UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No 2)*
The Ashton Technology Group, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01
- --------------------------------------------------------------------------------
(Title of Class of Securities)
045084-10-0
- --------------------------------------------------------------------------------
(CUSIP Number)
Louis J. Bevilacqua, Esq., Cadwalader Wickersham & Taft
100 Maiden Lane, New York, NY 10038
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 22, 1996
-------------------------------------------------------
(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 Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement . (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13-1(a) 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).
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fredric W. Rittereiser
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [x]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
1,000,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,000,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.2%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Eprile
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
750,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 750,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
750,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John A. Blohm
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
12,500
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 12,500
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.16%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Dover Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [x]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
513,500
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 513,500
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
513,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dr. F.E. Weimmer, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
10,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 10,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.01%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
F.E. Weimmer, Sr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
130,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 130,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
130,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
F.E. Rittereiser, Sr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
75,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 75,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
75,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.99%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tom Rittereiser, as Trustee for Alexis J. Rittereiser, Amanda Weimmer,
and John Weimmer
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x]
The existence of a group is disclaimed.
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
110,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 110,000
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
110,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.45%
14 TYPE OF REPORTING PERSON
OO
AMENDMENT NO. 2 TO SCHEDULE 13D
This Statement relates to shares of Common Stock, $.01 par value per share
(the "Common Stock"), of The Ashton Technology Group, Inc. (the "Issuer" ).
Fredric W. Rittereiser ("Rittereiser"), Robert A. Eprile ("Eprile"), John A.
Blohm ("Blohm"), The Dover Group, Inc. ("Dover"), F.E. Weimmer, Sr., Dr. F.E.
Weimmer, Jr., F.E. Rittereiser, Sr., and Thomas Rittereiser as Trustee for
Alexis J. Rittereiser, Amanda Weimmer, and John Weimmer ("Thomas Rittereiser as
Trustee") (each of the foregoing a "Reporting Person") filed a combined Schedule
13D on September 13, 1996 with respect to the Common Stock, which was amended on
September 17, 1996. From and after October 22, 1996, the Reporting Persons
hereby disclaim that they are acting as a group with respect to the Common
Stock. This Amendment No. 2 effectively terminates the Section 13(d) reporting
obligations of Blohm, F.E. Weimmer, Sr., Dr. F.E. Weimmer, Jr., F.E.
Rittereiser, Sr. and Thomas Rittereiser as Trustee because each such person is
currently a beneficial owner of less than 5% of the Common Stock. This Statement
amends and supplements Items 2, 3, 4, 5, 6 and 7 of any previous Schedule 13D
regarding the Issuer filed by Rittereiser, Eprile, Dover, F.E. Weimmer, Sr., Dr.
F.E. Weimmer, Jr., F.E. Rittereiser, Sr., and Thomas Rittereiser as Trustee.
Item 2. Identity and Background
This Item is hereby amended and restated as follows:
1. (a) Fredric W. Rittereiser.
(b) c/o Universal Trading Technologies Corporation ("UTTC"),
1900 Market Street, Suite 701, Philadelphia, Pennsylvania
19103-0012
(c) President and Chief Executive Officer of the Issuer,
Chairman of the Board of Directors of UTTC, an approximately
80% owned subsidiary of the Issuer and Chairman of the Board
of Directors and Chief Executive Officer of Dover.
(d) No.
(e) Rittereiser served as a President of Sherwood Capital Corp.
("Sherwood"), a broker-dealer in securities from February,
1987 through October, 1988. In May of 1993, a former
customer of Sherwood brought an action naming as respondents
Sherwood, the account executive who had previously serviced
the customer's account, the branch manager of the location
where the customer's account had previously been maintained
and Rittereiser, as President of Sherwood. The customer
alleged that as a result of the account executive having
made unsuitable investment recommendations, he had incurred
losses for which Sherwood, the branch office manager and
Rittereiser were jointly and severally liable as a result of
their alleged failure to have properly supervised the
account executive.
In August of 1993, the customer and Sherwood executed a
release and settlement agreement which provided, in
pertinent part, that the customer would withdraw all claims
that had been asserted against Sherwood and its affiliated
parties (including former officers) and that the customer
would release Sherwood and such affiliated parties from all
further claims.
Based in part on Rittereiser's belief that as an officer he
was an affiliated party of Sherwood who was indemnified and
therefore covered by the release and settlement agreement,
as well as the fact that Rittereiser was not served with a
copy of the customer's statement of claim, Rittereiser did
not respond to the customer's allegations. In April of 1994,
notwithstanding the release and settlement agreement and the
fact that Rittereiser was not then a member of the NASD, a
default award was entered against Rittereiser and the other
individual respondents in the amount of $33,500 together
with the costs in the amount of $1,700. Rittereiser did not
pay this arbitration award and, as a result thereof, his
registration as a member of the NASD was suspended on or
about September of 1994. Rittereiser has retained counsel
for the purpose of setting aside or otherwise rescinding
such suspension.
(f) U.S.A.
2. (a) Robert A. Eprile.
(b) 124 West 60th Street, Suite 18D, New York, New York 10023.
(c) Chairman of the Board of Directors and Treasurer of the
Issuer, Director, President and Chief Operating Officer of
UTTC.
(d) No.
(e) No.
(f) U.S.A.
3. (a) John A. Blohm.
(b) 704 Squires Road, Towson, Maryland 21286.
(c) Director of the Issuer and Executive Vice President of UTTC.
(d) No.
(e) No.
(f) U.S.A.
4. (a) The Dover Group, Inc.
(b) 17 Route 37 East, Toms River, NJ 08753.
(c) A private family corporation whose stock is held by various
members of the extended Rittereiser and Weimmer families.
The principal business of Dover is investing. Dover is a
stockholder in the Issuer.
(d) No.
(e) No.
(f) Delaware.
5. (a) Dr. F.E. Weimmer, Jr.
(b) c/o Dover, 17 Route 37 East, Toms River, NJ 08753.
(c) Chiropractor. President and Director of Dover.
(d) No.
(e) No.
(f) U.S.A.
6. (a) F.E. Weimmer, Sr.
(b) c/o Dover, 17 Route 37 East, Toms River, NJ 08753.
(c) Director of Dover.
(d) No.
(e) No.
(f) U.S.A.
7. (a) F.E. Rittereiser, Sr.
(b) c/o Dover, 17 Route 37 East, Toms River, NJ 08753.
(c) Director of Dover.
(d) No.
(e) No.
(f) U.S.A.
8. (a) Thomas Rittereiser, as Trustee for Alexis J. Rittereiser,
Amanda Weimmer and John Weimmer.
(b) c/o Dover, 17 Route 37 East, Toms River, NJ 08753.
(c) Director of Dover.
(d) No.
(e) No.
(f) U.S.A.
Item 3. Source and Amount of Funds or Other Consideration
No change except see Item 4 for source of funds for Rittereiser.
Item 4. Purpose of Transaction
This Item is hereby amended and restated as follows:
At the time the Reporting Persons filed a combined Schedule 13D on
September 13, 1996 with respect to the Common Stock (as amended on September 17,
1996), the Reporting Persons were concerned with the direction of the Issuer
under the management of Raymond T. Tate, the former Chairman of the Board and
Chief Executive Officer of the Issuer. As described below, on October 22, 1996,
the Reporting Persons resolved their differences with Mr. Tate and the Issuer
regarding the direction of the Issuer. Consequently, the Reporting Persons do
not have any present intention, but hereby reserve the right as stockholders of
the Issuer, to take any action with respect to the matters listed in items (b)
through (j) of this Item 4. The Reporting Persons may each dispose of or acquire
additional shares of common stock or other securities of the Issuer. The
Reporting Persons each intend to exercise their rights as shareholders to vote
for or against any matter in accordance with their respective best interests.
On October 22, 1996, the Reporting Persons entered into a settlement
agreement (the "Settlement Agreement") with Raymond T. Tate ("Tate"), Helen J.
Tate, as trustee for the Andrew Patrick Tate Trust, Helen J. Tate, as trustee
for the Susan Katherine Tate Burrowbridge Trust and Helen J. Tate, as trustee
for the Elizabeth Tate Winters Trust (collectively, the "Tate Trusts"). A copy
of the Settlement Agreement is filed as Exhibit 99.1 to this Schedule 13D. The
Settlement Agreement resolved all differences among the parties thereto, and all
parties to the Settlement Agreement agreed to release each of the other parties
from any and all actions or claims arising out of or in connection with the
matters covered by the Settlement Agreement. Pursuant to the Settlement
Agreement, on October 22, 1996, Tate resigned from his position as Director of
the Issuer and its subsidiaries and all officer positions held by him in the
Issuer and its subsidiaries. Pursuant to the Settlement Agreement, on October
22, 1996, the Board of Directors of the Issuer elected Fred S. Weingard,
Executive Vice President of the Issuer's subsidiary UTTC, to fill the vacancy on
the Issuer's Board of Directors created by the resignation of Tate.
