BRIDGE FACILITY AGREEMENT

Exhibit 10.2

EXECUTION

BRIDGE FACILITY AGREEMENT

This Bridge Facility Agreement (“Agreement”) is made as of February 21, 2007 by and between MOSCOW CABLECOM CORP., a Delaware corporation (the “Company”), ZAO COMCOR-TV, a closed joint stock company organized under the laws of the Russian Federation and a wholly-owned subsidiary of the Company (“Borrower” and together with the Company, the “Obligors”), and RME FINANCE LTD, a company incorporated under the laws of Cyprus (the “Lender”). In consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

LOANS

1.1. TERM LOANS

On the terms and subject to the conditions of this Agreement, from the date hereof through the Availability End Date, the Lender agrees to make to the Borrower up to nine (9) working capital bridge loans (each a “Loan” and collectively, the “Loans”) in an aggregate principal amount not to exceed the Total Commitment, as adjusted from time to time in accordance with the terms of this Agreement, in nine (9) tranches, Tranche I, Tranche II, Tranche III, Tranche IV, Tranche V, Tranche VI, Tranche VII, Tranche VIII and Tranche IX. The aggregate principal amount of the Loan advanced under each tranche shall not exceed the Tranche Commitment in effect on the Funding Date of such Loan. Borrower may request, prior to the Availability End Date, one (1) Loan under each tranche during the Availability Periods specified below:

 

When the Borrower desires to obtain a Loan, the Borrower shall notify Lender (which notice shall be irrevocable) by facsimile transmission to be received no later than 1:00 p.m. New York City time five (5) Business Days before the proposed Funding Date on which the Loan is to be made, provided, however, that the notice for the Loan under Tranche I shall be delivered by the Borrower no later than 9.00 p.m. New York City time on the date hereof. The notice shall specify a proposed Funding Date that is within the Availability Period for such Loan and shall be signed by the General Director of the Borrower. Lender shall be entitled to rely on any notice given by a person who Lender believes to be the General Director of the Borrower or a designee thereof, and the Borrower shall indemnify and hold Lender harmless for any damages or loss suffered by Lender as a result of such reliance.

1.2. NOTES

The Borrower’s unconditional and absolute obligation to repay to the Lender the principal of the Loans and interest thereon shall be evidenced by one or more unsecured subordinated promissory notes (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, and together with any renewals thereof or substitutions therefor, each a “Note”, and collectively, the “Notes”), in substantially the

form of Exhibit A hereto with appropriate insertions. The date and amount of each repayment and prepayment of principal thereon received by the Lender with respect to each Note shall be recorded by the Lender in its records or, at its option, on the schedule attached to the applicable Note. The aggregate unpaid principal amount so recorded shall be prima facie evidence of the principal amount owing and unpaid on such Note to the Lender absent manifest error. The failure to so record any such amount or any error in so recording any such amount, however, shall not limit or otherwise affect the Borrower’s obligations hereunder or under any Note to repay the principal amount of the Loan together with all interest accruing thereon.

1.3. CLOSING

The closing (the “Closing”) will take place at the offices of Porzio, Bromberg & Newman P.C., 156 W. 56^th Street, New York, New York 10019 upon the satisfaction of the conditions to Closing set forth in this Agreement on the date hereof, or such other place, time and date as shall be mutually agreed to by the Borrower and the Lender (the “Closing Date”). On or before the Funding Date of each Loan, the Borrower shall deliver to the Lender a Note with respect to such Loan, dated as of the Funding Date, in the principal amount equal to the amount of such Loan. The Borrower shall deliver each Note against receipt by the Borrower from the Lender of an amount equal to the Loan corresponding to the tranche for with the Loan is made, by wire transfer in immediately available funds in U.S. dollars to an account designated in writing by the Borrower in its request for such Loan.

