CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), dated as of October 22, 1996,
is by and between Xxxxxxx X. Xxxx, a resident of the State of Maryland ("Xxxx"),
and The Ashton Technology Group, Inc., a Delaware corporation ("Ashton").
WHEREAS, Xxxx is (i) the President, Chairman of the Board, Chief Executive
Officer, Treasurer, and Principal Financial and Accounting Officer of Ashton,
(ii) a member of the Board of Directors and the Executive Vice President,
Principal Financial Officer and Secretary of UTTC and (iii) Chariman of the
Board of CSI;
WHEREAS, Xxxx and Ashton are parties to an Employment Agreement effective
January 1, 1996 (the "Employment Agreement"); and
WHEREAS, Xxxx and Ashton and its Subsidiaries wish consensually to
terminate the Employment Agreement and sever the employment relationship between
Xxxx and Ashton and its Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
1. Definitions. As used in this Agreement:
(i) "Affiliate" means, with respect to a Person, any other Person
controlled by or, as of the date of this Agreement, controlling or under common
control with, such Person. "Control" (including the terms "controlling",
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, the
holding of proxies, by contract or otherwise.
(ii) "Financial Market Participants" means any Person who participates, in
any capacity, in the Financial Markets, including, without limitation,
investment banking companies, broker dealers, investment companies, banks,
commercial trust companies, thrift institutions, savings and loan associations,
mutual savings banks and credit unions, life insurance companies, property and
casualty insurance companies, reinsurance companies, pension funds, and state
and government retirement funds.
(iii) "Financial Markets" means (A) all U.S. and foreign registered
national securities exchanges, the Nasdaq market systems, markets for
securities, physical commodities in commercially accepted bulk units,
commodities and other futures, derivatives, options, currencies and commercial
paper, (B) clearing corporations and depository trust companies, (C) wire
transfer systems including, without limitation, the Federal wire and S.W.I.F.T,
and (D) electronic market information systems, including, without limitation,
Instinent, Bloomberg, Investment Technology Group, Dow Xxxxx, Telerate and
Reuters.
(iv) "Financial Services Industry" means all U.S. and foreign Financial
Markets and Financial Market Participants to the extent, and only to the extent,
such Financial Markets and Financial Market Participants involve, execute or
engage in the trading, by electronic or other means, of securities, physical
commodities in commercially accepted bulk units, commodities and other futures,
derivatives, options, currencies and commercial paper.
(v) "License Agreement" means the License Agreement of even date herewith
between Xxxx and Ashton.
(vi) "Licensed Technology" shall have the meaning set forth in the License
Agreement.
(vii) "Person" means any individual, corporation, partnership, limited
liability company or partnership, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental entity or other entity
or organization.
(viii) "Subsidiaries" means Universal Trading Technologies Corporation and
Computer Science Innovations, Inc. and each corporation as to which the Company
directly or indirectly owns a majority of the outstanding shares of stock or
other ownership interests having voting power under ordinary circumstances to
elect a majority of directors of such corporation or other Persons performing
similar functions for such entity.
2. Effective Date. This Agreement shall be executed and become effective on
the date (the "Effective Date") of the closing of the transactions contemplated
by that certain Settlement Agreement dated October 22, 1996 by and among Xxxx,
Xxxxx X. Xxxx, as trustee for the Xxxxxx Xxxxxxx Xxxx Trust, Xxxxx X. Xxxx, as
trustee for the Xxxxx Xxxxxxxxx Xxxx Burrowbridge Trust and Xxxxx X. Xxxx, as
trustee for the Xxxxxxxxx Xxxx Xxxxxxx Trust (collectively the "Xxxx Trusts"),
Xxxxxx X. Xxxxxx, Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxxxx, The Dover Group, Inc.,
X. X. Xxxxxxx, Xx., X. X. Xxxxxxx, Xx., X.X. Xxxxxxxxxxx, Xx., and Xxx
Xxxxxxxxxxx as trustee for Xxxxxx X. Xxxxxxxxxxx, Xxxxxx Xxxxxxx and Xxxx
Xxxxxxx (the "Settlement Agreement").
