UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
THE LEHIGH GROUP INC.
(Name of issuer)
Common Stock, $.001 Par Value
(Title of class of securities)
52481610 5
(CUSIP number)
Gary Epstein, Esq.
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
(305) 579-0832
(Name, address and telephone number of person
authorized to receive notices and communications)
October 29, 1996
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
CUSIP No. 52481610-5 SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Medical Corporation - # 65-0631901
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7. SOLE VOTING POWER 6,000,000 shares
SHARES
BENEFICIALLY 8. SHARED VOTING POWER - 0 -
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 6,000,000 shares
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE
POWER - 0 -
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,000,000 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 37%
14. TYPE OF REPORTING PERSON
CO
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock, par value $.001
per share (the "Common Stock"), of The Lehigh Group Inc.
("Lehigh"). Lehigh's executive offices are located at 810
Seventh Avenue, 27th Floor, New York, New York 10019.
ITEM 2. IDENTITY AND BACKGROUND.
First Medical Corporation ("FMC") is a Delaware corporation
whose principal offices are located at 1055 Washington
Boulevard, Stamford, Connecticut 06901. FMC is an
owner/manager and provider of management and consulting
services to physicians, hospitals and other health care
delivery organizations and facilities.
The executive officers and directors of FMC and their
respective positions are as follows:
[CAPTION]
<TABLE>
<S> <C>
Name Position
Dennis A. Sokol Chairman of the Board and Chief
Executive Officer
Charles J. Pendola President and Director
Jeffrey Fine Executive Vice President,
General Counsel, Secretary
and Director
Elias J. Nemnom Chief Financial Officer
Elliot H. Cole Director
Paul Murphy Director
Melvin E. Levinson,
M.D. Director
Stuart Kaufman Director
Mark Kugler Director
</TABLE>
The address for each of the above officers and directors is
1055 Washington Boulevard, Stamford, Connecticut 06901.
Neither FMC, nor any of the above officers and/or directors
has, during the last five years, been convicted in a criminal
proceeding.
Neither FMC, nor any of the above officers and/or directors
has been party to a civil proceeding of a judicial or
administrative body of competent jurisdiction which resulted
in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, Federal or state securities laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On October 29, 1996, FMC, Lehigh and Lehigh Management Corp.,
a wholly-owned subsidiary of Lehigh ("Merger Sub"), entered
into an Agreement and Plan of Merger (the "Merger Agreement")
providing for the merger (the "Merger") of FMC with and into
Merger Sub with FMC surviving the Merger. Upon consummation
of the Merger and pursuant to the terms of the Merger
Agreement, each issued and outstanding share of common stock
of FMC will be exchanged for (1) 1,033.925 shares of Common
Stock and (ii) 95.1211 shares of Series A Convertible
Preferred Stock, par value $.001 per share (the "Preferred
Stock"), of Lehigh. Each share of Preferred Stock will be
convertible at any time by the holder thereof into 250 shares
of Lehigh Common Stock.
The Merger and the terms of the Merger Agreement have been
approved by the Board of Directors of each of Lehigh and FMC
and by the holders of a majority of the outstanding common
stock of FMC. Consummation of the Merger is contingent upon,
among other things, the approval of Lehigh's stockholders.
Concurrent with the execution of the Merger Agreement,
Salvatore J. Zizza, Lehigh's Chairman of the Board and Chief
Executive Officer, sold to FMC an option (the "Option") to
purchase up to 6,000,000 shares of Common Stock from Mr. Zizza
at an exercise price of $.50 per share, which is the price at
which Mr. Zizza can acquire those shares from Lehigh under
certain pre-existing agreements. The Option is currently
exercisable by FMC and accordingly, FMC is deemed to be the
beneficial owner of 6,000,000 shares of Common Stock. In the
event the Merger is not approved by Lehigh's stockholders, the
Option will expire, unless earlier exercised. If the Option
is exercised in full by FMC prior to the consummation of the
Merger, FMC would acquire approximately 37% of the issued and
outstanding shares of Lehigh Common Stock.
As consideration for the granting of the Option, FMC delivered
a promissory note (the "Note") in the principal amount of
$100,000 to Mr. Zizza. It is currently anticipated that if
the Option is exercised in full, the $3,000,000 exercise price
will be financed through borrowings from First Union National
Bank of Florida ("First Union"). FMC has received a
commitment from First Union to loan up to $3,300,000 to FMC in
order to fund FMC's exercise of the Option and other
transactional costs associated with the Merger (the "Exercise
Line of Credit").
