SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K/A
Amendment No.1
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 23, 1999
Consolidated Technology Group Ltd.
(Exact name of Registrant as Specified in its Charter)
New York 0-4186 13-1948169
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
160 Broadway, New York, New York 10038
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (212) 233-4500.
Purpose of Amendment:
In June of 1999 modifications were made to the vesting and anti-dilution
provisions of certain executives option agreements. Originally, the options
were to vest over a three year period subject to earlier vesting when and if the
Company's market capitalization reached certain levels. As modified, the
options vest when, and only if the market capitalization of the Company equals
or exceeds $25 million. Originally, certain of the options contained anti-
dilution provisions as to both the price per share and the number of shares in
the event of any reverse stock split of the Company's common stock. As
modified, all such options contain anti-dilution provisions such that the number
of shares issuable upon exercise of the options will not be affected by any
reverse split of the Company's common stock, however, the exercise price will be
adjusted to reflect any such reverse split. As a result of these modifications,
the disclosures from the original 8-K have been modified to conform with the
modified agreements and the related modified employment and option agreements
have been included in the exhibits to the 8-K/A.
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Item 1. Changes in Control of Registrant.
Acquisition of stock and voting rights
On April 20, 1999, Technology Acquisitions, Ltd., a Bermuda corporation
("TAL"), purchased 8,000,000 shares, or approximately 17.1% of the Registrant's
outstanding common stock from the following shareholders in a private
transaction, at a purchase price of $.25 per share or an aggregate of
$2,000,000:
Name Number of Shares Purchase Price
- ---- ---------------- --------------
Chevra of Lud Chabad 674,000 $ 168,500.00
Mosdos Chinoch 192,000 48,500.00
Concha Company Ltd. 210,719 52,679.75
Tzivos Hashem 2,206,314 551,578.50
Fabio Kirchenchleyn 1,538,667 384,666.75
Fernando Schechter 259,300 64,825.00
Marc Schmerling 454,000 113,500.00
Yeshivat Tomchei Tmimim 2,415,000 603,250.00
Patterson Travis 50,O00 12,500.00
------ ---------
Total 8,000,000 $2,000,000.00
Contemporaneously with the purchase of the 8,000,000 shares, the
following shareholders granted TAL options to purchase an aggregate of 7,999,785
shares of the Registrant's common stock for $.35 per share, or an aggregate of
$2,799,925.
Name Number of Shares
- ---- ----------------
Concha Company Ltd. 2,194,281
Fabio Kirchenchleyn 900,000
Fernando Schechter 2,049,000
Marc Schmerling 1,973,000
Jan Wernick 163,504
Judah Wernick 720,000
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Total 7,999,785
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The options may be exercised as to all of the shares subject to the
option at any time during the 13 month period commencing on March 23, 1999. The
shareholders who granted the options have the right to require TAL to exercise
the options at $.35 per share within twenty days after TAL's receipt of notice
that the Registrant's common stock has traded at an average share price in
excess of $.45 for a period of ten consecutive trading days. As long as the
options are outstanding, TAL has the right to vote the 7,999,785 shares of
common stock, representing an additional 17.1% of the Registrant's outstanding
common stock.
As a result of the purchase of the 8,000,000 shares and the grant of
the voting rights with respect to the 7,999,785 shares of common stock subject
to the options, TAL has voting rights with respect to 34.2% of the Registrant's
common stock and may be deemed to be a control person with respect to the
Registrant.
TAL purchased the 8,000,000 shares from the proceeds of a private
placement of its equity securities, $1,542,000 of the net proceeds of such
private placement being used for such purposes, and from the proceeds of a
$326,000 bridge loan from Trident III, L.L.C. and a $150,000 bridge loan from
Benchmark Equity Group, Inc. ("Benchmark").
As previously reported, TAL entered into an agreement dated as of March
23, 1999 pursuant to which the Registrant, through its wholly-owned subsidiary,
SIS Capital Corp. ("SISC"), sold all of its equity interest in Arc Networks,
Inc. ("Arc") to TAL for $850,000. The proceeds of the sale and the shares of Arc
common stock being sold are being held in escrow pending receipt of the consent
of the New York Public Service Commission to the sale of the shares to TAL and
certain related matters. The Registrant owns approximately 67% of the
outstanding common stock of Arc.
Change in directors and officers
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On April 19, 1999, in anticipation of TAL's purchase of 8,000,000
shares of common stock of the Registrant and the grant to TAL of options to
purchase an additional 7,999,785 shares of common stock of the Registrant, the
board of directors elected Mr. Frank DeLape as a director. Mr. DeLape, who is 45
years old, is president of Benchmark, a position he has held since 1994. Mr.
DeLape is also a director of Benchmark, TAL and Trident Equity Management Group,
Inc., TAL's parent. In addition to such positions, Mr. DeLape was, during the
last five years, a member of the board of directors of Think New Ideas, Inc., a
publically owned company engaged in the web-based public relations business, and
is currently a director of I-Storm, Inc., a publicly owned company engaged in
the Internet based E-commerce business.
On April 20, 1999, Seymour Richter resigned as the Registrant's
president and chief executive officer. Simultaneously with his resignation, Mr.
Richter entered into a nine-month consulting agreement with the Registrant
pursuant to which he will receive an aggregate of $56,250.
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On April 22, 1999, the board of directors elected Mr. Richard Young as
a director and chief operating officer of the Registrant and Mr. DeLape as
chairman of the board of the Registrant. Mr. Young, who is 31 years old, is a
certified public accountant. Prior to becoming an officer and director of the
Registrant, during the period 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 a Regional Controller for IKON Office Solutions, Inc.,
a public company 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., a
publicly-owned 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.
On April 22, 1999, the board of directors also approved three-year
employment agreements between the Registrant and Messrs. DeLape and Young
pursuant to which they will receive annual salaries of $250,000 and $135,000,
respectively. Subsequent to April 22, 1999, the new board also elected Mr.
DeLape as chief executive officer and Mr. Young as president of the Registrant
in addition to their respective positions as chairman of the board and chief
operating officer. 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 Registrant and Mr. Young to devote his full time to the
performance of his duties as president and chief operating officer of the
Registrant. The agreements provide for annual cash bonuses, annual equity
incentive awards including grants of restricted stock and stock options, certain
fringe benefits, including life insurance and severance compensation. Pursuant
to the agreements, the Registrant granted Messrs. DeLape and Young options to
purchase 400,000 and 250,000 shares of the common stock of the Registrant,
respectively, at $.14 per share, being the closing price of the Registrant's
common stock on April 20, 1999. Both of the options become exercisable only
upon the Company's aggregate market capitalization being at least $25 million.
The options provide the holders with stock appreciation rights, which can
exercised to the extent that the options are exercisable. Additionally, the
agreements provide for the grant to Messrs. DeLape and Young, on the last day of
each fiscal year during the term thereof, of additional stock options of 250,000
and 100,000 shares of common stock of the Registrant, exercisable at the closing
price of the Registrant's common stock on the day immediately prior to the date
of purchase, any such options being subject to performance objectives to be
agreed upon by the board and such persons for each such year. Mr. DeLape's and
Mr. Young's options contain anti-dilution provisions as to the number of shares
in the event of any reverse stock split of the Company's common stock effected
on a basis of up to 1 for 30 shares. All of such options are subject to
shareholder approval.
On April 22, 1999, Messrs. Seymour Richter, Edward D. Bright and Donald
Chaifetz resigned as directors of the Registrant and Mr. Bright resigned as
chairman of the board. In connection with Mr. Bright's resignation as chairman
of the board, the board of directors approved the issuance to Mr. Bright of a
three-year warrant to purchase 100,000 shares of the common stock of the
Registrant at $.15 per share, being the closing price of the Registrant's common
stock on such date.
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Item 5. Other Matters.
The Registrant issued notification to Netsmart Technologies, Inc.
("Netsmart"), pursuant to the previously reported agreement dated as of March
25, 1999, among the Registrant, SISC, Netsmart and the Management Investors
named therein, that it will exercise its option pursuant to such agreement not
to sell an additional 200,000 shares of Netsmart's common stock to the
Management Investors. As a result, the maximum number of shares of Netsmart's
common stock which may be purchased from SISC pursuant to the agreement, in
addition to the 585,750 shares previously purchased from SISC pursuant to the
agreement, is 206,874 shares.
