EXHIBIT 99.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement"), dated as of January 30, 1997,
is by and among THE ASHTON TECHNOLOGY GROUP, INC., a Delaware corporation (the
"Company"), UNIVERSAL TRADING TECHNOLOGIES CORPORATION, a Delaware corporation
and a subsidiary of Ashton ("UTTC"), XXXXXXX X. XXXXXXXXXXX ("Xxxxxxxxxxx"), THE
DOVER GROUP, INC. ("Dover") and XXXXX X. XXXXXXXXX ("Rosensaft").
WHEREAS, the Company and UTTC have engaged Rosensaft as a consultant to
advise UTTC on, among other things, the implementation of the Universal Trading
System with the Philadelphia Stock Exchange;
WHEREAS, the Company, UTTC and Rosensaft executed a consulting agreement,
dated as of January 19, 1996, (the "Consulting Agreement");
WHEREAS, Rosensaft owns beneficially or otherwise 750,000 shares (the
"Ashton Shares") of the outstanding common stock of the Company, par value $.01
per share;
WHEREAS, Rosensaft owns beneficially or otherwise 333,333 shares (the "UTTC
Shares") of the outstanding common stock of UTTC, par value $.01 per share, (the
"UTTC Common Stock"); and
WHEREAS, certain disputes have arisen among Rosensaft, on the one hand, and
the Company, UTTC, Dover and Rittereiser, on the other, with respect to
Rosensaft's relationship with the Company and UTTC and his role as a consultant
to the Company and UTTC, and the parties have agreed to settle and resolve each
and every dispute and to enter into certain agreements on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. In addition to the terms elsewhere defined in this
Agreement, the following terms when used in this Agreement shall have the
following respective meanings, unless the context clearly indicates otherwise:
"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.
"Ashton Shares" is defined in the Recitals.
"Consulting Agreement" is defined in the Recitals.
"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.
"Promissory Note" shall mean the 9% promissory note due February 6, 1997
issued by Dover to Rosensaft on the date hereof in the principal amount of
$60,000.
"Purchase Price" shall mean the total purchase price of $2,000,000 for the
Ashton Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiaries" shall mean UTTC 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.
"Stock Purchase Agreement" shall mean the agreement attached hereto as
Exhibit A by and among the Company, Rittereiser and Rosensaft for the sale and
purchase of the Ashton Shares.
"UTTC Common Stock" is defined in the Recitals.
"UTTC Shares" is defined in the Recitals.
ARTICLE II
TERMS OF AGREEMENT
2.1 Consulting Agreement. Effective upon the payment in full of the
Purchase Price to Rosensaft as provided for in the Stock Purchase Agreement, the
Consulting Agreement shall be deemed to be void ab initio and all rights and
obligations of the parties thereto shall cease to exist and be of no legal force
or effect.
2.2 Purchase and Sale of Ashton Shares. Simultaneously with the execution
of this Agreement, the Company, Rittereiser and Rosensaft shall enter into the
Stock Purchase Agreement.
2.3 Registration Rights. Pursuant to the terms and subject to the
conditions set forth in the Stock Purchase Agreement, the Company agrees to
cause the Ashton Shares to be registered under the Securities Act upon request
by Rittereiser or his assignee.
2.4 Promissory Note. Simultaneously with the Agreement, Dover or its
assignee shall deliver to Rosensaft the Promissory Note in consideration for the
$60,000 loan made by Rosensaft to Dover on October 21, 1996.
2.5 Release. Effective upon the payment in full of the Purchase Price to
Rosensaft as provided for in the Stock Purchase Agreement and except for any
breach of this Agreement or the Stock Purchase Agreement, and except as provided
in Section 2.6 below, each of the parties hereto, on behalf of itself and each
and every one of its present, former and future stockholders, officers,
directors, employees, agents, parents, subsidiaries, affiliates, successors,
assigns and predecessors, does hereby release and forever discharge each of the
other parties hereto and each of their respective Affiliates, heirs, executors,
administrators, successors, agents, attorneys and assigns, of and from any and
all manner of claims, demands, damages, actions, causes of action or suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, trespasses, judgments
and executions whatsoever, in law or equity, whether known or unknown, directly
or indirectly which any of them or any of their heirs, executors,
administrators, successors and assigns can, shall or may have, or ever had, or
might have but for this release, for, upon or by reason of any matter, cause or
thing whatsoever, from the beginning of the world to the date of this Agreement.
