AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT made and entered into as of the 29th day of
October 1996, by and among The Lehigh Group Inc., a Delaware corporation
("Lehigh"), Lehigh Management Corp., a Delaware corporation and a wholly-owned
subsidiary of Lehigh ("Newco") and First Medical Corporation, a Delaware
corporation ("FMC"). Unless the context indicates otherwise, all references
herein to Lehigh or FMC refer to Lehigh and FMC and their respective wholly
owned subsidiaries.
W I T N E S S E T H T H A T:
R E C I T A L S:
A. Lehigh has recently organized Newco for the purpose of
merging with and into FMC on the terms and conditions set forth herein and with
the effect that, as a result thereof, the present stockholders of Lehigh will
after consummation of the Merger hold four percent (4%) of the issued and
outstanding common stock, $.001 par value of Lehigh (the "Lehigh Common Stock")
on a fully-diluted basis.
B. Simultaneously with the execution and delivery of this
Agreement, FMC is lending to Lehigh the sum of $300,000 and, in evidence
thereof, Lehigh is delivering to FMC a debenture in the form annexed hereto as
Exhibit A.
C. It is intended that the transactions contemplated by this
Agreement shall constitute a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements and the benefits to be realized by each of the parties, the parties
hereto agree as follows:
1. THE MERGER
(a) On the Closing Date, Newco shall be merged with
and into FMC (the "Merger") in accordance with the provisions of the General
Corporation Law of the State of Delaware (the "DGCL"). FMC shall be the
surviving corporation of the Merger, shall be a wholly-owned subsidiary of
Lehigh and shall continue to be governed by the laws of Delaware. Immediately
prior to the Effective Time (as hereinafter defined), a 1 for 23 reverse stock
split of the 10,339,250 shares of the Lehigh Common Stock currently outstanding
shall be effected, resulting in there being an aggregate of approximately
450,000 shares of the Lehigh Common Stock outstanding immediately prior to the
Effective Time. Upon the effectiveness of the Merger, and by virtue thereof
without any further action by Lehigh, FMC or any of their stockholders: (i) any
and all shares of the Lehigh Common Stock held by FMC immediately prior to the
Effective Time shall be cancelled; (ii) each other share of the Lehigh Common
Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding; (iii) each share of common stock, $.01 par value,
of FMC (the "FMC Common Stock") shall cease to be outstanding and shall be
converted into 1,000 shares of Lehigh Common Stock.
(b) Certificates representing shares of FMC Common Stock shall
be exchanged for certificates of Lehigh Common Stock as follows:
(i) After the Effective Time, certificates evidencing
outstanding shares of FMC Common Stock shall evidence the right of the holder
thereof to receive certificates representing 1,000 whole share(s) of Lehigh
Common Stock for each share of FMC Common Stock. Each holder of FMC Common
Stock, upon surrender of the certificates which prior thereto represented shares
of FMC Common stock, to a trust company to be designated by Lehigh which shall
act as the exchange agent (the "Exchange Agent") for such stockholders to effect
the exchange of certificates on their behalf, shall be entitled upon such
surrender to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Lehigh Common Stock into which the
shares of FMC Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted. Until so surrendered,
each such outstanding certificate for shares of FMC Common Stock shall be
deemed, for all corporate purposes including voting rights, subject to the
further provisions of this Section 1(b), to evidence the ownership of the whole
shares of Lehigh Common Stock into which such shares have been converted.
(ii) No certificate representing a fraction of Lehigh
Common Stock will be issued and no right to vote or receive any distribution or
any other right of a stockholder shall attach to any fractional interest of
Lehigh Common Stock to which any holder of shares of FMC Common Stock would
otherwise be entitled hereunder.
(iii) If any certificate for whole shares of Lehigh
Common Stock is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly endorsed
and otherwise be in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of certificates for shares of Lehigh Common stock in any
name other than that of the registered holder of the certificate surrendered.
(iv) At the Effective Time, all shares of FMC Common
Stock which shall then be held in its treasury, if any, shall cease to exist,
and all certificates representing such shares shall be cancelled.
(c) Lehigh and FMC shall each submit this Agreement to its
stockholders for approval in accordance with the DGCL, at an annual or special
meeting of the stockholders (the "Meeting") called and held on a date to be
fixed by their respective Boards of Directors and shall use their best efforts
to hold such meeting on or before January 15, 1997 or as soon thereafter as
practical.
(d) Lehigh and FMC shall each use their best efforts to obtain
the affirmative vote of stockholders required to approve this Agreement and the
transactions contemplated hereby, and will recommend to their respective
stockholders the approval of the Merger, subject however, in the case of each
company's Board of Directors, to its fiduciary obligation to stockholders.
Lehigh and FMC shall each mail to all their stockholders entitled to vote at and
receive notice of such meeting the material required in accordance with the
Registration Statement and Prospectus provisions specified in paragraph 9
hereof.
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(e) On or before the date of the Meeting, the Board of
Directors of Newco shall duly approve this Agreement and Lehigh, as sole
stockholder of Newco, shall duly approve this Agreement and the transactions
contemplated hereby.