1.4. USE OF PROCEEDS

The proceeds of the Loans shall be used solely for the purpose of funding the Borrower’s capital expenditures, operations and working capital requirements and of the Borrower, in each case, incurred in the ordinary course of business as presently conducted, and consistent with Schedule 7.1 of the Company Disclosure Schedules (as defined below). None of the proceeds of any Loan will be used to prepay or repurchase outstanding debt, make any payments to stockholders, directors, officers, employees, contractors or affiliates (other than ordinary course of business operating expenses, salary and wage payments), or make any dividend or other distribution with respect to capital stock, or for any personal, family or household purposes; provided, however, the Borrower may use proceeds of the Loans to repay existing intercompany debt owing to the Company up to the amount set forth on Section 1.4 of the Disclosure Schedule.

1.5. SUBORDINATION

The Notes and the indebtedness evidenced by each Note are subordinated to all Senior Debt pursuant to the terms of a Subordination Agreement, dated as of the date hereof, by and between the Lender and the Agent under the 2004 Facility Agreement (as that term is defined therein).

ARTICLE II

REPAYMENT; PREPAYMENTS; INTEREST

2.1. REPAYMENT OF THE LOAN

The Borrower shall repay the aggregate outstanding principal amount of the Loans, together with all accrued but unpaid interest thereon, and all other obligations arising under this Agreement or the other Transaction Documents, in full, in lawful money of the United States of America, on the earliest of (the “Maturity Date”): (a) October 31, 2009, (b) the second anniversary of the Availability End Date, or (c) the date upon which the Loans become or are declared due and payable pursuant to Article VII of this Agreement or pursuant to any Note or other Transaction Document.

 

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2.2. PREPAYMENTS

(a) The Borrower shall have the right to prepay the principal amount of each Loan, in whole or in part, at any time without penalty or premium so long as the Borrower does each of the following: (i) except in connection with a prepayment as contemplated by Section 7.1(h) (in which case the Borrower shall provide as much prior notice as is reasonably practicable under the circumstances), provides Lender with not less than five (5) Business Days’ prior written notice of its intent to prepay the Loans, which notice shall be irrevocable and shall state the principal amount to be prepaid, date on which prepayment will be made and shall state that the Borrower terminates the unfunded portion of the Total Commitment and any right to receive Loans or other extensions of credit from Lender (the “Prepayment Notice”), and (ii) tenders to Lender payment, in respect of the Loans being prepaid: (i) the principal amount of the Loans to be prepaid, (ii) all accrued and unpaid interest, fees and expenses then outstanding hereunder or any Transaction Document on the date of prepayment; and (iii) all other amounts, if any, that shall have become due and payable hereunder, under the Notes or under any other Transaction Document.

(b) Restrictions on prepayment:

(i) No amounts paid or prepaid with respect to any Loan may be reborrowed.

(ii) No amounts of the Commitment cancelled may be subsequently reinstated.

2.3. INTEREST

(a) The Loans shall bear interest on the outstanding principal amount thereof at a rate of ten percent (10%) per annum from the Closing Date. All accrued interest on the Loans shall be, at the option of the Borrower (unless required to be paid earlier by the terms hereof or any Note): (i) upon not less than five (5) Business Days’ prior written notice to the Lender, paid by the Borrower to the Lender in arrears on the last day of each calendar quarter, or (ii) if not paid pursuant to clause (i) above, capitalized with, and added to, the principal amount of such Loan on the last day of each calendar quarter, and shall thereafter be deemed for all purposes to be a part of the principal amount thereof (and the principal amount shall be increased by the amount of such capitalized interest at the end of such calendar quarter); provided that (1) interest accrued pursuant to Section 2.3(b) shall be payable on demand, and (2) in the event of any repayment or prepayment of the Loans, accrued interest on the principal amount repaid or prepaid (not previously capitalized and added to the principal amount of the Loans) shall be payable on the date of such repayment or prepayment. All computations of interest shall be made on the basis of a year of 360 days, and actual days elapsed.

(b) Notwithstanding the rate of interest specified above, after an Event of Default and during the continuance thereof (regardless of whether the Loans have been accelerated), the Borrower agrees to pay interest (after as well as before judgment to the extent permitted by applicable law) on all unpaid principal, interest or other amounts owing under the Transaction Documents, at a rate of thirteen percent (13%) per annum. Unpaid interest on such amounts will continue to accrue and will (to the extent permitted by applicable law) be compounded daily.