Pursuant to the Settlement Agreement and in consideration of the payment of
$250,000, on October 22, 1996, Helen J. Tate, as trustee for the Tate Trusts,
granted to Rittereiser or his designee the option (the "Call Option"),
exercisable at any time from April 2, 1997 through June 2, 1997, to purchase
1,000,000 shares of the Issuer's Common Stock, from the Tate Trusts for a total
purchase price of $4,500,000. The $250,000 was paid on behalf of Rittereiser by
Dover, a Delaware corporation of which Rittereiser is the Chairman and Chief
Executive Officer. Pursuant to the Settlement Agreement and in consideration for
$1, Rittereiser also granted Tate the option (the "Put Option"), exercisable at
any time during the five business days following the exercise of the Call
Option, to require Rittereiser to purchase from Tate the 107,500 shares of
Common Stock of the Issuer owned, beneficially or otherwise, by Tate for a total
purchase price of $483,750. The Put Option is assignable by Rittereiser.
On October 22, 1996, Tate and the Issuer also entered into a license
agreement (the "License Agreement"), a copy of which is filed as Exhibit 99.2 to
this Schedule 13D. Under the terms of the License Agreement, the Issuer granted
to Tate a perpetual, worldwide license, at his own cost, to use, sublicense,
reproduce and make derivative works and enhancements of the technology used by
the Issuer to develop the Ashton Technology Encryption Devices ("ATED"),
including the ATED Key Management System, encryption software and crypto-server
technology (the "Licensed Technology") in any field of use other than the
Financial Services Industry (as such term is defined in the License Agreement).
In consideration for granting the license, Tate (or his permitted assigns under
the License Agreement) must pay a perpetual annual royalty to the Issuer equal
to 2% of the total gross revenues earned from the use of the Licensed
Technology. Tate's right to use the Licensed Technology will be exclusive,
provided Tate pays to the Issuer a cumulative license fee equal to $100,000 by
October 22, 2000 (the "License Fee"). The License Fee will be reduced by the
total amount of royalties paid to the Issuer. Tate may assign the license to any
person or entity controlled by Tate.
The Issuer and Tate also entered into a consulting agreement, dated October
22, 1996, (the "Consulting Agreement"), a copy of which is filed as Exhibit 99.3
to this Schedule 13D. Under the terms of the Consulting Agreement, the Issuer
retained Tate to act as a consultant to Computer Sciences Innovations, Inc.
("CSI"), a subsidiary of the Issuer, for the period from October 22, 1996 to
December 31, 1998. As compensation for such services, for the period from
October 22, 1996 through December 31, 1996, the Issuer will pay Tate (or, in the
event of his death, his estate) $40,000, in substantially equal bi-weekly
payments. For the period from October 22, 1996 through December 31, 1998, the
Issuer will pay to Raymond Tate Associates, Inc. $120,000 per annum. Tate also
agreed not to compete with the Issuer in the Financial Services Industry (as
such term is defined in the Consulting Agreement) during the term of the
Consulting Agreement.
In connection with the Settlement Agreement, First United Equities
Corporation the representative of the underwriters of the Company's May 2, 1996
initial public offering ("First United"), agreed to waive certain restrictions
on the transfer of Common Stock by Mr. Tate and Helen J. Tate, as trustees of
the Tate Trusts. In consideration for such waiver, the Company agreed to release
First United from any and all actions or claims arising out of or in connection
with the Settlement Agreement. The Company also agreed to indemnify First United
for any such actions and to reimburse First United for certain legal fees
incurred in connection with the Settlement Agreement.
The Settlement Agreement, the License Agreement and the Consulting
Agreement and all transactions contemplated thereby were unanimously approved by
the Company's Board of Directors, acting through Vice Admiral (U.S. Navy
retired) Albert J. Baciocco, Jr. and Dr. Ruth M. Davis, the Company's outside
directors.
On October 22, 1996, after closing the transactions contemplated by the
Settlement Agreement, the newly-constituted Board of Directors of the Issuer
convened a meeting and took the following actions: (i) amended Article V,
Section 6 of the By-Laws of the Issuer to permit the positions of Chairman of
the Board and Chief Executive Officer to be held by different individuals; (ii)
elected Eprile, currently a Director of the Issuer as well as the President and
Chief Operating Officer of UTTC, Chairman of the Board and Treasurer of the
Issuer; (iii) appointed Rittereiser President and Chief Executive Officer of the
Issuer and Chairman of the Board of UTTC and (iv) authorized the Issuer to
reimburse the Reporting Persons for any and all legal services rendered by the
law firm of Cadwalader, Wickersham & Taft in connection with or relating to the
Settlement Agreement, the transactions contemplated thereby and the disputes
settled thereby.
Effective October 22, 1996, the Reporting Persons hereby disband the group
formed to pursue negotiations with the Issuer regarding the possible resolution
of the concerns previously expressed in this Statement by the Reporting Persons
and therefore disclaim beneficial ownership of the voting securities of the
Issuer held by each Reporting Person.
Item 5. Interest in Securities of the Issuer
This Item is hereby amended and restated as follows:
(a) According to the Issuer's Form 10-QSB for the period ending June 30,
1996, the Issuer had issued and outstanding 7,562,500 shares of Common Stock.
Eprile is the beneficial owner of 750,000 shares or 9.9% of the outstanding
Common Stock. Blohm is the beneficial owner of 12,500 shares or 0.16% of the
outstanding Common Stock. The shares of Common Stock held by Blohm exclude
350,000 options, 70,000 exercisable on April 1, 1997, 70,000 on April 1, 1998
and 210,000 on April 1, 1999. Dr. F.E. Weimmer, Jr., F.E. Weimmer Sr. and F.E.
Rittereiser, Sr. are the beneficial owners of 10,000, 130,000 and 75,000 shares
of Common Stock, respectively, or 0.01%, 1.7% and 0.99% respectively, of the
total outstanding Common Stock. Thomas Rittereiser as Trustee is the beneficial
owner of 110,000 shares or 1.45% of the total shares of Common Stock
outstanding. The shares of Common Stock held by Thomas Rittereiser as Trustee
exclude 40,000 shares owned by Donna Rittereiser, his wife, to which he
disclaims beneficial ownership.
Rittereiser is not the record holder of any shares of Common Stock.
However, as a result of the Call Option, Rittereiser may be deemed to be the
beneficial owner of 1,000,000 shares of Common Stock, or 13.2% of the
outstanding Common Stock. Dover is the record holder of 513,500 shares of Common
Stock, or 6.8% of the outstanding Common Stock . The shares of Common Stock held
by Dover exclude 240,000 warrants exercisable on May 2, 1997 and expiring on May
2, 2002.
As disclosed in Item 4, effective October 22, 1996, the Reporting Persons
hereby disband the group formed to pursue negotiations with the Issuer regarding
the possible resolution of the concerns previously expressed in this Statement
by the Reporting Persons. Neither the filing of this Schedule 13D nor any of its
contents shall be deemed to constitute an admission that any Reporting Person is
the beneficial owner of any of the shares of Common Stock owned by another
Reporting Person for purposes of Section 13(d) of the Exchange Act or for any
other purpose, and such beneficial ownership is expressly disclaimed.
<TABLE>
<CAPTION>
(b)
- ---------------------------------------------------------------------------------------------------------------------
Rittereiser Eprile Blohm Dover Dr. F.E. F.E. F.E. Thomas
Weimmer, Jr. Weimmer, Sr. Rittereiser, Rittereiser,
Sr. as Trustee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sole Power 1,000,000 750,000 12,500 513,500 10,000 130,000 75,000 110,000
to vote/
direct vote
- ---------------------------------------------------------------------------------------------------------------------
Shared Power -0- -0- -0- -0- -0- -0- -0- -0-
to
vote/direct
vote
- ---------------------------------------------------------------------------------------------------------------------
Sole Power 1,000,000 750,000 12,500 513,500 10,000 130,000 75,000 110,000
to dispose/
direct
disposition
- ---------------------------------------------------------------------------------------------------------------------
Shared Power -0- -0- -0- -0- -0- -0- -0- -0-
to dispose/
direct
disposition
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) During the past sixty days, the following transactions in the Common
Stock were effected by the Reporting Persons:
See Item 4.
(d) Not Applicable
(e) As of October 22, 1996, Blohm, F.E. Weimmer, Sr., Dr. F.E. Weimmer,
Jr., F.E. Rittereiser, Sr. and Thomas Rittereiser as Trustee ceased to be
beneficial owners of more than five percent of the Common Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
See Item 4.
Item 7. Material to Be Filed as Exhibits
Exhibit 99.1: Settlement Agreement, dated October 22, 1996, by and
among the Issuer, Tate, Helen J. Tate as trustee for the Tate Trusts
and the Reporting Persons.
Exhibit 99.2: License Agreement, dated October 22, 1996 between the
Issuer and Tate.
Exhibit 99.3: Consulting Agreement, dated October 22, 1996, between
the Issuer and Tate.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 25, 1996
Fredric W. Rittereiser Robert A. Eprile
/s/ Fredric W. Rittereiser /s/ Robert A. Eprile
John A. Blohm The Dover Group, Inc.
/s/ John A. Blohm /s/ Fredric W. Rittereiser
Name: Fredric W. Rittereiser
Title: Chairman
Dr. F.E. Weimmer, Jr. F.E. Weimmer, Sr.
/s/ Dr. F.E. Weimmer, Jr. /s/ F. E. Weimmer, Sr.
