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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X]Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE ASHTON TECHNOLOGY GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O- 11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
- --------------------------------------------------------------------------------
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing party:
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(4) Date filed:
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May , 1998
Dear Stockholder,
You are cordially invited to attend a Special Meeting of Stockholders
of The Ashton Technology Group, Inc. (the "Company") to be held at 10:00 a.m. on
May 29, 1998 at the Company's corporate headquarters located at 1900 Market
Street, Suite 701, Philadelphia, Pennsylvania 19103.
At the Special Meeting, the Company will ask the Stockholders to: (i)
approve and adopt an amendment to the Company's Certificate of Incorporation, as
amended, to increase the authorized number of shares of common stock and
preferred stock of the Company; and (ii) authorize the issuance of shares of
common stock of the Company pursuant to certain put rights and upon the
conversion or exercise, as the case may be, of certain shares of preferred stock
and warrants of the Company to purchase shares of common stock of the Company
issued or issuable pursuant to the Private Equity Line of Credit
Agreement, dated as of April 2, 1998, between the Company and the purchasers
referred to therein.
Whether you plan to attend the Special Meeting or not, it is important
that you promptly complete, sign, date and return the enclosed proxy card in
accordance with the instructions set forth on the card. This will ensure your
proper representation at the Special Meeting.
Sincerely,
Fredric W. Rittereiser
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE REMEMBER TO RETURN YOUR PROXY PROMPTLY.
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[LOGO]
THE ASHTON TECHNOLOGY GROUP, INC.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
------------------------------
To the Holders of Common Stock and Preferred Stock of
THE ASHTON TECHNOLOGY GROUP, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Special Meeting") of The Ashton Technology Group, Inc. (the "Company") will be
held at 10:00 a.m. on May 29, 1998 at the Company's corporate headquarters
located at 1900 Market Street, Suite 701, Philadelphia, Pennsylvania 19103 for
the purpose of considering and voting upon the following matters:
1. To approve and adopt an amendment to the Company's Certificate of
Incorporation which would increase the number of authorized shares
of the Company's common stock, par value $.01 per share (the "Common
Stock"), from 20,000,000 to 60,000,000.
2. To approve and adopt an amendment to the Company's Certificate of
Incorporation which would increase the number of authorized shares
of the Company's preferred stock, par value $.01 per share, from
1,000,000 to 3,000,000.
3. To authorize the issuance of Common Stock pursuant to certain put
rights and upon the conversion or exercise, as the case may be, of
the Company's Series D Convertible Preferred Stock, Series E
Convertible Preferred Stock and warrants to purchase shares of
Common Stock issued or issuable pursuant to the Private Equity Line
of Credit Agreement dated as of April 2, 1998, among the Company,
Settondown Capital International, Ltd and the purchasers referred to
therein.
The close of business on May 8, 1998 has been fixed as the record date
(the "Record Date") for the determination of stockholders entitled to notice of
and to vote at the meeting and any adjournments thereof. A list of the
stockholders entitled to vote at the Special Meeting will be open to the
examination of any stockholder of the Company upon request during regular
business hours at the offices of the Company for the ten-day period prior to the
Special Meeting.
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YOU ARE EARNESTLY REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT
THE SPECIAL MEETING, TO MARK, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors,
FREDRIC W. RITTEREISER
President and Chief Executive Officer
Philadelphia, Pennsylvania
May ___, 1998
<PAGE>
[LOGO]
THE ASHTON TECHNOLOGY GROUP, INC.
PROXY STATEMENT
Special Meeting to be Held on May 29, 1998
INTRODUCTION
This Proxy Statement is furnished to holders of the (i) common stock,
par value $.01 per share (the "Common Stock"), (ii) Series A Convertible PIK
Preferred Stock (the "Series A Preferred Stock"), (iii) Series B Convertible
Preferred Stock (the "Series B Preferred Stock"), (iv) Series C Convertible
Preferred Stock (the "Series C Preferred Stock") and (v) Series D Convertible
Preferred Stock (the "Series D Preferred Stock", together with the Series A
Preferred Stock, the Series B Preferred Stock, and the Series C Preferred Stock,
the "Outstanding Preferred Stock", and together with the Common Stock, the
"Securities") of The Ashton Technology Group, Inc. (the "Company") in connection
with the solicitation by, and on behalf of, the Board of Directors (the "Board")
of the Company of proxies to be voted at the Special Meeting of Stockholders to
be held at the Company's corporate headquarters located at 1900 Market Street,
Suite 701, Philadelphia, Pennsylvania 19103, on May 29, 1998 at 10:00 a.m., and
at any postponements, continuations or adjournments thereof (the "Special
Meeting").
All proxies in the accompanying form that are properly executed and
duly returned will be voted in accordance with the instructions specified
therein. If no instructions are given, such proxies will be voted (i) With
respect to holders of Common Stock, FOR the proposal to amend the Certificate of
Incorporation of the Company to increase the authorized number of shares of
Common Stock from 20,000,000 to 60,000,000, (ii) With respect to holders of
Common Stock and holders of Outstanding Preferred Stock, FOR the proposal to
amend the Certificate of Incorporation of the Company to increase the authorized
number of shares of Preferred Stock, $.01 par value (the "Preferred Stock"),
from 1,000,000 to 3,000,000, and (iii) With respect to holders of Common Stock,
FOR the proposal to authorize the issuance of Common Stock pursuant to certain
put rights and upon the conversion or exercise of the Securities issued or
issuable pursuant to the Private Equity Line of Credit Agreement (the "Equity
Line of Credit"), dated as of April 2, 1998 among the Company, Settondown
Capital International, Ltd. (the "Placement Agent") and the purchasers referred
to therein (the "Investors"). A proxy may be revoked at any time prior to its
exercise by written notice to the Company, by submission of another proxy
bearing a later date or by voting in person at the meeting. Such revocation will
not affect a vote on any matters taken prior thereto. The mere presence at the
meeting of the person appointing a proxy will not revoke the appointment.