2.4. USURY

Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Loan, together with all fees, charges and other amounts which are treated as interest on the Loans under applicable law shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate.

 

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2.5 TAX GROSS UP

Any and all payments or reimbursements made hereunder, under the Notes, under the Guaranty or any other Loan Document shall be made free and clear of and without deduction for any and all Taxes or other charges or withholding and all liabilities with respect thereto of any nature whatsoever imposed by any taxing authority, excluding such taxes to the extent imposed on the Lender’s gross or net income by the jurisdiction in which the Lender is organized, doing business or otherwise is subject to tax without regard to the transactions contemplated by this Agreement (any such taxes described herein as “Excluded Taxes”). Except with respect to Excluded Taxes, if any Obligor shall be required by law to deduct any such amounts from or in respect of any sum payable hereunder to the Lender, then the sum payable hereunder or under such other Transaction Document shall be increased as may be necessary so that, after making all required deductions, the Lender receives an amount equal to the sum it would have received had no such deductions been made. Each Obligor shall (within three (3) Business Days of demand by the Lender) pay to the Lender an amount equal to the loss, liability or cost that the Lender determines will be or has been, directly or indirectly, suffered for or on account of any Tax (other than Excluded Taxes) in respect of a Loan Document.

2.6 OBLIGATIONS ABSOLUTE.

The payment obligations of the Obligors hereunder and under the Transaction Documents shall be absolute, unconditional and irrevocable under all circumstances whatsoever, including, the existence of any claim, set-off, defense or other rights which an Obligor may have at any time against the Lender or any other Person whether in connection with this Agreement or any related or unrelated transaction.

ARTICLE III

CONDITIONS TO CLOSING AND FUNDING

3.1. CONDITIONS TO CLOSING. The obligation of the Lender to make the Tranche I Loan, is subject to the fulfillment to the Lender’s satisfaction, on or prior to the Closing Date, of each of the following conditions, unless otherwise waived in writing by the Lender:

(a) Loan Documents. The Lender shall have received, in form and substance satisfactory to the Lender each of the following:

(i) this Agreement;

(ii) the Tranche I Note;

(iii) the Guaranty;

(iv) certificates of the Secretary of the Borrower and the Company with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement and the other Transaction Documents; and

(v) such other documents, instruments and certificates as the Lender may reasonably request.

(b) Execution of Merger Agreement. The Merger Agreement shall have been fully executed and delivered.

(c) Consents and Waivers. The Obligors shall have obtained all necessary consents or waivers, if any, from all parties governmental and private to any Material Contracts to which either Obligor is a party or by which it is bound immediately prior to the Closing in order that the transactions contemplated by the Transaction Documents may be consummated.

 

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(d) Corporate Proceedings. All corporate and other proceedings taken or required to be taken by the Obligors in connection with the transactions contemplated by this Agreement and the other Transaction Documents to be consummated prior to the Closing shall have been taken, and the Lender shall have received such other documents, in form and substance reasonably satisfactory to the Lender and its counsel, as to such other matters incident to the transactions contemplated hereby as the Lender may reasonably request.

3.2. CONDITIONS TO FUNDING EACH LOAN. The obligation of the Lender to make each Loan, including the Tranche I Loan, is subject to the fulfillment to the Lender’s satisfaction, on or prior to the Funding Date for such Loan, of each of the following conditions, unless otherwise waived in writing by the Lender:

(a) Delivery of a Note. The Borrower shall have executed and delivered a Note prepared by the Lender setting forth the terms of the Loan.

(b) Representations and Warranties Correct; No Default. The representations and warranties of the Obligors set forth in Article IV hereof (including without limitation the representations set forth in the Merger Agreement incorporated herein) shall be true and correct when made, and shall be true and correct on the Closing Date and each Funding Date with the same force and effect as if they had been made on and as of the Closing Date and each Funding Date. No Event of Default, or any other event which, with the giving of notice, the lapse of time, or both, would constitute an Event of Default, shall have occurred and be continuing on the date of this Agreement, on the Closing Date, on the date any request for a Loan is submitted to Lender, or on any Funding Date.