F.E. Rittereiser, Sr. Thomas Rittereiser as Trustee
/s/ F.E. Rittereiser, Sr. /s/ Thomas Rittereiser as Trustee
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (together with all exhibits and schedules hereto,
this "Agreement") is entered into this 22nd day of October, 1996 by and among
RAYMOND T. TATE ("Tate"), HELEN J. TATE, as trustee for the Andrew Patrick Tate
Trust, HELEN J. TATE, as trustee for the Susan Katherine Tate Burrowbridge Trust
and HELEN J. TATE, as trustee for the Elizabeth Tate Winters Trust
(collectively, the "Tate Trusts"), THE ASHTON TECHNOLOGY GROUP, INC. (the
"Company"), ROBERT A. EPRILE ("Eprile"), JOHN A. BLOHM ("Blohm"), FREDRIC W.
RITTEREISER ("Rittereiser" and together with Eprile and Blohm, the
"Representatives"), THE DOVER GROUP, INC., F.E. WEIMMER, JR., F.E. WEIMMER, SR.,
F.E. RITTEREISER, SR., and THOMAS RITTEREISER, as trustee for Alexis J.
Rittereiser, Amanda Weimmer and John Weimmer (collectively, together with the
Representatives, the "Group Members").
WHEREAS, Tate is the President, Chairman of the Board, Chief Executive
Officer, Treasurer, and Principal Financial and Accounting Officer of the
Company;
WHEREAS, the Tate Trusts own beneficially or otherwise in the aggregate
1,000,000 shares (the "Trust Shares") of the outstanding Common Stock of the
Company, par value $.01 per share (the "Common Stock");
WHEREAS, Tate owns beneficially or otherwise 107,500 shares of Common Stock
(the "Tate Shares"); and
WHEREAS, certain disputes have arisen among Tate, on the one hand, and the
Group Members, on the other, with respect to the direction of the Company, and
the parties have agreed to settle and resolve each and every dispute and to
enter into certain agreements on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms elsewhere defined in this
Agreement, the following terms when used in this Agreement shall have the
following respective meanings, unless the context clearly indicates otherwise:
"Affiliate" means, with respect to a Person, any other Person controlled by
or, as of the date of this Agreement, controlling or under common control with,
such Person. "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, the holding of proxies,
by contract or otherwise.
"Closing" and "Closing Date" shall have the respective meanings set forth
in Section 3.1.
"Common Stock" is defined in the Recitals.
"Consulting Agreement" means the agreement dated the Closing Date between
Tate and the Company in the form of Exhibit A.
"License Agreement" means the agreement dated the Closing Date between Tate
and the Company in the form of Exhibit B.
"Person" means any individual, corporation, partnership, limited liability
company or partnership, firm, joint venture, association, joint stock company,
trust, unincorporated organization, governmental entity or other entity or
organization.
"Representatives' Nominee" means Fred S. Weingard.
"Subsidiaries" means Universal Trading Technologies Corporation and
Computer Science Innovations, Inc. and each corporation as to which the Company
directly or indirectly owns a majority of the outstanding shares of stock or
other ownership interests having voting power under ordinary circumstances to
elect a majority of directors of such corporation or other Persons performing
similar functions for such entity.
"Tate Employment Agreement" means that certain employment agreement
effective as of January 1, 1996 between the Company and Tate.
"Tate Shares" is defined in the Recitals.
"Trust Shares" is defined in the Recitals.
ARTICLE II
TERMS OF AGREEMENT
2.1 Resignation of Tate. Effective at 5:00 p.m., New York time, on the
Closing Date, Tate shall resign from his position as a Director of the Company
and its Subsidiaries and all officer positions held by Tate in the Company and
its Subsidiaries.
2.2 Election of Representatives' Nominee as Director. Effective at 5:01
p.m., New York time, on the Closing Date, the Representatives' Nominee shall be
elected by the Board of Directors of the Company to fill the vacancy created by
the resignation of Tate pursuant to Section 2.1.
2.3 Call Option. (a) Subject to the terms and conditions of this Agreement,
and in consideration for $250,000 payable by Rittereiser to Helen J. Tate, as
trustee for the Tate Trusts (the "Trustee"), in cash at the Closing, Rittereiser
or his designee shall have the right and option (the "Call Option"), exercisable
upon written notice delivered to the Trustee at any time during the period
beginning at 12:00 a.m., New York time, on April 2, 1997 and ending at 11:59
p.m., New York time, on June 2, 1997 (the "Call Exercise Period"), to purchase
and acquire all of the Trust Shares for a total purchase price of $4,500,000
(the "Call Exercise Price"). If the Call Option is exercised, unless the Trustee
and Rittereiser mutually agree otherwise, delivery to Rittereiser or his
designee of the share certificates representing all of the Trust Shares,
accompanied by a stock power duly executed in blank, and payment of the Call
Exercise Price in full in cash shall take place on the date that is seven (7)
business days following the date the Trustee receives written notice of the
exercise of the Call Option (the "Option Settlement Date") at 10:00 a.m., New
York Time, at the offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New
York, New York 10038.
(b) The Trustee hereby agrees that during the period from the Closing Date
through the end of the Call Exercise Period and, if the Call Option is
exercised, during the period ending on the Option Settlement Date, the Trustee
shall (i) not offer, sell, contract to sell, transfer, pledge, encumber or
otherwise dispose of the Trust Shares and (ii) vote the Trust Shares in the same
manner and proportion as all other shares of Common Stock are voted with respect
to all matters, including any proposal that relates to the operation or
management of the Company and proposals to elect and remove directors.
(c) The Trustee hereby represents and warrants to Rittereiser and
Rittereiser's designee, if any, that acquires the Call Option that: (i) the
Trustee is the lawful beneficial owner of the Trust Shares and has complete and
unrestricted right to sell, transfer, assign and convey the Trust Shares to
Rittereiser or his designee and (ii) if the Call Option is exercised, the
Trustee will deliver to Rittereiser or his designee good and marketable title to
the Trust Shares free and clear of any liens, claims, charges, security
interests, options or other legal or equitable encumbrances, in the case of
clauses (i) and (ii), subject to the terms of the waiver agreement between the
Trustee and the Company and the Trustee and First United Equities Corporation
dated October 22, 1996.
2.4 Put Option. (a) Subject to the terms and conditions of this Agreement,
and in consideration for $1 payable by Tate to Rittereiser in cash at the
Closing, Rittereiser hereby grants to Tate the right and option (the "Put
Option"), exercisable by written notice to Rittereiser or his designee at any
time during the period beginning at 12:00 a.m., New York time, on the business
day immediately following exercise of the Call Option and ending at 11:59 p.m.
on the fifth business day immediately following exercise of the Call Option (the
"Put Exercise Period"), to require Rittereiser or his designee to purchase and
acquire from Tate all of the Tate Shares for a total purchase price of $483,750
(the "Put Exercise Price"). If the Put Option is exercised, unless Tate and
Rittereiser mutually agree otherwise, delivery to Rittereiser or his designee of
the share certificates representing all of the Tate Shares, accompanied by a
stock power duly executed in blank, and payment of the Put Exercise Price in
full in cash shall take place on the Option Settlement Date at the same time and
place as is specified in Section 2.3(a).
(b) Tate hereby agrees that during the period from the Closing Date through
the end of the Put Exercise Period, and, if the Put Option is exercised, during
the period ending on the Option Settlement Date, Tate shall vote the Tate Shares
in the same manner and proportion as all other shares of Common Stock are voted
with respect to all matters, including any proposal that relates to the
operation or management of the Company and proposals to elect or remove
directors.
(c) Tate hereby represents and warrants to Rittereiser and Rittereiser's
designee, if any, that acquires the Tate Shares pursuant to the Put Option that,
as of the Option Settlement Date: (i) Tate is the lawful beneficial owner of the
Tate Shares and has complete and unrestricted right to sell, transfer, assign
and convey the Tate Shares to Rittereiser or his designee and (ii) upon exercise
of the Put Option, Tate will deliver to Rittereiser or his designee good and
marketable title to the Tate Shares free and clear of any liens, claims,
charges, security interests, options or other legal or equitable encumbrances,
in the case of clauses (i) and (ii), subject to the terms of the waiver
agreement between Tate and the Company and Tate and First United Equities
Corporation, dated October 22, 1996.
2.5 Consulting Agreement and License Agreement. On the Closing Date, the
Company and Tate shall enter into the Consulting Agreement and the License
Agreement.
2.6 Employee Matters. Effective at 5:00 p.m., New York time, on the Closing
Date, Tate shall cause Susan Burrowbridge and Elizabeth Winters to resign from
all positions they hold in the Company and its Subsidiaries. On the Closing
Date, the Company shall pay $4,216.02 to each of Ms. Burrowbridge and Ms.
Winters which amount represents severance pay equal to one month's current
salary.
