which the Bank may
reasonably request in order to confer upon and confirm to the Bank 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 Section 6.01(e) or Sections 6.06 to 6.19 (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 Bank; 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 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 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) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
other than C-TEC shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 35% or more of the outstanding shares
of common stock of the Borrower; or, during any period of twelve
consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower; or
(l) 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
(m) 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 Commitment shall thereupon
automatically be terminated and 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 Bank may, by notice in writing to the Borrower, terminate the
Commitment hereunder, if still in existence, and it shall thereupon be
terminated, and the Bank 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 Bank pursuant to Sections 2.03 and 2.09 hereof which are given
otherwise than by telex or facsimile transmission shall not be effective until
received by the Bank. Any such notice, request, demand or communication shall
be delivered or addressed as follows:
(i) if to the Borrower, to it at Mercom, Inc., 105 Carnegie
Center, Princeton, New Jersey 08540; Attention: Treasurer (if
by facsimile transmission, to facsimile no: 609-734-3875);
(ii) if to the Bank, communications relating to its
Euro-Dollar Loans shall be delivered or addressed to the
address, telex or facsimile transmission number set forth on
the signature pages hereof for its Euro-Dollar Lending Office
and all other communications shall be delivered or addressed to
the address, telex or facsimile transmission number set forth
on the signature pages hereof for its Domestic Lending Office;
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 Bank.
(b) No failure or delay by the Bank 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. (a) The provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
Borrower and the Bank 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 Bank.
(b) The Bank, upon notice to the Borrower, may at any time
assign to one or more banks or other institutions (each an "Assignee") all, or
a proportionate part (equivalent to an initial Commitment of not less than
$3,000,000) of all, of its rights under this Agreement and the Note. The Bank
may at any time grant to one or more banks or other institutions (each a
"Participant") participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by the Bank of a participating interest
to a Participant, whether or not upon notice to the Borrower the Bank shall
remain responsible for the performance of its obligations hereunder, and the
Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this Agreement. Any
agreement pursuant to which the Bank may grant such a participating interest
shall provide that the Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such participation agreement may
provide that the Bank will not agree to any modification, amendment or waiver
of this Agreement (i) which increases or decreases the Commitment of the Bank
(ii) reduces the principal of or rate of interest on any Loan or (iii)
postpones the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Section 2.12 and
Article IV hereof with respect to its participating interest.
(c) The Bank may at any time assign all or any portion of its
rights under this Agreement and the Note to a Federal Reserve Bank. No such
assignment shall release the Bank from its obligations hereunder.
(d) No Assignee, Participant or other transferee of the Bank's
rights shall be entitled to receive any greater payment under Section 4.03
hereof than the Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 4.03(c) hereof
requiring the Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 8.04. Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses and
internal charges of the Bank (including reasonable fees and disbursements of
special counsel for the Bank and time charges of attorneys who may be
employees of the Bank) 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 thereunder, any
amendment hereof or thereof, or any Default or alleged Default hereunder or
thereunder and (ii) if there is an Event of Default, all out-of-pocket
expenses and internal charges incurred by the Bank (including fees and
disbursements of special counsel for the Bank and time charges of attorneys
who may be employees of the Bank) in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify the Bank 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 Bank and hold the
Bank 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 Bank in connection
with any investigative, administrative or judicial proceeding (whether or not
the Bank 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 Bank 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 BANK 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.
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/ Bruce Godfrey
__________________________
Title: Executive Vice
President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Eugenia Wilds
__________________________
Title: Vice President
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware
Facsimile No.: (302) 634-1092
EXHIBIT A
NOTE
U.S. $24,692,667 , 1995
New York, New York
FOR VALUE RECEIVED, MERCOM, INC., Delaware corporation (the
"Borrower"), hereby unconditionally promises to pay to the order of MORGAN
GUARANTY TRUST COMPANY OF NEW YORK (the "Bank") for the account of its
Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the last day of the Interest Period relating to such Loan. 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 Bank located at 60 Wall Street, New York,
New York 10260.
