U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(MarkOne)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996.
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission file number: 333182
The Ashton Technology Group, Inc.
Delaware 22-6650372
(State of incorporation) (IRS Employer
Identification No.)
1900 Market Street, Suite 701
Philadelphia, PA 19103
(Address of principal executive offices)
(215) 751-1900
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of common stock,
as of December 31, 1996: 7,562,500.
<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC.
INDEX - FORM 10-QSB
December 31, 1996
PART I - FINANCIAL INFORMATION.................................................
ITEM 1. FINANCIAL STATEMENTS...................................................
Consolidated Balance Sheets.............................................
As of December 31, 1996 and March 31, 1996
Consolidated Statements of Operations...................................
For the Three and Nine Months Ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows...................................
For the Nine Months Ended December 31, 1996 and 1995
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS...........................
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................
PART II - OTHER INFORMATION....................................................
Item 5. Other Information...................................................
Item 6. Exhibits and Reports on Form 8-K....................................
SIGNATURES.....................................................................
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 1996 and March 31, 1996
<TABLE>
<CAPTION>
ASSETS December 31, 1996 March 31, 1996
----------------- --------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,416,032 $ 31,021
Contracts receivable, net of allowance for doubtful accounts 1,197,681 --
Notes receivable from stockholders 91,448 --
Prepayments and other current assets 171,580 --
--------------- ---------------
Total Current Assets 2,876,741 31,021
Property and equipment, net 963,455 21,359
Deferred offering costs 1,960 614,856
Investment in unconsolidated investee 100,000 708,844
Goodwill, net 582,691 --
Other assets 70,016 27,590
=============== ===============
Total Assets $ 4,594,863 $ 1,403,670
=============== ===============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<S> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses $ 1,236,476 $ 1,067,429
Billings in excess of costs 205,861 --
Notes payable to stockholders -- 1,244,771
Total current liabilities 1,442,337 2,312,200
Long-term debt -- 650,000
Total liabilities 1,442,337 2,962,200
Minority Interest 412,610 --
Commitments and contingencies
Stockholders' Equity (Deficiency):
Preferred stock - $.01 par value -- --
Common stock - $.01 par value 75,625 52,900
Warrants outstanding, exercise price of $5.85 618,125 --
Additional paid-in capital 9,898,192 1,341,109
Treasury stock -- (300,000)
Accumulated deficit (7,852,026) (2,652,539)
Total stockholders' equity (deficiency) 2,739,916 (1,558,530)
Total Liabilities and
Stockholders' Equity (Deficiency) $ 4,594,863 $ 1,403,670
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three and Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------ -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 1,501,244 $ -- $ 4,663,332 $ --
------------ --------- ----------- ------------
Costs and expenses:
Cost of revenues 1,183,388 -- 3,592,156 --
Development costs 668,518 1,355,893 2,643,462 1,355,893
Selling, general and administrative expenses 815,816 143,541 2,692,935 300,153
----------- --------- ----------- -----------
Total costs and expenses 2,667,722 1,499,434 8,928,553 1,656,046
----------- --------- ----------- -----------
Loss from operations (1,166,478) (1,499,434) (4,265,221) (1,656,046)
Other costs and revenues:
Cost of corporate restructuring (702,678) -- (702,678) --
Interest income (expense), net 15,105 (41,092) 113,865 (51,448)
Equity in earnings of unconsolidated
subsidiary -- 31,616 -- 31,616
Minority interest in earnings of subsidiary (37,085) -- (118,153) --
----------- ----------- ----------- -----------
Loss before provision for income taxes (1,891,136) (1,508,910) (4,972,187) (1,675,878)
Provision for income taxes 155,800 -- 227,300 --
----------- ----------- ----------- --------------
Net loss $ $ $ (1,675,878)
==============
(2,046,936) (1,508,910) $(5,199,487)
========== ========== ===========
Net loss per common share $ $ (.29) $ $ (.32)
=========== ===============
(.27) (.73)
=========== ===========
Weighted average number of common shares
outstanding 7,562,500 5,290,000 7,150,416 5,290,000
=========== ========== ============ =========
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
--------------------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (5,199,487) $ (1,675,878)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities, net of acquired
business in 1996:
Depreciation and amortization 253,827 27,910
Development costs -- 1,355,893
Equity in earnings of unconsolidated investee -- (31,616)
Changes in operating asset and liabilities
Increase in contracts receivable, net (229,469) --
Increase in prepayments and other (236,094) (17,152)
(Decrease) Increase in accounts payable and accrued (250,440) 48,741
expenses
Increase in billings in excess of costs 194,043 --
---------------- ---------------
Net cash (used in) provided by operating (5,467,620) (292,102)
activities
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (1,012,917) (19,388)
Cash paid for acquisition of CSI(R), net of
cash acquired (512,012) (679,024)
Increase in minority interest 118,153 --
---------------- ---------------
Net cash used in investing activities (1,406,776) (698,412)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance costs for private placement (1,960) (67,340)
Issuance costs for initial public offering (282,001) (164,500)
Proceeds from initial public offering 10,394,709 --
Proceeds from notes payable 250,000 1,340,346
Collection of receivable in connection with
issuance of common stock -- 24,332
Payment of notes payable (2,101,341) --
---------------
----------------
Net cash provided by financing activities 8,259,407 1,132,838
---------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,385,011 142,324
Cash and cash equivalents, beginning of period 31,021 --
---------------- ---------------
Cash and cash equivalents, end of period $ 1,416,032 $ 142,324
================ ===============
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION1. DESCRIPTION OF BUSINESS
AND BASIS OF PRESENTATION
The accompanying consolidated financial statements for the three and nine
months ended December 31, 1996 include the accounts of The Ashton Technology
Group, Inc. ("Ashton") and its subsidiaries, Universal Trading Technologies
Corporation ("UTTC") and Computer Science Innovations, Inc. ("CSI(R)")
(collectively, the "Company"). The financial statements for the three and nine
months ended December 31, 1995 represent the accounts of Ashton. On October 25,
1995, Ashton acquired 80% of the common stock of UTTC and on May 2, 1996, Ashton
purchased additional shares of CSI(R) which enabled the Company to own 80% of
both classes of CSI's(R) common stock. These business combinations have been
accounted for as a purchase. Prior to September 30, 1995, Ashton had an
investment in CSI(R) that was accounted for using the equity method.