3. Termination of Employment Agreement. As of the Effective Date, the
Employment Agreement shall be deemed terminated and shall have no further force
or effect. Xxxx and Ashton agree that there are no existing defaults by either
party under the Employment Agreement and that, as of the Effective Date, each
party had fully performed all of its obligations to the other party under the
Employment Agreement. Without limiting the effect of the foregoing two
sentences, Ashton specifically agrees that, as of the Effective Date, except as
otherwise expressly provided in this Agreement, all of the restrictions on Xxxx
under the Employment Agreement shall be terminated.
4. Resignations and Termination of Existing Employment Relationship. As of
the Effective Date, Xxxx shall be deemed to have resigned from all corporate
offices and the Board of Directors of Ashton, and from all offices and
directorships of Ashton's Subsidiaries, joint ventures, and affiliated companies
and organizations. Except for purposes of the matters set forth in Sections 6, 7
and 8 hereof, Xxxx'x employment by Ashton shall be deemed to have terminated as
of 5:00 p.m. on the Effective Date.
5. Corporate Records and Bank Accounts. Immediately after the Effective
Date, Ashton shall take such steps as may be necessary to (a) reflect in the
corporate records of Ashton, its Subsidiaries, joint ventures, and affiliated
companies and organizations that Xxxx has resigned as an officer and director of
Ashton and as an officer and director of Ashton's Subsidiaries, joint ventures,
and affiliated companies and organizations, and (b) remove Xxxx and his family
members, if any, as an authorized signatory on all corporate bank accounts.
6. Consulting Compensation. Ashton shall pay Xxxx (or, in the event of his
death, his estate) during the period from the Effective Date through December
31, 1996, $40,000 , in substantially equal bi-weekly payments, with Federal and
state wage-type withholding deductions in accordance with applicable law and
Xxxx'x elections. Ashton shall pay to Xxxxxxx Xxxx Associates, Inc. during the
period from the Effective Date through December 31, 1998, $120,000 per annum, in
substantially equal bi-weekly payments.
7. Consultation. During the period from the Effective Date until December
31, 1998, Ashton hereby retains Xxxx to consult with CSI, such consultations to
be at times reasonably convenient to both Xxxx and CSI; provided, however, that
Xxxx'x consultation obligations hereunder shall not require more than five hours
per week of Xxxx'x time. Unless otherwise agreed by the parties hereto, such
consultations shall not be deemed to involve a transfer of any intellectual
property or intangible property rights to Ashton or CSI. Ashton shall reimburse
Xxxx for reasonable documented expenses incurred in connection with his
consultation with CSI during the period from the Effective Date through December
31, 1998.
8. Continuing Role in CSI. As of the Effective Date, Ashton shall name Xxxx
Chairman Emeritus of the Board of Directors of CSI.
9. Non-Competition and Non-Solicitation. (a) Except with the prior written
consent of Ashton, Tate shall not, during the period ending December 31, 1998,
directly or indirectly manage, operate, control, be employed by, participate in,
invest in, or be connected in any manner with, the management, operation,
ownership or control of any business or venture to the extent such business or
venture competes with products or services of Ashton in the Financial Services
Industry, provided that nothing herein shall prohibit Xxxx from owning up to 5%
of the outstanding voting securities of any issuer the securities of which are
listed or traded on a U.S. national stock exchange, the NASDAQ system, or a
comparable foreign exchange or system.
(b) During the period ending December 31, 1998, Xxxx and his Affiliates
shall not:
(i) Hire any employee of the Company or any Person who was an
employee of the Company within the 6-month period prior to the
Closing Date except employees (other than Xxxxxxx Xxxxxxx) who
work at the Company's headquarters in Maryland;
(ii) Hire or enter into any consulting arrangement, joint venture or
other business relationship with any Person, or attempt to do or
assist any other Person in entering into or attempting to enter
into any of the foregoing with any Person, for the purpose of
developing, marketing, producing, creating, directly or
indirectly, products or services for use in the Financial
Services Industry; or
(iii) Solicit the business of either (i) any customer of the Company
or its Subsidiaries to whom Xxxx or the Company or its
Subsidiaries rendered services during either (x) the 12-month
period prior to the Closing Date or (y) 12-month period prior to
termination of this Agreement (a "Specific Customer"); or (ii)
any Person whose business the Company or Xxxx solicited during
either (x) the 6-month period prior to the Closing Date or (y)
the 6-month period prior to the termination of this Agreement (a
"Specific Contact"), in either case for the purpose of
developing, marketing, producing, creating, directly or
indirectly, products or services for use in the Financial
Services Industry.