(f) Following the approval of the Merger by the stockholders
of Lehigh, Newco and FMC, a Certificate of Merger containing the information
required by applicable law shall be executed by the appropriate officers of FMC
and Newco.
(g) Notwithstanding any other provision of this Agreement to
the contrary, if Lehigh receives a proposal for a business combination with any
other party which is more favorable to Lehigh or its stockholders than the terms
set forth in this Agreement (an "Alternate Proposal") at any time prior to
consummation of the Merger, Lehigh shall be entitled to pursue and/or consummate
such transaction free of any obligation to FMC under or pursuant to this
Agreement except for those obligations set forth in Section 17 hereof.
2. CLOSING; EFFECTIVE TIME
(a) The closing of all the transactions contemplated hereby
(herein called the "Closing" or the "Closing Date") shall occur at a date and
place mutually agreed between the parties and on a date within fifteen (15)
business days after all of the of the conditions described in paragraphs 14 and
15 hereof have been satisfied or, to the extent permitted by paragraph 16(c)
hereof, their satisfaction has been waived. Lehigh, Newco and FMC will use their
best efforts to obtain the approvals specified in paragraph 8 hereof and any
other of the consents, waivers, or approvals necessary or desirable to
accomplish the transactions contemplated by this Agreement. All documents
required to be delivered by each of the parties hereto shall be duly delivered
to the respective recipient thereof at or prior to the Closing. Without the
consent of FMC and Lehigh to extend such date, the Closing Date shall be no
later than February 1, 1997, and if it is delayed beyond said date, or extended
date, then either party shall have the right to terminate this Agreement upon
notice to that effect.
(b) At the Closing, Lehigh, Newco and FMC shall jointly direct
that the Certificate of Merger be duly filed, and in accordance with such
direction it shall be filed, in the Offices of the Secretary of State of
Delaware so that the Merger shall be effective on the Closing Date. The time at
which the Merger becomes effective is referred to herein as the "Effective
Time."
3. LISTING
At a time mutually agreed to by Lehigh and FMC, but in no
event later than the date following the approval of stockholders of both Lehigh
and FMC, Lehigh agrees, at its expense, to apply for and use its best efforts to
obtain additional listings on the New York Stock Exchange, subject to notice of
issuance, of the shares of Lehigh Common Stock to be delivered to FMC
stockholders pursuant to the terms of this Agreement. FMC agrees to render
assistance to Lehigh in obtaining such listing, including the furnishing of such
financial statements as Lehigh may reasonably request.
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4. INVESTIGATION BY THE PARTIES
Lehigh and FMC acknowledge that they have made or caused to be
made such investigation of the properties of the other and its subsidiaries and
of its financial and legal condition as the party making such investigation
deems necessary or advisable to familiarize itself with such properties and
other matters. Lehigh and FMC each agree that if matters come to the attention
of either party requiring additional due diligence, each agrees to permit the
other and its authorized agents or representatives to have, after the date of
execution hereof, full access to its premises and to all of its books and
records at reasonable hours, and its subsidiaries and officers will furnish the
party making such investigation with such financial and operating data and other
information with respect to the business and properties of it and its
subsidiaries as the party making such investigation shall from time to time
reasonably request. No investigation by Lehigh or FMC shall affect the
representations and warranties of the other and each such representation and
warranty shall survive any such investigation. Each party further agrees that in
the event the transactions contemplated by this Agreement shall not be
consummated, it and its officers, employees, accountants, attorneys, engineers,
authorized agents and other representatives will not disclose or make available
to any other person or use for any purpose unrelated to the consummation of this
Agreement any information, whether written or oral, with respect to the other
party and its subsidiaries or their business which it obtained pursuant to this
Agreement. Such information shall remain the property of the party providing it
and shall not be reproduced or copied without the consent of such party. In the
event that the transactions contemplated by this Agreement shall not be
consummated, all such written information shall be returned to the party
providing it.
5. "AFFILIATES" OF FMC
Each stockholder of FMC who is, in the opinion of counsel to
Lehigh, deemed to be an "affiliate" of FMC as such term is defined in the rules
and regulations of the Securities and Exchange Commission under the Securities
Act of 1933, as amended (hereinafter called the "1933 Act"), is listed on a
Schedule to be delivered to Lehigh within 20 days hereof, and will be informed
by FMC that: (i) absent an applicable exemption under the 1933 Act, the shares
of Lehigh Common Stock to be received by such "affiliate" and owned beneficially
on consummation of the transactions contemplated hereunder may be offered and
sold by him only pursuant to an effective registration statement under the 1933
Act or pursuant to the provisions of paragraph (d) of Rule 145 promulgated under
the 1933 Act; (ii) Rule 145 restricts the amount and method of subsequent
dispositions by such "affiliate" of such shares and (iii) a continuity of
interests by the "affiliate" must be maintained. Prior to the Closing Date, FMC
agrees to obtain from each "affiliate" an agreement to the effect that such
affiliate will not publicly sell any of such shares unless a registration
statement under the 1933 Act with respect thereto is then in effect, or such
disposition complies with paragraph (d) of Rule 145 promulgated under the 1933
Act, or counsel satisfactory to Lehigh has delivered a written opinion to Lehigh
and to such "affiliate" that registration under the 1933 Act is not required in
connection with such disposition.
