EXHIBIT 10.37
UNANIMOUS SHAREHOLDER AGREEMENT
Made as of December 20, 1999
Between
THE ASHTON TECHNOLOGY GROUP, INC.
as "ATG"
and
3690822 CANADA INC.
as "NumberCo"
and
ASHTON TECHNOLOGY CANADA INC.
as "Corporation"
XXXXXXXX XXXXX
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BARRISTERS & SOLICITORS
TABLE OF CONTENTS
RECITALS.......................................................... 1
SECTION 1 - INTERPRETATION ....................................... 1
1.1 Definitions............................................. 1
(1) Adoption Agreement................................. 1
(2) Agreement.......................................... 2
(3) Affiliate.......................................... 2
(4) Applicable Law..................................... 2
(5) Arm's Length....................................... 2
(6) Articles........................................... 2
(7) Bankruptcy Proceedings............................. 2
(8) Business Corporations Act.......................... 2
(9) Business Day....................................... 2
(10) By-laws............................................ 2
(11) Canadian Securities................................ 3
(12) Closing Date....................................... 3
(13) Confidential Information........................... 3
(14) Control............................................ 3
(15) Corporate Shareholder.............................. 3
(16) Fair Market Value.................................. 3
(17) GAAP............................................... 3
(18) Governmental Authority............................. 3
(19) Indebtedness....................................... 4
(20) Individual Shareholder............................. 4
(21) Licence and Services Agreement..................... 4
(22) Lien 4
(23) Notice............................................. 4
(24) Permitted Transferee............................... 4
(25) Person............................................. 4
(26) Principal Shareholders............................. 4
(27) Purchase Price..................................... 4
(28) Purchasing Shareholder............................. 4
(29) Question........................................... 4
(30) Selling Shareholder................................ 4
(31) Shares............................................. 4
(32) Shareholders....................................... 5
(33) Triggering Event................................... 5
1.2 Headings and Table of Contents.......................... 5
1.3 References.............................................. 5
1.4 Number and Gender....................................... 5
1.5 Time of Day............................................. 5
1.6 Business Day............................................ 5
1.7 Governing Law........................................... 5
1.8 Conflict................................................ 5
(i)
1.9 Severability............................................ 6
1.10 Time of Essence......................................... 6
1.11 Statutory References.................................... 6
1.12 Schedules............................................... 6
1.13 Entire Agreement........................................ 6
1.14 GAAP.................................................... 6
1.15 Unanimous Shareholder Agreement......................... 6
SECTION 2 - MANAGEMENT ........................................... 6
2.1 Number of Directors..................................... 6
2.2 Election of Directors................................... 6
2.3 Quorum.................................................. 7
2.4 Officers................................................ 7
2.5 Restrictions on Management.............................. 7
2.6 Amalgamation with NumberCo.............................. 8
2.7 Signing Authority....................................... 8
SECTION 3 - SHAREHOLDER MATTERS .................................. 8
3.1 Meetings of Shareholders................................ 8
3.2 Non-Competition Covenant................................ 9
3.3 Non-Solicitation Covenant............................... 9
3.4 Confidentiality......................................... 9
3.5 Breach of Obligations................................... 10
SECTION 4 - FINANCIAL AND SUPPORT OBLIGATIONS .................... 10
4.1 ATG Funding and Support Obligations..................... 10
4.2 Further Obligations..................................... 11
4.3 Dividends............................................... 11
4.4 Auditors................................................ 11
SECTION 5 - DEALING WITH SHARES .................................. 11
5.1 Ownership of Shares..................................... 11
5.2 Restrictions on Transfer of Shares...................... 11
5.3 Permitted Transfers..................................... 12
5.4 Employee Stock Option Plan.............................. 12
5.5 Put/Call................................................ 12
SECTION 6 - COMPLETION OF PURCHASE AND SALE ...................... 13
6.1 Purchase Price.......................................... 13
6.2 Determination and Notification of Fair Market Value..... 13
6.3 Outstanding Indebtedness................................ 14
6.4 Title to Shares Free and Clear.......................... 14
6.5 Closing and Closing Date................................ 14
6.6 Time and Place of Closing............................... 15
6.7 Payment of Purchase Price and Delivery of Certificates.. 15
6.8 Failure to Complete Transaction of Purchase and Sale.... 15
SECTION 7 - GENERAL .............................................. 16
7.1 Carrying out of Agreement............................... 16
7.2 Assignment and Enurement................................ 16
7.3 Notices................................................. 16
(ii)
7.4 No Set-off.............................................. 17
7.5 Waivers................................................. 17
7.6 Further Assurances...................................... 17
7.7 Remedies Cumulative..................................... 17
7.8 Counterparts and Adoption Agreement..................... 17
7.9 Amendments.............................................. 18
7.10 Submission to Jurisdiction.............................. 18
7.11 Termination............................................. 18
Schedule 1.1(1) - Adoption Agreement
Schedule 1.1(6) - Articles
Schedule 1.1(10) - By-Laws
(iii)
EXHIBIT 10.37
UNANIMOUS SHAREHOLDER AGREEMENT
This Agreement is made as of December 20, 1999 , between
THE ASHTON TECHNOLOGY GROUP, INC.