2.7 Release. From and after 5:00 p.m., New York time, on the Closing Date,
and except for any breach of this Agreement, each of the parties hereto does
hereby release and forever discharge each of the other parties hereto and each
of their respective Affiliates, heirs, executors, administrators, successors,
agents, attorneys and assigns, of and from any and all manner of claims,
demands, damages, actions, causes of action or suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, trespasses, judgments and executions
whatsoever in law or equity, whether known or unknown, directly or indirectly,
by reason of or arising out of or in connection with (i) the Tate Shares or the
Trust Shares, (ii) the Tate Employment Agreement, (iii) the management of and
conduct of the business of the Company and its Subsidiaries, (iv) the services
performed by Tate or any of the Group Members to the Company or its
Subsidiaries, or (v) the relationship by and among the parties, which any of
them or any of their heirs, executors, administrators, successors and assigns
can, shall or may have, or ever had, or might have but for this release, for,
upon or by reason of any matter, cause or thing whatsoever, from the beginning
of the world to the date of this Agreement.
2.8 Waiver of Derivative Claim. At no time shall any party hereto bring a
derivative claim which can be asserted on behalf of the Company or any of its
Subsidiaries in relation to, by reason of, based upon, or arising out of or in
connection with this Agreement or the matters which are settled by this
Agreement.
2.9 Life Insurance Policy. Effective as of the Closing Date, Tate and the
Company shall cause the Company to be named the beneficiary under that certain
life insurance policy (Number 4282052) with the Provident Mutual Life Insurance
Company of Philadelphia under which Tate is the insured (the "Policy"). During
the period from the Closing Date through the end of the Call Exercise Period,
and if the Call Option is exercised, during the period ending on the Option
Settlement Date, the Company will pay insurance premiums under the Policy
sufficient to secure $1.5 million of face value of life insurance. In
consideration for transfer of the life insurance policy to the Company, in the
event of the death of Tate during the period from the Closing Date through the
end of the Call Exercise Period, and if the Call Option is exercised during the
period ending on the Option Settlement Date, the Company will use the proceeds
of the Policy to purchase 333,333 of the Trust Shares from the Tate Trusts, as
allocated by the Trustee, whereupon the number of Trust Shares subject to the
Call Option and the Call Exercise Price shall be decreased accordingly.
2.10 Books and Records. Tate hereby disclaims and waives for himself and
his Affiliates any ownership interest in any and all books, records, accounting
records, drawings, writings, customer lists, data, reports, test results,
evaluations, plans, studies, instructions, manuals, computer software, computer
codes, formulas and formulations, corporate minute books, corporate seals and
consolidated financial and tax records, files and documents (including computer
tapes or disks) of Ashton and its Subsidiaries (the "Books and Records"). Except
as expressly permitted by this Agreement, neither Tate nor his Affiliates shall
remove copies of the Books and Records from the premises of Ashton or any of its
Subsidiaries, whether in written or machine or computer readable form, without
Ashton's written consent, and, prior to the Closing Date, Tate shall return to
the premises of Ashton any Books and Records or written or machine or computer
readable copies thereof that may be in his possession or the possession of his
Affiliates. Notwithstanding the foregoing, Tate shall have the right to (i)
retain duplicate photocopies of Books and Records that he has obtained in the
ordinary course of business and maintained in places other than the premises of
the Company or its Subsidiaries; (ii) retain personal notes that do not
constitute Books and Records of Ashton maintained in the ordinary course of
business; (iii) retain one copy of Ashton's closing binder for its initial
public offering; and (iv) retain copies of and use records, files, information,
documents as permitted by the License Agreement. Nothing in this Agreement shall
limit Tate's right to remove personal effects from Ashton premises.
2.11 Ownership of UTTC. The Company hereby agrees that during the period
from the Closing Date through the end of the Call Exercise Period, and if the
Call Option is exercised, during the period ending on the Option Settlement
Date, the Company shall not permit UTTC to (i) engage in any merger,
consolidation or similar transaction with or merge into any other Person or sell
or transfer all or a material portion of its assets or (ii) issue, sell or
otherwise distribute any capital stock or other equity security of UTTC, or any
security convertible, during such period(s), into any capital stock or equity
security of UTTC, unless, in the case of either clause (i) or (ii), the residual
value to Ashton of its equity interest in UTTC is at least equal to or greater
than $20 million computed on the basis of the value received by UTTC from any
such (x) consolidation, merger or similiar transaction or sale or transfer or
(y) the issuance, sale or distribution of any such stock or other security.
2.12 Best Interests of Stockholders. The Group Members each agree and
acknowledge that all disagreements and concerns regarding the management and
policies of the Company have been fully resolved by this Agreement. The parties
hereto have determined that this Agreement is in the best interests of the
Company's stockholders and, in their judgment, will result in significant
long-term benefits to the Company and its stockholders.
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on October 22, 1996 (such date, the "Closing
Date"). The Closing shall be held at 5:00 p.m., New York time, on the Closing
Date at the offices of Latham & Watkins, 1001 Pennsylvania Avenue, N.W.,
Washington, DC 20004.
3.2 Deliveries and Proceedings at Closing. At Closing the parties shall
make the following deliveries:
(a) Deliveries by Tate: Tate will deliver or cause to be delivered:
(i) duly executed letters of resignation as contemplated by Sections
2.1 and 2.6;
(ii) the Consulting Agreement executed by Tate;
(iii) the License Agreement executed by Tate; and
(iv) $1 cash to Rittereiser.
(b) Deliveries by Group Members. Rittereiser will deliver or cause to be
delivered by certified or bank cashier's check $83,334 to Helen J. Tate, as
Trustee for the Andrew Patrick Tate Trust, $83,333 to Helen J. Tate, as Trustee
for the Susan Katherine Tate Burrowbridge Trust, and $83,333 to Helen J. Tate,
as Trustee for the Elizabeth Tate Winters Trust.
(c) Deliveries by the Company. The Company will deliver or cause to be
delivered:
(i) the Consulting Agreement executed by the Company;
(ii) the License Agreement executed by the Company;
(iii) a certificate signed by an executive officer or director of the
Company stating that (x) this Agreement has been approved by the
Company's Board of Directors, and attached thereto are true and
correct copies of the resolutions of the Board of Directors, (y)
attached thereto are true and correct copies of resolutions of
the Company's Board of Directors electing the Representatives'
Nominee to the Board of Directors, and (z) the person authorized
to sign this Agreement, the Settlement Agreement, the Consulting
Agreement and all other documents to be delivered by the Company
in connection herewith is a duly elected officer or director of
the Company and has been duly authorized to sign such documents
on behalf of the Company;
(iv) $4,216.02 to Ms. Burrowbridge by certified or bank cashier's
check; and
(v) $4,216.02 to Ms. Winters by certified or bank cashier's check;
ARTICLE IV
GENERAL PROVISIONS
4.1 Representations and Warranties. Each party represents and warrants to
the other party that (i) the execution, delivery and performance of this
Agreement has been duly authorized and all actions necessary for the due
execution, delivery and performance of this Agreement have been taken, (ii) this
Agreement constitutes the legal, valid and binding obligation of the parties
enforceable against each party in accordance with its terms, (iii) it has been
represented by legal counsel of its choosing, and (iv) this Agreement has been
executed and delivered as its own free act and deed and not as the result of
duress by any other party hereto. The representations, warranties and covenants
of the parties set forth in this Agreement (including, without limitation,
Section 2.3 and this Section 4.1) shall survive the Closing.
4.2 Further Assurances. Each party agrees from time to time, at the request
of any other party to execute such documents or ratify such agreements as may be
reasonably necessary to effect the agreements contained herein.
4.3 Modification. This Agreement shall not be modified or amended except by
an agreement in writing executed by all parties hereto.
4.4 Applicable Law. This Agreement shall be governed under the law of the
State of Delaware without regard to the principles of conflicts of law thereof.
4.5 Assignment. None of the parties hereto may assign any of their
respective rights or delegate any of their respective obligations under this
Agreement to any party without the prior written consent of each of the other
parties hereto; provided, however, that upon written notice to the parties
hereto (i) this Agreement may be assigned by operation of law or pursuant to the
laws of descent and distribution and (ii) Rittereiser may assign his rights and
delegate his obligations under Sections 2.3 and 2.4 to any Person without the
consent of any of the other parties hereto. Notwithstanding the foregoing, this
Agreement and the rights and obligations set forth herein shall be binding on
all parties and on their successors and permitted assigns.
4.6 Entire Agreement. This Agreement contains the entire and final
agreement between the parties with respect to the subject matter hereof, and no
oral statements, assumptions or representations or prior written matter not
contained or referred to in this instrument shall have any force or effect.
4.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be one and the same instrument.
4.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
4.9 Headings. The headings used in this Agreement are for convenience only
and shall not be deemed part of the agreements of the parties set forth herein.
4.10 Time is of the Essence. Time is of the essence of this Agreement and
every provision hereof.
4.11 Waiver. No consent or waiver, express or implied, by any party to or
of any breach or default by another party in performance by the breaching party
of its obligations under this Agreement shall be deemed or construed to be a
consent or waiver to or of any breach or default by the breaching party in the
performance by such breaching party of any other obligations of such breaching
party under this Agreement. Failure on the part of any party to object to or
complain of any act or failure to act of any of the other parties or to declare
any of the other parties in default shall not constitute a waiver of any right
or remedy or the ability to object or complain or to declare any default at any
time in the future.
4.12 Specific Performance. The parties agree that any breach of this
Agreement by any party would result in irreparable harm for which the other
parties would not have an adequate remedy at law and that the parties shall each
be entitled to injunctive and other equitable relief to enforce specifically the
terms and provisions hereof, in addition to any other rights or remedies
available to such parties.