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This Proxy Statement and the accompanying notice and proxy are being
mailed on or about May 8, 1998 to holders of record of the Common Stock and
Outstanding Preferred Stock as of May 8, 1998 (the "Record Date"). Only holders
of record of the Common Stock and Outstanding Preferred Stock at the close of
business on the Record Date are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, there were 8,551,263 shares of Common Stock
outstanding, each of which entitles the holder thereof to one vote on all
matters that may properly come before the Special Meeting, and 852,503 shares of
Outstanding Preferred Stock, each of which entitles the holder thereof to one
vote solely on the proposal to increase the number of authorized shares of
Preferred Stock. There is no cumulative voting with respect to the Common Stock
or Outstanding Preferred Stock.
The mailing address of the Company's principal executive offices is
1900 Market Street, Suite 701, Philadelphia, Pennsylvania 19103.
PROPOSAL ONE:
TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF PROPOSAL ONE.
The Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), currently authorizes the issuance of 20,000,000
shares of Common Stock. On February 11, 1998, the Board approved an amendment to
the Certificate of Incorporation to increase the authorized number of shares of
Common Stock from 20,000,000 to 60,000,000. The form of amendment approved by
the Board and to be considered at the Special Meeting is attached as Exhibit A
to this Proxy Statement.
As of the Record Date, the Company had 8,551,263 shares of Common Stock
issued and outstanding and of the remaining 11,448,737 authorized but unissued
shares of Common Stock, the Company has reserved approximately 3,697,750 shares
in connection with the possible exercise of outstanding warrants, 7,054,793
shares in connection with the conversion of Outstanding Preferred Stock, and
270,000 shares pursuant to the Company's outstanding options. Not included in
the number of shares reserved in connection with the exercise of outstanding
warrants and options are 422,000 shares of Common Stock issuable upon the
exercise of warrants and 180,000 shares of Common Stock issuable upon the
exercise of options held by certain executive officers and directors as set
forth below.
Pursuant to the Private Equity Line of Credit Agreement (the "Equity
Line of Credit"), dated as of April 2, 1998, among the Company, Settondown
Capital International, Ltd (the "Placement Agent") and the purchasers referred
to therein, in a private placement transaction, on April 3, 1998, the Company
issued (i) three shares of Series D Preferred Stock, liquidation preference $1
million per share, together with warrants, subject to certain adjustments (the
"Series D Warrants") to purchase 250,000 shares of Common Stock to the Investors
for an aggregate purchase price of $3 million, and (ii) warrants (the "Series D
Placement Agent Warrants") to purchase up to 190,000 shares of Common Stock,
fifteen-one hundredths (15/100) of a share of Series D Preferred Stock and
20,000 shares of Common Stock, subject to certain adjustments, to the Placement
Agent for fees.
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Subject to, among other things, the approval of the stockholders of
Proposal One and Proposal Three, the Equity Line of Credit contemplates the
issuance of (i) two shares of Series E Convertible Preferred Stock, liquidation
preference $1 million per share (the "Series E Preferred Stock"), and warrants
(the "Series E Warrants", together with the Series D Warrants, the "Private
Warrants") to purchase up to 100,000 shares of Common Stock, subject to certain
adjustments, for an aggregate purchase price of $2 million, (ii) shares of
Common Stock (the "Put Shares") required to be purchased from time to time by
the Investors upon notice (a "Put Notice") from the Company at a price equal to
85% of the market price of the Common Stock as of the date of the Put Notice up
to such number of Put Shares that may be purchased pursuant to the Equity Line
of Credit for an aggregate purchase price of a maximum of $13 million, if all
Put Shares are purchased, and (iii) one-tenth (1/10) of a share of Series E
Preferred Stock and warrants (the "Series E Placement Agent Warrants", together
with the Series D Placement Agent Warrants, the "Placement Agent Warrants") to
purchase up to 60,000 shares of Common Stock, subject to certain adjustments, to
the Placement Agent for fees. The Private Warrants are exercisable to purchase
shares of Common Stock for five years following their respective date of
issuance at an exercise price of $4.7026 per share (120% of the average closing
bid price of the Common Stock for the five trading days preceding April 3,
1998). As of the date of this proxy statement, there are no shares of Series E
Preferred Stock, Put Shares or Series E Warrants outstanding.
