<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE ASHTON TECHNOLOGY GROUP, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(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 0-11 (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 0-11(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.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ASHTON TECHNOLOGY GROUP, INC. APPEARS HERE]
THE ASHTON TECHNOLOGY GROUP, INC.
1900 MARKET STREET
SUITE 701
PHILADELPHIA, PENNSYLVANIA 19103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 1, 1999
To the Holders of Common Stock of
THE ASHTON TECHNOLOGY GROUP, INC.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the "Annual
Meeting") of The Ashton Technology Group, Inc. (the "Company") will be held at
12:00 noon on Wednesday, September 1, 1999 at The Wyndham Franklin Plaza Hotel
at 17th and Race Street, Philadelphia, Pennsylvania for the purpose of
considering and voting upon the following matters:
1. The election of seven directors to serve until the next Annual Meeting
and until their successors have been duly elected and qualified; and
2. Any other business that may properly come before the meeting or any
postponement, continuation or adjournment thereof.
The close of business on July 6, 1999 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any postponement, continuation or adjournment thereof. Such
stockholders may vote in person or by proxy. A list of the stockholders
entitled to vote at the Annual 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 Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether you plan to
attend the Annual 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 Annual Meeting. This Notice of Annual Meeting and the
Proxy Statement and form of proxy are being sent or given to stockholders
commencing on or about July 19, 1999.
Sincerely,
/s/ Fredric W. Rittereiser
Fredric W. Rittereiser
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE REMEMBER TO RETURN YOUR PROXY PROMPTLY.
<PAGE>
[LOGO OF ASHTON TECHNOLOGY GROUP, INC. APPEARS HERE]
THE ASHTON TECHNOLOGY GROUP, INC.
1900 MARKET STREET
SUITE 701
PHILADELPHIA, PENNSYLVANIA 19103
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 1, 1999
This Proxy Statement and the accompanying form of proxy are being furnished
to the stockholders of The Ashton Technology Group, Inc., a Delaware
corporation (the "Company" or "Ashton"), in connection with the solicitation
of proxies by the Board of Directors (together, the "Board of Directors") for
use at the Annual Meeting of Stockholders of the Company to be held at The
Wyndham Franklin Plaza Hotel at 17th and Race Street, Philadelphia,
Pennsylvania on Wednesday, September 1, 1999, at 12:00 noon local time, and at
any postponement, continuation or adjournment thereof (the "Annual Meeting").
Only stockholders of record at the close of business on July 6, 1999 are
entitled to notice of, and to vote at, the Annual Meeting. The Notice of
Annual Meeting, Proxy Statement and form of proxy are being sent or given to
stockholders commencing on or about July 19, 1999.
At the Annual Meeting, stockholders will be asked to (i) elect seven
directors to serve until the next Annual Meeting of Stockholders and until
their successors have been duly elected and qualified and (ii) transact such
other business as may properly come before the Annual Meeting.
YOU ARE REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL
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,
/s/ Fredric W. Rittereiser
Fredric W. Rittereiser
Chairman and Chief Executive Officer
Philadelphia, Pennsylvania
July 19, 1999
<PAGE>
INTRODUCTION
Solicitation of Proxies
If the accompanying proxy is properly executed and returned, the shares of
the common stock, par value $.01 per share ("Common Stock") represented
thereby will be voted in accordance with the instructions specified in the
proxy. In the absence of instructions to the contrary, such shares will be
voted in favor of the election of the seven nominees for director whose names
are listed herein. The Board of Directors does not intend to bring any other
matters before the Annual Meeting and is not aware of any matters that will
come before the Annual Meeting other than those described in this Proxy
Statement. In the absence of instructions to the contrary, it is the intention
of the persons named in the accompanying proxy to vote such proxy in their
discretion with respect to such other matters, if any, that may properly come
before the Annual Meeting.
Manner and Expenses of Solicitation
Solicitation of proxies will be undertaken by officers and employees of the
Company, on behalf of the Board of Directors, by mail, telephone, facsimile
and personal contact. All costs thereof will be borne by the Company. The
Company may also make arrangements with brokerage houses, banks and other
custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of the Common 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. In
addition, the Company has entered into an arrangement with Corporate Investor
Communications, Inc. ("CIC"), whereby CIC shall act as proxy solicitor on
behalf of the Board of Directors in connection with the Annual Meeting,
soliciting proxies by mail, telephone, facsimile and personal contact. In
exchange for its services as proxy solicitor, CIC will receive payment of
approximately $4,000 from the Company.
Revocation of Proxy
Any stockholder may revoke his or her proxy at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to
such revocation). Any stockholder who signs and returns a proxy may revoke it
at any time before it has been voted by (i) delivering written notice of its
revocation to the Company, (ii) delivering to the Company a duly executed
proxy bearing a later date, or (iii) attending the Annual Meeting and voting
in person (although attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy).
Quorum and Required Vote
At July 6, 1999, the outstanding voting securities of the Company consisted
of 23,483,787 shares of Common Stock. Each share is entitled to one non-
cumulative vote for each director to be elected and one vote on each other
matter of business properly brought before the meeting.
The presence, in person or by proxy, of a majority of the outstanding shares
of Common Stock is necessary to constitute a quorum at the Annual Meeting.
Only stockholders of record at the close of business on July 6, 1999 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. A list of all of the Company's stockholders entitled to notice of and
to vote at the Annual Meeting will be available at the Annual 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 Annual
Meeting.
Shares of Common Stock represented by a properly signed and returned proxy
will be counted as present at the Annual Meeting for purposes of determining a
quorum, without regard to whether the proxy is marked as casting a vote or
abstaining.
Election of each director requires the affirmative vote of a majority of the
outstanding shares of Common Stock present in person or by proxy and entitled
to vote at the Annual Meeting. Abstentions and broker non-votes (which result
when a broker holding shares for a beneficial owner has not received timely
voting instructions on certain matters from such beneficial owner) will be
counted for quorum purposes, but will have no effect on the outcome of the
election of directors or on the vote with respect to the approval of any other
item.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees for Election as Directors
The Board of Directors currently consists of six (6) members: Fredric W.
Rittereiser, Fred S. Weingard, K. Ivan F. Gothner, Richard Butler, William W.
Uchimoto, and John A. Blohm. On June 29, 1999, Robert A. Eprile resigned from
the Board of Directors. Under the Company's Bylaws, the Board of Directors is
authorized to determine the number of directors of the Company. The number of
directors to be elected at the Annual Meeting has been fixed at seven (7). The
Board of Directors has nominated Fredric W. Rittereiser, Fred S. Weingard, K.
