<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
PCQUOTE.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7375 36-4284139
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) No.)
</TABLE>
300 SOUTH WACKER DRIVE, SUITE 300
CHICAGO, ILLINOIS 60606
(312) 913-2800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JIM R. PORTER, CHIEF EXECUTIVE OFFICER
PCQUOTE.COM, INC.
300 SOUTH WACKER DRIVE, SUITE 300
CHICAGO, ILLINOIS 60606
(312) 913-2800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
DONALD E. FIGLIULO, ESQ. NEIL GOLD, ESQ.
Wildman, Harrold, Allen & Dixon Fulbright & Jaworski L.L.P.
225 West Wacker Drive 666 Fifth Avenue
Chicago, Illinois 60606-1229 New York, New York 10103
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share..... 8,912,500 $14.00 $124,775,000 $34,687
</TABLE>
(1) Includes 1,162,500 shares of common stock issuable upon exercise of the
underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the amount of the
Registration Fee in accordance with Rule 457(a) of the Securities Act of
1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION - JUNE 9, 1999
PROSPECTUS
- --------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
PCQUOTE.COM MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
7,750,000 Shares
[LOGO]
Common Stock
- -------------------------------------------------------------------------
PCQuote.com, Inc. is offering 5,800,000 shares and HyperFeed Technologies, Inc.,
the selling stockholder, is offering 1,950,000 shares of common stock in an
initial public offering.
PCQuote.com is a leading Internet-based provider of high performance, real-time
financial data, timely business news and comprehensive research and analytical
tools.
Prior to this offering, there has been no public market for our common stock. It
is anticipated that the public offering price will be between $12.00 and $14.00
per share. The shares of PCQuote.com will be included for quotation in the
Nasdaq National Market under the symbol "PCQT".
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Public offering price............................................ $ $
Underwriting discounts and commissions........................... $ $
Proceeds, before expenses, to PCQuote.com........................ $ $
Proceeds to selling stockholder.................................. $ $
</TABLE>
SEE "RISK FACTORS" ON PAGES 7 TO 18 FOR FACTORS THAT SHOULD BE CONSIDERED BEFORE
INVESTING IN THE SHARES OF PCQUOTE.COM.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
- --------------------------------------------------------------------------------
The underwriters may, under certain circumstances, purchase up to 387,500
additional shares from PCQuote.com and up to 775,000 additional shares from the
selling stockholder at the public offering price, less underwriting discounts
and commissions. Delivery and payment for the shares will be on ,
1999.
PRUDENTIAL SECURITIES
U.S. BANCORP PIPER JAFFRAY
FAC/EQUITIES
E*OFFERING
,1999
<PAGE>
[Pictures of the WWW.PCQUOTE.COM, MARKETSMART-REAL.PCQUOTE.COM and WWW.CNNFN.COM
Web sites and PCQuote 6.0]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Risk Factors...................... 7
Forward Looking Statements........ 18
Use of Proceeds................... 19
Dividend Policy................... 19
Dilution.......................... 20
Capitalization.................... 21
Selected Financial Data........... 22
Management's Discussion and
Analysis of Financial Condition
and Results of Operations....... 23
Business.......................... 30
<CAPTION>
PAGE
----
<S> <C>
Management........................ 41
Principal and Selling
Stockholders.................... 46
Certain Transactions.............. 48
Description of Capital Stock...... 55
Shares Eligible for Future Sale... 57
Underwriting...................... 58
Legal Matters..................... 60
Experts........................... 60
Where You Can Find Additional
Information..................... 60
Index to Financial Statements..... F-1
</TABLE>
- --------------------------------------------------------------------------------
The terms "PCQuote.com", "we", "our" and "us" refer to PCQuote.com, Inc.
unless the context suggests otherwise. The term "you" refers to a prospective
investor.
Our Web sites' addresses are WWW.PCQUOTE.COM and
MARKETSMART-REAL.PCQUOTE.COM. The information on our Web sites is not a part of
this prospectus.
PCQuote and PCQuote.com are two of our service marks. This prospectus also
includes trademarks and trade names of other companies.
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are not
making an offer of these securities in any jurisdiction where the offer or sale
is not permitted. You should not assume that the information contained in this
prospectus is accurate as of any date other than the date on the front cover of
this prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
investors should consider before investing in the common stock of PCQuote.com.
Investors should read the entire prospectus carefully.
PCQUOTE.COM
PCQuote.com is a leading, Internet-based provider of high performance,
real-time financial data, timely business news and comprehensive research and
analytical tools. We are a leader in the online financial information industry
in terms of data speed and reliability. Many existing online financial or
business Web sites focus on financial news, quotes or analysis. We combine all
of these features in a comprehensive portfolio of services targeted at
sophisticated investors. Our investor service offerings consist of two Web
sites, WWW.PCQUOTE.COM and MARKETSMART-REAL.PCQUOTE.COM, and two
Internet-enabled desktop applications, PCQuote 6.0 and PCQuote Orbit. Our
services provide access to sophisticated and dynamic financial information that
allows users to make informed investment decisions. We also offer several
business-to-business services that enable clients to present financial data and
information on their Web sites or desktop applications.
WWW.PCQUOTE.COM is our free Web site that provides access to delayed quotes,
news, research and analytical tools. Through our strategic relationship with
CNNFN, we provide users of our Web sites with access to timely, original news
headlines and stories published by CNNFN. WWW.PCQUOTE.COM serves as the primary
marketing and promotions engine for the rest of the services we provide.
According to @plan, our demographics provider, the number of unique visitors to
our WWW.PCQUOTE.COM Web site grew from approximately 796,000 per month in their
Winter 1998 report (covering the months of July to September 1998) to
approximately 912,000 per month in their Spring 1999 report (covering the months
of October to December 1998). Our Web sites attract a more sophisticated
investor than many general purpose financial Web sites. This results in user
demographics that are more attractive to potential advertisers. Our visitors
are, on average, more affluent and more likely to use the Web for online
shopping than visitors to many other financially-oriented Web sites.
MARKETSMART-REAL.PCQUOTE.COM is our subscription-based Web site that
provides real-time, snapshot market quotations, along with all of the news,
research and analytical tools that are available on WWW.PCQUOTE.COM. This site
is targeted toward a more sophisticated investor than is WWW.PCQUOTE.COM.
MARKETSMART-REAL.PCQUOTE.COM uses sparse graphics, text indices and creative
advertising to speed download times and give users faster access to the site's
content.
We offer two Internet-enabled desktop services, PCQuote 6.0 and PCQuote
Orbit, that provide streaming quotes and a variety of real-time analytical
tools. PCQuote 6.0 provides our subscribers with a professional-quality, NASDAQ
level II, real-time quote system that offers reliable, streaming real-time
market data for all North American equities and options. PCQuote 6.0 is online
trading-enabled and offers order execution capabilities through participating
broker-dealers. PCQuote Orbit, which we expect to launch in Summer 1999,
provides subscribers with streaming, real-time market quotations delivered via
an Internet-enabled desktop application.
