Exhibit 3
PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT (as amended, restated or otherwise
modified, the "Pledge Agreement"), dated as of June 30, 1997 is made by C-TEC
Corporation, a Pennsylvania corporation ("C-TEC"), in favor of First Union
National Bank, a national banking association ("First Union"), as
Administrative Agent for the ratable benefit of itself and the Lenders
delivered pursuant to the Credit Agreement dated as of June 30, 1997 (as
amended, restated or otherwise modified, the "Credit Agreement") by and among
the Pledgor, the Lenders who are or may become party thereto (the "Lenders")
and First Union National Bank, as Administrative Agent (the "Administrative
Agent").
STATEMENT OF PURPOSE
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Pursuant to the terms of the Credit Agreement, the Lenders have
agreed to extend certain credit facilities to the Borrowers in the aggregate
amount of up to the Aggregate Commitment under the Credit Agreement.
C-TEC is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by Mercom, Inc. (the "Issuer").
In connection with the transactions contemplated by the Credit
Agreement, the Lenders have requested, and C-TEC has agreed to execute and
deliver this Pledge Agreement and the Pledged Stock (in accordance with the
terms hereof) to the Administrative Agent for the ratable benefit of the
itself and the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into and make available
Loans pursuant to the Credit Agreement, the Pledgor hereby agrees with the
Administrative Agent for the ratable benefit of itself and the Lenders as
follows:
1. Defined Terms. Unless otherwise defined herein, terms which
are defined in the Credit Agreement and used herein are so used as so defined,
and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of North Carolina.
"Collateral" means the Pledged Stock and all Proceeds.
"Pledge Agreement" means this Pledge Agreement, as amended,
restated or otherwise modified.
"Pledged Stock" means the shares of capital stock of the
Issuer listed on Schedule I hereto, together with all stock
certificates, options or rights of any nature whatsoever that may
be issued or granted by the Issuer to the Pledgor while this
Pledge Agreement is in effect.
"Pledgor" means C-TEC and, after the execution and delivery
of the Pledge Supplement in the form attached hereto as Exhibit A
as of the Assumption Date in accordance with Section 2.6 of the
Credit Agreement, Cable Michigan.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income
from the Pledged Stock, collections thereon, proceeds of sale
thereof or distributions with respect thereto.
2. Pledge and Grant of Security Interest. The Pledgor hereby
delivers to the Administrative Agent, for the ratable benefit of itself and
the Lenders, all the Pledged Stock and hereby grants to Administrative Agent,
for the ratable benefit of itself and the Lenders, a first priority security
interest in the Collateral, as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the
Administrative Agent of each certificate representing one or more shares of
Pledged Stock, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor.
4. Representations and Warranties. To induce the
Administrative Agent and Lenders to execute the Credit Agreement and make any
Loans and to accept the security contemplated hereby, the Pledgor hereby
represents and warrants that:
(a) the Pledgor has the corporate power, authority and
legal right to execute and deliver, to perform its obligations
under, and to grant the Lien on the Collateral pursuant to, this
Pledge Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of
the Lien on the Collateral pursuant to, this Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(c) except as contemplated by Section 19 hereof, the
execution, delivery and performance of this Pledge Agreement will
not violate any provision of any Applicable Law or contractual
obligation of the Pledgor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the
Pledgor pursuant to any Applicable Law or contractual obligation,
except as contemplated hereby;
(d) except as contemplated by Section 19 hereof, no
consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of the Pledgor or any Issuer), is required
in connection with the execution, delivery, performance, validity
or enforceability of this Pledge Agreement, except that certain
routine notification filings with the FCC, any applicable PUC and
any Governmental Authority that grants CATV Franchises with
respect to the Loan Documents may be required after the Closing
Date;
(e) no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Pledgor, threatened by or against the Pledgor
or against any of its properties or revenues with respect to this
Pledge Agreement or any of the transactions contemplated hereby;
(f) the shares of Pledged Stock listed on Schedule I
constitute all the issued and outstanding shares of all classes of
the capital stock of the Issuer;
(g) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock listed on
Schedule I, free of any and all Liens or options in favor of, or
claims of, any other Person, except the Lien created by this
Pledge Agreement; and
(i) upon (i) filing of UCC-1 financing statements with the
jurisdictions set forth on Schedule II hereto and (ii) delivery to
the Administrative Agent of the stock certificates evidencing the
Pledged Stock, the Lien granted pursuant to this Pledge Agreement
will constitute a valid, perfected first priority Lien on the
Collateral (to the extent that such a security interest in such
collateral can be perfected under the Code by taking such action
(and subject to the requirements of Section 9-306 of the Code with
respect to any proceeds of Collateral and to the further
requirement that additional steps described in Section 5(a) hereof
may be necessary to perfect a security interest in dividends or
other distributions in kind)) enforceable as such against all
creditors of the Pledgor and any Persons purporting to purchase
any Collateral from the Pledgor.