Ivan F. Gothner, Richard Butler, William W. Uchimoto, Arthur J. Bacci, and
Thomas G. Brown to be elected to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and
qualified. Mr. Eprile and Mr. Blohm are not standing for election as
directors.
Each nominee has consented to being a nominee and to serving as a director
if elected. In the event that any nominee should be unable to serve as a
director (which is not now anticipated), proxies will be voted for substitute
nominees recommended by the Board of Directors or the Board of Directors may
decide to reduce the number of directors. All of the nominees for election as
directors are presently members of the Board of Directors with the exception
of Arthur J. Bacci and Thomas G. Brown. The Board of Directors recommends a
vote FOR all of the nominees proposed by the Board of Directors.
Directors and Executive Officers of the Company
Set forth below is certain information about (i) the directors and executive
officers of the Company, (ii) Julio Gomez, a significant employee of the
Company, and (iii) the two individuals nominated for election who are not
currently serving as directors. For information concerning the number of
shares of Common Stock owned by each director and all directors and executive
officers as a group as of July 6, 1999, see "Security Ownership of Certain
Beneficial Owners and Management."
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Fredric W. Rittereiser(1).. 62 Chairman, Chief Executive Officer, and
Director
Arthur J. Bacci(1)......... 40 President, Chief Operating Officer, Chief
Financial Officer, and Nominee
William W. Uchimoto(1)..... 43 Executive Vice President, General Counsel, and
Director
Fred S. Weingard(1)........ 46 Executive Vice President, Chief Technology
Officer, and Director
K. Ivan F. Gothner(1)...... 41 Director
Richard E. Butler(1)....... 63 Director
Thomas G. Brown(1)......... 53 Nominee
John A. Blohm.............. 53 Director
Robert A. Eprile........... 44 Former Director
Julio Gomez................ 39 Chairman and Chief Executive Officer, Gomez
Advisors, Inc. (subsidiary of the Company)
</TABLE>
- --------
(1) Nominee for election as director.
Fredric W. Rittereiser has been Chairman of the Board of Directors since
March 24, 1999. Mr. Rittereiser has been Chief Executive Officer of the
Company since October 1996 and a member of the Board of Directors since
December 1996. Mr. Rittereiser also serves as Chairman, Chief Executive
Officer and director of Universal Trading Technologies Corporation
("UTTC(TM)") and as a director of Gomez Advisors, Inc. ("Gomez Advisors");
both majority owned subsidiaries of the Company. Mr. Rittereiser has been an
independent management consultant since 1990, mainly serving companies
involved in the financial services industry, having held senior management
positions with a number of investment banking firms prior to becoming an
independent management consultant. He also has extensive experience in the
development and introduction of electronic securities trading systems, having
served as President, Chief Operating Officer and director of Instinet
Corporation, a publicly held company, from 1983 through 1985.
3
<PAGE>
Arthur J. Bacci has been President and Chief Operating Officer since March
24, 1999. Since August 1998, Mr. Bacci has served as Chief Financial Officer
of the Company and UTTC(TM). Mr. Bacci is also a director of Gomez Advisors.
Immediately prior to joining the Company in 1998, Mr. Bacci was a Senior
Manager at KPMG. From 1995 to 1997, Mr. Bacci was a Principal Consultant with
Price Waterhouse. Before joining Price Waterhouse, Mr. Bacci held various
positions with William E. Simon & Sons and its affiliates since 1989.
William W. Uchimoto has been a member of the Board of Directors since June
1998 and serves as Executive Vice President and General Counsel of the Company
and UTTC(TM). Mr. Uchimoto also serves as the President of NextExchange, Inc.,
a subsidiary of UTTC(TM). Mr. Uchimoto joined UTTC(TM) in the fall of 1997 as
Executive Vice President of International Business Development. Mr. Uchimoto
served as Associate General Counsel of the Philadelphia Stock Exchange from
1986 to 1987, at which time he was appointed General Counsel, a position he
held until 1997. From 1981 to 1986, Mr. Uchimoto was an attorney with the
Securities and Exchange Commission ("SEC").
Fred S. Weingard has been Executive Vice President of Technology and
Advanced Computing Programs since July 1996 and a member of the Board of
Directors since October 1996. Mr. Weingard also serves as the President of
UTTC(TM). Mr. Weingard was employed as a principal of Booz Allen & Hamilton
Inc. ("Booz Allen") from 1985 until June 1996. Mr. Weingard was the founder
and director of Booz Allen's Advanced Computational Technologies & Systems.
Mr. Weingard is a Professional Engineer in Mechanical Engineering and is
registered in New York State and Washington State. Mr. Weingard has expertise
in the field of neural networks and has been an invited panelist/lecturer for
government, industry, academia, and professional societies. He has authored
over 12 scientific papers and publications and holds patents on several
inventions.
K. Ivan F. Gothner has been a member of the Board of Directors since
December 1997 and a director of Gomez Advisors since May 1997. Mr. Gothner is
Managing Director and founder of Adirondack Capital, LLC, ("Adirondack") a
private merchant banking firm, which focuses on serving small and mid-size
growth companies. Mr. Gothner also served as Managing Director of First United
Equities Corporation ("First United") from 1995 to 1997. First United was the
managing underwriter of the Company's initial public offering, for which it
received customary compensation. From 1994 to 1995, Mr. Gothner served as the
Executive Vice President and interim Chief Operating Officer of Breasy Medical
Equipment (USA) Inc. Mr. Gothner is also a director of Laminaire Corporation,
a publicly traded company.
Richard E. Butler has been a member of the Board of Directors since February
1998. Mr. Butler has been an independent management and marketing consultant
since 1984. Throughout his career, Mr. Butler has been active in marketing and
strategic development for a variety of public and private companies. Mr.
Butler has held executive positions with organizations including CBS, Prepared
Products and has served as President and Chief Executive Officer of BBDO/West.
His work experience has focused on new and emerging companies and industries
ranging from financial services to consumer products. Mr. Butler has served as
a director of several public and private companies and was a founding director
of Metrobank, now Comerica.
John A. Blohm has been a member of the Board of Directors since 1994. Mr.
Blohm also served as Executive Vice President of the Company from December
1996 until January 1999. In March 1995, Mr. Blohm became Executive Vice
President of UTTC(TM). Prior to 1995, Mr. Blohm served as President and
Chairman of the Board of Directors of Computer Science Innovations, Inc.
("CSI"), a former subsidiary of the Company.
