SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 1997
Consolidated Technology Group Ltd.
(Exact name of Registrant as Specified in its Charter)
Delaware 0-4186 13-1948169
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
160 Broadway, Suite 901, New York, New York 10038
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (212) 233-4500
<PAGE>
Item 5. Other Events.
The Lafayette Industries, Inc. ("Lafayette") Form 10-KSB for its year
ended December 31, 1996, filed April 15, 1997, included a disclaimer of opinion
by Lafayette's independent certified public accountants. This report disclosed
that there was substantial doubt with respect to Lafayette's ability to continue
as a going concern. In addition, Lafayette's accountants reported that they were
unable to obtain written representations from Lafayette's counsel regarding
litigation relating, among other things, to financial guarantees. Because of
material uncertainties on the part of the Company and SIS Capital Corp., a
subsidiary of the Company ("SISC"), with respect to Lafayette's guarantees,
pending litigation, the accuracy of representations and warranties made by
Lafayette in the December 20, 1996 Stock Purchase Agreement with SISC, DLB, Inc.
("DLB") and Lewis S. Schiller ("LSS") (the "Agreement"), the accuracy and
completeness of Lafayette's financial statements with respect to material
liabilities, Lafayette's financial condition and other matters, all of which
were brought to the attention of Lafayette by SISC following the discovery
thereof, SISC's and Lafayette's respective boards of directors determined that,
in order to avoid costly and time consuming litigation, Lafayette and SISC would
enter into an agreement providing for, among other things, the following: (a)
Lafayette's transfer to SPECTEC, Inc., a majority owned subsidiary of SISC
("SPECTEC"), and to DLB and LSS, as their respective interest appear, of all of
Lafayette's interest in SES Holdings Corp. ("SESH") acquired by Lafayette
pursuant to the Agreement; (b) SISC's transfer (or the transfer to Lafayette by
any other holder) of all of the Class A Convertible Preferred Stock and Series B
Redeemable Preferred Stock of Lafayette issued by Lafayette in consideration of
the purchase of the capital stock of SESH under the Agreement; (c) DLB's and
LSS's waiver of their respective rights, as provided for in the Agreement, to
receive any shares of Lafayette Common Stock; (d) the cancellation of all
obligations for loans and/or advances by Lafayette to SESH or subsidiaries of
SESH and the treatment of the amount of any such loans and/or advances as
additional contributions to capital; and (e) the indemnification by SPECTEC of
Lafayette, on a limited basis, from and against any losses or damages resulting
from claims by those investors who purchased from Lafayette 8,000,000 shares of
Lafayette's capital stock in private transactions between December 20, 1996 and
April 21, 1997; and (f) the delivery by SPECTEC to Lafayette of any of such
securities purchased by such investors which were delivered to such investors by
Lafayette. A Settlement Agreement containing the foregoing provisions was
consummated between Lafayette, SIS Capital Corp., DLB, Inc., Lewis S. Schiller
and SPECTEC, Inc. as of April 21, 1997.
Item 7. Financial Statements and Exhibits.
1. Settlement Agreement dated as of April 21, 1997, by and among
Lafayette Industries, Inc., SIS Capital Corp., DLB, Inc., Lewis S. Schiller and
SPECTEC, Inc.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED TECHNOLOGY GROUP LTD.
Lewis S. Schiller
-----------------
Lewis S. Schiller
Chairman and Chief Executive Officer
Dated: April 25, 1997
<PAGE>
Exhibit 1
SETTLEMENT AGREEMENT
AGREEMENT dated as of the 21st day of April, 1997, by and
among LAFAYETTE INDUSTRIES, INC., a Delaware corporation ("Lafayette"), SIS
CAPITAL CORP., a Delaware corporation ("SISC"), DLB, INC., a Delaware
corporation ("DLB"), LEWIS S. SCHILLER ("LSS"), SPECTEC, INC., a Delaware
corporation and a majority owned subsidiary of SISC ("SPECTEC") and such
additional persons, if any, who have executed this Agreement under the caption
"Additional Signatories" (collectively, the "Additional Signatories").