5. Certain Covenants. The Pledgor covenants and agrees with
the Administrative Agent for the ratable benefit of the Administrative Agent
and the Lenders that, from and after the date of this Pledge Agreement until
the Obligations are paid in full and the Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of
the Pledged Stock, become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a
conversion of, or in exchange for any shares of the Pledged Stock,
or otherwise in respect thereof, the Pledgor shall accept the same
as the agent of the Administrative Agent, hold the same in trust
for the Administrative Agent and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by
the Pledgor to the Administrative Agent, if required, together with
an undated stock power covering such certificate duly executed in
blank by the Pledgor, to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for
the Obligations. In addition, any sums paid upon or in respect of
the Pledged Stock upon the liquidation or dissolution of the
Issuer shall be paid over to the Administrative Agent to be held
by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made
on or in respect of the Pledged Stock or any property shall be
distributed upon or with respect to the Pledged Stock pursuant to
the recapitalization or reclassification of the capital of the
Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Administrative Agent to be
held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Stock shall be received by
the Pledgor, the Pledgor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or
property in trust for the Administrative Agent, segregated from
other funds of the Pledgor, as additional collateral security for
the Obligations.
(b) Without the prior written consent of the
Administrative Agent, the Pledgor will not (i) vote to enable, or
take any other action to permit, the Issuer to issue any stock or
other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of
the Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral,
or (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided
for by this Pledge Agreement; provided, however, nothing contain
in the Section 5(b) shall prohibit the Mercom Contribution. The
Pledgor will defend the right, title and interest of the
Administrative Agent in and to the Collateral against the claims
and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of
the Pledgor, the Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such
further actions as the Administrative Agent may reasonably request
for the purposes of obtaining or preserving the full benefits of
this Pledge Agreement and of the rights and powers herein granted
provided, that unless an Event of Default shall have occurred and
be continuing, the Pledgor shall not be obligated to make any
filing with, or to seek or obtain any consent or authorization of,
any Governmental Authority of the nature described in Section 19
hereof. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory
note, other instrument or chattel paper, such note, instrument or
chattel paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this
Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may
be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions
contemplated by this Pledge Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing and the Administrative Agent shall have
given notice to the Pledgor of the Administrative's Agent intent to exercise
its rights pursuant to Section 7 below, the Pledgor shall be permitted to
receive all dividends or other payments or distributions made upon or with
respect to the Pledged Stock in cash paid in accordance with the terms of the
Credit Agreement in respect of the Pledged Stock and to exercise all voting
and corporate rights with respect to the Pledged Stock; provided, that no vote
shall be cast or corporate right exercised or other action taken which, in the
Administrative Agent's judgment, exercised in a reasonable manner, would
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, the Notes, any other Loan
Documents or this Pledge Agreement.
7. Rights of the Administrative Agent.
(a) If an Event of Default shall occur on or after the
Borrowing Date and be continuing and the Administrative Agent shall give
notice of its intent to exercise such rights to the Pledgor, (i) the
Administrative Agent shall have the right to receive any and all cash
dividends paid in respect of the Pledged Stock and make application thereof to
the Obligations in the order set forth in the Credit Agreement and (ii) all
shares of the Pledged Stock shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise, in a commercially reasonable manner but
otherwise in its discretion, (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders
of the Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock (including, without limitation, the right to
exchange any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the Issuer, or upon the exercise by the Pledgor or the
Administrative Agent of any right, privilege or option pertaining to such
shares of the Pledged Stock, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to account for
property actually received by it, but the Administrative Agent shall have no
duty to the Pledgor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Lender of any right or remedy against the Borrower
or against any other Person which may be or become liable in respect of all or
any part of the Obligations or against any collateral security therefor,
guarantee therefor or right of offset with respect thereto. Neither the
Administrative Agent nor any Lender shall be liable for any failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so, nor shall the Administrative Agent be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Pledgor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, with the consent of the Required Lenders, the Administrative Agent
may, and upon the request of the Required Lenders, the Administrative Agent
shall, exercise on behalf of itself and the Lenders, all rights and remedies
granted in this Pledge Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, and in addition thereto,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing with regard to the scope of the Administrative
Agent's remedies, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the Pledgor,
the Issuer or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Administrative Agent or any Lender
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole
or any part of the Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is hereby waived or released.
