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 Management 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, THEREFORE, 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.
(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
December 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 December 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.
(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
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.
(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 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 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.
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 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.
(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 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.
(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 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.
(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.
(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 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.
(c) 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.
(d) Each and all of the respective agreements of Lehigh to be
performed on or before the Closing Date pursuant to the terms
hereof shall in all material respects have been duly performed
and Lehigh shall have delivered to DHB a certificate dated the
Closing Date, of the Chairman, President or a Vice President
of Lehigh to that effect.
(e) 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.
(f) 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
convertible into common stock or upon exercise would require
common stock to be issued, except as set forth in the
Disclosure Schedule.
(g) The completion of Lehigh'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
Lehigh Board of Directors.
(i) The absence of any material contingent liabilities of Lehigh
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.
(k) The Board of Directors of Lehigh shall be constituted as set
forth on Exhibit B annexed hereto.
(l) 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.
(m) 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.
(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 December 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.)
(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.
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.
Option 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.
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.
/s/ Mary Kreidell By /s/ David H. Brooks
- ----------------- -------------------
AUTHORIZED OFFICER David H. Brooks, Chairman
and Chief Executive Officer
ATTEST: THE LEHIGH GROUP INC.
/s/ Robert A. Bruno By /s/ Salvatore J. Zizza
- ------------------- ----------------------
AUTHORIZED OFFICER Salvatore J. Zizza,
Chairman of the Board and
Chief Executive Officer
ATTEST: LEHIGH MANAGEMENT CORP.
/s/ Robert A. Bruno By /s/ Salvatore J. Zizza
- ------------------- ----------------------
AUTHORIZED OFFICER Salvatore J. Zizza, President and
Chief Executive Officer
AGREEMENT OF MERGER
OF
DHB CAPITAL GROUP INC.
AND
LEHIGH MANAGEMENT CORP.
AGREEMENT OF MERGER made as of the _____ day of ___________, 1996, by
and among DHB Capital Group Inc. a Delaware Corporation ("DHB"), Lehigh
Management Corp. a Delaware Corporation ("Newco") and The Lehigh Group Inc. a
Delaware corporation ("Lehigh"). DHB and Newco are sometimes hereinafter
collectively referred to as the "Constituent Corporations".
RECITALS:
DHB is a Delaware corporation originally organized as a New York
Corporation in 1992 and reincorporated in Delaware in 1995, and its authorized
capital stock consists of 25,000,000 shares of Common Stock par value $.001 per
share ("DHB Common Stock"), of which _________ shares were issued and
outstanding as of June 30, 1996.
Newco is a Delaware corporation organized in July 1996 and its
authorized capital stock consists of 2,500 shares of Common Stock, no par value,
of which 100 shares are issued and outstanding and all of which are owned by
Lehigh.
Lehigh is a Delaware corporation organized in 1928 and its authorized
capital stock consists of 100,000,000 shares of Common Stock par value $.001 per
share of which ___________ shares of Common Stock were issued and outstanding as
of June 30, 1996
Lehigh, DHB and Newco have entered into an Agreement and Plan of
Reorganization dated as of July 1 1996 (the "Reorganization Agreement") setting
forth certain representations, warranties, agreements, and conditions in
connection with the merger provided for herein.
The respective Boards of Directors of Lehigh, DHB and Newco have, by
resolutions, duly approved the execution of and the transactions contemplated by
the Reorganization Agreement and this Agreement of Merger and directed that they
be submitted to the respective shareholders of the two Constituent Corporations
and Lehigh for adoption and approval.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto have agreed and do
hereby agree, subject to the terms and conditions hereinafter set forth, as
follows:
I
MERGER
1.1 In accordance with the provisions of this Agreement and applicable law,
Newco shall be merged with and into DHB (the "Merger"). DHB shall be
and is herein sometimes referred to as the "Surviving Corporation".
1.2 Upon the Effective Date of the Merger (as defined in Article III
hereof) the separate existence of Newco shall cease and DHB, as the
Surviving Corporation, (i) shall continue to possess all of its rights
and property as constituted immediately prior to the effective Date of
the Merger and shall succeed, without other transfer, to all of the
rights and property of Newco and (ii) shall continue subject to all of
its debts and liabilities as the same shall have existed immediately
prior to the Effective Date of the Merger, and become subject to all
the debts and liabilities of Newco in the same manner as if DHB had
itself incurred them, all as more fully provided under the Delaware
General Corporation law.
1.3 Lehigh hereby agrees that at the time when the Merger shall become
effective, Lehigh will issue that number of whole shares of Lehigh into
which shares of DHB Common Stock issued and outstanding immediately
prior to the Effective Date of the Merger will, as of the Effective
Date of the Merger and by virtue of the Merger, be converted as
hereinafter provided.
1.4 The Merger shall not become effective until the following actions shall
have been completed: (i) this Agreement of Merger shall have been
adopted and approved by the shareholders of each of Lehigh, DHB and
Newco; (ii) all of the other conditions precedent to the consummation
of the Merger specified in the Reorganization Agreement shall have been
satisfied or duly waived by the party entitled to satisfaction thereof;
and (iii) a certificate of merger meeting the requirements of
applicable Delaware law shall have been filed with applicable
authorities.