a corporation subsisting under the laws of Delaware
as "ATG"
and
3690822 CANADA INC. a corporation subsisting under
the laws of Canada
as "NumberCo"
and
ASHTON TECHNOLOGY CANADA INC. a
corporation subsisting under the laws of Canada
as "Corporation"
RECITALS
A. The authorized capital of the Corporation consists of an unlimited number of
common shares in two classes, of which 100,000 shares are issued and
outstanding;
B. At the date of this Agreement all of the issued and outstanding shares of the
Corporation are legally and beneficially owned by ATG and NumberCo;
C. The parties have agreed to enter into this Agreement to provide for certain
rights and obligations concerning the Corporation and to record their agreement
as to the manner in which the affairs of the Corporation shall be conducted.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 - INTERPRETATION
1.1 Definitions. In this Agreement:
1.1(10)-1
(1) Adoption Agreement means an agreement by which a Person agrees to be bound
by the terms of this Agreement, substantially in the form of Schedule 1.1(1);
(2) Agreement means this agreement including any recitals and schedules to this
agreement, as amended, supplemented or restated from time to time;
(3) Affiliate has the meaning ascribed thereto in the Business Corporation Act;
(4) Applicable Law in respect of any Person, property, transaction or event,
means all present and future laws, statutes, regulations, treaties, judgments
and decrees applicable to that Person, property, transaction or event and,
whether or not having the force of law, all applicable official directives,
rules, consents, approvals, authorizations, guidelines, orders and policies of
any Governmental Authority having or purporting to have authority over that
Person, property, transaction or event;
(5) Arm's Length has the meaning given to it in the Income Tax Act (Canada) as
amended or re-enacted from time to time;
(6) Articles means the articles of the Corporation attached to this Agreement as
Schedule Schedule 1.1(6), as amended, restated or replaced from time to time in
accordance with this Agreement;
(7) Bankruptcy Proceedings by or against a Person means any voluntary or
involuntary case or proceeding (including the filing of any notice) under any
insolvency, incorporation or other Applicable Law in any jurisdiction in respect
of the:
(a) bankruptcy, liquidation, winding-up, dissolution or suspension of
general operations;
(b) composition, rescheduling, reorganization, arrangement or readjustment
of, or other relief from, or stay or proceedings to enforce, some or
all of the debts or obligations;
(c) appointment of a trustee, receiver, receiver and manager, liquidator,
administrator, custodian or other official for, all or a substantial
part of the assets; or
(d) possession, foreclosure or retention, or sale or other disposition of,
or other proceedings to enforce security over, all or a substantial
part of the assets;
of that Person;
(8) Business Corporations Act means the Canada Business Corporations Act, as
amended or re-enacted from time to time;
(9) Business Day means a day on which banks are open for business in the City of
Toronto, but does not include a Saturday, Sunday or statutory holiday in the
Province of Ontario. The Business Day will end at 5:00 p.m. on that day;
(10) By-laws means the by-laws of the Corporation attached to this Agreement as
Schedule Schedule 1.1(10), as amended or replaced from time to time in
accordance with this Agreement;
(11) Canadian Securities means the securities issued by any company domiciled in
Canada or whose principal place of business is Canada. "Canadian Securities"
shall also mean the securities of any company listed for trading on any
registered Canadian exchange.
(12) Closing Date means in the case of a purchase and sale under Section 5.5,
the date determined under Section 6.5, unless otherwise agreed by the parties to
the transaction of purchase and sale;
(13) Confidential Information means all information, documentation, knowledge,
data or know-how owned, possessed or controlled by, or relating to, the
Corporation or acquired or developed for its benefit, that the Corporation
treats as confidential including, without limitation, supplier and customer
lists, price lists, marketing information, product information, trade secrets
and computer software, but excluding any information:
(a) that is or becomes part of the public domain by publication or
otherwise without any breach of this Agreement;
(b) that is obtained on a non-confidential basis from another source
acting in good faith without any breach of this Agreement; or
(c) that was not obtained from another source and that can be demonstrated
by the recipient to have been known or independently developed by the
recipient before disclosure to the recipient;
(14) Control means the possession of the power to direct or cause the direction
of the management and policies of a corporation or a trust through, in the case
of a corporation, legal and beneficial ownership of a majority of voting shares
in the corporation, or, in the case of a trust, through legal ownership of a
trust's assets;
(15) Corporate Shareholder means a corporation which owns Shares;
(16) Fair Market Value of any class of Shares means the fair market value of all
the issued and outstanding Shares of that class on any particular date
determined in accordance with Section 6.2 and for the purposes of this
definition "fair market value" means the highest price expressed in money or
money's worth, available in an open and unrestricted market between informed and
willing parties acting at arm's length and under no compulsion to act, with no
discount for minority interests, illiquid markets or restrictions on transfers
of shares and no premium for a control block of Shares;
(17) GAAP means generally accepted accounting principles in effect in Canada
including, without limitation, the accounting recommendations published in the
Handbook of the Canadian Institute of Chartered Accountants;
(18) Governmental Authority means any domestic or foreign government, including,
without limitation, any federal, provincial, state, territorial or municipal
government, and any
government agency, tribunal, commission or other authority exercising or
purporting to exercise executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government;
(19) Indebtedness of a Person means all debts, liabilities and other obligations
of that Person however incurred;
(20) Individual Shareholder means an individual who:
(a) owns Shares; or
(b) owns shares of a Corporate Shareholder;
(21) Licence and Services Agreement means the Licence and Services Agreement
dated the date hereof between the Corporation, ATG and Universal Trading
Technologies Corporation;