6. STATE SECURITIES LAWS
Lehigh will take such steps as may be necessary to comply with
any state securities or so-called Blue Sky laws applicable to the actions to be
taken in connection with the Merger and the delivery by Lehigh to FMC
stockholders of the shares of Lehigh Common Stock to be delivered
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pursuant to this Agreement. Costs and expenses of any such Blue-Sky
qualifications shall be borne by Lehigh.
7. CONDUCT OF BUSINESS PENDING THE CLOSING
From the date hereof, to and including the Closing Date,
except as may be first approved by the other Party or as is otherwise permitted
or contemplated by this Agreement:
(i) Lehigh and FMC shall each conduct their business only in
the usual and ordinary course;
(ii) neither Lehigh or FMC shall make any change in its
authorized or outstanding capitalization;
(iii) Except as set forth on their respective Disclosure
Schedules annexed to this Agreement neither Lehigh or FMC shall authorize for
issuance or issue or enter any agreement or commitment for the issuance of
shares of capital stock;
(iv) neither Lehigh or FMC shall create or grant any rights or
elections to purchase stock under any employee stock bonus, thrift or purchase
plan or otherwise;
(v) neither Lehigh or FMC shall amend their Certificates of
Incorporation or Bylaws unless deemed to be reasonably necessary to consummate
the transaction contemplated herein and upon prior notice thereof to each other;
(vi) Neither Lehigh or FMC shall make any modification in
their employee benefit programs or in their present policies in regard to the
payment of salaries or compensation to their personnel and no increase shall be
made in the compensation of their personnel, except in the ordinary course of
business;
(vii) Neither Lehigh or FMC shall make any contract,
commitment, sale or purchase of assets or incur debt, except in the ordinary
course of business;
(viii) Lehigh and FMC will use all reasonable and proper
efforts to preserve their respective business organizations intact, to keep
available the services of their present employees and to maintain satisfactory
relationships with suppliers, customers, regulatory agencies, and others having
business relations with it;
(ix) Neither Lehigh or FMC shall create or implement a profit
sharing plan; and,
(x) The Board of Directors of Lehigh and FMC will not declare
any dividends on, or otherwise make any distribution in respect of, their
outstanding shares of capital stock.
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8. EFFORTS TO OBTAIN APPROVALS AND CONSENTS
FMC and Lehigh will use all reasonable and proper efforts to
obtain, where required, the approval and consent (i) of any governmental
authorities having jurisdiction over the transactions contemplated in this
Agreement, and (ii) of such other persons whose consent to the transactions
contemplated by this Agreement is required.
9. PROXY STATEMENT AND REGISTRATION STATEMENT
(a) FMC and Lehigh agree that they shall cooperate in the
preparation of and the filing with the Securities and Exchange Commission by
Lehigh of a proxy statement/prospectus (the "Proxy Statement") in accordance
with the Securities Exchange Act of 1934 (the "1934 Act") and the applicable
rules and regulations thereunder, to be included in the registration statement
of Lehigh referred to below and (ii) the filing with the Securities and Exchange
Commission, by Lehigh, of a registration statement on Form S-4 or such other
Form as may be appropriate (the "Registration Statement"), including the Lehigh
Proxy Statement, in accordance with the Securities Act of 1933 (the "1933 Act")
and the applicable rules and regulations thereunder covering the shares of
Lehigh Common Stock to be issued pursuant to this Agreement. Lehigh and FMC
thereafter shall use all reasonable efforts to cause the Registration Statement
to become effective under the 1933 Act at the earliest practicable date, and
shall take such actions as may reasonably be required under applicable state
securities laws to permit the transactions contemplated by this Agreement.
Lehigh shall advise FMC promptly when the Registration Statement has become
effective, and FMC and Lehigh shall thereupon each send a Proxy Statement to
their respective stockholders for purposes of the Meeting contemplated by this
Agreement. The Proxy Statements shall be mailed not less than 20 days prior to
such meetings to all stockholders of record at their address of record on the
transfer records of FMC and Lehigh. Each party shall bear their respective out
of pocket expenses, and expenses related to preparing their respective Proxy
Statement, soliciting proxies, and preparing documents, financial statements,
schedules, exhibits, and like materials for inclusion in the Registration
Statement. Lehigh shall be responsible for the expenses of filing the
Registration Statement.
