EXHIBIT 4.21
RGC INTERNATIONAL INVESTORS, LDC
0 XXXX XXXXX XXXX, XXXXX 000
000 XX. XXXXXX XXXX
XXXX XXXXXX, XX 00000
April 11, 2002
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
RE: Letter Loan Agreement
Ladies and Gentlemen:
1. LOAN. This letter when fully executed will constitute a loan agreement
(the "AGREEMENT") among RGC International Investors, LDC, a Cayman Islands
limited duration company ("LENDER"), and each of The Ashton Technology Group,
Inc., a Delaware corporation ("ASHTON"), and Universal Trading Technologies
Corporation, a Delaware corporation ("UTTC" and, severally and jointly with
Ashton, "BORROWER"), pursuant to which Lender, on the terms and conditions
provided herein, shall agree to make one or more loans to or for the benefit of
Borrower hereunder in increments of not less than Fifty Thousand Dollars
($50,000) (each a "LOAN" and collectively, the "LOANS"), provided the aggregate
principal amount of all Loans shall not exceed Two Hundred Fifty Thousand
Dollars ($250,000) (the "MAXIMUM LOAN AMOUNT"). Lender's obligation to make a
Loan is subject to the Borrower's fulfillment of each of the applicable
conditions set forth in Section 4 hereof. Provided such conditions are
satisfied, Borrower may request a Loan by delivery of written notice to Lender.
In no event shall Borrower request, or Lender be obligated to make, a Loan in
excess of the Required Amount (as defined in Section 4(a)(ix) hereof). Lender
shall make such Loan available to Borrower within three (3) business days after
receipt of such notice and the satisfaction of the conditions contained in
Section 4 hereof with respect to such Loan. The day on which Lender makes a Loan
is referred to herein as a "CLOSING DATE."
2. LOAN DOCUMENTS.
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a. Note. The Loans shall be evidenced by a promissory note in the
principal amount of each such Loan in the form attached hereto as Exhibit A
(together with any replacements and substitutes therefor, the "NOTE"). The
principal amount of the Loans and interest thereon, calculated at the rate of
15% per annum as provided in the Note, shall be payable as set forth more
particularly therein.
b. Security Agreement. The Loan shall be secured by a blanket, first
priority lien on all of the Borrower's assets, including, without limitation,
the interest of Ashton and UTTC in all entities of which either is the sole or
majority shareholder or member (each, a
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Universal Trading Technologies Corporation
April 11, 2002
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"SUBSIDIARY" and collectively, the "SUBSIDIARIES") and certain assets of certain
Subsidiaries of Ashton and UTTC (collectively, the "COLLATERAL"), pursuant to,
and except as provided in, the terms of (i) a Security Agreement in the form
attached hereto as Exhibit B, (ii) Collateral Pledge Agreements in the form
attached hereto as Exhibit C and (iii) Collateral Assignments in the form
attached hereto as Exhibit D (collectively, the "SECURITY AGREEMENTS"). This
Agreement, the Note and the Security Agreements and each other document which
evidences and/or secures the Loans are hereinafter collectively referred to as
the "LOAN DOCUMENTS."
3. TERM AND TERMINATION. Subject to Section 8 below, the aggregate
principal amount of the outstanding Note and all accrued and unpaid interest
thereon and other sums owing hereunder and thereunder shall be due and payable
on the earliest of (i) the closing of the contribution of $20,000,000 of
intellectual property assets and cash of $10,000,000 by Optimark Innovations
Inc. ("OPTIMARK") to Ashton in exchange for shares of Ashton's common stock and
a senior secured note in the principal amount of $2,727,273 as contemplated by
that certain Securities Purchase Agreement, dated as of February 4, 2002, by and
between Ashton and Optimark, as amended on March 6, 2002 (the "SECURITIES
PURCHASE AGREEMENT"), (ii) the date that the Securities Purchase Agreement is
terminated and (iii) April 30, 2002.
