-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UUvmJsvubRJkn83TA9oGiEGvnyEg6obMOu/rjRH+3klc0JEbobL9ITV/kqMIWAyO 2oCATfcmuSU/9I/lgn7v/w== 0000950133-99-002398.txt : 19990709 0000950133-99-002398.hdr.sgml : 19990709 ACCESSION NUMBER: 0000950133-99-002398 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990708 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED TECHNOLOGY GROUP LTD CENTRAL INDEX KEY: 0000089041 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 131948169 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-39346 FILM NUMBER: 99661085 BUSINESS ADDRESS: STREET 1: 700 GEMINI STREET CITY: HOUSTON STATE: TX ZIP: 77058 BUSINESS PHONE: 2184883883 MAIL ADDRESS: STREET 1: 160 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10038 FORMER COMPANY: FORMER CONFORMED NAME: SEQUENTIAL INFORMATION SYSTEMS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SEQUENTIAL ELECTRONIC SYSTEMS INC DATE OF NAME CHANGE: 19680822 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TECHNOLOGY ACQUISITIONS LLC CENTRAL INDEX KEY: 0001073516 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 700 GEMINI CITY: HOUSTON STATE: TX ZIP: 77058 BUSINESS PHONE: 2814883883 MAIL ADDRESS: STREET 1: 700 GEMINI CITY: HOUSTON STATE: TX ZIP: 77058 SC 13D 1 SCHEDULE 13D RE: CONSOLIDATED TECHNOLOGY GROUP LTD 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 Consolidated Technology Group Ltd. (Name of Issuer) Common Stock, $0.01 par value (Title of Class of Securities) 818793 20 0 (CUSIP Number) Technology Acquisitions, Ltd. With a copy to: Connie Jones 700 Gemini, Suite 100, Houston, Texas 77058 (281) 488-3883 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 20, 1999 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 Page 2 of 12 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Technology Acquisitions, Ltd. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Bermuda - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 15,999,785 Shares SHARES BENEFICIALLY ------------------------------------------------------ OWNED BY 8. SHARED VOTING POWER EACH REPORTING ------------------------------------------------------ PERSON 9. SOLE DISPOSITIVE POWER WITH 15,999,785 Shares ------------------------------------------------------ 10. SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 15,999,785 Shares - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) CO 3 Page 3 of 12 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Benchmark Equity Group, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [X] ------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Benchmark Equity Group, Inc. - Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 15,999,785 Shares SHARES BENEFICIALLY ------------------------------------------------------ OWNED BY 8. SHARED VOTING POWER EACH REPORTING ------------------------------------------------------ PERSON 9. SOLE DISPOSITIVE POWER WITH 15,999,785 Shares ------------------------------------------------------ 10. SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 15,999,785 Shares - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) CO 4 Page 4 of 12 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Frank DeLape - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [X] ------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION US - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 15,999,785 Shares SHARES BENEFICIALLY ------------------------------------------------------ OWNED BY 8. SHARED VOTING POWER EACH REPORTING ------------------------------------------------------ PERSON 9. SOLE DISPOSITIVE POWER WITH 15,999,785 Shares ------------------------------------------------------ 10. SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 15,999,785 Shares - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) IN 5 Page 5 of 12 ITEM 1. SECURITY AND ISSUER The title of the class of securities to which this filing relates is common stock, par value $.01 per share (the "Common Stock"), of Consolidated Technology Group Ltd., a New York corporation (the "Company" or "COTG"). The Company's principal executive office is located at 700 Gemini, Houston, Texas 77058. ITEM 2. IDENTITY AND BACKGROUND This statement is being filed jointly by Technology Acquisitions, Ltd., a Bermuda corporation ("Technology Acquisitions"), Benchmark Equity Group, Inc. ("Benchmark"), a Delaware corporation, and Frank DeLape, an individual. Benchmark wholly owns 100% of the voting Common Stock of Technology Acquisitions. Frank DeLape is a director of each of Technology Acquisitions, and Benchmark and owns of record 100% of the voting stock of Benchmark. Mr. DeLape is also a director and Chairman of the Board of COTG. Technology Acquisitions, Benchmark and Frank DeLape shall together be referred to as the "Reporting Persons." The agreement among the Reporting Persons relating to the joint filing of this statement is attached as Exhibit 1 hereto. The principal business address of Technology Acquisitions is Clarendon House, 2 Church Street, Hamilton HM 11 Bermuda. The principal business address of Benchmark Equity Group, Inc. and Frank DeLape is 700 Gemini, Houston, Texas 77058. Technology Acquisitions was formed in March 1999 to effect the proposed transactions described in Item 4 below. Benchmark owns 120,000 shares of the Common Stock of Technology Acquisitions, or 100% of the outstanding capital stock which it purchased, for a capital contribution of $12,000. Benchmark is a private merchant banking firm engaged in the financing and structuring of private and public companies. During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five years, none of the Reporting Persons have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in its being subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Technology Acquisitions entered into separate Stock Purchase Agreements on April 1, 1999 with nine common stockholders of COTG to purchase an aggregate of 8,000,000 shares of COTG Common Stock, which represents 17.1% of Technology Acquisitions' outstanding shares of COTG Common Stock, at a price per share of US $0.25 for an aggregate consideration of $2,000,000. Technology Acquisitions consummated the purchase of these 8,000,000 shares of Common Stock on April 20, 1999 (the "Initial Purchase"), applying $1,542,000 of the net proceeds raised from the sale of its Series A Cumulative Convertible 6 Page 6 of 12 Preferred Stock ("Series A Preferred Stock"), $326,000 in proceeds from a bridge loan from Trident III, L.L.C., a Cayman Islands limited liability company, and $150,000 from Benchmark. The bridge loans each carried an interest rate of 15% and an origination fee of 5%, and each was repaid on April 26, 1999 from the proceeds of further sales by Technology Acquisitions of Series A Preferred Stock. The 8,000,000 shares of COTG Common Stock purchased by Technology Acquisitions have not been registered under the federal securities laws. The source of funds for the Initial Purchase was the offering and sale of shares of the Series A Preferred Stock of Technology Acquisitions, to non-affiliated accredited investors only, at a purchase price of US $25.00 per share. The Series A Preferred Stock is entitled to a quarterly dividend equivalent to 90% of the total net revenue received by Technology Acquisitions in that quarterly period, until such time as each holder of the Series A Preferred Stock ("Holder") has received a total dividend payment equal to 100% of the aggregate purchase price it paid for the Series A Preferred Stock. After each Holder has received a total dividend equal to 100% of the aggregate purchase price it paid for its Series A Preferred Stock, Technology Acquisitions will apply 90% of its total net revenue to redeem each share of Series A Preferred Stock at a price of $25.00 per share on a pro rata basis among the holders. As such time as the final redemption price is paid in full, the holders of the Series A Preferred Stock will be entitled to receive, in the aggregate, such number of shares of Common Stock of Technology Acquisitions as shall equal at that time 50% of the total number of shares of outstanding Common Stock of Technology Acquisitions, after the issuance of such shares. At that time, each holder of Series A Preferred Stock, including holders of shares of Series A Preferred Stock issued subsequently to the date of this Schedule, will receive its proportionate share of the newly-issued Common Stock. The Series A Preferred Stock is convertible, at the option of the holder, at any time prior to redemption, into shares of the Technology Acquisitions Common Stock on a one-for-one basis. No Holder of Series A Preferred Stock presently holds more than 14.2% of