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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT OF 1934
Date of Report: September 1, 1998
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11747 22-6650372
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
1900 Market Street, Suite 701, Philadelphia, PA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 751-1900
Not applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 1, 1998, The Ashton Technology Group, Inc. (the
"Company") entered into an agreement with four accredited investors and a
placement agent to amend (the "Amendment") the Private Equity Line of
Credit Agreement, dated as of April 2, 1998 (the "Agreement"). The four
accredited investors, Dominion Capital Fund, Ltd., Canadian Advantage
Limited Partnership, Excalibur Limited Partner, and Sovereign Partners
Limited Partnership (individually, an "Investor" and collectively, the
"Investors") and the placement agent, Settondown Capital International,
Ltd. (the "Placement Agent"), were the original parties to the Agreement
along with the Company. The Company filed a Current Report on Form 8-K on
April 9, 1998, which announced that the Company had completed the placement
of Series D Convertible Preferred Stock and warrants in exchange for
$3,000,000 in financing pursuant to the Agreement, and that the Company
would, subject to certain conditions, obtain up to $15,000,000 in
additional financing from the Investors as provided by the Agreement.
The Company completed the placement of Series E Convertible Preferred
Stock and warrants on July 15, 1998, for an aggregate investment amount of
$2,000,000 in financing pursuant to the Agreement. The Company has
currently satisfied conditions under the Agreement that would allow it to
begin exercising its right to put (the "Put Rights") to each of the
Investors additional shares of the Company's common stock ("Common Stock"),
par value $.01 per share, in exchange for up to $13,000,000 in aggregate
financing from the Investors, provided that certain conditions are
satisfied at the time of each Put.
The Amendment clarifies that each Investor may not beneficially own
more than 4.99 percent of the Company's Common Stock at one time, including
Common Stock underlying convertible securities that would be deemed to be
beneficially owned pursuant to Section 13(d) of the Securities Exchange Act
of 1934 and Rule 13d-3 promulgated thereunder. The Amendment provides that
each Investor may not convert any shares of convertible preferred stock or
exercise any warrants to purchase Common Stock, if such conversion or
exercise, as the case may be, results in such Investor beneficially owning
more than 4.99 percent of the Company's outstanding Common Stock. The
Amendment also provides that the Company may not exercise a Put to any
Investor if, at the time of such Put, the Investor beneficially owns, or
would upon exercise of the Put own, more than 4.99 percent of the Company's
outstanding Common Stock. Finally, the Amendment clarifies that, in the
event that any Investor beneficially owns 4.99 percent of the Company's
outstanding Common Stock at the time the Company desires to exercise a Put,
the Company is not limited in its right to Put shares of Common Stock to
any other Investor that does not own more than such prescribed maximum
amount.
While the Amendment does not alter the $18,000,000 maximum amount of
financing that the Company could, subject to the satisfaction of
conditions, obtain under
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the Agreement, as amended, or alter the $13,000,000 maximum amount of
Common Stock that the Company can Put to the Investors, subject to the
satisfaction of conditions, there can be no assurance that all of the
conditions necessary to the exercise of the Company's Put Rights, as set
forth in the Agreement, as amended, can or will be satisfied in the future
and that the Company will obtain the maximum aggregate $13,000,000 in
financing or any portion thereof from the Investors if one or more of the
Investors cannot purchase additional Put shares due to the amount of
outstanding Common Stock such Investor then beneficially owns. Should the
Company decide in the future to exercise the maximum aggregate of $13
million, or any portion threof, and the Investors do not or cannot purchase
additional put shares, the Company's inability to receive the proceeds from
the exercise of the Puts could have a material adverse effect on its
operations and financial condition.