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial statements and in accordance with the
instructions for Form 10-QSB. Accordingly, they do not contain all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the
accompanying unaudited consolidated financial statements have been prepared on
the same basis as the audited statements and include all adjustments, consisting
only of normal recurring adjustments, which are necessary for a fair statement
of the results of the interim periods presented. These financial statements
should be read in conjunction with the footnotes contained in the Company's
10-KSB for the fiscal year ended March 31, 1996.
The preparation of interim financial statements, in conformity with
generally accepted accounting principles, also requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities; the disclosure of contingent assets and liabilities at the date of
the interim statements; and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. INITIAL PUBLIC OFFERING OF STOCK
On May 2, 1996, Ashton's previously filed Registration Statement on Form
SB-2 became effective and the Company completed an initial public offering (the
"Offering") of 2,150,000 shares of common stock at an offering price of $4.50
per share and 2,150,000 warrants at $.25 per warrant. The common stock and the
warrants are separately tradable. The Company granted to the underwriters the
right to exercise over-allotment options of 322,500 shares of common stock
and/or 322,500 warrants at the public offering rate, within 45 days of May 2,
1996. On May 7, 1996, the underwriters exercised the over-allotment options and
offered an additional 322,500 shares of common stock and 322,500 warrants to the
public at $4.50 per share and $.25 per warrant. As a result of the initial
public offering, the Company received net proceeds of approximately $10,395,000
($9,498,000 after out of pocket expenses associated with the offering) and
increased its total shares of common stock and warrants outstanding by 2,472,500
each. The net proceeds from the Offering were used to repay all notes payable to
stockholders, long-term debt and related accrued interest in existence through
the date of the Offering and provide working capital. The net proceeds were also
used to purchase the additional shares of CSI(R) stock and provide the Company
with additional working capital.
Concurrent with the initial public offering, the Company registered 760,000
additional warrants to purchase common stock. The warrants were issuable
automatically upon the completion of the offering in exchange for the already
existing outstanding common stock shares.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIRD QUARTER OF FISCAL 1997 COMPARED TO THIRD QUARTER OF FISCAL
1996.THIRD QUARTER OF FISCAL 1997 COMPARED TO THIRD QUARTER OF FISCAL
1996.
The results of operations for the third quarter of fiscal 1997 are not
comparable to the third quarter of fiscal 1996 because all of the accounts in
fiscal 1996 were the accounts of Ashton only, whereas fiscal 1997 accounts also
include Ashton's subsidiaries, Universal Trading Technologies Corporation (UTTC)
and Computer Science Innovations (CSI(R)) (See Footnote 1. "Description of
Business and Basis of Presentation".)
The Company had revenues of $1,501,244 for the quarter ended December 31,
1996 and revenues of $4,663,332 for the nine months ended December 31, 1996. All
of the Company's revenues, and the related "cost of revenues", were generated by
the Company's CSI(R)subsidiary.
During the three months ended December 31, 1996, the Company incurred a net
loss of $2,046,936 and for the nine months ended December 31, 1996, the Company
incurred a net loss of $5,199,487. The losses for the three months ended
December 31, 1996, include the cost of corporate restructuring related to the
resignation of Raymond T. Tate as Chairman, President and C.E.O of Ashton; the
subsequent closing of Ashton's corporate offices in Columbia, Maryland; the
transfer of all corporate functions to Philadelphia; and the termination of the
eight person staff in Maryland. (None of these positions will be replaced except
the financial control function.)
Cost of Corporate Restructuring
On September 6, 1996, Robert A. Eprile filed an amended Schedule 13D
relating to his ownership of common stock of Ashton. On September 13, 1996, a
group filed a Schedule 13D, which was amended on September 17, 1996. This group
was comprised of Robert A. Eprile, Fredric W. Rittereiser, John A. Blohm, The
Dover Group, Inc. and affiliates of the Dover Group (collectively, the "Group
Members"). The Group Members were concerned that the management of Ashton was
not taking appropriate measures to protect the interests of Ashton's
stockholders and to enhance the value of the stockholders' investments in
Ashton. Through legal counsel, the Group Members commenced discussions with
Ashton's legal counsel and counsel for Raymond T. Tate. These discussions led to
a resolution of the Group Members' differences with Raymond T. Tate and to
Tate's resignation as Chairman, President, and CEO of Ashton (see "Settlement
Agreement" below.)
The Company has recorded a charge of $702,678 for corporate restructuring
costs. This charge includes legal fees, severance pay, relocation costs and
termination payments.
Development Costs
During the three months ended December 31, 1996, the Company incurred
$668,518 of development costs on a consolidated basis. Ashton incurred costs of
$316,507 for the ATED encryption device. UTTC incurred costs of $352,011 for the
development of the UTSTM system which will be an electronic pricing and
transaction facility for trading exchange listed and NASDAQ NMS securities in
conjunction with the Philadelphia Stock Exchange.
Capital Equipment
During the three months ended December 31, 1996, the Company spent $124,285
for the acquisition of equipment, primarily computer hardware and software for
the UTSTM system.
Selling, General and Administrative Expenses
During the three months ended December 31, 1996, the Company incurred
$815,816 of Selling, General and Administrative (SG&A) expenses. On a per
subsidiary basis, Ashton incurred $314,681 of SG&A expense, UTTC $397,522 and
CSI $103,613. The largest component of Ashton and UTTC's SG&A expenses was labor
costs which amounted to $88,997 for Ashton and $184,374 for UTTC.