Pursuant to the previously reported February 25, 1999 agreement between
the Registrant, SISC and Trans Global Services, Inc. ("Trans Global"), on May 3,
1999, the Registrant, through SISC, transferred 1,150,000 shares of Trans Global
common stock owned by it to Trans Global in consideration of the cancellation of
shares of the Registrant's Series G 2% Cumulative Redeemable Preferred Stock
owned by Trans Global, including accrued dividends, and certain other
obligations due by the Registrant to Trans Global. The transfer of the 1,150,000
shares to Trans Global reduced the Registrant's holdings in Trans Global to
379,994 shares, or approximately 14.2% of Trans Global's outstanding common
stock. Prior to the transfer, the Registrant owned 40.1% of Trans Global's
outstanding common stock.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Consulting Agreement dated April 20, 1999 between
the Registrant and Seymour Richter.(*)
99.2 Form of Employment Agreement dated April 21, 1999 between
the Registrant and Frank DeLape.
99.3 Form of Employment Agreement dated April 21, 1999 between
the Registrant and Richard Young.
99.4 Form of Common Stock Option of the Registrant issued to
Frank DeLape.
99.5 Form of Common Stock Option of the Registrant issued to
Richard Young.
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(*) Incorporated by reference to the original 8-K filed on May 5, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED TECHNOLOGY GROUP LTD.
By:/S/__________________________________
Date: June 28, 1999 Richard Young
President and Chief Operating Officer
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), effective as April 21, 1999
(the "Effective Date"), between Frank DeLape ("Executive") and of Consolidated
Technology Group Ltd., a New York corporation ("Employer").
In consideration of the premises and the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive, and Executive hereby agrees
to be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth.
2. Employment Period
Subject to earlier termination as provided in section 5, the term of
Executive's employment under this Agreement shall commence as of the date hereof
and shall continue for a period of three (3) years (the "Initial Employment
Period"). Unless either party gives notice of non-renewal at least six (6)
months prior to the expiration of the Initial Employment Period or any extension
thereof, the term of this Agreement shall be extended for an additional one (1)
year period (the Initial Employment Period and any extension thereof is
hereafter referred to as the "Employment Period").
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive shall have the
titles of Chairman of the Board and Chief Executive Officer of the Employer and
shall be charged with pursuing a growth strategy of building the Employer's
business. Executive shall devote such of his business time and expend such of
his best efforts, energies and skills to the Employer, as may be necessary for
Executive to fulfill his obligations hereunder. Executive shall be responsible
for the affairs of the Employer and its subsidiaries in pursuit of the
Employer's Business. Executive shall perform such duties, consistent with his
status as President and Chief Executive Officer of Employer, as he may be
assigned from time to time by Employer's Board of Directors (the "Board").
Employer shall nominate Executive to the Board and use its best efforts to see
that Executive is appointed to the Board. Any such appointment shall be subject
to Board approval. Executive acknowledges that the Employer may expand its
business. In connection therewith, Employer may hire individuals with knowledge
and experience in such alternative business areas to guide Employer in the
pursuit of such alternative business areas and to be solely responsible for
Employer's expansion into such alternative business areas.
4. Compensation and Related Matters
4.1 Base Salary. For each twelve-month period during the Employment
Period, commencing with the twelve-month period beginning on the date of this
Agreement (each such period, an "Employment Year"), Employer shall pay to
Executive a base salary equal to $250,000, subject to increase at the discretion
of the Board (the initial base salary, including any Board approved increase
thereof, the "Base Salary"). The Base Salary for each Employment Year shall be
payable in advance in monthly increments.
4.2 Annual Bonus. For each fiscal year during the Employment Period
(each, a "Bonus Year"), Executive will receive a cash bonus at least 50% of base
salary.
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4.3 Life Insurance. Employer shall maintain in effect at all times
during the Employment Period, at Employer's expense, a policy of term insurance
on the life of Executive in the amount equal to eight times Base Salary, naming
such person as Executive shall designate from time to time as the owner and
beneficiary thereof. Executive agrees that Employer shall have the right to
obtain other life insurance on Executive's life, at Employer's sole expense and
with Employer or an affiliate thereof as the sole beneficiary thereof. Executive
shall (i) cooperate fully with Employer in obtaining all such insurance, (ii)
sign any necessary consents, applications and other related forms or documents,
and (iii) take any required medical examinations.
4.4 Country Club, Car Allowance. Employer shall provide Executive with
a monthly allowance during the Employment Period not to exceed $400 to cover the
costs of a country club selected by the Executive. In addition, during the
Employment Period, Employer shall provide the Executive with a monthly car
allowance in the amount of $1,000 to cover the costs of an automobile lease;
Employer shall also bear the costs and the expenses of maintenance and upkeep of
the automobile.
4.5 Other Benefits. During the Employment Period, subject to, and to
the extent Executive is eligible under their respective terms, Executive shall
be entitled to receive such fringe benefits as are, or are from time to time
hereafter generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, accidental death and dismemberment
insurance, travel accident insurance or other similar plan or program of
Employer. Employer shall provide short-term and long-term disability insurance
for Executive which provides benefits equal to at least 60% of Base Salary. To
the degree that Employer's medical insurance does not fully cover the cost of an
annual physical examination for Executive, Employer shall reimburse Executive
for such expense promptly after such expense is incurred. Executive's Base
Salary shall (where applicable) constitute the compensation on the basis of
which the amount of Executive's benefits under any such plan or program shall be
fixed and determined.
4.6 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation of signed, itemized accounts of such
expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees.
4.7 [reserved]
4.8 Annual Equity Incentives. In order to provide further incentive to
Executive and align the interests of Executive with those of the stockholders of
Employer, Employer shall grant to Executive annual equity incentives consisting
of (i) shares of common stock of Employer (the "Common Stock"), subject to
forfeiture and restricted as to transfer ("Restricted Stock") and (ii) options
to purchase Common Stock ("Options").
(a) Restricted Stock Award. Employer may grant to the Executive a
Restricted Stock Award consisting of Restricted Stock (the "Restricted Stock
Award"). The Restricted Stock Award shall vest and become transferable in two
installments over a period of three years from the date hereof and shall have
such other terms and conditions as set forth in the Restricted Stock Award
Agreement attached hereto as Exhibit A.
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(b) Option Award. As of the date hereof, Employer shall grant to
Executive an Option with respect to 400,000 shares of Common Stock with an
exercise price equal to the closing price of the Common Stock on the NASD OTC
Bulletin Board as of the trading day immediately prior to the date hereof (the
"400,000 Option Award"). The 400,000 Option Award shall not be adjusted in terms
of number of shares issuable upon exercise in the event of a reverse stock split
of up to 1 for 30 effected within one year of the date hereof, but the exercise
price will be adjusted. The Options shall vest and become exercisable when, as
and after the date that the Company's market capitalization (the total number of
outstanding shares of common stock and common stock equivalents, i.e., debt and
preferred stock convertible into common stock, computed on an as converted
basis, multiplied by the transaction price reported by a stock exchange, an
automated quotation system such as the Nasdaq Stock Market or the OTC Bulletin
Board, or a market maker) first equals or exceeds $25,000,000; and the Options
shall have such other terms and conditions as set forth in the Stock Option
Agreement attached hereto as Exhibit B.
(c) Additional Option Purchase. On the last day of each fiscal year
during the Employment Period, provided Executive has met or exceeded the
performance objectives agreed upon by the Board and Executive for such fiscal
year, Executive shall have the right to purchase from Employer an additional
Option with respect to 250,000 shares of Common Stock (the "Additional Option").
The Additional Option shall have a per share exercise price equal to the closing
price of the Common Stock on the NASD OTC Bulletin Board on the trading day
immediately prior to the date of purchase. The Additional Option shall be fully
vested and shall have such other terms and conditions as are mutually agreed
upon between Employer and the Executive. The purchase price for any Additional
Option shall be determined by Employer's independent accountants based on a
Black-Scholes valuation methodology.
4.9 Relocation Expenses; Temporary Living Expenses. In the event that
the Company's headquarters is located anywhere other than in the Houston
metropolitan area, upon submission of properly documented receipts, Employer
shall reimburse Executive for (i) reasonable moving costs in connection with
Executive's relocation of his family from the Houston area to a location near
the Employer's main headquarters and (ii) reasonable real estate commissions
with respect to the sale of Executive's current residence in the Houston area in
connection with or following such relocation. In addition, in the event that
Employee is required to relocate, for a period of one year from the date hereof
or until Executive relocates to such location, if earlier, Employer shall
reimburse Executive for the reasonable cost of temporary housing in such
location and reasonable travel between Houston and such location for the purpose
of visiting his family. Such reimbursement shall not exceed $20,000 and shall be
subject to submission of properly documented housing and travel receipts.