The Series D Preferred Stock is convertible into such number of shares
of Common Stock determined by dividing the liquidation preference per share of
Series D Preferred Stock by the Conversion Price. The Conversion Price is equal
to the market price of the Common Stock on the date of conversion multiplied by
75%; provided, however, that the maximum Conversion Price shall be $4.61 per
share of Common Stock (125% of the closing bid price of $3.688 for the Common
Stock on April 3, 1998, the date the Series D Preferred Stock was purchased). As
a result, 3.15 outstanding shares of Series D Preferred Stock are convertible
into a minimum of 643,297 shares of Common Stock. The Series D Preferred Stock
may not be converted into Common Stock until the earlier of (i) June 3, 1998 or
(ii) the date that a registration statement (the "Registration Statement")
registering the shares of Common Stock issuable pursuant to the Equity Line of
Credit has been filed with the Securities and Exchange Commission. At March 31,
2000, any outstanding shares of Series D Preferred Stock will be automatically
converted into Common Stock at the Conversion Price.
The Series E Preferred Stock is convertible into such number of shares
of Common Stock determined by dividing the liquidation preference per share of
Series E Preferred Stock by the Conversion Price. The Conversion Price is equal
to the market price of the Common Stock on the date of conversion multiplied by
80%; provided, however, that the maximum Conversion Price shall be the lesser of
(i) 125% of the closing bid price for the Common Stock on the date the Series E
Preferred Stock to be converted was purchased, or (ii) $5.00. No Series E
Preferred Stock has yet been issued. As an example, based on a bid price (as
defined in the Series E Preferred Stock Certificate of Designation) of the
Common Stock of $3.688 (the market price on April 3, 1998) the 2.1 shares of
Series E Preferred Stock issuable pursuant to the Equity Line of Credit, if they
had been converted on April 3, 1998, would be convertible into a minimum of
455,531 shares of Common Stock. At March 31, 2000, any outstanding shares of
Series E
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Preferred Stock will be automatically converted into Common Stock at the
Conversion Price. The Investors are not obligated to purchase the $2 million of
Series E Preferred Stock unless a number of conditions are satisfied, including
among other things, (i) Proposal One and Proposal Three are approved by the
stockholders, (ii) the Registration Statement is effective, (iii) the closing
bid price of the Common Stock on the day immediately preceding such purchase is
at least $1.50 per share, and (iv) the Common Stock has traded at a volume of at
least 25,000 shares a day for the 30 trading days preceding such purchase.
Following the purchase of the Series E Preferred Stock and subject to
the satisfaction of certain other conditions under the Equity Line of Credit,
the Company may from time to time over a two-year period require the Investors
to purchase the Put Shares. The Company may not require the Investors to
purchase greater than $2 million of Put Shares at any one time, subject to
certain trading volume requirements and other restrictions. It is expected that
the Put Shares will be issued and sold over the course of the two year period
following the effective date of the Registration Statement. Based on the market
price (as defined in the Equity Line of Credit) for the Common Stock as of April
3, 1998 of $3.9188, the Equity Line of Credit provides for the issuance of up to
3,317,342 Put Shares.
Upon the issuance of the Series E Preferred Stock, the Company will
have reserved up to 600,000 shares of Common Stock issuable upon the exercise of
the Private Warrants.
Of the 40,000,000 additional shares of Common Stock to be authorized
pursuant to Proposal One, up to 4,829,555 shares of Common Stock (based on the
market price of the Common Stock as of April 3, 1998 and assuming the
consummation of all transactions contemplated by the Equity Line of Credit)
would be required to be reserved for issuance under the Equity Line of Credit.
The aggregate purchase price of all securities issuable under the Equity Line of
Credit is approximately $18 million. The proceeds from the Equity Line of Credit
will be used for general corporate purposes, including working capital. The
consummation of the transactions contemplated by the Equity Line of Credit,
which are subject to stockholder approval of Proposal One and Proposal Three, is
critical to achievement of the Company's business plan. The Equity Line of
Credit provides financing for the Company's global strategy of selling on-line
transaction systems in international exchange and non-exchange markets and for
the continued growth of the Company's subsidiary, Gomez Advisors, which
specializes in providing strategic counsel and market research concerning
on-line brokerage and financial services. Failure by the stockholders to approve
Proposal One and Proposal Three may result in payment by the Company to the
Investors of $1.1 million in liquidated damages pursuant to the Equity Line of
Credit.
On September 11, 1997, subject to the approval by the stockholders of
Proposal One, the Board authorized the Company to issue to its officers,
directors, employees and to other contributors to the value of the Company,
options to purchase up to 6,000,000 shares of Common Stock at an exercise price
of $1.875 per share. In accordance with such action taken on September 11, 1997,
the Board has authorized the issuance of 1,015,000 shares of such options
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to certain non-officers, non-directors and non-employees. As of the date of this
proxy statement, the Board has not made any other agreement or commitment to
issue any such options and there is no other understanding between the Company
and any other persons with respect to the issuance of any such options or the
terms upon which such options would be issued. The issuance of Common Stock
pursuant to the Equity Line of Credit and the stock option plan described above
will substantially dilute the currently outstanding shares of Common Stock.
Except as described in this paragraph and pursuant to the Equity Line of Credit,
the Company has no immediate agreements, commitments or understandings with
respect to the issuance of any of the additional shares of Common Stock that
would be authorized by the proposed amendment, although opportunities for
additional issuance could arise at any time.