such outstanding Series A Preferred Stock. All of the outstanding Common Stock of Technology Acquisitions is held by Trident Equity Management Group ("TEMG"). Effective April 15, 1999, Benchmark acquired an Option to purchase all of the outstanding Common Stock of Technology Acquisitions from TEMG exercisable for a period of one year at a total exercise price of $12,000, or $0.10 per share. Effective April 15, 1999, TEMG also granted Benchmark an Irrevocable Proxy to vote all of the outstanding Common Stock of Technology Acquisitions during the term of the Option. Technology Acquisitions has entered into separate Option Agreements, exercisable until May 20, 2000, with certain common stockholders of COTG (each an "Optionor" and collectively the "Optionors") to purchase, in the aggregate, up to 7,999,785 shares of COTG Common Stock at a price of $0.35 per share, subject to customary antidilution adjustments (collectively, the "Options"). During the term of the Options, the Optionors have granted Technology Acquisitions full voting power with respect to the shares of Common Stock underlying the Options. If Technology Acquisitions were to exercise fully each of the Options, the aggregate amount of consideration which would be paid by Technology Acquisitions to 7 Page 7 of 12 acquire the COTG Common Stock which is subject to the Options would be US $2,799,962.20. In the event that COTG Common Stock should trade during the term of the Option Agreements at an average per share price in excess of $0.45 for a period of ten (10) consecutive trading days, each Optionor shall have the right, by written notice, to cause Technology Acquisitions, within twenty (20) days of its receipt of such notice, to exercise its Option at an exercise price of $0.35 per share, or to forfeit the Option. Technology Acquisitions anticipates that it will apply any proceeds which it may receive from the further offer and sale of Series A Preferred Stock, up to a maximum of $6.5 million for the sale of a maximum of 260,000 shares of Series A Preferred Stock, to the exercise of the Options, or to purchase the shares of COTG in the open market and/or through private sale. COTG, through its wholly-owned subsidiary, SIS Capital Corp. ("SISC"), sold all of its equity interest in Arc Networks, Inc. ("Arc"), a privately held company, to Technology Acquisitions for $850,000 pursuant to an agreement dated March 23, 1999. The proceeds of the sale and the purchased shares of Arc Common Stock are being held in escrow pending receipt of approval of the New York Public Service Commission to the sale of the shares to Technology Acquisitions and certain related matters. Until the sale of stock to Technology Acquisitions, COTG owned approximately 67% of the outstanding Common Stock of Arc. ITEM 4. PURPOSE OF TRANSACTIONS The immediate purpose of the Initial Purchase and the acquisition of the Options is to obtain voting control of 34.2% of the outstanding Common Stock of COTG for the Reporting Persons. As of April 20, 1999, Technology Acquisitions had executed and consummated Stock Purchase Agreements with nine COTG shareholders for the purchase of an aggregate 8,000,000 shares of Common Stock, and has also executed Option Agreements with six COTG shareholders for the purchase of up to an additional 7,999,785 shares of COTG Common Stock, as more fully described in Item 3 hereof. Technology Acquisitions now owns 17.1% of the voting Common Stock of COTG, and, pursuant to the Option Agreements, it has the present right to vote an additional 17.1% of the outstanding Common Stock of COTG, until such time as the Options are terminated or forfeited. On April 19, 1999, in anticipation of Technology Acquisitions' purchase of 8,000,000 shares of Common Stock of COTG and the grant to Technology Acquisitions of options to purchase an additional 7,999,785 shares of Common Stock of COTG, the Board of Directors elected 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 and Technology Acquisitions. In addition to such positions and to his position as a director of COTG, Mr. DeLape is a member of the Board of Directors of I-Storm, Inc., a publicly-owned corporation. Mr. DeLape is also the sole director of Oak Tree Capital, a privately-owned company. 8 Page 8 of 12 On April 20, 1999, Seymour Richter resigned as COTG's president and chief executive officer. Simultaneously with his resignation, Mr. Richter entered into a nine-month consulting agreement with COTG pursuant to which he will receive aggregate compensation of $56,250. On April 22, 1999, the Board of Directors of COTG elected Richard Young as a director and chief operating officer of COTG and Mr. DeLape as chairman of the board of COTG. Mr. Young, who is 31 years old, is a certified public accountant. Prior to becoming an officer and director of COTG, 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 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 also approved three-year employment agreements between COTG and Messrs. DeLape and Young pursuant to which they will receive annual salaries of $250,000 and $135,000, respectively. 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 COTG and Mr. Young to devote his full time to the performance of his duties as president and chief operating officer of COTG. The agreements provide for annual cash bonuses, annual equity incentive awards including grants of stock appreciation rights and stock options, certain fringe benefits, including life insurance and severance compensation. Pursuant to the agreements, COTG granted Messrs. DeLape and Young five-year options to purchase 400,000 and 250,000 shares of the Common Stock of COTG, respectively, at $.14 per share, the closing price of COTG's Common Stock on April 20, 1999. The options become exercisable only upon the Company's aggregate market capitalization meeting or exceeding $25,000,000 and upon the Company's adoption of a long term incentive plan. Additionally, the agreements provide for the grant to Messrs. DeLape and Young, on the last day of each fiscal year during the term hereof, of additional stock options of 250,000 and 100,000 shares of Common Stock of COTG, exercisable at the closing price of COTG's Common Stock on the day immediately prior to the date of issuance, any such options being subject to performance objectives to be agreed upon by the Board and such persons for each such year. The options become exercisable only upon the Company's aggregate market capitalization being at least $25,000,000. Such options contain anti-dilution provisions, including provisions with respect to any subsequent reverse stock split of COTG's Common Stock. Such options are subject to shareholder approval. On April 22, 1999, following the approval of the employment contracts of Messrs. DeLape and Young, Messrs. Seymour Richter, Edward D. Bright and Donald Chaifetz resigned as directors of COTG 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 9 Page 9 of 12 Common Stock of COTG at $.15 per share, the closing price of COTG's Common Stock on such date. Subsequent to April 22, 1999, the Board appointed Mr. DeLape as chief operating officer of COTG and Mr. Young as chief executive officer. The new Board then appointed Matthew Finch, general counsel of Benchmark, as Secretary of the Corporation, and approved the grant to Mr. Finch of five-year options to purchase 15,000 shares of Common Stock of the Company at an exercise price of $0.14 per share. The options become exercisable only upon the Company's aggregate market capitalization being at least $25,000,000. Such options will contain anti-dilution provisions, including provisions with respect to any subsequent reverse stock split of COTG's Common Stock, and are subject to shareholder approval. "Market capitalization," for the purposes of determining the vesting period of each of Mr. DeLape's, Mr. Young's and Mr. Finch's options, shall mean the product of (i) the total number of shares of Common Stock of COTG which, on the date as of which the computation is made, are either (a) outstanding or (b) issuable upon conversion of outstanding shares of preferred stock, and (ii) the average closing price of the Common Stock on the date as of which the computation is made, as reported by the principal stock exchange or market on which the COTG Common Stock is traded; provided, that if, on such day there are no reported sales of COTG Common Stock, the closing bid price on such date shall be used. In the event that the COTG Common Stock is not traded on any exchange or market that reports closing prices, the closing bid price as reported by the National Quotation Bureau, Inc. shall be used. The Board then approved the formation by COTG of a limited partnership entity, in