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:
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.
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
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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
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
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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.
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
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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.
8.7 Severability. If any provision of this Agreement, or part
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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:/s/ Robert A. Bruno
-------------------
Name: Robert A. Bruno
Title: V.P. & General Counsel
/s/ Salvatore J. Zizza
--------------------------
SALVATORE J. ZIZZA
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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
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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.
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.
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