Robert A. Eprile served as a member of the Board of Directors from 1994
until his resignation on June 29, 1999. Mr. Eprile served as Chairman of the
Board of Directors of the Company from December 1995 until March 24, 1999 and
as its Chief Financial Officer from October 1996 until August 1998. Mr. Eprile
also served as President and Chief Executive Officer of UTTC(TM) from its
inception in February 1995 until January 1999. Until 1994, Mr. Eprile was
President of Eprile & Associates, a management consulting firm.
Julio Gomez co-founded Gomez Advisors and has served as its Chief Executive
Officer and as a director since its inception in May 1997 and as Chairman of
the Board since April 1999. He also served as President
4
<PAGE>
from its inception until April 1999. Prior to founding Gomez Advisors, Mr.
Gomez was a Senior Analyst in the Money and Technology Strategies Service at
Forrester Research, Inc., a research and consulting firm, from 1996 to 1997.
In 1992, Mr. Gomez founded North Bridge Securities, a securities firm focusing
on broker/dealer aspects of municipal bond underwriting, in Boston,
Massachusetts. In 1994, North Bridge merged with R.W. Corby and Co. to form
Corby North Bridge Securities where Mr. Gomez served as Chairman and Chief
Executive Officer from 1994 to 1996.
Thomas G. Brown has been President and Managing Director of Wyndham Capital
Corporation, an investment banking and research firm since he founded it in
1996. Mr. Brown was also a co-founder of Ablum, Brown & Company, an investment
banking firm specializing in leveraged buyout transactions. He served as its
Managing Director from January 1988 until December 1995. Prior to his tenure
with Ablum, Brown & Company, Mr. Brown served as principal of several
investment management and investment banking firms including seven years as a
principal of Deihl, Speyer & Brown, a regional investment banking firm. Mr.
Brown is a Chartered Financial Analyst.
Committees of the Board of Directors
The Board of Directors has three committees: a Compensation Committee, an
Audit Committee, and a Nominating Committee. The Audit Committee is comprised
of K. Ivan F. Gothner and Richard E. Butler. The Audit Committee considers and
reviews all matters arising in connection with external audit reports,
auditors' management reports and related matters. The Compensation Committee
is comprised of Fredric Rittereiser, Richard E. Butler and K. Ivan F. Gothner.
The Compensation Committee reviews the compensation of all officers of the
Company and administers the Company's employee stock option plans. The Audit
Committee met six times during the last fiscal year. The Compensation
Committee met three times during the last fiscal year.
The Board of Directors formed the Nominating Committee in May 1999. The
Nominating Committee consists of Mr. Gothner and Mr. Butler. The Nominating
Committee reviews possible candidates for the Board of Directors and
recommends the nominees for directors to the Board of Directors for approval.
The Nominating Committee considers suggestions from many sources, including
shareholders, regarding possible candidates for director. Such suggestions,
together with appropriate biographical information, should be submitted to the
Secretary of the Company. The Nominating Committee met once since it was
formed.
The Board of Directors held 16 meetings during the last fiscal year. Each of
the Company's directors attended at least 75% of the aggregate of all meetings
of the Board of Directors and of all committees of which he was a member held
during the portion of the year that he was a member of the Board of Directors
or committee member.
Compensation of Directors
The directors of the Company who are also executive officers have not been
compensated for their service as directors. Commencing April 1, 1999, each
non-employee director began receiving a monthly retainer fee of $5,000. In
addition, the Chairman of the Audit Committee is paid an additional monthly
fee of $2,500. The following table describes the fees paid to directors of the
Company who are not executive officers and to be paid to Mr. Brown, a director
nominee:
<TABLE>
<CAPTION>
Board
Retainer Consulting
Name Fees Fees
- ---- ------------ -------------
<S> <C> <C>
Richard E. Butler(1)................................. $7,500/month --
K. Ivan F. Gothner(1)................................ $5,000/month $10,000/month
Thomas G. Brown(1)................................... $5,000/month --
</TABLE>
- --------
(1) See "Certain Relationships and Related Transactions."
5
<PAGE>
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Mr. Weingard, Ashton, and UTTC(TM) are parties to a letter agreement dated
as of June 21, 1996 which provides that Mr. Weingard is to serve as Executive
Vice President of Technology and Advance Programs of UTTC(TM) for a three-year
term. The agreement provides for a base salary of at least $185,000 per year
to be determined annually by the Board of Directors of Ashton and UTTC(TM).
Pursuant to the agreement, Mr. Weingard is eligible for a bonus every six
months. Each bonus is based upon Mr. Weingard's individual performance and the
overall performance of UTTC(TM) and is guaranteed to be no less than $40,000.
The agreement also provides that Mr. Weingard is entitled to participate in
the standard fringe benefits package generally available to all executive
management employees of Ashton and UTTC(TM). In connection with the execution
of the agreement, Mr. Weingard was granted a five-year option to purchase
250,000 shares of UTTC(TM) common stock at a price of $1.50 per share which
became exercisable on July 8, 1998 and an option to purchase 100,000 shares of
Common Stock at $14.25 and vesting over the term of the agreement. The
agreement also provides that UTTC(TM) shall maintain Officer's Errors and
Omissions Insurance including Mr. Weingard as an insured. In the event of Mr.
Weingard's termination by UTTC(TM), with or without cause, UTTC(TM) shall pay
Mr. Weingard one month's base salary for each whole or partial six-month
period of employment remaining under the agreement and a pro rata share of his
semi-annual bonus. The agreement also contains customary provisions regarding
confidentiality and non-competition. On June 24, 1999, the Compensation
Committee of the Board of Directors and Mr. Weingard agreed to a three-year
extension of the agreement. In addition, the terms of the agreement were
modified such that as of July 1, 1999, Mr. Weingard's salary was increased to
$265,000 per year with no guaranteed bonus. Additionally, the Compensation
Committee granted Mr. Weingard a five-year option to purchase 100,000 shares
of Common Stock at a price of $10.50 per share, which became exercisable on
June 24, 1999, and the Company agreed to register 150,000 shares of Common
Stock underlying options granted to Mr. Weingard on July 15, 1998.