Liquidity
At December 31, 1996, the Company had cash and cash equivalents of
$1,416,032. Management believes that the Company has sufficient resources to
complete its initial development program for ATEDs and the UTS system. To
provide financing for the development of new transactional products, marketing
and working capital UTTC commenced a private placement on December 26, 1996. See
"Subsequent Events." There can be no assurance that the UTTC private placement
will not be amended or terminated, or that any securities will be sold pursuant
thereto. In addition to the UTTC private placement, the Company is continuing to
explore other financing alternatives, including borrowings and further debt and
equity offerings, which management believes are currently available to the
Company. However, there can be no assurance that the Company will be able to
raise additional financing on favorable terms, if at all, or that it will be
able to do so on a timely basis. There can be no assurance that the Company's
actual cash requirements will not exceed its anticipated cash requirements or
that additional cash requirements or additional financing will not be required.
Settlement Agreement
On October 22, 1996, The Ashton Technology Group, Inc. (the "Company")
entered into a settlement agreement (the "Settlement Agreement") with the Group
Members, Raymond T. Tate and Helen J. Tate as trustee for the Tate Trusts. The
Settlement Agreement resolved the differences among the parties thereto related
to the management and direction of the Company. Pursuant to the Settlement
Agreement, on October 22, 1996, Mr. Tate resigned from his position as director
of the Company and its subsidiaries and all officer positions held by him in the
Company and its subsidiaries. Pursuant to the Settlement Agreement, on October
22, 1996, the Board of Directors of the Company elected Fred S. Weingard,
Executive Vice President for Technology and Advanced Computer Systems of the
Company's subsidiary Universal Trading Technologies Corporation, to fill the
vacancy on the Company's Board of Directors created by the resignation of Mr.
Tate.
On October 22, 1996, after closing the transactions contemplated by the
Settlement Agreement, the newly-constituted Board of Directors of the Company
convened a meeting and (i) elected Robert A. Eprile as Chairman of the Board and
Treasurer of the Company; (ii) appointed Mr. Rittereiser President and Chief
Executive Officer of the Company and Chairman of the Board of UTTC.
On October 23, 1996, Vice Admiral (U.S. Navy retired) Albert J. Baciocco,
Jr. resigned from his positions as a director of the Company and its subsidiary,
Computer Science Innovations, Inc. On October 25, 1996, Dr. Ruth M. Davis also
resigned her position as a director of the Company. The Board of Directors has
not filled the vacancies created by such resignations.
The Settlement Agreement and other agreements thereto were all attached as
Exhibits to the Form 8-K of the Company filed on October 28, 1996.
Subsequent Events
UTTC has commenced a private placement offering to raise a minimum of
$3,000,000 and a maximum of $4,500,000 from the sale of non-convertible and
convertible notes to accredited investors. It is anticipated that upon
successful completion of an offering the net proceeds will be used as follows:
----------------------------- ----------- -----------
Minimum Maximum
----------------------------- ----------- -----------
New Product Development $1,900,000 $2,400,000
Marketing 250,000 500,000
Working Capital 340,000 910,000
Total $2,490,000 $3,810,000
----------------------------- ----------- -----------
There can be no assurance that the UTTC offering will not be amended or
terminated, or that any securities will be sold pursuant thereto.
On January 30, 1997, Ashton, along with UTTC, Mr. Rittereiser and The Dover
Group, Inc. ("Dover") (of which Mr. Rittereiser is the Chairman) entered into a
Settlement Agreement with David N. Rosensaft ("Rosensaft") (a co-founder of
UTTC) under which the consulting agreement between Ashton, UTTC and Rosensaft
dated January 19, 1996 was deemed to be void ab initio and each of the parties
released and discharged each of the other parties from any and all agreements
and claims which any of them have against any of the other parties. The
Settlement Agreement granted Rosensaft registration rights under the Securities
Act of 1933, as amended (the "Securities Act") under certain terms and
conditions for the 333,333 shares of UTTC common stock that he owns. Also on
January 30, 1997, Ashton, Dover, Rittereiser and Rosensaft entered into a Stock
Purchase Agreement under which Dover, Rittereiser or his or its designee, agreed
to purchase the 750,000 shares of Ashton common stock owned by Rosensaft on
April 10, 1997 for a total purchase price of $2,000,000 and Ashton granted
Dover, Rittereiser or his or its designee, registration rights under the
Securities Act under certain conditions for the 750,000 shares. The Settlement
Agreement and the Stock Purchase Agreement are filed as Exhibits 10.1 and 10.2,
respectively to this 10-QSB.
<PAGE>
PART II - OTHER INFORMATION
(Items 1 through 4 have been omitted since the items are either inapplicable or
the answer is negative)
Item 5. Other Information
See "Subsequent Events" in Item 2 above.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 10.1 - Settlement Agreement dated January 30, 1997 among the
Company, UTTC, Fredric W. Rittereiser; The Dover
Group, Inc. and David A. Rosensaft.
Exhibit 10.2 - Stock Purchase Agreement dated January 30, 1997 among
the Company, Fredric W. Rittereiser; The Dover Group,
Inc. and David A. Rosensaft.
Exhibit 11 - Earnings per share computation.
Exhibit 27 - Financial Data Schedule
(B) Reports on Form 8-K
October 28, 1996 - Report on Change in Control of the Company
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
The Ashton Technology Group, Inc.
--------------------------------
(Registrant)
Date: February 14, 1997 By: /s/ Frederic W. Rittereiser
---------------------------
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit 10.1
- -------------
Settlement Agreement
Exhibit 10.2
- ------------
Stock Purchase Agreement
Exhibit 11
- ----------
Earnings per share computation
Exhibit 27
- ----------
Financial Data Schedule
EXHIBIT 10.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement"), dated as of January 30, 1997,
is by and among THE ASHTON TECHNOLOGY GROUP, INC., a Delaware corporation (the
"Company"), UNIVERSAL TRADING TECHNOLOGIES CORPORATION, a Delaware corporation
and a subsidiary of Ashton ("UTTC"), FREDRIC W. RITTEREISER ("Rittereiser"), THE
DOVER GROUP, INC. ("Dover") and DAVID N. ROSENSAFT ("Rosensaft").
