UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
The Lehigh Group, Inc.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
52481610-5
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(CUSIP Number)
David H. Brooks, Chairman
DHB Capital Group, Inc.
11 Old Westbury Road, Old Westbury, New York 11568
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 8, 1996
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(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. [ ]
Check the following box if a fee is being paid with the statement. [ X ]
A fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
1. NAME OF REPORTING PERSON S.S. OR IRS
IDENTIFICATION NO. OF ABOVE PERSON
DHB Capital Group, Inc. IRS Employer Identification No. 1-312-9361
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3. SEC USE ONLY
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4. SOURCE OF FUNDS*
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ X ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7. SOLE VOTING POWER 6,000,000
SHARES -------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY -----------------------------------------
EACH 9. SOLE DISPOSITIVE POWER 6,000,000
REPORTING --------------------------------------
PERSON WITH 10. SHARED DISPOSITIVE POWER 0
------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,000,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37
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14. TYPE OF REPORTING PERSON*
CO
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- ---------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer
This statement relates to shares of common stock (the "Common
Stock") of The Lehigh Group, Inc. (the "Issuer"). The Issuer's principal
executive office is located at 810 Seventh Avenue, New York, NY 10019.
Item 2. Identity and Background
This statement is being filed on behalf of DHB Capital Group,
Inc., a Delaware corporation ("DHB"). DHB is a publicly held holding company.
Its wholly owned subsidiary, DHB Armor Group, Inc. operating through its two
wholly owned subsidiaries, Point Blank Body Armor, Inc. ("Point Blank") and
Protective Apparel Corporation of America ("PACA") is an industry leader in the
manufacture and sale of U.S. bullet resistant vests and related products sold to
federal, state and local law enforcement agencies nationwide and
internationally. DHB's other holdings include NDL Products, Inc. ("NDL"), a
leading manufacturer of U.S. made sports, fitness and medical protective gear
and equipment and Orthopedic Products, Inc. ("OPI"), which supplies the medical
industry with orthopedic products. DHB's principal offices are at 11 Old
Westbury Road, Old Westbury, New York 11568.
The executive officers and directors of DHB and their respective
positions are as follows:
Name Position
David H. Brooks Chairman of the Board and CEO of DHB
Douglas T. Burns President of DHB
Mary Kreidell Secretary, Treasurer and Director of DHB
Leonard Rosen President of PACA
James Magee President of Point Blank
Joseph Giaquinto President of NDL
Jeffrey Schepp President of OPI
Melvin Paikoff Director of DHB
Gary Nadelman Director of DHB
Mr. Brooks', Ms. Kreidell's and Mr. Burn's business address is
the same as DHB's. Mr. Rosen's business address is 148 Cedar Place, Norris,
Tennessee, and Mr. Magee's, Mr. Giaquinto's and Mr. Schepp's business address is
4031 N.E. 12th Terrace, Oakland Park, Florida 33334. Mr. Paikoff's business
address is 61 Jericho Turnpike, Jericho, New York 11753 and Mr. Nadelman's
residence is at 6 Old Farm Road, Old Westbury, New York 11568.
Neither DHB, nor any of the above officers or directors has,
during the last five years, been convicted of a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has DHB, nor any of the above
officers or directors other than David H. Brooks, during the last five years,
been a 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 or finding any violations with respect to
such laws.
<PAGE>
David H. Brooks, Chairman and principal shareholder of DHB,
and his brother, Mr. Jeffrey Brooks, and Jeffrey Brooks Securities, Inc.
("JBSI"), a company wholly owned by Mr. Jeffrey Brooks, entered into a consent
decree with the Securities and Exchange Commission in December 1992. Without
admitting or denying any allegations, they were assessed a fine and agreed to be
enjoined from future violations of Section 15(b) and 15(f) of the Securities
Exchange Act of 1934 ("Exchange Act"). Mr. David Brooks is barred from having
any direct or indirect interest in, or acting as a director, officer or employee
of, any broker, dealer, municipal securities dealer, investment advisor, or
investment company. Mr. David Brooks may apply to become so associated after a
five-year period. Mr. David Brooks is not barred from being an officer or
director of any public company other than a registered broker-dealer or
investment company. Mr. Jeffrey Brooks was prohibited (for a period of one year
which ended December 1993) from acting in a supervisory capacity with respect to
any employee or any broker, dealer, municipal securities dealer, investment
company or investment adviser, and JBSI (his company) was required to institute
and maintain procedures pursuant to Section 15(f) of the Exchange Act.
Item 3. Source and Amount of Funds or Other Consideration
As of the date of the event which requires the filing of this
statement, DHB beneficially owns an Option to purchase six million (6,000,000)
shares of the Issuer's Common Stock (the "Option") at $0.50 per share. The
Option was acquired from Salvatore J. Zizza, Chairman and CEO of the Issuer for
$100,000 paid by the issuance to Mr. Zizza of a Promissory Note from DHB.
If the Option is exercised, it is presently anticipated that
funds for such exercise, would come from DHB's working capital.
Item 4. Purpose of Transaction
The Option owned by DHB was acquired for the purpose of
obtaining a favorable vote of stockholders of the Issuer with respect to the
proposed merger between DHB and the Issuer.
On July 8, 1996 the Issuer and DHB executed a definitive
Agreement and Plan of Reorganization (the "Agreement") pursuant to which DHB
will merge into a newly-formed subsidiary of the Issuer.
Under the terms of the Agreement the Issuer's shares will be
reverse-split on a 21.845 to 1 basis and DHB shares will be exchanged on a
one-to-one basis. Consequently, following the merger existing stockholders of
the Issuer will own 3% and DHB stockholders will own 97% of the resulting
company, which will be renamed from "The Lehigh Group, Inc." to "DHB Group,
Inc."
This transaction has been approved by the Boards of Directors
of both DHB and the Issuer and is subject to approval by the stockholders of
each. It is contemplated that such stockholder meetings will be held in early
October 1996.
<PAGE>
Concurrent with the execution of the Agreement Mr. Zizza sold
to DHB an Option to purchase up to six million (6,000,000) shares of the Issuer
at $0.50 per share, which is the price at which Mr. Zizza can acquire those
shares from the Issuer under pre- existing agreements. That Option, if exercised
in full, would equal approximately 37% of the Issuer's issued and outstanding
stock after giving effect to such exercise. Furthermore, Mr. Zizza agreed to use
his best efforts prior to the record date for the Issuer's stockholders' meeting
to obtain irrevocable proxies for shares of the Issuer owned by himself and
other officers and directors of Issuer.
The Option sold by Mr. Zizza to DHB expires on the later of
January 8, 1997 and the consummation or termination of the Agreement. Also, it
contains standstill agreements on DHB's ability to vote or dispose of any shares
of the Issuer which it may acquire. Under the Option Agreement, DHB may acquire
up to 5% of the Issuer's stock prior to October 15, 1996 on the open market or
privately negotiated purchases; and, if a new Schedule 13D is filed after July
8, 1996, by any party (other than DHB), DHB may acquire up to an additional 10%
of the Issuer's stock.
Item 5. Interest in Securities of the Issuer
(a) As of the date hereof, DHB is the beneficial owner of an
Option to purchase 6,000,000 shares of Common Stock of the Issuer. Based on the
most recent information from the Issuer, DHB believes there is to be 10,339,250
shares of the Issuer's Common Stock outstanding. Therefore, DHB beneficially
owns the right to acquire 37% of the Issuer's outstanding shares of Common Stock
(after giving effect to the exercise of the Option and the issuance of the
underlying shares).
(b) DHB has the sole power to exercise this Option and to
vote, direct the vote, dispose of or direct the disposition of all the shares of
the Issuer's Common Stock that they would beneficially own upon exercise the
Option.