4. CONDITIONS PRECEDENT.
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a. Documents to be Delivered. The obligation of Lender to make any
Loan is subject to the due execution and delivery by Borrower (or Borrower
causing the due execution and delivery) to Lender of each of the following (all
documents to be in form and substance satisfactory to Lender and its counsel):
i. This Agreement, a Note in the Maximum Loan Amount, the Security
Agreements, each other Loan Document and each other instrument, agreement and
document to be executed and/or delivered pursuant to this Agreement and/or the
instruments, agreements and documents referred to in this Agreement;
ii. A certified copy of the resolutions of the board of directors'
of each Borrower, dated as of the initial Closing Date, authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents.
iii. A certificate, dated as of the applicable Closing Date, signed
by the Chief Executive Officer of Ashton or Xxxxxxx Xxxxxxxx with respect to
items (i)-(v) below and the Chief Executive Officer of UTTC or Xxxxxxx Xxxxxxxx,
with respect to items (i) and (ii) below to the effect that: (i) the
representations and warranties set forth in Section 5 of this Agreement are true
and correct as of the applicable Closing Date, (ii) no Event of Default (as
defined herein) hereunder, and no event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default, has occurred as
of the applicable Closing Date, (iii) it is the present intention of Ashton as
of the applicable Closing Date to consummate the transactions contemplated by
the Securities Purchase Agreement, (iv) the shareholders of Ashton have not
failed to approve the proposals set forth in the Proxy Statement of Ashton filed
with the
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Universal Trading Technologies Corporation
April 11, 2002
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Securities and Exchange Commission on March 19, 2002 and (v) Ashton has
borrowed an aggregate of $500,000 under that certain letter agreement, dated
January 30, 2002, between XX Xxxxxx Group Limited ("XX XXXXXX") and Ashton (the
"XX XXXXXX BRIDGE AGREEMENT") and has expended all of the funds received
pursuant to the XX Xxxxxx Bridge Agreement for working capital purposes.
iv. A certificate, dated as of the applicable Closing Date, signed
by the President of Optimark to the effect that: (i) it is the present intention
of Optimark as of the applicable Closing Date to consummate the transactions
contemplated by the Securities Purchase Agreement (provided, however, that
receipt of such certificate shall not be considered a waiver by Optimark of any
closing conditions set forth in the Securities Purchase Agreement), (ii) the
shareholders of Optimark shall have not rescinded their approval relating to, or
otherwise failed to approve such matters as are necessary in order for Optimark
to consummate, the transactions contemplated by the Securities Purchase
Agreement and (iii) the Definitive Exchange Documents (as defined below) fulfill
in all respects the conditions contained in Section 4.4(c) of the Securities
Purchase Agreement to the obligation of Optimark contained in Section 1.1(b) of
the Securities Purchase Agreement.
v. Definitive documents between Ashton and Lender, in a form
reasonably acceptable to Lender, providing for the exchange (the "EXCHANGE") of
that certain 9% Secured Convertible Note of Ashton in the original principal
amount of $5,111,526, dated July 13, 2001, held by Lender for new notes and
warrants of Ashton, including, without limitation, a securities exchange
agreement, a promissory note, a common stock purchase warrant, a security
agreement and an intercreditor agreement (collectively, the "DEFINITIVE EXCHANGE
DOCUMENTS").
vi. An agreement or agreements pursuant to which (i) the following
provisions of the XX Xxxxxx Bridge Agreement shall be amended as follows: (a) in
Clause 4 of the XX Xxxxxx Bridge Agreement, the words "on or before March 30,
2002 (Hong Kong time)..." until the end of the sentence shall be deleted and
replaced with "(i) the closing of the contribution of US$20,000,000 of
intellectual property assets and cash of US$10,000,000 by Optimark Innovations
Inc. ("OPTIMARK") to Borrower in exchange for shares of Borrower's common stock
and a senior secured note in the principal amount of $2,727,273 as contemplated
by that certain Securities Purchase Agreement, dated as of February 4, 2002, by
and between Borrower and Optimark (the "SECURITIES PURCHASE AGREEMENT"), (ii)
the date that the Securities Purchase Agreement is terminated or (iii) April 30,
2002. (the "MATURITY").", (b) Clause 5(i) shall be deleted in its entirety and
replaced with the following "a post-dated cheque payable to "XX Xxxxxx Group
Limited" in an amount of US$250,000 (the "Post-Dated Cheque") to be dated no
later than April 30, 2002", (c) in Clause 6(ii), the phrase "US$500,000.00"
shall be deleted and replaced with "US$250,000", (d) in the first sentence of
the second paragraph of Clause 9, the word "Upon" shall be deleted and replaced
