Consolidated Technology Group Ltd.
700 Gemini Street
Houston, Texas 77058
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 22, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders (the
"Annual Meeting") of Consolidated Technology Group Ltd., a New York corporation
(the "Company"), will be held at South Shore Harbor Resort & Conference Center,
2500 South Shore Blvd., League City, Texas 77573 on July 22, 1999, at 9:00 A.M.
local time, for the purpose of considering and acting upon the following
matters:
1. The election of two (2) directors to serve until the 2000 Annual
Meeting of Shareholders and until their successors shall be elected and
qualified;
2. The approval of a one-for-30 reverse split of the Company's Common
Stock;
3. The approval of an amendment to the Company's Certificate of
Incorporation to change the number of authorized shares of Common Stock
to (a) 25,000,000 if the one-for-30 reverse split is approved by the
shareholders or (b) 150,000,000 if the one-for-30 reverse split is not
approved by the shareholders;
4. The approval of an amendment to the Company's Certificate of
Incorporation to change the Company's name to Cristen Group Limited
5. The approval of the Company's 1999 Long-Term Incentive Plan; and
6. The transaction of such other and further business as may properly come
before the meeting.
The Board of Directors of the Company has fixed the close of business on
June 21, 1999 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
The enclosed Proxy Statement contains information pertaining to the matters
to be voted on at the Annual Meeting. A copy of the Company's 1998 Annual Report
to Shareholders is being mailed with this Proxy Statement.
By order of the Board of Directors
Matthew J. Finch, Secretary
Houston, Texas
June 28, 1999
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THE MATTERS BEING VOTED ON AT THE ANNUAL MEETING ARE IMPORTANT TO THE COMPANY.
CERTAIN OF SUCH MATTERS REQUIRE THE APPROVAL OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK. IN ORDER THAT YOUR VOTE IS COUNTED AT THE
ANNUAL MEETING, PLEASE EXECUTE, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON AT
THE ANNUAL MEETING IF THE PROXY IS REVOKED IN THE MANNER SET FORTH IN THE PROXY
STATEMENT.
------------------------------------------
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PROXY STATEMENT
1999 Annual Meeting of Shareholders
GENERAL INFORMATION
The accompanying proxy and this Proxy Statement are furnished in
connection with the solicitation by the Board of Directors of Consolidated
Technology Group Ltd., a New York corporation (the "Company"), of proxies for
use at the Company's 1999 Annual Meeting of Shareholders (the "Annual Meeting")
to be held at South Shore Harbor Resort & Conference Center, 2500 South Shore
Blvd., League City, Texas 77573 on July 22, 1999 at 9:00 A.M. or at any
adjournment thereof. This Proxy Statement and the related proxy and the 1998
Annual Report to Shareholders (the "Annual Report") are being mailed to
shareholders of the Company on or about June 28, 1999.
At the Annual Meeting, shareholders will vote on (a) the election of
two (2) directors to serve until the 2000 Annual Meeting of Shareholders and
until their successors shall be elected and qualified, (b) the approval of a
one-for-30 reverse split of the Company's Common Stock (the "Reverse Split"),
(c) the approval of an amendment to the Company's Certificate of Incorporation
to change the number of authorized shares of Common Stock to (i) 25,000,000 if
the one-for-30 reverse split is approved by the shareholders or (ii) 150,000,000
if the one-for-30 reverse split is not approved by the shareholders; (d) the
approval of an amendment to the Company's Certificate of Incorporation to change
the name of the Company to Cristen Group Limited; (e) the approval of the
Company's 1999 Long-Term Incentive Plan (the "Plan"); and (f) such other and
further business as may properly come before the meeting. The Board of Directors
does not know of any other matters which will be voted upon at the Annual
Meeting.
Shareholders are encouraged to review the detailed discussion
concerning the above proposals as presented in this Proxy Statement and either
return the completed and executed proxy or attend the Annual Meeting.
Record Date; Outstanding Shares; Voting Rights and Proxies
Shareholders of record at the close of business on June 21, 1999 (the
"Record Date"), are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on the Record Date there were outstanding 46,855,096
shares of Common Stock of the Company (the "Common Stock"). The holders of the
Common Stock are entitled to one vote for each share owned of record on the
Record Date.
The presence in person or by proxy of holders of a majority of the
shares of Common Stock of the Company entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business at the Annual Meeting.
If a shareholder files a proxy or attends the Annual Meeting, his, her or its
shares will be counted as being present at the Annual Meeting for purposes of
determining whether there is a quorum, even if the shareholder abstains from
voting on all matters. The vote required for the election of directors and the
approval of the other proposals is set forth in the discussion of each proposal.
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Each shareholder of the Company is requested to complete, sign, date
and return the enclosed proxy without delay in order to ensure that his, her or
its shares are voted at the Annual Meeting. The return of a signed proxy will
not affect a shareholder's right to attend the Annual Meeting and vote in
person. Any shareholder giving a proxy has the right to revoke it at any time
before it is exercised by executing and returning a proxy bearing a later date,
by giving a written notice of revocation to the Secretary of the Company, or by
attending the Annual Meeting and voting in person. There is no required form of
proxy revocation. All properly executed proxies that are not revoked will be
voted at the Annual Meeting in accordance with the instructions contained
therein.
If a proxy is signed and returned, but no specification is made with
respect to any or all of the proposals listed thereon, the shares represented by
such proxy will be voted for all the proposals, including the election of
directors. Abstentions and broker non-votes are not counted as votes "for" or
"against" a proposal, but where the affirmative vote on the subject matter is
required for approval, abstentions and broker non-votes are counted in
determining the number of shares present or represented.
Technology Acquisitions, Ltd. ("TAL") owns or has voting rights with
respect to 15,999,785 shares of Common Stock, representing more than 34% of the
outstanding Common Stock on the Record Date. TAL has advised the Company that it
will vote such shares in favor of the election of the Board of Director's
nominees for election and in favor of the other proposals set forth herein. See
"Beneficial Ownership of Securities and Security Holdings of Management."
Cost of Solicitation
Proxies for the Annual Meeting are being solicited by the Company. The
Company will bear the costs of soliciting such proxies. The Company will request
that brokers and other custodians, nominees and fiduciaries forward these proxy
materials to the beneficial holders of the Common Stock held of record by such
individuals, where appropriate, and will, upon request, reimburse such
individuals for their reasonable out-of-pocket expenses incurred in connection
therewith. The Company intends to engage American Stock Transfer & Trust Company
to assist it in the solicitation of proxies for the Annual Meeting. The fees for
such services are estimated at approximately $5,000.
BENEFICIAL OWNERSHIP OF SECURITIES AND
SECURITY HOLDINGS OF MANAGEMENT
Set forth below is information as of May 31, 1999, based on information
provided to the Company by the individuals named below, as to each person owning
of record or known by the Company to own beneficially, 5% or more of the
Company's Common Stock, each director and nominee for director and all officers
and directors as a group.
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Name and Address(1) Shares Percent
------------------- ------ -------
Technology Acquisitions, Ltd. 15,999,785(2) 34.2%
700 Gemini Street
Houston, Texas 77058
Frank DeLape 15,999,785(3) 34.2%
700 Gemini Street
Houston, Texas 77058
Richard Young 0(4) ---
700 Gemini Street
Houston, Texas 77058
All directors and officers as a 15,999,785(3),(4),(5) 34.2%
group (three individuals)
(1) Unless otherwise indicated, each person or entity has the sole voting
and sole investment power and direct beneficial ownership of the
shares.
(2) Represents (a) 8,000,000 shares of Common Stock owned by TAL, and (b)
7,999,785 shares of Common Stock for which TAL holds irrevocable
proxies.
(3) Represents shares owned by or subject to proxies held by TAL. Because
Mr. DeLape is the chief executive officer of TAL, he has the right to
vote the shares owned by TAL. Does not include 400,000 shares of Common
Stock which are the subject of an option held by Mr. DeLape. The
exercise price of such option, but not the number of shares issuable
upon exercise of such option, is subject to adjustment if the Reverse
Split is approved. The option does not become exercisable until the
Company's aggregate market capitalization, as defined in the option, is
at least $25,000,000. Because the grant of such option is subject to
shareholder approval and to such vesting contingency, it is not treated
as being presently exercisable. Assuming shareholder approval of such
option, the consummation of the Reverse Split and satisfaction of the
$25,000,000 aggregate market capitalization vesting contingency, the
shares which are the subject of such option will, assuming the full
exercise of such option, represent approximately 20% of the outstanding
shares of Common Stock. See "Executive Compensation - Transactions with
Related Parties," "Approval of One-for-30 Reverse Split" and "Approval
of the 1999 Long-Term Incentive Plan."
(4) Does not include 250,000 shares of Common Stock which are the subject
of an option held by Mr. Young. The exercise price of such option, but
not the number of shares issuable upon exercise of such option, is
subject to adjustment if the Reverse Split is approved. The option does
not become exercisable until the Company's aggregate market
capitalization is at least $25,000,000. Because the grant of such
option is subject to shareholder approval and to such vesting
contingency, it is not treated as being presently exercisable. Assuming
shareholder approval of such option, the consummation of the Reverse
Split and satisfaction of the $25,000,000 aggregate market
capitalization vesting contingency, the shares which are the subject of
such option will, assuming the full
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exercise of such option, represent approximately 14% of the then
outstanding shares of Common Stock. See "Executive
Compensation-Transactions with Related Parties," "Approval of
One-for-30 Reverse Split" and "Approval of the 1999 Long-Term Incentive
Plan."
(5) Does not include the 650,000 shares of Common Stock described in
footnotes 3 and 4 to this table or an additional 15,000 shares of
Common Stock which are the subject of an option held by another
officer. Such option is subject to the same vesting contingency and has
the same anti-dilution protection as the options described in footnotes
3 an 4 to this table. Because the grant of the option to such other
officer is subject to shareholder approval and to such vesting
contingency, it is not treated as being presently exercisable.
Accordingly, assuming shareholder approval of all of such options, the
consummation of the Reverse Split, and satisfaction of the $25,000,000
aggregate market capitalization vesting contingency, the shares which
are the subject of the options held by all officers and directors as a
group will, assuming the full exercise of such options, represent
approximately 30% of the then outstanding shares of Common Stock. See
"Executive Compensation-Transactions with Related Parties," "Approval
of One-for-30 Reverse Split" and "Approval of the 1999 Long-Term
Incentive Plan."
ELECTION OF DIRECTORS
Directors of the Company are to be elected annually by the shareholders
to serve until the next annual meeting of shareholders and until their
respective successors are duly elected. The Company has not held a meeting of
its shareholders since 1993. The by-laws of the Company provide that the number
of directors comprising the whole Board shall be determined from time to time by
the Board of Directors. The Board of Directors has established the size of the
Board for the ensuing year at two and is recommending that the two incumbent
directors of the Company be re-elected. If either of the nominees becomes
unavailable for any reason, a situation which is not anticipated, a substitute
nominee may be proposed by the Board of Directors and all shares represented by
proxies will be voted for such substitute nominee, unless the Board reduces the
number of directors.
The Board of Directors is presently comprised of Mr. Frank DeLape and
Mr. Richard Young, who were elected to the Board of Directors in April 1999 by
the then Board of Directors of the Company in connection with the April 1999
transaction pursuant to which TAL acquired ownership of and/or voting rights to
approximately 34% of the outstanding shares of Common Stock. See "Transactions
with Related Parties."