2.6 Reservation of Rights. The foregoing release contained in Section 2.5
above does not include Rosensaft's right to enforce the terms of (i) the
Promissory Note against Dover or its assignee, or (ii) the January 16, 1997
agreement among and between Rosensaft, the Company, UTTC, Dover and Rittereiser.
2.7 Waiver of Derivative Claim. At no time shall any party hereto bring a
derivative claim which can be asserted on behalf of the Company or any of its
Subsidiaries in relation to, by reason of, based upon, or arising out of or in
connection with this Agreement or the claims which are settled and/or released
by this Agreement.
ARTICLE III
REGISTRATION RIGHTS
3.1 Rosensaft Registration Rights. If UTTC proposes at any time following
the date hereof to register any shares of the UTTC Common Stock in an initial
public offering registered under the Securities Act through an underwriter or
underwriters, UTTC shall promptly give written notice to Rosensaft of its
intention to register the UTTC Common Stock. Such written notice shall include,
without limitation, a list of the jurisdictions in which UTTC intends to attempt
to qualify such securities under the applicable blue sky or other state
securities laws. Upon receipt of UTTC's written notice, Rosensaft shall have
thirty days to provide UTTC with a written request specifying the total number
of UTTC Shares to be included in such registration under the Securities Act.
UTTC shall include in such registration statement (and any related qualification
under blue sky laws or other compliance required under the Securities Act) all
UTTC Shares requested by Rosensaft to be included therein; provided, however,
that UTTC may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with the
registration of all the other shares of UTTC Common Stock originally proposed to
be registered.
3.2 Underwriting. Rosensaft shall have the right to include any or all of
the UTTC Shares in any underwriting of UTTC Common Stock, provided, however,
that such right shall be conditioned upon Rosensaft's requesting inclusion of
such UTTC Shares in the underwriting and that the subsequent inclusion of such
UTTC Shares in the underwriting shall be on the terms and conditions provided
herein. In agreeing to distribute the UTTC Shares through such underwriting,
Rosensaft shall (together with UTTC and the other holders distributing their
UTTC Common Stock through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by UTTC. Notwithstanding any other provision of Section 3.1 or
this Section 3.2, in the event that the managing underwriter determines that
marketing factors require a limitation on the number of shares of UTTC Common
Stock to be sold, then UTTC will be required to include in such offering only
that number of shares of UTTC Common Stock which it is so advised should be
included in such offering. The UTTC Common Stock proposed by UTTC to be sold
shall have the first priority and all other shares of UTTC Common Stock,
including the UTTC Shares and any other shares of UTTC Common Stock in which
registration rights have been requested (the "Selling Shareholders' Shares"),
shall be given a second priority without preference among the relevant holders.
If less than all of the Selling Shareholders' Shares are to be included in the
offering, such shares shall be included in the offering pro rata based on the
total number of shares sought to be offered other than for issuance by UTTC. No
person may participate in any offering hereunder unless such person (x) agrees
to sell such person's UTTC Common Stock on the basis provided in any
underwriting arrangements approved by UTTC and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
If market conditions force UTTC to limit the number of shares of UTTC
Common Stock to be sold, UTTC shall so advise Rosensaft of the number of UTTC
Shares that may be included in the offering and underwriting at the time of the
filing of the registration statement. If Rosensaft disapproves of the terms of
any such underwriting, he may elect to withdraw all or any portion of the UTTC
Shares therefrom by written notice to UTTC and the underwriter.
3.3 Expenses of Registration. All expenses incurred in connection with the
registration statement contemplated by this Agreement, including without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses and fees and disbursements of counsel for UTTC and their respective
independent certified public accountants, underwriters (excluding discounts and
commissions) and other persons retained by UTTC shall be paid solely by UTTC
and, to the extent that they agree, any other holders of shares of UTTC Common
Stock (other than Rosensaft) whose shares are included in such registration
statement.