(c) Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Obligors on or prior to the Closing Date or any Funding Date shall have been performed or complied with by the Obligors.

(d) No Impediments. Neither the Obligors, nor the Lender shall be subject to any order, decree or injunction of a court or administrative or governmental body or agency of competent jurisdiction directing that the transactions provided for in the Transaction Documents or any material aspect thereof not be consummated as contemplated by the Transaction Documents. There shall not be any action, suit, proceeding, complaint, charge, hearing, inquiry or investigation before or by any court or administrative or governmental body or agency pending or, to the Obligors’ best knowledge, threatened, wherein an unfavorable order, decree or injunction would prevent the performance of any of the Transaction Documents or the consummation of any material aspect of the transactions or events contemplated thereby, declare unlawful any aspect of the transactions or events contemplated by the Transaction Documents, cause any material aspect of the transactions contemplated by the Transaction Documents to be rescinded or have a Material Adverse Effect.

(e) Satisfaction of Milestones. With respect to Tranches II through IX, the Borrower shall have delivered a certificate of the General Director of the Borrower, in form and substance satisfactory to the Lender, certifying that the Borrower has, for the immediately preceding calendar month, achieved or exceeded the required operating benchmarks set forth on Schedule I hereto, together with such supporting information, worksheets and documentation as the Lender may reasonably request in connection therewith.

(g) Availability Period. The Availability End Date shall not have occurred.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS

The Borrower, on behalf of itself, and the Company, on behalf of itself and the Borrower hereby: (a) represent and warrant that each Obligor has read and is aware of all of the terms, conditions, representations, warranties, covenants and other undertakings set forth in the Merger Agreement, (b) represent and warrant that each of the representations and warranties set forth in Article V of the Merger Agreement, as qualified or limited by the Company Disclosure Schedule (as that term is defined in the Merger Agreement), are true, correct and complete, and (c) make, for purposes of this Agreement, and incorporate herein by this reference as though fully set forth

 

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herein, each of the representations and warranties set forth in Article V of the Merger Agreement with the intent that such representations shall have independent force and effect under this Agreement notwithstanding the cancellation, expiration or termination of the Merger Agreement, the enforceability of any term or provision thereof, or any determination that the Merger Agreement is no longer in force or effect. Without limiting the generality of the foregoing, the Obligors shall be deemed to have made each of the representations and warranties set forth in Article V of the Merger Agreement as of the Closing Date, date of delivery of each request for a Loan and as of each Funding Date.

Except as set forth in (i) the Company Reports (as defined below) filed prior to the date hereof; or (ii) the applicable section of the disclosure schedule delivered by the Company to Lender on the date hereof (the “Disclosure Schedule”) (it being understood that any matter disclosed in any section or subsection of the Disclosure Schedule with respect to the corresponding section or subsection of this Agreement shall be deemed to be disclosed under any other section or subsection of this Agreement, as long as the relevance of such disclosure to such other section or subsection of the Agreement is reasonably apparent, the Obligors hereby jointly and severally represent and warrants to the Lender as follows:

4.1. AUTHORIZATION

Each of the Obligors has all requisite corporate power and authority (i) to execute and deliver, and to perform and observe their respective obligations under, the Transaction Documents to which it is a respective party, and (ii) to consummate the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by the Obligors.

4.2. BINDING OBLIGATIONS; NO MATERIAL ADVERSE CONTRACTS; NO CONSENTS

The Transaction Documents constitute valid and binding obligations of the Obligors enforceable in accordance with their respective terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to affecting creditors’ rights and to general equity principles. Except as set forth in Section 4.2 of the Disclosure Schedule, the execution, delivery and performance by the Obligors of the Transaction Documents and compliance therewith will not result in any violation of and will not conflict with, or result in a breach of any of the terms of, or constitute a default, or accelerate or permit the acceleration of any rights or obligations, under, any provision of state, local, federal or foreign Law to which any Obligor is subject, the Certificate of Incorporation, as amended, or the By-Laws, as amended, of any Obligor, or any Material Contract judgment, decree, order, rule or regulation or other restriction to which any Obligor is a party or by which it is bound, result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of such Obligor pursuant to any such term. No stockholder of the Obligors has or will have any preemptive rights or rights of first refusal by reason of the issuance of the Notes. No filing with or notice to, and no permit, authorization, registration, consent or approval of, any governmental entity is required on the part of either Obligor or any of their respective Subsidiaries for the execution, delivery and performance by Obligors of this Agreement or the consummation by the Obligors of the transactions contemplated hereby except such filings, notices, permits, authorizations, registrations, consents or approvals, the failure of which to make, give or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.3 ABSENCE OF CERTAIN CHANGES OR EVENTS.

