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S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 05/28/1999
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with, or for the benefit of, any Affiliate of any such Person (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction
is on terms that are no less favorable to such Issuer or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction by such Issuer or such Restricted Subsidiary with an unrelated
Person and (ii) such Issuer delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $2.5 million, a resolution of its Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved
by a majority of the members of its Board of Directors and (b) with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an investment banking, appraisal or accounting firm of national
standing; provided that none of the following shall be deemed to be Affiliate
Transactions:

  .  any employment agreement entered into by any of the Issuers or any of
     their Restricted Subsidiaries or Avalon in the ordinary course of
     business,

  .transactions between or among any of the Issuers and/or their Restricted
   Subsidiaries,

  .any sale or other issuance of Equity Interests (other than Disqualified
   Stock) of any of the Issuers,

  .  Restricted Payments that are permitted by the covenant described above
     under the caption "--Restricted Payments,"

  .  fees and compensation paid to members of the Boards of Directors of the
     Issuers and their Restricted Subsidiaries or Avalon in their capacity as
     such, to the extent such fees and compensation are reasonable and
     customary,

  .  advances to employees for moving, entertainment and travel expenses,
     drawing accounts and similar expenditures in the ordinary course of
     business,

  .  fees and compensation paid to, and indemnity provided on behalf of,
     officers, directors or employees of the Issuers or any of their
     Restricted Subsidiaries or Avalon, as determined by the Board of
     Directors of such Person, to the extent such fees and compensation are
     reasonable and customary,

  .  all transactions associated with the Reorganization and the Mercom
     Acquisition,

  .  the Mercom Intercompany Loan, the ABRY Management Agreement and the
     Mercom Management Agreement and

  .Indebtedness permitted under the Indenture.

 Sale and Leaseback Transactions

   The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Issuers or any of their Restricted Subsidiaries may enter into a sale and
leaseback transaction if:

  .  such Issuer or Restricted Subsidiary could have incurred Indebtedness in
     an amount equal to the Attributable Debt relating to such sale and
     leaseback transaction pursuant to the test set forth in the first
     paragraph of the covenant described above under the caption "--
     Incurrence of Indebtedness and Issuance of Preferred Stock,"

  .  the gross cash proceeds of such sale and leaseback transaction are at
     least equal to the fair market value (as determined in good faith by the
     Board of Directors of such Issuer or Restricted Subsidiary, whose
     determination shall be conclusive, and set forth in an Officers'
     Certificate delivered to the Trustee) of the property that is the
     subject of such sale and leaseback transaction and

  .  the transfer of assets in such sale and leaseback transaction is
     permitted by, and such Issuer or Restricted Subsidiary applies the
     proceeds of such transaction in compliance with, the covenant described
     above under the caption "Repurchase at the Option of Holders--Asset
     Sales."

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