W I T N E S S E T H:
WHEREAS, pursuant to a stock purchase agreement dated December 20,
1996, by and among Lafayette, SISC, DLB and LSS (the "Stock Purchase
Agreement"), Lafayette purchased from SISC, DLB and LSS all of the issued and
outstanding shares of the capital stock of SESH HOLDINGS CORP., a Delaware
corporation ("SESH"), consisting of 1,500 shares of common stock and 500 shares
of preferred stock (the "SESH Securities"); and
WHEREAS, SISC, DLB and LSS have raised certain concerns with respect to
the report of Lafayette's independent certified public accountants on the
financial statements of Lafayette for the year ended December 31, 1996, the said
accountants' disclosure of substantial doubt concerning Lafayette's ability to
continue as a going concern, the adequacy and completeness of such financial
statements with respect to material liabilities, Lafayette's financial condition
in general, Lafayette's guarantees, pending litigation against Lafayette, the
accuracy of Lafayette's representations and warranties in the Stock Purchase
Agreement, and other matters; and
WHEREAS, Lafayette and the Additional Signatories have requested that
all of the disputes and potential disputes arising or which could arise as a
result of the aforesaid concerns and allegations be settled on and subject to
the terms and conditions set forth herein; and
WHEREAS, SIS, DLB, LSS and SPECTEC are willing to enter into
such a settlement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, do hereby agree as follows:
<PAGE>
1. Transfer of Securities.
1.1. Lafayette hereby transfers the SESH Securities to SPECTEC, DLB and
LSS, as follows:
(a) 1,200 shares of the common stock of SESH and 500 shares of the
preferred stock of SESH to SPECTEC; and
(b) 150 shares of the common stock of SESH to each of DLB and LSS,
which shares constitute all of the SESH Securities owned by Lafayette and all of
Lafayette's interest in SESH acquired by Lafayette pursuant to the Stock
Purchase Agreement.
1.2. SISC hereby transfers, or will cause DLB and/or LSS to transfer to
Lafayette:
(a) 1,000 shares of the Series A Convertible Preferred Stock of
Lafayette; and
(b) 1,000 shares of the Series B Redeemable Preferred Stock of
Lafayette,
which shares constitute all of the Series A Convertible Preferred Stock and
Series B Redeemable Preferred Stock of Lafayette issued by Lafayette to SISC,
DLB and LSS in consideration of the purchase of the SESH Securities under the
Stock Purchase Agreement.
1.3. Within 21 business days after the date hereof, SPECTEC will deliver,
or cause to be delivered, to Lafayette the 8,000,000 shares of the capital stock
of Lafayette purchased from Lafayette to the extent that such shares were
delivered by Lafayette to investors in private transactions between December 20,
1996 and the date hereof (other than pursuant to the Stock Purchase Agreement).
If Lafayette has not delivered such securities to such investors, SPECTEC will
use its best efforts to deliver instruments of transfer and assignment to
Lafayette signed by each of such investors with respect to such securities as
soon as practical after the delivery to SPECTEC of the form of such instrument,
which instrument shall be reasonably acceptable to SPECTEC. Upon receipt by
Lafayette of such securities, the securities so received shall be canceled by
Lafayette on its books.
1.4. DLB and LSS hereby relinquish any and all rights which either of
them have or may have pursuant to Section 2.2 of the Stock Purchase Agreement to
acquire, obtain or otherwise receive any shares of the common stock of
Lafayette.
2
<PAGE>
2. Funds Provided to the Subsidiaries. On and as of the date hereof, any
and all debts or obligations which SESH or any of the Subsidiaries has or may
have for loans and/or advances made by Lafayette to SESH or any of the
Subsidiaries (as defined in the Stock Purchase Agreement), are canceled and the
amounts of any such loans or advances shall be converted into additional paid in
capital.