ITEM 4. PURPOSE OF TRANSACTION.
The Option was acquired for the purpose of voting in favor of
the approval of the Merger and not with a view to the sale, or
for resale in connection with, any distribution of the shares
of Common Stock issuable upon exercise of the Option. In
connection with the financing of the Option exercise price and
pursuant to the First Union letter of intent, FMC will be
required to, among other things, pledge to First Union as
collateral under the Exercise Line of Credit, the shares of
Lehigh Common Stock acquired upon the exercise of the Option.
Other than the foregoing, FMC does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer, or grant participation to such person or to any
third person, with respect to any shares of Common stock
issuable upon exercise of the Option.
In addition to seeking stockholder approval of the Merger at
a special meeting of stockholders, Lehigh will seek, among
other things, stockholder approval of (i) the adoption of
amendments to its Restated Certificate of Incorporation for
the purpose of: (A) changing the name of the corporation from
"The Lehigh Group Inc." to "First Medical Group, Inc."; (B)
eliminating cumulative voting for directors; (C) eliminating
action by stockholders by written consent; (D) fixing the
number of members of the Board of Directors at between seven
and eleven, as determined from time-to-time by the Board of
Directors; and (E) requiring any future amendment to the
provisions of the Certificate of Incorporation addressed by
items (B) through (D) to require the vote of the holders of at
least 60% of the outstanding shares of Lehigh Common Stock
(collectively, the "Certificate Amendments"); and (ii) the
election of seven (7) directors to the Board of Directors.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
As of the date hereof, FMC has an Option to purchase 6,000,000
shares of Common Stock. FMC does not beneficially own any
other securities of Lehigh. Based on information contained in
Lehigh's quarterly report on Form 10-Q for the quarter ended
September 30, 1996, Lehigh has 10,339,250 shares of Common
Stock issued and outstanding. Accordingly, if the Option is
exercised in full by FMC, FMC would beneficially own
approximately 37% of the issued and outstanding Common Stock
of Lehigh.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Other than the Merger Agreement, the Option, the Note and
other agreements related to the Merger, there are no other
contracts, arrangements, understandings or relationships among
the persons named in Item 2 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Option Agreement, dated October 29, 1996, between
Salvatore J. Zizza and FMC.
(b) Promissory Note, dated October 29, 1996, issued by FMC in
favor of Salvatore J. Zizza.
SIGNATURE
After reasonable inquiry and to the best of knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: December 23, 1996 FIRST MEDICAL CORPORATION
By: /s/Dennis A. Sokol
Dennis A. Sokol
Chairman of the Board and
Chief Executive Officer
INDEX TO EXHIBITS
[CAPTION]
<TABLE>
<S> <C> <C>
Exhibit No. Description Sequential Page No.
1. Option Agreement, dated October 29, 1996,
between Salvatore J. Zizza and
First Medical Corporation
2. Promissory Note, dated October 29,
1996, issued by First Medical
Corporation in favor of
Salvatore J. Zizza.
</TABLE>
EXHIBIT 1
Salvatore J. Zizza
810 Seventh Avenue
27th Floor
New York, N.Y. 10019
First Medical Corporation October 29, 1996
1055 Washington Boulevard
Stamford, CT 06901
Gentlemen:
When countersigned below, this letter agreement will
constitute a legal and binding agreement between us with respect to
the following matters.
1. GRANT OF OPTION. I hereby grant to First Medical
Corporation ("FMC") an option to acquire up to 6,000,000 shares of
common stock of The Lehigh Group Inc. ("Lehigh") upon the terms and
subject to the conditions set forth in this letter agreement.
2. CONSIDERATION. Concurrently with the acceptance of this
letter agreement, FMC is delivering its note in the principal
amount of $100,000 in payment for the option. The form of the FMC
note is attached hereto as Exhibit A.
3. TERM OF THE OPTION. The option shall expire at the
earlier of (a) January 15, 1997 or (b) consummation or termination
for any reason of the Agreement and Plan of Merger between Lehigh
and FMC (the "Merger Agreement").