(c) The only transaction in the class of securities reported
on that were effected during the past sixty (60) days was the acquisition of the
Option as described in Item 3 herein.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities to the Issuer.
The only contracts, arrangements, understandings or
relationships among the persons named in Item 2 and between such persons and any
person with respect to any securities of the Issuer are set forth in the
following documents:
1. Agreement and Plan of Reorganization dated July 8, 1996
between the Issuer and DHB and the following exhibits thereto:
Exhibit "A" -- Form of Agreement of Merger
Exhibit "B" -- Proposed Board of Directors and Officers
Exhibit "C" -- Employment Agreement with Salvatore J. Zizza
Exhibit "D" -- Employment Agreement with Robert A. Bruno
2. Option Agreement dated July 8, 1996 between Salvatore J.
Zizza and DHB and Exhibit "A" thereto. (Exhibit A is contained in Exhibits 10.2
and 10.5 to Issuer's Current Report on Form 8-K filed with the Securities and
Exchange Commission in September 1994 and which is incorporated herein by
reference).
<PAGE>
Item 7. Material to be Filed as Exhibits
Copies of the Agreements and documents set forth in Item 6
herein are attached hereto and incorporated herein.
The undersigned, after reasonable inquiry and to the best of
my knowledge and belief, certify that the information set forth in this
statement is true, complete and correct.
Dated: New York, New York
July 17, 1996
DHB CAPITAL GROUP, INC.
By: /s/ David H. Brooks
David H. Brooks
Chairman and CEO
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT made and entered into as of the 8th day of
July 1996, by and among The Lehigh Group Inc., a Delaware corporation
("Lehigh"), Lehigh Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Lehigh, ("Newco") and DHB Capital Group, Inc., a Delaware
corporation ("DHB"). Unless the context indicates otherwise, all references
herein to Lehigh or DHB refer to Lehigh and DHB and their respective wholly
owned subsidiaries.
W I T N E S S E T H T H A T:
A. Lehigh has recently organized Newco for the purpose of merging with
DHB.
B. Newco and DHB will enter into an Agreement of Merger (hereinafter
called the "Merger Agreement") in substantially the form attached
hereto and made a part hereof as Exhibit A, which provides, among
other things, for the statutory merger of Newco with DHB in accordance
with the General Corporation Law of Delaware.
C. It is intended that the transactions contemplated by this Agreement
shall constitute a merger conforming to the provisions of Section 368
(a)(2)(E) of the Internal Revenue Code of 1986.
NOW, HEREFORE, in consideration of the mutual covenants and
agreements and the benefits to be realized by each of the parties:
1. The Merger
(a) Newco has an authorized capital stock, consisting of 100
shares of common stock, no par value, the issued shares of
which are owned by Lehigh.
(b) In accordance with the Merger Agreement, on the Closing Date
hereinafter referred to, Newco shall be merged with and into
DHB (the "Merger"). DHB shall be the surviving corporation.
As part of the Merger, and in exchange for all of the issued
and outstanding shares of capital stock of DHB, Lehigh shall
issue shares of Lehigh common stock, par value $.001 per
share, (the "Shares") in order to permit the Merger to be
effected in accordance with the terms of the Merger
Agreement. The exact number of Shares to be issued to the
shareholders of DHB shall be that number of authorized but
unissued shares of Lehigh that would equal 97% of the total
number of issued and outstanding shares of Lehigh upon
consummation of the Merger contemplated hereby, after giving
effect to such issuance.
(c) Lehigh shall issue and deliver as and when required by the
Merger Agreement, certificates representing the Shares for
which the shares of capital stock of DHB outstanding
immediately prior to the effective time of the Merger shall
have been converted.
<PAGE>
(d) Lehigh and DHB shall each submit this Agreement and the
Merger Agreement to its shareholders for approval in
accordance with the Delaware General Corporation Law, at an
annual or special meeting of the shareholders (the "Meeting")
called and held on a date to be fixed by their respective
Board of Directors and shall use their best efforts to hold
such meeting on or before November 15, 1996, or as soon
thereafter as practical.
(e) Lehigh and DHB shall each use their best efforts to obtain
the affirmative vote of shareholders required to approve the
Merger Agreement and the transactions contemplated thereby,
and will recommend to their respective shareholders the
approval of the Merger, subject however, in the case of each
company's Board of Directors, to its fiduciary obligation to
shareholders. Lehigh and DHB shall each mail to all their
shareholders 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.
(f) On or before the date of the Meeting, the Board of Directors
of Newco shall duly approve the Merger Agreement and Lehigh,
as sole shareholder of Newco, shall duly approve the Merger
Agreement and the transactions contemplated thereby.
(g) Following the approval of the Merger by the shareholders of
Lehigh, Newco and DHB, and upon execution of the Merger
Agreement by the officers of Newco and DHB as required by
applicable law, a Certificate of Merger containing the
information required by the applicable law shall be executed
by the appropriate officers of DHB and Newco.
2. CLOSING
(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 15 and 16
hereof have been satisfied or, to the extent permitted in
paragraph 17(c) hereof, their satisfaction has been waived.
Lehigh, Newco and DHB 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
and the Merger 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 DHB and Lehigh to extend
such date, the Closing Date shall be no later than November
15, 1996, 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.
<PAGE>
(b) At the Closing, Lehigh, Newco and DHB shall jointly direct
that the Certificate of Merger be duly filed, and it shall be
in accordance with such direction be filed, in the Offices of
the Secretary of State of Delaware so that the Merger shall
be effective on the Closing Date.
3. LISTING
At a time mutually agreed to by Lehigh and DHB, but in no event
later than the date following the approval of shareholders of both
Lehigh and DHB, Lehigh agrees, at its expense, to apply for and use is
best efforts to obtain additional listings on the New York Stock
Exchange, subject to notice of issuance, of the Shares to be delivered
to DHB shareholders pursuant to the terms of the Merger Agreement. DHB
agrees to render assistance to Lehigh in obtaining such listing,
including the furnishing of such financial statements as Lehigh may
reasonably request.
4. INVESTIGATION BY THE PARTIES
Lehigh and DHB acknowledge that they have made or cause 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 DHB 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 DHB 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 that 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 DHB
Each shareholder of DHB who is, in the opinion of counsel to
Lehigh, deemed to be an "affiliate" of DHB 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 Schedule 5 attached hereto and made a part
hereof, and will be informed by DHB that: (i) absent an applicable
<PAGE>
exemption under the 1933 Act, the Shares 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, DHB 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
action to be taken in connection with the Merger and the delivery by
Lehigh to DHB shareholders of the Shares pursuant to this agreement
and the Merger 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 or the Merger Agreement:
(i) Lehigh and DHB shall each conduct their business only in the
usual and ordinary course;
(ii) neither Lehigh or DHB shall make any change in its
authorized capitalization, unless such change will not dilute the
percentage ownership of the shareholders of the other as further set
forth in Exhibit 1 annexed hereto and made a part hereof, as
constituted in Lehigh immediately after the Effective Date of the
Merger.
(iii) Except as set forth on their respective Disclosure
Statements to be delivered to each other pursuant to paragraphs 12(b)
and 13(b) herein, neither Lehigh or DHB shall authorize for issuance
or issue or enter any agreement or commitment for the issuance of
shares of capital stock;
(iv) neither Lehigh or DHB 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 DHB shall amend their Articles 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 DHB 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 DHB shall make any contract, commitment,
sale or purchase of assets, except in the ordinary course of business.