The Company and Mr. Bacci entered into an Employment Agreement dated as of
July 13, 1998 pursuant to which the Company agreed to employ Mr. Bacci and he
agreed to serve as Senior Vice President and Chief Financial Officer of the
Company for a three-year term. The agreement provides for an annual base
salary of $150,000, as well as a one-time lump sum payment of $68,000 related
to relocation expenses. As of June 30, 1999, Mr. Bacci's salary was $180,000
per year. Under the agreement, Mr. Bacci is eligible to participate in any
bonus plan established for executives of the Company and is entitled to all
benefits provided to similarly situated employees of the Company. In
connection with the execution of the agreement, the Company granted Mr. Bacci
a five-year option to purchase 150,000 shares of Common Stock at $3.188, a
five-year warrant to purchase 250,000 shares of common stock of UTTC(TM) at a
price of $1.00 per share, a five-year option to purchase 50,000 shares of
common stock of Gomez Advisors, Inc. at a price of $2.00 per share, a five-
year option to purchase 100,000 shares of common stock of Electronic Market
Center, Inc. at a price to be determined and a five-year option to purchase
100,000 shares of common stock of ATG(TM) International, Inc. at a price to be
determined. UTTC(TM), Gomez Advisors, Inc., Electronic Market Center, Inc. and
ATG(TM) International, Inc. are subsidiaries of the Company. All of the
options granted in connection with the execution of the agreement vest over
the term of the agreement. In the event of Mr. Bacci's termination without
cause, the Company will pay his salary for six months and continue his
benefits for the duration of the term of the agreement. The agreement also
contains customary confidentiality and non-competition provisions.
Mr. Gomez and the Company are parties to a letter agreement dated August 4,
1998 which provides for the Company's employment of Mr. Gomez as President and
Chief Executive Officer of Gomez Advisors, Inc. for a term of three years
expiring on May 15, 2000. Under the agreement, Mr. Gomez is paid a salary of
$15,000 per month and is entitled to the standard benefits for executives of
the Company in similar positions. Mr. Gomez was granted a five-year option to
purchase 150,000 shares of Common Stock at $1.875 per share, a warrant to
purchase 250,000 shares of common stock of UTTC(TM) at a price of $1.00 per
share, options to purchase 1,500,000 shares of common stock of Gomez Advisors,
Inc. at a price of $.01 per share and options to purchase 1,000,000 shares of
common stock of Gomez Advisors, Inc. at a price of $1.00 per share. The option
to purchase Common Stock vests over the term of the agreement or immediately
in the event of a change of control of the Company. The agreement also
contains customary provisions regarding confidentiality and non-competition.
6
<PAGE>
On January 22, 1999, Gomez Advisors, certain persons affiliated with Gomez
Advisors, and certain persons affiliated with ATG(TM) entered into an Exchange
Agreement pursuant to which, among other things, Mr. Gomez (i) exchanged
options to purchase 1,500,000 shares of Gomez Advisors common stock at an
exercise price of $.01 per share and paid $.01 per share for 1,051,000 shares
of Gomez Advisors Class A common stock, and (ii) exchanged options to purchase
1,000,000 shares of Gomez Advisors common stock at an exercise price of $1.00
per share for an option to purchase 1,501,000 shares of Gomez Advisors Class A
common stock at $.011 per share.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Management
The following tables set forth certain information as of July 6, 1999
regarding (i) the beneficial ownership of the equity securities of the Company
and certain of its subsidiaries by the executive officers and directors of the
Company and (ii) the beneficial ownership of the equity securities of the
Company and certain of its subsidiaries by all executive officers and
directors of the Company as a group. As of July 6, 1999, there were 23,483,787
shares of Common Stock issued and outstanding.
1. Common Stock
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent
Beneficial Owner** Ownership of Class
- ------------------- ---------- --------
<S> <C> <C>
Arthur J. Bacci....................................... 50,400(1) *
John A. Blohm......................................... 888,750(2) 3.6%
Thomas G. Brown....................................... 50,000(3) *
Richard Butler........................................ 180,000(4) *
Robert A. Eprile...................................... 803,000(5) 3.3%
Julio Gomez........................................... 99,000(6) *
K. Ivan F. Gothner.................................... 1,018,001(7) 4.2%
Fredric W. Rittereiser................................ 1,763,500(8) 7.2%
William W. Uchimoto................................... 180,000(9) *
Fred S. Weingard...................................... 738,750(10) 3.0%
All executive officers and directors of the Company as
a group (10 persons)................................. 5,771,401 20.4%
</TABLE>
- --------
* Represents less than 1%.
** The address of each of the beneficial owners in the foregoing table, with
the exception of Mr. Eprile, is c/o The Ashton Technology Group, Inc., 1900
Market Street, Suite 701, Philadelphia, PA 19103. Mr. Eprile's address is 1
Columbus Place, New York, New York 10019.
(1) Represents (i) 50,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock, which are currently exercisable at
$3.1875 per share; and (ii) 400 shares of Common Stock held jointly by Mr.
Bacci and his wife.
(2) Includes: (i) 350,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock which are currently exercisable at $4.00
per share; and (ii) 538,750 shares of Common Stock issuable upon exercise
of options to purchase Common Stock which will become exercisable on July
15, 1999 at $1.875 per share.
(3) Represents 50,000 shares of Common Stock issuable upon exercise of stock
options, which are currently exercisable at $1.875 per share.
(4) Represents 180,000 shares of Common Stock issuable upon exercise of stock
options, which will become exercisable on July 15, 1999 at $1.875 per
share.
(5) Includes: (i) 500,000 shares of Common Stock issuable upon exercise of
stock options which are currently exercisable at $1.875 per share; and
(ii) 303,000 shares of Common Stock held by Mr. Eprile.
7
<PAGE>
(6) Includes: (i) 49,500 shares of Common Stock issuable upon exercise of
options to purchase Common Stock which are currently exercisable at $1.875
per share; and (ii) 49,500 shares of Common Stock issuable upon exercise
of options to purchase Common Stock which will become exercisable on July
15, 1999 at $1.875 per share.
(7) Includes: (i) 163,993 shares of Common Stock issuable upon exercise of
warrants to acquire Common Stock which are currently exercisable at $5.85
per share; (ii) 750,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock which will become exercisable on July 15,
1999 at $1.875 per share; and (iii) 104,008 shares of Common Stock held
jointly by Mr. Gothner and his wife.
(8) Mr. Rittereiser may be deemed to be the beneficial owner of: (i) 513,500
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) 150,000 shares of Common Stock issuable upon the
exercise of warrants held by Dover which are currently exercisable at
$5.85 per share; (iii) 1,000,000 shares of Common Stock issuable upon
exercise of options to purchase Common Stock which will become exercisable
on July 15, 1999 at $1.875 per share; and (iv) 100,000 shares held by Mr.
Rittereiser's wife as a gift from her father, Frederick Weimmer, Sr., of
which Mr. Rittereiser disclaims beneficial ownership.
(9) Represents 180,000 shares of Common Stock issuable upon exercise of stock
options, which will become exercisable on July 15, 1999 at $1.875 per
share.
