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S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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if such incurrence or issuance is on or prior to December 31, 2000, and (b) 6.5
to 1, if such incurrence or issuance is after December 31, 2000.
 
   The Indenture will also provide that the Issuers will not incur any
Indebtedness that is contractually subordinated in right of payment to any
other Indebtedness of the Issuers unless such Indebtedness is also
contractually subordinated in right of payment to the Notes on substantially
identical terms; provided, however, that no Indebtedness of the Issuers shall
be deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Issuers solely by virtue of being unsecured.
 
   The provisions of the first paragraph of this covenant shall not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
 
     (1) the incurrence by the Issuers or their Restricted Subsidiaries of
  Indebtedness under the Credit Facility letters of credit (with letters of
  credit being deemed to have a principal amount equal to the maximum
  potential liability of the Issuers and their Restricted Subsidiaries
  thereunder) and related Guarantees under the Credit Facility; provided that
  the aggregate principal amount of all Indebtedness of the Issuers and their
  Restricted Subsidiaries outstanding under the Credit Facility after giving
  effect to such incurrence, including all Permitted Refinancing Indebtedness
  incurred to refund, refinance or replace any other Indebtedness incurred
  pursuant to this clause (1) does not exceed an amount equal to $345,888,000
  less the aggregate amount applied by the Issuers and their Restricted
  Subsidiaries to permanently reduce the availability of Indebtedness under
  the Credit Facility pursuant to the provisions described under the caption
  "--Certain Covenants--Asset Sales";
 
     (2) the incurrence by the Issuers of the ABRY Subordinated Debt;
 
     (3) the incurrence by the Issuers and their Restricted Subsidiaries of
  Existing Indebtedness;
 
     (4) the incurrence by the Issuers of the Existing Michigan Indebtedness
  and the Mercom Intercompany Loan;
 
     (5) the incurrence by the Issuers of Indebtedness represented by the
  Notes and the incurrence by the Company Issuers of Indebtedness represented
  by the Senior Subordinated Notes in an aggregate principal amount of $150
  million outstanding on the date of the Indenture;
 
     (6) the incurrence by the Issuers or any of their Restricted
  Subsidiaries of Indebtedness represented by Capital Lease Obligations,
  mortgage financings or purchase money obligations, in each case incurred
  for the purpose of financing all or any part of the purchase price or cost
  of construction or improvement of property, plant or equipment used in the
  business of the Issuers or such Restricted Subsidiary, in an aggregate
  principal amount, including all Indebtedness incurred to refund, refinance
  or replace Indebtedness incurred pursuant to this clause (6), not to exceed
  $10.0 million at any time outstanding;
 
     (7) the incurrence by the Issuers or any of their Restricted
  Subsidiaries of Permitted Refinancing Indebtedness;
 
     (8) the incurrence by the Issuers or any of their Restricted
  Subsidiaries of intercompany Indebtedness between or among any of the
  Issuers and any of their Restricted Subsidiaries; provided, however, that
  (1) if one of the Issuers is the obligor on such Indebtedness, such
  Indebtedness is expressly subordinated to the prior payment in full in cash
  of all Obligations with respect to the Notes and the Indenture, and (2)(A)
  any subsequent event or issuance or transfer of Equity Interests that
  results in any such Indebtedness being held by a Person other than one of
  the Issuers or a Restricted Subsidiary thereof and (B) any sale or other
  transfer of any such Indebtedness to a Person that is not any one of the
  Issuers or a Restricted Subsidiary thereof shall be deemed, in each case,
  to constitute an incurrence of such Indebtedness by such Issuer or such
  Restricted Subsidiary, as the case may be, that was not permitted by this
  clause (8);
 
     (9) the incurrence by the Issuers or any of their Restricted
  Subsidiaries of Hedging Obligations that are incurred in the ordinary
  course of business for the purpose of fixing or hedging currency, commodity
  or interest rate risk (including with respect to any floating rate
  Indebtedness that is permitted by the terms
 
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