Prior to the election of Messrs. DeLape and Young to the Board of
Directors in April 1999, the Board of Directors was comprised of Messrs. Edward
D. Bright, Donald Chaifetz and Seymour Richter, who were elected to the Board in
April 1998 following the resignations of Messrs. Lewis S. Schiller, Norman
Hoskin and E. Gerald Kay and Ms. Grazyna B. Wnuk as directors of the Company.
Messrs. Bright, Chaifetz and Richter resigned from the Board in April 1999
immediately following the election to the Board of Messrs. DeLape and Young.
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The following table sets forth certain information concerning the
nominees for director:
Name Age Position with the Company Director Since
- ---- --- ------------------------- --------------
Frank DeLape 45 Chairman of the Board and Chief April 1999
Executive Officer
Richard Young 31 President and Chief Operating April 1999
Officer
Mr. DeLape has been the Company's Chairman of the Board and Chief
Operating Officer since April 1999. He is also the president and a director of
Benchmark Equity Group ("Benchmark"), a Houston, Texas based merchant banking
firm, a position he has held since 1994, and is chief executive officer and a
director of TAL, a position he has held since the organization of TAL in March
1999. Mr. DeLape is also a director of I-Storm, Inc., which is engaged in the
electronic-commerce business.
Mr. Young has been the Company's President and Chief Operating Officer
since April 1999. From 1997 through 1999, Mr. Young served in various positions
with, and eventually as a principal of, Benchmark. From 1996 until 1997, Mr.
Young served as regional controller for IKON Office Solutions, Inc., which is
engaged in the office systems design and outsourcing business. During a part of
1996, Mr. Young was assistant to the president and chief executive officer of
Learmonth & Burchette Management Systems, Plc., an English company engaged in
the application development process software business. From 1992 to 1996, Mr.
Young was employed by Price Waterhouse, LLP in staff accounting positions,
eventually serving as a senior accountant. Mr. Young is a certified public
accountant.
The Company's by-laws give the Board of Directors the power to
determine the number of directors. The Board of Directors may, in its
discretion, increase the size of the Board and elect additional directors
subsequent to the Annual Meeting if qualified independent directors are selected
who are willing to serve. Any such directors will have a term which expires at
the 2000 Annual Meeting of Shareholders.
Meetings; Committees of the Board of Directors; Directors Compensation
and Filings under the Securities Exchange Act of 1934
The Board of Directors has no committees.
During 1998, the Board of Directors held six meetings, all of which
were attended by all of the then members of the Board of Directors. All other
action by the Board of Directors in 1998 was taken by unanimous written consents
in lieu of a meeting which were signed by all of such directors.
During 1998, neither of the present directors was subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934, as
amended.
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Vote Required
Provided that a quorum is present at the Annual Meeting, the two
directors receiving the most votes will be elected as directors for a term of
one year and until their successors are elected and qualified.
The Board of Directors recommends a vote FOR the election to the Board
of the nominees listed above.
EXECUTIVE OFFICERS
Set forth below are the executive officers of the Company and
information concerning the officer who is not also a director of the Company.
Name Position
- ---- ---------
Frank DeLape Chairman of the Board and Chief Executive Officer
Richard Young President and Chief Operating Officer
Matthew Finch Secretary
Mr. Finch has been Secretary of the Company since April 1999.
He is also General Counsel to Benchmark. Mr. Finch is a 1994 graduate of the
Georgetown University Law Center. From 1994 to 1996, Mr. Finch was an associate
with the law firm of Jenkens & Gilchrist, P.C., and in 1996 and 1997, Mr. Finch
was an associate with the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP.
From 1997 to 1998, Mr. Finch was an associate with the law firm of Andrews &
Kurth in Houston, Texas and in 1998, Mr. Finch joined Benchmark as its General
Counsel.
EXECUTIVE COMPENSATION
Set forth in the table below is information with respect to
compensation paid or accrued by the Company and its subsidiaries in 1998, 1997
and 1996 to its chief executive officer and to each other officer whose annual
compensation for 1998 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Principal Year Salary Bonus(1) Other Annual Restricted Securities
- ------------------ ----- ------- ----- ------------ ---------- ----------
Position Compensation(2) Stock Underlying
- -------- ------------ ----- ----------
Awards Options,
(Dollars) SARs
(Number)
<S> <C> <C> <C> <C> <C> <C>
George W. Mahoney 1998 $202,000 $ 30,000 $ 953,000 --- ---
Chief Financial 1997 189,000 65,000 11,000 --- ---
Officer 1996 177,000 187,000 13,000 --- ---
Lewis S. Schiller, 1998 138,000 --- 3,503,000 --- ---
Chief Executive 1997 616,000 --- 358,000 --- ---
Officer through 1996 286,000 --- --- --- ---
March 1998
Seymour Richter, 1998 60,000 5,000 --- --- ---
Chief Executive
Officer from April
1998(3)
Grazyna B. Wnuk, 1998 53,000 --- 215,000 --- ---
Secretary through 1997 229,000 --- --- --- ---
March 1998 1996 98,000 --- --- --- ---
</TABLE>
(1) Mr. Mahoney received his bonuses pursuant to his employment agreement
with the Company. In 1996, his bonus included $140,000 related to
services performed for a subsidiary of the Company in connection with
obtaining various loans from its senior lender.
(2) Other annual compensation includes the following:
For Mr. Mahoney, other annual compensation for 1998 includes, (a) a
finders fee of $414,000 paid to him in connection with the sale of
International Magnetic Imaging, Inc. ("IMI"), a subsidiary of the
Company which was sold in April 1998, (b) $350,000 paid in settlement
of Mr. Mahoney's claims under his employment agreement which provided
for a lump sum payment in the event of a change of control, (c)
$186,000 for net proceeds received by him at the time of the sale of
IMI from certain IMI incentive stock options, and (d) $3,000 for
automobile and life insurance allowances. Other annual compensation for
1997 and 1996 represents automobile and life insurance allowances to
which he was entitled under his employment agreement.
For Mr. Schiller, other annual compensation for 1998 includes $1.2
million paid to Mr. Schiller and certain of his family members for his
10% ownership interest in IMI, $1.9 million for the purchase of his
contract rights by the Company in April 1998 and $350,000 of amounts
accrued in connection with a January 1999 settlement agreement between
the Company and Mr. Schiller, which was paid in February 1999. Other
annual compensation for 1997 consists of commissions that Mr. Schiller
earned on the Company's investment activities, a portion of which was
paid during 1998.
For Ms. Wnuk, other annual compensation for 1998 includes $135,000 paid
to Ms. Wnuk for her 1% ownership interest in IMI and $80,000 for the
purchase by the Company in April 1998 of her rights under her
employment agreement.
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(3) Mr. Richter served as President and Chief Executive Officer of the
Company from April 1998 through April 1999.
Employment and Consulting Agreements
In March 1995, Mr. Mahoney entered into an employment agreement with
the Company pursuant to which he agreed to serve as the Chief Financial Officer
of the Company and IMI. The agreement, as subsequently amended, provided for a
term which expired in 2002, and provided for payments to him in the event of
termination of his employment, either by him or by the Company, in the event of
a change of control. In June 1998, following a claim by Mr. Mahoney that he was
entitled to the change of control compensation as provided in his employment
agreement, Mr. Mahoney and the Company amended and restated the terms of his
employment. Pursuant to such amended terms, Mr. Mahoney agreed to serve for a
term of one year, commencing June 1, 1998. In March 1999, the agreement was
further extended until August 31, 1999. In May 1999, following the change of
control in the Company's management resulting from the purchase by TAL of
8,000,000 shares of Common Stock and the grant to TAL of proxies to vote an
additional 7,999,785 shares of Common Stock, Mr. Mahoney's employment was
terminated by mutual consent, and the Company paid Mr. Mahoney $48,000 in
consideration of such early termination. Mr. Mahoney agreed to provide
consulting services to the Company through December 31, 1999, at an agreed upon
per diem rate.
Mr. Schiller and Ms. Wnuk were parties to employment agreements with
the Company. Such agreements were terminated in April 1998. In connection with
the termination of their employment agreements, the Company purchased from Mr.
Schiller and Ms. Wnuk all of their rights under their contracts. The
compensation paid to Mr. Schiller and Ms. Wnuk pursuant to their employment
agreements and to Mr. Schiller in connection with a certain settlement agreement
is reflected in the Summary Compensation Table.
Contemporaneously with Seymour Richter's resignation as an officer and
director of the Company in April 1999, Mr. Richter and the Company entered into
a consulting agreement for a nine month period expiring in December 1999.
Pursuant to such agreement, Mr. Richter receives a monthly consulting fee of
$6,250.
Effective April 21, 1999, the Company entered into three-year
employment agreements with Mr. Frank DeLape and Mr. Richard Young pursuant to
which such individuals will receive annual salaries of $250,000 and $135,000,
respectively. Pursuant to such agreements, Mr. DeLape serves as the Chairman of
the Board and Chief Executive Officer of the Company and Mr. Young serves as the
President and Chief Operating Officer of the Company. The agreements require Mr.
DeLape to devote such time as is necessary to perform his duties as Chairman of
the Board and Chief Executive Officer of the Company and Mr. Young to devote his
full time to the performance of his duties as President and Chief Operating
Officer of the Company. The agreements provide for annual cash bonuses, annual
equity incentive awards, including the grant of stock options, and certain
fringe benefits, including life insurance and severance compensation. The
options granted to Messrs. DeLape and Young, as described under "Approval of the
1999 Long-Term Incentive Plan" were granted pursuant to their employment
agreements. Their
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employment agreements also provide for the grant to Mr. DeLape and Mr. Young of
options to purchase 250,000 and 100,000 shares of Common Stock, respectively, at
the end of each fiscal year during the term of their employment agreements. Such
options are to be granted pursuant to a plan approved by the Company's
shareholders.
TRANSACTIONS WITH RELATED PARTIES
In April 1998, the Company entered into agreements with Messrs. Lewis
S. Schiller, E. Gerald Kay, Norman Hoskin and Grazyna Wnuk, who were then
officers and directors of the Company pursuant to which:
o Each of them resigned as a director and officer of the Company and its
subsidiaries contemporaneously with the closing of the sale of IMI;
o The Company paid an aggregate of approximately $4.0 million to Mr.
Schiller and Ms. Wnuk to purchase all of their rights under their
respective employment agreements with the Company and their stock
interests in IMI. Such payments represented a significant discount from
the amounts due under such employment agreements;
o Mr. Schiller transferred to the Company 1,190,000 shares of the
Company's Common Stock which he acquired in 1997 for $.03 per share,
representing a discount from the then current market price of $.06 per
share. Payment for the shares was made by Mr. Schiller by reducing the
amount then owed to him by the Company;
o The Company transferred to Mr. Schiller or his designees, for nominal
consideration, certain subsidiaries of the Company;
o Mr. Schiller agreed to enter into a three-year consulting agreement
with the Company for which he was to receive annual compensation of
$100,000. The Company's obligations to Mr. Schiller for such consulting
services were subject to a settlement agreement between Mr. Schiller
and the Company pursuant to which the Company paid him $350,000 in 1999
in respect of any claims Mr. Schiller had against the Company; and
o The Company, its subsidiaries and Mr. Schiller, Ms. Wnuk and Mr. Kay
executed mutual releases, and the Company granted certain rights to
indemnification Messrs. Schiller, Kay and Hoskin and Ms. Wnuk.