WHEREAS, the Company and UTTC have engaged Rosensaft as a consultant to
advise UTTC on, among other things, the implementation of the Universal Trading
System with the Philadelphia Stock Exchange;
WHEREAS, the Company, UTTC and Rosensaft executed a consulting agreement,
dated as of January 19, 1996, (the "Consulting Agreement");
WHEREAS, Rosensaft owns beneficially or otherwise 750,000 shares (the
"Ashton Shares") of the outstanding common stock of the Company, par value $.01
per share;
WHEREAS, Rosensaft owns beneficially or otherwise 333,333 shares (the "UTTC
Shares") of the outstanding common stock of UTTC, par value $.01 per share, (the
"UTTC Common Stock"); and
WHEREAS, certain disputes have arisen among Rosensaft, on the one hand, and
the Company, UTTC, Dover and Rittereiser, on the other, with respect to
Rosensaft's relationship with the Company and UTTC and his role as a consultant
to the Company and UTTC, 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.
"Ashton Shares" is defined in the Recitals.
"Consulting Agreement" is defined in the Recitals.
"Person" means any individual, corporation, partnership, limited liability
company or partnership, firm, join venture, association, joint stock company,
trust, unincorporated organization, governmental entity or other entity or
organization.
"Promissory Note" shall mean the 9% promissory note due February 6, 1997
issued by Dover to Rosensaft on the date hereof in the principal amount of
$60,000.
"Purchase Price" shall mean the total purchase price of $2,000,000 for the
Ashton Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiaries" shall mean UTTC 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.
"Stock Purchase Agreement" shall mean the agreement attached hereto as
Exhibit A by and among the Company, Rittereiser and Rosensaft for the sale and
purchase of the Ashton Shares.
"UTTC Common Stock" is defined in the Recitals.
"UTTC Shares" is defined in the Recitals.
ARTICLE II
TERMS OF AGREEMENT
2.1 Consulting Agreement. Effective upon the payment in full of the
Purchase Price to Rosensaft as provided for in the Stock Purchase Agreement, the
Consulting Agreement shall be deemed to be void ab initio and all rights and
obligations of the parties thereto shall cease to exist and be of no legal force
or effect.
2.2 Purchase and Sale of Ashton Shares. Simultaneously with the execution
of this Agreement, the Company, Rittereiser and Rosensaft shall enter into the
Stock Purchase Agreement.
2.3 Registration Rights. Pursuant to the terms and subject to the
conditions set forth in the Stock Purchase Agreement, the Company agrees to
cause the Ashton Shares to be registered under the Securities Act upon request
by Rittereiser or his assignee.
2.4 Promissory Note. Simultaneously with the Agreement, Dover or its
assignee shall deliver to Rosensaft the Promissory Note in consideration for the
$60,000 loan made by Rosensaft to Dover on October 21, 1996.
2.5 Release. Effective upon the payment in full of the Purchase Price to
Rosensaft as provided for in the Stock Purchase Agreement and except for any
breach of this Agreement or the Stock Purchase Agreement, and except as provided
in Section 2.6 below, each of the parties hereto, on behalf of itself and each
and every one of its present, former and future stockholders, officers,
directors, employees, agents, parents, subsidiaries, affiliates, successors,
assigns and predecessors, 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 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.
2.6 Reservation of Rights. The foregoing release contained in Section 2.5
above does not include Rosensaft's right to enforce the terms of (i) the
Promissory Note against Dover or its assignee, or (ii) the January 16, 1997
agreement among and between Rosensaft, the Company, UTTC, Dover and Rittereiser.
2.7 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 claims which are settled and/or released
by this Agreement.
ARTICLE III
REGISTRATION RIGHTS
3.1 Rosensaft Registration Rights. If UTTC proposes at any time following
the date hereof to register any shares of the UTTC Common Stock in an initial
public offering registered under the Securities Act through an underwriter or
underwriters, UTTC shall promptly give written notice to Rosensaft of its
intention to register the UTTC Common Stock. Such written notice shall include,
without limitation, a list of the jurisdictions in which UTTC intends to attempt
to qualify such securities under the applicable blue sky or other state
securities laws. Upon receipt of UTTC's written notice, Rosensaft shall have
thirty days to provide UTTC with a written request specifying the total number
of UTTC Shares to be included in such registration under the Securities Act.
UTTC shall include in such registration statement (and any related qualification
under blue sky laws or other compliance required under the Securities Act) all
UTTC Shares requested by Rosensaft to be included therein; provided, however,
that UTTC may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with the
registration of all the other shares of UTTC Common Stock originally proposed to
be registered.
3.2 Underwriting. Rosensaft shall have the right to include any or all of
the UTTC Shares in any underwriting of UTTC Common Stock, provided, however,
that such right shall be conditioned upon Rosensaft's requesting inclusion of
such UTTC Shares in the underwriting and that the subsequent inclusion of such
UTTC Shares in the underwriting shall be on the terms and conditions provided
herein. In agreeing to distribute the UTTC Shares through such underwriting,
Rosensaft shall (together with UTTC and the other holders distributing their
UTTC Common Stock through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by UTTC. Notwithstanding any other provision of Section 3.1 or
this Section 3.2, in the event that the managing underwriter determines that
marketing factors require a limitation on the number of shares of UTTC Common
Stock to be sold, then UTTC will be required to include in such offering only
that number of shares of UTTC Common Stock which it is so advised should be
included in such offering. The UTTC Common Stock proposed by UTTC to be sold
shall have the first priority and all other shares of UTTC Common Stock,
including the UTTC Shares and any other shares of UTTC Common Stock in which
registration rights have been requested (the "Selling Shareholders' Shares"),
shall be given a second priority without preference among the relevant holders.