3.4 Registration Procedures. In the case of a registration statement filed
under the Securities Act pursuant to this Agreement, UTTC will keep Rosensaft,
if participating therein, advised in writing as to the initiation of such
registration statement and as to the completion thereof. UTTC will:
(1) Keep such registration statement pursuant to Section 3.1 effective for
a period of 180 days or until Rosensaft has completed the distribution
described in the registration statement relating thereto, whichever
first occurs; and
(2) Furnish such number of prospectuses and other documents incident
thereto as Rosensaft from time to time may reasonably request.
3.5 Indemnification. (a) Rosensaft will, if any of the UTTC Shares are
included in a registration statement pursuant to Section 3.1, indemnify the
Company, each of their directors and officers who sign such registration
statement, each underwriter, each person who controls any underwriter of the
UTTC Common Stock covered by such a registration statement and each person who
controls UTTC within the meaning of the Securities Act, against all claims,
losses, damages, and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus or other document,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and will reimburse UTTC, such directors, officers, persons, or underwriters for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus or other document in reliance upon and in
conformity with information furnished in writing to UTTC by Rosensaft
specifically for use therein.
(b) With respect to a registration statement filed pursuant to Section 3.1,
UTTC will indemnify Rosensaft, each underwriter and each person who controls any
underwriter of the UTTC Common Stock, against all claims, losses, damages, and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus or other document (including any related registration statement,
notification or the like) incident to any such registration statement, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by UTTC of any rule or regulation promulgated under the
Securities Act applicable to UTTC and relating to action or inaction required of
UTTC in connection with any such registration statement and will reimburse
Rosensaft and each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that UTTC will not be liable in any such
case to the extent that any final damage award or fully adjudicated liability is
based on any untrue statement or omission based upon information furnished to or
omitted to be furnished to UTTC by Rosensaft specifically for use therein, and
which was used therein with Rosensaft's written permission.
(c) Each party entitled to indemnification under this Section 3.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that, counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 3.6. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
3.6 Information by Rosensaft. If any of the UTTC Shares are included in any
registration statement pursuant to Section 3.1, Rosensaft shall furnish to UTTC
such information regarding Rosensaft as UTTC may request in writing and as shall
be reasonably required in connection with any such registration statement. Prior
to using any such information, UTTC shall obtain Rosensaft's prior written
permission to use such information in any registration statement, which approval
Rosensaft shall reasonably provide.
ARTICLE IV
CLOSING
4.1 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on April 10, 1997 at the offices of Cadwalader,
Xxxxxxxxxx & Xxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, X.X. 00000.
ARTICLE V
GENERAL PROVISIONS
5.1 Representations and Warranties. Each party represents and warrants to
the other party that (i) 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, (ii) this
Agreement constitutes the legal, valid and binding obligation of the parties
enforceable against each party in accordance with its terms, (iii) it has been
represented by legal counsel of its choosing, and (iv) this Agreement has been
executed and delivered as its own free act and deed and not as the result of
duress by any other party hereto. The representations, warranties and covenants
of the parties set forth in this Section 5.1 shall survive the Closing.
5.2 Further Assurances. Each party agrees from time to time, at the request
of any other party, to execute such documents or ratify such agreements as may
be reasonably necessary to effect the agreements contained herein.
5.3 Modification. This Agreement shall not be modified or amended except by
an agreement in writing executed by all parties hereto.
5.4 Applicable Law. This Agreement shall be governed under the law of the
State of New York without regard to the principles of conflicts of law thereof.
5.5 Assignment. None of the parties hereto may assign any of their
respective rights or delegate any of their respective obligations under this
Agreement to any party without the prior written consent of each of the other
parties hereto; provided, however, that upon written notice to the parties
hereto (i) this Agreement may be assigned by operation of law or pursuant to the
laws of descent and distribution and (ii) the rights and obligations of Dover
and Rittereiser under the Stock Purchase Agreement may be assigned as provided
in Section 9.1 thereof. Notwithstanding the foregoing, this Agreement and the
rights and obligations set forth herein shall be binding on all parties and on
their successors and permitted assigns.