(b) Subject to the conditions set forth below, the parties
agree to indemnify and hold harmless each other, their respective officers,
directors, partners, employees, agents and counsel against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 9, but not be limited to, attorneys' fees and any and
all expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact made by the party
against whom indemnification is sought and contained (1) in any Prospectus/Proxy
Statement, the Registration Statement, or Proxy Statement (as from time to time
amended and supplemented) or any amendment or supplement thereto; or (2) in any
application or other document or communication (in this Section 9 collectively
called an "application") executed by or on behalf of either party or based upon
written information filed in any jurisdiction in order to qualify the shares of
Lehigh Common Stock to be issued in connection with the Merger under the "Blue
Sky" or securities laws thereof or filed with the Securities and Exchange
Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
indemnifying party from the party seeking indemnification expressly for
inclusion in any
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Prospectus/Proxy Statement, the Registration Statement, or Proxy Statement, or
any amendment or supplement thereto, or in any application, as the case may be,
or (ii) any breach of representation, warranty, covenant, or agreement contained
in this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability each party may otherwise have, including liabilities arising under
this Agreement. If any action is brought against either party or any of its
officers, directors, partners, employees, agents, or counsel ( an "indemnified
party") in respect of which indemnity may be sought pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the other
party (the "indemnifying party") in writing of the institution of such action
(but the failure to so notify shall not relieve the indemnifying party from any
liability it may have other than pursuant to this Paragraph 9(b)) and the
indemnifying party shall promptly assume the defense of such action, including
the employment of counsel and payment of expenses (satisfactory to such
indemnified party or parties). Such indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties to have charge of the defense of such
action or such indemnified party or parties shall have reasonably concluded that
there may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
the other party in any of which events such fees and expenses shall be borne by
the indemnifying party and the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties.
Anything in this paragraph to the contrary notwithstanding, the indemnifying
party shall not be liable for any settlement of any such claim or action
effected without its written consent.
10. COOPERATION BETWEEN PARTIES
FMC and Lehigh shall fully cooperate with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their obligations under this Agreement, including the
preparation of financial statements and the supplying of information in
connection with the preparation of the Registration Statement and the Proxy
Statement.
11. REPRESENTATIONS OF LEHIGH
Lehigh represents, warrants and agrees that:
(a) Lehigh is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and it subsidiaries
are duly organized, validly existing and in good standing under the laws of the
jurisdiction pursuant to which they were incorporated. Lehigh and its
subsidiaries have the corporate power and any necessary governmental authority
to own or lease their properties now owned or leased and to carry on their
business as now being conducted. Lehigh and its subsidiaries are duly qualified
to do business and in good standing in every jurisdiction in which the nature of
their business or the character of their properties makes such qualification
necessary.
(b) As of the date hereof, the authorized capital stock of
Lehigh consists of 100,000,000 shares of Lehigh Common Stock, of which
10,339,250 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, $.001 par value, none of which is issued and outstanding. As of the date
hereof, there are options and warrants outstanding to purchase
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18,697,187 shares of Lehigh Common Stock. The outstanding capital stock of
Lehigh and its subsidiaries has been duly authorized and issued and is fully
paid and nonassessable. Except for the foregoing, Lehigh and its subsidiaries
have no commitment to issue, nor will they issue, any shares of their capital
stock or any securities or obligations convertible into or exchangeable for, or
give any person any right to acquire from Lehigh or its subsidiaries, any shares
of Lehigh's or it subsidiaries' capital stock. Lehigh owns all of the issued and
outstanding capital stock of Newco.
(c) The shares of Lehigh Common Stock which are to be issued
and delivered to the FMC stockholders pursuant to the terms of this Agreement,
when so issued and delivered, will be validly authorized and issued and will be
fully paid and nonassessable. Lehigh shall have applied for and shall use its
best efforts to obtain approval for listing all such shares subject to notice of
issuance on the New York Stock Exchange prior to the Effective Time, and no
stockholder of Lehigh or other person will have any preemptive rights in respect
thereto.
(d) Lehigh has furnished FMC with copies of its Annual Report
on Form 10-K filed with the Securities and Exchange Commission for the year
ended December 31, 1995 which contains consolidated balance sheets of Lehigh and
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of operations, stockholders equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1995 audited by BDO Seidman,
LLP. Lehigh has also furnished FMC with unaudited financial statements as of
June 30, 1996 as set forth in its Form 10-Q as filed with the Securities and
Exchange Commission. All of the above financial statements present fairly the
consolidated financial position of Lehigh and its subsidiaries at the periods
indicated, and the consolidated results of operations and cash flows for the
periods then ended. The interim financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis, and in the opinion of Lehigh include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of such interim
period. Since June 30, 1996 there has been no material adverse change in the
assets or liabilities or in the business or condition, financial or otherwise,
of Lehigh or its consolidated subsidiaries, and no change except in the ordinary
course of business or as contemplated by this Agreement.
(e) Except as disclosed in the public filings of Lehigh and
except for the lawsuit filed by Southwicke Corporation a copy of the complaint
in which is annexed hereto, neither Lehigh nor any of its subsidiaries is (i)
engaged in or a party to, or to the knowledge of Lehigh, threatened with any
material legal action or other proceeding before any court or administrative
agency or (ii) to the knowledge of Lehigh, has been charged with, or is under
investigation with respect to, any charge concerning any presently pending
material violation of any provision of Federal, state, or other applicable law
or administrative regulations in respect to its business.