If less than all of the Selling Shareholders' Shares are to be included in the
offering, such shares shall be included in the offering pro rata based on the
total number of shares sought to be offered other than for issuance by UTTC. No
person may participate in any offering hereunder unless such person (x) agrees
to sell such person's UTTC Common Stock on the basis provided in any
underwriting arrangements approved by UTTC and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
If market conditions force UTTC to limit the number of shares of UTTC
Common Stock to be sold, UTTC shall so advise Rosensaft of the number of UTTC
Shares that may be included in the offering and underwriting at the time of the
filing of the registration statement. If Rosensaft disapproves of the terms of
any such underwriting, he may elect to withdraw all or any portion of the UTTC
Shares therefrom by written notice to UTTC and the underwriter.
3.3 Expenses of Registration. All expenses incurred in connection with the
registration statement contemplated by this Agreement, including without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses and fees and disbursements of counsel for UTTC and their respective
independent certified public accountants, underwriters (excluding discounts and
commissions) and other persons retained by UTTC shall be paid solely by UTTC
and, to the extent that they agree, any other holders of shares of UTTC Common
Stock (other than Rosensaft) whose shares are included in such registration
statement.
3.4 Registration Procedures. In the case of a registration statement filed
under the Securities Act pursuant to this Agreement, UTTC will keep Rosensaft,
if participating therein, advised in writing as to the initiation of such
registration statement and as to the completion thereof. UTTC will:
(1) Keep such registration statement pursuant to Section 3.1
effective for a period of 180 days or until Rosensaft has
completed the distribution described in the registration
statement relating thereto, whichever first occurs; and
(2) Furnish such number of prospectuses and other documents incident
thereto as Rosensaft from time to time may reasonably request.
3.5 Indemnification. (a) Rosensaft will, if any of the UTTC Shares are
included in a registration statement pursuant to Section 3.1, indemnify the
Company, each of their directors and officers who sign such registration
statement, each underwriter, each person who controls any underwriter of the
UTTC Common Stock covered by such a registration statement and each person who
controls UTTC within the meaning of the Securities Act, against all claims,
losses, damages, and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus or other document,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and will reimburse UTTC, such directors, officers, persons, or underwriters for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus or other document in reliance upon and in
conformity with information furnished in writing to UTTC by Rosensaft
specifically for use therein.
(b) With respect to a registration statement filed pursuant to Section 3.1,
UTTC will indemnify Rosensaft, each underwriter and each person who controls any
underwriter of the UTTC Common Stock, against all claims, losses, damages, and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus or other document (including any related registration statement,
notification or the like) incident to any such registration statement, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by UTTC of any rule or regulation promulgated under the
Securities Act applicable to UTTC and relating to action or inaction required of
UTTC in connection with any such registration statement and will reimburse
Rosensaft and each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that UTTC will not be liable in any such
case to the extent that any final damage award or fully adjudicated liability is
based on any untrue statement or omission based upon information furnished to or
omitted to be furnished to UTTC by Rosensaft specifically for use therein, and
which was used therein with Rosensaft's written permission.
(c) Each party entitled to indemnification under this Section 3.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that, counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 3.6. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
3.6 Information by Rosensaft. If any of the UTTC Shares are included in any
registration statement pursuant to Section 3.1, Rosensaft shall furnish to UTTC
such information regarding Rosensaft as UTTC may request in writing and as shall
be reasonably required in connection with any such registration statement. Prior
to using any such information, UTTC shall obtain Rosensaft's prior written
permission to use such information in any registration statement, which approval
Rosensaft shall reasonably provide.
ARTICLE IV
CLOSING
4.1 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on April 10, 1997 at the offices of Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, N.Y. 10038.
ARTICLE V
GENERAL PROVISIONS
5.1 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 Section 5.1 shall survive the Closing.
5.2 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.
5.3 Modification. This Agreement shall not be modified or amended except by
an agreement in writing executed by all parties hereto.
5.4 Applicable Law. This Agreement shall be governed under the law of the
State of New York without regard to the principles of conflicts of law thereof.
5.5 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) the rights and obligations of Dover
and Rittereiser under the Stock Purchase Agreement may be assigned as provided
in Section 9.1 thereof. 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.
5.6 Entire Agreement. This Agreement and the Stock Purchase Agreement
contain 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.
5.7 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.
5.8 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.
5.9 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.
5.10 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.
5.11 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 New York, New
York 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.
5.12 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.
5.13 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.
5.14 Confidentiality. Except as required by law pursuant to a valid
subpoena, or with the written 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 or Rosensaft, (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) attorneys and other professional advisors (each an "Authorized Person") if,
and only if, the Authorized Person agrees to be bound by the terms of this
Section 5.14. If an Authorized Person breaches the terms of this Section 5.15,
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 5.14.
5.15 Notice. All notices or requests hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally or by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Rosensaft shall be addressed
to:
David N. Rosensaft
215 East 68th Street, Suite 12-O
New York, New York 10021
with a copy to:
Thomas Campbell, Esq.
Smith Campbell & Paduano
150 East 58th Street
New York, New York 10155
Tel: (212) 754-4242
Fax: (212) 754-4399
or at such other address and to the attention of such other person as Rosensaft
may designate by written notice to the other parties hereto. Notices to the
Company or UTTC shall be addressed to:
Universal Trading Technologies Corporation
1900 Market Street, Suite 701
Philadelphia, PA 19103-0012
Attn: Robert A. Eprile
Tel: (215) 988-3400
Fax: (215) 636-3560
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Harvey Spear
Tel: (212) 504-6000
Fax: (212) 504-6666
or at such other address and to the attention of such other person as the
Company or UTTC may designate by written notice to the other parties hereto.
Notices to Rittereiser or Dover shall be addressed to:
The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Attn: Fredric W. Rittereiser
Tel: (908) 505-9300
Fax: (908) 505-8540
or at such other address and to the attention of such other person as
Rittereiser or Dover may designate by written notice to the other parties
hereto.