(10) Includes: (i) 100,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock which are currently exercisable at
$14.25 per share; (ii) 538,750 shares of Common Stock issuable upon
exercise of options to purchase Common Stock which will become
exercisable on July 15, 1999 at $1.875 per share; and (iii) 100,000
shares of Common Stock issuable upon exercise of options to purchase
Common Stock which are currently exercisable at $10.50 per share.
2. Universal Trading Technologies Corporation ("UTTC(TM)") (Majority Owned
Subsidiary), Common Stock, par value $.01 per share
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner** Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
Fredric Rittereiser............................... 333,334(1) 1.4%
Fred S. Weingard.................................. 250,000(2) 1.0%
Arthur J. Bacci................................... 82,500(3) *
Julio Gomez....................................... 82,500(4) *
Robert A. Eprile.................................. 749,965(5) 3.0%
</TABLE>
- --------
*Represents less than 1%.
** The address of each of the beneficial owners in the foregoing table, with
the exception of Mr. Eprile, is c/o The Ashton Technology Group, Inc., 1900
Market Street, Suite 701, Philadelphia, PA 19103. Mr. Eprile's address is 1
Columbus Place, New York, New York 10019.
(1) Includes 333,334 shares of common stock held by Dover.
(2) Includes 250,000 shares of common stock issuable upon exercise of options
to purchase common stock, which are currently exercisable at $1.50 per
share.
(3) Includes 82,500 shares of common stock issuable upon exercise of options
to purchase common stock, which will become exercisable on July 13, 1999
at $1.00 per share.
(4) Includes 82,500 shares of common stock issuable upon exercise of options
to purchase common stock, which will become exercisable on September 30,
1999 at $1.00 per share.
(5) On June 29, 1999, the Company and Mr. Eprile entered into an agreement
providing for, among other things, receipt of 416,632 shares of common
stock of UTTC(TM), see "Certain Relationships and Related Transactions."
8
<PAGE>
3. Gomez Advisors, Inc. (Majority Owned Subsidiary), Class A Common Stock, par
value $.0001 per share
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner* Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
Julio Gomez...................................... 1,801,500(1) 40.2%
Fredric W. Rittereiser........................... 531,000(2) 14.2%
K. Ivan F. Gothner............................... 300,000 8.0%
Arthur J. Bacci.................................. 200,000 5.4%
William W. Uchimoto.............................. 200,000 5.4%
Fred S. Weingard................................. 200,000 5.4%
</TABLE>
- --------
* The address of each of the beneficial owners in the foregoing table is c/o
The Ashton Technology Group, Inc., 1900 Market Street, Suite 701,
Philadelphia, PA 19103.
(1) Includes (i) 1,051,000 shares of common stock of Gomez Advisors, and (ii)
750,500 shares of common stock of issuable upon exercise of options to
purchase common stock of Gomez Advisors which are currently exercisable at
$.011 per share.
(2) Includes 31,000 shares of common stock of Gomez Advisors held by Dover.
Certain Beneficial Owners
The following table sets forth certain information as of July 6, 1999
regarding each person, other than directors and executive officers, who is
known by the Company to own beneficially more than five percent (5%) of the
Common Stock.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
The Dover Group, Inc.
20 Maple Street
Toms River, NJ 08753............................ 1,763,500(1) 7.2%
</TABLE>
- --------
(1) Includes (i) 513,500 shares of Common Stock held of record by Dover, (ii)
150,000 shares of Common Stock issuable upon the exercise of warrants held
by Dover which are currently exercisable at $5.85 per share, (iii)
1,000,000 shares of Common Stock held by Mr. Rittereiser issuable upon
exercise of options to purchase Common Stock which will become exercisable
on July 15, 1999 at $1.875 per share and (iv) 100,000 shares held by Mr.
Rittereiser's wife as a gift from her father, Frederick Weimmer, Sr., of
which Mr. Rittereiser disclaims beneficial ownership. Dover is a
corporation of which Mr. Rittereiser is the sole shareholder, director and
officer.
9
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth the amount of all compensation paid by the
Company during the years ended March 31, 1997, March 31, 1998, and March 31,
1999 to the Company's Chief Executive Officer and to the Company's most highly
compensated executive officers.
On July 1, 1999, the Company entered into deferred compensation plans with
each of its key executives. Pursuant to the plan, the Company will maintain
variable life key man life insurance policies on Mr. Rittereiser in the amount
of $2,000,000 and on Mr. Bacci, Mr. Uchimoto, and Mr. Weingard in the amount
of $900,000 each. The plan provides that the executive's interest in the
policy vests upon the first to occur of (i) the fifth anniversary of the
policy commencement date, provided the executive is still employed by the
Company; (ii) the executive's retirement from employment on or after age 65;
(iii) a determination that the executive is totally and permanently disabled;
or (iv) a change in control of the Company. Within 90 days following the date
upon which the executive's interest in the policy vests, the policy will be
transferred to the executive. Should the executive die prior to vesting of the
policy, the executive's designated beneficiary will receive the death benefits
associated with the policy, less premium payments made by the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------- -------------------------------------
Restricted Number LTIP All
Name and Salary Bonus Other Stock of Payouts Other
Principal Position Year ($) ($) ($) Total Awards Options ($) ($)
------------------ ---- ------- ------- -------- ------- ---------- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fredric W. Rittereiser.. 1997 -0- -0- -0- -0- -0- -0- -0- -0-
Chairman and Chief 1998(a) -0- -0- -0- -0- -0- -0- -0- -0-
Executive Officer 1999(a) -0- -0- 1,170(b) 1,170 -0- 1,000,000 -0- -0-
Arthur J. Bacci......... 1999 92,307 -0- 68,000(c) 160,307 -0- 250,000 -0- -0-
President, Chief
Operating Officer, and
Chief Financial Officer
William W. Uchimoto..... 1998 40,385 -0- -0- 40,385 -0- -- -0- -0-
Executive Vice 1999 119,851 25,000(d) -0- 144,841 -0- 280,000 -0- -0-
President and General
Counsel
Fred S. Weingard........ 1997 215,192 -0- -0- 215,192 -0- 100,000 -0- -0-
Executive Vice 1998 224,999 -0- -0- 224,999 -0- -- -0- -0-
President and Chief 1999 188,557 120,000 -0- 308,557 -0- 688,750 -0- -0-
Technology Officer
Julio Gomez............. 1998 40,385 -0- -0- 40,385 -0- -0- -0- -0-
Chairman and Chief 1999 145,670 -0- -0- 145,670 -0- 150,000 -0- -0-
Executive Officer,
Gomez Advisors, Inc.