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank 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 Bank on the schedule attached hereto and made a part hereof;
provided that the failure of the Bank 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 Term Credit Agreement
between the Borrower and the Bank dated as of November 26, 1989 and as amended
and restated as of August 16, 1995 (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: __________________________
Title:
EXHIBIT B
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November 26, 1989 and amended and
restated as of August 16, 1995 among MERCOM, INC., a Delaware corporation (the
"Borrower"), COMMUNICATIONS AND CABLEVISION, INC., a Michigan corporation
("CCV", and together with the Borrower, the "Pledgors" and each a "Pledgor")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank").
In connection with the Term Credit Agreement dated as of
November 26, 1989 (as amended and restated as of August 16, 1995, and as
further amended from time to time, the "Term Credit Agreement") between the
Borrower and the Bank, and the Revolving Credit Agreement dated as of November
26, 1989 (as amended and restated as of August 16, 1995 and as further amended
from time to time, the "Revolving Credit Agreement", and, together with the
Term Credit Agreement, the "Credit Agreements") between the Borrower and the
Bank, the Bank has agreed to make Loans to the Borrower on the condition,
among others, that the Pledgors deliver and pledge to the Bank all Voting
Securities of each Subsidiary. This Pledge Agreement is intended to set forth
the terms and conditions upon which such instruments will, from time to time,
be delivered and pledged. Accordingly, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor and the Bank agree as follows:
1. Pledge. As collateral security for the full and timely
payment, performance and observance of all indebtedness, obligations,
liabilities and agreements of any kind of the Borrower to the Bank under the
Credit Agreements and of CCV under the Subsidiary Guaranty dated as of August
16, 1995 by CCV, Allegan County Cablevision, Inc., a Michigan corporation,
Coldwater Cablevision, Inc., a Michigan corporation and Mercom of Florida,
Inc., a Florida corporation in favor of the Bank in connection with the Credit
Agreements (collectively, the "Obligations"), the Pledgors herewith deposit
and pledge with the Bank, in form transferable for delivery, and grant to the
Bank a security interest in, the shares of stock and the certificates or other
instruments or documents evidencing same more particularly described in
Schedule A annexed hereto and such additional property at any time and from
time to time receivable by the Bank hereunder or otherwise distributed in
respect of or in exchange for any or all such shares or obligations (herein
collectively called the "Pledged Securities").
2. Representations and Warranties. Each of the Pledgors
represents and warrants that the Pledged Securities are duly and validly
issued and duly and validly pledged with the Bank in accordance with law, and
agrees to defend the Bank's right, title, lien and security interest in and
to the Pledged Securities against the claims and demands of all persons
whomsoever. Each Pledgor also represents and warrants to the Bank that it
has, and will have on deposit hereunder, good title to all of the Pledged
Securities, free and clear of all claims, mortgages, pledges, liens,
encumbrances and security interests of every nature whatsoever, that the
information with respect to the Pledged Securities set forth on Schedule A of
this Pledge Agreement is true and correct and that no consent or approval of
any governmental or regulatory authority, or of any securities exchange, was
or is necessary to the validity of this pledge which has not been obtained.
In the event the Bank is entitled to take any remedial action pursuant to this
Pledge Agreement, it will be necessary to obtain prior approval from the FCC
for the assignment of any FCC licenses held by the Pledgors or any Subsidiary
or for any transfer of control of the Pledgors or any Subsidiary.
3. Rights of Pledgor. So long as there shall exist no
condition, event or act which constitutes, or with notice or lapse of time, or
both, would constitute, a Default or an Event of Default under the
Obligations, each Pledgor shall be entitled:
(a) To exercise, as it shall think fit, but in a manner not
inconsistent with the terms hereof or of the Obligations, the voting
power with respect to the Pledged Securities; and
(b) To receive and retain for its own account any and all
payments of principal, dividends (other than stock or liquidating
dividends) and interest at any time and from time to time declared or
paid upon any of the Pledged Securities.