5. Termination of Employment Period
5.1 Termination Without Cause; Voluntary Termination by Executive.
Employer may, by notice to Executive at any time during the Employment Period,
terminate the Employment Period without Cause (as defined below). The effective
date of such termination of the Executive from the Employer shall be the date
that is thirty (30) days following the date on which such notice is given.
Executive may, by notice to Employer at any time during the Employment Period,
voluntarily resign from the Employer and terminate the Employment Period. The
effective date of such termination of the Executive from the Employer shall be
the date that is thirty (30) days following the date on which such notice is
given.
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5.2 By Employer for Cause. Employer may, at any time during the
Employment Period, by notice to Executive, terminate the Employment Period for
"Cause" effective on the giving of such notice. As used herein, "Cause" means
any of the following: (A) fraud on the part of Executive in the course of his
employment with Employer; (B) a willful breach of this Agreement by Executive
that is injurious to Employer; (C) Executive's conviction by a court of
competent jurisdiction of, or pleading "guilty" or "no contest" to, (x) a
felony, or (y) any other criminal charge (other than minor traffic violations)
which could reasonably be expected to have a material adverse impact on
Employer's reputation and standing in the community; (D) consistent drunkenness
by Executive or his illegal use of narcotics which is, or could reasonably be
expected to become, materially injurious to the reputation or business of the
Employer or which impairs, or could reasonably be expected to impair, the
performance of Executive's duties hereunder; or (E) willful failure by Executive
to follow the lawful directions of the Board, representing disloyalty to the
goals of the Employer. An act or failure to act on the part of Executive shall
be considered "willful" if done, or omitted to be done, by Executive in bad
faith or without a reasonable belief that the act or omission was in the best
interest of Employer.
5.3 By Executive for Good Reason. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement for "Good Reason" (as defined below) effective immediately. For
the purposes hereof, "Good Reason" means any of the following without
Executive's consent: (A) subject to Section 3 above, a material and adverse
change in the nature and scope of Executive's authority and duties from those
exercised or performed by Executive immediately after the Effective Date; (B) a
material breach of this Agreement by Employer or (C) a change in the composition
of the Board in which the individuals who constitute the Board, as of the date
hereof (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election was
approved by a vote of at least a majority of the Incumbent Board will be
considered as though such individual were a member of the Incumbent Board;
provided, however, that the circumstances set forth in this Section 5.3(A) and
(B) will not be Good Reason if within 30 days of notice by the Executive to the
Employer, Employer cures such circumstances.
5.4 Disability. During the Employment Period, if, as a result of
physical or mental incapacity or infirmity, Executive shall be unable to perform
his duties under this Agreement for (i) a continuous period of at least 120
days, or (ii) periods aggregating at least 180 days during any period of 12
consecutive months (each a "Disability Period"), and at the end of the
Disability Period there is no reasonable probability that Executive can promptly
resume his duties hereunder, Executive shall be deemed disabled (the
"Disability") and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of the
Disability Period. The existence of the Disability shall be determined by a
reputable, licensed physician selected by Employer in good faith, whose
determination shall be final and binding on the parties. Executive shall
cooperate in all reasonable respects to enable an examination to be made by such
physician. Notwithstanding the foregoing, Employer may conclusively determine
Executive to be disabled and terminate the Employment Period on account of
Disability at any time after Executive has commenced receiving benefits under
the long-term disability insurance policy obtained pursuant to Section 4.5
hereof.
5.5 Death. Notwithstanding any other provision of this agreement, the
Employment Period shall end on the date of Executive's death.
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6. Termination Compensation
6.1 Termination Without Cause by Employer or for Good Reason by
Executive. If the Employment Period is terminated by Employer pursuant to the
provisions of Section 5.1 hereof or by Executive pursuant to the provisions of
Section 5.3 hereof, Employer will pay to Executive (i) Executive's Base Salary
through the date of termination, (ii) within five (5) days following the date of
termination in one lump sum an amount equal to the Base Salary multiplied by the
number of years (and fractional portions thereof) remaining in the Employment
Period (the "Severance Period") and (iii) on the date due pursuant to the
provisions of Section 4.2 hereof, the bonus for the then current Bonus Year,
prorated for the period of time during the Bonus Year that Executive was
employed. All other benefits provided for in Sections 4.3, 4.4 and Section 4.5
(except for pension and retirement benefits) shall be continued at the expense
of Employer for the Severance Period. In the event that any such benefits cannot
be continued under the terms of the applicable benefit programs or Employer
chooses not to continue such benefits, the Employer shall pay to Executive a
lump sum amount having an equal value of such remaining benefits. In addition,
if the Employment Period is terminated by Employer pursuant to the provisions of
Section 5.1 hereof or by Executive pursuant to the provisions of Section 5.3
hereof, (i) the restrictions with respect to all unvested shares of Restricted
Stock previously granted to Executive shall immediately lapse and such shares
shall become transferable and no longer subject to forfeiture and (ii) all
unvested portions of the Options previously granted to Executive shall
immediately become vested and exercisable. Employer shall have no obligation to
continue any other benefits provided for in Section 4 past the date of
termination.
6.2 Certain Other Terminations. If the Employment Period is terminated
by Employer pursuant to the provisions of Sections 5.2 or 5.4, or by death,
pursuant to the provisions of Section 5.5, Employer shall pay to Executive,
within thirty (30) days of the date of termination, Executive's Base Salary
through the date of termination. Provided the date of termination is after the
end of a calendar year for which a Bonus is payable, but prior to the date of
payment, Employer shall also pay to Executive, when due pursuant to provisions
of Section 4.2 hereof, the Bonus for such Bonus Year. Employer shall have no
obligation to continue any other benefits provided for in Section 4 past the
date of termination.
6.3 No Other Termination Compensation. Executive shall not, except as
set forth in this Section 6, be entitled to any compensation following
termination of the Employment Period.
7. Professional Liability Insurance; Indemnification
7.1 Insurance. The Employer will provide coverage for Executive under
the Employer's director and officer professional liability insurance policy.
7.2 Indemnification. Employer shall indemnify the Executive to the
fullest extent permitted by law in effect as of the date hereof, or as hereafter
amended, against all costs, expenses, liabilities and losses (including, without
limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes,
penalties and amounts paid in settlement) reasonably incurred by the Executive
in connection with a Proceeding. For the purposes of this Section, a
"Proceeding" shall mean any action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which the Executive is made, or is
threatened to be made, a party to, or a witness in, such action, suit or
proceeding by reason of the fact that he is or was an officer, director or
employee of the Employer or is or was serving as an officer, director, member,
employee, trustee or agent of any other entity at the request of the Employer.
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(a) Notification and Defense of Claim. Promptly after receipt by the
Executive of notice of the commencement of any Proceeding, the Executive will,
if a claim in respect thereof is to be made against the Employer under this
Agreement, notify the Employer in writing of the commencement thereof; but the
omission to so notify the Employer will not relieve the Employer from any
liability that it may have to the Executive otherwise than under this Agreement.
Notwithstanding any other provision of this Agreement, with respect to any such
Proceeding as to which the Executive gives notice to the Employer of the
commencement thereof:
(i) The Employer will be entitled to participate therein at
its own expense; and
(ii) Except as otherwise provided in this Section 7.2(a)(ii)
to the extent that it may wish, the Employer, jointly with any other
indemnifying party similarly notified, shall be entitled to assume the defense
thereof, with counsel satisfactory to the Executive. After notice from the
Employer to the Executive of its election to so assume the defense thereof, the
Employer shall not be liable to the Executive under this Agreement for any legal
or other expenses subsequently incurred by the Executive in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. The Executive shall have the right to employ the Executive's own
counsel in such Proceeding, but the fees and expenses of such counsel incurred
after notice from the Employer of its assumption of the defense thereof shall be
at the expense of the Executive unless (a) the employment of counsel by the
Executive has been authorized by the Employer, (b) the Executive shall have
reasonably concluded that there may be a conflict of interest between the
Employer and the Executive in the conduct of the defense of such Proceeding
(which conclusion shall be deemed reasonable if, without limitation, such action
shall seek any remedy other than money damages and the Executive would be
personally affected by such remedy or the carrying out thereof), or (c) the
Employer shall not in fact have employed counsel to assume the defense of the
Proceeding, in each of which cases the fees and expenses of counsel shall be at
the expense of the Employer. The Employer shall not be entitled to assume the
defense of any Proceeding brought against the Executive by or on behalf of the
Employer or as to which the Executive shall have reached the conclusion provided
for in clause (b) above.
8. Confidentiality
Unless otherwise required by law or judicial process, Executive shall
retain in confidence during the Employment Period and after termination of
Executive's employment with Employer pursuant to this Agreement all confidential
information known to the Executive concerning Employer and its businesses. The
obligations of Executive pursuant to this Section 8 shall survive the expiration
or termination of this Agreement.