5.6 Entire Agreement. This Agreement and the Stock Purchase Agreement
contain the entire and final agreement between the parties with respect to the
subject matter hereof, and no oral statements, assumptions or representations or
prior written matter not contained or referred to in this instrument shall have
any force or effect.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be one and the same instrument.
5.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
5.9 Headings. The headings used in this Agreement are for convenience only
and shall not be deemed part of the agreements of the parties set forth herein.
5.10 Waiver. No consent or waiver, express or implied, by any party to or
of any breach or default by another party in performance by the breaching party
of its obligations under this Agreement shall be deemed or construed to be a
consent or waiver to or of any breach or default by the breaching party in the
performance by such breaching party of any other obligations of such breaching
party under this Agreement. Failure on the part of any party to object to or
complain of any act or failure to act of any of the other parties or to declare
any of the other parties in default shall not constitute a waiver of any right
or remedy or the ability to object or complain or to declare any default at any
time in the future.
5.11 Submission to Jurisdiction. Any judicial proceeding brought with
respect to this Agreement must be brought in any United States District Court
(or if such court lacks jurisdiction, any state court) sitting in New York, New
York and by execution and delivery of this Agreement, each signatory hereto (i)
hereby submits to and accepts, generally and unconditionally, the exclusive
jurisdiction of such courts and any related appellate court, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement and (ii) irrevocably waives any objection it may now or hereafter have
as to the venue of any such suit, action or proceeding brought in such a court
or that such court is an inconvenient forum.
5.12 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.
5.13 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.
5.14 Confidentiality. Except as required by law pursuant to a valid
subpoena, or with the written 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 or Rosensaft, (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) attorneys and other professional advisors (each an "Authorized Person") if,
and only if, the Authorized Person agrees to be bound by the terms of this
Section 5.14. If an Authorized Person breaches the terms of this Section 5.15,
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 5.14.
5.15 Notice. All notices or requests hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally or by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Rosensaft shall be addressed
to:
Xxxxx X. Xxxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 00-X
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxx Xxxxxxxx, Esq.
Xxxxx Xxxxxxxx & Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or at such other address and to the attention of such other person as Rosensaft
may designate by written notice to the other parties hereto. Notices to the
Company or UTTC shall be addressed to:
Universal Trading Technologies Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or at such other address and to the attention of such other person as the
Company or UTTC may designate by written notice to the other parties hereto.
Notices to Rittereiser or Dover shall be addressed to:
The Dover Group, Inc.
00 Xxxxx 00 Xxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or at such other address and to the attention of such other person as
Rittereiser or Dover may designate by written notice to the other parties
hereto.
5.16 Time is of the Essence. Time is of the essence of this Agreement and
every provision hereof.
5.17 Expenses. Whether the Closing does or does not occur, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
5.18 Tolling. The statute of limitations shall be tolled as of December 9,
1996 through and including the date the release provided in Section 2.5 becomes
effective or, in the event the Agreement is determined to be null and void
pursuant to Section 5.19 hereof, thirty (30) days following receipt by Rosensaft
of notice claiming that the Agreement is null and void thereunder, on all claims
that Rosensaft has or may have against the Company, UTTC, Dover and Rittereiser,
individually or collectively.
5.19 Standstill. Notwithstanding any other provision hereof, this
Settlement Agreement and the Stock Purchase Agreement shall be null and void if
at any time between the date hereof and the Closing Date (i) Rosensaft commences
any litigation against any of the other parties hereto relating to any claim he
may have against any party to this Agreement, or (ii) Rosensaft talks or
otherwise communicates with or provides information to any publication or its
employees, relating to Rosensaft's relationship (past, present or future) to the
Company, UTTC, or their officers or directors.
5.20 "Confidential Treatment"
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THE ASHTON TECHNOLOGY GROUP, INC. THE DOVER GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx Name: Xxxxxxx X. Xxxxxxxxxxx
Title: President Title: Chairman
UNIVERSAL TRADING TECHNOLOGIES XXXXXXX X. XXXXXXXXXXX
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Chairman Title:
XXXXX X. XXXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title:
