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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 29549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 4, 1995 (April 19, 1995)
MERCOM, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-17750 38-2728175
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
105 Carnegie Center, Princeton, NJ 08540-6215
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(609) 734-3700
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ITEM 5. Other Events
On April 19, 1995, Communications and Cablevision, Inc. and Mercom,
Inc. (together with their subsidiaries, affiliates and employees hereinafter
referred to as "the Company" entered into a Settlement Agreement and Mutual
Release in settlement of outstanding litigation which commenced in 1988 with
Kenneth E. Lahey, ("Lahey") relating to the termination of Lahey as president of
Communications and Cablevision, Inc. The Company agreed, subject to certain
terms and conditions as set forth in the Settlement Agreement and Mutual
Release, to pay Lahey $4.3 million over a four year time frame in full
satisfaction of all claims that have been made against the Company pursuant to
certain agreements between Lahey and the Company.
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Item 7 Exhibits
(c) Exhibits
10.12 Settlement Agreement and Mutual Release by Communications and
Cablevision, Inc. and Mercom, Inc. and Kenneth Lahey;
99 Press release of Mercom, Inc. dated as of April 19, 1995
announcing the settlement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
MERCOM, INC.
(Registrant)
By: /s/ Bruce Godfrey
Executive Vice President
and Chief Financial Officer
Date: May 4, 1995
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EXHIBIT 10.12
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
---------------------------------------
This Settlement Agreement and Mutual Release ("Settlement Agreement") made
this 19 day of April, 1995 by Communications and Cablevision, Inc. and MERCOM,
-- -----
Inc. (together with their subsidiaries, affiliates and employees hereinafter
referred to as "CCI") and Kenneth Lahey (together with his successors, heirs and
assigns) is based on the following facts and representations, all of which are
agreed to be true;
WHEREAS, CCI filed a Complaint against Lahey in the Ottawa County Circuit
Court, Grand Haven, Michigan, Case No. 88-8995-CZ seeking a determination of its
rights under an Employment Agreement and a Shareholders Agreement with Lahey;
WHEREAS, Lahey filed a Counter-Complaint against CCI in that same action;
WHEREAS, on March 27, 1995, the Ottawa County Circuit Court entered
judgment in Lahey's favor in the amount of $2,949,000 representing the value of
Lahey's rights under the Employment and Shareholders Agreements referenced above
plus prejudgment interest at a rate of 5% per annum from December 31, 1987
through December 31, 1994 in the amount of $1,200,783.30 for a total of
$4,150,383.30;
WHEREAS CCI and Lahey desire to settle this lawsuit and any claims Lahey
may have against CCI and to dismiss the lawsuit with prejudice;
NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, it is agreed as follows:
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1. CCI agrees to pay Lahey a total of $4,300,000 in accordance with the
following terms and conditions:
A. CCI shall pay Lahey $100,000 upon signing the Agreement.
B. On or before July 1, 1995, CCI shall pay Lahey $1,400,000.
C. If CCI lacks sufficient funds to pay Lahey the sums described in
paragraphs 1(A) and (B), C-TEC Corporation, the single largest
investor in MERCOM, Inc., CCI's parent corporation, shall ensure
that those payments are made in a timely manner.
D. On or before July 1, 1996, CCI shall pay Lahey $700,000.
E. On or before July 1, 1997, CCI shall pay Lahey $700,000.
F. On or before July 1, 1998, CCI shall pay Lahey $700,000.
G. On or before July 1, 1999, CCI shall pay Lahey $700,000.
2. Except as set forth in paragraph (1)(C), C-TEC Corporation does not
guarantee CCI's performance under this Settlement Agreement. However, C-TEC
Corporation represents that it is currently involved in negotiations with a
third party lender to restructure MERCOM, Inc.'s debt which would include an
equity infusion to MERCOM in the form of either a subordinated debt instrument,
convertible preferred stock, or a rights offering. It is anticipated that this
restructuring will improve CCI's finances vis-a-vis CCI's ability to perform its
obligations under this Settlement Agreement.
3. In the event that any payment is not received in a timely fashion,
Lahey shall notify CCI in writing of said default. CCI shall have 24 hours to
wire transfer the funds for the allegedly untimely payment to an account
designated by Lahey. If CCI fails to wire transfer the
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untimely payment within 24 hours of receiving notice from Lahey of the allegedly
untimely payment, Lahey shall have the right to reinstate the March 27, 1995
Judgment with interest accruing thereafter, with a credit for any previous
payments made by CCI.
4. It is the intent of this Agreement to resolve, fully and forever, the
lawsuit in accordance with the obligations and pursuant to the terms contained
in this Agreement.
5. CCI and Lahey shall cause their respective attorneys to execute and
file a Stipulation dismissing the lawsuit with prejudice. CCI shall reimburse
Lahey's attorneys' fees not to exceed $12,500.00.