In March 1999, the Company entered into an agreement with TAL, pursuant
to which the Company sold all of its 67% equity interest in Arc Networks, Inc.
to TAL for $850,000. The stock of Arc Networks and the purchase price are being
held in escrow subject only to the consent of the New York Public Service
Commission to the sale of the shares to TAL and certain related matters, which
consent was obtained in June 1999.
On April 20, 1999, TAL purchased 8,000,000 shares, or approximately
17.1% of the outstanding shares of Common Stock, from nine shareholders of the
Company in a private
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transaction, for an aggregate purchase price of $2,000,000 or $.25 per share.
Contemporaneously with such purchase, TAL was also granted options to purchase
an aggregate of an additional 7,999,785 shares of the Common Stock from six
other shareholders of the Company, such options having a term of 13 months and
providing for an aggregate exercise price of $2,799,925 or $.35 per share. TAL
has proxies with respect to all of the shares covered by such options during the
13 month term thereof. Accordingly, as a consequence of such purchase and
proxies, TAL owns and/or has the right to vote approximately 34% of the
outstanding shares of Common Stock.
Messrs. Edward D. Bright and Seymour Richter, who were directors of the
Company from April 1998 until April 1999, were also directors of Netsmart
Technologies, Inc. ("Netsmart") and Trans Global Services, Inc. ("Trans
Global"). The Company has equity interests in both Netsmart and Trans Global. As
non-employee directors of Netsmart and Trans Global, Messrs. Bright and Richter
received options granted under Netsmart's and Trans Global's long-term incentive
plans. See "Approval of the 1999 Long-Term Incentive Plan" for information
relating to certain options granted by the Company to Edward D. Bright.
In April and June 1999, the Company sold an aggregate of 792,624 shares
of the common stock of Netsmart owned by it to a group of investors, including
officers and directors of Netsmart, pursuant to a March 25, 1999 agreement
between the Company, Netsmart, and such investors. All of such shares were sold
at $2.014 per share. Mr. Edward D. Bright, who was then a director of the
Company, purchased 62,500 of such shares on the same terms as the other
investors.
See "Approval of the 1999 Long-Term Incentive Plan" for information
relating to certain options granted by the Company to its present officers and
directors, including options granted to Frank DeLape, Richard Young and another
officer of the Company, to purchase 400,000, 250,000 and 15,000 shares of Common
Stock, respectively, which options include certain significant anti-dilution
provisions.
PERFORMANCE GRAPH
The following graph, based on data provided by the Center for Research
in Security Prices, shows changes in the value of $100 invested at December 31,
1993, of: (a) shares of the Company's Common Stock; (b) the Nasdaq stock index
(US companies); and (c) an SIC peer group consisting of companies in the SIC
three-digit classification 671, which is the classification for holding
companies, which are principally bank holding companies. The lines represent
monthly index levels derived from compounded daily returns that include all
dividends. The indexes are reweighted daily, using the market capitalization on
the previous trading day. Total shareholder returns from each investment can be
calculated from the year-end investment values shown beneath the graph provided
below.
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---------
Consolidated Technology Group Ltd.
Nasdaq Stock Market (US Companies)
Peer Group Index
<TABLE>
<CAPTION>
12/31/93(1) 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Technology Group Ltd. 100.00 10.40 4.20 1.60 1.00 1.00
Nasdaq Market Index 99.60 97.30 137.60 169.30 207.30 292.20
Peer Group Index 100.90 100.70 149.50 197.30 334.10 338.80
</TABLE>
(1) The index level for all series was set to $100.00 on January 6, 1994.
The January 6, 1994 value is used for the Company at December 31, 1993.
APPROVAL OF ONE-FOR-30 REVERSE SPLIT
The Board of Directors has approved, subject to shareholder approval, a
proposal for the one-for-30 Reverse Split. As a result of the Reverse Split,
each share of Common Stock outstanding on the effective date of the Reverse
Split, will, without any action on the part of the holder thereof, become
one-thirtieth of a share of Common Stock. The par value of the Common Stock will
not be affected by the Reverse Split. For purposes of this proposal, the Common
Stock, as presently constituted, is referred to as the "Old Common Stock" and
the Common Stock resulting from the Reverse Split is referred to as the "New
Common Stock."
The Reverse Split will become effective upon the filing with the
Secretary of State of New York of an amendment to the Company's Certificate of
Incorporation which will provide that, upon the filing of such Amendment, each
share of Common Stock then issued and outstanding will automatically become and
be converted into one-thirtieth of a share of Common Stock.
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Principal Effects of the Reverse Split
The principal effects of the Reverse Split are the following:
1. Based upon the 46,855,096 shares of Old Common Stock outstanding on
the Record Date, the Reverse Split will decrease the outstanding shares of Old
Common Stock by 962/3%, and, upon the effectiveness of the Reverse Split,
approximately 1,561,836 shares of New Common Stock will be outstanding.
2. On the Record Date, there was outstanding a warrant to purchase
1,000,000 shares of Old Common Stock at $.75 per share, which was issued to the
principal lender of one of the Company's subsidiaries. As a result of the
Reverse Split, the number of shares of New Common Stock issuable upon exercise
of such warrant will be 33,333 and the exercise price of such warrant will be
$22.50 per share of New Common Stock.
3. On the Record Date, there were outstanding options held by officers,
directors and employees of the Company to purchase an aggregate of 670,000
shares of Old Common Stock, of which options to purchase 650,000 shares of Old
Common Stock were held by the Chief Executive Officer and President of the
Company. None of such become exercisable unless the Company's aggregate market
capitalization is at least $25,000,000. Pursuant to the anti-dilution provisions
of such options, as a result of the Reverse Split, the number of shares of New
Common Stock issuable upon the exercise of all of such options will be the same
as the number of shares of Old Common Stock presently issuable thereunder. These
option grants are subject to shareholder approval of the 1999 Long-Term
Incentive Plan. See "Beneficial Ownership of Securities and Security Holdings of
Management" and "Approval of the 1999 Long-Term Incentive Plan."
4. The Company has also granted options to purchase an aggregate of
250,000 shares of Common Stock to a former director of the Company at exercise
prices of $.15 and $.25 per share. As a result of the Reverse Split, the number
of shares of New Common Stock issuable upon exercise of such options will be
8,333, and the exercise price per share of New Common Stock will be $4.50 and
$7.50.
5. The directors have approved, subject to shareholder approval, the
1999 Long-Term Incentive Plan, pursuant to which options and other equity-based
incentives may be granted to purchase 2,490,000 shares of Common Stock. If the
Reverse Split is approved, the number of shares of Common Stock subject to such
plan will be 1,600,000, which will represent 102% of the number of shares of New
Common Stock to be outstanding upon the effectiveness of the Reverse Split. The
1,600,000 shares to be subject to the 1999 Long-Term Incentive Plan include the
options to purchase 670,000 shares of Common Stock described in Paragraph 3,
above.
The Company will obtain new CUSIP numbers for the New Common Stock
effective at the time of the Reverse Split. Following the effectiveness of the
Reverse Split, the Company will provide each record holder of Old Common Stock
with information to enable such holder to obtain new stock and warrant
certificates.
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Subject to the provisions for elimination of fractional shares, as
described below, consummation of the Reverse Split will not result in a change
in the relative equity position or voting power of the holders of Old Common
Stock, except that, if the options to Messrs. DeLape, Young, Finch and another
employee of the Company are approved by the shareholders and the $25,000,000
aggregate market capitalization vesting contingency is satisfied, their
proportional interest in the total outstanding New Common Stock will, assuming
the full exercise of such options, increase substantially. While the 670,000
shares of Old Common Stock issuable upon exercise of such options represents
approximately 1.5% of the 46,855,096 shares of New Common Stock presently
outstanding, after giving effect to the Reverse Split and the anti-dilution
provisions of such options, the 670,000 shares of New Common Stock issuable upon
exercise of these options will, assuming the $25,000,000 aggregate market
capitalization vesting contingency relating to such option is satisfied,
represent approximately 30% of the 2,226,836 shares of New Common Stock
outstanding after the Reverse Split, giving effect to and assuming the full
exercise of such options.
Assuming the Reverse Split is approved and implemented, the Certificate
of Amendment amending the Company's Certificate of Incorporation will be filed
with the Secretary of State of New York as promptly as practicable thereafter.
The Reverse Split will become effective as of the date of such filing (the
"Effective Date").
Purposes of the Reverse Stock Split
The Reverse Split would decrease the number of shares of Old Common
Stock outstanding and presumably increase the per share market price for the New
Common Stock. Theoretically, the number of shares outstanding should not, by
itself, affect the marketability of the Common Stock, the type of investor who
acquires it, or the Company's reputation in the financial community, but in
practice this is not necessarily the case, as many investors look upon a stock
trading at less than $1.00 per share as unduly speculative in nature and, as a
matter of policy, avoid investments in such stocks.
Prior to January 1994, the Common Stock was traded on the
over-the-counter market. From January 1994 until August 13, 1997, the Common
Stock was traded on The Nasdaq SmallCap Market. Since August 14, 1997, the
Common Stock has been trading on the OTC Electronic Bulletin Board. The Common
Stock was delisted from The Nasdaq SmallCap Market because of the failure of the
Company to meet Nasdaq's capital and surplus and bid price requirements. The
approval and implementation of the Reverse Split are not expected to have any
immediate impact upon the ability of the Company to list its Common Stock on The
Nasdaq SmallCap Market. In order for the Company to have its Common Stock listed
on The Nasdaq SmallCap Market, it will be necessary for the Company to meet the
initial listing requirements for The Nasdaq SmallCap Market. Based upon its
financial position at March 31, 1999, the Company will not meet the tests for
inclusion in The Nasdaq SmallCap Market as a result of the Reverse Split. No
assurance can be given that the Common Stock will ever be listed on The Nasdaq
SmallCap Market or any exchange.
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Many leading brokerage firms are reluctant to recommend lower-priced
securities to their clients and a variety of brokerage firm policies and
practices currently tend to discourage individual brokers within firms from
dealing in lower-priced stocks. Some of those policies and practices pertain to
the payment of brokers' commissions and to time consuming procedures that make
the handling of lower priced stocks unattractive to brokers from an economic
standpoint. In addition, the structure of trading commissions also tends to have
an adverse impact upon holders of lower priced stock because the brokerage
commission on a sale of a lower priced stock generally represents a higher
percentage of the sales price than the commission on a relatively higher priced
issue.
The Board of Directors, consisting of Messrs. DeLape and Young,
believes that the Reverse Split is in the best interest of the Company and its
shareholders. The price of the Old Common Stock during the period January 1
through June 9, 1999 ranged from a low closing price of $.__ to a high closing
price of $.__. On June 9, 1999, the closing price of the Old Common Stock was
$.1625 per share. The Company may require additional capital for its operations
and does not believe that it will be able to raise capital unless the price of
the Common Stock is higher than the current Common Stock price levels. However,
no assurance can be given that the Reverse Split will result in any increase in
the Common Stock price or that the Company will be able to obtain any capital
following the Reverse Split. The anti-dilution protection contained in the
options held by Messrs. DeLape, Young, Finch and another employee of the Company
may have an adverse effect upon the market price of the Common Stock, even
though such options do not vest and become exercisable unless the Company's
aggregate market capitalization equals or exceeds $25,000,000. See "Approval of
the 1999 Long-Term Incentive Plan."
Exchange of Certificate and Elimination of Fractional Share Interests
On the Effective Date, each 30 shares of Old Common Stock will
automatically be combined and changed into one share of New Common Stock. No
additional action on the part of the Company or any shareholder will be required
in order to implement the Reverse Split. Shareholders will be requested to
exchange their certificates representing shares of Old Common Stock held prior
to the Reverse Split for new certificates representing shares of New Common
Stock. Shareholders will be furnished with the necessary materials and
instructions to effect such exchange promptly following the Effective Date.