II
CONVERSION AND EXCHANGE OF SHARES
The manner and basis of converting shares of DHB Common Stock into
Shares of Lehigh and the exchange of certificates therefor, shall be as
follows:
2.1 The exact number of Shares to be issued shall be based on the agreed
formula used for all the issued and outstanding shares of DHB Common
Stock immediately prior to the Effective Date of the Merger. The
Shareholders of DHB will receive that number of shares of Lehigh that
would equal 97% of the total number of issued and outstanding shares of
Lehigh immediately after the Effective Date of the Merger. No
fractional DHB shares will be considered in the exchange and no
fractional Lehigh shares will be issued. Holders of Options and
Warrants to purchase shares of DHB Common Stock immediately prior to
the Effective Date of the Merger will have the right to exercise such
Options and Warrants after the Effective Date of the Merger as to
shares of Lehigh Common stock for the term, at the price per share and
in the amounts set forth on Schedule A annexed hereto.
2.2 After the Effective Date of the Merger, certificates evidencing
outstanding shares of DHB Common Stock shall evidence the right of the
holder thereof to receive certificates representing 1 whole share of
Lehigh Common Stock for each share of DHB Common Stock. Each holder of
DHB Common Stock, upon surrender of the certificates, which prior
thereto represented shares of DHB Common stock, to a trust company to
be designated by Lehigh which shall act as the exchange agent (the
"Exchange Agent") for such shareholders to effect the exchange of
certificates on their behalf, shall be entitled upon such surrender to
receive in exchange therefor a certificate or certificates representing
the number of whole shares of Lehigh Common Stock into which the shares
of DHB Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted. Until so
surrendered, each such outstanding certificate for shares of DHB Common
Stock shall be deemed, for all corporate purposes including voting
rights, subject to the further provisions of this Article II, to
evidence the ownership of the whole shares of Lehigh Common Stock into
which such shares have been converted.
2.3 No certificate representing a fraction of Lehigh Common Stock will be
issued and no right to vote or receive any distribution or any other
right of a shareholder shall attach to any fractional interest of
Lehigh Common Stock to which any holder of shares of DHB Common Stock
would otherwise be entitled hereunder.
2.4 If any certificate for whole shares of Lehigh Common Stock is to be
issued in a name other than that in which the certificate surrendered
in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly
endorsed and otherwise be in proper form for transfer and that the
person requesting such exchange pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of certificates for
whole shares of Lehigh Common stock in any name other than that of the
registered holder of the certificate surrendered, paid or is not
payable.
2.5 At the Effective Date of the Merger, all shares of DHB Common Stock
which shall then be held in its treasury, if any, shall cease to exist,
and all certificates representing such shares shall be cancelled.
III
EFFECTIVE DATE OF MERGER; ABANDONMENT OF MERGER
3.1 Subject to the provisions of this Article III, this Agreement of Merger
shall be submitted to the shareholders of Lehigh, DHB and Newco as
provided in the Reorganization Agreement. If adopted and approved by
the vote of at least a majority of the shareholders of each of the
Constituent Corporations and Lehigh and if all of the conditions
precedent to the consummation of the Merger specified in the
Reorganization Agreement shall have been satisfied or duly waived by
the party entitled to satisfaction thereof, then unless terminated as
provided in this Article III, the Merger Certificate shall be filed
with the appropriate governmental authorities. The Effective Date of
the Merger is the date upon which a duly executed copy of the Merger
Certificate is filed with the Secretary of State of Delaware in
accordance with Section 103(c) of the Delaware General Corporation Law.
The date when the Merger shall become effective as aforesaid is herein
called the "Effective Date of the Merger".
3.2 This Agreement of Merger may be terminated and the proposed Merger
abandoned at any time prior to the Effective Date of the Merger,
subject to and in the manner provided in the Reorganization Agreement.
IV
MISCELLANEOUS
4.1 For the convenience of the parties hereto and to facilitate the filing
of this Agreement of Merger, any number of counterparts hereof may be
executed and each such counterpart shall be deemed to be an original
instrument.
4.2 At any time prior to the Effective Date of the Merger the parties
hereto may, by written agreement, (i) extend the time for the
performance of any of the obligations or other acts of the parties
hereto, (ii) waive (in the manner specified in paragraph 17(c) of the
Reorganization Agreement) any breach or inaccuracy in the
representations and warranties contained in this Agreement of Merger or
in the Reorganization Agreement or in any document delivered pursuant
thereto, or (iii) waive (in the manner specified in paragraph 17(c) of
the Reorganization Agreement) compliance with any of the covenants,
conditions or agreement contained in this Agreement of Merger or in the
Reorganization Agreement.
4.3 Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mall, postage prepaid, 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 100l7
or such other person as may be designated in writing by the parties by
a notice given as aforesaid.
4.4 After the Merger becomes effective, Newco, through the persons who were
its officers immediately prior to the Merger shall execute or cause to
be executed such further assignments assurances or other documents as
may be necessary or desirable to confirm title to its properties,
assets, and rights in DHB.
4.5 The corporations who are parties to this Agreement are also parties to
the Reorganization Agreement. The two agreements are intended to be
construed together in order to effectuate their purposes, and said
agreements are intended as a plan of reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1954 as amended.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Agreement of Merger to be signed in its corporate name by its duly
authorized officers, all as of the date first above written.
THE LEHIGH GROUP INC.
By:
Title: Chairman
(Corporate Seal) By:
Title: Secretary
LEHIGH MANAGEMENT CORP.
By:
Title: President
(Corporate Seal) By:
Title: Secretary
DHB CAPITAL GROUP INC.
By:
Title: Chairman
(Corporate Seal) By:
Title: Secretary