4. EXERCISE PRICE. The price and terms upon which the
option may be exercised shall be governed by the Warrant Agreement
between Lehigh and me, a copy of which is attached hereto as
Exhibit B. In the event of any inconsistency between this letter
agreement and the Warrant Agreement, this letter agreement shall
govern. In order to avoid any penalties for "short swing profits"
under Section 16(b), to the extent necessary this letter agreement
shall be deemed to constitute an assignment of my rights under the
Warrant Agreement. The parties agree to take any other actions
which may be necessary to structure the exercise of the option and
the warrant so as to avoid any liability under Section 16(b). In
order to induce the grant of this option, FMC hereby represents and
warrants to Salvatore J. Zizza that FMC has obtained a Commitment
from First Union National Bank of Florida to lend to FMC the sum of
$3,000,000 to be used by FMC to exercise the option, which
commitment is embodied in a commitment letter a copy of which is
annexed hereto as Exhibit C.
5. STANDSTILL AGREEMENTS. Until December 31, 2001, FMC
agrees to the following: (i) it shall not acquire, directly or
indirectly, any shares of common stock of Lehigh or any voting
rights with respect thereto, except (a) by means of the option
granted pursuant to this letter agreement and (b) up to 15% of the
common stock of Lehigh through open market or privately negotiated
purchases which are consummated prior to January 15, 1997; (ii) the
only matter for which it may solicit proxies from Lehigh
shareholders is approval of the Merger Agreement, for which it
shall vote all shares of common stock of Lehigh under its control
or for which it obtains proxies in favor of the Merger Agreement;
(iii) on all other matters submitted for a vote of stockholders, it
shall vote all shares of common stock of Lehigh under its control
in accordance with the recommendation of the Board of Directors of
Lehigh (so long as such matter has no detrimental effect on the
Merger Agreement); and (iv) it shall not transfer, assign,
hypothecate, pledge or otherwise dispose of any of the shares of
common stock of Lehigh under its control (or the voting rights
attendant thereto) without first obtaining (a) my consent, and (b)
the agreement of the purchaser to be bound by these standstill
provisions; provided, however, that FMC may sell shares pursuant to
its demand registration right pursuant to the terms of an agreement
with Lehigh dated as of the date hereof.
6. NON-TRANSFERABILITY OF OPTION. This letter agreement,
and the option contained herein, may not be transferred, assigned,
hypothecated or pledged (either directly or indirectly) by FMC in
any fashion to any entity without my prior written consent. For
this purpose, a "change of control" of FMC would constitute a
transfer of the option for which my prior written consent would be
required.
7. INDEMNIFICATION AND CONTRIBUTION. FMC agrees to
indemnify and hold me harmless against any and all claims, causes
of action or liabilities which may arise from this letter agreement
or the exercise of the option or warrant hereunder. I agree to
provide FMC with prompt notification of any matter which could give
rise to a claim for indemnification; FMC agrees to promptly pay all
fees and expenses which I might incur in defending any such
matters, and to pay in full any ultimate liability which might
result. Notwithstanding FMC's agreement to provide such
indemnification, I shall control the selection of counsel and
direct the defense strategy. In the event indemnification is not
available due to public policy or otherwise, the parties shall
reformulate this provision to provide for contribution by FMC based
on the relative benefits obtained by it, which shall be assumed to
be 99%. FMC agrees that it will not prosecute or support any claim
which seeks to invalidate this provision.
8. PROXY AT MEETING. Prior to the record date for the
stockholder meeting at which the Merger Agreement shall be voted
upon,I will use my best efforts to obtain irrevocable proxies from
major stockholders (including myself and other officers and
directors of Lehigh) in favor of approval of the Merger Agreement.
9. MISCELLANEOUS. This letter agreement: constitutes the
entire agreement between us with respect to this subject; shall
inure to the benefit of my successors and assigns; may only be
modified or amended by a writing signed by both parties; and is
governed by the laws of the state of Delaware.
Very truly yours,
/s/ Salvatore J. Zizza
Agreed and accepted as of the date first written above.