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9. Noncompetition.
For the shorter of the duration of the Employment Period; the date of
termination of employment hereunder, in the event of termination of the
Executive by the Employer or by the Executive with Good Reason; or one-year
following the termination of employment hereunder in the event of termination of
employment hereunder by the Executive without Good Reason (such period referred
to herein as the "Non-Compete Period"), the Executive shall not directly or
indirectly, engage in any Competitive Activity (as defined below) in competition
with the Employer. "Competitive Activity" shall mean: (A) the participation,
directly or indirectly, in any business which is the same as or substantially
similar to or is or would be competitive with the business of the Employer at
the time; and (B) becoming an employee, director, officer, consultant,
independent contractor, lecturer or advisor of or to, or otherwise providing
services to, any business, individual, partnership, firm, association or
corporation, if the Executive's duties relate in any manner to the business of
developing, providing, marketing, administering, managing, or acting as a
consultant in the providing of, any business in which the Employer is engaged at
the time; provided however, that Executive's associations and other
responsibilities as of the date hereof shall not be deemed to be competitive
with the Company's business. Nothing herein shall prohibit Executive from
acquiring or holding any issue of stock or securities of any business,
individual, partnership, firm, or corporation (collectively "Entity") which has
any securities listed on a national securities exchange or quoted in the daily
listing of over-the-counter market securities, provided that at any one time he
and members of his immediate family do not own more than ten percent of the
voting securities of any such Entity. The obligations of Executive pursuant to
this Section 9 shall survive the expiration or termination of this Agreement.
10. Nonsolicitation.
During the Non-Compete Period, Executive shall not directly or
indirectly solicit to enter into the employ of any other Entity, or hire, any of
the employees of the Employer (or individuals who were employees of the Employer
within six months of termination of the Non-Compete Period). During the
Non-Compete Period, Executive shall not, directly or indirectly, solicit, hire
or take away or attempt to solicit, hire or take away (i) any customer or client
of the Employer or (ii) any former customer or client (that is, any customer or
client who ceased to do business with the Employer during the one (1) year
immediately preceding such date) of the Employer or encourage any customer or
client of the Employer to terminate its relationship with the Employer without
the Employer's prior written consent. The obligations of Executive pursuant to
this Section 10 shall survive the expiration or termination of this Agreement.
11. Successors; Binding Agreement
This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by Executive and Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other beneficiary or, if there be
no such beneficiary, to Executive's estate.
12. Survivorship
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
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13. Miscellaneous
13.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.
If to Employer: Consolidated Technology Group
700 Gemini
Houston Texas 77058
Attn.: Secretary
If to Executive: Mr. Frank DeLape
Consolidated Technology Group
700 Gemini
Houston Texas 77058
Attn.: Secretary
13.2 Taxes. Employer is authorized to withhold (from any compensation
or benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.
13.3 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas, without
reference to the principles of conflicts of laws therein.
13.4 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
the city in which the Employer's main corporate headquarters is then located in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court having
jurisdiction. The costs of the arbitration shall be borne by the non-prevailing
party.
13.5 Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
13.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
13.7 Severability. If any provision of this Agreement, or any part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
13.8 Entire Agreement and Representation. This Agreement contains the
entire agreement and understanding between Employer and Executive with respect
to the subject matter hereof. No representations or warranties of any kind or
nature relating to Employer or its several businesses, or relating to Employer's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Consolidated Technology Group Ltd.
By:_________________________________
Richard Young
President and COO
_________________________________
Frank DeLape
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), effective as April 21, 1999
(the "Effective Date"), between Richard Young ("Executive") and Consolidated
Technology Group Ltd., a New York corporation ("Employer").
In consideration of the premises and the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive, and Executive hereby agrees
to be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth.
2. Employment Period
Subject to earlier termination as provided in section 5, the term of
Executive's employment under this Agreement shall commence as of the date hereof
and shall continue for a period of three (3) years (the "Initial Employment
Period"). Unless either party gives notice of non-renewal at least six (6)
months prior to the expiration of the Initial Employment Period or any extension
thereof, the term of this Agreement shall be extended for an additional one (1)
year period (the Initial Employment Period and any extension thereof is
hereafter referred to as the "Employment Period").
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive shall have the
titles of President and Chief Operating Officer of the Employer and shall be
charged with pursuing a growth strategy of building the Employer's business.
Executive shall devote all of his business time and expend his best efforts,
energies and skills to the Employer. Executive shall perform such duties,
consistent with his status as President and Chief Operating Officer of Employer,
as he may be assigned from time to time by Employer's Board of Directors (the
"Board"). Employer shall nominate Executive to the Board and use its best
efforts to see that Executive is appointed to the Board. Any such appointment
shall be subject to Board approval.
4. Compensation and Related Matters
4.1 Base Salary. For each twelve-month period during the Employment
Period, commencing with the twelve-month period beginning on the date of this
Agreement (each such period, an "Employment Year"), Employer shall pay to
Executive a base salary equal to $135,000, subject to increase at the discretion
of the Board (the initial base salary, including any Board approved increase
thereof, the "Base Salary"). The Base Salary for each Employment Year shall be
payable in advance in monthly increments.
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4.2 Annual Bonus. For each fiscal year during the Employment Period
(each, a "Bonus Year"), at the discretion of the Board, Executive may receive a
cash bonus of up to 100% of the Base Salary (the "Bonus") based upon attainment
of annual performance objectives to be reasonably established by the Board for
the Bonus Year, such performance objectives to be established as soon as
possible following the beginning of the Bonus Year; provided, however, that for
the first Bonus Year (commencing on May 1, 1999), the performance objectives
shall be established as soon as possible following the date hereof. Any Bonus
earned shall be payable promptly following the determination thereof, on the
later of (i) fifteen (15) days after the members of the Board have received the
audited financial statements for such Bonus Year, or (ii) the first meeting of
the Board following the end of such Bonus Year. Except as otherwise set forth in
Section 6 hereof, the Bonus payable for any Bonus Year in which the Employment
Period terminates shall equal the Bonus that would have been paid had the
Employment Period not so terminated, multiplied by a fraction, the numerator of
which shall be the number of days of the Employment Period within the Bonus Year
and the denominator of which shall be 365.
4.3 Life Insurance. Employer shall maintain in effect at all times
during the Employment Period, at Employer's expense, a key man policy of term
insurance on the life of Executive in the amount equal to three times Base
Salary, naming the Company as the owner and beneficiary thereof. Executive
agrees that Employer shall have the right to obtain other life insurance on
Executive's life, at Employer's sole expense and with Employer or an affiliate
thereof as the sole beneficiary thereof. Executive shall (i) cooperate fully
with Employer in obtaining all such insurance, (ii) sign any necessary consents,
applications and other related forms or documents, and (iii) take any required
medical examinations.
4.4 Automobile; Tax and Financial Planning. Employer shall provide
Executive with a monthly allowance during the Employment Period of $1,000 to
cover the costs of an automobile, including maintenance, fuel, and insurance. In
addition, during the Employment Period, Employer shall pay for or reimburse
Executive (as determined by Employer for the cost of reasonable financial
planning services.
4.5 Other Benefits. During the Employment Period, subject to, and to
the extent Executive is eligible under their respective terms, Executive shall
be entitled to receive such fringe benefits as are, or are from time to time
hereafter generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, accidental death and dismemberment
insurance, travel accident insurance or other similar plan or program of
Employer. Employer shall provide short-term and long-term disability insurance
for Executive which provides benefits equal to at least 60% of Base Salary. To
the degree that Employer's medical insurance does not fully cover the cost of an
annual physical examination for Executive, Employer shall reimburse Executive
for such expense promptly after such expense is incurred. Executive's Base
Salary shall (where applicable) constitute the compensation on the basis of
which the amount of Executive's benefits under any such plan or program shall be
fixed and determined.
4.6 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation of signed, itemized accounts of such
expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees.
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4.7 Vacations. Executive shall be entitled to 20 days vacation for each
calendar year during the Employment Period, which vacations shall be taken at
such time or times as shall not unreasonably interfere with Executive's
performance of his duties under this Agreement.
4.8 Annual Equity Incentives. In order to provide further incentive to
Executive and align the interests of Executive with those of the stockholders of
Employer, Employer shall grant to Executive annual equity incentives consisting
of (i) shares of common stock of Employer (the "Common Stock"), subject to
forfeiture and restricted as to transfer ("Restricted Stock") or (ii) options to
purchase Common Stock ("Options").