3
<PAGE>
OUR STRATEGY
Our objective is to strengthen our position as a leading, Internet-based
provider of high performance, real-time financial data, timely business news and
comprehensive research and analytical tools. We intend to achieve our objective
by pursuing the following key strategies:
- build brand awareness to attract additional traffic
- capitalize on user demographics attractive to advertisers
- create up-sell opportunities through our service offerings
- leverage relationships with strategic partners
- expand our Web sites as comprehensive financial information destinations
- maintain our superior technological platform
To date, we have not broadly marketed our services. We intend to use a
portion of our net proceeds from this offering to aggressively market and
promote our Web sites and other service offerings in a variety of traditional
and online media. We believe that our marketing efforts will enable us to
significantly grow our advertising base by capitalizing on the attractive
demographics of our users. These marketing efforts are also intended to build
brand awareness, increase traffic to our Web sites and create a source of
potential subscribers for our services. We currently derive our revenues
primarily from the sale of subscriptions to our services and, to a lesser
extent, from advertising. We believe that our varied service offerings provide
us with the opportunity to derive increased revenues from multiple revenue
sources, including subscriptions, advertising and business-to-business services.
ABOUT US
Our WWW.PCQUOTE.COM Web site was first established in July 1995 by our
parent, PC Quote, Inc., a provider of securities market data. PC Quote, which
was founded in 1983, approved a change of its corporate name to Hyperfeed
Technologies, Inc., in April 1999. This name change is subject to stockholder
approval at their annual meeting to be held on June 16, 1999. We will refer to
our parent as HyperFeed Technologies in this prospectus. We operated as part of
HyperFeed Technologies until we were incorporated in March 1999 as a
wholly-owned subsidiary of HyperFeed Technologies.
Prior to the consummation of this offering, HyperFeed Technologies will
separate the business of PCQuote.com and our associated assets and liabilities
from HyperFeed Technologies' other businesses and operations. As a separate
entity, we believe we will be afforded more flexibility in considering
opportunities that are available to Internet businesses. We will enter into a
number of agreements with HyperFeed Technologies providing for our separation
from our parent and governing various interim and ongoing relationships between
us and HyperFeed Technologies.
Our address is 300 South Wacker Drive, Suite 300, Chicago, Illinois 60606
and our telephone number is (312) 913-2800.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Shares offered by PCQuote.com............... 5,800,000 shares
Shares offered by the selling stockholder... 1,950,000 shares
Total shares outstanding after this
offering.................................. 15,728,948 shares
Use of proceeds by PCQuote.com.............. Sales and marketing, acquisition of content,
purchase of new systems and technologies,
hiring of additional employees, repayment of
short-term liabilities and general corporate
purposes, including working capital.
Proposed Nasdaq National Market symbol...... PCQT
</TABLE>
You should be aware that the total shares outstanding after this offering do
not include:
- shares subject to outstanding options with a weighted average
exercise price of $
per share;
- 386,842 shares subject to an outstanding warrant with an exercise price of
$.01 per share;
- shares reserved for issuance under options that we may grant under
our 1999 Combined Incentive and Non-statutory Stock Option Plan; and
- 387,500 shares issuable by us upon exercise of the underwriters'
over-allotment options from us.
The shares offered by the selling stockholder do not include 775,000 shares
that may be sold by it upon exercise of the underwriters' over-allotment options
from it.
Unless otherwise specified, the information in this prospectus reflects the
9,800-for-1 stock split of our common stock as of , 1999.
RISK FACTORS
You should consider the risk factors before investing in our common stock
and the impact from various events that could adversely affect our business. See
"Risk Factors".
5
<PAGE>
SUMMARY FINANCIAL DATA
The following tables summarize the financial data for our business and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our financial statements and
related notes appearing elsewhere in this prospectus. The financial data are
presented as if our business had been a separate entity since we commenced
operations in July 1995.
The As Adjusted column in the Balance Sheet Data table below reflects our
receipt of the estimated net proceeds of $68.7 million from our sale of
5,800,000 shares of common stock in this offering at an assumed initial public
offering price of $13.00 per share. The As Adjusted column also reflects the
issuance to CNNFN on April 12, 1999 of a warrant to purchase 515,790 shares of
our common stock and the purchase by CNNFN on April 29, 1999, of 128,948 shares
of our common stock upon exercise of the vested portion of this warrant.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------------------------------------ --------------------------
1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $ -- $ 973 $ 4,763 $ 9,912 $ 1,898 $ 3,259
Total operating expenses..... 70 2,096 3,850 5,027 1,253 1,268
Loss from operations......... (70) (1,936) (3,288) (1,658) (747) (283)
Net loss..................... $ (70) $ (1,962) $ (4,572) $ (2,162) $ (850) $ (288)
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Pro forma basic and diluted
net loss per share......... $ (.01) $ (.20) $ (.47) $ (.22) $ (.09) $ (.03)
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Pro forma shares used in the
calculation of basic and
diluted net loss per
share(1)................... 9,800,000 9,800,000 9,800,000 9,800,000 9,800,000 9,800,000
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................................................. $ -- $ 67,368
Total assets............................................................................... 3,575 76,443
Long-term liabilities...................................................................... -- --
Total stockholders' equity................................................................. 919 75,141
</TABLE>
(1) Pro forma shares used in the calculation of basic and diluted net loss per
share reflects shares outstanding as of March 31, 1999 as if they were
outstanding for all periods presented.
6
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors, in addition to the
other information included in this prospectus, before purchasing shares of our
common stock. Each of these risk factors could adversely affect our business,
financial condition and results of operations, as well as adversely affect the
value of an investment in our common stock. This investment involves a high
degree of risk.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND THERE IS LIMITED INFORMATION UPON
WHICH YOU CAN EVALUATE OUR BUSINESS AND PROSPECTS.
We have yet to conduct our business as an independent entity. Our financial
statements are reported on a basis as if we had been separated from HyperFeed
Technologies during the periods reported. We have only a limited operating
history upon which you can evaluate our business and prospects. A purchaser of
our common stock must consider the risks, expenses and difficulties frequently
encountered by early stage companies in new and rapidly evolving markets,
especially Web-based financial data and business information companies.
WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT FUTURE LOSSES BECAUSE WE
ANTICIPATE THAT OUR OPERATING EXPENSES WILL GROW MORE QUICKLY THAN OUR
REVENUES.
We have incurred operating losses in each fiscal quarter reported. We expect
operating losses and negative cash flows to continue for the foreseeable future.
We intend to significantly increase our operating expenses and make additional
capital investments in our business. We will need to generate significant
revenues to achieve and maintain profitability and we cannot assure you that we
will be able to do so. If we are able to become profitable, we cannot assure you
that we will be able to sustain or increase our profitability on a quarterly or
annual basis.
WE NEED TO MAINTAIN AND INCREASE OUR SUBSCRIBER BASE IN ORDER TO ACHIEVE
PROFITABILITY.
Our future success is highly dependent on our ability to increase the number
of subscribers for our services. The number of Internet users willing to
subscribe to real-time financial data and analytical tools may not continue to
increase. If the market for subscription-based, real-time financial data and
analytical tools develops slower than we expect, our business, financial
condition and results of operations could be materially and adversely affected.