4.13 Submission to Jurisdiction. Any judicial proceeding brought with
respect to this Agreement must be brought in any United States District Court
(or if such court lacks jurisdiction, any state court) sitting in Wilmington,
Delaware and by execution and delivery of this Agreement, each signatory hereto
(i) hereby submits to and accepts, generally and unconditionally, the exclusive
jurisdiction of such courts and any related appellate court, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement and (ii) irrevocably waives any objection it may now or hereafter have
as to the venue of any such suit, action or proceeding brought in such a court
or that such court is an inconvenient forum.
4.14 Liability of Individuals. Eprile and Blohm, who are Directors of the
Company, have incurred obligations under this Agreement only in their individual
capacity and not as Directors of the Company. Tate, who is a Director and
Officer of the Company and certain Subsidiaries, has incurred obligations under
this Agreement only in his individual capacity and not as a director or officer
of the Company or a Subsidiary. Rittereiser has incurred certain obligations
under this Agreement only in his individual capacity and not as a director or
officer of The Dover Group, Inc.
4.15 Confidentiality. Except as required by law, pursuant to a valid
subpoena or with the prior consultation and prior consent of the parties hereto,
no party to this Agreement or any Person acting for or on their behalf, shall
directly or indirectly make any written or oral statement publicly or privately
to any Person if such statement relates to or concerns (i) this Agreement, (ii)
any matter related to this Agreement, (iii) the management, conduct or affairs
of the Company, its Subsidiaries, Tate or any of the Group Members, (iv) the
relationship by and among the parties, or (v) unless expressly directed by the
Company's Board of Directors, the relationship of the Company or its
Subsidiaries with any third party. Notwithstanding the foregoing, a party to
this Agreement may discuss any of the foregoing privately with (a) a member of
such party's immediate family or (b) directors, officers, employees or auditors
of the Company or its Subsidiaries (each an "Authorized Person") if, and only
if, the Authorized Person agrees to be bound by the terms of this Section 4.15.
If an Authorized Person breaches the terms of this Section 4.15, the party to
this Agreement who discussed the prohibited matters with the Authorized Person
shall be liable for the Authorized Person's breach of this Section 4.15.
Anything in this Section 4.15 to the contrary notwithstanding, the parties agree
that a press release in the form of Exhibit C to this Agreement shall be issued
by the Company on the Closing Date.
4.16 No Admissions. Nothing contained in this Agreement shall be considered
an admission by either party of any wrongdoing under any Federal, state or local
statute, public policy, tort law, contract law, common law or otherwise.
4.17 No Third Party Claims. Each party represents and warrants that no
other person or entity has, or to the best knowledge of such party claims, any
interest in any potential claims, demands, causes of action, obligations,
damages or suits released pursuant to this Agreement; that it or he is the owner
of all other claims, demands, causes of action, obligations, damages or suits so
released; that it or he has full and complete authority to execute this
Agreement; and that it or he has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation or
liability subject to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
/s/ Raymond T. Tate
----------------------------------
Raymond T. Tate
17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
/s/ Helen J. Tate
---------------------------------
Helen J. Tate, as trustee for the
Andrew Patrick Tate Trust
17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
/s/ Helen J. Tate
----------------------------------
Helen J. Tate, as trustee for the
Susan Katherine Tate Burrowbridge Trust
17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
/s/ Helen J. Tate
-----------------------------------
Helen J. Tate, as trustee for the
Elizabeth Tate Winters Trust
17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
(Signatures Continued on Next Page]
<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Ruth M. Davis
------------------------------
Name: Ruth M. Davis
Title: Director
10420 Little Patuxent Parkway
Suite 490
Columbia, MD 21044
Tel: 410-715-8732
Fax: 410-715-8735
/s/ Robert A. Eprile
-----------------------------------
Robert A. Eprile
c/o UTTC
1900 Market Street
Suite 701
Philadelphia, PA 19103
Tel: 215-988-3400
Fax: 215-988-3478
/s/ John A. Blohm
-----------------------------------
John A. Blohm
c/o UTTC
1900 Market Street
Suite 701
Philadelphia, PA 19103
Tel: 215-988-3400
Fax: 215-988-3478
/s/ Fredric W. Rittereiser
-----------------------------------
Fredric W. Rittereiser
c/o The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
(Signatures Continued on Next Page]
<PAGE>
THE DOVER GROUP, INC.
By: /s/ Fredric W. Rittereiser
------------------------------
Name: Fredric W. Rittereiser
Title: Chairman of the Board
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
/s/ F.E. Weimmer, Jr.
----------------------------------
F.E. Weimmer, Jr.
c/o The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
/s/ F.E. Weimmer, Sr.
----------------------------------
F.E. Weimmer, Sr.
c/o The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
/s/ F.E. Rittereiser, Sr.
----------------------------------
F.E. Rittereiser, Sr.
c/o The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
/s/ Thomas Rittereiser
----------------------------------
Thomas Rittereiser, as trustee for Alexis J.
Rittereiser, Amanda Weimmer and John
Weimmer
c/o The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Tel: 908-505-9300
Fax: 908-505-8540
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement"), dated as of October 22, 1996, is
by and between Raymond T. Tate, a resident of the State of Maryland (together
with his heirs and permitted assigns, "Tate"), and The Ashton Technology Group,
Inc., a Delaware corporation ("Ashton").
WHEREAS, Ashton is the owner of certain technology and rights relating
thereto; and
WHEREAS, Ashton is willing to grant to Tate and Tate desires to acquire
from Ashton a license to use such technology;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises set forth herein and for other good and valuable consideration, the
parties agree as follows:
1. Definitions. As used in this Agreement:
"Affiliate" means, with respect to a Person, any other Person controlled by
or, as of the date of this Agreement, controlling or under common control with,
such Person. "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, the holding of proxies,
by contract or otherwise.
"Field of Use" means any and all fields of use other than the Financial
Services Industry.
"Licensed Technology" means the technology described on Exhibit A hereto
employed by Ashton, utilizing CSI, Alliant TechSystems Inc. and Information
Security Systems Incorporated, as subcontractors, to develop the Ashton
Technology Encryption Devices ("ATED"), including the ATED Key Management
System, encryption software and crypto-server technology, but excluding all
trade and service names and trademarks and service marks associated therewith.
"Financial Market Participants" means any Person who participates, in any
capacity, in the Financial Markets, including, without limitation, investment
banking companies, broker dealers, investment companies, banks, commercial trust
companies, thrift institutions, savings and loan associations, mutual savings
banks and credit unions, life insurance companies, property and casualty
insurance companies, reinsurance companies, pension funds, and state and
government retirement funds.
"Financial Markets" means (A) all U.S. and foreign registered national
securities exchanges, the Nasdaq market systems, markets for securities,
physical commodities in commercially accepted bulk units, commodities and other
futures, derivatives, options, currencies and commercial paper, (B) clearing
corporations and depository trust companies, (C) wire transfer systems
including, without limitation, the Federal wire and S.W.I.F.T, and (D)
electronic market information systems, including, without limitation, Instinent,
Bloomberg, Investment Technology Group, Dow Jones, Telerate and Reuters.
"Financial Services Industry" means all U.S. and foreign Financial Markets
and Financial Market Participants to the extent, and only to the extent, such
Financial Markets and Financial Market Participants involve, execute or engage
in the trading, by electronic or other means, of securities, physical
commodities in commercially accepted bulk units, commodities and other futures,
derivatives, options, currencies and commercial paper. For example, the
definition of Financial Services Industry would not encompass a network
established by a company for communication among its branch offices. The
definition would, however, encompass a computer network used by the same company
to allow its pension administrator to execute trades on behalf of the company's
pension fund.
"Person" means any individual, corporation, partnership, limited liability
company or partnership, firm, joint venture, association, joint stock company,
trust, unincorporated organization, governmental entity or other entity or
organization.
2. Grant of License. Effective as of the Effective Date, Ashton hereby
grants to Tate, a perpetual, exclusive (subject to the provisions of Section 4
hereof) and worldwide license, at his own cost, to use, sublicense, reproduce,
and make derivative works and enhancements of, the Licensed Technology for any
purpose within the Field of Use. Neither Ashton nor its Subsidiaries nor Tate
shall have any present or future obligation to update, upgrade or modify the
Licensed Technology.
3. Transfer and Handling of Licensed Technology. (a) Upon written request
of Tate and at such place and time as reasonably requested by Tate, Ashton shall
provide Tate with one (1) copy of the Licensed Technology as it exists on the
date of transfer. To the extent reasonably practicable, upon transfer to Tate
all components of the Licensed Technology shall be stamped or marked as
"Confidential and Proprietary Information." The Licensed Technology and copies
thereof shall be kept in a locked and safe place at the principal offices of
Tate or other place as disclosed to Ashton in writing.