10. Other Matters.
(a) Xxxx has cancelled the Ashton American Express account heretofore
maintained for the benefit of Xxxx and other employees of Ashton and, following
the Effective Date, will not incur any further charges under such American
Express card.
(b) The parties shall use their best efforts to cause the automobile lease
under which Ashton is the lessee and which relates to the jeep driven by Xx.
Xxxx as an employee of Ashton (the "Automobile Lease") to be transferred to Xxxx
such that Xxxx shall be the lessee thereunder and Ashton shall be released from
its obligations under such lease. Ashton shall pay any transfer fee payable
under the Automobile Lease up to $150 and, if Ashton is released from the
Automobile Lease and Xxxx assumes such lease, Ashton shall pay to Xxxx an
automobile allowance at the rate of $500 per month during the period from the
Effective Date through December 31, 1998. If Ashton is not released from the
Automobile Lease, use of the jeep and payment of all amounts due under the
Automobile Lease shall be as agreed by Xxxx and Ashton.
(c) Xxxx shall have the right to purchase individual items of furniture and
equipment owned by Ashton and located at Ashton's headquarters office space in
Columbia, Maryland, at a price equal to the lower of the book value or appraised
value of such furniture and equipment. Such furniture and equipment shall be
specified by Xxxx in writing on or before the Effective Date. At Xxxx'x option,
the amounts due from Xxxx to Ashton in respect of such furniture and equipment
may be offset against Ashton's obligations to Xxxx under Section 6 hereof.
Otherwise, Xxxx shall pay Ashton the purchase price of such furniture and
equipment within 30 days after agreement as to the price thereof.
11. Indemnification and Directors and Officers Insurance Coverage.
(a) Ashton acknowledges that its By-Laws include provisions designed to
provide to former officers and directors indemnification in respect of
threatened and commenced actions, suits and proceedings in which an individual
is a party or is threatened to be made a party by reason of the fact that he is
or was an officer or director of Ashton or its Subsidiaries. Ashton shall, and
shall cause its Subsidiaries to, continue to provide indemnification to Xxxx
under such provisions to the maximum extent permitted by applicable law. Ashton
shall provide indemnification to Xxxx only as authorized in a specific case upon
a determination by Ashton or a court of competent jurisdiction that
indemnification of Xxxx is proper in the circumstances because he has met the
applicable standard of conduct under the Delaware General Corporation Law (the
"DGCL"). Xxxx shall be entitled to mandatory advancement of expenses (including
attorneys' fees) as contemplated by Section 145(e) of the DGCL in advance of a
final determination as to whether Xxxx is entitled to be indemnified by Ashton;
provided, however, that Xxxx hereby agrees to repay any such advanced expenses
if it shall ultimately be determined by a court of competent jurisdiction that
Xxxx is not entitled to be indemnified by Ashton as authorized by Section 145(e)
of the DGCL.
(b) Following the Effective Date, Ashton shall continue to maintain its
existing directors and officers liability insurance policies in effect in at
least the same amounts and against the same risks that are in effect as of the
Effective Date. If, for any reason, Ashton shall not continue to have in effect
directors and officers liability insurance coverage, on terms substantially
comparable to those presently in effect, Ashton shall provide Xxxx with written
notice of the reduction, cancellation, nonrenewal or other modification of such
coverage not less than 20 days prior to the effectiveness of such reduction,
cancellation, nonrenewal or other modification.
12. Proprietary Information and Business and Personal Property.
Xxxx hereby disclaims and waives for himself and his Affiliates any
ownership rights or title to, and will not directly or indirectly disclose, any
confidential records, information, documents, data, formulae, specifications,
know-how, technology, intellectual property, trademarks, trade names, service
marks, copyrights, patents, trade secrets and other intangible rights owned by
Ashton and its Subsidiaries, or to the use of any such information, except
pursuant to a valid court order, subpoena or discovery request (and in the case
of such disclosure Xxxx will provide Ashton with written notice of the same).