The purpose of Proposal One is to authorize 40,000,000 additional
shares of Common Stock. If this proposal is approved by stockholders, the
increased number of authorized shares of Common Stock will be available for
issuance from time to time pursuant to the Equity Line of Credit, the stock
option plan described above, upon exercise of other warrants or options and for
such purposes and consideration as the Board may approve without further
stockholder approval, except such approval as is required by law or the
regulations of the Nasdaq SmallCap Market. Such purposes may include additional
public or private issuances of Common Stock or Preferred Stock or other
securities convertible into Common Stock in connection with financing
transactions, acquisitions or other corporate transactions, as well as stock
dividends, warrants, stock option plans and other stock-based incentive or
compensation programs. The availability of additional shares of Common Stock for
issuance, without the delay and expense of obtaining stockholder approval, will
afford the Company greater flexibility in acting upon opportunities and
transactions, if any, which may arise in the future. The Common Stock has no
preemptive rights.
The Board, within the limitations and restrictions contained in the
Certificate of Incorporation and without further action by the Company's
stockholders, has the authority to issue the Common Stock from time to time.
PROPOSAL TWO:
TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF PROPOSAL TWO.
The Certificate of Incorporation currently authorizes the issuance of
1,000,000 shares of Preferred Stock. On February 11, 1998, the Board approved an
amendment to the Certificate of Incorporation to increase the authorized number
of shares of Preferred Stock from 1,000,000 to 3,000,000. The form of amendment
approved by the Board and to be considered at the Special Meeting is attached as
Exhibit A to this Proxy Statement.
As of April 16, 1998, the Company had authorized (i) 250,000 shares of
Series A Preferred Stock, all of which are issued and outstanding, (ii) 550,500
shares of Series B Preferred Stock, 547,500 of which are issued and outstanding,
(iii) 105,000 shares of Series C Preferred Stock, 10,000 of which are issued
and outstanding, (iv) 10 shares of Series D Preferred Stock, 3.15 of which
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are issued and outstanding, (v) 10 shares of Series E Preferred, none of which
are issued and outstanding, and (vi) 192,497 shares of unreserved Preferred
Stock, none of which are issued and outstanding.
The purpose of Proposal Two is to authorize 2,000,000 additional shares
of Preferred Stock. If this proposal is approved by stockholders, the increased
number of authorized shares of Preferred Stock will be available for issuance
from time to time for such purposes and consideration as the Board may approve
without further stockholder approval, except such approval as is required by law
or the regulations of the Nasdaq SmallCap Market. Such purposes may include
additional public or private issuances of Preferred Stock in connection with
financing transactions, acquisitions or other corporate transactions, as well as
stock dividends, stock option plans and other stock-based incentive or
compensation programs. The availability of additional shares of Preferred Stock
for issuance, without the delay and expense of obtaining further stockholder
approval, will afford the Company greater flexibility in acting upon
opportunities and transactions, if any, which may arise in the future. Other
than pursuant to the Equity Line of Credit discussed above, the Company has no
immediate agreements, commitments or understandings with respect to the issuance
of any of the additional shares of Preferred Stock that would be authorized by
the proposed amendment, although opportunities for additional issuance could
arise at any time.
The Board, within the limitations and restrictions contained in the
Certificate of Incorporation and without further action by the Company's
stockholders, has the authority to issue the authorized and unissued Preferred
Stock from time to time in one or more series and to fix the number of shares
and the relative dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and any other preferences, special rights
and qualifications of any such series.
CERTAIN ANTI-TAKEOVER EFFECTS OF PROPOSALS ONE AND TWO
At the present time, the Company is not aware of any pending or
threatened efforts by any third party to obtain control of the Company, and
Proposals One and Two are not being made in response to any such efforts.
However, the availability for issuance of additional shares of Common Stock and
Preferred Stock could enable the Board to make more difficult or discourage an
attempt to obtain control of the Company. For example, the issuance of shares of
Common Stock and Preferred Stock in a public or private sale, merger or similar
transaction would increase the number of outstanding shares, thereby diluting
the interest of a party attempting to obtain control of the Company and
deterring or rendering more difficult a merger, tender offer, proxy contest or
an extraordinary corporate transaction opposed by the Company.
The Company is also governed by Section 203 of the Delaware General
Corporation Law (the "Delaware anti-takeover law"), which provides that certain
"business combinations" between a Delaware corporation whose stock is generally
traded or held of record by more than 2,000 stockholders, such as the Company,
and an "interested stockholder" (generally defined as a stockholder who
beneficially owns 15% or more of a Delaware corporation's voting
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stock) are prohibited for a three-year period following the date that such
stockholder became an "interested stockholder", unless certain exceptions apply.
The term "business combination" is defined generally to include, among other
transactions, mergers, tender offers and transactions that increase an
"interested stockholder's" percentage ownership of stock in a Delaware
corporation.
As set forth above, such devices may adversely impact stockholders who
desire a change in management and/or the Board or to participate in a tender
offer or other sale transaction involving a change in control of the Company.
While it may be deemed to have potential anti-takeover effects, the proposed
amendments to increase the authorized Common Stock and Preferred Stock is not
prompted by any specific effort or takeover threat currently perceived by the
Board.
PROPOSAL THREE:
TO AUTHORIZE THE ISSUANCE OF COMMON STOCK PURSUANT TO CERTAIN
PUT RIGHTS AND UPON THE CONVERSION OR EXERCISE OF CERTAIN OF
THE SECURITIES ISSUED OR ISSUABLE PURSUANT TO THE EQUITY LINE OF CREDIT.
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF PROPOSAL THREE.