which COTG will hold a majority of the limited partnership interest, which will apply for approval as a Small Business Investment Company ("SBIC"). It is anticipated that Mr. DeLape, Mr. Young and Mr. Finch will directly own the equity interest in the corporate managing partner of such an entity. The SBIC application will be subject to Small Business Administration approval. The Board then approved the relocation of COTG's headquarters to Houston, Texas. The Reporting Persons' purposes for the acquisitions of COTG Common Stock may also include, without limitation, plans or proposals, which would relate to or would result in any one or more of the following: - Commencement of one or more operating businesses by COTG; - The acquisition by the Reporting Persons of additional securities of COTG or its subsidiaries, or the disposition by the Reporting Persons of securities of COTG; - An extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the COTG or any of its subsidiaries; - A sale or transfer of a material amount of assets of COTG or any of its subsidiaries; - A material acquisition of stock or assets in new lines of business; 10 Page 10 of 12 - A material change in the present capitalization or dividend policy of COTG, including the offering and sale of either Common Stock or of additional classes of stock, a stock split or reverse stock split, or the private placement of further debt; - A joint venture, partnership or management arrangement impacting COTG or any of its subsidiaries and/or affiliate entities or persons; - Changes in COTG's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person; - Other changes in COTG's or its subsidiaries' business or corporate structure; - Change in location of corporate headquarters and corporate name; - Reallocation of capital to existing and to newly created subsidiaries; and - Any action similar to any of those enumerated above. The Reporting Persons intend to continually assess the market for the Common Stock, as well as COTG's financial position and operations. The Reporting Persons do not have plans to acquire additional shares of Common Stock at the present time, but may determine to acquire additional shares in the future. Depending upon a continuing assessment and upon future developments, the Reporting Persons may determine, from time to time or at any time, to sell or otherwise dispose of some or all of the Common Stock. In making any such determination, the Reporting Persons will consider their goals and objectives, other business opportunities available to them, as well as general economic and stock market conditions. The foregoing actions may be taken by one or more of the Reporting Persons and, while currently there are no plans to do so, possibly in combination with others. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) Technology Acquisitions and its parent, Benchmark, each beneficially own 15,999,785 shares or 34.2% of the outstanding Common Stock of COTG. Eight million (8,000,000) of the shares of Common Stock were purchased by Technology Acquisitions on April 20, 1999, and Technology Acquisitions holds an option to purchase 7,999,785 of the shares of such Common Stock exercisable until May 20, 2000. During the term of this option, Technology Acquisition may vote such shares of Common Stock. Frank DeLape has acquired options to purchase up to 400,000 shares of Common Stock of COTG. Mr. DeLape's options will vest fully and become exercisable no earlier than the date that the Company's market capitalization meets or exceeds $25,000,000 and shall expire at 5:30 P.M. Houston, Texas time, on April 21, 2004. (b) Technology Acquisitions has the sole power to vote 15,999,785 shares of COTG Common Stock and the power to dispose of the 8,000,000 shares of COTG Common Stock which it presently owns. Its parent, Benchmark, has the power indirectly to vote the 15,999,785 shares of COTG held by Technology Acquisitions and the sole power to direct the 11 Page 11 of 12 disposition of the 8,000,000 shares which Technology Acquisitions directly owns. Frank DeLape holds the power to vote all of Benchmark's shares and accordingly has the power indirectly to vote the 15,999,785 shares of COTG held by Technology Acquisitions. (c) To the best knowledge of the Reporting Persons, no Reporting Person has beneficial ownership of, or has engaged in any transaction during the past 60 days in any shares of COTG Common Stock or its subsidiaries, except as described herein. (d) None. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER On March 23, 1999, Technology Acquisitions purchased 67% of the outstanding Common Stock of Arc from COTG's wholly-owned subsidiary, SIS Capital Corp. ("SISC"), for $850,000. Technology Acquisitions plans to merge Arc into a subsidiary of Gemini II, Inc., an affiliate of Benchmark. Benchmark holds 48.5% of the outstanding Common Stock of Gemini II, Inc., and together with its affiliates holds in excess of 70% of the Common Stock of Gemini II. Benchmark intends to enter into consulting agreements with one or more subsidiaries of COTG to provide strategic management and consulting services. No such agreements have been approved to date by the Board of Directors of COTG. Benchmark may also enter into agreements to provide leasing and consulting services to COTG on a fair and reasonable basis for consideration not to exceed market rates. Except as set forth in this Schedule 13D, to the best of the knowledge of the Reporting Persons, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of COTG, including but not limited to: transfer or voting of any of the securities of COTG or of its subsidiaries, joint ventures, loan or option arrangements, puts or calls, guarantees or profits, division of profits or loss, or the giving or withholding of proxies or a pledge or contingency the occurrence of which would give another person voting power over the securities of COTG. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS Exhibit 1 - Joint Filing Agreement Exhibit 2 - Purchase Option Agreement and Irrevocable Proxy Exhibit 3 - Form of Frank DeLape Employment Agreement Exhibit 4 - Form of Richard Young Employment Agreement Exhibit 5 - Form of Frank DeLape Option Agreement Exhibit 6 - Form of Richard Young Option Agreement 12 Page 12 of 12 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned each certifies that the information set forth in this statement is true, complete and correct. Dated: June 29, 1999 TECHNOLOGY ACQUISITIONS, LTD. By: /s/ VANCE R. TILLMAN ---------------------------------- Its: Treasurer BENCHMARK EQUITY GROUP, INC. By: /s/ FRANK DELAPE ---------------------------------- Its: Chief Executive Officer ---------------------------------- FRANK DELAPE By: /s/ FRANK DELAPE ---------------------------------- EX-99.1 2 JOINT FILING AGREEMENT 1 EXHIBIT 1 JOINT FILING AGREEMENT We, the signatories of the statement on Schedule 13D to which this Agreement is attached, hereby agree that such statement is, and any amendments thereto filed by any of us will be, filed on behalf of each of us. Dated: June 29, 1999 TECHNOLOGY ACQUISITIONS, LTD. By: /s/ VANCE R. TILLMAN --------------------------------- Its: Treasurer BENCHMARK EQUITY GROUP, INC. By: /s/ FRANK DELAPE --------------------------------- Its: Chief Executive Officer --------------------------------- FRANK DELAPE By: /s/ FRANK DELAPE --------------------------------- EX-99.2 3 PURCHASE OPTION AGREEMENT AND IRREVOCABLE PROXY 1 EXHIBIT 2 NEITHER THIS OPTION NOR THE SECURITIES UNDERLYING THE EXERCISE OF THIS OPTION HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY FOREIGN SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE UNITED STATES IN THE ABSENCE OF: (i) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT, OR (ii) AN EXEMPTION THEREFROM UNDER SAID ACT OR WITHOUT COMPLIANCE WITH ANY APPLICABLE FOREIGN SECURITIES LAWS. Void after 5:00 p.m. (Houston, Texas time) on April 15, 2000 as provided herein. Issue Date: April 15, 1999 Option to Purchase Common Shares Expiration Date: April 15, 2000 Exercisable Commencing: April 15, 1999 COMMON STOCK PURCHASE OPTION TO PURCHASE COMMON SHARES OF TECHNOLOGY ACQUISTIONS, LTD. Trident Equity Management Group ("Optionor"), hereby certifies that for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Benchmark Equity Group, Inc. ("Holder") is entitled, subject to the terms set forth in this common stock purchase option (the "Option"), at any time or from time to time, commencing April 15, 1999, (the "Exercise Date"), through but not later than April 15, 2000 (the "Expiration Date"), to purchase from the Company an aggregate of One Hundred Twenty Thousand Shares (120,000) shares of common stock, par value $.10 (the "Common