(f) Lehigh and Newco have the corporate power to enter into
this Agreement and, subject to requisite stockholder approval, the execution and
delivery and performance of this Agreement have been duly authorized by all
requisite corporate action and this Agreement constitutes the valid and binding
obligations of Lehigh and Newco.
(g) The execution and carrying out of this Agreement and
compliance with the terms and provisions hereof by Lehigh and Newco will not
conflict with or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, or result in the creation of, any
lien, charge, or encumbrance upon any of the properties or assets of Lehigh,
Newco or any of its other subsidiaries pursuant to any corporate charter,
indenture, mortgage, agreement (other than
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that which is created by virtue of this Agreement) or other instrument to which
Lehigh or any of its subsidiaries is a party or by which it or any of its
subsidiaries if bound or affected.
(h) This Agreement and the documents and financial statements
furnished hereunder on behalf of Lehigh do not contain and will not contain any
untrue statement of a material fact nor omit to state a material fact necessary
to be stated in order to make the statements contained herein and therein not
misleading; and there is no fact known to Lehigh which materially adversely
affects or in the future will materially adversely affect the business
operations, affairs or condition of Lehigh or any of its subsidiaries or any of
its or their properties or assets which has not been set forth in this Agreement
or any documents or materials furnished hereunder.
(i) There are no agreements or contracts between Lehigh and
its subsidiaries with any other third party that require approvals or consents
that could delay or prevent the Merger of Lehigh and Newco and the other
transactions contemplated thereby.
(j) Neither Lehigh nor any of its subsidiaries uses or handles
potentially hazardous materials and have not received notification of, and are
not aware of, any past or present event, condition or activity of or relating to
the business, properties or assets of Lehigh which violates any Environmental or
Occupational Safety Law.
12. REPRESENTATIONS OF FMC
FMC represents, warrants and agrees that:
(a) FMC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and its subsidiaries
are duly organized, validly existing and in good standing under the laws of the
jurisdiction pursuant to which they were incorporated. FMC and its subsidiaries
have the corporate power and any necessary governmental authority to own or
lease their properties now owned or leased and to carry on their business as now
being conducted. FMC and its subsidiaries are duly qualified to do business and
in good standing in every jurisdiction in which the nature of their business or
the character of their properties makes such qualification necessary.
(b) The authorized capital stock of FMC consists of 15,000
shares of FMC Common Stock, of which 10,000 shares are issued and outstanding.
The outstanding capital stock, of FMC and its subsidiaries has been duly
authorized and issued and is fully paid and nonassessable. FMC and its
subsidiaries have no commitment to issue, nor will they issue, any shares of
their capital stock or any securities or obligations convertible into or
exchangeable for, or give any person any right to acquire from FMC or its
subsidiaries any shares of FMC or it subsidiaries capital stock, except for
those rights identified in the Disclosure Schedule of FMC annexed hereto (the
"FMC Disclosure Schedule").
(c) FMC has furnished Lehigh with copies of the unaudited
consolidated balance sheet of FMC and subsidiaries as of June 30, 1996 and the
related consolidated statements of operations, shareholder equity (deficit) and
cash flows for the six months ended June 30, 1996, and the consolidated balance
sheets of MedExec, Inc., a principal operating subsidiary of FMC, and its
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of operations, stockholder equity (deficit) and cash flows for each
of the two years in the period ended December
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31, 1995 audited by KPMG Peat Marwick. All of the above financial statements
present fairly the consolidated financial position of FMC and its subsidiaries
at the periods indicated, and the consolidated results of operations and cash
flows for the periods then ended. The interim financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis, and in the opinion of FMC include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
such interim period. Since September 30, 1996 there has been no material adverse
change in the assets or liabilities or in the business or condition, financial
or otherwise, of FMC or its consolidated subsidiaries, and no change except in
the ordinary course of business or as contemplated by this Agreement.
(d) Neither FMC nor any of its subsidiaries is engaged in or a
party to, or to the knowledge of FMC, threatened with any material legal action
or other proceeding before any court or administrative agency except as set
forth in the FMC Disclosure Schedule to be furnished to Lehigh. Neither FMC nor
any of its subsidiaries, to the knowledge of FMC, has been charged with, or is
under investigation with respect to, any charge concerning any presently pending
material violation of any provision of Federal, state, or other applicable law
or administrative regulations in respect to its business except as set forth on
said FMC Disclosure Schedule.
(e) The information to be furnished by FMC for use in the
material mailed to stockholders of FMC in connection with the Meetings will in
all material respects comply with the applicable requirement of the 1933 Act and
the 1934 Act, and the rules and regulations promulgated thereunder.
(f) FMC has the corporate power to enter into this Agreement,
the execution and delivery and performance of this Agreement have been duly
authorized by all requisite corporate action, and this Agreement constitutes the
valid and binding obligations of FMC.