(a) Restricted Stock Award. Employer may at any time hereafter grant to
Executive a Restricted Stock Award consisting of shares of Restricted Stock (the
"Restricted Stock Award"). Any Restricted Stock Award shall vest and become
transferable in two installments over a period of three years from the date
hereof and shall have such other terms and conditions as set forth in the
Restricted Stock Award Agreement attached hereto as Exhibit A.
(b) Option Award. As of the date hereof, Employer shall grant to
Executive an Option with respect to 250,000 shares of Common Stock with an
exercise price equal to the closing price of the Common Stock on the NASD OTC
Bulletin Board as of the trading day immediately prior to the date hereof (the
"Option Award"). The 250,000 Option Award shall not be adjusted in terms of the
number of shares issuable upon exercise in the event of a reverse stock split of
up to 1 for 30 effected within one year of the date hereof, but the exercise
price will be adjusted. The Options shall vest and become exercisable when, as
and after the date that the Company's market capitalization (the total number of
outstanding shares of common stock and common stock equivalents, i.e., debt and
preferred stock convertible into common stock, computed on an as converted
basis, multiplied by the transaction price reported by a stock exchange, an
automated quotation system such as the Nasdaq Stock Market or the OTC Bulletin
Board, or a market maker) first equals or exceeds $25,000,000; and the Options
shall have such other terms and conditions as set forth in the Stock Option
Agreement attached hereto as Exhibit B.
(c) Additional Option Purchase. On the last day of each fiscal year
during the Employment Period, provided Executive has met or exceeded the
performance objectives agreed upon by the Board and Executive for such fiscal
year, Executive shall have the right to purchase from Employer an additional
Option with respect to 100,000 shares of Common Stock (the "Additional Option").
The Additional Option shall have a per share exercise price equal to the closing
price of the Common Stock on the NASD OTC Bulletin Board on the trading day
immediately prior to the date of purchase. The Additional Option shall be fully
vested and shall have such other terms and conditions as are mutually agreed
upon between Employer and the Executive. The purchase price for any Additional
Option shall be determined by Employer's independent accountants based on a
Black-Scholes valuation methodology.
4.9 Relocation Expenses; Temporary Living Expenses. In the event that
the Company's headquarters is located anywhere other than in the Houston
metropolitan area, upon submission of properly documented receipts, Employer
shall reimburse Executive for (i) reasonable moving costs in connection with
Executive's relocation of his family from the Houston area to a location near
the Employer's main headquarters and (ii) reasonable real estate commissions
with respect to the sale of Executive's current residence in the Houston area in
connection with or following such relocation. In addition, in the event that
Employee is required to relocate, for a period of one year from the date hereof
or until Executive relocates to such location, if earlier, Employer shall
reimburse Executive for the reasonable cost of temporary housing in such
location and reasonable travel between Houston and such location for the purpose
of visiting his family. Such reimbursement shall not exceed $20,000 and shall be
subject to submission of properly documented housing and travel receipts.
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5. Termination of Employment Period
5.1 Termination Without Cause; Voluntary Termination by Executive.
Employer may, by notice to Executive at any time during the Employment Period,
terminate the Employment Period without Cause (as defined below). The effective
date of such termination of the Executive from the Employer shall be the date
that is thirty (30) days following the date on which such notice is given.
Executive may, by notice to Employer at any time during the Employment Period,
voluntarily resign from the Employer and terminate the Employment Period. The
effective date of such termination of the Executive from the Employer shall be
the date that is thirty (30) days following the date on which such notice is
given.
5.2 By Employer for Cause. Employer may, at any time during the
Employment Period, by notice to Executive, terminate the Employment Period for
"Cause" effective on the giving of such notice. As used herein, "Cause" means
any of the following: (A) fraud on the part of Executive in the course of his
employment with Employer; (B) a willful breach of this Agreement by Executive
that is injurious to Employer; (C) Executive's conviction by a court of
competent jurisdiction of, or pleading "guilty" or "no contest" to, (x) a
felony, or (y) any other criminal charge (other than minor traffic violations)
which could reasonably be expected to have a material adverse impact on
Employer's reputation and standing in the community; (D) consistent drunkenness
by Executive or his illegal use of narcotics which is, or could reasonably be
expected to become, materially injurious to the reputation or business of the
Employer or which impairs, or could reasonably be expected to impair, the
performance of Executive's duties hereunder; or (E) willful failure by Executive
to follow the lawful directions of the Board, representing disloyalty to the
goals of the Employer. An act or failure to act on the part of Executive shall
be considered "willful" if done, or omitted to be done, by Executive in bad
faith or without a reasonable belief that the act or omission was in the best
interest of Employer.
5.3 By Executive for Good Reason. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement for "Good Reason" (as defined below) effective immediately. For
the purposes hereof, "Good Reason" means any of the following without
Executive's consent: (A) subject to Section 3 above, a material and adverse
change in the nature and scope of Executive's authority and duties from those
exercised or performed by Executive immediately after the Effective Date; (B) a
material breach of this Agreement by Employer or (C) a change in the composition
of the Board in which the individuals who constitute the Board, as of the date
hereof (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election was
approved by a vote of at least a majority of the Incumbent Board will be
considered as though such individual were a member of the Incumbent Board;
provided, however, that the circumstances set forth in this Section 5.3(A) and
(B) will not be Good Reason if within 30 days of notice by the Executive to the
Employer, Employer cures such circumstances.
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5.4 Disability. During the Employment Period, if, as a result of
physical or mental incapacity or infirmity, Executive shall be unable to perform
his duties under this Agreement for (i) a continuous period of at least 120
days, or (ii) periods aggregating at least 180 days during any period of 12
consecutive months (each a "Disability Period"), and at the end of the
Disability Period there is no reasonable probability that Executive can promptly
resume his duties hereunder, Executive shall be deemed disabled (the
"Disability") and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of the
Disability Period. The existence of the Disability shall be determined by a
reputable, licensed physician selected by Employer in good faith, whose
determination shall be final and binding on the parties. Executive shall
cooperate in all reasonable respects to enable an examination to be made by such
physician. Notwithstanding the foregoing, Employer may conclusively determine
Executive to be disabled and terminate the Employment Period on account of
Disability at any time after Executive has commenced receiving benefits under
the long-term disability insurance policy obtained pursuant to Section 4.5
hereof.
5.5 Death. Notwithstanding any other provision of this agreement, the
Employment Period shall end on the date of Executive's death.
6. Termination Compensation
6.1 Termination without Cause by Employer or for Good Reason by
Executive. If the Employment Period is terminated by Employer pursuant to the
provisions of Section 5.1 hereof or by Executive pursuant to the provisions of
Section 5.3 hereof, Employer will pay to Executive (i) Executive's Base Salary
through the date of termination, (ii) within five (5) days following the date of
termination in one lump sum an amount equal to the lesser of (a) the Base Salary
multiplied by the number of years (and fractional portions thereof) remaining in
the Employment Period (the "Severance Period") or (b) the Base Salary for a one
year term, and (iii) on the date due pursuant to the provisions of Section 4.2
hereof, the bonus for the then current Bonus Year, prorated for the period of
time during the Bonus Year that Executive was employed. All other benefits
provided for in Sections 4.3, 4.4 and Section 4.5 (except for pension and
retirement benefits) shall be continued at the expense of Employer for the
Severance Period. In the event that any such benefits cannot be continued under
the terms of the applicable benefit programs or Employer chooses not to continue
such benefits, the Employer shall pay to Executive a lump sum amount having an
equal value of such remaining benefits. In addition, if the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.1 hereof or by
Executive pursuant to the provisions of Section 5.3 hereof, (i) the restrictions
with respect to all unvested shares of Restricted Stock, if any, previously
granted to Executive shall immediately lapse and such shares shall become
transferable and no longer subject to forfeiture and (ii) all unvested portions
of the Options previously granted to Executive shall immediately become vested
and exercisable. Employer shall have no obligation to continue any other
benefits provided for in Section 4 past the date of termination.
6.2 Certain Other Terminations. If the Employment Period is terminated
by Employer pursuant to the provisions of Sections 5.2 or 5.4, or by death,
pursuant to the provisions of Section 5.5, Employer shall pay to Executive,
within thirty (30) days of the date of termination, Executive's Base Salary
through the date of termination. Provided the date of termination is after the
end of a calendar year for which a Bonus is payable, but prior to the date of
payment, Employer shall also pay to Executive, when due pursuant to provisions
of Section 4.2 hereof, the Bonus for such Bonus Year. Employer shall have no
obligation to continue any other benefits provided for in Section 4 past the
date of termination.
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6.3 No Other Termination Compensation. Executive shall not, except as
set forth in this Section 6, be entitled to any compensation following
termination of the Employment Period.