Stock") of Technology Acquisitions, Ltd., a Bermuda corporation (the "Company"), at an exercise price of $0.10 per share (such exercise price per share, as adjusted from time to time pursuant to the provisions set forth below, being referred to herein as the "Exercise Price"). The effective date of this Option shall be April 15, 1999. This Option and all rights hereunder, to the extent such rights shall not have been exercised, shall terminate and become null and void to the extent the Holder (as hereinafter defined) fails to exercise any portion of this Option prior to 5:00 p.m., Houston, Texas time, on the Expiration Date. 1. Restrictions on Transfer of Shares The Shares underlying this Option are restricted securities and have not been the subject of registration under the United States Securities Act of 1933, as amended (the "Act") or under Bermuda or other foreign securities laws, and may not be sold, transferred, pledged, hypothecated or otherwise disposed of in the United States in the absence of: (i) an effective registration statement for such securities under said Act, or (ii) an exemption therefrom under said Act, or without compliance with any applicable Bermuda or other foreign securities laws. 2 2. Exercise of Option (a) This Option may be exercised only in its entirety by the Holder at any time until the expiration date by surrendering it, with the form of subscription annexed hereto duly executed by such Holder, to the Company at its address set forth herein in Section 11 accompanied by payment in full, in cash or by certified or official bank check, of the full Exercise Price. This Option shall be deemed to have been exercised prior to the close of business on the date this Option is surrendered and payment is made in accordance with the foregoing provision; (b) The Optionor shall, at the time of any exercise of this Option, upon the request of the Holder hereof, acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Option; provided that if the Holder of this Option shall fail to make any such request, such failure shall not affect the continuing obligations of the Company to afford to such Holder any such rights; (c) The shares of Common Stock which may be delivered upon the exercise of this Option shall, upon delivery, be fully paid and nonassessable and free from all taxes, liens and charges with respect thereto. (d) The exercise of the this Option is subject to the prior approval of the Bermuda Monetary Authority ("BMA"), and any attempted exercise without such prior approval shall be null, void and without legal or beneficial effect with respect to the Optionor, the Holder and the Company. The Company shall have no obligation to register or to acknowledge any attempted exercise of this Option or any attempted transfer of Common Stock pursuant to the exercise of this Option without the express consent of the BMA. 3. Rights of the Holder (a) The Holder of this Option shall, be entitled to all voting, dividend or other rights of a common stockholder in the Company, either at law or equity pursuant to an Irrevocable Proxy that shall be executed with the Optionor concurrently with the grant of this Option. (b) At any time during the term of the Option, the Holder shall have the right to enjoin in a court of law any action of the Optionor which may contravene the rights of the Holder hereunder. Upon exercise, the Holder shall have the right to specific performance of this Option, including the right to the delivery of the unencumbered Common Stock underlying this Option. The Holder shall also have the right to any remedies in law or in equity for breach of this Option by the Optionor. 4. Adjustments (a) The number of shares of Common Stock purchasable on exercise of this Option and the purchase prices therefor shall be subject to adjustment from time to time in the event 2 3 that the Company shall: (1) pay a dividend in, or make a distribution of, shares of Common Stock; (2) subdivide its outstanding shares of Common Stock into a greater number of shares; (3) combine its outstanding shares of Common Stock into a smaller number of shares; or (4) spin-off a subsidiary by distributing, as a dividend or otherwise, shares of the subsidiary to its stockholders. In any such case, the total number of shares of Common Stock and the number of any other securities purchasable upon exercise of this Option immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive from the Optionor, at the same aggregate exercise price, the number of shares of Common Stock and the number of any other securities that the Holder would have owned or would have been entitled to receive immediately following the occurrence of any of the events described above had this Option been exercised in full immediately prior to the occurrence (or applicable record date) of such event. An adjustment made pursuant to this subsection shall, in the case of a stock dividend or distribution, be made as of the record date and, in the case of a subdivision or combination, be made as of the effective date thereof. If, as a result of any adjustment pursuant to this subsection, the Holder shall become entitled to receive shares of two or more classes or series of securities of the Company, the board of directors of the Company shall equitably determine the allocation of the adjusted exercise price between or among shares or other units of such classes or series and shall notify the Holder of such allocation. (b) In the event of any reorganization or recapitalization of the Company or in the event the Company consolidates with or merges into or with another entity or transfers all or substantially all of its assets to another entity, then and in each such event, the Holder, upon exercise of this Option as provided herein, at any time after the consummation of such reorganization, recapitalization, consolidation, merger or transfer, shall be entitled, and the documents executed to effectuate such event shall so provide, to receive the stock or other securities or property to which the Holder would have been entitled upon such consummation if the Holder had exercised this Option immediately prior thereto. In such case, the terms of this Option shall survive the consummation of any such reorganization, recapitalization, consolidation, merger or transfer and shall be applicable to the shares of stock or other securities or property receivable on the exercise of this Option after such consummation. (c) Whenever a reference is made in this section to the issue or sale of shares of Common Stock, the term "Common Stock" shall mean the Common Stock of the Company of the class authorized as of the date hereof and any other class of stock ranking on a parity with such Common Stock. (d) Whenever the number of shares of Common Stock purchasable upon exercise of this Option or the exercise prices thereof shall be adjusted as required herein, the Company shall forthwith file such information with its Secretary at its principal office, and with the exercise price determined as herein provided and setting forth in detail the facts requiring such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder and the Company shall, forthwith after such adjustment, deliver a copy of such certificate to the Holder. (e) The Company: (1) shall not cause the par value of any shares of Common Stock issuable on exercise of this Option to be in excess of the amount payable therefor on such exercise; and (2) shall take all action as may be necessary or appropriate so that the 3 4 Company may validly and legally issue fully paid and non-assessable shares of Common Stock (or other securities or property deliverable hereunder) upon the exercise of this Option. 5. Fractional Shares No fractional securities or scrip representing fractional securities shall be issued upon the exercise of this Option. With respect to any fraction of a security called for upon any exercise hereof, the Optionor shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such security in an amount, not less than the book value, determined in such reasonable manner as may be prescribed by Optionor. 