First Medical Corporation
By: /s/ Dennis A. Sokol
Chairman of the Board and
Chief Executive Officer
EXHIBIT 2
PROMISSORY NOTE
$100,000.00 New York, New York
As of October 29, 1996
FOR VALUE RECEIVED, FIRST MEDICAL CORPORATION, a Delaware
corporation, with its principal place of business located at 1055
Washington Boulevard, Stamford CT 06901 ("Maker"), does hereby
promise to pay to the order of Salvatore J. Zizza, an individual
with mailing address at c/o The Lehigh Group Inc., 810 Seventh
Avenue, Suite 27 F, New York, New York 10019 ("Holder"), or at such
other address or at such other place as may be designated from time
to time by notice form Holder to Maker, the principal sum of ONE
HUNDRED THOUSAND DOLLARS ($100,000.00); together with interest
accrued thereon at an interest rate per annum equal to 8% from the
date hereof. The principal and accrued interest amount of this
Note shall become due and payable upon the earliest to occur of (1)
January 15, 1997, (2) exercise, in whole or in part, of the stock
option granted by Holder to Maker pursuant to that certain letter
agreement dated October 29, 1996, or (3) termination of such letter
agreement in accordance with its terms. Except as otherwise
provided below, interest shall accrue on the outstanding principal
balance then outstanding from the date hereof until repaid, but
shall not be payable with respect to the principal amount of this
Note until the principal is due and payable in full in accordance
with the terms hereof when such interest shall become due and
payable. Interest on this Note shall be computed on a basis of a
year of 360 days for the actual number of days elapsed (including
the first day but excluding the last day).
1. EVENTS OF DEFAULT
The occurrence of any of the following events with respect to
Maker shall constitute an event of default which shall cause the
entire principal amount of this Note and accrued interest to become
immediately due and payable without the necessity for any demand on
Maker:
(a) If Maker shall default in the payment of principal
or any interest when due and such default shall have continued
unremedied for a period of thirty (30) days; or
(b) If Maker shall make an assignment for the benefit of
creditors, or file a voluntary petition under the U.S. Bankruptcy
Code, as amended (the "Bankruptcy Code"), or any other federal or
state insolvency law, or apply for or consent to the appointment of
a receiver, trustee or custodian of all or part of his property; or
(c) If Maker shall file an answer admitting the
jurisdiction of the court and the material allegations of an
involuntary petition filed against him under the Bankruptcy Code or
any other federal or state insolvency law; or
(d) If a proceeding shall be commenced against Maker
seeking the appointment of a trustee, receiver or custodian of all
or part of Maker's property and such proceeding shall not be
dismissed within two (2) days after its commencement.
2. PREPAYMENT
This Note may be prepaid without penalty or premium at any
time, in whole or in part, upon not less than two (2) days' prior
written notice.
3. MISCELLANEOUS PROVISIONS
(a) Failure to exercise Holder's rights hereunder shall
not constitute a waiver of the right to exercise same in the event
of any subsequent default.
(b) Maker and Holder hereby irrevocably submit to the
personal jurisdiction of any state or Federal court sitting in the
State of New York over any suit, action or proceeding arising out
of or relating to this Note. Maker and Holder hereby irrevocably
waive to the fullest extent permitted by applicable law any
objection which they have or hereafter have to laying of the venue
of any such suit, action or proceeding brought in such a court and
any claim that any such suit, action or proceeding brought in such
a court has been brought in an inconvenient forum. Maker and
Holder hereby agree to submit to the exclusive jurisdiction of the
courts of the state of New York for the purpose of resolving any
action or claim arising out of the performance of the provisions of
this Note.
(c) Maker expressly waives any right to a trial by jury
in any action to enforce this Note. Maker also waives the right to
interpose in any proceeding to collect this Note, any set-off,
affirmative defense or counterclaim of any nature except those
asserted in good faith that specifically arise under this Note.
(d) This Note shall be construed in accordance with and
governed by the laws of the state of Delaware.
(e) Maker expressly waives presentment for payment,
demand and protest, notice of protest and dishonor, and all other
notices in connection with the delivery, acceptance, performance
default or enforcement of the payment of this Note.
(f) This Note may not be modified nor shall any waiver
hereunder be effective unless in writing signed by the party
against whom the same is asserted.
IN WITNESS WHEREOF, this Note has been executed on behalf of
Maker as of the day and year first above written.
FIRST MEDICAL CORPORATION
By: /s/ Dennis A. Sokol
Chairman of the
Board and Chief
Executive Officer