with "Subject to Clause 13 hereof, upon" and the phrase "as explicitly provided
for herein" shall be inserted following the words "repayment of the Loan", (e) a
new sentence shall be added to the end of Clause 9 as follows: "Upon repayment
of the Loan, Lenders shall take all action necessary under applicable law or
otherwise to terminate any and all Security Documents.", (f) in clause (ii) of
the first paragraph
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Universal Trading Technologies Corporation
April 11, 2002
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of Clause 13, the words "of the first four" shall be inserted after the phrase
"end of each" and the word "period" shall be replaced by the word "periods"; and
(g) in each of the second paragraph of Clause 13 and Clause 13A, the words
"March 30, 2002" shall be deleted and replaced with "the date of the Maturity"
and (h) a new sentence shall be added to the end of the second paragraph of
Clause 13 as follows: "Notwithstanding anything to the contrary contained
herein, the rights and remedies of Lenders contained in Clauses 4 and 9 hereof
shall in all respects be subject to the provisions and obligations set forth in
this Clause 13." and (ii) the definition of Completion Date contained in Section
1.1 of that certain Agreement for Purchase and Sale of Shares dated January 30,
2002 between Ashton and XX Xxxxxx shall be deleted and replaced in its entirety
with the following: ""Completion Date" means the earlier of (i) the closing of
the contribution of US$20,000,000 of intellectual property assets and cash of
US$10,000,000 by Optimark Innovations Inc. ("OPTIMARK") to Seller in exchange
for shares of Seller's common stock and a senior secured note in the principal
amount of $2,727,273 as contemplated by that certain Securities Purchase
Agreement, dated as of February 4, 2002, by and between Seller and Optimark (the
"SECURITIES PURCHASE AGREEMENT"), (ii) the date that the Securities Purchase
Agreement is terminated and (iii) April 30, 2002." In addition, XX Xxxxxx shall
have delivered to Borrower the post-dated cheque originally delivered to XX
Xxxxxx in connection with the execution of the XX Xxxxxx Bridge Agreement.
vii. Opinions of Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP in the form
attached hereto as Exhibit E-1 and Xxxxxxx Xxxxxxxx in the form attached hereto
as Exhibit E-2.
viii. Receipt by Lender of a balance sheet dated as of the date
immediately preceding the applicable Closing Date and certified as true and
correct by the Chief Financial Officer of Ashton setting forth Ashton's cash
position as of such date as well as written certification as to the dollar
amount required by Ashton to fund its working capital needs from the applicable
Closing Date until the earlier of (i) two weeks from such applicable Closing
Date and (ii) the anticipated closing date of the transactions contemplated by
the Securities Purchase Agreement (the "REQUIRED AMOUNT").
ix. Borrower shall have complied with, or shall have received, any
and all consents, permits and waivers necessary or appropriate for consummation
by it of the transactions contemplated hereby and by the Loan Documents.
Notwithstanding the foregoing, Lender shall not be obligated to make any
Loan if all conditions precedent to the obligations of Ashton and Optimark to
consummate the transactions contemplated by the Securities Purchase Agreement
have been satisfied or waived, other than the closing of the transactions
contemplated by the Definitive Exchange Agreements where the failure to
consummate the transactions contemplated by the Definitive Exchange Agreements
results from Ashton's failure to satisfy all of the conditions to the closing of
the Exchange.
b. Absence of Certain Events. The following events shall not have
occurred or be occurring as of any Closing Date: (i) the occurrence of a
Material Adverse Effect (as defined below), (ii) an Event of Default, or (iii)
Ashton shall have breached any of its obligations
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Universal Trading Technologies Corporation
April 11, 2002
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under the XX Xxxxxx Bridge Agreement or any Securities Documents (as defined in
the XX Xxxxxx Bridge Agreement) or XX Xxxxxx has made any claim of any such
breach and Borrower has failed to cure such alleged breach prior to the
applicable Closing Date.
5. REPRESENTATIONS. To induce Lender to make the Loan, Ashton and UTTC,
jointly and severally, hereby warrant and represent to Lender that at and as of
the date hereof:
a. Each of Ashton and UTTC is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, and has the
requisite power to own its properties and to carry on its business as now being
conducted. Each of Ashton and UTTC is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
ability of Ashton or UTTC or any Subsidiary that is a party to any of the Loan
Documents to perform their obligations hereunder or any of the other Loan
Documents or on the business, operations, properties, prospects or financial
condition of Borrower or any Subsidiary.