The Common Stock is listed on the Nasdaq SmallCap Market. The Nasdaq
SmallCap Market requires stockholder approval prior to (i) the issuance by the
Company of Common Stock which would constitute 20% or more of the Common Stock
outstanding on the date of issuance, and (ii) the issuance by the Company of
Common Stock upon the conversion or exercise, as the case may be, of the
Securities, if such conversion would result in the issuance of 20% or more of
the Common Stock outstanding at the time of conversion. In addition, the Equity
Line of Credit requires stockholder approval for the issuance by the Company of
greater than 19.99% of the Common Stock in connection with the transactions
contemplated by the Equity Line of Credit.
As of April 3, 1998, based on a market price (as defined in the Series
D Preferred Stock Certificate of Designation) of the Common Stock of $3.9188,
the 3.15 outstanding shares of Series D Preferred Stock were convertible into
1,071,756 shares of Common Stock, representing approximately 11.4% of the
outstanding Common Stock (assuming no other conversions of Outstanding Preferred
Stock or exercise of warrants or options). As of April 3, 1998, based on a
market price (as defined in the Series E Preferred Stock Certificate of
Designation) of the Common Stock of $3.9188 per share, the 2.1 shares of Series
E Preferred Stock issuable pursuant to the Equity Line of Credit would be
convertible into 669,848 shares of Common Stock, representing approximately
7.26% of the outstanding Common Stock (assuming no other conversions of
Outstanding Preferred Stock or exercise of warrants or options). Based on the
market price (as defined in the Equity Line of Credit) for the Common Stock as
of April 3, 1998 of $3.9188, the Equity Line of Credit provides for the issuance
of up to 3,317,342 Put Shares, representing approximately 27.95% of the
outstanding Common Stock (assuming no other conversions of Outstanding Preferred
Stock or exercise of warrants or options). Based on the market price of the
Common Stock as of April 3, 1998 and assuming the
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exercise and conversion of all Securities issuable under the Equity Line of
Credit, up to 5,658,946 shares of Common Stock would be required to be issued
under the Equity Line of Credit, representing approximately 39.82% of the
outstanding Common Stock (assuming no other conversions of Outstanding Preferred
Stock or exercise of outstanding warrants or options).
However, in accordance with the provisions of the Equity Line of
Credit, the issuance of the Series E Preferred Stock is subject to various
conditions, including the condition that the number of shares of Common Stock
issuable upon conversion of the Series E Preferred stock cannot exceed the
number of such shares which, when aggregated with all other shares of Common
Stock then owned by the Investors, would result in the Investors owning more
than 4.99% of the outstanding Common Stock. Similarly, under the Equity Line of
Credit the right of the Company to cause the Investors to purchase the Put
Shares is subject to various conditions, including the condition that the number
of shares of Common Stock so purchased cannot exceed the number of such shares
which, when aggregated with all other shares of Common Stock then owned by the
Investors, would result in the Investors owning more than 4.99% of the
outstanding Common Stock. The tender by the Company of the Put Notice, requiring
the purchase of the Common Stock by the Investors, is at the discretion of the
Company and may occur over the two-year period following the effective date of
the Registration Statement as provided for in the Equity Line of Credit. The
number of shares of Common Stock which may be "put" by the Company on any put
date also is subject to limitations specified in the Equity Line of Credit based
on the closing price of the Common Stock and the 30-day average daily trading
volume of the Common Stock.
The purpose of Proposal Three is to authorize the issuance of Common
Stock pursuant to certain put rights and the issuance of Common Stock upon the
conversion and exercise of all Securities issuable pursuant to the Equity Line
of Credit. The consummation of the transactions contemplated by the Equity Line
of Credit, which are subject to stockholder approval of Proposal One and
Proposal Three, is critical to achievement of the Company's business plan. The
Equity Line of Credit provides financing for the Company's global strategy of
selling on-line transaction systems in international exchange and non-exchange
markets and for the continued growth of the Company's subsidiary, Gomez
Advisors, which specializes in providing strategic counsel and market research
concerning on-line brokerage and financial services. Failure by the stockholders
to approve Proposal One and Proposal Three may result in payment by the Company
to the Investors of $1.1 million in liquidated damages pursuant to the Equity
Line of Credit.
QUORUM AND REQUIRED VOTE
The presence, in person or by proxy, of a majority of the total
outstanding shares is necessary to constitute a quorum at the Special Meeting.
Shares of Common Stock and Outstanding Preferred Stock represented by a properly
signed and returned proxy will be counted as present at the Special Meeting for
purposes of determining a quorum, without regard to whether the proxy is marked
as casting a vote or abstaining.
Approval and adoption of Proposal One requires the affirmative vote of
a majority of the outstanding shares of Common Stock. Abstentions and broker
non-votes will have the same effect as votes against Proposal One.
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Approval and adoption of Proposal Two requires the affirmative vote of
(i) a majority of the outstanding shares of Common Stock and Outstanding
Preferred Stock, (ii) a majority of the outstanding shares of Common Stock and
(iii) a majority of the shares of Outstanding Preferred Stock, voting together
as a class. Abstentions and broker non-votes will have the same effect as votes
against Proposal Two.
Approval and adoption of Proposal Three requires the affirmative vote
of a majority of the outstanding share of Common Stock present in person or by
proxy. Abstentions and broker non-votes will have the same effect as votes
against Proposal Three.