(22) Lien means any lien, mortgage, charge, hypothec, encumbrance, security
interest, pledge, hypothecation, deposit arrangement, priority, conditional sale
agreement, other title retention agreement or other security arrangement of any
kind;
(23) Notice means any notice, approval, demand, direction, consent, designation,
request, document, instrument, certificate or other communication required or
permitted to be given under this Agreement;
(24) Permitted Transferee means a single Affiliate of a Shareholder and of which
the Shareholder has Control;
(25) Person means any natural person, sole proprietorship, partnership,
corporation, trust, joint venture, any Governmental Authority or any
incorporated or unincorporated entity or association of any nature;
(26) Principal Shareholders means ATG and NumberCo;
(27) Purchase Price has the meaning given to it in Section 6.1;
(28) Purchasing Shareholder means a Shareholder purchasing Shares pursuant to
Section 5.5(1) or 5.5(2), as the case may be;
(29) Question includes any resolution, by-law, or other matter submitted to
directors or Shareholders of the Corporation, as applicable;
(30) Selling Shareholder means a Shareholder selling Shares pursuant to Section
5.5(1) or 5.5(2), as the case may be;
(31) Shares means:
(a) common and preference shares in the capital of the Corporation,
(b) any other securities into which those common or preference shares may
be converted, exchanged, reclassified, redesignated, subdivided,
consolidated or otherwise changed from time to time,
(c) any securities of any successor corporation to or corporation
continuing from the Corporation which those common or preference
shares or other securities are changed into or become as a result of
any amalgamation, continuance, merger, consolidation, plan of
arrangement or reorganization, statutory or otherwise, and
(d) any securities received as a stock dividend or other distribution on
or in respect of those common shares or preference or other
securities;
(32) Shareholders means ATG, NumberCo and any other Person who at the relevant
time owns Shares;
(33) Triggering Event means a change in Control of a Shareholder, a sale of all
or substantially all of the assets of a Shareholder, or, in the event Shares in
the Corporation held by a Shareholder have been transferred to a Permitted
Transferee under Section 5.3, a change in Control of such Permitted Transferee
or a sale of all or substantially all of the assets of such Permitted
Transferee.
1.2 Headings and Table of Contents. The division of this Agreement into
sections, the insertion of headings and the provision of a table of contents are
for convenience of reference only and are not to affect the construction or
interpretation of this Agreement.
1.3 References. Unless otherwise specified, references in this Agreement to
Sections and Schedules are to sections of, and schedules to, this Agreement.
1.4 Number and Gender. Unless otherwise specified, words importing the singular
include the plural and vice versa and words importing gender include all
genders.
1.5 Time of Day. Unless otherwise specified, references to time of day or date
mean the local time or date in the City of Toronto, Province of Ontario.
1.6 Business Day. If under this Agreement any payment or calculation is to be
made or any other action is to be taken, on or as of a day which is not a
Business Day, that payment or calculation is to be made, and that other action
is to be taken, as applicable, on or as of the next day that is a Business Day.
Any extension of time will be included for the purposes of computation of
interest.
1.7 Governing Law. This Agreement and each of the documents contemplated by or
delivered under or in connection with this Agreement are governed by, and are to
be construed and interpreted in accordance with, the laws of the Province of
Ontario and the laws of Canada applicable in the Province of Ontario.
1.8 Conflict. If there is a conflict between the provisions of this Agreement
and the Articles or By-laws, the provisions of this Agreement prevail and the
Articles and By-laws are to be amended accordingly. If there is a conflict
between any provision of this Agreement and any
other document contemplated by or delivered under or in connection with this
Agreement, the relevant provision of this Agreement is to prevail.
1.9 Severability. If any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, the illegality, invalidity or
unenforceability of that provision will not affect:
(1) the legality, validity or enforceability of the remaining provisions of this
Agreement; or
(2) the legality, validity or enforceability of that provision in any other
jurisdiction.
1.10 Time of Essence. For every provision of this Agreement, time is of the
essence.
1.11 Statutory References. Each reference to an enactment is deemed to be a
reference to that enactment, and to the regulations made under that enactment,
as amended or re-enacted from time to time.
1.12 Schedules. The following Schedules are attached to and form part of this
Agreement:
Schedule Description
Schedule 1.1(1) Adoption Agreement
Schedule 1.1(6) Articles
Schedule 1.1(10) By-laws
1.13 Entire Agreement. This Agreement and all documents contemplated by or
delivered under or in connection with this Agreement, constitute the entire
agreement between the parties with respect to the subject matter and supersede
all prior agreements, negotiations, discussions, undertakings, representations,
warranties and understandings, whether written or verbal.
1.14 GAAP. Unless otherwise specified, any financial statements to be prepared
in respect of any accounting period are to be prepared in accordance with GAAP
applied on a consistent basis.
1.15 Unanimous Shareholder Agreement. This Agreement is a unanimous shareholder
agreement within the meaning of the Business Corporations Act. To the extent
that this Agreement specifies that any matter may only be or shall be dealt with
or approved by or requires action by the Shareholders, the powers of the
directors of the Corporation to manage and supervise the management of the
business and affairs of the Corporation with respect to those matters are
correspondingly restricted.
SECTION 2 - MANAGEMENT
2.1 Number of Directors. The board of directors of the Corporation shall consist
of five directors, the majority of whom shall be resident Canadians.
2.2 Election of Directors. ATG shall nominate three directors and NumberCo shall
nominate two directors. The Shareholders shall vote at all meetings of the
Shareholders and act in all other respects in connection with the corporate
proceedings of the Corporation to ensure
that ATG's three nominees and NumberCo's two nominees are elected and maintained
in office from time to time as directors.