<PAGE>
(viii) Lehigh and DHB will use all reasonable and proper efforts
to preserve their respective business organization 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 DHB shall create or implement a profit
sharing plan; and,
(x) Except as set forth on their respective Disclosure Statements
to be delivered to each other pursuant to paragraphs 12(b) and 13(b)
herein, the Board of Directors of Lehigh and DHB will not declare any
dividends on, or otherwise make any distribution in respect of, their
outstanding shares of capital stock unless such dividend or
distribution will not dilute the percentage ownership of the
shareholders of the other, as further set forth in Exhibit 1 annexed
hereto and made a part hereof.
8. EFFORTS TO OBTAIN APPROVALS AND CONSENTS
DHB 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 the Merger Agreement, and (ii) of
such other persons whose consent is required to the transactions
contemplated by this Agreement and the Merger Agreement.
9. PROXY STATEMENT AND REGISTRATION STATEMENT
(a) DHB and Lehigh agree that they shall cooperate in the
preparation of and the filing with the Securities and
Exchange Commission, by DHB and 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 DHB Proxy Statement
and Lehigh Proxy Statement, in accordance with the 1933 Act
and the applicable rules and regulations thereunder covering
the Shares to be issued pursuant to this Agreement. Lehigh
and DHB 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 DHB promptly when the
Registration Statement has become effective, and DHB and
Lehigh shall thereupon each send a Proxy Statement to their
respective shareholders for purposes of the Meeting
contemplated by this Agreement. The Proxy Statements shall be
<PAGE>
mailed not less than 20 days prior to such meetings to all
shareholders of record at their address of record on the
transfer records of DHB 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 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 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 statement 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
<PAGE>
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
DHB 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. TAX RULING AND OTHER ACTIONS
(a) If deemed necessary or desirable by DHB and Lehigh, DHB and
Lehigh will use their best efforts to obtain as promptly as
possible rulings from the United States Internal Revenue
Service (IRS), satisfactory to their respective counsel, to
the effect that for Federal income tax purposes no gain or
loss will be recognized to the holders of DHB shares upon the
receipt of Shares in exchange for their DHB shares in
accordance with the provisions of this Agreement, and as to
other matters incident to the transactions contemplated by
this Agreement as such counsel may deem appropriate. Lehigh
and DHB agree not to take action inconsistent with the
representations made by them in such ruling request if such
action would result in the inapplicability of any of the
rulings given by the Internal Revenue Service. In lieu of a
ruling from the Internal Revenue, DHB may request an opinion
of counsel to DHB, to the foregoing effect which opinion
shall be a condition to both parties obligations to
consummate the Merger. All expenses relating to said ruling
or opinion of counsel shall be DHB's responsibility.
<PAGE>
12. 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 March 31, 1996, the capitalization of Lehigh and its
subsidiaries is as set forth in financial statements and
filings furnished to DHB. The outstanding capital stock,
including warrants of Lehigh and its subsidiaries has been
duly authorized and issued and is fully paid and
nonassessable. 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 or it
subsidiaries capital stock, except for those shares
identified in the Disclosure Schedule to be delivered by
Lehigh to DHB ("Disclosure Schedule"). Lehigh owns all of the
issued and outstanding capital stock of Newco.
(c) The Shares which are to be issued and delivered to the DHB
shareholders pursuant to the terms of this Agreement and the
Merger 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 used 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 Date of Merger and no stockholder of
Lehigh or other person will have any preemptive rights in
respect thereto.
(d) Lehigh has furnished DHB 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, shareholders 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 DHB with unaudited financial statements as of
March 31, 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 March 31, 1996 there has been no material adverse
change in the assets or liabilities or in the business or
<PAGE>
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) Neither Lehigh nor any of its subsidiaries is 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 except as set forth on the Disclosure
Schedule. Neither Lehigh nor any of its subsidiaries, 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 except as set forth on
said Disclosure Statement.
(f) The information to be furnished by Lehigh for use in the
material mailed to stockholders of DHB 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.
(g) Lehigh and Newco have 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 Lehigh and Newco.
(h) 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 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.
(i) This Agreement, the Disclosure Schedule, 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 the Disclosure Schedule
or other documents and material furnished hereunder.
<PAGE>
(j) 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.
(k) Neither Lehigh nor any of its subsidiaries use or handle
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.
13. REPRESENTATIONS OF DHB
DHB represents, warrants and agrees that:
(a) DHB 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. DHB 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. DHB 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 March 31, 1996, the capitalization of DHB and its
subsidiaries is as set forth in financial statements and
filings furnished to Lehigh. The outstanding capital stock,
of DHB and its subsidiaries has been duly authorized and
issued and is fully paid and nonassessable. DHB 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 DHB or its subsidiaries any
shares of DHB or it subsidiaries capital stock, except for
those shares identified in the Disclosure Schedule to be
delivered by DHB to Lehigh ("DHB Disclosure Schedule").
(c) DHB has furnished Lehigh with copies of its Annual Reports on
Form 10-KSB filed with the Securities and Exchange Commission
for the year ended December 31, 1995 and 1994 which contains
consolidated balance sheets of DHB and subsidiaries as of
December 31, 1995 and 1994 and the related consolidated
statements of operations shareholder equity (deficit) and
cash flows for each of the three years in the period ended
December 31, 1995 audited by Capraro Centofranchi Kramer &
Co., P.C. DHB has also furnished Lehigh with unaudited
financial statements as of March 31, 1996 as set forth in its
Form 10-QSB as filed with the Securities and Exchange
Commission. All of the above financial statements present
fairly the consolidated financial position of DHB and its
subsidiaries at the periods indicated, and the consolidated
results of operations and cash flows for the periods then
<PAGE>
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 DHB
include all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of such interim
period. Since March 31, 1996 there has been no material
adverse change in the assets or liabilities or in the
business or condition, financial or otherwise, of DHB or its
consolidated subsidiaries, and no change except in the
ordinary course of business or as contemplated by this
Agreement.
(d) Neither DHB nor any of its subsidiaries is engaged in or a
party to, or to the knowledge of DHB, threatened with any
material legal action or other proceeding before any court or
administrative agency except as set forth in the DHB
Disclosure Schedule to be furnished to Lehigh. Neither DHB
nor any of its subsidiaries, to the knowledge of DHB, 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 DHB Disclosure
Statement.
(e) The information to be furnished by DHB for use in the
material mailed to stockholders of DHB 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) DHB 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 DHB.
(g) The execution and carrying out of this Agreement and
compliance with the terms and provisions hereof by DHB 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 DHB 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 Lehigh or any of its subsidiaries is a
party or by which it or any of its subsidiaries if bound or
affected.
<PAGE>
(h) This Agreement, the DHB Disclosure Schedule, documents and
financial statements furnished hereunder on behalf of DHB 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 DHB or any of its subsidiaries or any
of its or their properties or assets which has not been set
forth in this Agreement the DHB Disclosure Schedule or other
documents and material furnished hereunder.
(i) There are no agreements or contracts between DHB and its
subsidiaries with any other third party that require
approvals or consents that could delay or prevent the Merger
of DHB and Newco and the other transactions contemplated
thereby.
(j) Neither Lehigh nor any of its subsidiaries use or handle
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.
14. SURVIVAL OF WARRANTIES
The representations and warranties made herein by DHB and Lehigh
shall survive this Agreement for a period of two years from the
closing date and shall not expire with, nor be terminated by the
Merger of Newco into DHB.
15. 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 vote of a majority of the
outstanding shares of common stock of Lehigh and DHB.
(b) Each "affiliate" of DHB will have properly executed and
delivered the Affiliate's Agreement described in paragraph
five hereof.
(c) DHB 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 DHB common stock
entitled to vote, evidencing approval of this Agreement and
the Merger Agreement and the transactions contemplated hereby
and thereby; (ii) certified copies of resolutions duly
adopted by the Board of Directors of DHB approving the
execution and delivery of this Agreement and the Merger
Agreement and authorizing all necessary or proper corporate
<PAGE>
action, to enable DHB to comply with the terms hereof and
thereof; (iii) an opinion dated the closing date of counsel
for DHB in the form and substance satisfactory to DHB and its
counsel to the effect that:
(1) DHB 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
DHB, 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 DHB'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 DHB made a part of the
Registration Statement;
(2) this Agreement and the Merger Agreement each have been
duly authorized and executed by proper corporate action
of DHB and each constitutes the valid and legally
binding obligation of DHB in accordance with its terms;
(3) no provision of the Articles of Incorporation or the
By-laws of DHB or of any contract (except those
pursuant to which waivers or consents have been
obtained) known to such counsel to which DHB 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 DHB before a
court or other governmental body or instituted or
threatened by any public authority or by the holders of
any securities of DHB, other than as specifically set
forth in the DHB Disclosure Schedule.
(5) DHB has adequate title, subject only to liens and other
matters set forth on the financial statements furnished
to Lehigh pursuant to paragraph 13(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 DHB, and
except for minor defects in titles, none of which,
based upon information furnished by officers of DHB,
does or will materially adversely affect DHB's use of
such properties or its operations, and to which the
rights of DHB therein have not been questioned. In
giving such opinion, counsel may rely upon title
policies previously issued to DHB or updated
certificates furnished by title insurance companies.
<PAGE>
(6) to the best knowledge of such counsel and based upon
inquiries of responsible officers of DHB and upon
searches of Uniform Commercial Code filings in the
offices of the appropriate Secretary of State, there
are no liens against properties of DHB (excluding real
estate) except as to be disclosed by DHB to Lehigh in
the DHB Disclosure Schedule. In rendering this opinion
with resect to the laws of any jurisdiction other than
Delaware, DHB counsel may rely on the opinion of other
counsel retained by DHB 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 DHB contained in this
Agreement shall be true in all material respect 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 DHB
shall have received from DHB at the Closing a certificate
dated the Closing Date of the Chairman, President or a Vice
President of DHB to that effect.
(e) Each and all of the respective agreements of DHB to be
performed on or before the Closing Date pursuant to the terms
hereof shall in all material respects have been duly
performed and DHB shall have delivered to DHB a certificate
dated the Closing Date, of the Chairman, President or a Vice
President of DHB to that effect.
(f) Rulings and other actions, if desirable or required, to the
effect described in paragraph 11 hereof, satisfactory to
counsel for DHB and Lehigh, shall have been obtained or filed
and the conditions of such rulings or other actions which
must be complied with on or prior to the Closing Date shall
have been complied with.
(g) The completion of DHB's Proxy Statement and the effectiveness
of Lehigh's Registration on Form S-4, as each may be amended.
(h) The approval of this Agreement and the Merger Agreement by
the DHB Board of Directors.
(i) The absence of any material contingent liabilities of DHB not
previously disclosed to Lehigh.
(j) The nonexistence of any agreement or contract that could
delay or prevent the completion of the transactions
contemplated by this Agreement.
16. CONDITIONS TO THE OBLIGATIONS OF DHB
The obligations of DHB 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 vote of a majority of the
outstanding shares of common stock of Lehigh and DHB.
<PAGE>
(b) Lehigh shall have furnished DHB with (i) certified copies of
resolutions duly adopted by the holders of a majority or more
of the issued and outstanding shares of Lehigh common stock
entitled to vote, evidencing approval of this Agreement and
the Merger Agreement and the transactions contemplated hereby
and thereby; (ii) certified copies of resolutions duly
adopted by the Board of Directors of Lehigh approving the
execution and delivery of this Agreement and the Merger
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 the form and substance satisfactory to DHB 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
Registration Statement;
(2) this Agreement and the Merger Agreement each have been
duly authorized and executed by proper corporate action
of Lehigh and each constitutes the valid and legally
binding obligation of Lehigh in accordance with its
terms;
(3) no provision of the Articles 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 DHB pursuant to paragraph 12(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
<PAGE>
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
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 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.
(d) The representations and warranties of Lehigh contained in
this Agreement shall be true in all material respect 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 Lehigh
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.
(e) 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 DHB a
certificate dated the Closing Date, of the Chairman,
President or a Vice President of Lehigh to that effect.
(f) Rulings and other actions, if desirable or required, to the
effect described in paragraph 11 hereof, satisfactory to
counsel for Lehigh and DHB, shall have been obtained or filed
and the conditions of such rulings or other actions which
must be complied with on or prior to the Closing Date shall
have been complied with.
(g) At the time immediately prior to the closing of this
transaction, no more than 473,289 shares of Common Stock of
Lehigh shall be issued and outstanding resulting from Lehigh
shareholders having voted for a 21.845 for 1 reverse stock
split with respect to the 10,339,250 shares of Common Stock
presently outstanding; no other class of equity securities
will be issued and outstanding, nor will there be any
Warrants, Options or other securities outstanding which are
<PAGE>
convertible into common stock or upon exercise would require
common stock to be issued, except as set forth in the
Disclosure Schedule.
(h) The completion of Lehigh's proxy Statement and the
effectiveness of Lehigh's Registration on Form S-4, as each
may be amended.
(i) The approval of this Agreement and the Merger Agreement by
the Lehigh Board of Directors.
(j) The absence of any material contingent liabilities of Lehigh
not previously disclosed to Lehigh.
(k) The nonexistence of any agreement or contract that could
delay or prevent the completion of the transactions
contemplated by this Agreement.
(l) The Board of Directors of Lehigh shall be constituted as set
forth on Exhibit B annexed hereto.
(m) The Employment Agreement shall be entered into with Messrs.
Salvatore J. Zizza and Robert A. Bruno in the forms annexed
hereto as Exhibit C and D respectively.
(n) The Board of Directors of Lehigh and the shareholders of
Lehigh shall have approved an amendment to Lehigh's Articles
of Incorporation changing the name of Lehigh to "The DHB
Group, Inc." effective upon the closing of the transactions
contemplated hereby.
17. TERMINATION AND MODIFICATIONS RIGHTS
(a) This Agreement (except for the last three sentences of
paragraph 4 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 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.
<PAGE>
(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 November 15, 1996.
(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 shareholders of Lehigh, DHB and
Newco unless such amendment is approved by such shareholders
in accordance with applicable law.
18. INDEMNIFICATION
(a) Salvatore J. Zizza ("Zizza") and Robert A. Bruno ("Bruno"),
solely to the extent and in the manner set forth herein,
shall jointly and severally indemnify Lehigh and hold it
harmless against and in respect of any and all damage, loss,
cost or reasonable expense (which shall also include
reasonable attorney's fees) suffered, incurred or required to
be paid by Lehigh after the Effective Date of the Merger
(herein referred to as "Losses") by reason of any
representation or warranty made by Lehigh in or pursuant to
this Agreement or in the Disclosure Statement, documents or
financial statements delivered pursuant hereto being untrue
or incorrect, to the extent not actually known by DHB prior
to the Effective Date of the Merger at the date of this
Agreement, provided that Zizza and Bruno had actual knowledge
that such representation or warranty was untrue or incorrect
prior to the Effective Date of the Merger.
(b) There shall be no indemnification for Losses unless the
aggregate amount of such Losses exceeds $25,000, and then
only the Losses in excess of $25,000 shall be subject to
indemnification in accordance with this paragraph 18. The
limitation of liability for Losses above the $25,000
threshold shall in the case of each of Zizza and Bruno be the
amount of and shall be paid from the remaining unpaid salary
from their respective employment contracts, annexed hereto as
Exhibits C and D. In computing the amount of Losses, the
indemnification shall be for the net amount of a loss after
giving effect to anything which directly mitigates the loss
and after taking into account insurance proceeds or any other
recovery resulting from the loss. (If, after the payment of
any indemnification hereunder, the amount of a loss shall be
reduced beyond the amount, if any, previously taken into
account by a recovery, settlement, or otherwise, the amount
of such reduction which is directly related to the loss less
any expenses incurred in connection with such reduction shall
promptly be repaid to the party that paid the indemnification
hereunder.)
<PAGE>
(c) Notwithstanding anything herein contained, Zizza and Bruno
shall not be liable for any Losses referred to in paragraphs
18(a) or 18(b) hereof unless a written notice setting forth
in reasonable detail the breach which is being asserted has
been given to Zizza and/or Bruno within the applicable period
of limitations set forth in paragraph 18(d) hereof and, in
addition, if such matter arises out of a claim by a third
party, such notice shall be given promptly and in any event
(so long as the indemnifying party shall not have been
prejudiced by delay) not later than thirty (30) days after
the party seeking indemnity shall have become aware thereof.
The party from whom indemnification is sought shall be
entitled to defend against any such claim as set forth in
paragraph 18 hereof.
(d) No claim may be asserted with respect to indemnification
after the period ending two years from the Closing Date.
(e) In the event that any claim is made by a third party which,
if valid, would entitle Lehigh to indemnity under this
paragraph 18, Zizza and Bruno shall be given written notice
as set forth in paragraph 18(c) hereof within the time
hereinabove provided and they, or either of them, may defend
against and settle the claim at their own expense and with
counsel of their choosing. Lehigh shall have the right, but
not the obligation, to participate at its own expense in the
defense thereof by counsel of its own choosing, but Zizza and
Bruno, or either of them, shall be entitled to control the
defense unless Lehigh has relieved them from liability with
respect to the particular matter. In the event Zizza or Bruno
shall fail timely to defend, contest or otherwise protect
against such claim, Lehigh shall have the right, but not the
obligation, to defend, contest or otherwise protect against
the same or, on not less than thirty (30) days' written
notice, to Zizza and Bruno make any compromise or settlement
thereof, and such settlement shall be binding on the party
from whom indemnification was sought for purposes of
indemnification under this paragraph 18 unless such party
objects thereto within the thirty (30) day period aforesaid.
19. 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.
20. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the State of Delaware.
<PAGE>
21. 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:
(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
(b) If the DHB
David H. Brooks, Chairman
DHB CAPITAL GROUP, INC.
11 Old Westbury Road
Old Westbury, New York 11568
With a copy to
Peter Landau, Esq.
Opton Handler Gottlieb Feiler & Katz
52 Vanderbilt Avenue
New York NY 10017
22. 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.
23. 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.
24. HEADINGS AND REFERENCES
The headings of the paragraphs of this Agreement are inserted
for convenience of reference only.
<PAGE>
25. 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.
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: DHB CAPITAL GROUP, INC.
______________________ By________________________________
AUTHORIZED OFFICER David H. Brooks, Chairman
and Chief Executive Officer
ATTEST: THE LEHIGH GROUP INC.
______________________ By________________________________
AUTHORIZED OFFICER Salvatore J. Zizza, Chairman of the Board
and Chief Executive Officer
ATTEST: LEHIGH ACQUISITION CORPORATION
_____________________ By________________________________
AUTHORIZED OFFICER Salvatore J. Zizza, President and
Chief Executive Officer
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 11, 1996, between Robert A.
Bruno ("Executive") an individual having an address at 871 Annette Drive,
Wantagh, NY 11793 and The Lehigh Group Inc., a Delaware corporation ("Employer")
having its principal place of business at 810 Seventh Ave., New York, NY 10019.
In consideration of the premises and the mutual covenants hereinafter
set forth, the parties hereto hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive and Executive hereby agrees
to be and remain in the employ of Employer upon the terms and conditions
hereinafter set forth.
2. Employment Period
The term of Executive's employment under this Agreement (the Employment
Period") shall commence as of the Effective Date ("Effective Date") as herein
defined and, subject to earlier termination as provided in Section 5, shall
terminate four years after the Effective Date. The Effective Date is the date
the merger between The Lehigh Group Inc., (or its subsidiary) merge with DHB
Capital Group, Inc., as further defined in the Agreement and Plan of Merger
between The Lehigh Group Inc., (or its subsidiary) and DHB Capital Group Inc.
3. Duties and Responsibilities
During the Employment Period, Executive (i) shall be a Vice President
and General Counsel of Employer, (ii) shall expend his best efforts, energies
and skills, and such time as is reasonably required to fulfill his
responsibilities hereunder, to the business of Company (as hereinafter defined),
it being understood that (although Executive may engage in other business
activities) the Company will require a substantial majority of Executive's
business time, and (iii) shall have such authority, discretion, power and
responsibility, and shall be entitled to office, secretarial and other
facilities and conditions of employment, as are customary or appropriate to this
position (including without limitation those currently exercised by and afforded
to him). Executive shall also serve without additional compensation as a
director of Employer and as an officer and director of any of its subsidiaries,
if so elected or appointed, but if he is not so elected or appointed his
compensation hereunder shall in no way be affected. Employer shall use its best
efforts to cause Executive to be elected as a director of Employer at all times
during the Employment Period. Executive shall report directly to the President
and Chief Executive Officer of Employer. For all purposes of this Agreement, the
term "Company" means Employer and all corporations, associations, companies,
partnerships, firms and other enterprises controlled by or under common control
with Employer.
4. Compensation and Related Matters
4.1 Compensation, Generally. For all services rendered and required to
be rendered by Executive under this Agreement, Employer shall pay to Executive
during and with respect to the Employment Period, and Executive agrees to
accept, such base salary ("Base Salary") and discretionary performance bonus as
are set forth on Exhibit 4.1.
<PAGE>
4.2 Other Benefits. During the Employment Period, subject to, and to
the extent Executive is eligible under their respective terms, Executive shall
be entitled to receive such fringe benefits as are, or are from time to time
hereafter, generally provided by Employer to Employer's employees of comparable
status (other than those provided under or pursuant to separately negotiated
individual employment agreements or arrangements and other than as would
duplicate benefits otherwise provided to Executive) under any pension or
retirement plan, disability plan or insurance, group life insurance, medical
insurance, or other similar plan or program of Employer. Executive's Base Salary
shall (where applicable) constitute the compensation on the basis of which the
amount of Executive's benefits under any such plan or program shall be fixed and
determined.
4.3 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation, no less frequently than monthly, of
signed, itemized accounts of such expenditures all in accordance with Employer's
procedures and policies as adopted and in effect from time to time and
applicable to its employees of comparable status.
4.4 Vacations. Executive shall be entitled to two weeks paid vacation
each year (in addition to public holidays), which shall be taken at such time or
times as shall not unreasonably interfere with Executive's performance of his
duties under this Agreement.
5. Termination of Employment Period
5.1 By Employer: Cause. Employer may, at any time during the Employment
Period by notice to Executive, terminate the Employment Period "for cause"
effective immediately. Such notice shall specify the cause for termination. For
the purposes hereof, "for cause" means (i) willful and continued failure by
Executive to substantially perform his duties hereunder (other than as a result
of incapacity due to illness or injury), after a demand for substantial
performance is delivered to Executive by the Company, which identifies the
manner in which the Company believes that Executive shall not have substantially
performed his duties, (ii) willful misconduct by Executive which is demonstrably
and materially injurious to Company, monetarily or otherwise, (iii) commission
by Executive of an act of fraud or embezzlement, resulting in material economic
harm to Company, or (iv) the conviction of Executive of a felony involving moral
turpitude (other than driving while intoxicated).
5.2 Disability. During the Employment Period, if, solely as a result of
physical or mental incapacity or infirmity (other than alcoholism or drug
addiction), Executive shall be unable to perform this substantial duties under
this Agreement for (i) a continuous period of at least 180 days, or (ii) periods
aggregating at least 270 days during any period of 24 consecutive months (each a
"Disability Period"), and at the end of the Disability Period there is no
reasonable probability that Executive can promptly resume his duties hereunder
pursuant hereto, Executive shall be deemed disabled ("the Disability") and
Employer, by notice to Executive, shall have the right to terminate the
Employment Period for Disability at, as of or after the end of the Disability
Period. The existence of the disability shall be determined by a reputable,
licensed physician mutually selected by Employer and Executive, whose
determination shall be final and binding on the parties, provided, that if
Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the New York County Medical Society,
and if for any reason such President shall fail or refuse to designate such
physician, such physician shall, at the request of either party, be designated
by the American Arbitration Association. Executive shall cooperate in all
reasonable respects to enable an examination to be made by such physician.
<PAGE>
5.3 Death. The Employment Period shall end on the date of Executive's
death.
5.4 Termination Compensation. Executive shall not be entitled to
compensation following the termination of the Employment Period in accordance
with this Section 5 (except for Base Salary through the date of termination of
the Employment Period and performance bonus, if any, in respect of any year
prior to termination).
5.5 Rights Upon Termination: No Mitigation. In the event of the
termination by Employer of Executive's employment hereunder other than pursuant
to this Section 5 or if Executive terminates his employment hereunder by reason
of a material breach by Employer of any provision of this Agreement that
Employer fails to remedy or cease within 30 days after notice thereof to
Employer (provided, that if the Company previously materially breached the same
provision and cured such breach after notice given pursuant to this Section,
only five days notice shall be required), then (i) each installment of Base
Salary that would have become payable during the Employment Period (if the
Employment Period had not been terminated prior to the expiration thereof) shall
become due and payable immediately to Executive, (ii) Executive shall continue
to be entitled to the benefits set forth in Sections 4.2 and 4.3 of this
Agreement through the remainder of the Employment Period (as if the Employment
Period had not be so terminated), and (iii) Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due Executive under this Agreement on account of any remuneration attributable
to any subsequent employment that Executive may obtain.
6. Location of Executive's Activities
Executive's principal office shall be located in Old Westbury, NY.
Notwithstanding the preceding sentence, Executive will engage in such travel and
spend such time in other places as may be necessary or appropriate in
furtherance of his duties hereunder.
7. Miscellaneous
7.1 Notices. Any notice, consent or authorization required or permitted
to be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set froth in the heading
of this Agreement, by registered or certified mail (if available), postage paid,
or at such other address as either party shall designate by notice given to the
other in the manner provided herein.
7.2 Taxes. Employer is authorized to withhold (from any compensation or
benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary to
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.
7.3 Confidential Information. Executive shall not at any time, whether
during the Employment Period or thereafter, disclose or use (except in the
course of his employment hereunder and in furtherance of the business of
Company, or as required by applicable law) any confidential information, trade
secrets or proprietary data of the Company.
7.4 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of New York applicable to agreements
made and to be performed therein.
<PAGE>
7.5 Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
7.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7.7 Severability. If any provision of this Agreement, or part hereof,
is held to be unenforceable, the remainder of such provision and this Agreement,
as the case may be, shall nevertheless remain in full force and effect.
7.8 Attorneys' Fees. In the case of any action or proceeding brought by
a party to enforce any provision of this Agreement, upon the entering of a final
non-appealable judgment with respect thereto, the prevailing party shall be
entitled to recover from the other party the prevailing party's reasonable
attorneys' fees and expenses incurred in connection with such action or
proceeding.
7.9 Waiver of Compliance. The failure of a party to insist on strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver, of or deprive that party of the right thereafter to insist upon strict
adherence to, that term or any other term of this Agreement. Any waiver must be
in writing.
7.10 Arbitration. Any dispute or controversy under or in connection
with this Agreement shall be settled by arbitration conducted in the City of New
York before one arbitrator in accordance with the rules then in effect of the
American Arbitration Association. Judgment may be entered upon the arbitrator's
award in any court having jurisdiction thereof, and the parties consent to the
jurisdiction of the New York courts for this purpose.
7.11 Entire Agreement. This Agreement, together with the option
agreement referred to herein, contains the entire agreement and understanding
between Employer and Executive with respect to the subject matter hereof. This
Agreement supersedes any prior agreement between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE LEHIGH GROUP INC.
By:_______________________
SALVATORE J. ZIZZA
Chairman of the Board & President
__________________________
ROBERT A. BRUNO
<PAGE>
Exhibit 4.1
Compensation
1. Base Salary. During the Employment Period, Employer shall pay to
Executive Base Salary, payable in accordance with Employer's usual payroll
practice, at the rate of (i) $100,000 per annum during the first year of the
Employment Period (ii) $110,000. per annum during the second year of the
Employment Period (iii) $120,000 per annum during the third year of the
Employment Period and (iv) $130,000. per annum during the fourth year of the
Employment Period.
2. Performance Bonus. At the end of each calendar year within the
Employment Period, Employer shall review its performance and that of Executive
and may, in its sole judgment and discretion, determine to pay to Executive a
discretionary performance bonus. Such bonus, if any, shall be payable with 90
days after the end of such year. The payment of such bonus to Executive for any
year or years shall not entitle Executive to a discretionary performance bonus
for any succeeding year.
3. Stock Option. In consideration for Executive renegotiating his
current salary and Employer's desire to have Executive exchange his existing
stock options, Employer agrees on the Effective Date, to issue Executive a stock
option to purchase up to 92,000 fully paid and non-assessable shares of the
Employer's common stock, $ .001 par value immediately after the Effective Date
at a price of $1.00 per share and shall be exercisable at any time on or before
four years after the Effective Date after said options vest.
The aforementioned stock options shall vest as follows: (i) 23,000
options shall vest immediately, (ii) 23,000 options shall vest one year after
the Effective Date, (iii) 23,000 options shall vest two years after the
Effective Date and (iv) 23,000 options shall vest within three years after the
Effective Date.
The stock, pursuant to which this stock option is granted, shall be
registered at the time of the merger between the Employer (or its subsidiary)
and DHB Capital Group Inc. ("DHB"). Said stock options shall also contain a
customary "anti-dilution adjustment" clause to preserve the relative position of
Executive in relation to the number and percentage of the Employer's shares
which he may acquire upon exercise of said option. Such adjustment shall take
into account any changes in the capitalization of the Employer or DHB from and
after June 11, 1996, without giving effect to any options, warrants, convertible
securities or other rights to acquire shares of stock of either the Employer or
DHB.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 11, 1996, between Salvatore J.
Zizza ("Executive") an individual having an address at 1 Gracie Square, New
York, NY 10028 and The Lehigh Group Inc., a Delaware corporation ("Employer")
having its principal place of business at 810 Seventh Ave., New York, NY 10019.
In consideration of the premises and the mutual covenants hereinafter
set forth, the parties hereto hereby agree as follows:
<PAGE>
1. Employment of Executive
Employer hereby agrees to employ Executive and Executive hereby agrees
to be and remain in the employ of Employer upon the terms and conditions
hereinafter set forth.