A list of all of the Company's stockholders entitled to notice of and
to vote at the Special Meeting will be available at the Special Meeting for
inspection by any stockholder upon request and during regular business hours at
the offices of the Company for the ten-day period prior to the Special Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
In addition to the Common Stock, the Company has four classes of
Preferred Stock entitled to vote at the Meeting: (i) Series A Preferred Stock,
of which 250,000 shares are outstanding as of the Record Date, (ii) Series B
Preferred Stock, of which 547,500 shares are outstanding as of the Record Date,
(iii) Series C Preferred Stock, of which 10,000 shares are outstanding as of the
Record Date, and (iv) Series D Preferred Stock, of which 3.15 shares are
outstanding as of the Record Date.
Management
The following table sets forth certain information as of the Record
Date regarding (i) the beneficial ownership of the equity securities of the
Company by the executive officers and directors of the Company, and (ii) the
beneficial ownership of the equity securities of the Company by all executive
officers and directors of the Company as a group. As of the Record Date, there
were 8,551,263 shares of Common Stock issued and outstanding.
As of the Record Date, no executive officer or director of the Company
was the beneficial owner of any shares of Series B Preferred Stock, Series C
Preferred Stock, or Series D Preferred Stock.
9
<PAGE>
<TABLE>
<CAPTION>
Common Stock Series A Preferred Stock
-------------------------------------- ------------------------------------
Amount and Amount and
Nature of Nature of
Name/Address Beneficial Percent of Beneficial Percent of
of Beneficial Owner Ownership Class Ownership Class
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
John A. Blohm 202,500(1) 2.37% 5,000 2.00%
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Richard Butler 0 0 0 0
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Robert A. Eprile 800,000(2) 9.36 5,000 2.00
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
K. Ivan F. Gothner 192,000(3) 2.25 0 0
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Fredric W. Rittereiser 703,500(4) 8.22 0 0
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
William W. Uchimoto 0 0 0 0
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Fred S. Weingard 40,000(5) * 0 0
c/o The Ashton Technology
Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
All executive officers and 1,773,100 20.73 10,000 4.00
directors of the Company and
its subsidiaries as a group (7
persons)
</TABLE>
10
<PAGE>
* Represents less than 1%.
(1) Includes: (i) 12,500 shares of Common Stock held by John A. Blohm as Trustee
of the John A. Blohm Living Trust, (ii) 50,000 shares of Common Stock
issuable upon conversion of 5,000 shares of Series A Preferred Stock held by
Mr. Blohm, and (iii) 140,000 shares of Common Stock issuable upon exercise
of options to purchase Common Stock held by Mr. Blohm which are currently
exercisable at $4.00 per share. Mr. Blohm has agreed that such options may
not be exercisable unless the number of shares of Common Stock authorized
by the Company is increased in accordance with Proposal One.
(2) Includes 50,000 shares of Common Stock issuable upon conversion of 5,000
shares of Series A Preferred Stock held by Mr. Eprile.
(3) Includes 182,000 shares of Common Stock issuable upon exercise of warrants
to acquire Common Stock held by Mr. Gothner which are currently exercisable
at $5.85 per share. Includes 10,000 shares of Common Stock held jointly by
K. Ivan F. Gothner and Pamela S. Gothner. Mr. Gothner has agreed that such
warrants may not be exercisable unless the number of shares of Common Stock
authorized by the Company is increased pursuant to Proposal One.
(4) Includes: (i) 363,500 shares of Common Stock held of record by The Dover
Group, Inc. ("Dover"), a corporation of which Mr. Rittereiser is the sole
shareholder, director and officer, (ii) 240,000 shares of Common Stock
issuable upon the exercise of 240,000 warrants held by Dover which are
currently exercisable at $5.85 per share, and (iii) 100,000 shares held by
Mr. Rittereiser's wife, of which Mr. Rittereiser disclaims beneficial
ownership. Dover has agreed that such warrants may not be exercisable unless
the number of shares of Common Stock authorized by the Company is increased
pursuant to Proposal One.
(5) Includes 40,000 shares of Common Stock issuable upon exercise of options to
purchase Common Stock held by Mr. Weingard which are currently exercisable
at $14.25 per share. Mr. Weingard has agreed that such options may not be
exercisable unless the number of shares of Common Stock authorized by the
Company is increased pursuant to Proposal One.
Certain Beneficial Owners
Common Stock. The following table sets forth certain information as of
April 16, 1998 regarding each person who is known by the Company to own
beneficially more than five percent of the Common Stock:
Common Stock
----------------------------
Amount and
Nature of
Name/Address of Beneficial Percent
Beneficial Owner Ownership Owned
- ---------------- ---------- ---------
Kenneth Arthur Stokes 1,035,000(1) 10.48%
Fosseway South - Milds
BA34AN, England
The Dover Group, Inc. 603,502(2) 7.26
70 East Water Street
Toms River, NJ 08753
(1) Represents 825,000 shares of Common Stock issuable upon conversion of 82,500
shares of Series A Preferred Stock held by Mr. Stokes and 210,000 shares of
Common Stock issuable upon conversion of 35,000 shares of Series B Preferred
Stock held by Mr. Stokes.
(2) Includes 240,000 shares of Common Stock issuable upon the exercise of
240,000 warrants held by Dover, which are currently exercisable at $5.85
per share. Fredric W. Rittereiser, the Company's president and chief
executive officer, is the sole shareholder, director and officer of Dover
and, consequently, may be deemed the beneficial owner of the shares of
Common Stock held by Dover. Dover has agreed that such warrants may not be
exercisable unless the number of shares of Common Stock authorized by the
Company is increased pursuant to Proposal One.