Any significant downturn or other negative development with respect to activity
in financial exchanges and markets could significantly reduce the number of
subscribers for our services. In addition, we presently offer a portion of our
content for free. We may increase the amount of content or services offered for
free to increase traffic to our Web sites. Increased free content or services
could reduce the number of persons willing to pay for our subscription services.
Substantially all of our subscription contracts are of relatively short duration
and may be canceled on short notice.
FAILURE TO CONTINUE TO ADD COMPELLING CONTENT THAT ATTRACTS OUR TARGET
AUDIENCE COULD CAUSE OUR AUDIENCE SIZE TO DECREASE OR CHANGE THE
DEMOGRAPHICS OF OUR AUDIENCE.
Our future success depends on our ability to continue to add content that
satisfies the financial and investing information needs of our target audience.
If our content does not satisfy the needs of our users, then the size of our
audience could decrease or the demographic characteristics of our audience could
change. Either of these results would adversely affect our ability to attract
advertisers. Our ability to expand and enhance our Web sites depend on several
factors, including the following:
- technical expertise of our production and design staff;
- ability to enter into additional strategic relationships; and
- access to third party content.
7
<PAGE>
WE NEED TO INCREASE THE NUMBER OF VISITORS TO OUR WWW.PCQUOTE.COM WEB SITE
IN ORDER TO ATTRACT ADVERTISING REVENUE.
We expect that the portion of our revenues derived from advertising will
grow. We plan to aggressively promote our services in print, broadcast and
online media to build traffic to our Web sites. Increasing the number of
visitors to our WWW.PCQUOTE.COM Web site is critical to selling advertising and
generating larger revenues. If we cannot increase the size of our audience, then
we may be unable to attract new or retain existing advertisers. To attract and
retain a demographically desirable audience, we must do the following:
- continue to offer compelling content;
- encourage our users to become part of our community;
- conduct effective marketing campaigns to attract new users;
- develop new and maintain existing distribution relationships with other
Web sites;
- update and enhance the features of our Web sites;
- increase awareness of the "PCQuote" brand; and
- offer targeted services.
Our failure to achieve one or more of these objectives could adversely
affect our business. We cannot assure you that we will be successful in these
efforts.
We may not be able to build a loyal community of users of WWW.PCQUOTE.COM.
We believe community features help retain actively engaged users. The concept of
developing a community on a Web site is unproven. If developing a community is
not successful, then it may be more difficult to increase the size of our
audience.
We also depend on establishing and maintaining distribution relationships
with high-traffic Web sites to increase our audience. There is intense
competition for placement on these sites, and we may not be able to enter into
relationships on commercially reasonable terms or at all. Even if we enter into
distribution relationships with other Web sites, they may not attract
significant numbers of users and we may not obtain additional users from these
relationships.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE, ADVERSELY AFFECTING THE PRICE
OF OUR COMMON STOCK.
Our quarterly operating results may fluctuate significantly as a result of a
variety of factors, many of which are outside our control. These factors
include:
- the number of individuals who use the Web;
- the number of visitors to our Web sites, which can fluctuate significantly
as a result of financial market activity and business and financial news
events;
- increases in fees that we are required to pay to financial exchanges for
quotes and other financial information;
- our ability to attract and retain advertisers;
- changes in rates paid for Web advertising resulting from seasonality,
competition or other factors;
- the amount and timing of costs related to our marketing efforts;
- fees we may pay for distribution or content agreements;
- new services or Web sites introduced by us or our competitors; or
- technical difficulties or system downtime affecting the Web generally or
the operation of our Web sites specifically.
8
<PAGE>
We believe that quarter-to-quarter comparisons of our results of operations
are not necessarily meaningful and should not be relied upon as indications of
future performance. In addition, it is possible that in a particular quarter our
operating results may be below the expectations of market analysts and
investors. This could result in the price of our common stock being materially
and adversely affected.
OUR FUTURE REVENUES CANNOT BE PREDICTED WITH CERTAINTY AND MAY NOT BE ABLE
TO KEEP PACE WITH OUR EXPENSES IN THE NEAR FUTURE.
To attract and retain a larger audience, we plan to significantly increase
our expenditures for marketing our "PCQuote" brand and for content, technology
and infrastructure development. Many of these expenditures are planned or
committed in advance in anticipation of future revenues. Our cost structure
could change dramatically as we increasingly operate independently from
HyperFeed Technologies. If our revenues are lower than expected, we may not be
able to reduce spending accordingly. We believe brand awareness will be critical
to increasing our audience, especially because there are few barriers to entry
for Internet businesses. If we do not increase our revenues as a result of our
branding and other marketing efforts or if we otherwise fail to promote our
brand successfully, our business, financial condition and results of operations
could be materially and adversely affected.
THERE IS INTENSE COMPETITION WITH RESPECT TO WEB SITES PROVIDING BUSINESS
AND FINANCIAL NEWS AND INFORMATION.
Many Web sites compete for consumers' and advertisers' attention and
spending. The competition is particularly intense with respect to Web sites in
the business and financial news and information areas. New competitors may
emerge and rapidly acquire significant market share. For example, Dow Jones
recently announced that it will introduce a free Web site that will offer
business and financial information. Increased competition could result in price
reductions for subscription services or advertising, reduced margins or loss of
market share. Any of these could materially and adversely affect our business,
financial condition and results of operations.
We compete for subscribers, advertisers and content providers with many
types of companies, including:
- Web sites targeted to business, finance and investing needs, such as
CBS.Marketwatch.com, TheStreet.com, The Motley Fool and Quote.com;
- Web portals, such as EXCITE.COM, INFOSEEK.GO.COM, LYCOS.COM, YAHOO.COM and
other high-traffic Web sites that offer quotes, financial news and/or
other programming, as well as links to business-and finance-related Web
sites;
- proprietary online services, such as America Online and Microsoft Network,
that provide access to financial and business-related content and
services;
- online brokerage firms, such as Charles Schwab and E*TRADE, many of which
provide financial and investment news and information;
- providers of terminal-based financial news and data, such as Bloomberg
Business News, Reuters News Service, Dow Jones Markets and Bridge News
Service; and
- publishers and distributors of traditional media, including television,
radio and print, such as CNBC, Marketplace on National Public Radio and
The Wall Street Journal.
MANY OF OUR EXISTING OR POTENTIAL COMPETITORS HAVE GREATER RESOURCES THAN
US.
Many of our existing competitors, as well as our potential competitors, have
longer operating histories on the Web, greater name recognition, larger customer
bases, higher amounts of user traffic and significantly greater financial,
technical and marketing resources than we do. These competitors may also be able
to
9
<PAGE>
- undertake more extensive marketing campaigns;
- adopt more aggressive pricing policies;
- engage in more extensive research and development;
- make more attractive offers to existing and potential employees, strategic
partners, advertisers and content providers;
- respond more quickly to new or emerging technologies and changes in Web
user requirements; and
- develop services that are superior to or achieve greater market acceptance
than our services.
WE DEPEND ON ESTABLISHING AND MAINTAINING STRATEGIC RELATIONSHIPS.