John A. Blohm........... 1997 76,945 -0- 1,410(e) 78,355 -0- -0- -0- -0-
Former Executive Vice 1998 176,838 -0- -0- 176,838 -0- -0- -0- -0-
President 1999 145,527 60,000 -0- 205,527 -0- 538,750 -0- -0-
Robert A. Eprile........ 1997 92,308 -0- -0- 92,308 -0- -0- -0- -0-
Former Chairman and 1998 121,154 -0- -0- 121,154 -0- -0- -0- -0-
Chief Financial Officer 1999 168,846 -0- 25,000(f) 193,846 -0- 800,000(g) -0- -0-
Raymond T. Tate......... 1997(h) 143,937 4,500 531,063 679,500 -0- -0- -0- -0-
Former Chairman, 1998(i) -0- 6,000 120,000 126,000 -0- -0- -0- -0-
President, and Chief 1999(i) -0- 3,500 87,692 91,692 -0- -0- -0- -0-
Executive Officer
</TABLE>
- --------
(a) Dover was paid $125,000 and $235,000 in consulting fees for the fiscal
years ended March 31, 1998 and 1999, respectively. Mr. Rittereiser is the
sole shareholder, director and officer of Dover.
(b) Represents the payments of the premium of a life insurance policy for the
benefit of the family of Mr. Rittereiser.
(c) Represents a one-time lump sum payment for the reimbursement of relocation
expenses.
(d) Represents one-time signing bonus paid upon becoming an officer of the
Company.
10
<PAGE>
(e) Represents the payments of the premium of a life insurance policy for the
benefit of the family of Mr. Blohm.
(f) Represents payments to compensate Mr. Eprile for out-of-pocket expenses.
(g) On June 29, 1999, the Company and Mr. Eprile entered into an agreement
providing for, among other things, the amendment of the option to purchase
common stock which was granted to Mr. Eprile on July 15, 1998 to reduce
the number of shares from 800,000 to 500,000, see "Certain Relationships
and Related Transactions."
(h) Represents payments of the premium of a life insurance policy for the
benefit of the family of Mr. Tate through October 22, 1996, the date of a
Settlement Agreement pursuant to which Mr. Tate resigned from all
positions within the Company, and certain other expenditures, and $252,000
in additional funds agreed to under the Settlement Agreement, of which
$53,269 was paid in the fiscal year ended March 31, 1997; does not reflect
any payments made to Mr. Tate in connection with the Settlement Agreement
otherwise than in his position as Chairman, President or Chief Executive
Officer.
(i) Represents payment of consulting fees and automobile allowances to Raymond
Tate Associates, Inc. and Raymond Tate in connection with the Settlement
Agreement. See "Certain Relationships and Related Transactions."
Since inception, the Company has not granted stock appreciation rights and
does not have a defined benefit or actuarial plan.
Option Grants in Last Fiscal Year
The following table sets forth, for each of the named executive officers,
certain information concerning options granted during the fiscal year ended
March 31, 1999.
Option/SAR Grants in Last Fiscal Year Individual Grants
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options Granted Exercise or
Underlying Options to Employees in Base Price Expiration
Name Granted (#) Fiscal year ($/share) Date
---- ------------------ --------------- ----------- --------------
<S> <C> <C> <C> <C>
Fredric W. Rittereiser.. 1,000,000 17.5% $1.875 July 15, 2003
Arthur J. Bacci......... 150,000 2.6% $3.188 July 15, 2003
Arthur J. Bacci......... 100,000 1.7% $2.000 March 31, 2004
William W. Uchimoto..... 180,000 3.1% $1.875 July 15, 2003
William W. Uchimoto..... 100,000 1.7% $2.000 March 31, 2004
Fred S. Weingard........ 538,750 9.4% $1.875 July 15, 2003
Fred S. Weingard........ 150,000 2.6% $2.000 March 31, 2004
Julio Gomez............. 150,000 2.6% $1.875 July 15, 2003
John A. Blohm........... 538,750 9.4% $1.875 July 15, 2003
Robert A. Eprile........ 800,000(1) 14.0% $1.875 July 15, 2003
</TABLE>
- --------
(1) On June 29, 1999, the Company and Mr. Eprile entered into an agreement
providing for, among other things, the amendment of the option to purchase
common stock which was granted to Mr. Eprile on July 15, 1998 to reduce
the number of shares from 800,000 to 500,000, see "Certain Relationships
and Related Transactions."
Aggregated Option Exercises in Year Ended March 31, 1999 and Year End Option
Values
None of the named executive officers exercised any options during the fiscal
year ended March 31, 1999. The following table sets forth, certain information
concerning the number of unexercised stock options held by such persons at
March 31, 1999 and the value thereof. Amounts were calculated by multiplying
the number of
11
<PAGE>
unexercised options by the closing price of the Common Stock on March 31, 1999
($3.66) and subtracting the exercise price.
<TABLE>
<CAPTION>
Shares Number of Securities In-the-Money Value
Acquired Value Underlying Unexercised of Unexercised
On Realized Options at FY-End (#) Options at FY-End ($)
Name Exercises ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Fredric W. Rittereiser.. -- -- -0-/1,000,000 -0-/1,785,000
Arthur J. Bacci......... -- -- -0-/250,000 -0-/236,800
William W. Uchimoto..... -- -- -0-/280,000 -0-/487,300
Fred S. Weingard........ -- -- 100,000/688,750 -0-/1,210,669
Julio Gomez............. -- -- 49,500/100,500 88,358/179,393
John A. Blohm........... -- -- 350,000/538,750 -0-/961,669
Robert A. Eprile........ -- -- -0-/800,000(1) -0-/1,428,000
</TABLE>
- --------
(1) On June 29, 1999, the Company and Mr. Eprile entered into an agreement
providing for, among other things, the amendment of the option to purchase
common stock which was granted to Mr. Eprile on July 15, 1998 to reduce
the number of shares from 800,000 to 500,000, see "Certain Relationships
and Related Transactions."
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Dover Group, Inc. and Fredric W. Rittereiser. On May 1, 1997, David N.
Rosensaft, a co-founder of UTTC(TM), commenced an action in the U.S. District
Court for the Southern District of New York captioned Rosensaft v. The Ashton
Technology Group, Inc., et al, No. 97 Civ. 3138 ("the Rosensaft lawsuit"). The
Rosensaft lawsuit alleged ten claims against the Company, UTTC(TM), Dover and
Mr. Rittereiser, including breach of contract and securities fraud. On
December 3, 1997, the U.S. District Court for the Southern District of New
York entered judgment in favor of the plaintiff and against Dover and Mr.
Rittereiser. While the Company and its UTTC(TM) subsidiary were initially
parties to this lawsuit, they were dismissed as defendants on August 29, 1997,
leaving only Dover and Mr. Rittereiser as defendants. On January 14, 1998, the
Company entered into an agreement with Dover and Mr. Rittereiser, whereby
Dover and Mr. Rittereiser agreed to reimburse the Company for $413,980 in
legal costs associated with the Rosensaft lawsuit to the extent such costs
were not covered by the Company's directors' and officers' liability insurance
carrier. Dover and Mr. Rittereiser pledged 333,334 shares of UTTC(TM) stock as
collateral in support of their agreement to pay the legal costs. The Company
has submitted a claim to its insurance carrier in the full amount of such
legal costs. To date, the Company and its insurance carrier have not reached
agreement as to whether the legal costs of the Rosensaft lawsuit are covered
by the Company's directors and officers' liability insurance policy.
On March 4, 1998, the U.S. District Court for the Southern District of New
York entered an order awarding damages against Dover and Mr. Rittereiser in
the Rosensaft lawsuit in the amount of $1.2 million. On April 7, 1998, the
Company's Board of Directors, after due deliberation, concluded that the
Company and its UTTC(TM) subsidiary derived mutual benefit from the Rosensaft
settlement entered into by Dover and Mr. Rittereiser. The Board resolved to
fund one-third of the $1.2 million settlement amount. Separately, UTTC(TM)
agreed to fund one-third of the Rosensaft settlement. On April 8, 1998, the
Company loaned $380,000 to Dover and Mr. Rittereiser at an annual interest
rate of 9% for thirty months. In exchange for the loan to satisfy the
Rosensaft settlement, Dover pledged 300,000 shares of the Common Stock under
its control to the Company.
For the fiscal years ended March 31, 1998 and March 31, 1999, the Company
paid Dover $125,000 and $235,000 in consulting fees for consulting services
rendered in connection with the Company's financings and product development.
Mr. Rittereiser, the Company's Chairman and Chief Executive Officer, is the
sole shareholder, director and officer of Dover.
Adirondack Capital, L.L.C. and K. Ivan F. Gothner. On January 7, 1998, the
Company completed the sale of 100,000 shares of the Company's Series C
Convertible Preferred Stock to a group of foreign investors for an aggregate
purchase price of $1,000,000. As compensation for its services in structuring
the offering of the Series C Convertible Preferred Stock, the Company paid
Adirondack a fee of $50,000 and, on July 15, 1998, granted it options to
purchase 100,000 shares of the Company's Common Stock at $1.875 per share
which become exercisable on July 15, 1999 and agreed to issue warrants to
purchase 100,000 shares of UTTC(TM) stock at $1.00 per share. K. Ivan F.
Gothner, a director of the Company, is the managing director of Adirondack.
On April 3, 1998, the Company entered into a Private Equity Line of Credit
Agreement (the "Private Equity Agreement") with a group of accredited
investors the ("Accredited Investors"), which provides for an aggregate
commitment of $18,000,000 to the Company. In connection with the Private
Equity Agreement, the Accredited Investors agreed to purchase shares of the
Company's Series D Convertible Preferred Stock and Series E Convertible
Preferred Stock and granted the Company certain put rights to cause the
Accredited Investors, subject to conditions set forth in the Private Equity
Agreement, to purchase shares of the Company's Common Stock in the aggregate
amount of $13,000,000. As compensation for its services in structuring the
Private Equity Agreement, the Company paid Adirondack a fee of $150,000 and,
on July 15, 1998, granted it options to purchase 500,000 shares of the
Company's Common Stock at $1.875 per share, which become exercisable on July
15, 1999 and agreed to issue warrants to purchase 500,000 shares of UTTC(TM)
at $1.00 per share. In addition, upon the completion of the purchase of the
Series E Convertible Preferred Stock by the Accredited Investors, the Company
paid Adirondack a fee of $100,000. Since August 1998, the Company has
exercised its put rights causing the Accredited Investors to purchase Common
Stock valued at $10,250,000.
13
<PAGE>
Adirondack was also paid $50,000 during April 1999 by Gomez Advisors in
conjunction with providing financial advisory services in connection with the
offer and sale of 1,100,000 shares of Series B Convertible Preferred Stock by
Gomez Advisors. Mr. Gothner is a member of the Board of Directors of Gomez
Advisors.
In addition to the foregoing, on May 2, 1997 the Company entered into a
consulting arrangement with Adirondack pursuant to which it pays Adirondack a
consulting fee of $10,000 per month in exchange for investment banking and
financial advisory services provided to the Company. The Company has received
an independent opinion stating that the fees paid to Adirondack are comparable
to fees that it would have been required to pay, if it had obtained such
services from an unaffiliated third party. Commencing April 1, 1999, Mr.
Gothner began to receive a monthly board retainer fee of $5,000 per month.
Richard Butler. The Company had entered into a consulting arrangement with
Mr. Butler pursuant to which it has agreed to pay Mr. Butler a consulting fee
of $7,500 per month, plus reimbursement for expenses, for strategic marketing
services provided to the Company and its subsidiaries. Commencing April 1,
1999, the arrangement with Mr. Butler was terminated on April 1, 1999 and Mr.
Butler began receiving a monthly board retainer fee of $5,000 per month. In
addition, Mr. Butler receives an additional monthly retainer fee of $2,500 per
month as Chairman of the Audit Committee of the Board of Directors.
Wyndham Capital Corporation and Thomas G. Brown. On September 22, 1997, the
Company entered into an agreement with Wyndham Capital Corporation ("Wyndham")
whereby Wyndham provides investment banking and financial advisory services
and prepared an institutional research report. Pursuant to this agreement, the
Company agreed to pay Wyndham $5,000 per month, $15,000 for the preparation of
the research report and 5% of any equity raised by Wyndham, and to reimburse
Wyndham for out-of-pocket expenses. Pursuant to the sale of equity, Wyndham
was paid $120,000. Mr. Brown, a nominee, is the President and Managing
Director of Wyndham. Upon Mr. Brown's election as a director, the monthly
payment to Wyndham will be terminated and Mr. Brown will receive a monthly
board retainer fee of $5,000 per month.
Thomas Rittereiser. On September 18, 1997, the Company commenced a private
offering and exchange offer pursuant to which it offered to certain investors
shares of Series A Convertible PIK Preferred Stock, shares of Series B
Convertible Preferred Stock, and the opportunity to exchange shares of
convertible and non-convertible notes of UTTC(TM) for shares of the Company's
Series B Convertible Preferred Stock. The Company realized gross proceeds of
$5.4 million in connection with the sale of these two series of convertible
preferred stock. As compensation for Thomas Rittereiser's assistance in
soliciting investors for these transactions, the Company granted him options
to purchase 30,000 shares of the Company's Common Stock, at an exercise price
of $1.875 per share, which become exercisable on July 15, 1998. Thomas
Rittereiser is a director of REB Securities, Inc., a subsidiary of UTTC(TM),
and the brother of Fredric W. Rittereiser, the Company's Chief Executive
Officer.
Raymond T. Tate, the former Chairman of the Board of Directors, entered into
a consulting agreement, dated October 22, 1996 (the "Consulting Agreement").
Under the terms of the Consulting Agreement, the Company retained Tate to act
as a consultant to CSI for the period from October 22, 1996 to December 31,
1998. As compensation for such services, the Company agreed to pay Raymond
Tate Associates and Tate $120,000 per annum and certain other fees. Mr. Tate
also agreed not to compete with the Company in the Financial Services Industry
(as such term is defined in the Consulting Agreement) during the term of the
Consulting Agreement.
Robert A. Eprile, On June 29, 1999, Ashton, UTTC(TM) and Mr. Eprile entered
into an agreement pursuant to which Mr. Eprile resigned from all of his
positions with Ashton as of June 29, 1999 and his employment with UTTC(TM) was
deemed terminated effective March 24, 1999. In addition, Ashton and Mr. Eprile
agreed to reduce the number of shares of Common Stock subject to options
granted to Mr. Eprile on July 15, 1998 from 800,000 to 500,000. Such options
vested upon execution of the agreement, will expire on July 15, 2003 and are
subject to certain registration provisions. Also in connection with the
agreement, UTTC(TM) delivered 416,632 shares of its common stock to Mr.
Eprile. The shares of UTTC(TM) issued to Mr. Eprile are subject to certain
registration rights should UTTC(TM) consummate an initial public offering.
Ashton and UTTC(TM) also agreed to release Mr. Eprile, and Mr. Eprile agreed
to release Ashton and UTTC(TM), from any claims that each might have against
the other.
14
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Goldstein Golub Kessler LLP
("GGK") as independent auditors for the Company for the fiscal year which
began on April 1, 1999. Representatives of GGK are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4, and 5 and amendments thereto
furnished to the Company during and with respect to its most recent fiscal
year, the Company believes that all of its executive officers, directors and
persons who may have been deemed to be greater than 10% stockholders during
the year have made all filings required to be made under Section 16(a) of the
Securities Exchange Act of 1934, as amended, except for the following: Mr.
Bacci, Mr. Butler, Mr. Gothner, and Mr. Uchimoto each filed one late Form 3
that reported one transaction that was not reported on a timely basis.
FINANCIAL INFORMATION
The Company's 1999 Annual Report to Stockholders is being mailed to the
Company's stockholders with this Proxy Statement. The Company will provide,
without charge, to each stockholder, upon such stockholder's written or oral
request, a copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1999 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 Secretary of the Company.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings consistent with regulations adopted by
the SEC. For stockholder proposals to be considered by the Board of Directors
for inclusion in the proxy statement and form of proxy relating to the 2000
annual meeting of stockholders, they must be received by the Company not later
than March 14, 2000. If any stockholder wishes to present a proposal to the
2000 annual meeting of stockholders that is not included in the proxy
statement relating to such meeting and fails to submit such proposal to the
Secretary of the Company on or before May 28, 2000, then the Board of
Directors will be allowed to use its discretionary voting authority when the
proposal is raised at the annual meeting, without any discussion of the matter
in its proxy statement. All proposals should be addressed to the Company at
1900 Market Street, Suite 701, Philadelphia, PA 19103, Attention: President.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy materials relating to such annual meeting of stockholders any
stockholder proposal which does not meet all of the requirements for inclusion
established by the SEC and the Company's Bylaws at that time in effect.
15
<PAGE>
OTHER MATTERS
Management does not know of any other matters to come before the Annual
Meeting. However, if any additional matters are properly presented at the
meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ Fredric W. Rittereiser
Fredric W. Rittereiser
Chairman and Chief Executive Officer
July 19, 1999
16
<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC.
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS ON SEPTEMBER 1, 1999
The undersigned stockholder hereby appoints Arthur J. Bacci, Fredric W.
Rittereiser and William W. Uchimoto, 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 Annual Meeting of the Stockholders of The Ashton
Technology Group, Inc. (the "Company"), to be held at 12:00 noon on Wednesday,
September 1, 1999, at The Wyndham Franklin Plaza Hotel at 17th and Race Street,
Philadelphia, Pennsylvania, or at any postponements, continuations or
adjournments thereof, and to vote all shares of common stock of the Company, par
value $.01 per share, held by the signatory at the close of business on July 6,
1999, 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 below.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholders. If no direction is made, this proxy will be voted
"FOR" the election of the nominees for Director listed below. In their
discretion, the proxies are authorized to vote on such other matters as may
properly come before the meeting or any and all postponements, continuations or
adjournments thereof.
This proxy is solicited on behalf of the Board of Directors of the Company.
The Board of Directors of the Company recommends that you vote "FOR" the
nominees for Director.
1. ELECTION OF DIRECTORS
Fredric W. Rittereiser, Arthur J. Bacci, William W. Uchimoto, Fred S.
Weingard, K. Ivan F. Gothner, Richard E. Butler and Thomas G. Brown.
[_] FOR [_] WITHHELD [_] FOR ALL EXCEPT
If you wish to withhold authority to vote your shares from any individual
nominee(s), mark the "For All Except" box and strike a line through the name(s)
of the nominee(s).
(Continued and to be SIGNED on Reverse Side)
X Please mark your
votes as in this example.
<PAGE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ANNUAL REPORT ON FORM 10-
KSB, NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT AND
HEREBY REVOKES ALL PREVIOUSLY GRANTED PROXIES.
Please be sure to sign and date
this proxy
Date: ____________________________
__________________________________
Stockholder sign here
__________________________________
Co-owner sign here
Please sign this proxy exactly as
your name(s) appear(s) on the books
of the Company. Joint owners should
each sign personally. Trustees and
other fiduciaries should indicate
the capacity in which they sign,
and where more than one name
appears, a majority must sign. If a
corporation, this signature should
be that of an authorized officer
who should state his or her title.
PLEASE VOTE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