(b) Notwithstanding anything contained herein to the contrary, the Licensed
Technology is provided "AS-IS" and ASHTON DOES NOT MAKE NOR SHALL ASHTON BE
DEEMED TO HAVE MADE, AND ASHTON HEREBY EXPRESSLY DISCLAIMS, ANY WARRANTY,
EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, WORKMANSHIP, DESIGN, PATENT
INFRINGEMENT, COPYRIGHT INFRINGEMENT, OPERATION, MERCHANTABILITY, OR FITNESS FOR
USE OF THE LICENSED TECHNOLOGY OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED TECHNOLOGY. In no
event shall Ashton be liable to Tate, his Affiliates, permitted assigns or
sublicensees for lost profits, lost savings, or other special, indirect or
consequential damages arising out of any use or inability to use the Licensed
Technology, or for any claim against them by any other party.
4. License Fee. During the period beginning on the date of this Agreement
and ending four years thereafter, Tate shall pay to Ashton a cumulative license
fee equal to $100,000 (the "License Fee") in order to retain the exclusivity of
the license granted in Section 2. The License Fee shall be reduced by the total
amount of royalties paid to Ashton during such period pursuant to Section 6. If
(i) Tate fails to pay the License Fee when due or (ii) Raymond T. Tate dies
prior to paying the License Fee and his heirs or permitted assigns do not agree
in writing within three months of Raymond T. Tate's death to pay the License Fee
when due, in either case, Ashton shall have the right, effective immediately
upon default to license the Licensed Technology, on such terms and conditions as
Ashton shall determine, to any one or more persons for use in any field of use
including the Field of Use.
5. Right to Sublicense. Ashton hereby grants to Tate the right to grant
sublicenses to third parties to use the Licensed Technology in the Field of Use
on such terms and conditions as are consistent with this Agreement.
6. Royalty. In consideration of the license granted in Section 2, Tate
shall, or shall cause his Affiliates and permitted assigns under this Agreement,
if any, to pay to Ashton a perpetual royalty equal to 2% of the total gross
revenues earned by Tate, his Affiliates and permitted assigns under this
Agreement, if any, from use, maintenance or support of the Licensed Technology.
Such royalty shall be payable on an annual calendar year basis within 90 days
after the end of each calendar year. Royalty payments which are not timely made
shall bear interest at 10% per annum.
7. Records. Tate shall, and shall require his Affiliates, sublicensees and
permitted assigns under this Agreement to keep accurate financial accounts of
the gross revenues generated by use of the Licensed Technology in accordance
with generally accepted accounting principles. Tate shall and shall cause each
such Person to render a full statement (the "Royalty Statement") of the same in
writing to Ashton for each calendar quarter for so long as this Agreement
remains in effect. All Royalty Statements shall be accompanied by a certificate
signed by Tate, or an executive officer of Tate's Affiliates, sublicensees or
permitted assigns under this Agreement, as the case may be, which certificate
shall show in sufficient detail how the royalty amount was computed and state
that the Royalty Statement has been reviewed by qualified independent public
accountants. Ashton shall have the right during normal business hours to examine
all of the books and records of Tate, his Affiliates, sublicensees and permitted
assigns under this Agreement that are relevant to the determination of the
royalties for the purpose of verifying Royalty Statements and earned royalties.
8. Disclaimer of Ownership; Reservations. Tate hereby disclaims and waives
for himself and his Affiliates and permitted assigns under this Agreement any
ownership rights, title, patent rights, copyrights and intellectual property
rights to the Licensed Technology, and all such rights, if any, are hereby
transferred and assigned in perpetuity to Ashton. Ashton hereby reserves to
itself the right to use, sell and sublicense the Licensed Technology itself for
any purpose in the Financial Services Industry, which Tate agrees is exclusively
reserved to Ashton.
9. Improvements. Tate shall be the exclusive owner of all rights, title and
interest in and to any derivative works, enhancements, upgrades, improvements or
developments of or in the Licensed Technology that may be made or developed by
Tate after the Effective Date ("Improvements"); provided, however, that Tate
shall not use, sell or sublicense Improvements for any purpose in the Financial
Services Industry.
10. Enforcement. In the event that Tate or Ashton become aware that any
third party is or may be infringing or misappropriating any intellectual
property rights in the Licensed Technology, each shall promptly notify the other
in writing of such infringement or misappropriation. Either party may, at its
option, include in such notification a demand that the other party take
appropriate steps to enforce the rights in the Licensed Technology against such
third parties. If either party does not take such steps within ten calendar days
after receipt of such a demand, the other party shall have the right (but not an
obligation), at its own expense, to enforce the rights in the Licensed
Technology against third parties who are or may be infringing or
misappropriating any intellectual property rights in the Licensed Technology.
Tate's rights of enforcement of the Licensed Technology shall be the same as if
Tate were a joint owner of all rights, title and interest in and to the Licensed
Technology. Ashton and Tate shall each provide reasonable cooperation and
assistance in connection with any enforcement of the Licensed Technology by
either party, including joining in any litigation or proceedings, at their own
cost, to the extent reasonably required for enforcement of Ashton and Tate's
respective rights in the Licensed Technology against third parties. In the event
that either party takes action against any third party with respect to the
Licensed Technology (including without limitation the commencement of litigation
or licensing or settlement discussions), any and all recovery of damages,
monetary settlements or licensing or other revenues shall belong exclusively to
the party bringing such action, unless the other party has participated in the
defense of the Licensed Technology in which case such recoveries shall go first
to each party in the amount of such party's reasonable documented legal fees and
other expenses directly connected with its participation in the defense of the
Licensed Technology and then to Ashton to the extent that the infringement or
misappropriation was not within the Field of Use and to Tate to the extent that
the infringement or misappropriation was within the Field of Use, subject in the
case of recoveries to Tate in excess of Tate's reasonable documented legal fees
and other expenses, to Tate's royalty obligations under Section 6. Neither
Ashton nor Tate shall enter into any settlement or other agreement limiting the
other's rights in the Licensed Technology without the prior written consent of
the other party to such limitation.
11. Confidentiality and Non-Disclosure. Tate shall, and shall cause his
Affiliates, permitted assigns and sublicensees to maintain the confidential and
proprietary status of the Licensed Technology and not use the Licensed
Technology for any purpose other than as provided in this Agreement. Tate agrees
that the Licensed Technology will not be disclosed to third parties and will not
be accessible to anyone without a need to know, or use, the Licensed Technology
to give effect to the purposes of this Agreement. Tate shall notify each
employee to whom access is given or disclosure is made with respect to the
Licensed Technology that such disclosure is made in confidence and shall be kept
confidential. Tate shall enter into appropriate agreements with his employees to
protect the confidentiality of the Licensed Technology. Tate will not disclose
the Licensed Technology to independent contractors and consultants without first
obtaining appropriate confidential disclosure agreements, and will otherwise use
at least the same degree of care used to protect his own confidential
information.
12. Government Approvals. It is understood and agreed that the grant of a
license hereunder may be limited by and subject to the export license
requirements of the United States Government respecting all intellectual
property rights in and to the Licensed Technology and encryption computer
software and hardware systems generally. Tate agrees to abide by and comply with
all existing and future laws and regulations which may be required to obtain
export licenses pursuant to the laws and regulations of the United States
Government respecting the Licensed Technology. Tate agrees to indemnify and hold
Ashton harmless from any breach of this obligation in connection with Licensed
Technology including reasonable attorneys' fees.
13. Miscellaneous.
13.1 Representations and Warranties. Each party represents and warrants to
the other party that (i) the execution, delivery and performance of this
Agreement has been duly authorized and all actions necessary for the due
execution, delivery and performance of this Agreement have been taken, (ii) this
Agreement constitutes the legal, valid and binding obligation of the parties
enforceable against each party in accordance with its terms, (iii) it has been
represented by legal counsel of its choosing, and (iv) this Agreement has been
executed and delivered as its own free act and deed and not as the result of
duress by any other party hereto.
13.2 Further Assurances. Each party agrees from time to time, at the
request of any other party to execute such documents or ratify such agreements
as may be reasonably necessary to effect the agreements contained herein.
13.3 Modification. This Agreement shall not be modified or amended except
by an agreement in writing executed by all parties hereto.
13.4 Applicable Law. This Agreement shall be governed under the law of the
State of Delaware without regard to the principles of conflicts of law thereof.
13.5 Assignment. Ashton may assign or otherwise transfer any of its rights
and interests, or delegate any of its respective obligations hereunder without
the prior written consent of Tate. Tate shall not assign or otherwise transfer
any of his rights and interests, nor delegate any of his respective obligations
hereunder without the prior written consent of Ashton; provided, however, that
Tate may fully assign his rights and interests, and delegate his obligations
hereunder, effective upon written notice thereof, to any Affiliate of Tate if
such Affiliate assumes all of the obligations of Tate hereunder, agrees to be
bound by the terms of this Agreement and this Agreement remains binding upon
Tate.
13.6 Entire Agreement. This Agreement contains the entire and final
agreement between the parties with respect to the subject matter hereof, and no
oral statements, assumptions or representations or prior written matter not
contained or referred to in this instrument shall have any force or effect.
13.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be one and the same instrument.
13.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
13.9 Headings. The headings used in this Agreement are for convenience only
and shall not be deemed part of the agreements of the parties set forth herein.