Our business strategy depends on establishing and maintaining strategic
relationships with providers of global financial news and other content. There
is intense competition for these types of relationships. Many companies with
whom we wish to develop strategic relationships also offer services that compete
with ours. We may not be able to enter into the strategic relationships that we
pursue or maintain our current relationships on commercially reasonable terms,
or at all. We cannot be sure that any strategic relationship will result in
increased use of our Web sites or other services. To the extent we enter into a
strategic relationship to build traffic to our Web sites, any decline in the
popularity of our strategic partner's Web site would adversely affect our
ability to increase traffic to our sites.
WE RELY ON A SOFTWARE LICENSING AGREEMENT THAT COULD BE TERMINATED OR
ALLOWED TO EXPIRE.
The software we use to offer our PCQuote 6.0 service is licensed to us from
Townsend Analytics. For the year ended December 31, 1998, we derived 78.2 % of
our revenues, and for the three months ended March 31, 1999, we derived 86.8% of
our revenues, from subscriptions to our PCQuote 6.0 service or from private
label versions of that service. Accordingly, if our license from Townsend
Analytics were terminated or if we were for any reason unable to make use of the
licensed software, it would have a material and adverse effect upon our
business, financial condition and results of operations. If any upgrade is made
by Townsend Analytics to the licensed software, they are required to make the
same upgrade available to us. Townsend Analytics is not required to make changes
in the licensed software to assist us in responding to changes in the industry
or the introduction of new or improved competitive services. Any resulting
inability on our part to enhance or otherwise modify our PCQuote 6.0 service in
response to these developments could have a material and adverse effect on our
business, financial condition and results of operations. Our license agreement
with Townsend Analytics is for an initial term ending December 4, 2000 and
provides for automatic one-year renewals unless either party delivers a notice
of nonrenewal 90 days prior to the termination date.
WE NEED TO EMPLOY ADDITIONAL PERSONNEL IN ORDER TO CONDUCT AND GROW OUR
BUSINESS.
As a result of our separation from HyperFeed Technologies and our
anticipated growth, we need to employ additional technical and other personnel
to perform functions for us that were previously handled by employees of
HyperFeed Technologies. We believe that our future success will depend upon our
ability to identify, attract, hire, train, motivate and retain highly-skilled
technical, managerial, engineering, marketing, sales and customer service
personnel. Competition for qualified computer programming and other technical
personnel is particularly intense. At times we have experienced difficulties in
attracting new technical personnel. We may not be successful in attracting,
assimilating or retaining a sufficient number of qualified personnel to conduct
our business in the future. The failure to do so could have a material adverse
effect on our business, financial condition and results of operations.
WE MAY NOT BE ABLE TO ADEQUATELY MANAGE OUR EXPECTED GROWTH.
We have experienced rapid growth in our operations. Our rapid growth has
placed, and our anticipated future growth will continue to place, a significant
strain on our managerial, operational and
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financial resources. We will have to implement and improve operational and
financial systems, procedures and managerial controls. We cannot assure you that
we have made adequate allowances for the costs and risks associated with our
expected expansion. Our systems, procedures and managerial controls may not be
adequate to support our operations. We may not be able to successfully offer and
expand our services. If we are unable to successfully manage this growth, our
business, financial condition and results of operations could be materially and
adversely affected.
WE RELY HEAVILY ON OUR EXECUTIVE OFFICERS AND KEY EMPLOYEES.
Our success is highly dependent upon the efforts and abilities of our
executive officers and other key employees, particularly Jim R. Porter, our
Chief Executive Officer and Chairman of our Board of Directors. The loss of
services of any of our executive officers or key employees could have a material
and adverse effect upon our business, financial condition and results of
operations. Mr. Porter will devote one-half of his business time to our business
and the other half to HyperFeed Technologies. The limitation on Mr. Porter's
availability could impact our ability to expand our operations and develop our
business.
Two of our executive officers, Timothy K. Krauskopf, our President and Chief
Operating Officer, and Andrew N. Peterson, our Chief Financial Officer, joined
us in April 1999. These individuals have not previously worked together or with
the other members of our management team. We cannot be sure that our new
management team will be able to successfully manage our growth.
AN INCREASE IN USERS MAY STRAIN OUR SYSTEMS AND CAUSE THEM TO MALFUNCTION.
News, financial developments or a significant growth in average trading
volume from current levels could cause an increase in the use of our services,
materially and adversely affecting our ability to deliver services. We are
seeking to significantly grow our user base. Our infrastructure must be able to
accommodate an increasing volume of traffic and deliver the real-time quotes and
frequently updated news that our subscribers expect. Our infrastructure has in
the past, and may in the future, experience slower response times or other
problems. These problems could cause us to lose a portion of our customer base
and materially and adversely affect our business, financial condition and
results of operations.
We depend on information providers, including HyperFeed Technologies, to
provide us with information and data on a timely basis. Our services could
experience disruptions or interruptions due to a failure or delay in the
transmission of this information. We are currently prohibited under the terms of
our agreements with HyperFeed Technologies from providing for a back-up data
feed source for our PCQuote Orbit service. This prohibition could exacerbate
complications arising from any interruption of data feed services from HyperFeed
Technologies for this service. In addition, our users depend on Internet service
providers, online service providers and other Web site operators for access to
our services. Many of these providers and operators have experienced outages or
service delays in the past, and could experience outages, delays and other
difficulties due to failures unrelated to our systems. These types of
occurrences could cause users to perceive our products as not functioning
properly and cause them to use other services to obtain financial data or
analytical tools.
THE FAILURE OF OUR SYSTEMS COULD HARM OUR REPUTATION AND REDUCE OUR REVENUE.
Our ability to provide timely information, current market data and
continuous news updates depends on the efficient and uninterrupted operation of
our computer and communications hardware and software systems. Similarly, our
ability to track, measure and report the delivery of advertisements on our site
depends on the efficient and uninterrupted operation of a third-party system,
Dart by DoubleClick. These systems and operations are vulnerable to damage or
interruption from:
- human error;
- natural disasters;
- telecommunication failures;
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- computer viruses; and
- intentional acts of vandalism and similar events.
We do not have a formal disaster recovery plan. Any system failure that
causes an interruption in our service or a decrease in responsiveness of our Web
sites could result in reduced traffic, reduced revenue and harm to our
reputation, brand and our relations with advertisers. Any disruption in the
Internet access to our Web sites could materially and adversely affect our
business, financial condition and results of operations. Our insurance policies
may not adequately compensate us for any losses that we may incur because of any
failures in our system or interruptions in our delivery of content or services.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR INTELLECTUAL
PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES.
We rely primarily on a combination of copyright, trademark and trade secret
law and restrictions on disclosure to protect our intellectual property, such as
our content, source codes, trademarks, trade names and trade secrets. We
generally enter into confidentiality agreements with our employees, consultants
and strategic partners, and seek to control access to and distribution of our
proprietary information. Despite our efforts to protect our intellectual
property rights and proprietary information from unauthorized use or disclosure,
parties may attempt to disclose, obtain or use our proprietary information. This
could result in our losing our intellectual property rights. We may need to
engage in litigation in order to enforce our intellectual property rights in the
future. This litigation could result in substantial costs and diversion of
management and other resources, either of which could have a material and
adverse effect on our business, financial condition and results of operations.