5.16 Time is of the Essence. Time is of the essence of this Agreement and
every provision hereof.
5.17 Expenses. Whether the Closing does or does not occur, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
5.18 Tolling. The statute of limitations shall be tolled as of December 9,
1996 through and including the date the release provided in Section 2.5 becomes
effective or, in the event the Agreement is determined to be null and void
pursuant to Section 5.19 hereof, thirty (30) days following receipt by Rosensaft
of notice claiming that the Agreement is null and void thereunder, on all claims
that Rosensaft has or may have against the Company, UTTC, Dover and Rittereiser,
individually or collectively.
5.19 Standstill. Notwithstanding any other provision hereof, this
Settlement Agreement and the Stock Purchase Agreement shall be null and void if
at any time between the date hereof and the Closing Date (i) Rosensaft commences
any litigation against any of the other parties hereto relating to any claim he
may have against any party to this Agreement, or (ii) Rosensaft talks or
otherwise communicates with or provides information to any publication or its
employees, relating to Rosensaft's relationship (past, present or future) to the
Company, UTTC, or their officers or directors.
5.20 "Confidential Treatment"
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
THE ASHTON TECHNOLOGY GROUP, INC. THE DOVER GROUP, INC.
By: /s/ Fredric W. Rittereiser By: /s/ Fredric W. Rittereiser
--------------------------- -----------------------------
Name: Fredric W. Rittereiser Name: Fredric W. Rittereiser
Title: President Title: Chairman
UNIVERSAL TRADING TECHNOLOGIES FREDRIC W. RITTEREISER
CORPORATION
By: /s/ Fredric W. Rittereiser By: /s/ Fredric W. Rittereiser
--------------------------- -----------------------------
Name: Fredric W. Rittereiser Name: Fredric W. Rittereiser
Title: President Title: Chairman
DAVID N. ROSENSAFT
By: /s/ David N. Rosensaft
-----------------------------
Name: David N. Rosensaft
Title:
Exhibit 10.2
------------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 30,
1997, is by and among THE ASHTON TECHNOLOGY GROUP, INC., a Delaware corporation,
(the "Company"), THE DOVER GROUP, INC. ("Dover"), FREDRIC W. RITTEREISER
("Rittereiser") and DAVID N. ROSENSAFT ("Seller").
WHEREAS, Dover, Rittereiser or his or its designee ("Buyer") desire to
purchase from Seller, and Seller desires to sell to Buyer, 750,000 shares of the
issued and outstanding common stock of the Company, par value $.01 per share
(the "Shares"), for a total purchase price of $2,000,000 (the "Purchase Price"),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company desires to grant to Buyer registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), to the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms when used in this Agreement shall have the
following respective meanings, unless the context clearly indicates otherwise.
All capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the settlement agreement, dated as of January 30,
1997, by and among the Company, Rittereiser, UTTC, Dover and Seller (the
"Settlement Agreement"):
"Closing" is defined in Article XIII.
"Closing Date" is defined in Article XIII.
"Common Stock" shall mean the issued and outstanding common stock of the
Company, par value $.01 per share.
"Person" shall mean 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.
"Securities Act" is defined in the Recital.
"Shares" is defined in the Recital.
ARTICLE II
SALE OF STOCK
2.1 Purchase and Sale. (a) On the basis of the representations, warranties,
covenants and agreements set forth herein and subject to the satisfaction or
waiver of the conditions set forth herein, upon execution of the Settlement
Agreement, Seller will sell the Shares to Buyer and Buyer will purchase the
Shares from Seller in consideration of $2,000,000 payable at the Closing (the
"Stock Purchase"). At the Closing, Seller and the Company (to the extent that it
has any of the Shares in its possession or control) shall deliver to Buyer the
stock certificates representing all of the Shares, accompanied by a stock power
duly executed in blank and shall take such steps as shall be necessary to cause
the Company to enter Buyer or any nominee(s) upon the books of the Company as
the holder of the Shares and to issue one or more share certificates evidencing
ownership of the Shares to Buyer or any nominee(s).
(b) Seller hereby agrees that during the period from the execution of the
Settlement Agreement through the Closing Date, Seller shall vote the Shares in
any and all stockholder meetings 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.
ARTICLE III
REQUEST FOR REGISTRATION
3.1 Request for Registration. (a) In case the Company shall receive from
Buyer a written request that the Company register under the Securities Act all
or a part of the Shares, the Company will, as soon as practicable, use its
diligent best efforts to register (including, without limitations, the execution
of an undertaking to file post-effective amendments, appropriate qualifications
under the applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act and any
other governmental requirements or regulations) all or such portion of such
Shares as are specified in such request; provided, however, that the Company
shall not be obligated to take any action to register the Shares pursuant to
this Section 3.1 after (i) the Company has filed one such registration pursuant
to this subparagraph (a) with the Securities and Exchange Commission (the
"Commission") and such registration has been declared or ordered effective or
(ii) December 31, 2001.
(b) Subject to the foregoing proviso, the Company shall file with the
Commission a registration statement covering the Shares requested to be
registered as soon as practical, but in any event within ninety days, after
receipt of the request of Buyer; provided, however, that if the Company shall
furnish to such Buyer a certificate signed by the president of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed at the date filing would be required and it is therefore
essential to defer the filing of such registration statement, the Company shall
have an additional period of not more than ninety days within which to file such
registration statement.
3.2 Underwriting. If Buyer intends to distribute the Shares covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to Section 3.1. In such event, if so
requested in writing by the Company, Buyer shall negotiate with an underwriter
selected by the Company with regard to the underwriting of such requested
registration; provided, however, that if Buyer has not agreed with such
underwriter as to the terms and conditions of such underwriting within twenty
days following commencement of such negotiations, Buyer may select an
underwriter of his choice. The Company, together with Buyer, shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company or Buyer, as the case may be.