Since December 31, 2005 and through the date hereof and each Funding Date, except as disclosed in the Company Reports and Section 4.3 of the Disclosure Schedule, each of the Company and its Subsidiaries has conducted its business only in the ordinary course of such business, and there has not been any change in or effect on the business, assets, liabilities, property, financial condition or results of operations of any of the Company and its Subsidiaries that individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

The Obligors hereby jointly covenant and agree, so long as any obligations hereunder, under any Note or any other Transaction Document remain outstanding or the Lender has any obligation to make additional Loans, as follows:

5.1. MAINTENANCE OF CORPORATE EXISTENCE; TAXES

(a) The Obligors shall maintain in full force and effect their respective corporate existence, rights and franchises and all terms of licenses and other rights to use licenses, trademarks, trade names, service marks, copyrights, patents, processes or any other Intellectual Property owned or possessed by it and necessary to the conduct of its business, except where failure to maintain such rights, franchises and terms of licenses and other rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect.

(b) The Obligors shall (i) promptly pay and discharge, or cause to be paid and discharged when due and payable, all lawful Taxes, assessments and governmental charges or levies imposed upon the income, profits, assets, property or business of the Obligors and the Subsidiaries, (ii) withhold and promptly pay to the appropriate tax authorities all amounts required to be withheld from wages, salaries and other remuneration to employees, and (iii) promptly pay all claims or indebtedness (including, without limitation, claims or demands of workmen, materialmen, vendors, suppliers, mechanics, carriers, warehousemen and landlords) which, if unpaid might become a Lien upon the assets or property of the Obligors; provided, however, that any such Tax, Lien, assessment, charge or levy need not be paid if (1) the validity thereof shall be contested timely and in good faith by appropriate proceedings, (2) the Obligors shall have set aside on its books adequate reserves with respect thereto, and (3) the failure to pay shall not be prejudicial in any material respect to the holders of the Notes, and provided further that the Obligors will pay or cause to be paid any such tax, lien, assessment, charge or levy forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefore. Except to the extent prohibited by Article VI of this Agreement, the Obligors shall pay or cause to be paid all other indebtedness incident to the operations of the Obligors or the Subsidiaries.

5.2. BASIC FINANCIAL INFORMATION

The Obligors shall furnish the following reports to the Lender, so long as it is a holder of any Note:

(a) as soon as practicable, but in any event within 90 days after the end of each fiscal year of the Obligors, (i) audited balance sheets of the Obligors as at the end of such year, together with audited statements of income and retained earnings and statements of cash flows of the Obligors for such year, together with notes related thereto, each prepared in accordance with GAAP, consistently applied, and setting out in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and certified by certified independent public accountants of established national reputation, and (ii) a report of the principal financial officer of the Company containing a management discussion and analysis of the Company’s consolidated financial condition at the end of such year and the results of operations for such year, including, but not limited to, a description of significant events with respect to the Company and its Subsidiaries, if any, during the preceding year and any planned or anticipated significant activities or events during the upcoming months;

(b) as soon as practicable, but in any event within 45 days after the end of each of the first three fiscal quarters of the Obligors in each year, (i) an unaudited balance sheet at the end of such quarter, and unaudited statements of income, of profit and loss and of changes in financial condition of the Obligors (including cash flow statements) for such period and for the current fiscal year to date, in each case prepared in accordance with GAAP, consistently applied (other than for accompanying notes and subject to changes resulting from year-end audit adjustments), and (ii) a report of the principal financial officer of the Company containing a management discussion and analysis of the Company’s consolidated financial condition at the end of such quarter and the results of

 

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operations for such quarter and the year to date, including, but not limited to, a description of significant events with respect to the Company and its Subsidiaries, if any, during such periods and any planned or anticipated significant activities or events during the upcoming months; and

(c) with reasonable promptness such other information and financial data concerning the Obligors as any Person entitled to receive materials under this Section 5.2 may reasonably request.