From time to time, we may be subject to claims by third parties for alleged
infringement of their intellectual property. These claims and any resulting
litigation could subject us to significant liability for damages and could
result in the invalidation of our proprietary rights. Even if we prevail,
litigation could be time-consuming, expensive to defend and result in the
diversion of our time and attention. In the event of a successful claim of
infringement by a third party, we may need to introduce new content or
trademarks, develop non-infringing technology or license the infringed or
similar technology, which may be unavailable on commercially reasonable terms.
Our failure or inability to do so on a timely basis could materially and
adversely affect our business, financial condition and results of operations.
We use licensed technology, such as software from DoubleClick and data and
content from third parties. Because we license some data and content from third
parties, our exposure to copyright infringement actions may increase because we
must rely upon these third parties for information as to the origin and
ownership of the licensed content. The outcome of any litigation between these
licensors and a third party or between us and a third party could lead to
royalty obligations for which we are not indemnified or for which
indemnification is insufficient.
WE MAY NOT BE ABLE TO MAINTAIN EXCLUSIVE RIGHTS TO WEB DOMAIN NAMES RELATING
TO OUR BRAND, WHICH MAY DECREASE THE VALUE OF OUR TRADEMARKS.
We currently hold two Web domain names relating to our brands,
"WWW.PCQUOTE.COM" and "MARKETSMART-REAL.PCQUOTE.COM". Currently, the acquisition
and maintenance of domain names is regulated by governmental agencies and their
designees. The regulation of domain names in the U.S. and in foreign countries
is expected to change in the near future. As a result, we may not be able to
acquire or maintain relevant domain names in all countries in which we conduct
our business. These changes could include the introduction of additional top
level domains, which could cause confusion among Web users trying to locate our
sites. Furthermore, the relationship between regulations governing domain names
and laws protecting trademarks and similar proprietary rights is unclear. We may
be unable to prevent third parties from acquiring domain names that are similar
to or otherwise decrease the value of our trademarks.
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WE MAY NOT BE ABLE TO KEEP UP PACE WITH CONTINUING CHANGES IN TECHNOLOGY.
Our market is characterized by rapidly changing technology and frequent
introduction of new Web sites and other service offerings. To be successful, we
must adapt to this rapidly changing environment by continually improving the
performance, features and reliability of our services. We could incur
substantial costs if we need to modify our services or infrastructure or adapt
our technology to respond to these changes. Our business could be materially and
adversely affected if we experience difficulties in introducing new services or
if these new services are not accepted by users. For example, we intend to
introduce additional or enhanced services, such as commentary on options,
e-mailed financial updates and news searches. A delay or failure to address
technological advances and developments or an increase in costs resulting from
these changes could have a material and adverse effect on our business,
financial condition and results of operations.
WE DERIVE A SIGNIFICANT PORTION OF OUR REVENUES FROM A SINGLE CUSTOMER.
Our largest customer, a private label redistributor of PCQuote 6.0,
accounted for 11.1% of our total revenues in 1998 and 15.8% of our total
revenues in the three months ended March 31, 1999. Under the terms of our
license agreement with Townsend Analytics, we will not be able to continue to
receive revenues from this customer after December 21, 1999 without the consent
of Townsend Analytics. The loss of our largest customer could have a material
and adverse effect on our business, financial condition and results of
operations. The revenue derived from specific customers and advertisers varies
from year to year. We cannot be sure that a specific large customer or
advertiser in one year will continue to use our services or advertise on our Web
sites in a subsequent year.
OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY BE
MATERIALLY AND ADVERSELY AFFECTED IF WE ARE NOT YEAR 2000-COMPLIANT.
We and our subscribers are dependent, to a substantial degree, upon the
proper functioning of our and their computer systems, as well as the computer
systems of our suppliers and service providers. A failure of these computer
systems to correctly recognize dates beyond December 31, 1999 could materially
disrupt our operations or the ability of our subscribers to access our Web sites
or other service offerings. Disruptions also may arise as a result of third
parties not being Year 2000-compliant. Any malfunction in our information
technology systems, or those of our suppliers or major customers, could cause us
to incur significant costs and have a material and adverse effect on our
business, financial condition and results of operations. In addition, we rely on
representations made by HyperFeed Technologies regarding the Year 2000-readiness
of the information technology systems contributed to us as part of our
separation. We have not independently assessed, remediated or corrected any Year
2000 risks relating to these systems.
RISKS RELATED TO OUR INDUSTRY
OUR SUCCESS DEPENDS ON CONTINUED GROWTH IN USE OF THE INTERNET.
The market for Internet-based delivery of financial data and related
business information is new and rapidly evolving. Our business, financial
condition and results of operations would be materially and adversely affected
if Internet usage does not continue to grow significantly. Internet usage may be
inhibited for a number of reasons, such as:
- inadequate network infrastructure;
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- security concerns;
- inconsistent quality of service; and
- inability to provide cost-effective, high-speed service.
Even if Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth. As a result, its performance
and reliability may decline. Web sites and proprietary online services have
experienced interruptions in their service as a result of outages and other
delays. If these outages or delays occur frequently, use of the Internet as a
medium for the exchange of information and for commerce could grow more slowly
or decline.
THE ENACTMENT OF NEW LAWS OR CHANGES IN GOVERNMENT REGULATIONS RELATING TO
THE INTERNET COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.
Due to the increasing popularity of the Internet, it is possible that laws
or regulations may be adopted regarding the Internet, any of which could
materially and adversely affect our business. These laws may relate to issues
such as user privacy, pricing, taxation and the characteristics and quality of
products and services. For example, the Telecommunications Act of 1996 sought to
prohibit the transmission of certain types of information and content over the
Web. The Federal Communications Commission recently decided that a Web user's
calls to gain access to the Internet are interstate communications and therefore
subject to federal jurisdiction. This could result in an increase in the cost of
transmitting data over the Internet. The applicability to the Internet of
existing laws in various jurisdictions governing issues like property ownership,
libel and personal privacy is ambiguous and may take years to resolve. Due to
the global nature of the Internet, it is possible that the United States, state
governments or foreign countries might attempt to adopt new laws, regulate our
services or levy sales or other taxes on our activities. We might
unintentionally violate these laws or any new laws that are enacted in the
future. Any of these developments could have a material and adverse effect on
our business, financial condition and results of operations.
SECURITY CONCERNS COULD HINDER INTERNET-BASED COMMERCE.
The need to securely transmit confidential information over the Internet has
been a significant barrier to electronic commerce and communications over the
Web. Any well-publicized compromise of security could cause Internet usage to
decline. Security breaches could also make people reluctant to use the Internet
to conduct transactions that involve transmitting confidential information, such
as stock trades or purchases of goods or services. This could result in
decreased traffic to our Web sites and reduced subscription and advertising
revenue. We may also incur significant costs to protect against the threat of
security breaches or to alleviate problems caused by security breaches.