b. (i) Each of Ashton and UTTC and each Subsidiary that is a party to
any of the Loan Documents has the requisite power and authority to enter into
and perform its obligations under this Agreement and the other Loan Documents,
as applicable, (ii) the execution, delivery and performance of this Agreement
and the other Loan Documents by each of Ashton and UTTC and each Subsidiary that
is a party to any of the Loan Documents and the consummation by each of them of
the transactions contemplated hereby and thereby have been duly authorized by
each of Ashton's and UTTC 's and each such Subsidiary's board of directors (or
other governing board or committee) and no further consent or authorization of
either of Ashton and UTTC or any Subsidiary, their respective board of
directors, any committee of the board of directors (or other governing board or
committee) or stockholders or members is required and (iii) this Agreement
constitutes, and, upon execution and delivery by each of Ashton and UTTC and
each Subsidiary that is a party to any of the Loan Documents of the other Loan
Documents, such agreements will constitute, valid and binding obligations of
Ashton and UTTC and each such Subsidiary enforceable against each in accordance
with their terms.
c. The execution, delivery, and performance by each of Ashton and UTTC
and each Subsidiary that is a party to any of the Loan Documents of the Loan
Documents and its obligations thereunder will not contravene or constitute a
default (or an event which with the giving of notice or passage of time, or
both, would constitute a default) under or result in the imposition of any lien
upon the assets of Ashton or UTTC or any such Subsidiary (other than liens
arising under this Agreement and the Security Agreement) pursuant to, any
applicable law or regulation (including any rules or regulations of any
self-regulatory organization or exchange to which the Company or its securities
are subject) , any charter document of Ashton or UTTC or any such Subsidiary, or
any contract, agreement, judgment, order, decree, or other instrument binding
upon or affecting Ashton or UTTC or any such Subsidiary or their respective
properties.
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Universal Trading Technologies Corporation
April 11, 2002
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d. Except as previously disclosed to Lender in writing, there is no
action, suit, or proceeding pending or threatened against Ashton or UTTC, any
Subsidiary or their respective properties that could reasonably be expected to
have a Material Adverse Effect.
e. All required federal, state and other tax returns required to be
filed have been filed by Ashton or UTTC or any Subsidiary and the taxes in
connection therewith which are due and payable have been paid to date, and no
additional taxes or assessments in connection therewith have been asserted or
are anticipated.
f. None of Ashton, UTTC or any Subsidiary is in violation of any
material ordinance, law or regulation of any governmental authority as to its
business, premises or properties, except violations which could not be
reasonably expected to have a Material Adverse Effect.
g. Except as otherwise set forth in writing by Ashton to Lender, all
of Ashton's, UTTC's and the Subsidiaries' accounts and contract rights are good,
valid and enforceable in accordance with their terms and are not, to its
knowledge, subject to any defense, set-off, claim of credit, adjustment or
allowance.
h. Except as set forth on Schedule 5(h) hereto, all inventory and
other corporate assets of Ashton, UTTC and their respective Subsidiaries are now
owned, held and used by Ashton, UTTC or such Subsidiary in the ordinary course
of business and are not subject to any prior liens, security interests or
encumbrances.
i. Except as set forth on Schedule 5(i) hereto, there are no
governmental authorizations, permits, certificates, licenses, filings,
registrations, approvals or consents which must be obtained, received or made by
Ashton, UTTC or any Subsidiary that is a party to any of the Loan Documents for
Ashton, UTTC or any such Subsidiary to lawfully (i) make, execute and deliver
this Agreement or the other Loan Documents or (ii) perform all of its
obligations under this Agreement or the other Loan Documents.
j. Other than approvals and consents which have been obtained, and
except for those consents and approvals set forth on Schedule 5(j) hereto which
must be obtained by Ashton or UTTC prior to any Closing Date hereunder, no
approval or consent of or from the holder of any security or indebtedness of
Ashton, UTTC or any Subsidiary or any other third party is required by or under
any law, rule or regulation (including any rules or regulations of any
self-regulatory organization or exchange to which Ashton, UTTC or any Subsidiary
or any of their respective securities are subject), Ashton's, UTTC's or any
Subsidiary's Certificate of Incorporation, By-Laws or other organizational
documents or any indenture, agreement or other instrument to which Ashton, UTTC
or any Subsidiary is a party in connection with the execution of this Agreement
or the other Loan Documents or the performance of its obligations under this
Agreement or the other Loan Documents.
k. There exists no Event of Default.