EXHIBITS
10.1 Form of Agreement of Amendment and Modification By and Among The
Ashton Technology Group, Inc., Dominion Capital Fund, Ltd., Canadian
Advantage Limited Partnership, Excalibur Limited Partner, and
Sovereign Partners Limited Partnership.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 1, 1998 /s/ John A. Blohm
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John A. Blohm
Executive Vice President and Secretary
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AGREEMENT OF AMENDMENT AND MODIFICATION
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Agreement of Amendment and Modification made as of September , 1998, by and
among The Ashton Technology Group, Inc. (the "Company"), Dominion Capital Fund,
Ltd., Canadian Advantage Limited Partnership, Excalibur Limited Partner, and
Sovereign Partners Limited Partnership (collectively referred to as the
"Investors").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Private Equity Line of Credit Agreement dated
as of April 2, 1998 by and among the Company and Investors (the "Equity Line
Agreement").
WITNESSETH:
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Whereas, the Company and the Investors wish to amend the Equity Line
Agreement.
Now, therefore, in consideration of the mutual covenants, conditions and
promises contained herein and in the Equity Line Agreement, the parties agrees
as follows:
1. The following Section shall be added to the Equity Line Agreement:
"Section 3.6 (c) Each Investor identified in Schedule A agrees that it
shall not convert any share or shares of Preferred Stock, or exercise
any Warrant, which would result in any Investor holding, at any one
time, more than 4.99% of the then outstanding shares of Common Stock.
The preceding sentence shall not interfere with any Investor's right
to convert Preferred Stock, or exercise any Warrant into more than
4.99% of the then outstanding shares of Common Stock in the aggregate,
over time, and is not intended to mean that each Investor is limited
in its conversion and/or exercise to an aggregate total of no more
than 4.99% of then outstanding shares of Common Stock. This
restriction shall not apply in the event the Preferred Stock remains
outstanding on the Expiration Date, as this term is defined in each of
the Certificates of Designation for the Series D and Series E
Convertible Preferred Stock"
2. Section 7.2(h) of the Equity Line Agreement is hereby deleted and
replaced by the following:
"Section 7.2 (h) 4.99% Percent Limitation. The Company shall not
be permitted to serve a Put Notice which would result in any single
Investor identified in Schedule A, on any Closing Date for a Put, when
aggregated with all other shares of Common Stock then actually owned
by each individual Investor, actually owning more than 4.99% of all of
such Common Stock as would be outstanding on such Closing
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Date. For purposes of this Section 7.2(h), in the event that the
amount of Common Stock outstanding as determined in accordance with
Rule 13d-3 promulgated pursuant to Section 13(d) of the Exchange Act
and the other regulations promulgated thereunder is greater on a
Closing Date than on the date upon which the Put Notice associated
with such Closing Date is given, the amount of Common Stock
outstanding on such Closing Date shall govern for purposes of
determining whether such individual Investor, when aggregating all
purchases of Common Stock made pursuant to this Agreement and, if any,
Warrant Shares, would own more than 4.99% of the Common Stock
following such Closing. Then, in such event, the Company would reduce
that number of Put Shares so issuable to such individual Investor so
that it would not exceed the aforementioned 4.99% limitation. Each
Investor so affected by the aforementioned shall notify the Company as
soon as possible, but in any event within three (3) business days of
receiving a Put Notice, if such Investor believes such Investor's
purchase of the Put Shares specified in the Put Notice would result in
such Investor exceeding the 4.99% limitation described above. Nothing
in this Section 7.2(h) shall limit the Company's right to serve a Put
Notice on other individual Investors not so affected by such 4.99%
limitation."
3. Except for the provisions of this Agreement of Amendment and
Modification, all of the terms, conditions, and covenants of the Equity Line
Agreement shall remain in full force and effect.
In Witness Whereof, the parties hereto have executed this Agreement of
Amendment and Modification as of the date first set forth above.
THE ASHTON TECHNOLOGY GROUP, INC.
By___________________________
John A. Blohm
Executive Vice President and Secretary
SOVEREIGN PARTNERS LIMITED
PARTNERSHIP
By________________________
DOMINION CAPITAL FUND, LTD.
By________________________
CANADIAN ADVANTAGE LIMITED
PARTNERSHIP
By________________________
EXCALIBUR LIMITED PARTNER
By________________________
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