WE COULD BE LIABLE IF PERSONAL INFORMATION ABOUT OUR USERS IS DISCLOSED;
THERE MAY BE LIMITS IMPOSED ON USES OF PERSONAL INFORMATION GATHERED USING
THE INTERNET.
If third parties are able to penetrate our network security or otherwise
misappropriate our users' personal or credit card information, we could be
subject to liability. We could be subject to claims for unauthorized purchases
with credit card information, impersonation or other misuses of personal
information, such as for unauthorized marketing purposes. These claims could
result in litigation.
Several states have proposed legislation that would limit the uses of
personal information gathered using the Internet. The Federal Trade Commission
recently settled a proceeding with one proprietary online service regarding the
manner in which personal information was collected from its users and provided
to third parties. The European Union recently enacted its own privacy
regulations that may result in limits on the collection and use of user
information. Changes to existing laws or the passage of new laws intended to
address these issues could, among other things:
- create uncertainty in the marketplace that could reduce demand for our
services;
- limit our ability to collect and to use data from our users;
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- increase the cost of doing business as a result of litigation costs or
increased service delivery costs; or
- decrease the efficacy of Internet advertising.
Like most Web sites, we typically place certain information, commonly
referred to as cookies, on a user's hard drive without the user's knowledge or
consent. We use cookies for a variety of reasons, including enabling us to limit
the frequency with which a user is shown a particular advertisement. Current
Internet browsers allow users to modify their browser settings to remove cookies
at any time or to prevent cookies from being stored on their hard drives. In
addition, some Internet commentators, privacy advocates and governmental bodies
have suggested limiting or eliminating the use of cookies. Any reduction or
limitation in the use of cookies could limit the effectiveness of this
technology.
ACCEPTANCE AND EFFECTIVENESS OF THE INTERNET FOR ADVERTISING ARE UNPROVEN.
Our future is dependent, in part, on an increase in the use of the Internet
for advertising. If the Internet advertising market fails to develop or develops
more slowly than we expect, then our business could be adversely affected. The
Internet advertising market is new and rapidly evolving and the industry cannot
yet gauge the effectiveness of advertising on the Internet as compared to
traditional media. As a result, demand for Internet advertising is uncertain.
Many advertisers have little or no experience using the Internet for advertising
purposes. The adoption of Internet advertising requires the acceptance of a new
way of conducting business, exchanging information and advertising products and
services. Businesses may find advertising on the Internet to be undesirable or
less effective for promoting their products and services relative to traditional
advertising media.
Due in part to the proliferation of Web sites selling advertising space on
their Web pages, advertising rates charged within the industry generally have
been declining over the last year. We do not know whether advertising rates will
continue to decline in the future. In addition, different pricing models are
used to sell advertising on the Web and it is difficult to predict which model
will emerge as the industry standard. For example, advertising rates based on
the number of "click throughs," or user requests for additional information made
by clicking on the advertisement, instead of rates based on the number of
impressions, or times an advertisement is displayed, could adversely affect our
revenues since much of our existing advertising is impression-based. Moreover,
"filter" software programs that limit or prevent advertising from being
delivered to an Internet user's computer are available. Widespread adoption of
this software could adversely affect the commercial viability of Internet
advertising.
RISKS RELATED TO OUR RELATIONSHIP WITH HYPERFEED TECHNOLOGIES
HYPERFEED TECHNOLOGIES IS IN A POSITION TO CONTROL MATTERS REQUIRING A
STOCKHOLDER VOTE, WHICH MAY MATERIALLY AND ADVERSELY AFFECT THE MARKET PRICE
OF OUR COMMON STOCK OR DENY OUR STOCKHOLDERS AN OPPORTUNITY TO REALIZE A
PREMIUM ON THEIR SHARES.
Upon the closing of this offering, HyperFeed Technologies will beneficially
own 49.9% of our outstanding common stock (43.9% if the underwriters exercise
their over-allotment options in full). As a practical matter, HyperFeed
Technologies will have sufficient voting power to control our management, as
well as the outcome of matters submitted to our stockholders for approval,
including the election of directors and any merger, consolidation or sale of
substantially all of our assets. The members of the Board of Directors of
HyperFeed Technologies may be elected by two of HyperFeed Technologies'
principal stockholders, PICO Holdings, Inc. and Physicians Insurance Company of
Ohio, which collectively beneficially own 47.9% of HyperFeed Technologies'
common stock. These two affiliated stockholders are currently in a position to
effectively control HyperFeed Technologies' management and the outcome of
matters submitted to its stockholders for approval.
The concentration of ownership of our common stock could delay or prevent
proxy contests, mergers, tender offers, open-market purchase programs or other
purchases of our common stock that could give our stockholders the opportunity
to realize a premium over the then-prevailing market price
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for our common stock. In addition, the market price of our common stock may be
materially and adversely affected by events relating to HyperFeed Technologies
that are unrelated to us.
WE DEPEND SOLELY ON HYPERFEED TECHNOLOGIES FOR CERTAIN SERVICES AND IT MAY
BE COSTLY TO OBTAIN THESE SERVICES FROM ANOTHER PROVIDER IF HYPERFEED
TECHNOLOGIES IS UNABLE OR UNWILLING TO PROVIDE THESE SERVICES TO US.
HyperFeed Technologies currently provides us with research and development
assistance, data feeds, communications lines and related facilities and network
operations, as well as administrative, engineering and human resources services.
HyperFeed Technologies has experienced significant operating losses during the
past three years. Financial problems at HyperFeed Technologies could materially
and adversely affect its ability to provide services to us. We may not be able
to replace these services, especially the market data feed, without incurring
significant additional costs. If we choose to perform these services ourselves,
we may not be able to perform them adequately. During any transition, our
business could be disrupted. As a result, we could lose a significant number of
subscribers, users and advertisers.
WE DEPEND ON HYPERFEED TECHNOLOGIES FOR IMPROVEMENTS TO PCQUOTE ORBIT AND
QUOTESOCKETS.
We currently license PCQuote Orbit and Quotesockets from HyperFeed
Technologies. We may license additional services or technologies from HyperFeed
Technologies in the future. HyperFeed Technologies acts as our research and
development resource and is responsible for providing software updates to the
services we license from them. A delay or failure by HyperFeed Technologies to
provide us with updates and improvements to these services may result in our
inability to keep pace with changes in technology and user preferences.
OUR AGREEMENTS WITH HYPERFEED TECHNOLOGIES WILL NOT BE SUBJECT TO
DISINTERESTED NEGOTIATIONS.
As part of our separation from HyperFeed Technologies, we are entering into
agreements with HyperFeed Technologies providing for, among other things, our
separation from that company, the contribution of assets to us and the provision
to us by HyperFeed Technologies of licenses and various services that are
important to the conduct of our business. Because we were a division of
HyperFeed Technologies, none of these agreements will result from disinterested
negotiations.
CERTAIN MEMBERS OF OUR MANAGEMENT MAY HAVE CONFLICTS OF INTEREST WITH
HYPERFEED TECHNOLOGIES.