4. Stock Dividends, etc. In case, upon the dissolution or
liquidation (in whole or in part) of the issuer of any of the Pledged
Securities, any sum shall be paid as a liquidating dividend or otherwise upon
or with respect to any of the Pledged Securities, and in case any sum shall be
paid on account of the principal of any of the Pledged Securities which shall
be an obligation, such sum shall be paid over to the Bank, to be held by the
Bank as additional collateral hereunder. In case any stock dividend shall be
declared on any of the Pledged Securities, or any shares of stock or fractions
thereof shall be issued pursuant to any stock split involving any of the
Pledged Securities, or any distribution of capital shall be made on any of the
Pledged Securities, or any shares, obligations or other property shall be
distributed upon or with respect to the Pledged Securities pursuant to a
recapitalization or reclassification of the capital of the issuer thereof, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of such issuer, or to the merger or consolidation of such
issuer with or into another corporation, the shares, obligations or other
property so distributed shall be delivered to the Bank, to be held by it as
additional collateral hereunder, and all of the same (other than cash) shall
constitute Pledged Securities for all purposes hereof. Any cash received and
retained by the Bank as additional collateral hereunder pursuant to the
foregoing provisions may at any time and from time to time be applied (in
whole or in part) by the Bank, at its option, to the payment of interest on
and/or principal of the Obligations (in such order of maturity as the Bank
shall in its sole discretion determine).
5. Remedies of the Bank. If a Default or an Event of Default
shall occur under the Obligations or if the Obligations shall not be paid when
due, whether at the stated maturity thereof or by acceleration or otherwise,
the Bank, without obligation to resort to other security, shall have the right
at any time and from time to time to sell, resell, assign and deliver, in its
discretion, all or any of the Pledged Securities, in one or more parcels at
the same or different times, and all right, title and interest, claim and
demand therein and right of redemption thereof, on any securities exchange on
which the Pledged Securities or any of them may be listed, or at public or
private sale, for cash, upon credit or for future delivery, and in connection
therewith the Bank may grant options, each Pledgor hereby waiving and
releasing any and all equity or right of redemption. If any of the Pledged
Securities are sold by the Bank upon credit or for future delivery, the Bank
shall not be liable for the failure of the purchaser to purchase or pay for
the same and, in the event of any such failure, the Bank may resell such
Pledged Securities. In no event shall either Pledgor be credited with any part
of the proceeds of sale of any Pledged Securities until cash payment thereof
has actually been received by the Bank. The Bank shall have the right, for
and in the name, place and stead of the Pledgor, to execute endorsements,
assignments or other instruments of conveyance or transfer with respect to all
or any of the Pledged Securities, and to cause all or any of the Pledged
Securities to be transferred to or registered in its name or the name of its
nominee.
6. Manner of Sale. No demand, advertisement or notice, all of
which are hereby expressly waived, shall be required in connection with any
sale or other disposition of any part of the Pledged Securities which
threatens to decline speedily in value or which is of a type customarily sold
on a recognized market; otherwise the Bank shall give the Pledgors at least
five days' prior notice of the time and place of any public sale and of the
time after which any private sale or other disposition is to be made, which
notice the Pledgors agree is reasonable, all other demands, advertisements and
notices being hereby waived. The Bank shall not be obligated to make any sale
of Pledged Securities if it shall determine not to do so, regardless of the
fact that notice of sale may have been given. The Bank may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. Upon each private sale of Pledged
Securities of a type customarily sold in a recognized market and upon each
public sale, the Bank or any holder of the Obligations may purchase all or any
of the Pledged Securities being sold, free from any equity or right of
redemption, which is hereby waived and released, and may make payment therefor
(by endorsement without recourse) in Obligations in lieu of cash to the amount
then due thereon which the Pledgors hereby agree to accept. In the case of
all sales of Pledged Securities, public or private, the Pledgors shall jointly
and severally pay all costs and expenses of every kind for sale or delivery,
including brokers' and attorneys' fees, and after deducting such costs and
expenses from the proceeds of sale, the Bank shall apply any residue to the
payment of the Obligations, and the Pledgors shall continue to be jointly and
severally liable for any deficiency. The balance, if any, remaining after
payment in full of all of the Obligations, shall be paid to the Pledgors,
subject to any duty of the Bank imposed by law to the holder of any
subordinate security interest in the Pledged Securities known to the Bank.