11
<PAGE>
Series A Preferred Stock. The following table sets forth certain
information as of April 16, 1998 regarding each person who is known by the
Company to own beneficially more than five percent of the issued and outstanding
Series A Preferred Stock:
Series A Preferred Stock
----------------------------
Amount and
Nature of
Name/Address of Beneficial Percent
Beneficial Owner Ownership Owned
- ---------------- ---------- ---------
Kenneth Arthur Stokes 82,500 33.00%
Fosseway South - Milds
BA34AN, England
Brian Walsh 12,500 5.00
11 MacClesfield Drive
Medford, NJ 08055
Kenneth Yourish 20,000 8.00
31-62 29th Street
Astoria, NY 11106
Series B Preferred Stock. The following table sets forth certain
information as of April 16, 1998 regarding each person who is known by the
Company to own beneficially more than five percent of the issued and outstanding
Series B Preferred Stock:
Series B Preferred Stock
----------------------------
Amount and
Nature of
Name/Address of Beneficial Percent
Beneficial Owner Ownership Owned
- ---------------- ---------- ---------
Kenneth Arthur Stokes 35,000 6.39%
Fosseway South - Milds
BA34AN, England
Series C Preferred Stock. The following table sets forth certain
information as of April 16, 1998 regarding each person who is known by the
Company to own beneficially more than five percent of the issued and outstanding
Series C Preferred Stock:
12
<PAGE>
Series C Preferred Stock
----------------------------
Amount and
Nature of
Name/Address of Beneficial Percent
Beneficial Owner Ownership Owned
- ---------------- ---------- ---------
Avalon Capital Limited 10,000 100.0%
17 Farisfort Terrace
Dublin 2, Ireland
Series D Preferred Stock. The following table sets forth certain
information as of April 16, 1998 regarding each person who is known by the
Company to own beneficially more than five percent of the issued and outstanding
Series D Preferred Stock:
Series D Preferred Stock
----------------------------
Amount and
Nature of
Name/Address of Beneficial Percent
Beneficial Owner Ownership Owned
- ---------------- ---------- ---------
Dominion Capital Fund, Ltd. 1 31.74%
c/o/ Citco Fund Services
Limited
Bahamas Financial Center
Charlotte & Sherley Streets,
Third Floor
Nassau, Bahamas
Canadian Advantage Limited 1 31.74
Partnership
365 Bay Street, Tenth Floor
Toronto, Ontario M5H2V2
Excalibur Limited Partner 1/4 7.94
365 Bay Street, Tenth Floor
Toronto, Ontario M5H2V2
Sovereign Partners Limited 3/4 23.81
Partnership
365 Bay Street, Tenth Floor
Toronto, Ontario M5H2V2
13
<PAGE>
MANNER AND EXPENSES OF SOLICITATION
Solicitation of proxies will be undertaken by officers and employees of
the Company, on behalf of the Board, by mail, telephone, facsimile and personal
contact. All costs thereof will be borne by the Company. In addition, the
Company may make arrangements with brokerage houses, banks and other custodians,
nominees and fiduciaries to forward proxy materials to the beneficial owners of
the Company's Common Stock and Preferred Stock and to request authority for the
execution of proxies. If it does so, the Company will reimburse such
organizations for their reasonable expenses in connection therewith.
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the proxy statement to
be issued in connection with the Company's 1998 Annual Meeting of Stockholders
must be mailed to the Corporate Secretary, The Ashton Technology Group, Inc.,
1900 Market Street, Suite 701, Philadelphia, PA 19103, and must be received by
the Corporate Secretary on or before May 8, 1998. The Company will consider only
proposals meeting the requirements of the applicable rules of the Securities and
Exchange Commission.
14
<PAGE>
INCORPORATION BY REFERENCE
The Company incorporates herein by reference information set forth in
the Annual Report on Form 10-KSB of the Company for the fiscal year ended March
31, 1997 and the Quarterly Reports on Form 10-QSB of the Company for the periods
ended June 30, 1997, September 30, 1997 and December 31, 1997. The Company will
provide, without charge, to each stockholder, upon such stockholder's written or
oral request, the aforementioned documents by first class mail or other equally
prompt means within one business day of receipt of such request. Requests for
such documents should be directed to:
The Ashton Technology Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Tel.: (215) 751-1900
Attention: John A. Blohm
Corporate Secretary
By Order of the Board of Directors,
FREDRIC W. RITTEREISER
President and Chief Executive Officer
Philadelphia, Pennsylvania
May __, 1998
15
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE ASHTON TECHNOLOGY GROUP, INC.
-----------------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------------
The Ashton Technology Group, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies as follows:
1. The Certificate of Incorporation of the Corporation was filed in the
office of the Secretary of State of Delaware on February 16, 1994 and amendments
to the Certificate of Incorporation were subsequently duly filed and recorded
(the Certificate of Incorporation together with such amendments shall be
hereinafter referred to as the "Certificate of Incorporation").
2. The first paragraph of ARTICLE FOURTH of the Certificate of
Incorporation is hereby amended to read in full as follows:
FOURTH: The total number of all classes of stock which the Corporation
shall have authority to issue shall be 63,000,000, of which 60,000,000
shares shall be common stock, having a par value of $.01 per share, and
3,000,000 shares shall be preferred stock, having a par value of $.01
per share.