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Universal Trading Technologies Corporation
April 11, 2002
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x. Xxxxxx, UTTC and each of their Subsidiaries has fully provided
Lender with all the information Lender has requested for deciding whether to
enter into this Agreement and has not omitted any information that Ashton, UTTC
or any Subsidiary reasonably believes is material to enable the Lender to make
such decision. Neither this Agreement, the Note or the Security Agreements nor
any statements or certificates or information made, delivered or provided by or
on behalf of Ashton, UTTC or any Subsidiary in connection with such decision
contains any untrue statement of material fact or omits to state any material
fact necessary to make the statements herein and therein not misleading. As of
their respective dates and except as disclosed on Schedule 5(l) attached hereto,
all reports, schedules, forms, statements and other documents required to be
filed by Ashton with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), or filed by Ashton
pursuant to the Securities Act of 1933, as amended (the "1933 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits to
such documents) incorporated by reference therein, being hereinafter referred to
herein as the "SEC DOCUMENTS"), complied in all material respects with the
requirements of the 1934 Act or the 1933 Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings prior to the
date hereof). As of their respective dates, and except as disclosed on Schedule
5(l) attached hereto, the financial statements of Ashton included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Except as disclosed on Schedule 5(l) attached hereto, such
financial statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of Ashton and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
m. UTTC owns, free and clear of any lien, claim or encumbrance, all
issued and outstanding securities of Croix Securities, Inc. ("CROIX"). There are
not outstanding any options, warrants, puts, calls, rights (including conversion
or preemptive rights and rights of first refusal) or other rights or agreements
of any kind for the purchase or acquisition from, sale to or exchange with,
UTTC, Croix or any other party of any shares of any class or series of capital
stock of Croix. Ashton owns all outstanding membership interests and other
securities or other rights to share in the profits and losses of ATG Trading,
LLC ("ATG"). There are not outstanding any options, warrants, puts, calls,
rights (including conversion or preemptive rights
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Universal Trading Technologies Corporation
April 11, 2002
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and rights of first refusal) or other rights or agreements of any kind for the
purchase or acquisition from, sale to or exchange with, Ashton, ATG or any other
party of any shares of any class or series of membership interests, capital
stock or other indicia of ownership of ATG. Schedule 5(m) hereto sets forth, as
of each of June 30, 2001, December 31, 2001 and the date hereof the aggregate
amounts each of Croix and ATG owed the Philadelphia Stock Exchange, Inc. (the
"Exchange"), Stock Clearing Corporation, Options Clearing Corporation and
members and member firms of the Exchange (as such terms are defined in the
By-Laws of the Exchange).
All representations and warranties made by Borrower under or in connection with
this Agreement or in any other Loan Documents delivered by Borrower to Lender in
connection with this Agreement shall survive the making of the Loans and
issuance and delivery of the Note to Lender, notwithstanding any investigation
made by Lender or on Lender's behalf. All statements contained in any
certificate or financial statement delivered by Borrower to Lender under this
Agreement shall constitute representations and warranties made by Borrower
hereunder.
6. AFFIRMATIVE COVENANTS. So long as any part of the indebtedness
contemplated hereby shall remain unpaid, Borrower will and will cause each
Subsidiary to:
a. Promptly pay and discharge all taxes, assessments and governmental
charges which may be lawfully levied, imposed or assessed upon Borrower or any
Subsidiary or their respective properties and assets or upon either Borrower's
or any Subsidiary's income or profits when they shall become due and payable;
provided, however, that Borrower or any Subsidiary shall have the right to
contest in good faith any such tax, assessment, charge or levy by appropriate
proceedings;
b. Keep accurate and complete books and records and maintain the same
at Borrower's principal offices;
c. Defend at all times any claim by a third party relating to the
possession of or any interest in the assets of Borrower or any Subsidiary;
d. Give prompt written notice to Lender of any material process or
action taken or pending whereby a third party is claiming any interest in the
assets of Borrower or any Subsidiary;
e. Insure and keep insured by fire and extended coverage the assets of
Borrower and each Subsidiary in an amount at least equal to the fair market
value thereof against loss by fire and other risks customarily insured against,
together with liability insurance in reasonable amounts, all insured with
insurance companies reasonably acceptable to Lender and shall, upon request by
Lender, furnish evidence of such insurance coverage. Lender shall be named as an
additional insured and loss payee under such insurance coverages;
f. Maintain their existence in good standing (or equivalent) in each
state or other jurisdiction in which it conducts business unless failure to
maintain such existence in good standing would not have a Material Adverse
Effect;
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Universal Trading Technologies Corporation
April 11, 2002
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g. Furnish Lender with prompt notice of any material change in
Borrower's or any Subsidiary's existence, business, operations, properties,
prospects or financial conditions or any material change in the representations
set forth herein;
h. Give prompt written notice to Lender of any material changes or
modifications in existing material contracts, indentures or agreements other
than contracts with customers entered into in the ordinary course of business.