7. Professional Liability Insurance; Indemnification
7.1 Insurance. The Employer will provide coverage for Executive under
the Employer's director and officer professional liability insurance policy.
7.2 Indemnification. Employer shall indemnify the Executive to the
fullest extent permitted by law in effect as of the date hereof, or as hereafter
amended, against all costs, expenses, liabilities and losses (including, without
limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes,
penalties and amounts paid in settlement) reasonably incurred by the Executive
in connection with a Proceeding. For the purposes of this Section, a
"Proceeding" shall mean any action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which the Executive is made, or is
threatened to be made, a party to, or a witness in, such action, suit or
proceeding by reason of the fact that he is or was an officer, director or
employee of the Employer or is or was serving as an officer, director, member,
employee, trustee or agent of any other entity at the request of the Employer.
(a) Notification and Defense of Claim. Promptly after receipt by the
Executive of notice of the commencement of any Proceeding, the Executive will,
if a claim in respect thereof is to be made against the Employer under this
Agreement, notify the Employer in writing of the commencement thereof; but the
omission to so notify the Employer will not relieve the Employer from any
liability that it may have to the Executive otherwise than under this Agreement.
Notwithstanding any other provision of this Agreement, with respect to any such
Proceeding as to which the Executive gives notice to the Employer of the
commencement thereof:
(i) The Employer will be entitled to participate therein at
its own expense; and
(ii) Except as otherwise provided in this Section 7.2(a)(ii)
to the extent that it may wish, the Employer, jointly with any other
indemnifying party similarly notified, shall be entitled to assume the defense
thereof, with counsel satisfactory to the Executive. After notice from the
Employer to the Executive of its election to so assume the defense thereof, the
Employer shall not be liable to the Executive under this Agreement for any legal
or other expenses subsequently incurred by the Executive in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. The Executive shall have the right to employ the Executive's own
counsel in such Proceeding, but the fees and expenses of such counsel incurred
after notice from the Employer of its assumption of the defense thereof shall be
at the expense of the Executive unless (a) the employment of counsel by the
Executive has been authorized by the Employer, (b) the Executive shall have
reasonably concluded that there may be a conflict of interest between the
Employer and the Executive in the conduct of the defense of such Proceeding
(which conclusion shall be deemed reasonable if, without limitation, such action
shall seek any remedy other than money damages and the Executive would be
personally affected by such remedy or the carrying out thereof), or (c) the
Employer shall not in fact have employed counsel to assume the defense of the
Proceeding, in each of which cases the fees and expenses of counsel shall be at
the expense of the Employer. The Employer shall not be entitled to assume the
defense of any Proceeding brought against the Executive by or on behalf of the
Employer or as to which the Executive shall have reached the conclusion provided
for in clause (b) above.
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8. Confidentiality
Unless otherwise required by law or judicial process, Executive shall
retain in confidence during the Employment Period and after termination of
Executive's employment with Employer pursuant to this Agreement all confidential
information known to the Executive concerning Employer and its businesses. The
obligations of Executive pursuant to this Section 8 shall survive the expiration
or termination of this Agreement.
9. Noncompetition
For the shorter of the duration of: (i) the date of termination of the
Employment Period; (ii) the date of termination of employment hereunder, in the
event of termination of the Executive by the Employer or by the Executive with
Good Reason; or (iii) one-year following the termination of employment hereunder
in the event of termination of employment hereunder by the Executive without
Good Reason (such period referred to herein as the "Non-Compete Period"), the
Executive shall not directly or indirectly, engage in any Competitive Activity
(as defined below) in competition with the Employer. "Competitive Activity"
shall mean: (A) the participation, directly or indirectly, in any business which
is the same as or substantially similar to or is or would be competitive with
the business of the Employer at the time; and (B) becoming an employee,
director, officer, consultant, independent contractor, lecturer or advisor of or
to, or otherwise providing services to, any business, individual, partnership,
firm, association or corporation, if the Executive's duties relate in any manner
to the business of developing, providing, marketing, administering, managing, or
acting as a consultant in the providing of, any business in which the Employer
is engaged at the time. Nothing herein, however, shall prohibit Executive from
acquiring or holding any issue of stock or securities of any business,
individual, partnership, firm, or corporation (collectively "Entity") which has
any securities listed on a national securities exchange or quoted in the daily
listing of over-the-counter market securities, provided that at any one time he
and members of his immediate family do not own more than five percent of the
voting securities of any such Entity. The obligations of Executive pursuant to
this Section 9 shall survive the expiration or termination of this Agreement.
10. Nonsolicitation
During the Non-Compete Period, Executive shall not directly or
indirectly solicit to enter into the employ of any other Entity, or hire, any of
the employees of the Employer (or individuals who were employees of the Employer
within six months of termination of the Non-Compete Period). During the
Non-Compete Period, Executive shall not, directly or indirectly, solicit, hire
or take away or attempt to solicit, hire or take away (i) any customer or client
of the Employer or (ii) any former customer or client (that is, any customer or
client who ceased to do business with the Employer during the one (1) year
immediately preceding such date) of the Employer or encourage any customer or
client of the Employer to terminate its relationship with the Employer without
the Employer's prior written consent. The obligations of Executive pursuant to
this Section 10 shall survive the expiration or termination of this Agreement.
11. Successors; Binding Agreement
This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by Executive and Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other beneficiary or, if there be
no such beneficiary, to Executive's estate.
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12. Survivorship
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
13. Miscellaneous
13.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.
If to Employer: Consolidated Technology Group
700 Gemini
Houston Texas 77058
Attn.: Secretary
If to Executive: Mr. Richard Young
Consolidated Technology Group
700 Gemini
Houston Texas 77058
13.2 Taxes. Employer is authorized to withhold (from any compensation
or benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.
13.3 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas, without
reference to the principles of conflicts of laws therein.
13.4 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
the city in which the Employer's main corporate headquarters is then located in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court having
jurisdiction. The costs of the arbitration shall be borne by the non-prevailing
party.
13.5 Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
13.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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<PAGE>
13.7 Severability. If any provision of this Agreement, or any part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
13.8 Entire Agreement and Representation. This Agreement contains the
entire agreement and understanding between Employer and Executive with respect
to the subject matter hereof. No representations or warranties of any kind or
nature relating to Employer or its several businesses, or relating to Employer's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Consolidated Technology Group Ltd.
By:__________________________________
Frank DeLape
Chairman and CEO
__________________________________
Richard Young
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EXHIBIT B
STOCK OPTION AGREEMENT
Consolidated Technology Group Ltd., a New York corporation (the
"Company"), hereby grants to Benchmark Equity Group, Inc. ("Optionee") certain
options, as more particularly described in Schedule A which is attached hereto
and incorporated herein by reference, which are exercisable to purchase that
number of shares of the Company's common stock ("Stock") as set forth in
Schedule A. Unless express reference is made to the type of option, any
Incentive Stock Option ("ISO") and/or Nonqualified Stock Option ("NQSO") granted
are herein referred to as "Options" (the option to purchase any one share of
Stock, hereinafter referred to as an "Option"). The Options granted hereunder
are subject to all of the terms, conditions and limitations of the 1999
Long-Term Incentive Plan (the "Plan") adopted by the Company, which is
incorporated herein by reference and the terms and conditions of this Stock
Option Agreement ("Agreement"). Unless otherwise indicated herein, defined terms
in this Agreement shall have the meaning indicated in the Plan.
1. Option Price. The Option price for each share of stock subject to
an ISO or NQSO granted hereunder is specified in Schedule A.
2. Description of Options. The Optionee is granted an ISO and/or a NQSO
to purchase the number of shares of Stock of the Company as set forth in
Schedule A. This 400,000 Option Award shall not be adjusted in terms of number
of shares issuable upon exercise in the event of a reverse stock split of up to
1 for 30 effected within one year of the date hereof, but the exercise price
will be adjusted.
3. Exercise of Options.
A. Schedule of Rights to Exercise. The Options shall vest and
become exercisable when, as and after the date that the Company's market
capitalization (the total number of outstanding shares of common stock and
common stock equivalents, i.e., debt and preferred stock convertible into common
stock, computed on an as converted basis, multiplied by the transaction price
reported by a stock exchange, an automated quotation system such as the Nasdaq
Stock Market or the OTC Bulletin Board, or a market maker) first equals or
exceeds $25,000,000; and the Options shall have such other terms and conditions
as set forth in the Stock Option Agreement attached hereto as Exhibit B. To the
extent that the Options become exercisable, they shall be called "Vested
Options."