6. Except for contract rights arising from this Settlement Agreement, CCI
and Lahey releases and forever discharges the other, their officers, employees,
directors, shareholders, attorneys, agents, affiliates, successor and assigns,
from all manner of actions and causes of action, suits, debts, obligations,
causes of action, contracts, covenants, warranties, claims, sums of money,
judgments, damages, and rights whatsoever, in law or in equity, now existing or
which may thereafter accrue in favor of the other by reason of any facts or
circumstances existing at the date of this Settlement Agreement, including, but
not limited to, all claims which were or could have been asserted in this
lawsuit.
7. CCI and Lahey mutually covenant that, except for actions or suits
based on breaches of the terms of this Settlement, each will refrain from
commencing any action or suit, or prosecuting any pending action or suit, at law
or in equity, on account of any action or cause of action at law or in equity
which now exists or which could have been raised as of the date of this
Settlement Agreement. In addition to any other liability which shall accrue upon
the breach of
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this covenant, the breaching party shall be liable to pay all reasonable
attorneys' fees and costs incurred by the other party in the defense of such
action or suit.
8. CCI and Lahey each understands and agrees that the acts done and
evidenced by this Settlement Agreement and the releases granted under this
Settlement Agreement are done and granted solely to compromise disputed claims
and to avoid further costs in connection with the lawsuit; and they shall not
constitute, nor be construed as, an admission that either CCI or Lahey have
performed or failed to perform any act in violation of any law or regulation or
the rights of any party whatsoever, or that the claims made in the lawsuit are
valid. CCI expressly denies all allegations made against it.
9. Each party to this Settlement Agreement acknowledges and represents
that: (a) each has read the Settlement Agreement; (b) each clearly understands
the Settlement Agreement and each of its terms; (c) each fully and
unconditionally consents to the terms of this Settlement Agreement; (d) each has
had the benefit and advice of counsel of his or her own selection; (e) each has
executed this Settlement Agreement and Release freely, with knowledge, and
without duress; (f) each is not relying upon any representations (other than
those contained in this Settlement Agreement), either written or oral, express
or implied, made to them by any person; and (g) the consideration received by
them has been actual and adequate.
10. This Settlement Agreement shall be binding on and inure to the benefit
of the successors and assigns of CCI.
11. It is understood and agreed by CCI and Lahey that all understandings
and agreements heretofore and by the parties with respect to matters covered by
this Agreement are merged into this Agreement which alone fully and completely
expresses the parties' agreement.
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12. CCI and Lahey declare that, prior to the execution of this Agreement,
they apprised themselves of sufficient relevant data in order that they might
intelligently exercise their own judgments in deciding whether to execute and in
deciding on the contents of this Agreement. CCI and Lahey further declare that
their decision to execute this Agreement is not predicated on or influenced by
any declarations or representations not set forth in this Agreement by any other
person or party or any predecessors in interest, successors, assigns, officers,
directors, employees, agents or attorneys of any said person or party.
13. This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan.
14. The individuals signing this Agreement and the releases delivered
under its terms represent and warrant that they, and each of them, are duly
authorized and empowered to act on behalf of and to sign for the parties for
whom they have signed respectively.
15. By signing this Settlement Agreement, C-TEC Corporation is not
guaranteeing or warranting CCI's performance hereunder except with respect to
paragraph 1(C).
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IN WITNESS WHEREOF, the undersigned have caused this Settlement Agreement
and Release to be executed as of the day and year first above written.
Dated: April 19, 1995
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Communications and Cablevision, Inc.
By: /s/ Michael J. Mahoney
--------------------------------
Its: President and Chief Operating Officer
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Dated: April 19, 1995
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MERCOM, Inc.
By: /s/ Michael J. Mahoney
--------------------------------
Its: President and Chief Operating Officer
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Dated: April 19, 1995 /s/ Kenneth Lahey
--------------------------------
Kenneth Lahey
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IN WITNESS WHEREOF, the undersigned have caused this Settlement Agreement
and Release to be executed as of the day and year first above written.
Dated: April 19, 1995
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C-TEC Corporation
By: /s/ Michael J. Mahoney
--------------------------------
Michael J. Mahoney
Its: President and Chief Operating Officer
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EXHIBIT 99
MERCOM, INC.
105 Carnegie Center
Princeton, NJ 08540
---------------
FOR IMMEDIATE RELEASE
April 19, 1995
Contact: Valerie Haertel (Investor Relations) 609-734-3816
Carrie Thorpe (Public Relations) 717-825-1177
MERCOM SETTLES OUTSTANDING LITIGATION
PRINCETON, NJ - Mercom, Inc. (OTC: MEEO) announced today the settlement of
outstanding litigation with Kenneth E. Lahey, a former officer of the Company,
relating to a lawsuit originally filed in 1988 regarding claims made by Lahey,
pursuant to certain agreements between himself and the Company. Mercom agreed to
pay Lahey $4.3 million over a four year frame in full satisfaction of all claims
that may have been made against the Company subject to certain terms and
conditions as set forth in the Settlement Agreement and Mutual Release.
Mercom, Inc. is a cable television operator with three cable television systems
in Southern Michigan and one cable television system in Port St. Lucie, Florida
providing service to over 37,000 subscribers. The Company is operating under the
management of C-TEC Cable Systems, Inc., a subsidiary of C-TEC Corporation, a
diversified telecommunications company headquartered in Princeton, NJ.