3. The aforesaid amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
A-1
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this certificate to be signed by its President and attested
by its Secretary this ____ day of May, 1998.
THE ASHTON TECHNOLOGY GROUP, INC.
By:______________________________
Frederic W. Rittereiser
President
[Corporate Seal]
Attest:
By:_________________________
[INSERT NAME]
Secretary
A-2
<PAGE>
[FORM OF COMMON STOCK PROXY]
THE ASHTON TECHNOLOGY GROUP, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
The undersigned stockholder hereby appoints John A. Blohm, Robert A. Eprile and
Fredric W. Rittereiser and each of them, each with full power to act alone and
with power of substitution, as proxy or proxies for the undersigned, to attend
the Special Meeting of the Stockholders of The Ashton Technology Group, Inc.
(the "Company"), to be held at 10:00 a.m. on Friday, May 29, 1998, at the
Company's corporate headquarters located at 1900 Market Street, Suite 701,
Philadelphia, Pennsylvania 19103 or at any postponements, continuations or
adjournments thereof, and to vote all shares of common stock of the Company held
by the signatory at the close of business on May 8, 1998, hereby revoking any
proxy or proxies heretofore given and ratifying and confirming all that said
proxies may do or cause to be done by virtue hereof with respect to the matters
described on the reverse side.
This Proxy, when executed, will be voted in the manner directed herein. If no
direction is made, this Proxy will be voted (i) FOR the proposal to amend the
Certificate of Incorporation of the Company to increase the authorized number of
shares of Common Stock from 20,000,000 to 60,000,000, (ii) FOR the proposal to
amend the Certificate of Incorporation of the Company to increase the authorized
number of shares of Preferred Stock from 1,000,000 to 3,000,000, and (iii) FOR
the proposal to authorize the issuance of Common Stock pursuant to certain put
rights and upon the conversion or exercise of the Securities issuable pursuant
to the Private Equity Line of Credit Agreement, dated as of April 2, 1998 among
the Company, Settondown Capital International, Ltd. and the purchasers referred
to therein. With respect to the tabulation of proxies for purposes of each of
the foregoing proposals, abstentions and broker non-votes are treated as votes
AGAINST the proposal.
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting, or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE ASHTON TECHNOLOGY GROUP, INC.
(Continued and to be signed on reverse side.)
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU
VOTE "FOR" THE THREE PROPOSALS
[X] Please mark
votes as in
this sample
-----------
COMMON
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BELOW BY
THE UNDERSIGNED STOCKHOLDER.
1. Proposal One: To amend the FOR AGAINST ABSTAIN
Certificate of Incorporation of [ ] [ ] [ ]
The Ashton Technology
Group, Inc. to increase the
number of authorized shares
of common stock.
2. Proposal Two: To amend the FOR AGAINST ABSTAIN
Certificate of Incorporation of [ ] [ ] [ ]
The Ashton Technology
Group, Inc. to increase the
number of authorized shares
of preferred stock.
3. Proposal Three: To approve FOR AGAINST ABSTAIN
the issuance of Common [ ] [ ] [ ]
Stock pursuant to certain put
rights and upon the conversion
or exercise of the Securities
issuable pursuant to the Equity
Line of Credit.
Signature(s)________________________________ Date_____________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE>
[FORM OF PREFERRED STOCK PROXY]
THE ASHTON TECHNOLOGY GROUP, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
The undersigned stockholder hereby appoints John A. Blohm, Robert A. Eprile and
Fredric W. Rittereiser and each of them, each with full power to act alone and
with power of substitution, as proxy or proxies for the undersigned, to attend
the Special Meeting of the Stockholders of The Ashton Technology Group, Inc.
(the "Company"), to be held at 10:00 a.m. on Friday, May 29, 1998, at the
Company's corporate headquarters located at 1900 Market Street, Suite 701,
Philadelphia, Pennsylvania 19103 or at any postponements, continuations or
adjournments thereof, and to vote all shares of preferred stock of the Company
held by the signatory at the close of business on May 8, 1998, hereby revoking
any proxy or proxies heretofore given and ratifying and confirming all that said
proxies may do or cause to be done by virtue hereof with respect to the matters
described on the reverse side.
This Proxy, when executed, will be voted in the manner directed herein. If no
direction is made, this Proxy will be voted FOR the proposal to amend the
Certificate of Incorporation of the Company to increase the authorized number of
shares of Preferred Stock from 1,000,000 to 3,000,000. With respect to the
tabulation of proxies for purposes of the proposal to amend the Company's
Certificate of Incorporation to increase the authorized number of shares of
Preferred Stock, abstentions and broker non-votes are treated as votes AGAINST
the proposal.
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE ASHTON TECHNOLOGY GROUP, INC.
(Continued and to be signed on reverse side.)
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU
VOTE "FOR" THE PROPOSAL
[X] Please mark
votes as in
this sample
------------
PREFERRED
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BELOW BY
THE UNDERSIGNED STOCKHOLDER.
2. Proposal Two: To amend the FOR AGAINST ABSTAIN
Certificate of Incorporation of [ ] [ ] [ ]
The Ashton Technology
Group, Inc. to increase the
number of authorized shares
of preferred stock.
Signature(s)________________________________ Date_____________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