The Administrative Agent shall apply any Proceeds from time to time held by it
and the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Administrative Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel thereto, to the payment in whole or in part of the Obligations, in the
order set forth in the Credit Agreement, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of
the Code, need the Administrative Agent account for the surplus, if any, to
the Pledgor. To the extent permitted by applicable law, the Pledgor waives
all claims, damages and demands it may acquire against the Administrative
Agent or any Lender arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.
The Pledgor further waives and agrees not to assert any rights or privileges
which it may acquire under Section 9-112 of the Code.
9. Private Sales.
(a) The Pledgor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale
of any of the Pledged Stock for the period of time necessary to permit the
Issuer to register such securities for public sale under the Securities Act,
or under applicable state securities laws, even if the Issuer would agree to
do so.
(b) The Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section 9
valid and binding and in compliance with any and all other Applicable Laws.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section 9 will cause irreparable injury to the Administrative Agent and
the Lenders not compensable in damages, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that to the greatest extent permitted by law each and every
covenant contained in this Section 9 shall be specifically enforceable against
the Pledgor, and to the greatest extent permitted by law the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred under the Credit Agreement.
10. No Subrogation. Notwithstanding any payment or payments
made by the Pledgor hereunder, or any setoff or application of funds of the
Pledgor by the Administrative Agent or Lender, or the receipt of any amounts
by the Administrative Agent or any Lender with respect to any of the
Collateral, the Pledgor shall not be entitled to be subrogated to any of the
rights of the Administrative Agent or any Lender against the Borrower or
against any other collateral security held by the Administrative Agent or any
Lender for the payment of the Obligations, nor shall the Pledgor seek any
reimbursement from the Borrower in respect of payments made by the Pledgor in
connection with the Collateral, or amounts realized by the Administrative
Agent or any Lender in connection with the Collateral, until all amounts owing
to the Agents and Lenders on account of the Obligations are paid in full and
the Commitments are terminated. If any amount shall be paid to the Pledgor on
account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Pledgor in
trust for the Administrative Agent, segregated from other funds of the
Pledgor, and shall, forthwith upon receipt by the Pledgor, be turned over to
the Administrative Agent in the exact form received by the Pledgor (duly
indorsed by the Pledgor to the Administrative Agent, if required) to be
applied against the Obligations, whether matured or unmatured, in such order
as set forth in the Credit Agreement.
11. Amendments, etc. With Respect to the Obligations. The
Pledgor shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby, notwithstanding that, without any
reservation of rights against the Pledgor, and without notice to or further
assent by the Pledgor, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Obligations continued, and
the Obligations, or the liability of the Borrower or any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified accelerated, compromised,
waived, surrendered, or released by the Administrative Agent or any Lender,
and the Credit Agreement, the Notes, any other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or part, as the Lenders (or the
Required Lenders, as the case may be) may deem advisable from time to time,
and any guarantee, right of offset or other collateral security at any time
held by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any other Lien at any time held by it as security
for the Obligations or any property subject thereto. The Pledgor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Pledge Agreement; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in
reliance upon this Pledge Agreement; and all dealings between the Borrower and
the Pledgor, on the one hand, and the Administrative Agent and the Lenders, on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Pledge Agreement. The Pledgor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or the Pledgor with respect to the
Obligations.