The immediately preceding sentence shall not apply to information: (i) related
to the Licensed Technology; (ii) disclosure of which is required by law or by
process lawfully issued; (iii) which has been disclosed to Xxxx or to a third
party by a person not under a duty of confidentiality with respect to that
information; or (iv) which later enters the public domain through no fault or
breach of duty by Xxxx.
13. Confidentiality. Except as required by law, pursuant to a valid
subpoena or with the prior consultation and prior consent of the parties hereto,
no party to this Agreement or any Person acting for or on their behalf, shall
directly or indirectly make any written or oral statement publicly or privately
to any Person if such statement relates to or concerns (i) this Agreement, (ii)
any matter related to this Agreement, (iii) the management, conduct or affairs
of the Company, its Subsidiaries, Xxxx or any of the Group Members, (iv) the
relationship by and among the parties, or (v) unless expressly directed by the
Company's Board of Directors, the relationship of the Company or its
Subsidiaries with any third party. Notwithstanding the foregoing, a party to
this Agreement may discuss any of the foregoing privately with (a) a member of
such party's immediate family or (b) directors, officers. employees or auditors
of the Company or its Subsidiaries (each an "Authorized Person") if, and only
if, the Authorized Person agrees to be bound by the terms of this Section 13. If
an Authorized Person breaches the terms of this Section 13, the party to this
Agreement who discussed the prohibited matters with the Authorized Person shall
be liable for the Authorized Person's breach of this Section 13. Anything in
this Section 13 to the contrary notwithstanding, the parties agree that a press
release in the form of Exhibit C to the Settlement Agreement shall be issued by
the Company on the Closing Date.
14. No Admissions. Nothing contained in this Agreement shall be considered
an admission by either party of any wrongdoing under any Federal, state or local
statute, public policy, tort law, contract law, common law or otherwise.
15. No Third Party Claims. Each party represents and warrants that no other
person or entity has, or to the best knowledge of such party claims, any
interest in any potential claims, demands, causes of action, obligations,
damages or suits released pursuant to this Agreement; that it or he is the owner
of all other claims, demands, causes of action, obligations, damages or suits so
released; that it or he has full and complete authority to execute this
Agreement; and that it or he has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation or
liability subject to this Agreement.
16. Expenses. Each party shall pay its own costs incident to the
negotiation, preparation, performance, execution, and enforcement of this
Agreement, and all fees and expenses of its or his counsel, accountants, and
other consultants, advisors and representatives for all activities of such
persons undertaken in connection with this Agreement.
17. No Third Party Beneficiaries. Except as expressly stated herein, the
parties do not intend to make any person or entity who is not a party to this
Agreement a beneficiary hereof, and this Agreement should not be construed as
being made for the benefit of any person or entity not expressly provided for
herein.
18. Representations and Warranties. Each party represents and warrants to
the other party that (a) the execution, delivery and performance of this
Agreement has been duly authorized and all actions necessary for the due
execution, delivery and performance of this Agreement have been taken, and (b)
this Agreement constitutes the legal, valid and binding obligations of the party
in question enforceable against such party in accordance with its terms.
19. Advice of Counsel. The parties acknowledge that they have been advised
by competent legal counsel in connection with the execution of this Agreement,
that they have read each and every paragraph of this Agreement and that they
understand their respective rights and obligations. Xxxx declares that he has
completely read this Agreement, fully understands its terms and contents, and
freely, voluntarily and without coercion enters into this Agreement.
20. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and all prior
negotiations and representations are merged herein or replaced hereby.
21. Severability. If any provision of this Agreement is held illegal,
invalid or unenforceable, such illegality, invalidity, or unenforceability shall
not affect any other provision hereof. Any such provision and the remainder of
this Agreement shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable the remaining provisions hereof.
22. Governing Law. This Agreement shall be construed and enforced in
accordance with the law of the State of Delaware.
23. Effectiveness. This Agreement has been executed by or on behalf of Xxxx
and Ashton on the dates shown opposite their respective signatures below, and
this Agreement is effective as of the Effective Date.
24. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
on the Effective Date.
IN WITNESS WHEREOF, Xxxxxxx X. Xxxx and The Ashton Technology Group, Inc.
have executed this Agreement on the date first written above.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title: Director
00000 Xxxxxx Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
/s/ Xxxxxxx X. Xxxx
---------------------------------------
Xxxxxxx X. Xxxx
00000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