2. Employment Period
The term of Executive's employment under this Agreement (the Employment
Period") shall commence as of the Effective Date ("Effective Date") as herein
defined and, subject to earlier termination as provided in Section 5, shall
terminate four years after the Effective Date. The Effective Date is the date
the merger between The Lehigh Group Inc., (or its subsidiary) merge with DHB
Capital Group, Inc., as further defined in the Agreement and Plan of Merger
between The Lehigh Group Inc. (or its subsidiary) and DHB Capital Group Inc.
3. Duties and Responsibilities
During the Employment Period, Executive (i) shall be the President and
Chief Operating Officer of Employer, (ii) shall expend his best efforts energies
and skills, and such time as is reasonably required to fulfill his
responsibilities hereunder, to the business of Company (as hereinafter defined),
it being understood that (although Executive may engage in other business
activities as described in Section 7) the Company will require a substantial
portion of Executive's business time, and (iii) shall have such authority,
discretion, power and responsibility, and shall be entitled to office,
secretarial and other facilities and conditions of employment, as are customary
or appropriate to this position (including without limitation those currently
exercised by and afforded to him). Executive shall also serve without additional
compensation as a director of Employer and as an officer and director of any of
its subsidiaries, if so elected or appointed, but if he is not so elected or
appointed his compensation hereunder shall in no way be affected. Employer shall
use its best efforts to cause Executive to be elected as a director of Employer
at all times during the Employment Period. Executive shall report directly to
the Chief Executive Officer and to the Board of Directors of Employer. For all
purposes of this Agreement, the term "Company" means Employer and all
corporations, associations, companies, partnerships, firms and other enterprises
controlled by or under common control with Employer.
4. Compensation and Related Matters
4.1 Compensation, Generally. For all services rendered and required to
be rendered by Executive under this Agreement, Employer shall pay to Executive
during and with respect to the Employment Period, and Executive agrees to
accept, such base salary ("Base Salary") and performance bonus as are set forth
on Exhibit 4.1.
4.2 Automobile. To facilitate the performance of Executive's
responsibilities hereunder, at all times during the Employment Period, Employer
shall continue to make available to Executive, at Employer's expense, for
Executive's personal use, the automobile currently provided to him by Employer
(or a substantially comparable automobile), and Employer shall pay the costs of
operating, maintaining, insuring and subject to such policies as may be in
effect from time to time applicable to senior executive officers of Employer.
<PAGE>
4.3 Other Benefits. During the Employment Period, subject to, and to
the extent Executive is eligible under their respective terms, Executive shall
be entitled to receive such fringe benefits as are, or are from time to time
hereafter, generally provided by Employer to Employer's employees of comparable
status (other than those provided under or pursuant to separately negotiated
individual employment agreements or arrangements and other than as would
duplicate benefits otherwise provided to Executive) under any pension or
retirement plan, disability plan or insurance, group life insurance, medical
insurance, or other similar plan or program of Employer. Executive's Base Salary
shall (where applicable) constitute the compensation on the basis of which the
amount of Executive's benefits under any such plan or program shall be fixed and
determined.
4.4 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation, no less frequently than monthly, of
signed, itemized accounts of such expenditures all in accordance with Employer's
procedures and policies as adopted and in effect from time to time and
applicable to its employees of comparable status.
4.5 Vacations. Executive shall be entitled to vacations consistent with
those previously taken by Executive, which shall be taken as such time or times
as shall not unreasonably interfere with Executive's performance of his duties
under this Agreement.
5. Termination of Employment Period
5.1 By Employer: Cause. Employer may, at any time during the Employment
Period by notice to Executive, terminate the Employment Period "for cause"
effective immediately. Such notice shall specify the cause for termination. For
the purposes hereof, "for cause" means (i) willful and continued failure by
Executive to substantially perform his duties hereunder (other than as a result
of incapacity due to illness or injury), after a demand for substantial
performance is delivered to Executive by Employer's Board of Directors (by a
duly adopted resolution), which specifically identifies the manner in which such
Board believes that Executive shall not have substantially performed his duties,
(ii) willful misconduct by Executive which is demonstrably and materially
injurious to Company, monetarily or otherwise, (iii) commission by Executive of
an act of fraud or embezzlement, resulting in material economic harm to Company,
or (iv) the conviction of Executive of a felony involving moral turpitude (other
than driving while intoxicated). For the purposes hereof, no act, or failure to
act, on Executive's part shall be considered "Willful" unless done, or omitted
to be done, by Executive not in good faith and without reasonable belief that
such action or omission was in or not opposed to the best interests of Company.
Termination "for cause" shall be effected only if (A) Employer has delivered to
Executive a copy of a notice of termination that complies with this paragraph
and that gives Executive, on at lease ten business days prior notice, the
opportunity, together with Executive's counsel to be heard before Employer's
Board of Directors, and (B) Employer's Board of Directors (after such notice and
<PAGE>
opportunity to be heard), adopts a resolution concurred in by not less than
two-thirds of all of the directors of Employer then in office, including at
least two-thirds of all of the directors who are not officers of Employer, that
in the good faith opinion of Employer's Board of Directors Executive was guilty
of conduct set forth above in clauses (i) through (iv) above, and specifying the
particulars thereof in detail.
5.2 Disability. During the Employment Period, if, solely as a result of
physical or mental incapacity or infirmity (other than alcoholism or drug
addiction), Executive shall be unable to perform this substantial duties under
this Agreement for (i) a continuous period of at least 180 days, or (ii) periods
aggregating at least 270 days during any period of 24 consecutive months (each a
"Disability Period"), and at the end of the Disability Period there is no
reasonable probability that Executive can promptly resume his duties hereunder
pursuant hereto, Executive shall be deemed disabled ("the Disability") and
Employer, by notice to Executive, shall have the right to terminate the
Employment Period for Disability at, as of or after then end of the Disability
Period. The existence of the disability shall be determined by a reputable,
licensed physician mutually selected by Employer and Executive, whose
determination shall be final and binding on the parties, provided, that if
Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the New York County Medical Society,
and if for any reason such President shall fail or refuse to designate such
physician, such physician shall, at the request of either party, be designated
by the American Arbitration Association. Executive shall cooperate in all
reasonable respects to enable an examination to be made by such physician.
5.3 Death. The Employment Period shall end on the date of Executive's
death.
5.4 Termination Compensation. Executive shall not be entitled to
compensation following the termination of the Employment Period in accordance
with this Section 5 (except for Base Salary through the date of termination of
the Employment Period and performance bonus, if any, in respect of any year
prior to termination). If, on or after July 1 of any year, Executive's
employment hereunder is terminated by reason of this death or Disability,
Executive shall also be entitled to receive the pro rata portion of his
performance bonus, if any, for that year (based on the number of days within
that year on or prior to the date of termination relative to the total number of
days within that year).
5.5 Mitigation. In the event of the termination by Employer of
Executive's employment other than pursuant to this Section 5, Executive shall be
under no obligation to seek other employment and there shall be no offset
against amounts due Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that Executive may
obtain.
6. Location of Executive's Activities
Executive's principal office shall be located in Old Westbury, NY.
Notwithstanding the preceding sentence, Executive will engage in such travel and
spend such time in other places as may be necessary or appropriate in
furtherance of his duties hereunder.
<PAGE>
7. Other Activities
The parties acknowledge that (i) Executive is also the Chairman,
President, Treasurer and a Director and stockholder of Initial Acquisition Corp.