12. Regulatory Approval. The Pledgor will, at its expense,
promptly execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments, registration statements and all other
documents and papers the Administrative Agent may, to the extent commercially
reasonable, request or as may be required by law in connection with the
obtaining of any consent, approval, registration, qualification or
authorization of any Governmental Authority or of any other Person necessary
or appropriate for the effective exercise of any rights under this Pledge
Agreement, provided, that unless an Event of Default shall have occurred and
be continuing, the Pledgor shall not be obligated to make any filing with, or
to seek or obtain any consent or authorization of, any Governmental Authority
of the nature described in Section 19 hereof. Without limiting the generality
of the foregoing, if an Event of Default shall have occurred and be
continuing, the Pledgor shall take any action which the Administrative Agent
may, to the extent commercially reasonable, request in order to transfer and
assign to the Administrative Agent, or to such one or more third parties as
the Administrative Agent may designate, or to a combination of the foregoing,
each FCC License, PUC Authorization and CATV Franchise. To enforce the
provisions of this Section, the Administrative Agent is, at any time when an
Event of Default has occurred and is continuing, empowered to request the
appointment of a receiver from any court of competent jurisdiction. Such
receiver shall be instructed to seek from the applicable Governmental
Authority an involuntary transfer of control of each such FCC License, PUC
Authorization and CATV Franchise for the purpose of seeking a bona fide
purchaser to whom control will ultimately be transferred. The Pledgor hereby
agrees, so long as such Event of Default is continuing, to authorize such an
involuntary transfer of control upon the request of the receiver so appointed
and, if the Pledgor shall refuse to authorize the transfer, its approval may
be required by the court. Upon the occurrence and continuance of an Event of
Default, the Pledgor shall further use its best efforts to assist in obtaining
approval of the applicable Governmental Authority, if required, for any action
or transactions contemplated by this Pledge Agreement including, without
limitation, the preparation, execution and filing with the applicable
Governmental Authority of the assignor's or transferor's portion of any
application or applications for consent to the assignment of any FCC License,
PUC Authorization or CATV Franchise or transfer of control necessary or
appropriate under the rules and regulations of the applicable Governmental
Authority for the approval of the transfer or assignment of any portion of the
Collateral, together with any FCC License, PUC Authorization and CATV
Franchise. The Pledgor acknowledges that the assignment or transfer of each
FCC License, PUC Authorization and CATV Franchise is integral to the
Administrative Agent's and Lenders' realization of the value of the
Collateral, that there is no adequate remedy at law for failure by the Pledgor
to comply with the provisions of this Section and that such failure would
cause irreparable injury not adequately compensable in damages, and therefore
agrees that to the greatest extent permitted by law each and every covenant
contained in this Section may be specifically enforced, and to the greatest
extent permitted by law the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants.
13. Limitation on Duties Regarding Collateral. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. Neither the Administrative Agent, any Lender nor any of their
respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or otherwise.
14. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral constitute
irrevocable powers coupled with an interest.
15. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
16. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
17. No Waiver; Cumulative Remedies. Neither the Administrative
Agent nor any Lender shall by any act (except by a written instrument pursuant
to Section 18 hereof) be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise, nor any delay
in exercising, on the part of the Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any Lender
of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent or such Lender
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
18. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and Administrative Agent; provided that (i) any provision of this
Pledge Agreement may be waived by the Administrative Agent in a letter or
agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent and (ii) any consent by the
Administrative Agent to any amendment, supplement or modification hereto shall
be subject to approval thereof by the Lenders or Required Lenders, as
applicable, in accordance with Section 13.11 of the Credit Agreement. This
Pledge Agreement shall be binding upon the successors and assigns of the
Pledgor and shall inure to the benefit of the Administrative Agent and the
Lenders and their respective successors and assigns. This Pledge Agreement
shall be governed by, and construed and interpreted in accordance with, the
laws of the State of North Carolina.
19. Regulatory Concerns. Notwithstanding any other provision to
the contrary contained in this Agreement, the ability of the Administrative
Agent to (i) transfer record ownership of the Pledged Stock into the name
of the Administrative Agent or its nominee pursuant to Section 7 hereof,
(ii) vote and give consents, ratifications and waivers with respect to the
Pledged Stock pursuant to Section 7 hereof and (iii) sell the Pledged Stock
pursuant to Section 8 or 9 hereof is subject to the Administrative Agent or
its nominee (a) obtaining, to the extent necessary under applicable laws
and regulations, the prior approval of the FCC, any PUC or any other
Governmental Authority having jurisdiction with respect to any Issuer and
its Subsidiaries and (b) making any additional filings, reports or
notifications required with respect to the exercise by the Administrative
Agent of the powers specified in clauses (i), (ii) and (iii) of this
section.