2.3 Quorum. The quorum for the transaction of business at any meeting of the
board of directors of the Corporation shall be at least three directors present
in person or by telecommunication of which at least two of the directors present
in person or by telecommunication are ATG's nominees. For greater certainty, all
Questions before the board of directors of the Corporation shall be decided by a
majority of the votes cast on the Question. The Chairman of the meeting shall
not have a second or casting vote.
2.4 Officers. Until changed by resolution of the directors, the officers of the
Corporation shall be:
Office Name
------ ----
Chairman Xxxxxxxx X. Xxxxxxxxxxx
President and Chief Executive Officer Xxxxxx X. Xxxxxx
Chief Technology Officer Xxxxx X. Xxxxxxxx
Treasurer Xxxxxx X. Xxxxx
Secretary Xxxxx X. Xxxxxxxxxx
2.5 Restrictions on Management. Except as otherwise expressly contemplated by
this Agreement, none of the following actions shall be taken without the consent
of all the Shareholders:
(1) any change in the authorized or issued share capital of the Corporation;
(2) the allotting or issuing of any Shares, the entering into of any agreement,
or the making of any offer or the granting of any right capable of becoming an
agreement, to allot or issue any Shares;
(3) the redemption, purchase or other acquisition of any Shares by the
Corporation;
(4) the taking of any steps to amalgamate or merge the Corporation with another
person or to continue the Corporation under the laws of another jurisdiction;
(5) the taking of any steps to wind-up, dissolve, reorganize or terminate the
corporate existence of the Corporation or the taking of any steps in respect of
Bankruptcy Proceedings by or against the Corporation;
(6) the taking of any steps in connection with the distribution of Shares of the
Corporation to the public;
(7) the borrowing of money from, or the giving of security, to any Shareholder;
(8) the sale, lease, exchange, encumbrance, transfer or other disposition of all
or a substantial part of the assets of the Corporation or any subsidiary of the
Corporation, including the granting of an option for any such transaction;
(9) the entering into of a partnership, joint venture or any other arrangement
for the sharing of profits with any Person;
(10) any material change in the business to be carried on by the Corporation at
the date of this Agreement , namely the business contemplated in the Licence and
Services Agreement;
(11) any change in the number of directors of the Corporation, the establishment
of any committee of directors or the delegation of any power of the directors to
a committee of directors or a managing director;
(12) the entering into of any contract or commitment with any Shareholder or a
Shareholder's Affiliate;
(13) any agreement by the Corporation with respect to any of the matters listed
in this Section; and
(14) any other matters required by the Business Corporations Act to be approved
by the shareholders of a corporation.
2.6 Amalgamation with NumberCo. Subject to the proviso in the next sentence,
prior to any distribution of Shares of the Corporation to the public or any sale
of the Corporation or all or substantially all of its assets to a third party,
NumberCo shall have the right to require the Corporation to amalgamate with
NumberCo (and/or its Permitted Transferee, if any) and upon exercise of such
right by notice in writing from NumberCo to the Corporation and the other
Shareholder(s), the parties hereto will vote at all meetings of the Corporation
and act in all other respects so as to implement the amalgamation as
expeditiously as possible. NumberCo's right to require an amalgamation shall be
subject to (i) NumberCo (and its Permitted Transferee, if applicable) having no
assets or liabilities at the time of the amalgamation, other than an interest in
Shares and such other assets and liabilities contemplated in this Agreement or
consented to by the other Shareholders; and (ii) there being no material
detriment to ATG (or its Permitted Transferree, if any) as a result of such
amalgamation.
2.7 Signing Authority.
(1) All deeds, contracts, obligations, documents or other instruments in writing
shall be signed on behalf of the Corporation by the President or such other
Persons authorized by the Corporation's board of directors.
(2) All cheques drawn by the Corporation shall be signed by either the President
or Treasurer of the Corporation or such other Persons authorized by the
Corporation's board of directors. The Shareholders and the Corporation shall
work together to establish appropriate banking and internal accounting
mechanisms for the Corporation as soon as possible following the execution of
this Agreement.
SECTION 3 - SHAREHOLDER MATTERS
3.1 Meetings of Shareholders.
(1) The quorum for the transaction of business at any meeting of the
Shareholders shall be two persons present in person or by proxy holding at least
66 2/3% of the Shares entitled to vote at the meeting. No meeting shall continue
with the transaction of business in the absence of a quorum.
(2) Subject to Section 2.5 and the Business Corporations Act, all Questions
before the Shareholders shall be decided by a majority of the votes cast on the
question. The chairman of a meeting of the Shareholders shall not have a second
or casting vote.
3.2 Non-Competition Covenant. No Shareholder, while a Shareholder or for a
period of 2 years after ceasing to be a Shareholder, shall directly or
indirectly, alone or in partnership or in conjunction with any Person:
(1) engage in a business, or
(2) advise, invest in, lend money to, guarantee the debts or obligations of, or
permit its name or any part of its name to be used by any Person engaged in a
business,
that competes with the business carried on by the Corporation in Canada with
respect to the development, licensing and marketing of technology and related
services for the trading of Canadian Securities.
3.3 Non-Solicitation Covenant.
(1) No Shareholder, while a Shareholder or for a period of 2 years after ceasing
to be a Shareholder, shall directly or indirectly, alone or in partnership or
conjunction with any Person, solicit business from any Person who is a customer
of the Corporation at any time while it is a Shareholder or within six months
after it ceases to be a Shareholder, if that business competes with the business
carried on by the Corporation in Canada at any time while it is a Shareholder,
or at the time it ceases to be a Shareholder.