Certificates representing shares of Old Common Stock subsequently presented for
transfer will not be transferred on the books and records of the Company but
will be returned to the tendering person for exchange. Shareholders should not
submit any certificates until requested to do so. In the event any certificate
representing shares of Old Common Stock is not presented for exchange upon
request by the Company, any dividends that may be declared after the Effective
Date of the Reverse Split with respect to the Common Stock represented by such
certificate will be withheld by the Company until such certificate has been
properly presented for exchange, at which time all such withheld dividends which
have not yet been paid to a public official pursuant to relevant abandoned
property laws will be paid to the holder thereof or his designee, without
interest.
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No fractional shares of New Common Stock will be issued to any
shareholder. Accordingly, shareholders of record who would otherwise be entitled
to receive fractional shares of New Common Stock, will, upon surrender of their
certificates representing shares of Old Common Stock, receive a cash payment in
lieu thereof equal to the fair value of such fractional share. Holders of less
than 30 shares of Old Common Stock as a result of the Reverse Split will, on the
Effective Date, no longer be shareholders of the Company. The Board of Directors
has determined that the fair value of the Common Stock will be based on the
closing price of the Common Stock on the OTC Electronic Bulletin Board on the
Effective Date (as adjusted to reflect the Reverse Split) or, if there are no
reported sales on such date, the average of the last reported high bid and low
asked price on such day shall be used.
Federal Income Tax Consequences of the Reverse Split
The combination of each 30 shares of Old Common Stock into one share of
New Common Stock should be a tax-free transaction under the Internal Revenue
Code of 1986, as amended, and the holding period and tax basis of the Old Common
Stock will be transferred to the New Common Stock received in exchange therefor.
Generally, cash received in lieu of fractional shares will be treated
as a sale of the fractional shares (although in unusual circumstances such cash
might possibly be deemed a dividend), and shareholders will likely recognize
gain or loss based upon the difference between the amount of cash received and
the basis in the surrendered fractional share.
This discussion should not be considered as tax or investment advice,
and the tax consequences of the Reverse Split may not be the same for all
shareholders. Shareholders should consult their own tax advisors to determine
their individual Federal, state, local and foreign tax consequences.
Financial Statements
The Company's audited consolidated financial statements for the year
ended December 31, 1998 and the unaudited consolidated financial statements for
the three months ended March 31, 1999, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" with respect to such financial
statements which are included in the Annual Report and the Company's Form 10-Q
for the quarter ended March 31, 1999, are incorporated by reference in this
Proxy Statement. See "Incorporation by Reference."
Vote Required
The Reverse Split requires the approval of the holders of a majority of
the outstanding shares of Common Stock.
The Board of Directors recommends a vote FOR the Reverse Split.
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APPROVAL OF CHANGE IN AUTHORIZED CAPITAL STOCK
The Board of Directors has approved, subject to shareholder approval,
an amendment to the Company's Certificate of Incorporation which would change
the number of authorized shares of Common Stock, par value $.01 per share. If
the Reverse Split is approved, the number of authorized shares of Common Stock
would be decreased from 50,000,000 shares to 25,000,000 shares. If the Reverse
Split is not approved, the number of authorized shares would be increased from
50,000,000 shares to 150,000,000 shares.
The adoption of the amendment will not effect any change in the
Company's outstanding Common Stock.
Financial Statements
The Company's audited consolidated financial statements for the year
ended December 31, 1998 and the unaudited consolidated financial statements for
the three months ended March 31, 1999, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" with respect to such financial
statements which are included in the Annual Report and the Company's Form 10-Q
for the quarter ended March 31, 1999, are incorporated by reference in this
Proxy Statement. See "Incorporation by Reference."
Discussion of the Amendment
On the Record Date, there were outstanding 46,855,096 shares of Common
Stock. In addition, on such date there were 1,000,000 shares of Common Stock
issuable upon the exercise of warrants held by the principal lender to one of
the Company's presently inactive subsidiaries and 920,000 shares reserved for
issuance pursuant to other outstanding options and warrants, including options
and warrants issued to former and present officers and directors of the Company.
Accordingly, the Company does not have sufficient shares of Common
Stock available for issuance for the purpose of raising additional capital for
future acquisitions. However, if the Reverse Split is approved, the 25,000,000
shares of authorized Common Stock will exceed the reasonable requirements for
such shares, and the Board of Directors believes that a reduction in the number
of authorized shares of Common Stock is in the best interests of the
Corporation.
In the event that the Reverse Split is not approved, the Company will
not have sufficient shares of Common Stock available to enable it to issue any
significant number of additional shares of Common Stock, including shares
issuable for the purposes described herein. In such event, the Board of
Directors believes that the increased authorization to 150,000,000 shares of
Common Stock is necessary to provide the Company with sufficient shares in the
event that such shares are necessary. Except as set forth above, the Company has
no agreements or understandings at this time with respect to the issuance of
additional shares of Common Stock.
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<PAGE>
Under the Company's Certificate of Incorporation, the Board of
Directors of the Company has authority to issue authorized and unissued shares
of capital stock of any class without obtaining approval from the holders of the
Common Stock. The holders of the Company's Common Stock and Preferred Stock do
not have preemptive rights. The Company's Certificate of Incorporation gives the
Board of Directors broad authority to issue shares of preferred stock in one or
more series and to determine such matters as the dividend rate and preference,
voting rights, conversion privileges, redemption provisions, liquidation
preferences and other rights of each series. Each share of Common Stock is
entitled to one vote. The holders of any series of preferred stock issued in the
future will be entitled to such voting rights as may be specified by the Board
of Directors.
Because of the broad powers granted to the Board of Directors to issue
shares of preferred stock and determine the rights, preferences and privileges
of the holders of such series, the Board has the power to issue shares of
preferred stock in a manner which could be used as a defensive measure against a
hostile takeover or to keep the Board of Directors in power. The Board of
Directors has no present plans to issue shares for such purpose.
The Board of Directors of the Company believes it will benefit the
shareholders to have additional unreserved shares available for issuance in
order that adequate shares may be available for the possible issuance of Common
Stock, convertible preferred stock or convertible debt securities in connection
with a possible financing of the Company's business or an acquisition. The
Company has no plans, arrangements, understandings or commitments at this time
with respect to the issuance of any such shares.
Vote Required
The amendment to the Certificate of Incorporation requires the approval
of the holders of a majority of the outstanding shares of Common Stock.
The Board of Directors recommends a vote FOR the proposed change to the
authorized capital stock of the Company.
APPROVAL OF CHANGE OF NAME
The Board of Directors has approved, subject to shareholder approval,
an amendment to the Company's Certificate of Incorporation to change the
Company's name from Consolidated Technology Group Ltd. to Cristen Group Limited
The Board of Directors believes that a change of the Company's corporate name is
necessary as a result of the change in the Company's business. The Company,
through its majority owned subsidiaries, and its controlling interest in other
companies, was engaged in a range of different businesses. The Company's current
name reflects the prior activities and businesses engaged in by the Company.
During 1998 and 1999, the Company divested itself of its former businesses and
it now neither operates nor controls any operating businesses. In view of the
change in the Company's business, the Board of Directors
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believes that the new name of Cristen Group Limited is in the best interests of
the Company and its shareholders.
Vote required
The amendment to the Certificate of Incorporation requires the approval
of the holders of a majority of the outstanding shares of Common Stock.
The Board of Directors recommends a vote FOR the proposed change of the
Company's corporate name.
APPROVAL OF THE 1999 LONG-TERM INCENTIVE PLAN
The Board of Directors believes that in order for the Company and its
subsidiaries to attract and retain the services of executive and other key
employees, it is necessary for the Company to have the ability and flexibility
to provide a compensation package which compares favorably with those offered by
other companies. Accordingly, the Board of Directors adopted the 1999 Long-Term
Incentive Plan (the "Plan"), subject to shareholder approval, covering 2,490,000
shares of Common Stock. The number of shares of Common Stock issuable pursuant
to the Plan will be 1,600,000 shares if the Reverse Split becomes effective. Set
forth below is a summary of the Plan, but this summary is qualified in its
entirety by reference to the full text of the Plan, a copy of which is attached
as Appendix A to this Proxy Statement.
The Plan is authorized for 2,490,000 shares of Common Stock (1,600,000
shares if the Reverse Split becomes effective). If shares subject to an option
or other right under the Plan cease to be subject to such option or right, or if
shares awarded under the Plan are forfeited, or otherwise terminate without a
payment being made to the participant in the form of stock, such shares will
again be available for future issuance under the Plan. The Plan does not have an
expiration date.
Awards under the Plan may be made to key employees, including officers
and directors of and consultants to the Company and its subsidiaries. Members of
the Committee are also eligible for options granted under the Plan. The Plan
imposes no limit on the number of officers and other key employees to whom
awards may be made.
The Plan will be administered by a committee of at least two
non-employee directors to be appointed by the Board (the "Committee"). The
Committee has broad discretion in determining the individuals to whom stock
options or other awards are to be granted, the terms and conditions of the
award, including the type of award, the exercise price and term, the vesting
provisions and the restrictions and forfeiture conditions. Members of the
Committee are eligible for the grant of options and other rights under the Plan.
If no Committee is appointed, the functions of the Committee shall be performed
by the Board of Directors. Since the Company only has two directors, the Board
of Directors presently serves as the Committee.
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The Committee will have the authority to grant the following types of
awards under the Plan: incentive or non-qualified stock options; stock
appreciation rights; restricted stock; deferred stock; stock purchase rights
and/or other stock-based awards. The Plan is designed to provide the Committee
with broad discretion to grant incentive stock-based rights.
Pursuant to their employment agreements, Messrs. Frank DeLape and
Richard Young are entitled, on each December 31st during the term of their
agreements, to receive options to purchase 250,000 and 100,000 shares of Common
Stock, respectively, at the market price of the Common Stock on such dates,
provided that such individuals are employed by the Company at that time and that
certain performance objectives to be determined by the Committee have been met
at that time. Such options are to be granted pursuant to a plan approved by the
shareholders and may have stock appreciation rights. If there are sufficient
shares of Common Stock available for issuance pursuant to the Plan, the Company
anticipates that such options will be granted pursuant to the Plan.
The Committee also has the authority to determine, in its sole
discretion, the effect of any reverse split or other recapitalization upon the
number of shares subject to the Plan and the number of shares and option or base
price of all options or other equity-based incentives granted under the Plan and
to provide financial assistance to persons exercising options pursuant to the
Plan. Pursuant to such authority, the Board of Directors, acting as the
Committee, determined that, upon the effectiveness of the Reverse Split, the
number of shares of Common Stock subject to the Plan will be 1,600,000 shares.
The Plan also provides certain cashout rights in the event of a change of
control.
The following table sets forth information concerning options granted
pursuant to the Plan as of May 31, 1999. None of the present officers and
directors and none of the individuals named in the Summary Compensation Table
held any options at December 31, 1998, the end of the Company's most recent
fiscal year. The options granted under the Plan to the Company's present
officers and employees have stock appreciation rights. The stock appreciation
right gives the holder the right to receive, in shares of Common Stock, the
appreciation in the value of the Common Stock from the exercise price of the
option. The number of shares to be issued with respect to each option to
purchase one share of Common Stock is determined by subtracting the exercise
price of the option from the fair market value of the Common Stock at the time
of exercise and dividing the result by such fair market value. The stock
appreciation rights were granted in tandem with the options. Thus, any exercise
of the option reduces the number of shares of Common Stock subject to the stock
appreciation right, and any exercise of the stock appreciation right reduces
the number of shares of Common Stock subject to the option. Except for the
cashout rights in the event of a change of control, the option holders have no
right to receive cash in respect of the stock appreciation rights.
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Number of Shares Exercise Price
Name and Position Underlying Options Granted Per Share
----------------- -------------------------- ---------
Frank DeLape, chairman and chief 400,000 $.14
executive officer
Richard Young, president and chief 250,000 .14
operating officer
All current executive officers 665,000 .14
All other employees 5,000 .14
The following is a description of the options granted pursuant to the
Plan, all of which are subject to shareholder approval of the Plan.
Frank DeLape and Richard Young. Pursuant to employment agreements
between the Company and Messrs. DeLape and Young, the Company granted such
individuals five-year non-qualified stock options to purchase 400,000 and
250,000 shares of the Common Stock of the Company, respectively, at $.14 per
share, being the closing price of the Company's Common Stock on April 20, 1999.
Both of such options become exercisable only upon the Company's aggregate market
capitalization being at least $25,000,000. The options provide the holders with
stock appreciation rights, which can be exercised to the extent that the options
are exercisable.
The number of shares of Common Stock issuable upon exercise of Mr.
DeLape's and Mr. Young's options will not be affected by the Reverse Split.
However, the exercise price of all of such options will be adjusted to reflect
the Reverse Split. Accordingly, the $.14 per share exercise price of the
aforementioned options held by Messrs. DeLape and Young will be adjusted to
$4.20 per share upon the effectiveness of the Reverse Split. Thus, upon the
effectiveness of the Reverse Split, Messrs. DeLape and Young will have options
to purchase 400,000 and 250,000 shares of Common Stock, respectively, at $4.20
per share, and the related stock appreciation rights.
Other Options to Employees. In April 1999, the Company granted
five-year non-qualified stock options to Matthew J. Finch, Secretary of the
Company, and to another employee of the Company, to purchase 15,000 and 5,000
shares of Common Stock, respectively at $.14 per share, the closing price of the
Company's Common Stock on the date of grant of such options. The options provide
the holders with stock appreciation rights, which can be exercised to the extent
that the options are exercisable. These options become exercisable when the
Company has an aggregate market capitalization of at least $25,000,000 and
contain the same anti-dilution provisions with respect to the number of shares
covered by such options as are contained in the options granted to Messrs.
DeLape and Young. Accordingly, the number of shares subject to such options will
not be adjusted as a result of the Reverse Split. However, the $.14 per share
exercise price of such options will be adjusted to $4.20 per share upon the
effectiveness of the Reverse Split. Thus, upon the effectiveness of the Reverse
Split, Mr. Finch and such other
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employee will have options to purchase 15,000 and 5,000 shares of Common Stock,
respectively, at $4.20 per share, with the related stock appreciation rights.
Edward D. Bright. In August 1998, the Company granted Edward D. Bright,
who was then the Chairman of the Board and a director of the Company, options to
purchase 150,000 shares of Common Stock. The options have a term of three years
and are exercisable at $.25 per share, the fair market value of the Common Stock
on July 7, 1998. This option was included in the Plan.
In April 1999, the Company granted Mr. Bright a three-year option to
purchase 100,000 shares of Common Stock at $.15 per share, the fair market value
of the Common Stock on April 22, 1999. Such option does not require shareholder
approval and is not included in the Plan. Accordingly, if the shareholders do
not approve the Plan, the option granted to Mr. Bright in April 1999 will
nevertheless remain in full force and effect.
Both the number of shares and the exercise price of the aforementioned
options held by Mr. Bright will be subject to adjustment upon the consummation
of the Reverse Split. Accordingly, the option to purchase 150,000 shares of
Common Stock at $.25 per share will be adjusted to 5,000 shares exercisable at
$7.50 per share and the option to purchase 100,000 shares of Common Stock at
$.15 per share will be adjusted to 3,333 shares exercisable at $4.50 per share.
The options granted to Mr. Bright do not have stock appreciation rights.
The options granted pursuant to the Plan were granted subject to
shareholder approval of the Plan. In the event that the Plan is not approved by
the shareholders, all of the options granted under the Plan will terminate.
Tax consequences of awards provided under the Plan are dependent upon
the type of award granted. The grant of an incentive or non-qualified stock
option does not result in any taxable income to the recipient or deduction to
the Company. Upon exercise of a non-qualified stock option, the recipient
recognizes income in the amount by which the fair market value on the date of
exercise exceeds the exercise price of the option, and the Company receives a
corresponding tax deduction. In the case of incentive stock options, no income
is recognized to the employee, and no deduction is available to the Company upon
the exercise of such options, if the stock issued upon exercise of the option is
not transferred within two years from the date of grant or one year from the
date of exercise, whichever occurs later. However, the exercise of an incentive
stock option may result in additional taxes through the application of the
alternative minimum tax. In the event of a sale or other disqualifying transfer
of stock issued upon exercise of an incentive stock option, the employee
realizes income, and the Company receives a tax deduction, equal to the amount
by which the lesser of the fair market value on the date of exercise or the
proceeds from the sale exceeds the exercise price. The issuance of stock upon
exercise of a stock appreciation right results in taxable income equal to the
value of the shares of Common Stock issued. The issuance of stock pursuant to a
stock grant results in taxable income to the recipient on the date the rights to
the stock become non-forfeitable, and the Company receives a
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deduction in such amount. However, if the recipient of the award makes an
election in accordance with the Internal Revenue Code of 1986, as amended, the
amount of his or her income is based on the fair market value on the date of
grant rather than the fair market value on the date the rights become
non-forfeitable. When compensation is to be recognized by the employee,
appropriate arrangements are to be made with respect to the payment of
withholding tax.
Vote Required
The approval of the Plan requires the approval of a majority of the
shares present and voting at the meeting provided that a quorum is present.
The Board of Directors recommends a vote FOR the adoption of the Plan.
INDEPENDENT ACCOUNTANTS
Moore Stephens, P.C. has been the independent certified public
accountants for the Company since 1985, and its report is included in the Annual
Report. At no time since their engagement has such firm had any direct or
indirect financial interest in or any connection with the Company or any of its
subsidiaries other than as independent auditors.
Representatives of Moore Stephens, P.C. are not expected to be present
at the Annual Meeting but will, however, be available by telephone to respond to
appropriate questions from shareholders. The Company does not have an audit
committee. The Board of Directors performs such functions.
INCORPORATION BY REFERENCE
The Company hereby incorporates by reference in this Proxy Statement,
its Annual Report on Form 10-K for the year ended December 31, 1998, which is
included in the Annual Report, and its Form 10-Q for the quarter ended March 31,
1999. The Form 10-K includes, among other information, a description of the
Company's business and its audited financial statements for the years ended
December 31, 1997 and 1998 and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Form 10-Q for the
quarter ended March 31, 1999, which includes unaudited financial statements for
the quarter ended March 31, 1999 and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." A copy of the Annual Report is
being mailed to shareholders of record on the Record Date concurrently with the
mailing of this Proxy Statement. Additional copies of the Annual Report will be
provided by the Company without charge upon request. Copies of such Form 10-Q
will be provided without charge upon request.
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OTHER MATTERS
Any proposal which a shareholder wishes to present at the 2000 Annual
Meeting of Shareholders must be received by the Company at its executive offices
at 700 Gemini Street, Suite 100, Houston, Texas 77058, not later than January
31, 2000.
Copies of the Company's Form 10-K for the year ended December 31, 1998
and Form 10-Q for the quarter ended March 31, 1999, without Exhibits, may be
obtained without charge by writing to Matthew J. Finch, Esq., Secretary,
Consolidated Technology Group Ltd., 700 Gemini Street, Suite 100, Houston, Texas
77058. Exhibits will be furnished upon request and upon payment of a handling
charge of $.25 per page, which represents the Company's reasonable cost of
furnishing such Exhibits.
The Board of Directors does not know of any other matters to be brought
before the Annual Meeting. If any other matters are properly brought before the
meeting, the individuals named in the enclosed proxy intend to vote such proxy
in accordance with their best judgment on such matters.
By Order of the Board of Directors
Frank DeLape
Chairman of the Board
June __, 1999
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Appendix A
CONSOLIDATED TECHNOLOGY GROUP LTD.
1999 Long-Term Incentive Plan
1. Purpose; Definitions.
The purpose of the Consolidated Technology Group Ltd. 1999 Long Term
Incentive Plan (the "Plan") is to enable Consolidated Technology Group Ltd. (the
"Company") to attract, retain and reward key employees of the Company and its
Subsidiaries and Affiliates, and others who provide services to the Company and
its Subsidiaries and Affiliates, and strengthen the mutuality of interests
between such key employees and such other persons and the Company's
stockholders, by offering such key employees and such other persons incentives
and/or other equity interests or equity-based incentives in the Company, as well
as performance-based incentives payable in cash.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any corporation, partnership, limited liability
company, joint venture or other entity, other than the Company and its
Subsidiaries, that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.
(b) "Board" means the Board of Directors of the Company.
(c) "Book Value" means, as of any given date, on a per share basis (i)
the stockholders' equity in the Company as of the last day of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding shares of Stock as of such
year-end date, as adjusted by the Committee for subsequent events.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(e) "Commission" means the Securities and Exchange Commission or any
successor thereto.
(f) "Committee" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
(g) "Company" means Consolidated Technology Group Ltd., a New York
corporation, or any successor corporation.
(h) "Common Stock" means the Common Stock, par value $.01 per share, of
the Company or any class of common stock into which such common stock may
hereafter be converted or for which such common stock may be exchanged pursuant
to the Company's certificate of incorporation or as part of a recapitalization,
reorganization or similar transaction.
(i) "Deferred Stock" means an award made pursuant to Section 8 of the
Plan of the right to receive Common Stock at the end of a specified deferral
period.
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(j) "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.
(k) "Early Retirement" means retirement, with the express consent for
purposes of this Plan of the Company at or before the time of such retirement,
from active employment with the Company and any Subsidiary or Affiliate pursuant
to the early retirement provisions of the applicable pension plan of such
entity.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, from time to time, and any successor thereto.
(m) "Fair Market Value" means, as of any given date, the market price
of the Common Stock as determined by or in accordance with the policies
established by the Committee in good faith; provided, that, in the case of an
Incentive Stock Option, the Fair Market Value shall be determined in accordance
with the Code and the Treasury regulations under the Code.
(n) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(o) "Non-Employee Director" means a director of the Company who is not
otherwise employed or engaged as a consultant by the Company or any Subsidiary
or Affiliate.
(p) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(q) "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.
(r) "Other Stock-Based Award" means an award under Section 10 of the
Plan that is valued in whole or in part by reference to, or is otherwise based
on, Common Stock.
(s) "Plan" means this Consolidated Technology Group Ltd. 1999 Long Term
Incentive Plan, as hereinafter amended from time to time.
(t) "Restricted Stock" means an award of shares of Common Stock that is
subject to restrictions under Section 7 of the Plan.
(u) "Retirement" means Normal Retirement or Early Retirement.
(v) "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 of the Plan to surrender to the Company all (or a
portion) of a Stock Option in exchange for an amount equal to the difference
between (i) the Fair Market Value, as of the date such award or Stock Option (or
such portion thereof) is surrendered, of the shares of Common Stock covered by
such Stock Option (or such portion thereof), subject, where applicable, to the
pricing provisions in Paragraph 6(b)(ii) of the Plan and (ii) the aggregate
exercise price of such Stock Option or base price with respect to such award (or
the portion thereof which is surrendered).
(w) "Stock Option" or "Option" means any option to purchase shares of
Common Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 of the Plan.
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(x) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 9 of the Plan.
(y) "Subsidiary" means any corporation or other business association,
including a partnership or limited liability company (other than the Company) in
an unbroken chain of corporations or other business associations beginning with
the Company if each of the corporations or other business associations (other
than the last corporation in the unbroken chain) owns equity interests
(including stock or partnership interests) possessing 50% or more of the total
combined voting power of all classes of equity in one of the other corporations
or other business associations in the chain.
In addition, the terms "Change in Control," "Potential Change in
Control" and "Change in Control Price" shall have meanings set forth,
respectively, in Paragraphs 11(b), (c) and (d) of the Plan and the term "Cause"
shall have the meaning set forth in Paragraph 5(b)(viii) of the Plan.
2. Administration.
(a) The Plan shall be administered by a Committee of not less than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. If and to the extent that no Committee exists
which has the authority to so administer the Plan, the functions of the
Committee specified in the Plan shall be exercised by the Board. Notwithstanding
the foregoing, in the event that the Company is not subject to the Exchange Act
or in the event that the administration of the Plan by a Committee of
Non-Employee Directors is not required in order for the Plan to meet the test of
Rule 16b-3 of the Commission under the Exchange Act, or any subsequent rule,
then the Committee need not be composed of Non-Employee Directors. As long as
said Rule 16b-3 requires, as a condition to the officers and directors obtaining
the benefit of such rule, that the Committee be composed of Non-Employee
Directors, each member or alternate member of the Committee shall not be
entitled to any grants under the Plan (except grants pursuant to Paragraph 4(b)
of the Plan) or under any other plans of the Corporation or its affiliates,
except to the extent that participation in a plan would not cause such person to
cease being a Non-Employee Directors for purposes of said Rule 16b-3.
(b) The Committee shall have full authority to grant, pursuant to the
terms of the Plan, to officers and other persons eligible under Section 4 of the
Plan: Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred
Stock, Stock Purchase Rights and/or Other Stock-Based Awards. In particular, the
Committee shall have the authority:
(i) to select the officers and other eligible persons to whom
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Stock Purchase Rights and/or Other Stock-Based Awards may from time to time be
granted pursuant to the Plan;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock, Stock Purchase Rights and/or Other Stock-Based Awards, or
any combination thereof, are to be granted pursuant to the Plan, to one or more
eligible persons;
(iii) to determine the number of shares to be covered by each
such award granted pursuant to the Plan;
(iv) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted under the Plan, including, but
not limited to, the share price or exercise price and any
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restriction or limitation, or any vesting, acceleration or waiver of forfeiture
restrictions regarding any Stock Option or other award and/or the shares of
Common Stock relating thereto, based in each case on such factors as the
Committee shall, in its sole discretion, determine;
(v) to determine whether, to what extent and under what
circumstances a Stock Option may be settled in cash, Restricted Stock and/or
Deferred Stock under Paragraph 5(b)(x) or (xi) of the Plan, as applicable,
instead of Common Stock;
(vi) to determine whether, to what extent and under what
circumstances Option grants and/or other awards under the Plan and/or other cash
awards made by the Company are to be made, and operate, on a tandem basis with
other awards under the Plan and/or cash awards made outside of the Plan in a
manner whereby the exercise of one award precludes, in whole or in part, the
exercise of another award, or on an additive basis;
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant, including any provision for any determination or method of
determination of the amount (if any) deemed to be earned on any deferred amount
during any deferral period;
(viii) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Common Stock purchased by exercising such Rights;
and
(ix) to determine an aggregate number of awards and the type
of awards to be granted to eligible persons employed or engaged by the Company
and/or any specific Subsidiary, Affiliate or division and grant to management
the authority to grant such awards, provided that no awards to any person
subject to the reporting and short-swing profit provisions of Section 16 of the
Exchange Act may be granted awards except by the Committee.
(c) The Committee shall have the authority to adopt, alter and repeal
such rules, guidelines and practices governing the Plan as it shall, from time
to time, deem advisable; to interpret the terms and provisions of the Plan and
any award issued under the Plan and any agreements relating thereto, and
otherwise to supervise the administration of the Plan.
(d) All decisions made by the Committee pursuant to the provisions of
the Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.
3. Stock Subject to Plan.
(a) The total number of shares of Common Stock reserved and available
for distribution under the Plan shall be two million four hundred ninety
thousand (2,490,000) shares of Common Stock. In the event that awards are
granted in tandem such that the exercise of one award precludes the exercise of
another award then, for the purpose of determining the number of shares of
Common Stock as to which awards shall have been granted, the maximum number of
shares of Common Stock issuable pursuant to such tandem awards shall be used.
(b) Subject to Paragraph 6(b)(v) of the Plan, if any shares of Common
Stock that have been optioned cease to be subject to a Stock Option, or if any
such shares of Common Stock that are subject to any Restricted Stock or Deferred
Stock award, Stock Purchase Right or Other Stock-Based Award granted under the
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Plan are forfeited or any such award otherwise terminates without a payment
being made to the participant in the form of Common Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, forward stock split, stock distribution,
reverse split, combination of shares or other change in corporate structure
affecting the Common Stock, such substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the base
number of shares, in the number and option price of shares subject to
outstanding Options granted under the Plan, in the number and purchase price of
shares subject to outstanding Stock Purchase Rights under the Plan, and in the
number of shares subject to other outstanding awards granted under the Plan as
may be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of shares subject to any award shall always be a whole
number. Such adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option. The Committee, in its sole discretion, may
make additional antidilution adjustments to any Options issued under the Plan.
4. Eligibility.
Officers and other key employees of, and consultants and independent
contractors to, and directors or, the Company and its Subsidiaries and
Affiliates who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company and/or its Subsidiaries and
Affiliates are eligible to be granted awards under the Plan. Members of the
Committee shall be eligible for options under the Plan.
5. Stock Options.
(a) Administration. Stock Options may be granted alone, in addition to
or in tandem with other awards granted under the Plan and/or cash awards made
outside of the Plan. Any Stock Option granted under the Plan shall be in such
form as the Committee may from time to time approve. Stock Options granted under
the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified
Stock Options. The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights).
(b) Option Grants. Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee, in
its sole discretion, shall deem desirable:
(i) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant.
(ii) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option shall be exercisable more than twelve (12)
years after the date the Option is granted.
(iii) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at or after grant. If the Committee provides, in its
sole discretion, that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or after
grant in whole or in part, based on such factors as the Committee shall, in its
sole discretion, determine;
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(iv) Method of Exercise.
(A) Subject to whatever installment exercise
provisions apply under Paragraph 5(b)(iii) of the Plan, Stock Options may be
exercised in whole or in part at any time during the option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument, securities or property as
the Committee may accept. A partial exercise of an Option shall not affect the
right of the Optionee to exercise the option from time to time, in accordance
with the Plan, as to the remaining number of shares subject to the Option.
Except as otherwise provided in this Plan. The purchase price of the shares
shall be in United States dollars, payable in cash or by certified bank check.
As and to the extent determined by the Committee, in its sole discretion, at or
after grant, payments in full or in part may also be made in the form of Common
Stock already owned by the optionee or, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock, or Options to purchase Common
Stock of the Company owned by him (and having an aggregate fair market value at
least equal to the total exercise price) subject to an award hereunder (based,
in each case, on the Fair Market Value of the Common Stock on the date the
Option is exercised, as determined by the Committee). Notwithstanding the
foregoing, in lieu of cash, a non-director Optionee may, with the approval of
the Board or the Committee, exercise his Option by tendering to the Company
shares of the common stock of the Company. The fair market value of any shares
of common stock so surrendered shall be determined by the Board or the
Committee.
(B) If payment of the option exercise price of a
Non-Qualified Stock Option is made in whole or in part in the form of Restricted
Stock or Deferred Stock, the Common Stock issuable upon such exercise (and any
replacement shares relating thereto) shall remain (or be) restricted or
deferred, as the case may be, in accordance with the original terms of the
Restricted Stock award or Deferred Stock award in question, and any additional
Common Stock received upon the exercise shall be subject to the same forfeiture
restrictions or deferral limitations, unless otherwise determined by the
Committee, in its sole discretion, at or after grant.
(C) No shares of Common Stock shall be issued until
full payment therefor has been received by the Company. In the event of any
exercise by note or other instrument, the shares of Common Stock shall not be
issued until such note or other instrument shall have been paid in full, and the
exercising optionee shall have no rights as a stockholder until such payment is
made.
(D) Subject to Paragraph 5(b)(iv)(C) of the Plan, an
optionee shall generally have the rights to dividends or other rights of a
stockholder with respect to shares subject to the Option when the optionee has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in Paragraph 14(a) of the
Plan.
(v) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(vi) Termination by Death. Subject to Paragraph 5(b)(ix) of
the Plan with respect to Incentive Stock Options, if an optionee's employment by
the Company and any Subsidiary or Affiliate terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised, to the extent
such option was exercisable at the time of death or on such accelerated basis as
the Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, for a period of one year
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(or such other period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(vii) Termination by Reason of Disability or Retirement.
Subject to Paragraph 5(b)(ix) of the Plan with respect to Incentive Stock
Options, if an optionee's employment by the Company and any Subsidiary or
Affiliate terminates by reason of a Disability or Normal or Early Retirement,
any Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of termination or on such
accelerated basis as the Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the Committee), for a
period of one year (or such other period as the Committee may specify at grant)
from the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter; provided,
however, that, if the optionee dies within such one-year period (or such other
period as the Committee shall specify at grant), any unexercised Stock Option
held by such optionee shall thereafter be exercisable to the extent to which it
was exercisable at the time of death for a period of one year from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of termination of employment by
reason of Disability or Normal or Early Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(viii) Other Termination. Unless otherwise determined by the
Committee (or pursuant to procedures established by the Committee) at or after
grant, if an optionee's employment by the Company and any Subsidiary or
Affiliate terminates for any reason other than death, Disability or Normal or
Early Retirement, the Stock Option shall thereupon terminate; provided, however,
that if the optionee is involuntarily terminated by the Company or any
Subsidiary or Affiliate without Cause, including a termination resulting from
the Subsidiary, Affiliate or division in which the optionee is employed or
engaged, ceasing, for any reason, to be a Subsidiary, Affiliate or division of
the Company, such Stock Option may be exercised, to the extent otherwise
exercisable on the date of termination, for a period of three months (or seven
months in the case of a person subject to the reporting and short-swing profit
provisions of Section 16 of the Exchange Act) from the date of such termination
or until the expiration of the stated term of such Stock Option, whichever is
shorter. For purposes of this Plan, "Cause" means conviction of a participant of
any felony or of a misdemeanor involving theft or moral turpitude, or the
failure of a participant to contest prosecution for a felony or such
misdemeanor, or a participant's willful misconduct or dishonesty, or a
participant's failure to perform the duties for which the participant was
employed or engaged.
(ix) Incentive Stock Options.
(A) Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422.
(B) To the extent required for "incentive stock
option" status under Section 422(d) of the Code (taking into account applicable
Treasury regulations and pronouncements), the Plan shall be deemed to provide
that the aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by the optionee during any calendar year under the Plan and/or
any other stock option plan of the Company or any Subsidiary or parent
corporation (within the meaning of Section 425 of the Code) shall not exceed
$100,000. If Section 422 is hereafter amended to delete the requirement now in
Section 422(d) that the plan text expressly provide for the $100,000 limitation
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set forth in Section 422(d), then this Paragraph 5(b)(ix)(B) shall no longer be
operative and the Committee may accelerate the dates on which the incentive
stock option may be exercised.
(C) To the extent permitted under Section 422 of the
Code or the applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
(I) If (x) a participant's employment is
terminated by reason of death, Disability or Retirement and (y) the portion of
any Incentive Stock Option that is otherwise exercisable during the
post-termination period specified under Paragraphs 5(b)(vi) and (vii) of the
Plan, applied without regard to the $100,000 limitation contained in Section
422(d) of the Code, is greater than the portion of such option that is
immediately exercisable as an "incentive stock option" during such
post-termination period under Section 422, such excess shall be treated as a
Non-Qualified Stock Option; and
(II) if the exercise of an Incentive Stock
Option is accelerated by reason of a Change in Control, any portion of such
option that is not exercisable as an Incentive Stock Option by reason of the
$100,000 limitation contained in Section 422(d) of the Code shall be treated as
a Non-Qualified Stock Option.
(x) Buyout Provisions. The Committee may at any time offer to
buy out for a payment in cash, Common Stock, Deferred Stock or Restricted Stock
an option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time that such
offer is made.
(xi) Settlement Provisions. If the option agreement so
provides at grant or is amended after grant and prior to exercise to so provide
(with the optionee's consent), the Committee may require that all or part of the
shares to be issued with respect to the spread value of an exercised Option take
the form of Deferred or Restricted Stock which shall be valued on the date of
exercise on the basis of the Fair Market Value (as determined by the Committee)
of such Deferred or Restricted Stock determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
6. Stock Appreciation Rights.
(a) Grant and Exercise.
(i) Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan. In the case of a
Non-Qualified Stock Option, such rights may be granted either at or after the
time of the grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of such Stock
Option.
(ii) A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
subject to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number of
shares covered by a related Stock Option.
(iii) A Stock Appreciation Right may be exercised by an
optionee, subject to Paragraph 6(b) of the Plan, in accordance with the
procedures established by the Committee for such purpose. Upon such exercise,
the optionee shall be entitled to receive an amount determined in the manner
prescribed in said Paragraph 6(b). Stock Options relating to exercised Stock
Appreciation Rights shall no longer be exercisable to the extent that the
related Stock Appreciation Rights have been exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions of this Section 6 and
Section 5 of the Plan; provided, however, that any Stock Appreciation Right
granted to an optionee subject to Section 16(b) of the Exchange Act subsequent
to the grant of the related Stock Option shall not be exercisable during the
first six months of its term, except that this special limitation shall not
apply in the event of death or Disability of the optionee prior to the
expiration of the six-month period. The exercise of Stock Appreciation Rights
held by optionees who are subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3 thereunder to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or shares of Common
Stock equal in value to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified in the related Stock
Option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment. When payment is to be made in shares of
Common Stock, the number of shares to be paid shall be calculated on the basis
of the Fair Market Value of the shares on the date of exercise. When payment is
to be made in cash, such amount shall be based upon the Fair Market Value of the
Common Stock on the date of exercise, determined in accordance with any
provisions of said Rule 16b-3 during the applicable period referred to in Rule
16b-3(e).
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be transferable
under Paragraph 5(b)(v) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised only to the extent of the number of
shares issued under the Stock Appreciation Right at the time of exercise based
on the value of the Stock Appreciation Right at such time.
(v) In its sole discretion, the Committee may grant Stock
Appreciation Rights that become exercisable only in the event of a Change in
Control and/or a Potential Change in Control, subject to such terms and
conditions as the Committee may specify at grant; provided that any such Stock
Appreciation Rights shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide
that, in the event of a Change in Control and/or a Potential Change in Control,
the amount to be paid upon the exercise of a Stock Appreciation Right shall be
based on the Change in Control Price, subject to such terms and conditions as
the Committee may specify at grant.
7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the price (if any) to be
paid by the recipient of Restricted Stock,
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subject to Paragraph 7(b) of the Plan, the time or times within which such
awards may be subject to forfeiture, and all other terms and conditions of the
awards. The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may, in its sole discretion, determine. The provisions of Restricted Stock
awards need not be the same with respect to each recipient.
(b) Awards and Certificates.
(i) The prospective recipient of a Restricted Stock award
shall not have any rights with respect to such award unless and until such
recipient has executed an agreement evidencing the award and has delivered a
fully executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such award.
(ii) The purchase price for shares of Restricted Stock may be
equal to or less than their par value and may be zero.
(iii) Awards of Restricted Stock must be accepted within a
period of 60 days (or such shorter period as the Committee may specify at grant)
after the award date, by executing a Restricted Stock Award Agreement and paying
the price, if any, required under Paragraph 7(b)(ii).
(iv) Each participant receiving a Restricted Stock award shall
be issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and shall
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.
(v) The Committee shall require that (A) the stock
certificates evidencing shares of Restricted Stock be held in the custody of the
Company until the restrictions thereon shall have lapsed, and (B) as a condition
of any Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Restricted Stock covered by such
award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the date of such
award (the "Restriction Period"), the participant shall not be permitted to
sell, transfer, pledge or assign shares of Restricted Stock awarded under the
Plan. Within these limits, the Committee, in its sole discretion, may provide
for the lapse of such restrictions in installments and may accelerate or waive
such restrictions in whole or in part, based on service, performance and/or such
other factors or criteria as the Committee may determine, in its sole
discretion.
(ii) Except as provided in this paragraph 7(c)(ii) and
Paragraph 7(c)(i) of the Plan, the participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive any regular cash
dividends paid out of current earnings. The Committee, in its sole discretion,
as determined at the time of award, may permit or require the payment of cash
dividends to be deferred and, if the Committee so determines, reinvested,
subject to Paragraph 14(e) of the Plan, in additional Restricted Stock to the
extent shares are available under Section 3 of the Plan, or otherwise
reinvested. Stock dividends, splits and distributions issued with respect to
Restricted Stock shall be treated as additional shares of Restricted Stock that
are subject to the same restrictions and other terms and conditions that apply
to the shares with respect to which such dividends are issued, and the Committee
may
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<PAGE>
require the participant to deliver an additional stock power covering the shares
issuable pursuant to such stock dividend, split or distribution. Any other
dividends or property distributed with regard to Restricted Stock, other than
regular dividends payable and paid out of current earnings, shall be held by the
Company subject to the same restrictions as the Restricted Stock.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a participant's employment
with the Company and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.
(iv) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction Period,
certificates for an appropriate number of unrestricted shares, and other
property held by the Company with respect to such Restricted Shares, shall be
delivered to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
Stock Option or performance-based or other award designed to guarantee a minimum
value, payable in cash or Common Stock to the recipient of a Restricted Stock
award, subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
8. Deferred Stock.
(a) Administration. Deferred Stock may be awarded either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Stock shall be awarded,
the number of shares of Deferred Stock to be awarded to any person, the duration
of the period (the "Deferral Period") during which, and the conditions under
which, receipt of the Common Stock will be deferred, and the other terms and
conditions of the award in addition to those set forth in Paragraph 8(b). The
Committee may condition the grant of Deferred Stock upon the attainment of
specified performance goals or such other factors or criteria as the Committee
shall, in its sole discretion, determine. The provisions of Deferred Stock
awards need not be the same with respect to each recipient.
(b) Terms and Conditions. The shares of Deferred Stock awarded pursuant
to this Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Paragraph 8(b)(vi) of the Plan, Deferred Stock awards
may not be sold, assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period (or the Elective
Deferral Period referred to in Paragraph 8(b)(v) of the Plan, where applicable),
share certificates representing the shares covered by the Deferred Stock award
shall be delivered to the participant or his legal representative.
(ii) Unless otherwise determined by the Committee at grant,
amounts equal to any dividends declared during the Deferral Period with respect
to the number of shares covered by a Deferred Stock award will be paid to the
participant currently, or deferred and deemed to be reinvested in additional
Deferred Stock, or otherwise reinvested, all as determined at or after the time
of the award by the Committee, in its sole discretion.
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<PAGE>
(iii) Subject to the provisions of the award agreement and
this Section 8, upon termination of a participant's employment with the Company
and any Subsidiary or Affiliate for any reason during the Deferral Period for a
given award, the Deferred Stock in question will vest, or be forfeited, in
accordance with the terms and conditions established by the Committee at or
after grant.
(iv) Based on service, performance and/or such other factors
or criteria as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Deferred Stock award
and/or waive the deferral limitations for all or any part of such award.
(v) A participant may elect to further defer receipt of an
award (or an installment of an award) for a specified period or until a
specified event (the "Elective Deferral Period"), subject in each case to the
Committee's approval and to such terms as are determined by the Committee, all
in its sole discretion. Subject to any exceptions adopted by the Committee, such
election must generally be made at least twelve months prior to completion of
the Deferral Period for such Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.
(c) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
Stock Option or performance-based or other award designed to guarantee a minimum
value, payable in cash or Common Stock to the recipient of a deferred stock
award, subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
9. Stock Purchase Rights.
(a) Awards and Administration. The Committee may grant eligible
participants Stock Purchase Rights which shall enable such participants to
purchase Common Stock (including Deferred Stock and Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at a percentage of such Fair Market Value on such date,
such percentage to be determined by the Committee in its sole discretion;
(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such Common Stock
on such date.
The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Stock Purchase Rights or the exercise thereof. The terms of Stock Purchase
Rights awards need not be the same with respect to each participant. Each Stock
Purchase Right award shall be confirmed by, and be subject to the terms of, a
Stock Purchase Rights Agreement.
(b) Exercisability. Stock Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee not to
exceed sixty (60) days. However, the Committee may provide, in its sole
discretion, that the Stock Purchase Rights of persons potentially subject to
Section 16(b) of the Exchange Act shall not become exercisable until six months
and one day after the grant date, and shall then be exercisable
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<PAGE>
for ten trading days at the purchase price specified by the Committee in
accordance with Paragraph 9(a) of the Plan.
10. Other StockBased Awards.
(a) Administration.
(i) Other awards of Common Stock and other awards that are
valued in whole or in part by reference to, or are otherwise based on, Common
Stock ("Other Stock-Based Awards"), including, without limitation, performance
shares, convertible preferred stock (to the extent a series of preferred stock
has been or may be created by, or in accordance with a procedure set forth in,
the Company's certificate of incorporation), convertible debentures, warrants,
exchangeable securities and Common Stock awards or options valued by reference
to Fair Market Value, Book Value or performance of the Company or any
Subsidiary, Affiliate or division, may be granted either alone or in addition to
or in tandem with Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock or Stock Purchase Rights granted under the Plan and/or cash
awards made outside of the Plan.
(ii) Subject to the provisions of the Plan, the Committee
shall have authority to determine the persons to whom and the time or times at
which such award shall be made, the number of shares of Common Stock to be
awarded pursuant to such awards, and all other conditions of the awards. The
Committee may also provide for the grant of Common Stock upon the completion of
a specified performance period. The provisions of Other Stock-Based Awards need
not be the same with respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to
this Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Paragraph 10(b)(v) of the Plan, shares of Common Stock
subject to awards made under this Section 10 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award
agreement and unless otherwise determined by the Committee at grant, the
recipient of an award under this Section 10 shall be entitled to receive,
currently or on a deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by the award, as
determined at the time of the award by the Committee, in its sole discretion,
and the Committee may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Common Stock or otherwise reinvested.