6. Notices of Record Dates, Etc. (a) If the Company shall fix a record date of holders of Common Stock (or other securities at the time deliverable on exercise of this Option) for the purpose of entitling or enabling them to receive any dividends or other distribution, or to receive any right to subscribe for or purchase any shares of any class of any securities or to receive any other right contemplated by Section 4 or otherwise; or (b) In the event of any reorganization or recapitalization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation or any transfer of all or substantially all of the assets of the Company to another entity; or (c) In the event of the voluntary or involuntary dissolution, liquidation or winding up of the Company; then, the Company shall mail or cause to be mailed to the Holder a notice specifying, as the case may be: (1) the date on which a record is to be taken for the purpose of such dividend, distribution or right and stating the amount and character of such dividend, distribution or right; or (2) the date on which a record is to be taken for the purpose of voting on or approving such reorganization, recapitalization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding up and the date on which such event is to take place and the time, if any, is to be fixed, as of which a holder of record of Common Stock (or any other securities at the time deliverable on exercise of this Option) shall be entitled to exchange its shares of Common Stock (or such other securities) for securities or other property deliverable on such reorganization, recapitalization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding up. Such notice shall be mailed at the same date as the Company shall inform its stockholders, but in no event less than ten (10) days preceding such record date. 7. Reservation of Shares The Optionor shall at all times reserve, for the purpose of transfer upon the exercise of this Option, such number of shares of Common Stock (or such class or classes of capital stock or other securities) as shall from time to time be sufficient to comply with this Option, and shall not sell, transfer, pledge, hypothecate or otherwise dispose of any shares of Common Stock held by it so that the number of shares held by Optionor falls below the number required to comply with this Option. The Optionor agrees to tender a certificate or certificates 4 5 evidencing the number of shares of Common Stock underlying this Option for the purpose of placing the following legend on the certificate(s): THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT CERTAIN COMMON STOCK PURCHASE OPTION DATED APRIL 15, 1999 BETWEEN TRIDENT EQUITY MANAGEMENT GROUP AND BENCHMARK EQUITY GROUP, INC. AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS THEREOF. 8. Approvals (a) The exercise of the this Option is subject to the prior approval of BMA, and any attempted exercise without such prior BMA approval shall be null, void and without legal or beneficial effect. The Optionor, the Holder and the Company shall each cooperate and use their best efforts to obtain and continue in effect the approval of the BMA. (b) In addition to the obligations set forth in Section 8(a), the Optionor and the Company shall from time to time use its best efforts to obtain and continue in effect any and all other permits, consents, registrations, qualifications and approvals of governmental agencies and authorities and to make all filings under applicable United States and foreign securities laws that may be or become necessary in connection with the issuance, sale, transfer and delivery of this Option and the issuance of securities on any exercise hereof. 9. Restrictions on Transfer This Option has not been registered under the Act or qualified under any state or foreign securities or "blue sky" law. This Option may not be offered, sold or otherwise transferred unless registered and qualified pursuant to the provisions of such Act, foreign or "blue sky" laws, or unless an exemption from registration and qualification is available. 10. Survival All agreements, covenants, representations and warranties herein shall survive: (a) the execution and delivery of this Option and any investigation at any time made by or on behalf of any parties hereto; and (b) the sale, exercise and/or purchase of this Option, and the sale or purchase of the shares of Common Stock (and any other securities or property) issuable upon exercise hereof. 11. Notices All demands, notices, consents and other communications to be given hereunder shall be in writing and shall be deemed duly given when delivered personally or five (5) days after being mailed by first class mail, postage prepaid, properly addressed, as follows: 5 6 (a) If to the Optionor: Trident Equity Management Group c/o Mees Pierson P.O. Box 2003 George Town, Grand Cayman, BWI (b) If to the Company: Technology Acquisitions, Inc. Clarendon House 2 Church Street Hamilton HM11 Bermuda with a copy to: Benchmark Equity Group, Inc. 700 Gemini Houston, Texas 77058 (c) If to the Holder: Benchmark Equity Group, Inc. 700 Gemini Houston, Texas 77058 The Company and the Holder may change such address at any time or times by notice hereunder to the other. 12. Amendments; Waivers; Terminations; Governing Law; Headings; Entire Agreement This Option and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Option shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. The headings in this Option are for convenience of reference only and are not part of this Option. This Option is intended to and does contain and embody all of the understandings and agreements, both written and oral, of the parties hereto with respect to the subject matter of this Option, and there exists no oral agreement or understanding, express or implied, whereby the absolute, final and unconditional character and nature of this Option shall be in any way invalidated, empowered or affected. A modification or waiver of any of the terms, conditions or provisions of this Option shall be effective only if made in writing and executed with the same formality of this Option. This Option shall be binding upon any assigns, successors or transferees of the Optionor. [THE REST OF THIS PAGE IS INTENTIONALLY BLANK] 6 7 IN WITNESS WHEREOF, Optionor has duly caused this Common Stock Purchase Option to be signed in its name and on its behalf by its duly authorized officers, as of June 7, 1999 ATTEST TRIDENT EQUITY MANAGEMENT GROUP By: - ------------------------------------- ----------------------------- Secretary Name: --------------------------- Title: -------------------------- The Company hereby joins in this Option for the purpose of evidencing its agreement with and obligations arising under Section 2, 4, 5, 8 and 10-12. ATTEST TECHNOLOGY ACQUISITIONS, LTD. By: - ------------------------------------- ----------------------------- Witness Name: --------------------------- Title -------------------------- ATTEST BENCHMARK EQUITY GROUP, INC. By: - ------------------------------------- ----------------------------- Witness Name: --------------------------- Title: -------------------------- 7 8 ANNEXED DOCUMENTS* *NOTE: Capitalized terms used in the following documents but not defined shall have the respective meanings attributed to them in the Common Stock Purchase Option to which such documents are annexed. 9 ANNEX TO OPTION FORM OF SUBSCRIPTION (To be completed and signed only upon an exercise of the Common Stock Purchase Option in whole or in part) TO: [Optionor] The undersigned, the Holder of the attached Option, hereby irrevocably elects to exercise the purchase right represented by the Option for and to purchase thereunder____ shares of Common Stock from ___________________________, and herewith makes payment of $______________ therefor in cash or by certified or official bank check. The undersigned hereby requests that the Certificate(s) for such securities be issued in the name(s) and delivered to the address(es) as follows: Name: ------------------------------------------------------- Address: ------------------------------------------------------- Social Security Number: ------------------------------------------------------- Deliver to: ------------------------------------------------------- Address: ------------------------------------------------------- : The Holder agrees and acknowledges that the exercise of the Option and the delivery of Shares thereunder is expressly conditioned on the obtaining of the prior approval of the Bermuda Monetary Authority. DATED: , 19 . --------------------- --- (Name of Holder) --------------------------------------------------------------- (Signature of Holder or Authorized Signatory) ----------------------------------- Signature Guaranteed: ---------------------------------------------------------- -------------------------------------------- (Social Security or Taxpayer Identification Number of Holder) 10 EXHIBIT 2 IRREVOCABLE PROXY COUPLED WITH AN INTEREST This Irrevocable Proxy, dated as of June 7, 1999, by and between Trident Equity Management Group ("TEMG" or "Grantor"), a Cayman Islands exempt company, and Benchmark Equity Group, Inc., a Delaware corporation ("Grantee" or "Benchmark"). In consideration of the premises and the mutual covenants and agreements set forth herein, twenty dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Grantor hereby irrevocably appoints Grantee, for a period of twelve months from the date hereof, as the Grantor's true and lawful proxy and attorney-in-fact, with full power of substitution, to vote all of the shares of Common Stock (the "Shares") which Grantor is entitled to vote, for and in the name, place and stead of the Grantor, at a meeting of the stockholders of Technology Acquisitions, Inc. or pursuant to any consent in lieu of a meeting or otherwise. 