ARTICLE IV
COMPANY REGISTRATION
4.1 Buyer Registration Rights. If the Company proposes at any time or from
time to time from the date hereof until December 31, 2001, to register any of
its Common Stock, either for its own account or the account of a holder or
holders of its Common Stock, in a registration statement under the Securities
Act, whether or not pursuant to an underwriting agreement, the Company shall
promptly give written notice to Buyer of its intention to register the Common
Stock. Such written notice shall include, without limitation, a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under the applicable blue sky or other state securities laws. Upon receipt of
the Company's written notice, Buyer shall have thirty days to provide the
Company with a written request specifying the total number of Shares to be
included in such registration under the Securities Act. Subject to Section 4.3
below, the Company shall include in such registration statement (and any related
qualification under blue sky laws or other compliance required under the
Securities Act) all the Shares requested to be included therein; provided,
however, that the Company may at any time withdraw or cease proceeding with any
such registration if it shall at the same time withdraw or cease proceeding with
the registration of all the other shares of Common Stock originally proposed to
be registered.
4.2 Underwriting. If Company decides to register any of its Common Stock
through an underwriter or underwriters, Buyer shall (together with the Company
and the other holders distributing their Common Stock through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.
4.3 Priority of Registration Rights. (a) Notwithstanding any other
provision of Section 4.1 or Section 4.2, if the Company or the managing
underwriter, as the case may be, determines that marketing factors require a
limitation on the number of shares of Common Stock to be sold, then the Company
will be required to include in such registration only that number of shares of
Common Stock which it believes or is so advised should be included in such
offering. The Common Stock proposed by the Company to be sold shall have the
first priority and all other shares of Common Stock, including the Shares and
any other shares of Common Stock in which registration rights have been
requested (the "Selling Shareholders' Shares"), shall be given a second priority
without preference among the relevant holders. If less than all of the Selling
Shareholders' Shares are to be registered, such shares shall be included in the
registration pro rata based on the total number of shares sought to be
registered other than for issuance by the Company.
(b) If market conditions force the Company to limit the number of shares of
Common Stock to be sold, the Company shall so advise Buyer of the number of
Shares that may be included in the registration statement at the time of filing
of the registration statement. If Buyer disapproves of the terms of any such
registration, he may elect to withdraw therefrom by written notice to the
Company and the underwriter, if any. Any portion of the Shares excluded or
withdrawn from such registration shall, unless Buyer requests otherwise, be
included in such registration but shall not be sold in a public distribution
prior to ninety days after the effective date of the registration statement
relating thereto.
ARTICLE V
EXPENSES OF REGISTRATION
5.1 Expenses. All expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and its
independent certified public accountants, underwriters (excluding discounts and
commissions), if any, and other persons retained by the Company, shall be shared
pro rata among the Company, Buyer and any other holders of shares of Common
Stock whose shares are included in such registration statement. Each party to
such registration statement shall pay a percentage of the expenses incurred by
the Company as determined by the number of their shares of Common Stock included
in such registration statement divided by the total number of shares of Common
Stock sold pursuant to the registration statement.
ARTICLE VI
REGISTRATION PROCEDURES
6.1 Registration Procedures. In the case of a registration statement filed
under the Securities Act pursuant to this Agreement, the Company will keep
Buyer, if participating therein, advised in writing as to the initiation of such
registration statement and as to the completion thereof. The Company will:
(a) Keep such registration statement pursuant to Section 3.1 or
Section 4.1 effective for a period of 180 days or until Buyer has
completed the distribution described in the registration
statement relating thereto, whichever first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as Buyer from time to time may reasonably request.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Buyer. Buyer will, if any of the Shares held by
Buyer are included in a registration statement pursuant to Section 3.1 or
Section 4.1, indemnify the Company, each of its directors and officers who sign
such registration statement, each underwriter, if any, and each person who
controls any such underwriter of the Shares and each person who controls the
Company within the meaning of the Securities Act, against all claims, losses,
damages, and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus or other document, or
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company, such directors, officers, persons, or
underwriters, if any, for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus or other document
in reliance upon and in conformity with information furnished to the Company by
Buyer specifically for use therein.
7.2 Indemnification by Company. With respect to a registration statement
filed with the Commission pursuant to Section 3.1 or Section 4.1, the Company
will indemnify Buyer, each of Buyer's officers and directors, each person
controlling Buyer, each underwriter, if any, and each person who controls any
such underwriter of the Shares, against all claims, losses, damages, and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus or other document (including any related registration statement,
notification or the like) incident to any such registration statement or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration statement and
will reimburse Buyer, each of Buyer's officers and directors, each person
controlling Buyer, each underwriter, if any, and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based upon
information furnished to the Company by Buyer or underwriter, if any,
specifically for use therein.
7.3 Indemnification Procedure. Each party entitled to indemnification under
this Article 7 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, that, counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article 7. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
ARTICLE VIII
INFORMATION BY BUYER
8.1 Information by Buyer. If any of the Shares are included in any
registration statement filed with the Commission pursuant to Section 3.1 or
Section 4.1, Buyer shall furnish to the Company such information regarding Buyer
and the distribution proposed by Buyer as the Company may request in writing and
as shall be required in connection with any such registration statement.
ARTICLE IX
ASSIGNMENT
9.1 Assignment. Buyer may assign this Agreement in its entirety to any
Person (an "Assignee") without the consent of any of the other parties hereto;
provided, however, that the Company is given written notice by Buyer at the time
or within a reasonable time after said transfer, stating the name and address of
said Assignee and identifying the share certificate(s) which are being assigned.