3. Mutual Releases.
3.1. In consideration of the performance by Lafayette and the
Lafayette Releasees (hereinafter defined) of their obligations and covenants
under this Agreement and their representations and warranties under this
Agreement, the adequacy and sufficiency of which consideration are hereby
acknowledged, each of SISC, DLB, LSS, and SPECTEC (hereinafter collectively
referred to as the "SISC Releasors"), hereby release and discharge each of
Lafayette and the Additional Signatories, and their respective shareholders,
officers, directors, partners (general and limited), principals, employees,
agents, parents, subsidiaries, affiliates (including, without limitation, any
entity owned, controlled by or under common control with such persons and
entities) and their respective heirs, executors, administrators, personal
representatives, successors and assigns (hereinafter collectively referred to as
the "Lafayette Releasees"), from any and all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, obligations, contracts, controversies, agreements, promises,
variances, trespasses, damages, liabilities, judgments, executions, claims and
demands whatsoever, in law, admiralty or equity (whether known or unknown and
whether liquidated or unliquidated), whether asserted individually,
derivatively, or in any other capacity, which the SISC Releasors, or any of
them, or their respective heirs, executors, administrators, personal
representatives, successors and assigns, and any entity owned, controlled by, or
under common control with any SISC Releasor and the respective shareholders,
officers, directors, partners (general and limited), principals, employees,
agents, parents, subsidiaries, and affiliates thereof ever had, now have or
hereafter can, shall or may have against any of the Lafayette Releasees from the
beginning of the world to the date of this Agreement for, by reason of, in any
way based upon, arising out of, related to, or connected with, directly or
indirectly, any matter, cause, thing, transaction, act, or omission whatsoever
by or on behalf of any Lafayette Releasee in connection with the Stock Purchase
Agreement and/or any transaction between or among any of the SISC Releasors and
the Lafayette Releasees since December 20, 1996 in connection with the
transactions described in the Stock Purchase Agreement,
3
<PAGE>
except for (i) any obligations of any Lafayette Releasee under or pursuant to
this Agreement, (ii) any claim asserted or any action which is commenced against
any of the SISC Releasors by any third party claiming by or through any of the
Lafayette Releasees, (iii) any claim or action against any of the SISC Releasors
by any third party for money or property alleged to be owed to any such third
party by any of the Lafayette Releasees, or (iv) any claim or action against any
of the SISC Releasors based upon any violation or alleged violation by any of
the Lafayette Releasees of any applicable United States or state securities
laws.
3.2. In consideration of the performance by SISC and the SISC
Releasors of their obligations and covenants under this Agreement and their
representations and warranties under this Agreement, the adequacy and
sufficiency of which consideration are hereby acknowledged, each of the
Lafayette Releasees and the Additional Signatories (hereinafter collectively
referred to as the "Lafayette Releasors"), hereby release and discharge each of
the SISC Releasors and their respective shareholders, officers, directors,
partners (general and limited), principals, employees, agents, parents,
subsidiaries, affiliates (including, without limitation, any entity owned,
controlled by or under common control with such persons and entities) and their
respective heirs, executors, administrators, personal representatives,
successors and assigns (hereinafter collectively referred to as the "SISC
Releasees"), from any and all actions, causes of action, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
obligations, contracts, controversies, agreements, promises, variances,
trespasses, damages, liabilities, judgments, executions, claims and demands
whatsoever, in law, admiralty or equity (whether known or unknown and whether
liquidated or unliquidated), whether asserted individually, derivatively, or in
any other capacity, which the Lafayette Releasors, or any of them, or their
respective heirs, executors, administrators, personal representatives,
successors and assigns, and any entity owned, controlled by, or under common
control with any Lafayette Releasor and the respective shareholders, officers,
directors, partners (general and limited), principals, employees, agents,
parents, subsidiaries, and affiliates thereof ever had, now have or hereafter
can, shall or may have against any of the SISC Releasees from the beginning of
the world to the date of this Agreement for, by reason of, in any way based
upon, arising out of, related to, or connected with, directly or indirectly, any
matter, cause, thing, transaction, act, or omission whatsoever by or on behalf
of any SISC Releasee in connection with the Stock Purchase Agreement and/or any
transaction between or among any of the Lafayette Releasors, the Additional
Signatories and the SISC Releasees since December 20, 1996 in connection with
the transactions described in the Stock Purchase Agreement, except for any
obligations of any SISC Releasee under or pursuant to this Agreement.