All such notices shall be accompanied by copies of such instruments;
i. Give prompt written notice to Lender of any acceleration of any
indebtedness caused by any material act of default by either Borrower or any
Subsidiary under any existing contract.
j. Upon written demand of Lender, furnish to Lender, within three (3)
days of such demand, any and all additional security agreements and other
documents which may be reasonably required or necessary or appropriate to
maintain the security of Lender in the Collateral provided by the Loan
Documents;
k. Indemnify Lenders against claims of brokers arising by reason of
the execution hereof or the consummation of the transactions contemplated hereby
except if claiming by or through Lender;
l. Promptly reimburse Lender for all reasonable fees and expenses of
legal counsel for Lender, incurred in connection with the amendment,
modification or enforcement of this Agreement, the Note and the other Loan
Documents;
m. Comply in all material respects with all valid laws and regulations
now in effect or hereafter promulgated by any properly constituted governmental
authority having jurisdiction over Borrower and any Subsidiary; or
n. Furnish Lender, upon request, with copies of all of Borrower's and
each Subsidiary's material correspondence, if any, with its respective
stockholders, directors, executive committees and the financial community.
7. NEGATIVE COVENANTS. So long as any part of the indebtedness
contemplated hereby shall remain unpaid, Borrower will not, directly or
indirectly, and will cause each Subsidiary not to, without the prior written
consent of Lender:
a. Make payment to any current officer or director of Borrower or any
Subsidiary, inclusive of salary, in excess of the amounts currently paid or
payable to such officer or director;
b. Remove any of Borrower's present officers from the management of
its affairs without prior written notification to Lender;
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April 11, 2002
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c. Use any funds borrowed hereunder for any purpose other than for
working capital for general corporate purposes;
d. Make any material changes in the plans to expand the Borrower's or
any Subsidiary's business activities;
e. Move any inventory except for inventory moved or sold in the
ordinary course of business;
f. Sell, transfer, lease or otherwise dispose of Borrower's or any
Subsidiary's material assets or properties other than in the ordinary course of
business;
g. Sell, assign, discount or dispose in any way, any accounts
receivable, promissory notes or trade acceptances held by Borrower or any
Subsidiary, with or without recourse, except for collection (including
endorsements) in the ordinary course of business;
h. Purchase, redeem, retire or otherwise acquire, or make any
distribution or pay any dividend on account of, any outstanding capital stock of
Borrower or any other securities or prepay any indebtedness;
i. Engage in any transaction with its affiliates except at an arms
length on reasonable terms and conditions;
j. Make any loans or advances to officers, directors or their
relatives, or any other entity, except for those advances to employees for
necessary business expenses incurred in the ordinary course of business;
k. Incur any liability or indebtedness, except in the ordinary course
of business;
l. Pay any amounts to XX Xxxxxx or to Optimark pursuant to Section
6.11 of the Securities Purchase Agreement or otherwise; or
m. Directly or indirectly create, incur, assume, or permit to exist
any lien with respect to any property or asset now owned by or hereafter
acquired by Borrower or any Subsidiary other than as expressly permitted by the
Security Agreement.
8. EVENTS OF DEFAULT; REMEDIES. Upon the occurrence of any of the
following (each, an "EVENT OF DEFAULT"):
a. Failure by Borrower to make any payment of principal or interest on
the Note when due;
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April 11, 2002
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b. Failure by Borrower or any Subsidiary that is a party to any of the
Loan Documents to observe or perform any other term or provision of, or covenant
or agreement contained in, this Agreement, the Note, the Security Agreements or
any other Loan Document;
c. Any representation made or information furnished to Lender by or on
behalf of Borrower shall be inaccurate or incomplete in any material respect;
d. There shall be commenced any bankruptcy, insolvency, arrangement,
reorganization, or other debtor-relief proceedings by or against, or the
dissolution, termination of existence or insolvency of, either Borrower or any
Subsidiary or either Borrower or any Subsidiary shall have made an assignment
for the benefit of creditors or consent to the appointment of a receiver or
trustee for it or for a substantial portion of its properties or business, or
any such receiver or trustee shall have otherwise been appointed;
e. The making of demand by any creditor of either Borrower or any
Subsidiary for payment of indebtedness of either Borrower or any Subsidiary for
borrowed money, which is payable upon demand, or the acceleration of the
maturity of any indebtedness of either Borrower for borrowed money upon default
by either Borrower or any Subsidiary;
f. A judgment or attaching creditor of either Borrower or any
Subsidiary shall obtain possession of any Collateral by any means including,
without limitation, levy, distraint, replevin or self-help;
g. The occurrence of any event which has a Material Adverse Effect;
h. The validity or enforceability of this Agreement, the Note, the
Security Agreements or any other Loan Document shall be contested by either
Borrower or any Subsidiary, any stockholder or creditor of either Borrower or
any Subsidiary or any other third party, or either Borrower or any Subsidiary
shall deny that it has any further liability or obligation hereunder or
thereunder;
i. Any final non-appealable judgment, writ or similar process shall
have been entered or filed against either Borrower or any Subsidiary;
j. The occurrence of any "reportable event" under the Employee
Retirement Income Security act of 1974 ("ERISA") which Lender in good faith
determines constitutes grounds for the imposition of liability against Borrower
under part IV, subtitle D of ERISA; or
k. Either Borrower or any Subsidiary shall sell, convey, assign or
otherwise dispose of all or substantially all of its assets or consolidate,
merge or otherwise engage in any business combination.