Jim R. Porter, Chief Executive Officer and a director of HyperFeed
Technologies, is Chief Executive Officer and a director of PCQuote.com. John E.
Juska, Chief Financial Officer of HyperFeed Technologies, is a director of
PCQuote.com. John R. Hart, a director of HyperFeed Technologies, is a director
of PCQuote.com. In addition, several of our executive officers, directors and
employees hold shares of HyperFeed Technologies common stock and options to
acquire shares of HyperFeed Technologies common stock. Mr. Porter beneficially
owns approximately 7.8% of the outstanding common stock of HyperFeed
Technologies and Mr. Juska beneficially owns approximately 1.5% of the
outstanding common stock of HyperFeed Technologies. Mr. Hart is Chief Executive
Officer and a director of PICO Holdings, Inc. and Physicians Insurance Company
of Ohio, which collectively beneficially own 47.9% of the outstanding common
stock of HyperFeed Technologies.
These individuals may have conflicts of interest with respect to business
opportunities and similar matters that may arise in the ordinary course of the
business of HyperFeed Technologies or PCQuote.com. They may also have conflicts
of interest with respect to relationships between HyperFeed Technologies and
PCQuote.com under inter-company agreements between us and HyperFeed
Technologies. Conflicts could be resolved in a manner adverse to us and our
stockholders.
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RISKS RELATED TO THIS OFFERING
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
You will experience an immediate and substantial dilution of $8.71 per share
in the net tangible book value per share of our common stock from the initial
public offering price, assuming an initial public offering price of $13.00 per
share. In addition, the exercise of options and warrants currently outstanding
could cause additional substantial dilution to you.
THERE IS A SIGNIFICANT AMOUNT OF UNALLOCATED NET PROCEEDS AND WE WILL HAVE
BROAD DISCRETION IN HOW WE USE THESE PROCEEDS.
We have not designated any specific uses for a significant portion of the
net proceeds of this offering. Therefore, we will have broad discretion in how
we use these net proceeds. We may use net proceeds for working capital, business
expansion and other general corporate purposes. Investors will have to rely on
the judgment of our management regarding the application of our net proceeds
from this offering.
SINCE THERE IS NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK, THE INITIAL
PUBLIC OFFERING PRICE MAY BE HIGHER THAN THE PRICE AT WHICH YOU WILL BE ABLE
TO RESELL YOUR SHARES.
Prior to this offering, there has not been a public market for our common
stock. We do not know the extent to which investor interest in PCQuote.com will
lead to the development of a trading market for our common stock or how our
common stock will trade in the future. The public offering price of our common
stock will be determined by negotiations among us, the selling stockholder and
the representatives of the underwriters. You may not be able to resell your
shares at or above the initial public offering price.
OUR STOCK PRICE COULD FLUCTUATE SIGNIFICANTLY.
The market price for shares of Internet companies has been volatile.
Numerous factors, many of which are beyond our control, may cause the market
price of our common stock to fluctuate significantly, such as:
- fluctuations in our quarterly revenues and earnings or those of our
competitors;
- shortfalls in our operating results from levels forecast by securities
analysts;
- announcements concerning us or our competitors;
- the introduction of new financial or business Web sites or Web-based
services;
- changes in service price policies by us or our competitors;
- market conditions in our industry; and
- the general state of the securities market (particularly the Internet
sector).
In addition, the stock market has from time to time experienced extreme
price and volume fluctuations. These broad market fluctuations may materially
and adversely affect the market price of our common stock.
SHARES ELIGIBLE FOR FUTURE SALE AFTER THIS OFFERING COULD MATERIALLY AND
ADVERSELY AFFECT OUR STOCK PRICE.
The market price of our common stock could drop due to sales of a large
number of shares of our common stock or the perception that these sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of our common stock.
After this offering, 15,728,948 shares of our common stock will be
outstanding (16,116,448 shares if the underwriters' over-allotment option from
us is exercised in full). Of these shares, the 7,750,000 shares sold in this
offering (8,912,500 shares if the underwriters' over-allotment options are
exercised in full) will be freely tradable without restrictions under the
Securities Act, except for any shares
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purchased by our "affiliates" within the meaning of Rule 144 under the
Securities Act. We have granted CNNFN one demand registration right and
unlimited piggyback registration rights covering the 128,948 shares of our
common stock they own and the 386,842 shares they may acquire upon exercise of
the warrant held by them. We will grant HyperFeed Technologies unlimited
"piggyback" and demand registration rights covering the 7,850,000 shares of our
common stock it will own after this offering (7,075,000 shares if the
underwriters' over-allotment option from them is exercised in full).
All of our officers, directors and stockholders, including the selling
stockholder, have entered into lock-up agreements pursuant to which they have
agreed not to offer or sell any shares of our common stock for a period of 180
days after the date of this prospectus without the prior written consent of
Prudential Securities, on behalf of the underwriters. Prudential Securities may,
at any time and without notice, waive the terms of these lock-up agreements
specified in the underwriting agreement. Upon expiration of this lock-up period,
7,203,948 outstanding shares may be sold in the future subject to compliance
with the volume limitations and other restrictions of Rule 144.
WE DO NOT CURRENTLY HAVE AN INTENTION TO PAY DIVIDENDS.
We have not declared or paid, and in the near future we do not anticipate
declaring or paying dividends on our common stock. Investors who anticipate a
need for immediate income from their investment should not purchase shares of
our common stock.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions about PCQuote.com including, among other things:
- our limited operating history and history of losses;
- our need to maintain and increase our subscriber base to increase
profitability;
- our ability to increase the number of visitors to our WWW.PCQUOTE.COM Web
site in order to increase advertising revenues;
- the need to establish strategic relationships;
- the intense competition with respect to Web sites providing business and
financial news and information;
- existing and future regulations affecting our business or the Internet
generally;
- our dependence on HyperFeed Technologies, Inc.; and
- other risk factors set forth under "Risk Factors" in this prospectus.
In addition, in this prospectus, the words "believe", "may", "will",
"estimate", "continue", "anticipate", "intend", "expect" and similar
expressions, as they relate to PCQuote.com, our business or our management are
intended to identify forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise
after the date of this prospectus. In light of these risks and uncertainties,
the forward-looking events and circumstances discussed in this prospectus may
not occur and actual results could differ materially from those anticipated or
implied in the forward-looking statements.
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USE OF PROCEEDS
The net proceeds to PCQuote.com from the sale of common stock in this
offering, assuming an initial public offering price of $13.00 per share, are
estimated to be approximately $68.7 million ($73.4 million if the underwriters
exercise their over-allotment option from us in full), after deducting
underwriting discounts and commissions and estimated offering expenses. We
intend to use these net proceeds as follows:
- INCREASED MARKETING AND PROMOTIONAL EFFORTS. We plan to initiate an
aggressive marketing campaign that will include advertising in a variety
of traditional and online media to promote our Web sites and service
offerings. We believe that these increased marketing efforts will enable
us to significantly grow our advertising base by capitalizing on the
attractiveness of our high-end user, as well as build brand awareness,
increase traffic and create a ready source of potential subscribers for
our services;
- ACQUISITION OF ADDITIONAL CONTENT TO ENHANCE OUR SERVICES. In order to
enable both current and future users to receive the type of online
experience they desire, we will use a portion of our net proceeds to
acquire the content and the technology needed to enhance our services,
such as personalization and community features;
- PURCHASE OF NEW SYSTEMS, TECHNOLOGIES AND RESOURCES TO SUPPORT OUR GROWTH.