13.10 Waiver. No consent or waiver, express or implied, by any party to or
of any breach or default by another party in performance by the breaching party
of its obligations under this Agreement shall be deemed or construed to be a
consent or waiver to or of any breach or default by the breaching party in the
performance by such breaching party of any other obligations of such breaching
party under this Agreement. Failure on the part of any party to object to or
complain of any act or failure to act of any of the other parties or to declare
any of the other parties in default shall not constitute a waiver of any right
or remedy or the ability to object or complain or to declare any default at any
time in the future.
13.11 Specific Performance. The parties agree that any breach of this
Agreement by any party would result in irreparable harm for which the other
parties would not have an adequate remedy at law and that the parties shall each
be entitled to injunctive and other equitable relief to enforce specifically the
terms and provisions hereof, in addition to any other rights or remedies
available to such parties.
13.12 Submission to Jurisdiction. Any judicial proceeding brought with
respect to this Agreement must be brought in any United States District Court
(or if such court lacks jurisdiction, any state court) sitting in Wilmington,
Delaware and by execution and delivery of this Agreement, each signatory hereto
(i) hereby submits to and accepts, generally and unconditionally, the exclusive
jurisdiction of such courts and any related appellate court, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement and (ii) irrevocably waives any objection it may now or hereafter have
as to the venue of any such suit, action or proceeding brought in such a court
or that such court is an inconvenient forum.
13.13 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
parties shall be in writing and delivered in person or by courier or by
facsimile transmission to the address for notices set forth next to each party's
name on the signature page hereto or to such other place and with such other
copies as either party may designate as to itself by written notice to the
others. Any failure by any party to deliver copies of any notice shall not, in
itself, affect the validity of such notice if otherwise properly made to the
other party.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by parties, effective as of
the day and year first above written.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Albert J. Baciocco, Jr.
---------------------------------
Name: Albert J. Baciocco, Jr.
Title: Director
10420 Little Patuxent Parkway
Suite 490
Columbia, MD 21044
Tel: 410-715-8732
Fax: 410-715-8735
RAYMOND T. TATE
/s/ Raymond T. Tate
---------------------------------
Address for Notices: 17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), dated as of October 22, 1996,
is by and between Raymond T. Tate, a resident of the State of Maryland ("Tate"),
and The Ashton Technology Group, Inc., a Delaware corporation ("Ashton").
WHEREAS, Tate is (i) the President, Chairman of the Board, Chief Executive
Officer, Treasurer, and Principal Financial and Accounting Officer of Ashton,
(ii) a member of the Board of Directors and the Executive Vice President,
Principal Financial Officer and Secretary of UTTC and (iii) Chariman of the
Board of CSI;
WHEREAS, Tate and Ashton are parties to an Employment Agreement effective
January 1, 1996 (the "Employment Agreement"); and
WHEREAS, Tate and Ashton and its Subsidiaries wish consensually to
terminate the Employment Agreement and sever the employment relationship between
Tate and Ashton and its Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
1. Definitions. As used in this Agreement:
(i) "Affiliate" means, with respect to a Person, any other Person
controlled by or, as of the date of this Agreement, controlling or under common
control with, such Person. "Control" (including the terms "controlling",
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, the
holding of proxies, by contract or otherwise.
(ii) "Financial Market Participants" means any Person who participates, in
any capacity, in the Financial Markets, including, without limitation,
investment banking companies, broker dealers, investment companies, banks,
commercial trust companies, thrift institutions, savings and loan associations,
mutual savings banks and credit unions, life insurance companies, property and
casualty insurance companies, reinsurance companies, pension funds, and state
and government retirement funds.
(iii) "Financial Markets" means (A) all U.S. and foreign registered
national securities exchanges, the Nasdaq market systems, markets for
securities, physical commodities in commercially accepted bulk units,
commodities and other futures, derivatives, options, currencies and commercial
paper, (B) clearing corporations and depository trust companies, (C) wire
transfer systems including, without limitation, the Federal wire and S.W.I.F.T,
and (D) electronic market information systems, including, without limitation,
Instinent, Bloomberg, Investment Technology Group, Dow Jones, Telerate and
Reuters.
(iv) "Financial Services Industry" means all U.S. and foreign Financial
Markets and Financial Market Participants to the extent, and only to the extent,
such Financial Markets and Financial Market Participants involve, execute or
engage in the trading, by electronic or other means, of securities, physical
commodities in commercially accepted bulk units, commodities and other futures,
derivatives, options, currencies and commercial paper.
(v) "License Agreement" means the License Agreement of even date herewith
between Tate and Ashton.
(vi) "Licensed Technology" shall have the meaning set forth in the License
Agreement.
(vii) "Person" means any individual, corporation, partnership, limited
liability company or partnership, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental entity or other entity
or organization.
(viii) "Subsidiaries" means Universal Trading Technologies Corporation and
Computer Science Innovations, Inc. and each corporation as to which the Company
directly or indirectly owns a majority of the outstanding shares of stock or
other ownership interests having voting power under ordinary circumstances to
elect a majority of directors of such corporation or other Persons performing
similar functions for such entity.
2. Effective Date. This Agreement shall be executed and become effective on
the date (the "Effective Date") of the closing of the transactions contemplated
by that certain Settlement Agreement dated October 22, 1996 by and among Tate,
Helen J. Tate, as trustee for the Andrew Patrick Tate Trust, Helen J. Tate, as
trustee for the Susan Katherine Tate Burrowbridge Trust and Helen J. Tate, as
trustee for the Elizabeth Tate Winters Trust (collectively the "Tate Trusts"),
Robert A. Eprile, John A. Blohm, Fredric W. Rittereiser, The Dover Group, Inc.,
F. E. Weimmer, Jr., F. E. Weimmer, Sr., F.E. Rittereiser, Sr., and Tom
Rittereiser as trustee for Alexis L. Rittereiser, Amanda Weimmer and John
Weimmer (the "Settlement Agreement").
3. Termination of Employment Agreement. As of the Effective Date, the
Employment Agreement shall be deemed terminated and shall have no further force
or effect. Tate and Ashton agree that there are no existing defaults by either
party under the Employment Agreement and that, as of the Effective Date, each
party had fully performed all of its obligations to the other party under the
Employment Agreement. Without limiting the effect of the foregoing two
sentences, Ashton specifically agrees that, as of the Effective Date, except as
otherwise expressly provided in this Agreement, all of the restrictions on Tate
under the Employment Agreement shall be terminated.
4. Resignations and Termination of Existing Employment Relationship. As of
the Effective Date, Tate shall be deemed to have resigned from all corporate
offices and the Board of Directors of Ashton, and from all offices and
directorships of Ashton's Subsidiaries, joint ventures, and affiliated companies
and organizations. Except for purposes of the matters set forth in Sections 6, 7
and 8 hereof, Tate's employment by Ashton shall be deemed to have terminated as
of 5:00 p.m. on the Effective Date.
5. Corporate Records and Bank Accounts. Immediately after the Effective
Date, Ashton shall take such steps as may be necessary to (a) reflect in the
corporate records of Ashton, its Subsidiaries, joint ventures, and affiliated
companies and organizations that Tate has resigned as an officer and director of
Ashton and as an officer and director of Ashton's Subsidiaries, joint ventures,
and affiliated companies and organizations, and (b) remove Tate and his family
members, if any, as an authorized signatory on all corporate bank accounts.
6. Consulting Compensation. Ashton shall pay Tate (or, in the event of his
death, his estate) during the period from the Effective Date through December
31, 1996, $40,000 , in substantially equal bi-weekly payments, with Federal and
state wage-type withholding deductions in accordance with applicable law and
Tate's elections. Ashton shall pay to Raymond Tate Associates, Inc. during the
period from the Effective Date through December 31, 1998, $120,000 per annum, in
substantially equal bi-weekly payments.
7. Consultation. During the period from the Effective Date until December
31, 1998, Ashton hereby retains Tate to consult with CSI, such consultations to
be at times reasonably convenient to both Tate and CSI; provided, however, that
Tate's consultation obligations hereunder shall not require more than five hours
per week of Tate's time. Unless otherwise agreed by the parties hereto, such
consultations shall not be deemed to involve a transfer of any intellectual
property or intangible property rights to Ashton or CSI. Ashton shall reimburse
Tate for reasonable documented expenses incurred in connection with his
consultation with CSI during the period from the Effective Date through December
31, 1998.
8. Continuing Role in CSI. As of the Effective Date, Ashton shall name Tate
Chairman Emeritus of the Board of Directors of CSI.
9. Non-Competition and Non-Solicitation. (a) Except with the prior written
consent of Ashton, Tate shall not, during the period ending December 31, 1998,
directly or indirectly manage, operate, control, be employed by, participate in,
invest in, or be connected in any manner with, the management, operation,
ownership or control of any business or venture to the extent such business or
venture competes with products or services of Ashton in the Financial Services
Industry, provided that nothing herein shall prohibit Tate from owning up to 5%
of the outstanding voting securities of any issuer the securities of which are
listed or traded on a U.S. national stock exchange, the NASDAQ system, or a
comparable foreign exchange or system.