THEN, Lender may, at its election and without demand or notice of any
kind, which are hereby waived, declare the unpaid balance of the Note, and
accrued interest thereon, immediately due and payable, proceed to collect the
same, and exercise any and all other rights, powers and
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
April 11, 2002
Page -12-
remedies given it by this Agreement, the Note, the Security Agreements, the
other Loan Documents or otherwise at law or in equity.
9. WARRANT OF ATTORNEY TO CONFESS JUDGMENT. ASHTON AND UTTC HEREBY
IRREVOCABLY AUTHORIZE AND EMPOWER ANY ATTORNEY OR ANY CLERK OF ANY COURT OF
RECORD UPON OR AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT TO APPEAR FOR AND
CONFESS JUDGMENT AGAINST IT, (A) FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE
ON THE BORROWERS' OBLIGATIONS, AND/OR (B) IN ANY ACTION OF REPLEVIN INSTITUTED
BY LENDER TO OBTAIN POSSESSION OF ANY COLLATERAL OR OTHER COLLATERAL SECURITY
FOR THE OBLIGATIONS OF BORROWER TO LENDER, IN EITHER CASE WITH OR WITHOUT
DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND WITH FIVE (5%)
PERCENT OF THE PRINCIPAL AMOUNT THEREOF, BUT NOT LESS THAN FIVE THOUSAND
($5,000.00) DOLLARS, ADDED FOR LIEN PRIORITY PURPOSES, WITH ACTUAL ATTORNEY'S
FEES GOVERNED BY PARAGRAPH 10(H) HEREOF. ASHTON AND UTTC UNCONDITIONALLY AND
IRREVOCABLY: (A) WAIVE THE RIGHT OF INQUISITION ON ANY REAL ESTATE LEVIED ON,
VOLUNTARILY CONDEMNS THE SAME, AUTHORIZES THE PROTHONOTARY OR CLERK TO ENTER
UPON THE WRIT OF EXECUTION SAID VOLUNTARY CONDEMNATION AND AGREES THAT SAID REAL
ESTATE MAY BE SOLD ON A WRIT OF EXECUTION; (B) WAIVE AND RELEASE ALL RELIEF FROM
ALL REDEMPTION, APPRAISEMENT, STAY, EXEMPTION OR APPEAL LAWS OF ANY STATE NOW IN
FORCE OR HEREAFTER ENACTED AND (C) RELEASE ALL ERRORS IN SUCH PROCEEDINGS. IF A
COPY OF THIS AGREEMENT, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF LENDER SHALL
HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL
OF THIS AGREEMENT AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR
FOR AND ENTER JUDGMENT AGAINST ASHTON AND UTTC SHALL NOT BE EXHAUSTED BY THE
INITIAL EXERCISE THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME, AS
OFTEN AS LENDER SHALL DEEM NECESSARY AND DESIRABLE, AND THIS AGREEMENT SHALL BE
A SUFFICIENT WARRANT THEREFOR. LENDER MAY ENTER ONE OR MORE JUDGMENTS IN THE
SAME OR DIFFERENT COUNTIES FOR ALL OR PART OF BORROWERS OBLIGATIONS, WITHOUT
REGARD TO WHETHER JUDGMENT HAS BEEN ENTERED ON MORE THAN ONE OCCASION FOR THE
SAME OBLIGATIONS. IN THE EVENT ANY JUDGMENT ENTERED AGAINST BORROWER HEREUNDER
IS STRICKEN OR OPENED UPON APPLICATION BY OR ON BORROWER'S BEHALF FOR ANY REASON
WHATSOEVER, LENDER IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND
CONFESS JUDGMENT AGAINST BORROWER; SUBJECT, HOWEVER, TO THE LIMITATION THAT SUCH
SUBSEQUENT ENTRY OR ENTRIES OF JUDGMENT BY LENDER MAY ONLY BE DONE TO CURE ANY
ERRORS IN PRIOR PROCEEDINGS, ONLY AND TO THE EXTENT THAT SUCH ERRORS ARE SUBJECT
TO CURE IN THE LATER PROCEEDINGS.