("IAC"), a "blank check" or "Blind pool" company, (ii) IAC's business objective
is to effect a business combination with an operating business that has, in
IAC's opinion, significant growth potential, (iii) IAC has retained an
investment banking firm to assist IAC in locating and presenting to IAC
appropriate business combination proposals and to advise IAC in connection
therewith, (iv) Executive may in the future organize, acquire substantial equity
interests in or otherwise become affiliated with other "blank check" or "blind
pool" companies with business objectives similar to that of IAC, and (v) it is
contemplated that proposed acquisition, merger or consolidation candidates will
be introduced to IAC and any such other "blank check" or "blind pool: companies
by investment banking firms or other persons retained by IAC or such other
companies for that purpose, and not but Executive. It is understood that
Executive may consider and approve in the ordinary course of business of IAC and
any such other "blank check" or "blind pool" companies investment and business
opportunities introduced to such companies by investment banking firms or other
persons and that, although such opportunities might be appropriate for Employer,
such opportunities would not be presented to Employer. It is further
acknowledged that Executive shall be permitted to continue his involvement with
his other business activities which includes by way of illustration and not
limitation, Bergen Cove Realty Inc., Primary Capital Resources, Inc., Real
Estate Investments, The Bethlehem Corporation and various Gabelli companies.
8. Miscellaneous
8.1 Notices. Any notice, consent or authorization required or permitted
to be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set forth in the heading
of this Agreement, by registered or certified mail (if available), postage paid,
or at such other address as either party shall designate by notice given to the
other in the manner provided herein.
8.2 Taxes. Employer is authorized to withhold (from any compensation or
benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.
8.3 Confidential Information. Executive shall not at any time, whether
during the Employment Period or thereafter, disclose or use (except in the
course of his employment hereunder and in furtherance of the business of
Company, or as required by applicable law) any confidential information, trade
secrets or proprietary data of the Company.
8.4 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of New York applicable to agreements
made and to be performed therein.
8.5 Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
8.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
<PAGE>
8.7 Severability. If any provision of this Agreement, or part hereof,
is held to be unenforceable, the remainder of such provision and this Agreement,
as the case may be, shall nevertheless remain in full force and effect.
8.8 Entire Agreement. This Agreement contains the entire agreement and
understanding between Employer and Executive with respect to the subject matter
hereof. This Agreement supersedes any prior agreement between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE LEHIGH GROUP INC.
By:_______________________
Name: Robert A. Bruno
Title: V.P. & General Counsel
__________________________
SALVATORE J. ZIZZA
<PAGE>
Exhibit 4.1
Compensation
1. Base Salary. During the Employment Period, Employer shall pay to
Executive Base Salary, payable in accordance with Employer's usual payroll
practices, at the rate of (i) $150,000 per annum during the first year of the
Employment Period (ii) $175,000. per annum during the second year of the
Employment Period (iii) $200,000 per annum during the third year of the
Employment Period and (iv) $225,000. per annum during the fourth year of the
Employment Period. If during the Employment Period Employer acquires one or more
new business, Employer's Board of Directors may increase his compensation to a
level commensurate with the compensation paid to top executives of comparable
businesses.
2. Bonus. In addition to the Base Salary Executive shall also be
entitled to a Bonus equal to: (i) 8% in excess of the Base Amount (as
hereinafter defined) during the first year of the Employment Period (ii) 6% in
excess of the Base Amount during the second year of the Employment Period and
(iii) 4% in excess of the Base Amount during the third and fourth years of the
Employment Period. The Bonus, if any, shall be payable within 90 days after.
The Base Amount shall equal the difference between the Employer's (i)
operating income before other income less (ii) other income, net of interest
income, as of the year ended December 31, 1996, in accordance with generally
accepted accounting principles applies on a consistent basis.
3. Stock Option. In consideration for Executive renegotiating his
current salary and Employer's desire to have Executive exchange his existing
stock options and warrants, Employer agrees on the Effective Date, to issue
Executive a stock option to purchase up to 232,000 fully paid and non-assessable
shares of the Employer's common stock, $ .001 par value immediately after the
Effective Date at a price of $1.00 per share and shall be exercisable at any
time on or before four years after the Effective Date after said options vest.
The aforementioned stock options shall vest as follows: (i) 58,000
options shall vest immediately, (ii) 58,000 options shall vest one year after
the Effective Date, (iii) 58,000 options shall vest two years after the
Effective Date and (iv) 58,000 options shall vest within three years after the
Effective Date.
The stock, pursuant to which this stock option is granted, shall be
registered at the time of the merger ("Merger") between the Employer (or its
subsidiary) and DHB Capital Group Inc. ("DHB"). Said stock options shall also
contain a customary "anti-dilution adjustment" clause to preserve the relative
position of Executive in relation to the number and percentage of the Employer's
shares which he may acquire upon exercise of said option. Such adjustment shall
take into account any changes in the capitalization of the Employer or DHB from
and after June 11, 1996, without giving effect to any options, warrants,
convertible securities or other rights to acquire shares of stock of either the
Employer or DHB.
4. Immediately after the Merger 30,000 shares of the registered common
stock of Lehigh will be issued to Executive in exchange for the cancellation by
Executive of Lehigh's current obligation to pay Executive the sum of $300,000,
which sum represents 18 months of accrued salary that Lehigh has not paid
Executive.
<PAGE>
The Employer shall adjust the number of shares of stock issued to
Executive to prevent said stock from being diluted so that the relative position
of Executive in relation to the number and percentage of Employer's shares
remain preserved. Such adjustment shall take into account any changes in the
capitalization of the Employer or DHB from and after June 11, 1996, without
giving effect to any options, warrants, convertible securities or other rights
to acquire shares of stock of either the Employer or DHB.
<PAGE>
Salvatore J. Zizza
810 Seventh Avenue
27th Floor
New York, N.Y. 10019
July 8, 1996
Mr. David H. Brooks
DHB Capital Group, Inc.
11 Old Westbury Road
Old Westbury, N.Y. 11568
Dear Mr. Brooks:
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 DHB Capital Group, Inc. ("DHB")
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, DHB is delivering its note in the principal amount of $100,000 in
payment for the option. The form of the DHB note is attached hereto as Exhibit
A.
3. Term of the Option. The option shall expire at the later of (a)
January 8, 1997 or (b) consummation or termination for any reason of the
Agreement and Plan of Reorganization between Lehigh and DHB (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).
5. Standstill Agreements. Until December 31, 2001, DHB 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, (b) up to 5% of
the common stock of Lehigh through open market or privately negotiated purchases
which are consummated prior to October 15, 1996, and (c) up to an additional 10%
of the common stock of Lehigh through open market or privately negotiated
purchases in the event any new Schedule 13D is filed after the date hereof; (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 to 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
<PAGE>
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 DHB may sell shares pursuant 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, cannot be transferred, assigned, hypothecated or pledged
(either directly or indirectly) by DHB in any fashion to any entity without my
prior written consent. For this purposes, a "change of control" of DHB would
constitute a transfer of the option for which my prior written consent would be
required.
7. Indemnification and Contribution. DHB 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 DHB with prompt notification of any matter which
could give rise to a claim for indemnification; DHB 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 DHB'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 DHB based on the relative benefits
obtained by it, which shall be assumed to be 99%. DHB 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; can 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,
-------------------------
Salvatore J. Zizza
Agreed and accepted as of the date first written above.
DHB Capital Group, Inc.
By_____________________
David H. Brooks
Chairman and CEO
<PAGE>
PROMISSORY NOTE
$100,000.00 New York, New York
As of July 8, 1996
FOR VALUE RECEIVED, DHB CAPITAL GROUP, INC., a Delaware
corporation, with its principal place of business located at 11 Old Westbury
Road, Old Westbury, New York 11568 ("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 from 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
earlier occurrence of (1) November 15, 1996, (2) exercise, in whole or in part,
of the stock option granted by Holder to Maker pursuant to that certain letter
agreement dated July 8, 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.
<PAGE>
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.
DHB CAPITAL GROUP, INC.
By:____________________
David H. Brooks,
Chairman and Chief Executive
Officer