B. Continuous Employment. Except as set forth below, the
Optionee may exercise the Vested Options granted hereunder only during the
period the Optionee is an employee of the Company. Except in the event of a
termination for Good Reason, all vesting shall cease and no further Options
shall become Vested Options after the Optionee ceases employment with the
Company.
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<PAGE>
Upon the Optionee's termination of employment with the
Company, without "Good Reason," as that term is defined in the Employee's
employment agreement with the Company, all of the Options that have not then
become Vested Options shall expire. Following Optionee's termination of
employment with the Company, Vested Options may be exercised only during the
following time periods. If Optionee's employment terminates on account of a
disability (as defined in the Plan), the Vested Options may be exercised for a
period of twelve (12) months following such termination and thereafter shall
expire. If Optionee's employment terminates on account of death, the Vested
Options may be exercised for a period of six (6) months following such
termination and thereafter shall expire. If the Optionee's employment terminates
for any other reason, the Vested Options may be exercised for a period of three
(3) months following such termination and thereafter shall expire.
Notwithstanding the exercise periods set forth above, all Options, which have
not already expired, shall expire on the Expiration Date as set forth in
Schedule A. Once exercised, a Vested Option shall be canceled and no longer
available for exercise.
Bona fide leaves of absence, military leave, and sick leave
shall not for this purpose be considered a termination of employment if the
Optionee is placed on such leave by the Company.
C. Method of Exercise. Vested Options may be exercised, in
whole or in part , by the Optionee providing the Company a written notice which
shall:
(1) state the election to exercise all or part of
the Vested Options granted hereunder, identify the number of Vested Option(s)
being exercised, the legal name of the Optionee in whose name the stock
certificate or certificates for such shares of Stock is to be registered, and
his address and Social Security Number;
(2) contain such representations and agreements as to
the Optionee's investment intent with respect to such shares of Stock as may be
satisfactory to the Committee and it's counsel;
(3) be signed by the Optionee entitled to exercise
such Options; and
(4) be in writing and delivered in person or by
certified mail to the Secretary of the Company at its executive offices.
D. Payment. Payment of the Option exercise price for shares of
Stock acquired upon exercise of an Option shall be in the manner provided in
Section 8 of the Plan. Unless otherwise stated in the written exercise notice to
the Company, the certificate or certificates for shares of the Stock acquired
upon the exercise of Options granted hereunder shall be registered in the name
of the person exercising such Options. A partial exercise of the Vested Options
granted hereunder does not waive an Optionee's right to a later exercise of some
or all of the remaining Vested Options.
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<PAGE>
E. Compliance with Law. The obligation of the Company to issue
shares of Stock pursuant to the exercise of Options shall be subject to all
applicable laws, rules and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any of the provisions hereof, the
Optionee hereby agrees that the Optionee will not exercise the Options, and that
the Company will be under no obligation to offer to sell or to sell and shall be
prohibited from offering to sell or selling any shares of Stock pursuant to the
exercise of any Option unless such exercise, offer or sale shall be properly
registered pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) (the "Securities Act") with the Securities and Exchange
Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms and
conditions of such exemption have been fully complied with. Any determination in
this connection by the Company shall be final, binding and conclusive. The
Company shall register the offer or sale of shares of Stock underlying any
Option pursuant to the Securities Act within six months of the date hereof. The
Company shall not be obligated to take any other affirmative action in order to
cause the exercise of the Options or the issuance or transfer of shares pursuant
thereto to comply with any law or regulation of any governmental authority. If
the shares of Stock offered for sale or sold under any Option are offered or
sold pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and any legend the Stock
certificates representing such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
The Company is relieved from any liability for the non-issuance or
non-transfer or any delay in issuance or transfer of any shares of Stock subject
to Options which results from the inability of the Company to obtain or in any
delay in obtaining from any regulatory body having jurisdiction all requisite
authority to issue or transfer shares of Stock of the Company either upon
exercise of the Options or shares of Stock issued as a result of such exercise
if counsel for the Company deems such authority necessary for lawful issuance or
transfer of any such shares.
4. Non-Transferability of Options. The Options granted hereunder may
not be transferred in any manner otherwise than by will or the laws of descent
and distribution and (other than in the event of the Optionee's death or
incapacity) may be exercised during the lifetime of the Optionee only by
him/her. The terms of the Options granted hereunder shall be binding upon the
executors, administrators, heirs and successors of the Optionee.
5. Term of Option. The Options granted shall terminate on the
Expiration Date as set forth on Schedule A and may be exercised only in
accordance with the Plan, the terms of this Agreement and any and all applicable
Securities Laws and Regulations.
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<PAGE>
6. Estoppel Provision: Additional Provisions.
(A) Optionee shall not have any rights to dividends or any
other rights of a shareholder with respect to any shares of Stock subject to the
Options until such shares have been issued to him (as evidenced by the
appropriate entry on the books of a duly authorized transfer agent of the
Company) upon the purchase of such shares following exercise.
(B) The Company shall not be liable or bound in any manner by
any oral or written statement, representation, or other information pertaining
to the Stock, the Company or any affiliate of the Company unless the same are
specifically set forth herein. The Optionee's acceptance hereof represents his
agreement and acknowledgment that the Company has not made and is not making any
representation or warranty either express or implied, concerning the Stock or
any matter or thing relating to or affecting the Company or any of its
affiliates except as specifically set forth in this Agreement.
(C) Optionee specifically acknowledges his understanding that
sales or other dispositions of any shares of Stock made in reliance upon Rule
144 under the Securities Act of 1993, as amended (the "Act") can be made only in
limited amounts in accordance with the terms and conditions of such Rule.
(D) To the extent that any of the Options are ISO's, the
Optionee agrees to notify the Company in writing, within 30 days of any
disposition (whether by sale exchange, gift or otherwise) of shares of Stock
pursuant to such ISO's purchased under this Agreement, within two (2) years from
the Grant Date, as set forth on Schedule A, or within one year of the transfer
of such shares of Stock to the Employee upon exercise of a Vested Option.
7. Plan. This Agreement is subject to the terms and conditions of the
Plan, a copy of which is attached hereto and incorporated by reference herein.
In the event of a conflict or inconsistency between discretionary terms and
provisions of the Plan and the express provisions of this Agreement, this
Agreement shall govern and control. In all other instances of conflicts or
inconsistencies or omissions, the terms and provisions of the Plan shall govern
and control. The Committee shall have sole authority, in its absolute
discretion, to construe and interpret this Agreement and to make all other
determinations it deems necessary or advisable for the administration of this
Agreement.
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<PAGE>
CONSOLIDATED TECHNOLOGY GROUP LTD.
ATTEST:
CHAIRMAN, EXECUTIVE COMPENSATION COMMITTEE
OPTIONEE DATE
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<PAGE>
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that he is familiar with the terms and provisions
thereof, and hereby accept this Option subject to all the terms and provisions
thereof. Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan.
DATE:_________________
OPTIONEE
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<PAGE>
SCHEDULE A
Frank DeLape April 21, 1999
(Optionee) (Grant date)
April 21, 2004
(Expiration Date)
Incentive Stock Option ("ISO")
Number of shares subject ISO 0____
Option price for each share $_____N/A__
subject to an ISO
Non-qualified Stock Option ("NQSO")
Number of shares subject NQSO 400,000 (subject to anti-dilution
protection in the event that the Company effects a reverse stock split
of up to 1 for 30, such that the number of shares will not be reduced)
Option price for each share subject to a NQSO $0.14 (subject to price
adjustment in the event of a reverse stock split of up to 1 for 30)
TOTAL NUMBER OF SHARES SUBJECT TO OPTIONS 400,000
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EXHIBIT B
STOCK OPTION AGREEMENT
Consolidated Technology Group Ltd., a New York corporation (the
"Company"), hereby grants to Richard Young ("Optionee") certain options, as more
particularly described in Schedule A which is attached hereto and incorporated
herein by reference, which are exercisable to purchase that number of shares of
the Company's common stock ("Stock") as set forth in Schedule A. Unless express
reference is made to the type of option, any Incentive Stock Option ("ISO")
and/or Nonqualified Stock Option ("NQSO") granted are herein referred to as
"Options" (the option to purchase any one share of Stock, hereinafter referred
to as an "Option"). The Options granted hereunder are subject to all of the
terms, conditions and limitations of the 1999 Long-Term Incentive Plan, which is
incorporated herein by reference and the terms and conditions of this Stock
Option Agreement ("Agreement"). Unless otherwise indicated herein, defined terms
in this Agreement shall have the meaning indicated in the Plan.
1. Option Price. The Option price for each share of stock subject to an
ISO or NQSO granted hereunder is specified in Schedule A.
2. Description of Options. The Optionee is granted an ISO and/or a NQSO
to purchase the number of shares of Stock of the Company as set forth in
Schedule A. This 250,000 Option Award shall not be adjusted in terms the number
of shares issuable upon exercise in the event of a reverse stock split of up to
1 for 30 effected within one year of the date hereof, but the exercise price
will be adjusted.
3. Exercise of Options.
A. Schedule of Rights to Exercise. The Options shall vest and
become exercisable when, as and after the date that the Company's market
capitalization (the total number of outstanding shares of common stock and
common stock equivalents, i.e., debt and preferred stock convertible into common
stock, computed on an as converted basis, multiplied by the transaction price
reported by a stock exchange, an automated quotation system such as the Nasdaq
Stock Market or the OTC Bulletin Board, or a market maker) first equals or
exceeds $25,000,000; and the Options shall have such other terms and conditions
as set forth in the Stock Option Agreement attached hereto as Exhibit B. to the
extent that the Options become exercisable, they shall be called "Vested
Options."
B. Continuous Employment. Except as set forth below, the
Optionee may exercise the Vested Options granted hereunder only during the
period the Optionee is an employee of the Company. Except in the event of a
termination for Good Reason, all vesting shall cease and no further Options
shall become Vested Options after the Optionee ceases employment with the
Company.
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<PAGE>
Upon the Optionee's termination of employment with the
Company, without "Good Reason," as that term is defined in the Employee's
employment agreement with the Company, all of the Options that have not then
become Vested Options shall expire. Following Optionee's termination of
employment with the Company, Vested Options may be exercised only during the
following time periods. If Optionee's employment terminates on account of a
disability (as defined in the Plan), the Vested Options may be exercised for a
period of twelve (12) months following such termination and thereafter shall
expire. If Optionee's employment terminates on account of death, the Vested
Options may be exercised for a period of six (6) months following such
termination and thereafter shall expire. If the Optionee's employment terminates
for any other reason, the Vested Options may be exercised for a period of three
(3) months following such termination and thereafter shall expire.
Notwithstanding the exercise periods set forth above, all Options, which have
not already expired, shall expire on the Expiration Date as set forth in
Schedule A. Once exercised, a Vested Option shall be canceled and no longer
available for exercise.
Bona fide leaves of absence, military leave, and sick leave
shall not for this purpose be considered a termination of employment if the
Optionee is placed on such leave by the Company.
C. Method of Exercise. Vested Options may be exercised, in
whole or in part , by the Optionee providing the Company a written notice which
shall:
(1) state the election to exercise all or part of the
Vested Options granted hereunder, identify the number of Vested Option(s) being
exercised, the legal name of the Optionee in whose name the stock certificate or
certificates for such shares of Stock is to be registered, and his address and
Social Security Number;
(2) contain such representations and agreements as to
the Optionee's investment intent with respect to such shares of Stock as may be
satisfactory to the Committee and it's counsel;
(3) be signed by the Optionee entitled to exercise
such Options; and
(4) be in writing and delivered in person or by
certified mail to the Secretary of the Company at the Company's executive
offices.
D. Payment. Payment of the Option exercise price for shares of
Stock acquired upon exercise of an Option shall be in the manner provided in
Section 8 of the Plan. Unless otherwise stated in the written exercise notice to
the Company, the certificate or certificates for shares of the Stock acquired
upon the exercise of Options granted hereunder shall be registered in the name
of the person exercising such Options. A partial exercise of the Vested Options
granted hereunder does not waive an Optionee's right to a later exercise of some
or all of the remaining Vested Options.
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<PAGE>
E. Compliance with Law. The obligation of the Company to issue
shares of Stock pursuant to the exercise of Options shall be subject to all
applicable laws, rules and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any of the provisions hereof, the
Optionee hereby agrees that the Optionee will not exercise the Options, and that
the Company will be under no obligation to offer to sell or to sell and shall be
prohibited from offering to sell or selling any shares of Stock pursuant to the
exercise of any Option unless such exercise, offer or sale shall be properly
registered pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) (the "Securities Act") with the Securities and Exchange
Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms and
conditions of such exemption have been fully complied with. Any determination in
this connection by the Company shall be final, binding and conclusive. The
Company shall register the offer or sale of shares of Stock underlying any
Option pursuant to the Securities Act within six months of the date hereof. The
Company shall not be obligated to take any other affirmative action in order to
cause the exercise of the Options or the issuance or transfer of shares pursuant
thereto to comply with any law or regulation of any governmental authority. If
the shares of Stock offered for sale or sold under any Option are offered or
sold pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and any legend the Stock
certificates representing such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
The Company is relieved from any liability for the non-issuance or
non-transfer or any delay in issuance or transfer of any shares of Stock subject
to Options which results from the inability of the Company to obtain or in any
delay in obtaining from any regulatory body having jurisdiction all requisite
authority to issue or transfer shares of Stock of the Company either upon
exercise of the Options or shares of Stock issued as a result of such exercise
if counsel for the Company deems such authority necessary for lawful issuance or
transfer of any such shares.
4. Non-Transferability of Options. The Options granted hereunder may
not be transferred in any manner otherwise than by will or the laws of descent
and distribution and (other than in the event of the Optionee's death or
incapacity) may be exercised during the lifetime of the Optionee only by
him/her. The terms of the Options granted hereunder shall be binding upon the
executors, administrators, heirs and successors of the Optionee.
5. Term of Option. The Options granted shall terminate on the
Expiration Date as set forth on Schedule A and may be exercised only in
accordance with the Plan, the terms of this Agreement and any and all applicable
Securities Laws and Regulations.
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<PAGE>
6. Estoppel Provision: Additional Provisions.
(A) Optionee shall not have any rights to dividends or any
other rights of a shareholder with respect to any shares of Stock subject to the
Options until such shares have been issued to him (as evidenced by the
appropriate entry on the books of a duly authorized transfer agent of the
Company) upon the purchase of such shares following exercise.
(B) The Company shall not be liable or bound in any manner by
any oral or written statement, representation, or other information pertaining
to the Stock, the Company or any affiliate of the Company unless the same are
specifically set forth herein. The Optionee's acceptance hereof represents his
agreement and acknowledgment that the Company has not made and is not making any
representation or warranty either express or implied, concerning the Stock or
any matter or thing relating to or affecting the Company or any of its
affiliates except as specifically set forth in this Agreement.
(C) Optionee specifically acknowledges his understanding that
sales or other dispositions of any shares of Stock made in reliance upon Rule
144 under the Securities Act of 1993, as amended (the "Act") can be made only in
limited amounts in accordance with the terms and conditions of such Rule.
(D) To the extent that any of the Options are ISO's, the
Optionee agrees to notify the Company in writing, within 30 days of any
disposition (whether by sale exchange, gift or otherwise) of shares of Stock
pursuant to such ISO's purchased under this Agreement, within two (2) years from
the Grant Date, as set forth on Schedule A, or within one year of the transfer
of such shares of Stock to the Employee upon exercise of a Vested Option.
7. Plan. This Agreement is subject to the terms and conditions of the
Plan, a copy of which is attached hereto and incorporated by reference herein.
In the event of a conflict or inconsistency between discretionary terms and
provisions of the Plan and the express provisions of this Agreement, this
Agreement shall govern and control. In all other instances of conflicts or
inconsistencies or omissions, the terms and provisions of the Plan shall govern
and control. The Committee shall have sole authority, in its absolute
discretion, to construe and interpret this Agreement and to make all other
determinations it deems necessary or advisable for the administration of this
Agreement.
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<PAGE>
CONSOLIDATED TECHNOLOGY GROUP LTD.
ATTEST:
CHAIRMAN, EXECUTIVE COMPENSATION COMMITTEE
OPTIONEE DATE
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<PAGE>
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that he is familiar with the terms and provisions
thereof, and hereby accept this Option subject to all the terms and provisions
thereof. Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan.
DATE:__________________
OPTIONEE
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<PAGE>
SCHEDULE A
Richard Young April 21, 1999
(Optionee) (Grant date)
April 21, 2004
(Expiration Date)
Incentive Stock Option ("ISO")
Number of shares subject ISO 0_____
Option price for each share $_____N/A_____
subject to an ISO $
Non-qualified Stock Option ("NQSO")
Number of shares subject NQSO 250,000 (subject to anti-dilution
protection in the event that the Company effects a reverse stock split
of up to 1 for 30, such that the number of shares will not be reduced)
Option price for each share subject to a NQSO $0.14 (subject to
adjustment in the event that the Company effects a reverse stock split)
TOTAL NUMBER OF SHARES SUBJECT TO OPTIONS 250,000
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