20. Notices. All notices and communications hereunder shall be
given to the addresses and otherwise in accordance with Section 12.1 of the
Credit Agreement.
21. Irrevocable Authorization and Instruction to Issuer. The
Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by it from the Administrative Agent in writing that (a)
states that an Event of Default has occurred and (b) is otherwise in
accordance with the terms of this Pledge Agreement, without any other or
further instructions from the Pledgor, and the Pledgor agrees that the Issuer
shall be fully protected in so complying.
22. Authority of Administrative Agent. The Pledgor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Pledge Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement
shall, as between the Administrative Agent and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Administrative Agent
and the Pledgor, the Administrative Agent shall be conclusively presumed to be
acting as agent for itself and the Lenders with full and valid authority so to
act or refrain from acting, and neither the Pledgor nor any Issuer shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
23. Consent to Jurisdiction. The Pledgor hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located
in Mecklenburg County, North Carolina, in any action, claim or other
proceeding arising out of any dispute in connection with this Pledge
Agreement, the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Pledgor
hereby irrevocably consents to the service of a summons and complaint and
other process in any action, claim or proceeding brought by the Administrative
Agent or any Lender in connection with this Pledge Agreement, the other Loan
Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 20. Nothing in this Section 23
shall affect the right of the Administrative Agent or any Lender to serve
legal process in any other manner permitted by Applicable Law or affect the
right of the Administrative Agent or any Lender to bring any action or
proceeding against the Pledgors or their properties, individually or
collectively, in the courts of any other jurisdictions.
24. Binding Arbitration; Waiver of Jury Trial.
(a) Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE PLEDGOR HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PLEDGE
AGREEMENT OR THEREUNDER, THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(b) Binding Arbitration. Upon demand of any party, whether
made before or after institution of any judicial proceeding, any dispute,
claim or controversy arising out of, connected with or relating to this Pledge
Agreement or any other Loan Documents ("Disputes"), between or among parties
to this Agreement or any other Loan Document shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a
party does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims concerning any aspect of the past, present or future
relationships arising out or connected with the Loan Documents. Arbitration
shall be conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be
applicable to claims of less than $500,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be
entered in any court having jurisdiction. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted. Notwithstanding the foregoing, this paragraph
shall not apply to any Hedging Agreement that is a Loan Document.
(c) Preservation of Certain Remedies. Notwithstanding the
preceding binding arbitration provisions, the parties hereto and the other
Loan Documents preserve, without diminution, certain remedies that such
Persons may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Each such Person shall have and hereby reserves the right
to proceed in any court of proper jurisdiction or by self help to exercise or
prosecute the following remedies: (i) all rights to foreclose against any
real or personal property or other security by exercising a power of sale
granted in the Loan Documents or under applicable law or by judicial
foreclosure and sale, (ii) all rights of self help including peaceful
occupation of property and collection of rents, set off, and peaceful
possession of property, (iii) obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding,
and (iv) when applicable, a judgment by confession of judgment. Preservation
of these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
25. Reorganization. Notwithstanding anything to the contrary
contained in this Agreement, no action required to be taken by the Pledgor or
the Issuer pursuant to the Reorganization shall be deemed to constitute an
Event of Default arising out of a breach of the terms of this Agreement;
provided, that if any such action conflicts with or otherwise results in any
breach of any provision of this Agreement, the Pledgor and the Issuer, or their
successors or assignees shall execute such amendments thereto and take all the
actions reasonably requested by the Administrative Agent in order that this
Agreement shall remain enforceable in accordance with its terms against such
Persons after the Reorganization.
26. Termination of Pledge Agreement. This Pledge Agreement
shall terminate upon the date when the obligations have been paid in full and
the Commitments terminated. Upon the termination of this Pledge Agreement, the
Administrative Agent will, at the expense of the Pledgor, deliver any
certificates evidencing the Pledged Stock and any other Collateral held by it
to the Pledgor and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence the termination of the Lien
created hereby on the Collateral.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be executed under seal by its duly authorized officers as of the
date first above written.