7. Securities Law Matters. Each Pledgor recognizes that the
Bank may be unable to effect a public sale of all or a part of the Pledged
Securities by reason of certain prohibitions contained in the Securities
Act of 1933, as amended, as now or hereafter in effect, or in applicable
Blue Sky or other state securities laws, as now or hereafter in effect, but
may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to
acquire such Pledged Securities for their own account, for investment and
not with a view to the distribution or resale thereof. Each Pledgor agrees
that private sales so made may be at prices and other terms less favorable
to the seller than if such Pledged Securities were sold at public sales,
and that the Bank has no obligation to delay sale of any such Pledged
Securities for the period of time necessary to permit the issuer of such
Pledged Securities, even if such issuer would agree, to register such
Pledged Securities for public sale under such applicable securities laws.
Each Pledgor agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially
reasonable manner.
8. Remedies Not Exclusive. The remedies provided herein in
favor of the Bank shall not be deemed exclusive, but shall be cumulative, and
shall be in addition to all other remedies in favor of the Bank existing at
law or in equity.
9. Duty of Care. The Bank shall have no duty as to the
collection or protection of the Pledged Securities or any income thereon or as
to the preservation of any rights pertaining thereto, beyond the safe custody
of any thereof actually in its possession. With respect to any maturities,
calls, conversions, exchanges, redemptions, offers, tenders or similar matters
relating to any of the Pledged Securities (herein called "events"), the Bank's
duty shall be fully satisfied if (i) the Bank exercises reasonable care to
ascertain the occurrence and to give reasonable notice to the Pledgors of any
events applicable to any Pledged Securities which are registered and held in
the name of the Bank or its nominee, (ii) the Bank gives the Pledgors
reasonable notice of the occurrence of any events, of which the Bank has
received actual knowledge, as to any securities which are in bearer form or
are not registered and held in the name of the Bank or its nominee (each
Pledgor agreeing to give the Bank reasonable notice of the occurrence of any
events applicable to any securities in the possession of the Bank of which
such Pledgor has received knowledge), and (iii) in the exercise of its sole
discretion (a) the Bank endeavors to take such action with respect to any of
the events as the Pledgors may reasonably and specifically request in writing
in sufficient time for such action to be evaluated and taken or (b) if the
Bank determines that the action requested might adversely affect the value of
the Pledged Securities as collateral, the collection of the Obligations, or
otherwise prejudice the interests of the Bank, the Bank gives reasonable
notice to the Pledgors that any such requested action will not be taken and if
the Bank makes such determination or if the Pledgors fail to make such timely
request, the Bank takes such other action as it deems advisable in the
circumstances. Except as hereinabove specifically set forth, the Bank shall
have no further obligation to ascertain the occurrence of, or to notify the
Pledgors with respect to, any events and shall not be deemed to assume any
such further obligation as a result of the establishment by the Bank of any
internal procedures with respect to any securities in its possession. Each
Pledgor releases the Bank from any claims, causes of action and demands at any
time arising out of or with respect to this Agreement, the Pledged Securities
and/or any actions, taken or omitted to be taken by the Bank with respect
thereto, and each Pledgor hereby agrees to hold the Bank harmless from and
with respect to any and all such claims, causes of action and demands.