(b) During the period ending December 31, 1998, Tate and his Affiliates
shall not:
(i) Hire any employee of the Company or any Person who was an
employee of the Company within the 6-month period prior to the
Closing Date except employees (other than Jeffrey Sussman) who
work at the Company's headquarters in Maryland;
(ii) Hire or enter into any consulting arrangement, joint venture or
other business relationship with any Person, or attempt to do or
assist any other Person in entering into or attempting to enter
into any of the foregoing with any Person, for the purpose of
developing, marketing, producing, creating, directly or
indirectly, products or services for use in the Financial
Services Industry; or
(iii) Solicit the business of either (i) any customer of the Company
or its Subsidiaries to whom Tate or the Company or its
Subsidiaries rendered services during either (x) the 12-month
period prior to the Closing Date or (y) 12-month period prior to
termination of this Agreement (a "Specific Customer"); or (ii)
any Person whose business the Company or Tate solicited during
either (x) the 6-month period prior to the Closing Date or (y)
the 6-month period prior to the termination of this Agreement (a
"Specific Contact"), in either case for the purpose of
developing, marketing, producing, creating, directly or
indirectly, products or services for use in the Financial
Services Industry.
10. Other Matters.
(a) Tate has cancelled the Ashton American Express account heretofore
maintained for the benefit of Tate and other employees of Ashton and, following
the Effective Date, will not incur any further charges under such American
Express card.
(b) The parties shall use their best efforts to cause the automobile lease
under which Ashton is the lessee and which relates to the jeep driven by Mr.
Tate as an employee of Ashton (the "Automobile Lease") to be transferred to Tate
such that Tate shall be the lessee thereunder and Ashton shall be released from
its obligations under such lease. Ashton shall pay any transfer fee payable
under the Automobile Lease up to $150 and, if Ashton is released from the
Automobile Lease and Tate assumes such lease, Ashton shall pay to Tate an
automobile allowance at the rate of $500 per month during the period from the
Effective Date through December 31, 1998. If Ashton is not released from the
Automobile Lease, use of the jeep and payment of all amounts due under the
Automobile Lease shall be as agreed by Tate and Ashton.
(c) Tate shall have the right to purchase individual items of furniture and
equipment owned by Ashton and located at Ashton's headquarters office space in
Columbia, Maryland, at a price equal to the lower of the book value or appraised
value of such furniture and equipment. Such furniture and equipment shall be
specified by Tate in writing on or before the Effective Date. At Tate's option,
the amounts due from Tate to Ashton in respect of such furniture and equipment
may be offset against Ashton's obligations to Tate under Section 6 hereof.
Otherwise, Tate shall pay Ashton the purchase price of such furniture and
equipment within 30 days after agreement as to the price thereof.
11. Indemnification and Directors and Officers Insurance Coverage.
(a) Ashton acknowledges that its By-Laws include provisions designed to
provide to former officers and directors indemnification in respect of
threatened and commenced actions, suits and proceedings in which an individual
is a party or is threatened to be made a party by reason of the fact that he is
or was an officer or director of Ashton or its Subsidiaries. Ashton shall, and
shall cause its Subsidiaries to, continue to provide indemnification to Tate
under such provisions to the maximum extent permitted by applicable law. Ashton
shall provide indemnification to Tate only as authorized in a specific case upon
a determination by Ashton or a court of competent jurisdiction that
indemnification of Tate is proper in the circumstances because he has met the
applicable standard of conduct under the Delaware General Corporation Law (the
"DGCL"). Tate shall be entitled to mandatory advancement of expenses (including
attorneys' fees) as contemplated by Section 145(e) of the DGCL in advance of a
final determination as to whether Tate is entitled to be indemnified by Ashton;
provided, however, that Tate hereby agrees to repay any such advanced expenses
if it shall ultimately be determined by a court of competent jurisdiction that
Tate is not entitled to be indemnified by Ashton as authorized by Section 145(e)
of the DGCL.
(b) Following the Effective Date, Ashton shall continue to maintain its
existing directors and officers liability insurance policies in effect in at
least the same amounts and against the same risks that are in effect as of the
Effective Date. If, for any reason, Ashton shall not continue to have in effect
directors and officers liability insurance coverage, on terms substantially
comparable to those presently in effect, Ashton shall provide Tate with written
notice of the reduction, cancellation, nonrenewal or other modification of such
coverage not less than 20 days prior to the effectiveness of such reduction,
cancellation, nonrenewal or other modification.
12. Proprietary Information and Business and Personal Property.
Tate hereby disclaims and waives for himself and his Affiliates any
ownership rights or title to, and will not directly or indirectly disclose, any
confidential records, information, documents, data, formulae, specifications,
know-how, technology, intellectual property, trademarks, trade names, service
marks, copyrights, patents, trade secrets and other intangible rights owned by
Ashton and its Subsidiaries, or to the use of any such information, except
pursuant to a valid court order, subpoena or discovery request (and in the case
of such disclosure Tate will provide Ashton with written notice of the same).
The immediately preceding sentence shall not apply to information: (i) related
to the Licensed Technology; (ii) disclosure of which is required by law or by
process lawfully issued; (iii) which has been disclosed to Tate or to a third
party by a person not under a duty of confidentiality with respect to that
information; or (iv) which later enters the public domain through no fault or
breach of duty by Tate.
13. Confidentiality. Except as required by law, pursuant to a valid
subpoena or with the prior consultation and prior consent of the parties hereto,
no party to this Agreement or any Person acting for or on their behalf, shall
directly or indirectly make any written or oral statement publicly or privately
to any Person if such statement relates to or concerns (i) this Agreement, (ii)
any matter related to this Agreement, (iii) the management, conduct or affairs
of the Company, its Subsidiaries, Tate or any of the Group Members, (iv) the
relationship by and among the parties, or (v) unless expressly directed by the
Company's Board of Directors, the relationship of the Company or its
Subsidiaries with any third party. Notwithstanding the foregoing, a party to
this Agreement may discuss any of the foregoing privately with (a) a member of
such party's immediate family or (b) directors, officers. employees or auditors
of the Company or its Subsidiaries (each an "Authorized Person") if, and only
if, the Authorized Person agrees to be bound by the terms of this Section 13. If
an Authorized Person breaches the terms of this Section 13, the party to this
Agreement who discussed the prohibited matters with the Authorized Person shall
be liable for the Authorized Person's breach of this Section 13. Anything in
this Section 13 to the contrary notwithstanding, the parties agree that a press
release in the form of Exhibit C to the Settlement Agreement shall be issued by
the Company on the Closing Date.
14. No Admissions. Nothing contained in this Agreement shall be considered
an admission by either party of any wrongdoing under any Federal, state or local
statute, public policy, tort law, contract law, common law or otherwise.
15. No Third Party Claims. Each party represents and warrants that no other
person or entity has, or to the best knowledge of such party claims, any
interest in any potential claims, demands, causes of action, obligations,
damages or suits released pursuant to this Agreement; that it or he is the owner
of all other claims, demands, causes of action, obligations, damages or suits so
released; that it or he has full and complete authority to execute this
Agreement; and that it or he has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation or
liability subject to this Agreement.
16. Expenses. Each party shall pay its own costs incident to the
negotiation, preparation, performance, execution, and enforcement of this
Agreement, and all fees and expenses of its or his counsel, accountants, and
other consultants, advisors and representatives for all activities of such
persons undertaken in connection with this Agreement.
17. No Third Party Beneficiaries. Except as expressly stated herein, the
parties do not intend to make any person or entity who is not a party to this
Agreement a beneficiary hereof, and this Agreement should not be construed as
being made for the benefit of any person or entity not expressly provided for
herein.
18. Representations and Warranties. Each party represents and warrants to
the other party that (a) the execution, delivery and performance of this
Agreement has been duly authorized and all actions necessary for the due
execution, delivery and performance of this Agreement have been taken, and (b)
this Agreement constitutes the legal, valid and binding obligations of the party
in question enforceable against such party in accordance with its terms.
19. Advice of Counsel. The parties acknowledge that they have been advised
by competent legal counsel in connection with the execution of this Agreement,
that they have read each and every paragraph of this Agreement and that they
understand their respective rights and obligations. Tate declares that he has
completely read this Agreement, fully understands its terms and contents, and
freely, voluntarily and without coercion enters into this Agreement.
20. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and all prior
negotiations and representations are merged herein or replaced hereby.
21. Severability. If any provision of this Agreement is held illegal,
invalid or unenforceable, such illegality, invalidity, or unenforceability shall
not affect any other provision hereof. Any such provision and the remainder of
this Agreement shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable the remaining provisions hereof.
22. Governing Law. This Agreement shall be construed and enforced in
accordance with the law of the State of Delaware.
23. Effectiveness. This Agreement has been executed by or on behalf of Tate
and Ashton on the dates shown opposite their respective signatures below, and
this Agreement is effective as of the Effective Date.
24. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
on the Effective Date.
<PAGE>
IN WITNESS WHEREOF, Raymond T. Tate and The Ashton Technology Group, Inc.
have executed this Agreement on the date first written above.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Ruth M. Davis
------------------------------------
Name: Ruth M. Davis
Title: Director
10420 Little Patuxent Parkway
Suite 490
Columbia, MD 21044
Tel: 410-715-8732
Fax: 410-715-8735
/s/ Raymond T. Tate
---------------------------------------
Raymond T. Tate
17929 Pond Road
Ashton, Maryland 20861
Tel: 301-774-7714
Fax: 301-774-7131