[CORPORATE SEAL] C-TEC CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP & CFO
ACKNOWLEDGEMENT AND CONSENT
The Issuer referred to in the foregoing Pledge Agreement hereby
acknowledges receipt of a copy thereof and agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to it. The
Issuer agrees to notify the Administrative Agent promptly in writing of the
occurrence of any of the events described in Section 5(a) of the Pledge
Agreement with respect to its shares.
[CORPORATE SEAL] MERCOM, INC.
ATTEST: By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP & CFO
SCHEDULE 1
To Pledge
Agreement
---------
DESCRIPTION OF PLEDGED STOCK
Class of Stock No. of
Issuer StockCertificate No. Shares
------ -------------------- ------
Mercom, Inc. common MCC 5243 761,483
Mercom, Inc. common MCC 5246 5,100
Mercom, Inc. common MCC 5252 2,944
Mercom, Inc. common MCC 5268 420
Mercom, Inc. common MCC 5269 13,000
Mercom, Inc. common MCC 5283 330
Mercom, Inc. common MCC 5401 330
Mercom, Inc. common MCC 5407 2,000
Mercom, Inc. common MCC 5410 142,800
Mercom, Inc. common MCC 5417 32,100
Mercom, Inc. common MCC 5427 5,000
Mercom, Inc. common MCC 5441 10,500
Mercom, Inc. common MF 46 4,000
Mercom, Inc. common MF 76 14,400
Mercom, Inc. common MF 78 4,000
Mercom, Inc. common MF 79 6,000
Mercom, Inc. common MF 90 16,000
Mercom, Inc. common MF 134 146
Mercom, Inc. common MF 151 400
Mercom, Inc. common MF 182 2,000
Mercom, Inc. common MF 183 5,000
Mercom, Inc. common MF 184 10,000
Mercom, Inc. common MF 191 1,241
Mercom, Inc. common MF 212 5,000
Mercom, Inc. common MF 1302 1,920,056
TOTAL 2,964,250
SCHEDULE II
To Pledge
Agreement
---------
UCC INFORMATION
Debtor Filing Jurisdiction
------ -------------------
C-TEC Corporation Secretary of State, New Jersey
C-TEC Corporation Xxxxxx County, New Jersey
Exhibit A to Pledge Agreement
PLEDGE AGREEMENT SUPPLEMENT, dated as of ________________, 19__ (the
"Supplement"), made by C-TEC Cable Systems of Michigan, Inc. ("CCSM"), in
favor of First Union National Bank, a national banking corporation, as
Administrative Agent (in such capacity, the "Administrative Agent"), under the
Credit Agreement (as defined in the Pledge Agreement referred to below) for
the ratable benefit of itself and the Lenders (as so defined).
Reference is hereby made to that Pledge Agreement, dated as of ____________,
1997, made by C-TEC Corporation ("C-TEC") in favor of the Administrative Agent
(as amended, restated or otherwise modified as of the date hereof, the "Pledge
Agreement"). As a result of the Mercom Contribution, CCSM will own all of the
Pledged Shares under the Pledge Agreement and, in connection therewith, CCSM
has agreed to execute this Supplement to confirm that it is the Pledgor under
the Pledge Agreement. This Supplement supplements the Pledge Agreement, forms
a part thereof and is subject to the terms thereof. Terms defined in the
Pledge Agreement are used herein as therein defined.
CCSM hereby confirms that it is the Pledgor under the Pledge Agreement, bound
by each of the terms thereof, and grants and reaffirms the first priority
security interest in the Collateral granted to the Administrative Agent for
the ratable benefit of itself and the Lenders thereunder as collateral
security for the Obligations.
CCSM hereby represents and warrants that the representations and warranties
contained in paragraph 4 of the Pledge Agreement are true and correct on the
date of this Supplement with references therein to the "Pledge Agreement" to
mean the Pledge Agreement as supplemented by this Supplement.
CCSM hereby agrees to deliver to the Administrative Agent such certificates
and other documents and take such other action as shall be reasonably
requested by the Administrative Agent in order to effectuate the terms hereof
and the Pledge Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly
executed under seal and delivered as of the date first above written.
C-TEC CABLE SYSTEMS OF MICHIGAN, INC.
[CORPORATE SEAL] By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