No party other than Buyer 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 this Agreement may be
assigned by operation of law or pursuant to the laws of descent and
distribution. In the event of any assignment pursuant to this Section 9.1, Dover
and Rittereiser shall guarantee performance by such assignee under this
Agreement.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
10.1 Representations and Warranties. Seller hereby represents and warrants
to Buyer that Seller is the lawful beneficial owner of the Shares and has
complete and unrestricted right to sell, transfer, assign and convey the Shares
to Buyer. Upon consummation of the transaction as contemplated by this
Agreement, Seller will deliver to Buyer good and marketable title to the Shares
free and clear of any liens, claims, charges, security interests, options or
other legal or equitable encumbrances.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
11.1 Representations and Warranties. Buyer is purchasing the Shares solely
for the purpose of investment and not with a view to distribution within the
meaning of the Securities Act. Buyer recognizes that the Shares have not been
and will not be registered under the Securities Act and further acknowledges
that he has been fully advised as to the applicable limitations upon resale of
the Shares, including the need to hold such Shares indefinitely unless they are
subsequently registered under the Securities Act or unless an exemption from
such registration is available.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
12.1 Representations and Warranties. (a) The Company is a corporation duly
incorporated and validly existing under the laws of the State of Delaware.
(b) No filing with, approval by or consent of any governmental authority,
court regulatory agency or any other person is required in order for the Company
to consummate the transactions contemplated by this Agreement.
ARTICLE XIII
CLOSING
13.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on April 10, 1997 (the "Closing
Date"), at such time and place as the parties may mutually agree.
ARTICLE XIV
CONDITIONS TO CLOSE
Each party's obligation to consummate the Closing is subject to the
satisfaction on or prior to the Closing Date of all of the following conditions:
14.1 Representations and Warranties. The representations and warranties of
each party contained in this Agreement shall be true in all material respects on
and as of the Closing Date.
14.2 No Injunction. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or governmental agency or
body of competent jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated by this Agreement.
ARTICLE XV
GENERAL PROVISIONS
15.1 Representations and Warranties. Each party represents and warrants to
the other parties 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 10.1, Section 11.1 and Section 12.1) shall survive the Closing.
15.2 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.
15.3 Modification. This Agreement shall not be modified or amended except
by an agreement in writing executed by all parties hereto.
15.4 Applicable Law. This Agreement shall be governed under the law of the
State of New York without regard to the principles of conflicts of law thereof.
15.5 Entire Agreement. This Agreement and the Settlement Agreement contain
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.
15.6 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.
15.7 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.
15.8 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.
15.9 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.
15.10 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 New York, New
York 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.
15.11 No Broker. Each of the parties represents that no broker or finder
has been employed by either of them in connection with the transactions
contemplated by this Agreement.
15.12 Expenses. Whether the Closing does or does not occur, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
15.13 Notices. All notices or requests hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally or by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller shall be addressed to:
David N. Rosensaft
215 East 68th Street, Suite 12-O
New York, New York 10021
with a copy to:
Thomas Campbell, Esq.
Smith Campbell & Paduano
150 East 58th Street
New York, New York 10155
Tel: (212) 754-4242
Fax: (212) 754-4399
or at such other address and to the attention of such other person as Seller may
designate by written notice to the other parties hereto. Notices to the Company
shall be addressed to:
Universal Trading Technologies Corporation
1900 Market Street, Suite 701
Philadelphia, PA 19103-0012
Attn: Robert A. Eprile
Tel: (215) 988-3400
Fax: (215) 636-3560
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Harvey M. Spear
Tel: (212) 504-6000
Fax: (212) 504-6666
or at such other address and to the attention of such other person as the
Company may designate by written notice to the other parties hereto. Notices to
Buyer shall be addressed to:
The Dover Group, Inc.
17 Route 37 East
Toms River, NJ 08753
Attn: Fredric W. Rittereiser
Tel: (908) 505-9300
Fax: (908) 505-8540
or at such other address and to the attention of such other person as Buyer may
designate by written notice to the other parties hereto.
15.14 Time is of the Essence. Time is of the essence of this Agreement and
every provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Fredric W. Rittereiser
------------------------------
Name: Fredric W. Rittereiser
Title: President
THE DOVER GROUP, INC.
By: /s/ Fredric W. Rittereiser
------------------------------
Name: Fredric W. Rittereiser
Title: Chairman
FREDRIC W. RITTEREISER
/s/ Fredric W. Rittereiser
--------------------------
DAVID N. ROSENSAFT
/s/ David W. Rosensaft
--------------------------
Exhibit 11
Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------ -------------------------------------
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted average common 7,562,500 5,290,000 7,150,416 5,290,000
shares outstanding
Dilutive effect of common
equivalent shares (a) 38,900 38,900 38,900 38,900
Weighted average shares
outstanding 7,601,400 5,328,900 7,189,316 5,328,900
================ ============= ============ =================
Net loss $ (2,046,936) $ $ $ (1,675,878)
(1,508,910) (5,199,487)
================ ============= ============= ==============
Fully diluted earnings per
share (b) $ (.27) $ (.28) $ (.72) $ (.31)
================ ============= ============= =====================
</TABLE>
(a) Calculates the dilutive effect of outstanding stock options based upon the
"Treasury Stock Method".
(b) As fully diluted earning per share and primary earnings per share are
equal, only fully diluted earnings per share will be disclosed in the Form
10-QSB.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,416,032
<SECURITIES> 0
<RECEIVABLES> 1,210,181
<ALLOWANCES> 12,500
<INVENTORY> 0
<CURRENT-ASSETS> 2,876,741
<PP&E> 1,905,497
<DEPRECIATION> 942,042
<TOTAL-ASSETS> 4,594,863
<CURRENT-LIABILITIES> 1,442,337
<BONDS> 0
0
0
<COMMON> 75,625
<OTHER-SE> 2,664,291
<TOTAL-LIABILITY-AND-EQUITY> 4,594,863
<SALES> 4,663,332
<TOTAL-REVENUES> 4,663,332
<CGS> 3,592,156
<TOTAL-COSTS> 2,692,935
<OTHER-EXPENSES> 3,464,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (113,865)
<INCOME-PRETAX> (4,972,187)
<INCOME-TAX> 227,300
<INCOME-CONTINUING> (5,199,487)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,199,487)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.73)
</TABLE>