(2) Except with the written consent of the Corporation, no Shareholder, while a
Shareholder or for a period of 2 years after ceasing to be a Shareholder, shall
directly or indirectly, alone or in partnership or in conjunction with any
Person:
(a) employ any Person who is an employee of the Corporation at any time
while it is a Shareholder or at the time it ceases to be a
Shareholder, or
(b) induce or attempt to induce any Person who is an employee of the
Corporation at any time while it is a Shareholder or at the time it
ceases to be a Shareholder, to leave his or her employment with the
Corporation.
3.4 Confidentiality.
(1) No Shareholder, while a Shareholder or any time after ceasing to be a
Shareholder, shall disclose any Confidential Information to any other Person,
except:
(a) to those of its employees or agents having a need to know and who
either are bound by the duties of their employment or engagement to
maintain the confidentiality of the Confidential Information or enter
into a confidentiality agreement in a form reasonably acceptable to
the Corporation,
(b) as authorized by the Corporation, or
(c) as required by law (if the Shareholder has immediately notified the
Corporation of that requirement of law, unless precluded by law from
doing so).
(2) Each Shareholder shall use at least the same degree of care in maintaining
the confidentiality of the Confidential Information as it uses in maintaining
the confidentiality of its own confidential or proprietary information, but in
no event with less care than is reasonable given the nature of the information.
(3) No Shareholder shall use or copy any Confidential Information, except:
(a) to advance the business of the Corporation,
(b) as authorized by the Corporation, or
(c) as required by law (if the Shareholder has immediately notified the
Corporation of that requirement of law, unless precluded by law from
doing so).
(4) The Corporation may at any time require a Shareholder that ceases to be a
Shareholder to immediately deliver to the Corporation or, at the Corporation's
option, to immediately erase or destroy, any documents and other materials and
copies and translations of them (whether recorded, stored or reproduced in or on
any medium or by means of any device) containing any Confidential Information in
the Shareholder's possession or control. The Shareholder shall provide evidence
satisfactory to the Corporation that all those documents, materials, copies and
translations have been delivered, erased or destroyed.
3.5 Breach of Obligations.
(1) Each Shareholder acknowledges that a breach or threatened breach of its
obligations under Sections 3.2, 3.3, or 3.4 would result in irreparable harm to
the Corporation which could not be calculated or adequately compensated by
recovery of damages alone. Each Shareholder therefore agrees that the
Corporation shall be entitled to interim or permanent injunctive relief,
specific performance and other equitable remedies.
(2) The obligations of the parties under Sections 3.2, 3.3, and 3.4 shall
survive termination of this Agreement and are in addition to and not in
substitution of the provisions in the Licence and Services Agreement.
SECTION 4 - FINANCIAL AND SUPPORT OBLIGATIONS
4.1 ATG Funding and Support Obligations. ATG shall provide a loan and/or equity
of (U.S.)$1 million in the aggregate to the Corporation to cover the
Corporation's short-term operating requirements. Initially, ATG shall invest
(U.S.) $333,400 by way of equity in the Class A common shares of the
Corporation. The balance of ATG's (U.S.) $1 million obligation will be provided
to the Corporation as and when required by the Corporation in accordance with
the Corporation's annual business plan which has been approved by the board of
directors of the Corporation. In addition, ATG shall provide all necessary
technical and administrative support to the Corporation, in accordance with the
requests of the Corporation's officers as they are made from time to time and
subject to the Licence and Services Agreement.
4.2 Further Obligations. The Shareholders shall have no further funding or
support obligations except as expressly contemplated by this Agreement or the
Licence and Services Agreement.
4.3 Dividends. Dividends shall be paid at the discretion of the board of
directors of the Corporation. However, the Shareholders acknowledge that they do
not expect to receive any dividends or other distributions from the Corporation
for at least three years from the date of formation of the Corporation.
4.4 Auditors. The auditors of the Corporation shall be a nationally recognized
accounting firm in Canada as selected by the Shareholders. The auditors shall be
instructed to prepare and deliver to the Shareholders audited financial
statements on an annual basis.
SECTION 5 - DEALING WITH SHARES
5.1 Ownership of Shares.
(1) The Shareholders acknowledge that at the date of this Agreement all of the
issued and outstanding Shares are legally owned as follows:
Shareholder Series and No. of Shares
ATG 51,000 Class A common shares
NumberCo 49,000 Class B common shares
(2) Each Shareholder represents and warrants to the other Shareholder that it is
the beneficial owner of the Shares legally owned by it at the date of this
Agreement, and shall be deemed to represent and warrant to the other Shareholder
throughout the term of this Agreement that subject to Section 5.4 it is the
beneficial owner of all those Shares and all other Shares legally held by it
after the date of this Agreement.
(3) The Corporation represents and warrants to the Shareholders that the Shares
described above are the only issued and outstanding shares of the Corporation at
the date of this Agreement and there are no outstanding options or other rights
obligating the Corporation to issue additional shares to any Person.
5.2 Restrictions on Transfer of Shares. No Shareholder shall directly or
indirectly sell, assign, transfer, devise, bequeath, give, mortgage, charge,
pledge, create a Lien against, or otherwise encumber or dispose of any Shares it
owns or permit those Shares to become encumbered except as otherwise permitted
by this Agreement or with the prior written consent of all the Shareholders.
5.3 Permitted Transfers. Notwithstanding Section 5.2, Shareholders are hereby
permitted to transfer their Shares in the Corporation to a Permitted Transferee.