2. Grantor further agrees that this Proxy is executed in connection with the grant to Benchmark of an unconditional option to purchase all of the Shares, and is coupled with an interest sufficient in law to support an irrevocable power and shall not be terminated by any act of the Grantor, by lack of appropriate power or authority or by the occurrence of any other event or events. 3. This Proxy shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the provision thereof relating to conflicts of law. 4. Grantor agrees that for the duration of this Irrevocable Proxy that it shall not alienate the Shares nor grant any other Proxy with respect to the Shares, and further, Grantor will, at Benchmark's request, execute and deliver any additional documents and take such actions as may reasonably be deemed by Grantee to be necessary or desirable to complete the Proxy granted herein or to carry out the provisions hereof. 5. If any term, provision, covenant, or restriction of this Proxy is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Proxy shall remain in full force and effect and shall not in any way be affected, impaired or invalidated. 6. This Proxy 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 document. 11 IN WITNESS WHEREOF, Grantor and the Grantee have caused this Irrevocable Proxy to be duly executed as of the date first above written. GRANTOR: Trident Equity Management Group By: ---------------------------------------- GRANTEE: BENCHMARK EQUITY GROUP, INC. By: ---------------------------------------- Frank DeLape President 2 EX-99.3 4 FORM OF EMPLOYMENT AGREEMENT 1 EXHIBIT 3 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. 2 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"), at the discretion of the Board, Executive may receive a cash bonus. 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, as well as 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 -2- 3 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. (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 -3- 4 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. 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 -4- 5 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. 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 -5- 6 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. (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 -6- 7 (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. 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 -7- 8 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. 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. -8- 9 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. -9- 10 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 -10- EX-99.4 5 FORM OF EMPLOYMENT 1 EXHIBIT 4 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 2 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"), 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 -2- 3 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 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 -3- 4 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. 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. -4- 5 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. 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 -5- 6 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. 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 -6- 7 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. 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 -7- 8 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. 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. -8- 9 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. 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. -9- 10 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 -10- EX-99.5 6 FORM OF OPTION AGREEMENT 1 EXHIBIT 5 STOCK OPTION AGREEMENT Consolidated Technology Group Ltd., a New York corporation (the "Company"), hereby grants to Frank DeLape ("Optionee") certain options (the "Options") to purchase shares of the Company's common stock, par value $.01 per share ("Common Stock"), which are more fully described Schedule A to this Agreement as either Incentive Stock Option ("ISO") and/or Nonqualified Stock Option ("NQSO"). This Agreement amends and restates as of May 18, 1999, the option previously granted by the Company's board of directors on April 22, 1999. The Options are granted pursuant to, and subject to the terms, conditions and limitations of, the Company's 1999 Long-Term Incentive Plan (the "Plan") adopted by the Company's board of directors, subject to shareholder approval. In the event that the Plan is not approved by the Company's shareholders, the Options shall terminate and be of no force and effect, and the Optionee shall have no rights under this Agreement. Unless otherwise indicated herein, defined terms in the Plan and not otherwise defined in this Agreement shall have the meaning in this Agreement as in the Plan. 1. Option Price. The exercise price (the "Option Price") per share of Common Stock issuable upon exercise of the Options shall be as set forth in Schedule A. The Company's board of directors has approved, subject to shareholder approval, a one-for-30 reverse split of the Common Stock (the "Reverse Split"). In the event that the Reverse Split is approved by the shareholders not later than April 21, 2000, the number of shares subject to the Option shall not be affected by the Reverse Split, although the Option Price shall be increased as set forth in said Schedule A. 2. Description of Options. The Optionee is granted an ISO and/or a NQSO to purchase the number of shares of Common Stock of the Company as is set forth in Schedule A. 3. Exercise of Options. A. Schedule of Rights to Exercise. The Options shall vest and become exercisable fully on the Initial Vesting Date and shall expire at 5:30 P.M. Houston, Texas time, on April 21, 2004. The Initial Vesting Date shall mean the later of (i) the date the Plan is approved by the Company's shareholders or (ii) the date that the Company's Market Capitalization, as hereinafter defined, is at least $25,000,000. The period during which the Options may be exercised is referred to as the Option Exercise Period. To the extent that the Options become exercisable, they shall be called "Vested Options." B. Market Capitalization. "Market Capitalization" shall mean the product of (i) the total number of shares of Common Stock which, on the date as of which the computation is made, are either (a) outstanding or (b) issuable upon conversion of outstanding shares of preferred stock, and (ii) the average closing price of the Common Stock on the date as of which the computation is made, as reported by the principal stock exchange or market on which the Common Stock is traded; provided, that if, on such day there are no reported sales of Common -1- 2 Stock, the closing bid price on such date shall be used. In the event that the Common Stock is not traded on any exchange or market that reports closing prices, the closing bid price as reported by the National Quotation Bureau, Inc. shall be used. C. Effect of Termination of Employment. (i) In the event that Optionee's employment with the Company shall be terminated for Good Reason, as defined in Optionee's employment agreement with the Company, the Options shall terminate on the effective date of such termination of employment, and the Optionee shall have no further rights to exercise the Option. (ii) If the Optionee's termination of employment with the Company without "Good Reason," all of the Options that have not then become Vested Options shall expire, and the Vested Options shall be exercisable as follows: (a) If the 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 the effective date of such termination (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. (b) If the Optionee's employment terminates on account of death, the Vested Options may be exercised for a period of six (6) months following the date of death (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. (c) If the Optionee's employment terminates for any reason other than as provided in Paragraph 3(C)(i) or 3(C)(ii)(a) or (b), the Vested Options may be exercised for a period of three (3) months following the effective date of such termination of employment (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. D. Method of Exercise. Vested Options may be exercised, in whole or in part, by the Optionee providing the Company a written notice in the form of Schedule B-1 to this Agreement. E. Payment. Payment of the Option Price shall be made by certified or bank check or the Optionee's personal check, provided, however, that if the Optionee delivers a personal check, the shares of Common Stock issuable upon exercise of the Option shall not be issued until the Company has been advised by its bank that the check has cleared. In addition, the Option may be exercised by delivery of shares of Common Stock having a value, based on the market price of the Common Stock, on the date of exercise equal to the Option Price payable for the shares of Common Stock issuable upon such exercise. 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. -2- 3 F. Stock Appreciation Rights, The Optionee shall be entitled to stock appreciation rights, as described and governed by Section 6 of the Plan; provided, however, that upon exercise of the stock appreciation rights, the Optionee shall be entitled to receive shares of Common Stock and not cash. Stock appreciation rights shall be exercised by the Optionee providing the Company a written notice in the form of Schedule B-2 to this Agreement. G. Compliance with Law. Anything in this Option to the contrary notwithstanding, the Optionee agrees that he will not exercise the Option, and that the Company will not be obligated to issue any shares of Common Stock pursuant to this Option, if the exercise of the Option or the issuance of such shares shall constitute a violation by the Optionee or by the Company of any provisions of any law or of any regulation of any governmental authority. Any determination by the Committee in this connection shall be final, binding and conclusive. In this connection, the Optionee understands that, unless the issuance of the Optioned Shares is registered pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the shares of Common Stock issuable upon exercise of the Option, if and when issued, will be restricted securities, as defined in Rule 144 of the Securities and Exchange Commission pursuant to the Securities Act. 4. Adjustment Provisions. The number of shares of Common Stock subject to the Option and the Option Price shall be adjusted in accordance with generally accepted accounting principles in the event of a stock dividend, stock split, stock distribution, reverse split or other combination of shares, recapitalization or otherwise, which affects the Common Stock; provided, however, that this Paragraph 4 shall not apply to the Reverse Split, which shall be governed by Paragraph 1 of this Option. In addition to or in lieu of, the adjustments referred to in the preceding sentence, the number of shares subject to the Option and the Option Price may also be adjusted pursuant to Paragraph 3(c) of the Plan. 5. No Rights to Continued Employment. Nothing in this Agreement shall be construed (a) as an employment agreement or (b) to grant the Optionee any rights to continue as an employee, officer or director of the Company or of a parent, subsidiary or affiliate of the Company. 6. Estoppel Provision: Additional Provisions. (A) The Optionee shall have no interest in and shall not be entitled to any voting rights or any dividend or other rights or privileges of a shareholder of the Company with respect to any shares of Common Stock issuable upon exercise of this Option prior to the exercise of this Option and payment of the Option Price. (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 -3- 4 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 ISOs, 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 ISOs purchased under this Agreement, within two (2) years from the Grant Date, as set forth on Schedule A, or within one year of the issuance of such shares of Common Stock to the Employee upon exercise of a Vested Option. (E) This Instrument of Grant shall be construed and governed in accordance with the laws of the State of New York without applying its conflict of laws principles. 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 the Plan and this Agreement, 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. 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. CONSOLIDATED TECHNOLOGY GROUP LTD. By: ----------------------------------- Richard Young, President OPTIONEE: -------------------------------------- Frank DeLape -------------------------------------- (address and Social Security Number) -4- 5 SCHEDULE A Frank DeLape April 22, 1999 ------------ -------------- (Optionee) (Grant date) April 21, 2004 -------------- (Expiration Date) Incentive Stock Option ("ISO") ------------------------------ Number of shares subject ISO None Non-qualified Stock Option ("NQSO") ----------------------------------- Number of shares subject NQSO 400,000 Option price for each share subject to a NQSO $0.14
Note: Pursuant to Paragraphs 1 of the Agreement, if the Reverse Split is approved by the Company's shareholders, the NQSO will become an option to purchase 400,000 shares of Common Stock at $4.20 per share. TOTAL NUMBER OF SHARES SUBJECT TO OPTIONS 400,000 -5- 6 SCHEDULE B-1 Date: Consolidated Technology Group Ltd. 700 Gemini Street Houston, Texas 77058 Attention: President Re: Stock Option Exercise pursuant to Agreement dated May 18, 1999 Gentlemen: I hereby exercise the above-referenced option to the extent of ______ shares of Common Stock, and I am tendering with this Notice full payment of the Purchase Price in the manner provided in Stock Option Agreement with respect to the shares of Common Stock as to which this Option is being exercised. I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option. Very truly yours, Frank DeLape -6- 7 SCHEDULE B-2 Date: Consolidated Technology Group Ltd. 700 Gemini Street Houston, Texas 77058 Attention: President Re: Stock Appreciation Right Exercise pursuant to Agreement dated May 18, 1999 Gentlemen: I hereby exercise my stock appreciation rights to the extent of _______ shares of Common Stock. The number of shares of Common Stock to be issued upon this exercise shall be determined pursuant to Paragraph 6(b) of the Plan. I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option. Very truly yours, Frank DeLape -7- EX-99.6 7 FORM OF OPTION AGREEMENT 1 EXHIBIT 6 STOCK OPTION AGREEMENT Consolidated Technology Group Ltd., a New York corporation (the "Company"), hereby grants to Richard Young ("Optionee") certain options (the "Options") to purchase shares of the Company's common stock, par value $.01 per share ("Common Stock"), which are more fully described Schedule A to this Agreement as either Incentive Stock Option ("ISO") and/or Nonqualified Stock Option ("NQSO"). This Agreement amends and restates as of May 18, 1999, the option previously granted by the Company's board of directors on April 22, 1999. The Options are granted pursuant to, and subject to the terms, conditions and limitations of, the Company's 1999 Long-Term Incentive Plan (the "Plan") adopted by the Company's board of directors, subject to shareholder approval. In the event that the Plan is not approved by the Company's shareholders, the Options shall terminate and be of no force and effect, and the Optionee shall have no rights under this Agreement. Unless otherwise indicated herein, defined terms in the Plan and not otherwise defined in this Agreement shall have the meaning in this Agreement as in the Plan. 1. Option Price. The exercise price (the "Option Price") per share of Common Stock issuable upon exercise of the Options shall be as set forth in Schedule A. The Company's board of directors has approved, subject to shareholder approval, a one-for-30 reverse split of the Common Stock (the "Reverse Split"). In the event that the Reverse Split is approved by the shareholders not later than April 21, 2000, the number of shares subject to the Option shall not be affected by the Reverse Split, although the Option Price shall be increased as set forth in said Schedule A. 2. Description of Options. The Optionee is granted an ISO and/or a NQSO to purchase the number of shares of Common Stock of the Company as is set forth in Schedule A. 3. Exercise of Options. A. Schedule of Rights to Exercise. The Options shall vest and become exercisable fully on the Initial Vesting Date and shall expire at 5:30 P.M. Houston, Texas time, on April 21, 2004. The Initial Vesting Date shall mean the later of (i) the date the Plan is approved by the Company's shareholders or (ii) the date that the Company's Market Capitalization, as hereinafter defined, is at least $25,000,000. The period during which the Options may be exercised is referred to as the Option Exercise Period. To the extent that the Options become exercisable, they shall be called "Vested Options." B. Market Capitalization. "Market Capitalization" shall mean the product of (i) the total number of shares of Common Stock which, on the date as of which the computation is made, are either (a) outstanding or (b) issuable upon conversion of outstanding shares of preferred stock, and (ii) the average closing price of the Common Stock on the date as of which the computation is made, as reported by the principal stock exchange or market on which the Common Stock is traded; provided, that if, on such day there are no reported sales of Common -1- 2 Stock, the closing bid price on such date shall be used. In the event that the Common Stock is not traded on any exchange or market that reports closing prices, the closing bid price as reported by the National Quotation Bureau, Inc. shall be used. C. Effect of Termination of Employment. (i) In the event that Optionee's employment with the Company shall be terminated for Good Reason, as defined in Optionee's employment agreement with the Company, the Options shall terminate on the effective date of such termination of employment, and the Optionee shall have no further rights to exercise the Option. (ii) If the Optionee's termination of employment with the Company without "Good Reason," all of the Options that have not then become Vested Options shall expire, and the Vested Options shall be exercisable as follows: (a) If the 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 the effective date of such termination (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. (b) If the Optionee's employment terminates on account of death, the Vested Options may be exercised for a period of six (6) months following the date of death (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. (c) If the Optionee's employment terminates for any reason other than as provided in Paragraph 3(C)(i) or 3(C)(ii)(a) or (b), the Vested Options may be exercised for a period of three (3) months following the effective date of such termination of employment (but not later than the last day of the Option Exercise Period), at which time the Options shall expire. D. Method of Exercise. Vested Options may be exercised, in whole or in part, by the Optionee providing the Company a written notice in the form of Schedule B-1 to this Agreement. E. Payment. Payment of the Option Price shall be made by certified or bank check or the Optionee's personal check, provided, however, that if the Optionee delivers a personal check, the shares of Common Stock issuable upon exercise of the Option shall not be issued until the Company has been advised by its bank that the check has cleared. In addition, the Option may be exercised by delivery of shares of Common Stock having a value, based on the market price of the Common Stock, on the date of exercise equal to the Option Price payable for the shares of Common Stock issuable upon such exercise. 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. -2- 3 F. Stock Appreciation Rights, The Optionee shall be entitled to stock appreciation rights, as described and governed by Section 6 of the Plan; provided, however, that upon exercise of the stock appreciation rights, the Optionee shall be entitled to receive shares of Common Stock and not cash. Stock appreciation rights shall be exercised by the Optionee providing the Company a written notice in the form of Schedule B-2 to this Agreement. G. Compliance with Law. Anything in this Option to the contrary notwithstanding, the Optionee agrees that he will not exercise the Option, and that the Company will not be obligated to issue any shares of Common Stock pursuant to this Option, if the exercise of the Option or the issuance of such shares shall constitute a violation by the Optionee or by the Company of any provisions of any law or of any regulation of any governmental authority. Any determination by the Committee in this connection shall be final, binding and conclusive. In this connection, the Optionee understands that, unless the issuance of the Optioned Shares is registered pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the shares of Common Stock issuable upon exercise of the Option, if and when issued, will be restricted securities, as defined in Rule 144 of the Securities and Exchange Commission pursuant to the Securities Act. 4. Adjustment Provisions. The number of shares of Common Stock subject to the Option and the Option Price shall be adjusted in accordance with generally accepted accounting principles in the event of a stock dividend, stock split, stock distribution, reverse split or other combination of shares, recapitalization or otherwise, which affects the Common Stock; provided, however, that this Paragraph 4 shall not apply to the Reverse Split, which shall be governed by Paragraph 1 of this Option. In addition to or in lieu of, the adjustments referred to in the preceding sentence, the number of shares subject to the Option and the Option Price may also be adjusted pursuant to Paragraph 3(c) of the Plan. 5. No Rights to Continued Employment. Nothing in this Agreement shall be construed (a) as an employment agreement or (b) to grant the Optionee any rights to continue as an employee, officer or director of the Company or of a parent, subsidiary or affiliate of the Company. 6. Estoppel Provision: Additional Provisions. (A) The Optionee shall have no interest in and shall not be entitled to any voting rights or any dividend or other rights or privileges of a shareholder of the Company with respect to any shares of Common Stock issuable upon exercise of this Option prior to the exercise of this Option and payment of the Option Price. (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 -3- 4 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 ISOs, 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 ISOs purchased under this Agreement, within two (2) years from the Grant Date, as set forth on Schedule A, or within one year of the issuance of such shares of Common Stock to the Employee upon exercise of a Vested Option. (E) This Instrument of Grant shall be construed and governed in accordance with the laws of the State of New York without applying its conflict of laws principles. 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 the Plan and this Agreement, 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. 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. CONSOLIDATED TECHNOLOGY GROUP LTD. By: -------------------------------------------- Frank DeLape, Chairman and CEO OPTIONEE: ----------------------------------------------- Richard Young ----------------------------------------------- (address and Social Security Number) -4- 5 SCHEDULE A Richard Young April 22, 1999 ------------- -------------- (Optionee) (Grant date) April 21, 2004 -------------- (Expiration Date) Incentive Stock Option ("ISO") ------------------------------ Number of shares subject ISO None Non-qualified Stock Option ("NQSO") ----------------------------------- Number of shares subject NQSO 250,000 Option price for each share subject to a NQSO $0.14
Note: Pursuant to Paragraphs 1 of the Agreement, if the Reverse Split is approved by the Company's shareholders, the NQSO will become an option to purchase 250,000 shares of Common Stock at $4.20 per share. TOTAL NUMBER OF SHARES SUBJECT TO OPTIONS 250,000 -5- 6 SCHEDULE B-1 Date: Consolidated Technology Group Ltd. 700 Gemini Street Houston, Texas 77058 Attention: President Re: Stock Option Exercise pursuant to Agreement dated May 18, 1999 Gentlemen: I hereby exercise the above-referenced option to the extent of ________ shares of Common Stock, and I am tendering with this Notice full payment of the Purchase Price in the manner provided in Stock Option Agreement with respect to the shares of Common Stock as to which this Option is being exercised. I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option. Very truly yours, Richard Young -6- 7 SCHEDULE B-2 Date: Consolidated Technology Group Ltd. 700 Gemini Street Houston, Texas 77058 Attention: President Re: Stock Appreciation Right Exercise pursuant to Agreement dated May 18, 1999 Gentlemen: I hereby exercise my stock appreciation rights to the extent of _______ shares of Common Stock. The number of shares of Common Stock to be issued upon this exercise shall be determined pursuant to Paragraph 6(b) of the Plan. I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option. Very truly yours, Richard Young -7- -----END PRIVACY-ENHANCED MESSAGE-----