(g) The execution and carrying out of this Agreement and
compliance with the terms and provisions hereof by FMC will not conflict with or
result in any breach of any of the terms, conditions, or provisions of, or
constitute a default under, or result in the creation of, any lien, charge, or
encumbrance upon any of the properties or assets of FMC or any of its other
subsidiaries pursuant to any corporate charter, indenture, mortgage, agreement
(other than that which is created by virtue of this Agreement) or other
instrument to which FMC or any of its subsidiaries is a party or by which it or
any of its subsidiaries if bound or affected.
(h) This Agreement, the FMC Disclosure Schedule and all
documents and financial statements furnished hereunder on behalf of FMC do not
contain and will not contain any untrue statement of a material fact nor omit to
state a material fact necessary to be stated in order to make the statements
contained herein and therein not misleading; and there is no fact known to FMC
which materially adversely affects or in the future will materially adversely
affect the business operations, affairs or condition of FMC or any of its
subsidiaries or any of its or their properties or assets which has not been set
forth in this Agreement the FMC Disclosure Schedule or other documents and
material furnished hereunder.
(i) There are no agreements or contracts between FMC and its
subsidiaries with any other third party that require approvals or consents that
could delay or prevent the Merger of FMC and Newco and the other transactions
contemplated thereby.
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(j) Neither FMC nor any of its subsidiaries uses or handles
potentially hazardous materials other than those customarily handled by medical
clinics of the type managed by FMC, and have not received notification of, and
are not aware of, any past or present event, condition or activity of or
relating to the business, properties or assets of FMC which violates any
Environmental or Occupational Safety Law.
13. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties made herein by FMC and
Lehigh shall not survive, and shall expire with and be terminated upon, the
Closing of the Merger.
14. CONDITIONS TO THE OBLIGATIONS OF LEHIGH
The obligations of Lehigh hereunder are subject to the
satisfaction on or before the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of stockholders of Lehigh and
FMC.
(b) Each "affiliate" of FMC will have properly executed and
delivered the Affiliate's Agreement described in paragraph 5 hereof.
(c) FMC shall have furnished Lehigh with (i) certified copies
of resolutions duly adopted by the holders of a majority or more of the issued
and outstanding shares of FMC common stock entitled to vote, evidencing approval
of this Agreement and the transactions contemplated hereby; (ii) certified
copies of resolutions duly adopted by the Board of Directors of FMC approving
the execution and delivery of this Agreement and authorizing all necessary or
proper corporate action, to enable FMC to comply with the terms hereof and
thereof; (iii) an opinion dated the closing date of counsel for FMC in form and
substance satisfactory to Lehigh and its counsel to the effect that:
(1) FMC and each of its subsidiaries are corporations duly
organized and validly existing and in good standing under the laws of
its respective jurisdiction of incorporation, and to the best of the
knowledge of such counsel based on inquiries of responsible officers of
FMC, is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of their business or the character of
their properties makes such qualification necessary, except where the
failure to be so qualified will not have a material adverse effect on
FMC's business or consolidated financial condition, and has all
corporate and other power and authority, including all governmental
licenses and authorizations, necessary to own its properties and to
carry on its business as described in the Proxy Statement;
(2) this Agreement has been duly authorized and executed by
proper corporate action of FMC and constitutes the valid and legally
binding obligation of FMC in accordance with its terms.
(3) no provision of the Certificate of Incorporation or the
By-laws of FMC or of any contract (except those pursuant to which
waivers or consents have been obtained) known to such counsel to which
FMC is a party, or any law, rule or regulation prevents it from
carrying out the transactions contemplated hereby.
11
(4) there is no material action or proceeding known to such
counsel, pending or threatened against FMC before a court or other
governmental body or instituted or threatened by any public authority
or by the holders of any securities of FMC, other than as specifically
set forth in the FMC Disclosure Schedule.
(5) FMC has adequate title, subject only to liens and other
matters set forth on the financial statements furnished to Lehigh
pursuant to paragraph 12(c) hereof, to all its real estate properties,
except for any lien of taxes not yet delinquent or being contested in
good faith by appropriate proceedings and easements and restrictions of
record which do not materially adversely affect the use of the property
by FMC, and except for minor defects in titles, none of which, based
upon information furnished by officers of FMC, does or will materially
adversely affect FMC's use of such properties or its operations, and to
which the rights of FMC therein have not been questioned. In giving
such opinion, counsel may rely upon title policies previously issued to
FMC or updated certificates furnished by title insurance companies.
(6) to the best knowledge of such counsel and based upon
inquiries of responsible officers of FMC and upon searches of Uniform
Commercial Code filings in the offices of the appropriate Secretary of
State, there are no liens against properties of FMC (excluding real
estate) except as disclosed by FMC to Lehigh in the FMC Disclosure
Schedule.
In rendering its opinion, FMC counsel may rely as to factual matters on
statements of officers of FMC. In rendering this opinion with respect to the
laws of any jurisdiction other than Delaware, FMC counsel may rely on the
opinion of other counsel retained by FMC provided that said opinion shall state
that Lehigh is justified in relying on the opinion or opinions of such other
counsel.
(d) The representations and warranties of FMC contained in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date, except for changes permitted by this Agreement or
those incurred in the ordinary course of business and FMC shall have received
from FMC at the Closing a certificate dated the Closing Date of the Chairman,
President or a Vice President of FMC to that effect.
(e) Each and all of the respective agreements of FMC to be
performed on or before the Closing Date pursuant to the terms hereof shall in
all material respects have been duly performed and FMC shall have delivered to
FMC a certificate dated the Closing Date, of the Chairman, President or a Vice
President of FMC to that effect.
(f) The completion of Lehigh's Proxy Statement and the
effectiveness of Lehigh's Registration Statement on Form S-4, as each may be
amended.
(g) The approval of this Agreement by the FMC Board of
Directors.
(h) The absence of any material contingent liabilities of FMC
not previously disclosed to Lehigh.
(i) The nonexistence of any agreement or contract that could
delay or prevent the completion of the transactions contemplated by this
Agreement.
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15. CONDITIONS TO THE OBLIGATIONS OF FMC
The obligations of FMC hereunder are subject to the
satisfaction on or before the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of stockholders of Lehigh and
FMC.
(b) Lehigh shall have furnished FMC with (i) certified copies
of resolutions duly adopted by a majority of the holders of the issued and
outstanding shares of Lehigh common stock validly present at a meeting,
evidencing approval of this Agreement and the transactions contemplated hereby;
(ii) certified copies of resolutions duly adopted by the Board of Directors of
Lehigh approving the execution and delivery of this Agreement and authorizing
all necessary or proper corporate action, to enable Lehigh to comply with the
terms hereof and thereof; (iii) an opinion dated the closing date of counsel for
Lehigh in form and substance satisfactory to FMC and its counsel to the effect
that:
(1) Lehigh and each of its subsidiaries are corporations duly
organized and validly existing and in good standing under the laws of
its respective jurisdiction of incorporation, and to the best of the
knowledge of such counsel based on inquiries of responsible officers of
Lehigh, is duly qualified to do business and is in good standing in
every jurisdiction in which the nature of their business or the
character of their properties makes such qualification necessary,
except where the failure to be so qualified will not have a material
adverse effect on Lehigh's business or consolidated financial
condition, and has all corporate and other power and authority,
including all governmental licenses and authorizations, necessary to
own its properties and to carry on the business as described in the
Proxy Statement of Lehigh made a part of the Proxy Statement.
(2) this Agreement has been duly authorized and executed by
proper corporate action of Lehigh and constitutes the valid and legally
binding obligation of Lehigh in accordance with its terms.
(3) no provision of the Certificate of Incorporation or the
By-laws of Lehigh or of any contract (except those pursuant to which
waivers or consents have been obtained) known to such counsel to which
Lehigh is a party, or any law, rule or regulation prevents it from
carrying out the transactions contemplated hereby.
(4) there is no material action or proceeding known to such
counsel, pending or threatened against Lehigh before a court or other
governmental body or instituted or threatened by any public authority
or by the holders of any securities of Lehigh, other than as
specifically set forth in the Disclosure Schedule.
(5) Lehigh has adequate title, subject only to liens and other
matters set forth on the financial statements furnished to FMC pursuant
to paragraph 11(d) hereof, to all its real estate properties, except
for any lien of taxes not yet delinquent or being contested in good
faith by appropriate proceedings and easements and restrictions of
record which do not materially adversely affect the use of the property
by Lehigh, and except for minor defects in titles, none of which, based
upon information furnished by officers of Lehigh, does or will
materially adversely affect Lehigh's use of such properties or its
operations, and to which the
13
rights of Lehigh therein have not been questioned. In giving such
opinion, counsel may rely upon title policies previously issued to
Lehigh or updated certificates furnished by title insurance companies.
(6) to the best knowledge of such counsel and based upon
inquiries of responsible officers of Lehigh and upon searches of
Uniform Commercial Code filings in the offices of the appropriate
Secretary of State, there are no liens against properties of Lehigh
(excluding real estate) except as to be disclosed by Lehigh to Lehigh
in the Disclosure Schedule.
In rendering its opinion, Lehigh counsel may rely as to factual matters on
statements of officers of Lehigh. In rendering this opinion with resect to the
laws of any jurisdiction other than Delaware, Lehigh counsel may rely on the
opinion of other counsel retained by Lehigh provided that said opinion shall
state that Lehigh is justified in relying on the opinion or opinions of such
other counsel.
(c) The representations and warranties of Lehigh contained in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date, except for changes permitted by this Agreement or
those incurred in the ordinary course of business and FMC shall have received
from Lehigh at the Closing a certificate dated the Closing Date of the President
or a Vice President of Lehigh to that effect.
(d) Each and all of the respective agreements of Lehigh to be
performed on or before the Closing Date pursuant to the terms hereof shall in
all material respects have been duly performed and Lehigh shall have delivered
to FMC a certificate dated the Closing Date, of the Chairman, President or a
Vice President of Lehigh to that effect.
(e) The completion of Lehigh's proxy Statement and the
effectiveness of Lehigh's Registration Statement on Form S-4, as each may be
amended.
(f) The approval of this Agreement by the Lehigh Board of
Directors.
(g) The absence of any material contingent liabilities of
Lehigh not previously disclosed to FMC.
(h) The nonexistence of any agreement or contract that could
delay or prevent the completion of the transactions contemplated by this
Agreement.
16. TERMINATION AND MODIFICATION OF RIGHTS
(a) This Agreement (except for the last three sentences of
paragraph 4 of this Agreement and paragraph 17 of this Agreement) may be
terminated at any time prior to the Closing Date by (i) mutual consent of the
parties hereto authorized by their respective Boards of Directors or (ii) upon
written notice to the other party, by either party upon authorization of its
Board of Directors:
(1) if in its reasonably exercised judgment since the date of
this Agreement there shall have occurred a material adverse change in
the financial condition or business of the other party or the other
party shall have suffered a material loss or damage to any of its
14
property or assets, which change, loss or damage materially affects or
impairs the ability of the other party to conduct its business, or if
any previously undisclosed condition which materially adversely affects
the earning power or assets of either party come to the attention of
the other party; or
(2) if any action or proceeding shall have been instituted or
threatened before a court or other governmental body or by any public
authority to restrain or prohibit the transactions contemplated by this
Agreement or if the consummation of such transactions would subject
either of such parties to liability for breach of any law or
regulation.
(b) As provided in paragraph 2(a), this Agreement may be
terminated by either party upon notice to the other in the event the Closing
shall not be held by February 1, 1997.
(c) Any term or condition of this Agreement may be waived at
any time by the party hereto which is entitled to the benefit thereof, by action
taken by the Board of Directors of such party; and any such term or condition
may be amended at any time, by an agreement in writing executed by the Chairman
of the Board, the President or any Vice President of each of the parties
pursuant to authorization by their respective Boards of Directors provided
however that no amendment of any principal term of the Merger shall be affected
after approval of this Agreement by the stockholders of Lehigh, FMC and Newco
unless such amendment is approved by such stockholders in accordance with
applicable law.
17. BREAK-UP FEE
In the event that Lehigh receives and consummates an Alternate
Proposal (as that term is defined in paragraph 1(g) hereof), then Lehigh shall
pay FMC $1,500,000 by wire transfer of immediately available funds at the date
of consummation of such Alternate Proposal.
18. BROKERS
Each of the parties represents that no broker, finder or
similar person has been retained or paid and that no brokerage fee or other
commission has been agreed to be paid for or on account of this Agreement other
than Gruntal & Company and First Union ________.
19. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the State of Delaware.
20. NOTICES
All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by registered or certified
mail, postage prepaid, or when given by telex or facsimile transmission
(promptly confirmed in writing), as follows:
15
(a) If to Lehigh or Newco:
Salvatore J. Zizza, President
810 Seventh Avenue - #27 F
New York, NY 10019
With a copy to:
Robert A. Bruno, Esq.
General Counsel & Vice President
810 Seventh Avenue - #27 F
New York, NY 10019
and
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attn: Ilan K. Reich, Esq.
(b) If to FMC:
Dennis Sokol
Chairman
First Medical Corporation
1055 Washington Boulevard
Stamford, CT 06901
With a copy to:
Gary Epstein, Esq.
Greenberg Traurig
1221 Brickell Avenue
Miami, FL 33131
21. NON-ASSIGNMENT
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
22. COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, and by the different parties hereto on separate counterparts each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
16
23. HEADINGS AND REFERENCES
The headings of the paragraphs of this Agreement are inserted
for convenience of reference only.
24. ENTIRE AGREEMENT; SEVERABILITY
This Agreement, including the Disclosure Schedules, documents
referred to herein which form a part hereof, contains the entire understanding
of the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter. A determination that any portion of this
Agreement is unenforceable or invalid shall not affect the enforceability or
validity of any of the remaining portions of this Agreement or this Agreement as
a whole.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto by their respective officers thereunto duly authorized by a
majority of their directors as of the date first above written.
ATTEST: THE LEHIGH GROUP INC.
/s/ Robert A. Bruno By /s/ Salvatore J. Zizza,
- --------------------------- ---------------------------
AUTHORIZED OFFICER Salvatore J. Zizza,
Chairman of the Board and
Chief Executive Officer
ATTEST: FIRST MEDICAL CORPORATION
By /s/ Dennis A. Sokol
- --------------------------- ---------------------------
AUTHORIZED OFFICER Name: Dennis A. Sokol
Title: Chairman
ATTEST: LEHIGH MANAGEMENT CORP.
/s/ Robert A. Bruno By /s/ Salvatore J. Zizza
- --------------------------- ---------------------------
AUTHORIZED OFFICER Salvatore J. Zizza, President and
Chief Executive Officer
18
EXHIBIT A
DEBENTURE
[Attached.]
19
FMC DISCLOSURE SCHEDULE
12(b) Subscription Agreement dated June 11, 1996 between FMC and Generale de
Sante International, PLC.
20
SOUTHWICKE LAWSUIT
(Attached)
21