However, no such transfer shall be effective unless and until the proposed
Permitted Transferee has executed an Adoption Agreement. In addition, the
Shareholder who has transferred its shares to its Permitted Transferee shall
continue to be bound by this Agreement notwithstanding such transfer of Shares
and shall at all times cause its Permitted Transferee to carry out the
provisions of this Agreement and any other agreement entered into pursuant to
this Agreement.
5.4 Employee Stock Option Plan
(1) The directors of the Corporation shall be entitled at any time to establish
an employee stock option plan providing for the transfer of Shares held by
NumberCo to employees of the Corporation designated by the directors, to a
maximum of 5% in the aggregate of the total Shares outstanding as of the date of
this Agreement.
(2) In the event that the board of directors of the Corporation elects to make
available to the Corporation's employees options on Shares of the Corporation,
NumberCo hereby agrees, on the exercise of such options by any employee, to
transfer (or cause its Permitted Transferee to transfer as the case may be) to
such employee that number of its Shares as required by the options exercised by
the employee (up to a maximum of 5% in the aggregate of all outstanding Shares
as of the date of this Agreement), provided such employee to whom such Shares
are transferred enters into an Adoption Agreement.
(3) The strike price for the employee stock options shall be established by the
directors of the Corporation and shall be within 25% of the fair market value
(as determined by the Corporation and notwithstanding Section 6.2 of this
Agreement) of the Shares and such options may only be exercised on a
distribution of Shares to the public or on a sale of the Corporation to a Person
other than a Shareholder or its Affiliates. Until duly exercised, such options
shall not entitle the holder thereof to any rights as a Shareholder of the
Corporation and, in particular, shall not entitle the holder to any rights as a
Shareholder under this Agreement, to vote at any meetings of the Corporation or
to participate in any dividends or other distributions by the Corporation.
5.5 Put/Call.
(1) If, at any time, a Triggering Event with respect to ATG or ATG's Permitted
Transferee occurs, NumberCo (or NumberCo's Permitted Transferee, as the case may
be) shall, for a period of 45 days from the date on which it has become aware or
received actual notice of the Triggering Event, have the option to sell all its
Shares in the Corporation to ATG and upon exercise of that option ATG shall
purchase such Shares at the Purchase Price as determined in accordance with
Section 6.2.
(2) If, at any time, both Xxx Xxxxxxx and Xxxx Xxxxxxxxx are no longer officers,
directors or employees of Thomson Kernaghan and Co. Ltd. or its Affiliates and
Xxx Xxxxxxx and Xxxx Xxxxxxxxx do not at such time, either individually or
collectively, Control NumberCo, ATG (or ATG's Permitted Transferee, as the case
may be) shall, for a period of 45 days from the date on which it has become
aware or received actual notice of such event, have the option to purchase all
of NumberCo's Shares (or the Shares of NumberCo's Permitted Transferee, as the
case may be) in the Corporation, and upon exercise of that option, NumberCo
shall sell (or NumberCo. shall cause its Permitted Transferee to sell) its
Shares to ATG (or ATG's Permitted Transferee, as the case may be) at the
Purchase Price as determined in accordance with Section 6.2.
(3) If, at any time, a purchase of NumberCo's Shares (or NumberCo's Permitted
Transferee's Shares, as the case may be) in the Corporation is effected under
Sections 5.5(1) or 5.5(2), ATG agrees to assume all the obligations of NumberCo
with respect to transferring Shares of the Corporation to employees of the
Corporation who hold options as contemplated in Section 5.4.
(4) The purchase of Shares under Sections 5.5(1) or 5.5(2) shall be completed in
accordance with Section 6, which shall be applicable only to purchases and sales
under Sections 5.5(1) and 5.1(2).
SECTION 6 - COMPLETION OF PURCHASE AND SALE
6.1 Purchase Price
(1) The purchase price ("Purchase Price") for Shares to be purchased and sold
pursuant to Sections 5.5(1) or 5.5(2) shall be the Fair Market Value of those
Shares on the date on which the applicable option referred to therein becomes
exercisable.
6.2 Determination and Notification of Fair Market Value
(1) The Fair Market Value of Shares to be purchased and sold pursuant to
Sections 5.5(1) or 5.5(2) shall be such amount as agreed by the Principal
Shareholders. If the Principal Shareholders fail to agree on such amount within
10 Business Days of the delivery of notice of the exercise of an option under
Section 5.5, then the Fair Market Value shall be determined by an Arm's Length,
nationally recognized investment banking firm in Canada selected by the
Principal Shareholders jointly, subject only to the parameters set out in
Section 1.1(16).
(2) If the Principal Shareholders cannot agree on the choice of a nationally
recognized investment banking firm, the Principal Shareholders agree to choose
one nationally recognized investment banking firm in Canada each which is at
Arm's Length to both the Principal Shareholders. The Fair Market Value of Shares
to be purchased and sold pursuant to Sections 5.5(1) or 5.5(2) shall be the mean
of the values proposed by each such investment banking firm. All costs
associated with the determination of Fair Market Value under Section 6,
including the fees of any nationally recognized investment banking firm
retained, shall be paid by the Corporation.
(3) The determination of Fair Market Value under Sections 6.2(1) or 6.2(2) shall
be final and no Shareholder shall dispute it.
(4) The Principal Shareholders shall request that the nationally recognized
investment banking firm(s) retained provide both Principal Shareholders written
notification of the Fair Market Value immediately after the determination of
such value is made.