10. Power of Attorney. Each Pledgor hereby appoints the Bank
as such Pledgor's attorney-in-fact for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any
instrument which either may deem necessary or advisable to accomplish the
purposes hereof. Without limiting the generality of the foregoing, the Bank
shall have the right and power to receive, endorse and collect all checks and
other orders for the payment of money made payable to the Pledgors
representing any interest or dividend or other distribution payable in respect
of the Pledged Securities or any part thereof and to give full discharge for
the same.
11. Waivers. No delay on the part of the Bank or of any
holder of the Obligations in exercising any of its options, powers or rights,
or partial or single exercise thereof, shall constitute a waiver thereof. Any
waiver of any of the Bank's rights hereunder shall not be effective unless in
writing and signed by a duly authorized officer of the Bank.
12. Return of Pledged Securities upon Satisfaction of
Obligations. Upon payment in full of the Obligations, the Pledgors shall be
entitled to the return of all of the Pledged Securities and of all other
property and cash which have not been used or applied toward the payment of
such Obligations. The assignment by the Bank to the Pledgors of such Pledged
Securities and other property shall be without representation or warranty of
any nature whatsoever and wholly without recourse.
13. Notices. Any notice or demand upon any Pledgor shall be
deemed to have been sufficiently given for all purposes thereof (i) if mailed,
postage prepaid, by registered or certified mail, return receipt requested,
(ii) if delivered, to such Pledgor at the address specified below, or at such
other address as such Pledgor may theretofore have designated in writing and
given in like manner to the Bank or (iii) if by facsimile transmission, when
transmitted to the facsimile number specified below and oral confirmation of
receipt is received.
14. Defined Terms. Capitalized terms used herein without
definition shall have the meanings given to them in the Credit Agreements.
15. Governing Law. This Agreement and the rights and
obligations of the Bank and each Pledgor hereunder shall be construed in
accordance with and governed by the law of the State of New York, cannot be
changed orally and shall bind and inure to the benefit of each Pledgor and the
Bank and their respective successors and assigns, and all subsequent holders
of the Obligations.
16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgors and the Bank have caused this
Agreement to be duly executed by their respective officers duly authorized as
of the day and year first above written.
MERCOM, INC.
By: __________________________
Title:
Address: Mercom, Inc.
105 Carnegie Center
Princeton, New Jersey
08540
Attn: Treasurer
Facsimile No.: 609-734-3875
COMMUNICATIONS AND CABLEVISION, INC.
By: __________________________
Title:
Address: Communications & Cablevision,
Inc.
105 Carnegie Center
Princeton, New Jersey
08540
Attn:
Facsimile No.: 609-734-3875
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: __________________________
Title:
EXHIBIT F
SUBSIDIARY GUARANTY
Subsidiary Guaranty dated as of August 16, 1995 by
Communications and Cablevision, Inc., a Michigan corporation, Allegan County
Cablevision, Inc., a Michigan corporation, Coldwater Cablevision, Inc., a
Michigan corporation and Mercom of Florida, Inc., a Florida corporation, (the
"Guarantors") in favor of the Bank in connection with the Term Credit
Agreement amended and restated as of August 16, 1995 (as amended from time to
time, the "Term Credit Agreement") between Mercom, Inc., a Delaware
corporation (the "Borrower") and Morgan Guaranty Trust Company of New York
(the "Bank") and the Revolving Credit Agreement amended and restated as of
August 16, 1995 (as amended from time to time, the "Revolving Credit
Agreement," and, together with the Term Credit Agreement, the "Credit
Agreements") between the Borrower and the Bank. Terms defined in the Credit
Agreements are used herein as defined in the Credit Agreements.
1. Corporate Existence and Power; Corporate and Governmental
Authorization; No Contravention; Binding Effect. Each of the Guarantors is a
corporation duly organized and validly existing under the laws of the state
of its incorporation without limitation on the duration of its existence and
is in good standing therein; and each of the Guarantors has corporate power to
enter into and perform this Subsidiary Guaranty. The execution and delivery by
each of the Guarantors of this Subsidiary Guaranty and the performance by each
of the Guarantors of its obligations hereunder, do not contravene, or
constitute a default under, any provision of applicable law or regulation of
such corporation's charter or bylaws or any indenture, agreement, instrument,
judgment or order to which any Guarantor is a party or by which it or any of
its material assets or properties may be bound or affected or which would
result in the creation or imposition of a Lien on any such asset. Each of the
Guarantors has taken all corporate action necessary to authorize its execution
and delivery of this Subsidiary Guaranty and the consummation of the
transactions contemplated hereby; this Subsidiary Guaranty constitutes the
valid and binding agreement of each of the Guarantors enforceable against the
Guarantor in accordance with its terms, except to the extent limited by
bankruptcy, reorganization, insolvency, moratorium and other similar laws of
general application relating to or affecting the enforcement of creditors'
rights or by general equitable principles. No consent, approval,
authorization, permit or license from, or registration or filing with, any
governmental authority is required in connection with making of this
Subsidiary Guaranty.
2. The Guaranty. Each of the Guarantors hereby
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the amounts payable by the
Borrower pursuant to the Credit Agreements and the Notes issued thereunder.
The obligations of the Guarantors hereunder shall be joint and several
obligations of each Guarantor. Upon failure by the Borrower to pay punctually
any such amount, the Guarantors shall forthwith on demand pay the amount not
so paid at the place and in the manner specified in the Credit Agreements.
3. Guaranty Unconditional. The obligations of the Guarantors
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower
under the Credit Agreements or the Notes, by operation of law or
otherwise, or of any Guarantor under this Subsidiary Guaranty, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to the
Credit Agreements or the Notes;
(iii) any release, impairment, non-perfection or
invalidity of any direct or indirect security for any obligation of
the Borrower under the Credit Agreements or the Notes or of any
Guarantor under this Subsidiary Guaranty;
(iv) any change in the corporate existence,
structure or ownership of the Borrower or any Guarantor, or any
insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower or any Guarantor or their assets or any
resulting release or discharge of any obligation of the Borrower
contained in the Credit Agreements or the Notes or of any
Guarantor contained in this Subsidiary Guaranty;
(v) the existence of any claim, set-off or other
rights which any Guarantor may have at any time against the
Borrower, the Bank, any Guarantor or any other corporation or
person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to
or against the Borrower for any reason of the Credit Agreements or
the Notes, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of the
principal of or interest on the Notes or any other amount payable
by the Borrower under the Credit Agreements, or any invalidity or
unenforceability relating to or against any Guarantor for any
reason of this Subsidiary Guaranty, or any provision of any
applicable law or regulation purporting to prohibit the payment by
any Guarantor of any amount payable under this Subsidiary
Guaranty; or
(vii) any other act or omission to act or delay of
any kind by the Borrower, the Bank, any Guarantor or any other
corporation or person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to any Guarantor's
obligations hereunder.
4. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. Each Guarantor's obligations hereunder shall remain in
full force and effect until the Commitment shall have terminated and the
principal of and interest on the Notes and all other amounts payable by the
Borrower under the Credit Agreements shall have been paid in full. If at any
time any payment of the principal of or interest on the Notes or any other
amount payable by the Borrower under the Credit Agreements is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, the Guarantors' obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made on time.
5. Waiver by the Guarantors. Each of the Guarantors
irrevocably waives acceptance hereof, presentment, demand, protest and any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any corporation or person against any Borrower or any other
corporation or person.
6. Subrogation and Contribution. Each Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder (i) to be subrogated to the
rights of the payee against the Borrower with respect to such payment or
against any direct or indirect security therefor, or otherwise to be
reimbursed, indemnified or exonerated by or for the account of the Borrower in
respect thereof or (ii) to receive any payment, in the nature of contribution
or for any other reason, from any other Guarantor with respect to such payment.
7. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Credit Agreements or
the Notes is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms
of the Credit Agreements shall nonetheless be payable by the Guarantors
hereunder forthwith on demand by the Bank.
8. Limit of Liability. The obligations of each Guarantor
hereunder shall be limited to an aggregated amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy code or any comparable provisions
of any applicable state law.
9. Notices. All notices, requests and other communications
hereunder shall be in writing (including bank wire, telex, telecopy, 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 mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and oral
confirmation of receipt is received, or (iv) if given by any other means, when
received at the address specified in this Section. Any such notice, request,
demand or communication shall be delivered or addressed (i) if to CCV, MFI,
ACC or CCI, to it at 105 Carnegie Center, Princeton, New Jersey 08540,
Attention: Treasurer (if by facsimile transmission, to facsimile number
609-734-3875) and (ii) if to the Bank, pursuant to Section 8.02 of the Credit
Agreements.
10. Amendments and Waivers. Any provision of this Subsidiary
Guaranty may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Bank.
11. Governing Law. This Subsidiary Guaranty shall be governed
by and construed in accordance with the internal laws of the State of New
York. Each of the Guarantors hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and
of any New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Subsidiary Guaranty or the
transactions contemplated hereby. Each of the Guarantors irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
12. Waiver of Jury Trial. EACH OF THE GUARANTORS AND THE
BANK, BY ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
COMMUNICATIONS AND
CABLEVISION, INC.
By:_______________________
Title:
MERCOM OF FLORIDA, INC.
By:_______________________
Title:
ALLEGAN COUNTY CABLEVISION,
INC.
By:_______________________
Title:
COLDWATER CABLEVISION, INC.
By:_______________________
Title:
EXHIBIT 99.1
MERCOM, INC.
105 Carnegie Center
Princeton, NJ 08540-6215
FOR IMMEDIATE RELEASE
August 11, 1995
Contact: Valerie C. Haertel, Investor Relations (609) 734-3816
Pat Rocchi, Public Relations (609) 734-7503
MERCOM SUCCESSFULLY CONCLUDES RIGHTS OFFERING
Company Raises Approximately $8.1 Million
PRINCETON, NJ - Mercom, Inc. (OTC: MEEO) announced that its rights
offering of 2,393,530 shares of its Common Stock expired at 5:00 p.m. EST
today and that shareholders fully subscribed for all shares of Common Stock
offered. Shareholders of record at the close of business on July 20, 1995,
received one right for every share of Common Stock held. Rights holders were
permitted to purchase one share of Common Stock for each right held at a
subscription price of $3.60 in cash per share. Each right also carried the
right to "oversubscribe" for shares of Common Stock that were not otherwise
purchased pursuant to the exercise of rights.
The Company estimates the net proceeds from the rights offering to be
approximately $8.1 million. Mercom expects to use such net proceeds to repay
approximately $5.1 million of outstanding indebtedness to Morgan Guaranty
Trust Company of New York under a credit agreement and to repay approximately
$2.3 million of outstanding indebtedness to C-TEC Corporation under demand
notes held by C-TEC. The remaining proceeds will be used for general
corporate purposes including capital expenditures.
C-TEC, which owned approximately 43.63 percent of the outstanding
Common Stock of Mercom prior to the rights offering, exercised the 1,044,194
rights it received in respect of the shares it held at an aggregate
subscription price of $3,759,098.40 and oversubscribed for all additional
shares of Common Stock offered which were not subscribed to by other Mercom
shareholders. Although final allocations have not been completed, it is
estimated that, following such allocations, C-TEC will beneficially own 2.96
million shares of Mercom Common Stock (including shares owned prior to the
rights offering), representing approximately 62 percent of the outstanding
shares of Common Stock.
Mercom, Inc. is a cable television operator providing service to over
39,000 subscribers through three clusters of cable television systems in
Southern Michigan and one cable television system in Port St. Lucie, Florida.
Mercom is operating under the management of C-TEC Cable Systems, Inc., a
subsidiary of C-TEC Corporation, a diversified telecommunications company
headquartered in Princeton, New Jersey.
# # #