10. MISCELLANEOUS.
--------------
a. The representations and warranties of Borrower contained herein
shall survive the making of the Loans and shall remain effective until all
indebtedness contemplated hereby shall have been paid by Borrower in full.
b. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
x. Xxxxxx and UTTC irrevocably consent to the jurisdiction of the
state and federal courts located in the Commonwealth of Pennsylvania in any suit
or proceeding based on
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
April 11, 2002
Page -13-
or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. Ashton and
UTTC, on behalf of itself and each of its Subsidiaries, irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
Ashton and UTTC, on behalf of itself and each of its Subsidiaries, agrees that
service of process upon it mailed by first class mail shall be deemed in every
respect effective service of process upon it and any of its Subsidiaries in any
such suit or proceeding. Nothing herein shall affect the Lender's right to serve
process in any other manner permitted by law. Ashton and UTTC, on behalf of
itself and each of its Subsidiaries, agrees that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
d. Any forbearance, failure, or delay by Lender in exercising any
right, power, or remedy shall not preclude the further exercise thereof, and all
of Lender's rights, powers, and remedies shall continue in full force and effect
until specifically waived in writing by Lender.
e. This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party.
f. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
g. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
h. Borrower shall reimburse Lender, on demand, for all reasonable fees
and costs incurred by Lender (including reasonable fees and costs of Lender's
counsel) in connection with the enforcement of Lender's rights and remedies
thereunder.
i. This Agreement and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters covered herein
and therein. No provision of this Agreement may be waived or amended other than
by an instrument in writing signed by the party to be charged with enforcement.
j. Any notices, demands or waivers required or permitted to be given
under the terms of this Agreement shall be in writing and shall be sent by
certified or registered mail (return receipt requested) or delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt, if delivered personally or by courier, or by
facsimile (if received during normal business hours), in each case to the
address of the party to receive such notice, demand or waiver as set forth
below:
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
April 11, 2002
Page -14-
If to Borrower:
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esquire
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Lender:
RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esquire
Telephone: 000-000-0000
Facsimile: 215-568-6603
Each party shall provide notice to the other party of any change in
address, such notice to become effective upon receipt.
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
April 11, 2002
Page -15-
k. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and assigns. Borrower shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Lender. Notwithstanding the foregoing, Lender may assign its rights
hereunder to any other person or entity without the consent of Borrower,
provided further that nothing herein shall be construed to limit Lender's right
to dispose of the Collateral upon the occurrence and during the continuance of
an Event of Default by way of assignment, sale or other means of conveyance to a
third party including, without limitation, a competitor of Borrower.
l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.
m. All remedies of Lender (i) are cumulative and concurrent, (ii) may
be exercised independently, successively or together against Borrower, (iii)
shall not be exhausted by any exercise thereof, but may be exercised as often as
occasion therefor may occur, and (iv) shall not be construed to be waived or
released by Lender's delay in exercising, or failure to exercise, them or any of
them at any time it may be entitled to do so.
[SIGNATURE PAGE FOLLOWS]
The Ashton Technology Group, Inc.
Universal Trading Technologies Corporation
April 11, 2002
Page -16-
By executing the appropriate signature line below, Borrower, intending to be
legally bound hereby, agrees to the terms and conditions of this Agreement as of
the date appearing opposite Borrower's signature.
Very truly yours,
RGC International Investors, LDC
By: Xxxx Xxxx Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
By: /s/Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
Managing Director
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/Xxxxxxx Xxxxxxxx Date: April 11, 200
--------------------------- -------------
Name: Xxxxxxx Xxxxxxxx
Its: EVP & General Counsel
Attest:
/s/Xxxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxxx Xxxxxxx
Its: Senior Vice President & CFO
UNIVERSAL TRADING TECHNOLOGIES CORPORATION
By: /s/Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Its: EVP & General Counsel
Attest:
/s/Xxxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxxx Xxxxxxx
Its: Senior Vice President & CFO