6.3 Outstanding Indebtedness. Concurrently with the completion of a transaction
of purchase and sale under Sections 5.5(1)or 5.5(2) of this Agreement:
(1) the Selling Shareholder shall repay, or cause to be repaid, to the
Corporation any Indebtedness then owing by that Shareholder (including, in the
case of a Corporate Shareholder, any indebtedness owing by the Individual
Shareholder who owns shares of that Corporate Shareholder) whether or not the
Indebtedness is then due and payable and the Purchasing Shareholder may
discharge that Indebtedness out of the purchase price payable to the Selling
Shareholder;
(2) if at that time the Corporation is indebted to the Selling Shareholder
(including, in the case of a Corporate Shareholder, any Indebtedness owing to
the Individual Shareholder who owns shares of that Corporate Shareholder) the
Purchasing Shareholder shall purchase that Indebtedness for a purchase price
equal to the amount of the Indebtedness against delivery of an assignment by the
selling Shareholder of the Indebtedness and any Liens for that Indebtedness or
the Corporation shall repay that Indebtedness;
(3) if at the Closing Date the Selling Shareholder (including, in the case of a
Corporate Shareholder, the Individual Shareholder who owns shares of that
Corporate Shareholder) is responsible for any guarantee of, or has given any
Lien for any of the Corporation's Indebtedness, the Purchasing Shareholder shall
use his best efforts to cause the Selling Shareholder or Individual Shareholder
to be released from all those guarantees and security, failing which the
Purchasing Shareholder shall indemnify the Selling Shareholder (and in the case
of a Corporate Shareholder, the Individual Shareholder who owns shares of that
Corporate Shareholder) from all claims arising out of those guarantees and
security.
6.4 Title to Shares Free and Clear.
(1) The Selling Shareholder represents and warrants to the Purchasing
Shareholder that it legally and beneficially owns, and has good and marketable
title to, and the right to sell, the Shares being purchased and sold, free and
clear of all Liens, Indebtedness, and claims of others.
(2) The obligation of a Purchasing Shareholder to complete a purchase of Shares
is subject to the conditions that:
(3) the representation and warranty of the Selling Shareholder under Section
6.4(1) is true and correct as at the Closing Date; and
(4) all consents and approvals necessary to complete the purchase and to
transfer good title to the Shares have been obtained.
These conditions are for the exclusive benefit of the Purchasing
Shareholder and may be waived in whole or in part by it.
6.5 Closing and Closing Date. Unless otherwise agreed, a transaction of purchase
and sale of Shares under Sections 5.5(1) or 5.5(2) shall take place on the 30th
Business Day following the date on which the Principal Shareholders agreed to
the Purchase Price under Section 6.2 or on which the determination of the
Purchase Price is notified to the Principal Shareholders under Section 6.2.
6.6 Time and Place of Closing. Unless otherwise agreed by the parties to a
transaction of purchase and sale, the closing of the transaction shall take
place at the registered office of the Corporation at 11:00 a.m. on the Closing
Date.
6.7 Payment of Purchase Price and Delivery of Certificates. The Purchase Price
shall be paid in full by certified cheque or bank draft in immediately available
funds against receipt by the Purchasing Shareholder of the share certificate or
certificates representing the Shares being purchased and sold, duly endorsed in
blank for transfer together with signed and dated resignations and releases by
the Selling Shareholder (and his nominees) as directors, officers and employees
of the Corporation. All payments required to be made in connection with a
transaction of purchase and sale shall be made by cheque, certified by a
Canadian chartered bank or trust company, or an official bank draft drawn on a
Canadian chartered bank.
6.8 Failure to Complete Transaction of Purchase and Sale.
(1) If the Selling Shareholder fails to complete the transaction of purchase and
sale on the Closing Date, the Purchasing Shareholder may, in addition to any
other rights or remedies he may have, complete the transaction of purchase and
sale in accordance with the provisions of this Section.
(2) If the Purchasing Shareholder deposits the purchase price due on the Closing
Date to an account at a branch of the Corporation's bankers in the name of the
Corporation in trust for the Selling Shareholder, then from and after the date
of that deposit, (and even though the certificates evidencing the Shares held by
the Selling Shareholder have not been delivered to the Purchasing Shareholder),
the purchase of the Shares owned by the Selling Shareholder shall be deemed to
have been completed and all right, title and interest in and to those Shares
shall be conclusively deemed to have been transferred and assigned to the
Purchasing Shareholder and all right, title and interest, of the Selling
Shareholder in and to those Shares shall cease;
(3) The Selling Shareholder irrevocably constitutes and appoints the Purchasing
Shareholder as its true and lawful attorney and agent for, in the name of and on
behalf of the Selling Shareholder to execute and deliver in the name of the
Selling Shareholder all documents or instruments that may be necessary to
transfer and assign his Shares, to the Purchasing Shareholder, or its nominee or
nominees, on the books of the Corporation. This appointment and power of
attorney, being coupled with an interest, shall not be revoked by the
insolvency, bankruptcy or incapacity of the Selling Shareholder. The Selling
Shareholder ratifies and confirms and agrees to ratify and confirm all that the
Purchasing Shareholder may lawfully do or cause to be done by virtue of the
provisions of this Section. This power of attorney will not revoke any other
powers of attorney granted by the Selling Shareholder. The Selling Shareholder
declares that it has given or intends to give multiple continuing powers of
attorney.