5.3. NOTICE OF ADVERSE CHANGE

The Obligors shall promptly give notice to the Lender (but in any event within two days) after becoming aware of the existence of any condition or event which constitutes, or the occurrence of, any of the following:

(a) any Event of Default or any default that with the passage of time or the giving of notice would constitute an Event of Default;

(b) the institution or threatening of institution of any action, suit or proceeding against the Obligors or any Subsidiary before any court, administrative agency or arbitrator, including, without limitation, any action of a foreign government or instrumentality, which, if adversely decided, could reasonably be expected to have a Material Adverse Effect;

(c) any information relating to the Obligors or any Subsidiary which could reasonably be expected to have a Material Adverse Effect; or

(d) any failure by the Obligors or any Subsidiary to comply with the provisions of Section 5.4 below.

Any notice given under this Section 5.3 shall specify the nature and period of existence of the condition, event, information, development or circumstance, the anticipated effect thereof and what actions the Company and the Borrower, as the case may be, has taken and proposes to take with respect thereto.

5.4. COMPLIANCE WITH AGREEMENTS; COMPLIANCE WITH LAWS

The Company shall, and shall cause its Subsidiaries to, comply with the terms and conditions of all Material Contracts. The Company shall, and shall cause each Subsidiary to, duly comply with any Laws relating to the conduct of their respective businesses, properties or assets, in each case except for any such noncompliance that could not reasonably be expected to have a Material Adverse Effect.

5.5. PROTECTION OF LICENSES

The Company shall, and shall cause its Subsidiaries to, maintain, defend and protect to the best of their ability licenses and sublicenses (and to the extent the Company or a Subsidiary is a licensee or sublicensee under any license or sublicense, as permitted by the license or sublicense agreement), trademarks, trade names, service marks, patents and applications therefore and other proprietary information or Intellectual Property owned or used by it or them and shall keep duplicate copies of any licenses, trademarks, service marks or patents owned or used by it, if any, at a secure place selected by the Company.

5.6. ACCOUNTS AND RECORDS; INSPECTIONS

(a) The Company shall keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to the business and affairs of the Company and its Subsidiaries in accordance with GAAP applied on a consistent basis.

 

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(b) The Obligors shall permit the Lender or any of such Lender’s officers, employees or representatives during regular business hours of the Obligors, upon reasonable notice and as often as the Lender may reasonably request, to visit and inspect the offices and properties of the Obligors and to make extracts or copies of the books, accounts and records of the Obligors or the Subsidiaries, and to discuss the affairs, finances and accounts of the Obligors and the Subsidiaries, with the Obligors’ directors and officers, its independent public accountants, consultants and attorneys.

(c) Nothing contained in this Section 5.6 shall be construed to limit any rights that the Lender may have with respect to the books and records of the Obligors and the Subsidiaries, to inspect its properties or to discuss its affairs, finances and accounts.

5.7. MAINTENANCE OF OFFICE

The Obligors will maintain its principal office at the address of the Obligors set forth in Section 10.4 of this Agreement where notices, presentments and demands in respect of this Agreement, the Notes and the other Transaction Documents may be made upon the Obligors, until such time as the Obligors shall notify the Lender in writing, at least 30 days prior thereto, of any change of location of such office.

5.8. FURTHER ASSURANCES

From time to time the Obligors shall execute and deliver to the Lender such other instruments, certificates, agreements and documents and take such other action and do all other things as may be reasonably requested by the Lender in order to implement or effectuate the terms and provisions of this Agreement and the transactions contemplated hereby.

5.9. SEC REPORTS

The Company will file, on a timely basis, any SEC Reports and keep all such SEC Reports and public information current, provided that, without limiting any obligations or requirements of the Merger Agreement, if the Company is unable to timely file any such SEC Report, so long as the Company files a Form 12b-25 in the time frame required by Rule 12b-25 promulgated under the Securities Exchange Act of 1934, as amended, the Company shall not be in violation of this Section 5.9 if it is using reasonable diligence to file such SEC Report as soon as practicable. The Company agrees that none of the SEC Reports filed by the Company will, at the time of filing, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

ARTICLE VI

NEGATIVE COVENANTS

Each Obligor hereby covenants and agrees, so long as any obligations hereunder, under any Note or any other Transaction Document remain outstanding, or the Lender has any obligation to make additional Loans, it will not, and will not permit any of its Subsidiaries, directly or indirectly, without the prior written consent of the Lender:

6.1. STAY, EXTENSION AND USURY LAWS

At any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereinafter in force, which may affect the covenants or the performance of the Notes, this Agreement or the other Transaction Documents, the Obligors hereby expressly waiving all benefit or advantage of any such law, or by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Lender but will suffer and permit the execution of every such power as though no such law had been enacted.

 

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6.2. LIENS

Except as otherwise provided in this Agreement or any other Transaction Document, create, incur, assume or permit to exist any Lien on any part of its properties or assets, or on any interest it may have therein, now owned or hereafter acquired.

6.3. INDEBTEDNESS

Create, incur, assume, suffer, permit to exist, or guarantee, directly or indirectly, any indebtedness, excluding:

(a) indebtedness existing on the date hereof and described in Section 6.3 of the Disclosure Schedule;

(b) indebtedness incurred by the Borrower relating to vendor financing provided that such vendor financing is incurred in its ordinary course of business for the purposes of building out the Broadband Cable Network and has been consented to by the Lender;

(c) indebtedness relating to amounts owed to an Obligor;

(d) indebtedness relating to trade credit in the ordinary course of business; or

(e) the Notes.

6.4. ARM’S LENGTH TRANSACTIONS

Enter into any transaction, contract or commitment or take any action other than at Arm’s Length, unless such transaction, contract or arrangement is entered into with an Obligor.

6.5. LOANS AND ADVANCES

Make any advance or loan to, or guarantee any obligation of, or make any investment in any Person, except for an intercompany loans or advances in the ordinary course of business and those provided for in this Agreement.

6.6. OTHER BUSINESS

Enter into or engage, directly or indirectly, in any business other than the business currently conducted or proposed to be conducted as disclosed to the Lender prior to the date hereof by the Obligors.

6.7. OTHER NEGATIVE PLEDGES

(a) Except as set forth in Section 7.1 of the Company Disclosure Schedule, the business of the Company and the Subsidiaries shall be conducted only in the ordinary course and, to the extent consistent therewith, the Company and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain their existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, key employees and business associates and keep available the services of the present key employees of the Company and the Subsidiaries.

 

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(b) Without limiting the generality of Section 6.7(a) and in furtherance thereof, the Company shall not and shall not permit its Subsidiaries to (unless the Lender shall otherwise approve in writing, in its sole discretion):

(i) adopt or propose any change in its certificate of incorporation or By-Laws (or similar governing documents);

(ii) merge or consolidate the Company or any of its Subsidiaries with any other Person, except for any such transactions among wholly-owned Subsidiaries of the Company;

(iii) acquire assets outside of the ordinary course of business from any Persons with a purchase price in excess of $100,000 in the aggregate except pursuant to Contracts in effect as of the date of this Agreement;

(iv) other than (A) as required by the terms of Contracts in effect as of the date of this Agreement, (B) upon the exercise of outstanding Company Options or Company Common Warrants or warrants to purchase Series B Stock, (C) pursuant to the terms of the Debentures (to the extent required by such terms) or (D) upon conversion of outstanding shares of Series A Stock and Series B Stock, in each case, in accordance with their terms, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of the Company or any Subsidiary (other than the issuance of shares by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary), or securities convertible or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;

(v) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for (i) dividends or other distributions by any direct or indirect wholly-owned Subsidiary of the Company to the Company or to any other direct or indirect wholly-owned Subsidiary of the Company, (ii) periodic dividends and other periodic distributions by non-wholly-owned Subsid