4
<PAGE>
3.3. Each of the SISC Releasors, the Lafayette Releasors and the
additional Signatories hereby covenants and agrees that, from and after the date
hereof, they will not commence or maintain, or directly or indirectly cause or
induce any third party to commence or maintain, any action or proceeding to set
aside or in any way challenge this Agreement or the transactions contemplated by
this Agreement. Each of such parties hereto hereby acknowledges to the other
that an action for damages is not an inadequate remedy for the enforcement of
this covenant and agrees that, in the event of any breach or threatened breach
hereof, this covenant may be enforced by any available equitable remedy
including, without limitation, an action for specific performance or injunctive
relief.
3.4. Notwithstanding any provision of this Agreement to the contrary, the
releases provided in Paragraphs 3.1 and 3.2 of this Agreement, and the indemnity
provided in Paragraph 4 of this Agreement, will be void ab initio and of no
further force or effect (i) as to any party to this Agreement who or which fails
to perform any of his or its obligations or covenants under this Agreement, or
(ii) in the event that this Agreement, or any provision hereof, is ever
adjudicated unenforceable, or (iii) in the event that this Agreement or any part
thereof is rescinded or modified by operation of law or by order of any court of
competent jurisdiction, including, without limitation, any order of any such
court pursuant to or in connection with a bankruptcy, insolvency or similar
proceeding.
4. Indemnification. Subject to the provisions of Paragraph 3.4 hereof
and in consideration of the performance by Lafayette and the Lafayette Releasors
and the Additional Signatories of their obligations and covenants under this
Agreement and the accuracy of their representations and warranties under this
Agreement, SPECTEC hereby agrees to defend, indemnify, and hold Lafayette and
the Lafayette Releasors harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses (including reasonable legal fees and
expenses) (collectively, the "Losses"), which are sustained or incurred by
Lafayette or the Lafayette Releasors, arising out of, or in connection with, any
claim, action or proceeding asserted or commenced against Lafayette or the
Lafayette Releasors by any purchaser from Lafayette of any of the 8,000,000
shares of Lafayette's capital stock in issuer transactions between December 20,
1996 and the date hereof in connection with the transaction relating to the
purchase of such securities (other than pursuant to the Stock Purchase
Agreement); provided, however, that SPECTEC will not be liable for
indemnification hereunder unless such Losses are the subject of a final,
nonappealable determination by a court of competent jurisdiction
5
<PAGE>
or for any amounts paid in settlement of any such action or proceeding if such
settlement is effected without the written consent of SPECTEC. Lafayette and the
Lafayette Releasors hereby agree to promptly notify SPECTEC of the assertion
against it or them of any claim, or the commencement of any action or
proceeding, for which a claim for indemnification hereunder may be made and to
provide SPECTEC with a copy of any notice and/or other document received by it
or them in connection therewith; provided, however, that the failure to promptly
notify SPECTEC, as aforesaid, shall not alter Lafayette's or the Lafayette's
Releasors' right to indemnification hereunder unless the failure to provide such
notification materially prejudices SPECTEC. In the event that any such claim,
action or proceeding is asserted or brought against Lafayette, or the Lafayette
Releasors, SPECTEC shall be entitled to participate in (and to the extent it
shall wish, to assume and direct) the defense thereof, at its sole expense.
Lafayette and the Lafayette Releasors may also employ separate counsel in
connection with any such claim, action or proceeding and participate in the
defense thereof provided, however, that the fees and expenses of such counsel
shall be borne by Lafayette or the Lafayette Releasors.
5. Miscellaneous.
5.1. Notices. Any notice or other communication required or permitted
to be given under this Agreement must be in writing and delivered in person or
by registered or certified mail, return receipt requested, or by a nationally
recognized overnight express courier service, receipt acknowledged, to the
proper address of the party to whom such notice is being given as specified
herein (or to any such party at any different address provided by notice given
in compliance with this provision). All notices or other communications to SIS,
any of the Subsidiaries or DLB, LSS or SPECTEC shall be addressed to it or them
c/o SIS Capital Corp., 160 Broadway, New York, New York 10038, Attn: Mr. Lewis
S. Schiller, with a copy to Robert L. Blessey, Esq., 51 Lyon Ridge Road,
Katonah, New York 10536. All notices or other communications to Lafayette or the
Lafayette Releasors shall be addressed to Lafayette Industries, Inc. at 140
Hinsdale Street, Brooklyn, New York 11207, Attn: Colin Halperin, or to such
other address as to which any of the Additional Signatories may specify for
notices to him or it, by notice given in accordance with this Paragraph. All
such notices or other communications shall be deemed given upon receipt, in the
case of hand or courier delivered notices or other communications, or within
three days of mailing, as aforesaid (except for a notice of a change of address
which shall be deemed given only upon receipt).
5.2. Non-Assignability; Benefit of Agreement. This Agreement is
non-assignable and shall inure to the benefit of, and shall be binding upon, the
parties hereto and their
6
<PAGE>
respective heirs, executors, administrators, successors, and legal
representatives.
5.3. Headings. The Paragraph headings contained in this Agreement are
for convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.4. Applicable Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
with respect to contracts made and to be fully performed therein, without regard
to the conflicts of laws provisions thereof. The parties hereto hereby agree
that any suit or proceeding arising under this Agreement or the consummation of
the transactions contemplated hereby, shall be brought solely in a federal or
state court located in the City, County, and State of New York. By their
execution hereof, the parties hereto hereby consent and irrevocably submit to
the in personam jurisdiction of the federal and state courts located in the
City, County and State of New York, and agree that any process in any suit or
proceeding commenced in such courts under this Agreement may be served upon them
personally, by certified or registered mail, return receipt requested or by
Federal Express or other nationally recognized overnight express courier
service, with the same force and effect as if personally served upon them in New
York. The parties hereto each waive any claim that any such jurisdiction is not
a convenient forum for any such suit or proceeding and any defense of lack of in
personam jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other parties hereto, on a joint and several basis, of his or its reasonable
counsel fees and disbursements in an amount judicially determined.
5.5. Partial Waiver. The failure of any party hereto in any one or more
instances to insist upon the performance of any of the terms or conditions of
this Agreement, or to exercise any right or privilege conferred in this
Agreement, or the waiver of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as thereafter waiving any
such terms, covenants, conditions, rights or privileges, and the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No change, termination or attempted waiver of any of the
provisions hereof shall be binding unless in writing and signed by the party
against whom the same is sought to be enforced.
5.6. Representations and Warranties. Each of the parties hereto hereby
represents and warrants to the other that (i) he or it has the full power and
authority to enter into this
7
<PAGE>
Agreement, (ii) this Agreement has been duly authorized by all necessary
corporate or other action required therefor, and (iii) this Agreement is a
binding obligation of each of the parties hereto.
5.7. Independent Legal Representation. Each of the parties represents
and warrants that such party has read and reviewed this Agreement in its
entirety and has sought and obtained, or has had the full opportunity to seek
and obtain, the benefit of full, complete and competent legal advice and counsel
in connection with this Agreement and that such party fully understands the
meaning and intent of every provision hereof. The parties hereto agree that the
fact that counsel for any one party may have drafted this Agreement or any of
the provisions contained in this Agreement shall not be cause for the
construction or interpretation of that provision against that party.
5.8. Counterparts. This Agreement may be executed in separate but
identical counterparts, each of which shall be an original, but all of which
shall together constitute but one and the same instrument.
5.9. Further Assurances. The parties hereto hereby agree that, at any
time and from time to time after the date hereof, upon the reasonable request of
any party hereto, they shall do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, such further acts, deeds,
assignments, transfers, conveyances, and assurances as may be reasonably
required to more effectively consummate this Agreement and the transactions
contemplated thereby or to confirm or otherwise effectuate the provisions of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto have duly
executed or caused this Agreement to be duly executed as of the day and year
first above written.
LAFAYETTE INDUSTRIES, INC.
By:____________________________
_______________________________
Print Name and Title
SIS CAPITAL CORP.
By: Lewis S. Schiller
-----------------
Lewis S. Schiller
Chairman of the Board and
Chief Executive Officer
8
<PAGE>
DLB, INC.
By: Carol Schiller
--------------
Carol Schiller
President
Lewis S. Schiller
-----------------
Lewis S. Schiller
SPECTEC, INC.
By: Lewis S. Schiller
-----------------
Lewis S. Schiller
Chairman of the Board and
Chief Executive Officer
ADDITIONAL SIGNATORIES:
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
9