(4) If the Purchasing Shareholder fails to complete the transaction of purchase
and sale on the Closing Date, the Selling Shareholder may, in addition to any
other rights or remedies he may have, give the purchaser within 10 Business Days
after default, a notice that in 30 Business Days after the Closing Date the
Selling Shareholder (the "New Purchasing Shareholder") will purchase from the
defaulting purchaser (the "New Selling Shareholder") all the Shares owned by the
New Selling Shareholder for an amount equal to 50% of the Purchase Price payable
pursuant to this Agreement. In that case, the provisions of Section 6.8 shall
apply mutatis mutandis except that all references in Section 6.8 to the "Selling
Shareholder" and the "Purchasing Shareholder", respectively, shall be deemed to
be references to the New Purchasing Shareholder and the New Selling Shareholder,
respectively.
SECTION 7 - GENERAL
7.1 Carrying out of Agreement.
(1) Each of the Shareholders shall vote at all meetings of the Shareholders and
act in all other respects in connection with the corporate proceedings of the
Corporation so as to carry out and cause the Corporation to carry out the
provisions of this Agreement and any agreement entered into pursuant to this
Agreement.
(2) The Corporation confirms its knowledge of this Agreement and shall carry out
and be bound by the provisions of this Agreement to the full extent that it has
the capacity and power at law to do so.
7.2 Assignment and Enurement. Except as expressly provided under this Agreement,
no party may assign this Agreement without the prior written consent of all the
Shareholders. This Agreement enures to the benefit of and binds the parties,
their respective heirs, executors, administrators, personal and legal
representatives, successors and permitted assigns and all permitted transferees
of Shares.
7.3 Notices. Unless otherwise specified, each Notice to a party must be given in
writing and delivered personally or by courier, or transmitted by fax to the
party as follows:
If to ATG:
Name: The Ashton Technology Group, Inc.
Address: 0000 Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxxxxxx, XX
00000
XXX
Attention: Xxxxxx X. Xxxxx
Fax No: (000) 000-0000
If to NumberCo:
Name: 3690822 Canada Inc.
Address: 000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx
Fax No: (000) 000-0000
If to the Corporation:
Name: Ashton Technology Canada Inc.
Address: 000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxx
Fax No: (000) 000-0000
or to any other address, fax number or Person that the party designates. Any
Notice, if delivered personally or by courier, will be deemed to have been given
when actually received, if transmitted by fax before 3:00 p.m. on a Business
Day, will be deemed to have been given on that Business Day, and if transmitted
by fax after 3:00 p.m. on a Business Day, will be deemed to have been given on
the Business Day after the date of the transmission.
7.4 No Set-off. Except as permitted in Section 6.3(1), payments made under this
Agreement or any document delivered under this Agreement shall be made without
set-off or counterclaim.
7.5 Waivers. No waiver of any provision of this Agreement is binding unless it
is in writing and signed by all the parties to this Agreement entitled to grant
the waiver. No failure to exercise, and no delay in exercising, any right or
remedy under this Agreement will be deemed to be a waiver of that right or
remedy. No waiver of any breach of any provision of this Agreement will be
deemed to be a waiver of any subsequent breach of that provision.
7.6 Further Assurances. Each party shall from time to time promptly execute and
deliver and take all further action as may be reasonably necessary or
appropriate to give effect to the provisions and intent of this Agreement and to
complete the transactions contemplated by this Agreement.
7.7 Remedies Cumulative. The rights and remedies under this Agreement are
cumulative and in addition to, and not in substitution for, any other rights and
remedies, available at law or in equity or otherwise. No single or partial
exercise by a party of any right or remedy precludes or otherwise affects the
exercise of any other right or remedy to which that party may be entitled.
7.8 Counterparts and Adoption Agreement.
(1) This Agreement and any amendment, supplement, restatement or termination of
any provision of this Agreement may be executed and delivered in any number of
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
(2) Each Person who proposes from time to time to become a Shareholder shall be
required to execute an Adoption Agreement. No Person shall become a Shareholder
and no issue or transfer of Shares shall be registered by the Corporation unless
the Person and any Person having Control of the Person have executed an Adoption
Agreement.
7.9 Amendments. Except as expressly provided in this Agreement, no amendment,
supplement, restatement, replacement or termination of any provision of this
Agreement is binding unless it is in writing and signed by all the Shareholders
that are, at the time of the amendment, supplement, restatement, replacement or
termination, parties to this Agreement.
7.10 Submission to Jurisdiction. Each of the parties irrevocably submits to the
non-exclusive jurisdiction of the courts of the Province of Ontario.
7.11 Termination. Except as otherwise provided, this Agreement shall terminate
upon the earlier of:
(1) the written agreement of all the Shareholders;
(2) one Shareholder becoming the owner of all of the Shares; or
(3) the offering of Shares of the Corporation to the public.
All obligations of the parties which expressly or by their nature survive
termination of this Agreement shall continue in full force and effect subsequent
to and not withstanding termination of this Agreement until they are fully
satisfied or by their nature expire. No party shall by reason of termination of
this Agreement be relieved of any obligation or liability towards any other
party accrued under this Agreement before termination, and all those obligations
and liabilities shall remain enforceable until they are fully satisfied or by
their nature expire.
The parties have executed this Agreement.
THE ASHTON TECHNOLOGY GROUP,
INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President & Chief Financial Officer
3690822 CANADA INC.
By: /s/ Xxx Xxxxxxx
-----------------------------------------------
Name: Xxx Xxxxxxx
Title: President
ASHTON TECHNOLOGY CANADA INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Technology Officer
Schedule 1.1(1) - Adoption Agreement
Schedule 1.1(6) - Articles
Schedule 1.1(10) - By-Laws