(iii) Any award under Section 10 and any Common Stock covered
by any such award shall vest or be forfeited to the extent so provided in the
award agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability
or death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining limitations
(if any) imposed with respect to any or all of an award pursuant to this Section
10.
(v) Each award under this Section 10 shall be confirmed by,
and subject to the terms of, an agreement or other instrument by the Company and
by the participant.
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<PAGE>
(vi) Common Stock (including securities convertible into
Common Stock) issued on a bonus basis under this Section 10 may be issued for no
cash consideration.
11. Change in Control Provisions.
(a) Impact of Event. In the event of a "Change in Control," as defined
in Paragraph 11(b) of the Plan, or a "Potential Change in Control," as defined
in Paragraph 11(c) of the Plan, if and to the extent so determined by the
Committee or the Board at or after grant (subject to any right of approval
expressly reserved by the Committee or the Board at the time of such
determination), the following acceleration and valuation provisions shall apply:
(i) Any Stock Appreciation Rights outstanding for at least six
months and any Stock Options awarded under the Plan not previously exercisable
and vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to
any Restricted Stock, Deferred Stock, Stock Purchase rights and Other
Stock-Based Awards, in each case to the extent not already vested under the
Plan, shall lapse and such shares and awards shall be deemed fully vested.
(iii) The value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards, in each case to the extent vested, shall unless
otherwise determined by the Committee in its sole discretion at or after grant
but prior to any Change in Control, be purchased by the Company ("cashout") in a
manner determined by the Committee, in its sole discretion, on the basis of the
"Change in Control Price" as defined in Paragraph 11(d) of the Plan as of the
date such Change in Control or such Potential Change in Control is determined to
have occurred or such other date as the Committee may determine prior to the
Change in Control.
(b) Definition of "Change in Control." For purposes of Paragraph 11(a)
of the Plan, a "Change in Control" means the happening of any of the following:
(i) When any "person" (as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) of the Exchange Act,
including a "group" as defined in Section 13(d) of the Exchange Act, but
excluding the Company and any Subsidiary and any employee benefit plan sponsored
or maintained by the Company or any Subsidiary and any trustee of such plan
acting as trustee) directly or indirectly becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding securities; provided, however,
that a Change of Control shall not arise if such acquisition is approved by the
board of directors or if the board of directors or the Committee determines that
such acquisition is not a Change of Control or if the board of directors
authorizes the issuance of the shares of Common Stock (or securities convertible
into Common Stock or upon the exercise of which shares of Common Stock may be
issued) to such persons; or
(ii) When, during any period of twenty-four consecutive months
during the existence of the Plan, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Directors") cease for any reason
other than death, Disability or Retirement to constitute at least a majority
thereof, provided, however, that a director who was not a director at the
beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of, or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent
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<PAGE>
Directors either actually (because they were directors at the beginning of such
24-month period) or by prior operation of this Paragraph 11(b)(ii); or
(iii) The occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other than the Company
or a Subsidiary through purchase of assets, or by merger, or otherwise.
(c) Definition of Potential Change in Control. For purposes of
Paragraph 11(a) of the Plan, a "Potential Change in Control" means the happening
of any one of the following:
(i) The approval by stockholders of an agreement by the
Company, the consummation of which would result in a Change in Control of the
Company as defined in Section 11(b) of the Plan; or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Company or a
Subsidiary or any Company employee benefit plan or any trustee of such plan
acting as such trustee) of securities of the Company representing five percent
or more of the combined voting power of the Company's outstanding securities and
the adoption by the Board of Directors of a resolution to the effect that a
Potential Change in Control of the Company has occurred for purposes of this
Plan.
(d) Change in Control Price. For purposes of this Section 11, "Change
in Control Price" means the highest price per share paid in any transaction
reported on the principal stock exchange on which the Stock is traded or the
average of the highest bid and asked prices as reported by Nasdaq, or paid or
offered in any bona fide transaction related to a potential or actual Change in
Control of the Company at any time during the sixty-day period immediately
preceding the occurrence of the Change in Control (or, where applicable, the
occurrence of the Potential Change in Control event), in each case as determined
by the Committee except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the optionee exercises
such Stock Appreciation Rights or, where applicable, the date on which a cashout
occurs under Paragraph 11(a)(iii).
12. Amendments and Termination.
(a) The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would impair the
rights of an optionee or participant under a Stock Option, Stock Appreciation
Right (or Limited Stock Appreciation Right), Restricted or Deferred Stock award,
Stock Purchase Right or Other Stock-Based Award theretofore granted, without the
optionee's or participant's consent, and no amendment will be made without
approval of the stockholders if such amendment requires stockholder approval
under state law or if stockholder approval is necessary in order that the Plan
comply with Rule 16b-3 of the Commission under the Exchange Act or any
substitute or successor rule or if stockholder approval is necessary in order to
enable the grant pursuant to the Plan of options or other awards intended to
confer tax benefits upon the recipients thereof.
(b) The Committee may amend the terms of any Stock Option or other
award theretofore granted, prospectively or retroactively, but no such amendment
shall impair the rights or any holder without the holder's consent. The
Committee may also substitute new Stock Options for previously granted Stock
Options (on a one for one or other basis), including previously granted Stock
Options having higher option exercise prices.
(c) Subject to the provisions of Paragraphs 12(a) and (b) of the Plan,
the Board shall have broad authority to amend the Plan to take into account
changes in applicable securities and tax laws and accounting
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<PAGE>
rules, as well as other developments, and, in particular, without limiting in
any way the generality of the foregoing, to eliminate any provisions which are
not required to included as a result of any amendment to Rule 16b-3 of the
Commission pursuant to the Exchange Act.
13. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained in this Plan shall
give any such participant or optionee any rights that are greater than those of
a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or payments in lieu of or with
respect to awards under this Plan; provided, however, that, unless the Committee
otherwise determines with the consent of the affected participant, the existence
of such trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan.
14. General Provision.
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option or other award under the Plan to represent to and agree with the
Company in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer. All certificates or shares of Common Stock or other
securities delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) Neither the adoption of the Plan nor the grant of any award
pursuant to the Plan shall confer upon any employee of the Company or any
Subsidiary or Affiliate any right to continued employment with the Company or a
Subsidiary or Affiliate, as the case may be, nor shall it interfere in any way
with the right of the Company or a Subsidiary or Affiliate to terminate the
employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements and the Company and its Subsidiaries or
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the participant.
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<PAGE>
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other types
of Plan awards) at the time of any dividend payment shall only be permissible if
sufficient shares of Common Stock are available under Section 3 of this Plan for
such reinvestment (taking into account then outstanding Stock Options, Stock
Purchase Rights and other Plan awards).
(f) If (i) the listing, registration or qualification of any Restricted
Stock, Deferred Stock, Stock Purchase Rights and Other Stock-Based Award Other
Stock Awards or Options issued hereunder, or of any securities that may be
purchased upon exercise of such Options ( collectively the "Subject Securities")
upon any securities exchange or quotation system, or under federal or state law
is necessary as a condition of or in connection with the issuance of the Subject
Securities or the issuance or exercise of the Options, or (ii) the consent or
approval of any governmental regulatory body is necessary as a condition of or
in connection with the issuance of the Subject Securities or the issuance or
exercise of the Options, the Company shall not be obligated to deliver the
certificates representing the Subject Securities or to accept or to recognize an
Option exercise unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained. The Company will take
reasonable action to so list, register, or qualify the Options and the Subject
Securities, or effect or obtain such consent or approval, so as to allow for
their issuance in accordance with obligations, if any, set forth in Option or
Subject Securities Agreements with various key employees and others pursuant to
this Plan.
(g) The Company is vested with authority under this Plan to assist
any employee to whom a Subject Security right or Option is granted hereunder
(including any director or officer of the Company or any of its subsidiaries who
is also an employee) in the payment of the purchase price payable on exercise of
that Subject Security Right or Option, by lending the amount of such purchase
price to such employee on such terms and at such rates of interest and upon such
security (or unsecured) as shall have been authorized by or under authority of
the Board. Any such assistance shall comply with the requirements of Regulation
G promulgated by the Board of the Federal Reserve System, as amended from time
to time, and any other applicable law, rule or regulation.
15. Effective Date of Plan.
The Plan shall be effective as of the date the Plan is approved by the Board,
subject to the approval of the Plan by the votes of a majority of the holders of
the Company's Common Stock at the next annual or special meeting of
stockholders. Any grants made under the Plan prior to such approval shall be
effective when made (unless otherwise specified by the Committee at the time of
grant), but shall be conditioned on, and subject to, such approval of the Plan
by such stockholders.
16. Term of Plan.
Stock Option, Stock Appreciation Right, Restricted Stock awards,
Deferred Stock awards, Stock Purchase Rights or Other Stock-Based Award may be
granted pursuant to the Plan, until this Plan shall be terminated, but awards
granted prior to such termination may extend beyond that date. Notwithstanding
the foregoing, no Incentive Stock Option may be granted after the tenth (10th)
anniversary of the date this Plan was approved by the Board, although Incentive
Stock Options granted prior to such date may extend beyond such date.
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<PAGE>
PROXY
CONSOLIDATED TECHNOLOGY GROUP LTD.
Annual Meeting of Shareholders - July 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank DeLape and Richard Young and each of
them with full power of substitution or revocation, proxies for the undersigned,
to vote at the 1999 Annual Meeting of Shareholders of Consolidated Technology
Group Ltd. (the "Company"), to be held at 9:00 a.m., local time, on July 22,
1999, at South Shore Harbor Resort and Conference Center, 2500 South Shore
Boulevard, League City, Texas 77573 and at any adjournment or adjournments
thereof, upon all subjects that may properly come before the meeting, including
the matters discussed in the proxy statement furnished herewith, subject to any
items given on this Proxy form, according to the number of votes the undersigned
might cast and with all powers the undersigned would possess if personally
present.
(1) To elect the following two (2) directors:
Frank DeLape and Richard Young
[ ] FOR all nominees listed above (except as marked to the contrary below).
[ ] Withhold authority to vote for all nominees listed above.
INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name below.
(2) To approve a one-for-30 reverse split of the Company's common stock;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To approve an amendment to the Company's Certificate of Incorporation to
change the number of authorized shares of common stock to (a) 25,000,000 if
the one-for-30 reverse spilt is approved by the shareholders or (b)
150,000,000 if the one-for-30 reverse split is not approved by the
shareholders;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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<PAGE>
(4) To approve an amendment to the Company's Certificate of Incorporation to
change the Company's name to Cristen Group Limited;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(5) To approve the Company's 1999 Long-Term Incentive Plan;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(6) In their discretion, for the transaction of such other business as may
properly come before the meeting;
all as set forth in the Proxy Statement, dated June 28, 1999.
The shares represented by this proxy will be voted on Items 1, 2, 3, 4
and 5 as directed by the shareholder, but if no direction is indicated, will be
voted FOR Items 1, 2, 3, 4 and 5.
If you plan to attend the meeting please indicate below:
I plan to attend the meeting [ ]
Dated: _________________________, 1999
_______ _____________________________
_______ _____________________________
(Signature(s))
Please sign exactly as name(s)
appear hereon. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such.
Please date, sign and mail this
proxy in the enclosed envelope,
which requires no postage if
mailed in the United States.
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