As our content and service offerings grow, we anticipate that we will have
a greater need for additional back-end production systems and
infrastructure. We will use a portion of our net proceeds to support our
services with new systems, technologies and resources;
- HIRING OF ADDITIONAL EMPLOYEES. We will use a portion of our net proceeds
to hire additional management, technical and administrative personnel;
- REPAYMENT OF SHORT-TERM LIABILITIES. We will use a portion of our net
proceeds to pay HyperFeed Technologies (1) $213,500 per month for services
provided to us beginning in April 1999 and (2) $500,000, representing
one-half of the amount to be paid by HyperFeed Technologies to Townsend
Analytics under a termination agreement between them.; and
- GENERAL CORPORATE PURPOSES, INCLUDING CAPITAL EXPENDITURES.
In addition, we may use a portion of our net proceeds to pay up to $2.0
million which we may be required to pay to HyperFeed Technologies to satisfy any
shortfall in the $5.0 million minimum aggregate license fees HyperFeed
Technologies anticipates it will be required to pay to Townsend Analytics under
an anticipated new agreement between those two companies.
Pending these uses, we may invest our net proceeds from this offering
temporarily in short-term, investment grade, interest-bearing securities or
guaranteed obligations of the U.S. government. We will not receive any proceeds
from the sale of shares by the selling stockholder.
DIVIDEND POLICY
We have not declared or paid and do not anticipate declaring or paying any
dividends on our common stock in the near future. Any future determination as to
the declaration and payment of dividends will be at the discretion of our Board
of Directors and will depend on then existing conditions, including our
financial conditions, result of operations, contractual restrictions, capital
requirements, business prospects and such other factors as our Board of
Directors deems relevant.
19
<PAGE>
DILUTION
Purchasers of common stock in this offering will experience immediate and
substantial dilution in the net tangible book value of the common stock from the
initial public offering price. Net tangible book value per share represents the
amount of the total tangible assets less total liabilities of PCQuote.com,
divided by the number of shares of common stock outstanding. At March 31, 1999,
as adjusted to reflect the purchase by CNNFN on April 29, 1999 of 128,948 shares
of our common stock upon the exercise of the vested portion of the warrant held
by them, PCQuote.com had a pro forma deficit in net tangible book value of $1.3
million or $0.13 per share of common stock. After giving effect to the sale of
5,800,000 shares of common stock by PCQuote.com at an assumed initial public
offering price of $13.00 per share and the deduction of underwriting discounts
and commissions and estimated offering expenses payable by PCQuote.com, the pro
forma net tangible book value of PCQuote.com at March 31, 1999 would have been
$67.4 million or $4.29 per share. This represents an immediate increase in net
tangible book value of $4.42 per share to existing stockholders and an immediate
and substantial dilution of $8.71 per share to new investors purchasing common
stock in this offering. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C> <C>
Assumed initial public offering price........................ $ 13.00
Pro forma deficit in net tangible book value as of March
31, 1999................................................. ($ 0.13)
Increase attributable to new investors..................... $ 4.42
Pro forma net tangible book value after this offering........ 4.29
---------
Dilution in pro forma net tangible book value to new
investors.................................................. $ 8.71
---------
---------
</TABLE>
The following table summarizes the differences between existing stockholders
and new investors in this offering with respect to the number of shares of
common stock purchased from PCQuote.com, the total consideration paid to
PCQuote.com and the average consideration paid per share (before the deduction
of underwriting discounts and commissions and estimated offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders (1)........................ 9,928,948 63.1% $ 918,965 1.2% $ 0.09
New investors.................................... 5,800,000 36.9% 75,400,000 98.8% 13.00
------------ --------- ------------- ---------
Total............................................ 15,728,948 100.0% $ 76,318,965 100.0%
------------ --------- ------------- ---------
------------ --------- ------------- ---------
</TABLE>
- ------------
(1) Sales by HyperFeed Technologies in this offering will cause the number of
shares held by existing shareholders to be reduced to 7,978,948, or 50.7% of
the total number of our shares outstanding after the offering, and will
increase the number of shares held by new investors to 7,750,000, or 49.3%
of the total number of our shares outstanding after this offering.
20
<PAGE>
CAPITALIZATION
The following table sets forth as of March 31, 1999, the cash and
capitalization of PCQuote.com, and the cash and capitalization of PCQuote.com
adjusted to reflect this offering and the application of the estimated net
proceeds to PCQuote.com. The As Adjusted column also reflects the issuance to
CNNFN on April 12, 1999 of a warrant to purchase 515,790 shares of our common
stock and the purchase by CNNFN on April 29, 1999 of 128,948 shares of our
common stock upon the exercise of the vested portion of this warrant. The
following table should be read in conjunction with the financial statements and
related notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1999
-------------------------
ACTUAL AS ADJUSTED(1)
--------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash................................................................................... $ -- $ 67,368
--------- -------
--------- -------
Stockholders' equity:
Preferred stock, par value $0.01 per share; 1,000,000 shares authorized; none issued
and outstanding actual and adjusted................................................ -- --
Common stock, par value $0.01 per share; 74,000,000 shares authorized; 9,800,000
shares issued and outstanding; and 15,728,948 shares issued and outstanding as
adjusted (2)....................................................................... $ 98 $ 157
Additional paid-in capital........................................................... 821 74,984
--------- -------
Total stockholders' equity............................................................. 919 75,141
--------- -------
Total capitalization................................................................... $ 919 $ 75,141
--------- -------
--------- -------
</TABLE>
- ------------
(1) Assumes no exercise of the underwriters' over-allotment option from us.
(2) Excludes an aggregate of shares of common stock issuable upon exercise
of outstanding options under the 1999 Combined Incentive and Non-statutory
Stock Option Plan and 386,842 shares of common stock issuable upon the
exercise of the outstanding CNNFN warrant.
21
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to, and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," our financial statements and the
related notes appearing elsewhere in this prospectus. The statement of
operations data presented below for the year ended December 31, 1995 are derived
from unaudited financial statements not included in this prospectus. The
statement of operations data of PCQuote.com presented below for the years ended
December 31, 1996, 1997 and 1998, and the balance sheet data as of December 31,
1997 and 1998 are derived from financial statements of PCQuote.com that have
been audited by KPMG LLP, independent certified public accountants, and are
included elsewhere in this prospectus. The statement of operations data for the
three months ended March 31, 1998 and 1999 and the balance sheet data as of
March 31, 1999 are derived from unaudited financial statements which, in the
opinion of management, have been prepared on the same basis as the audited
financial statements and contain all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the results of
operations for such periods. The results of operations for the three months
ended March 31, 1999 are not necessarily indicative of results to be expected
for the full year. We commenced operations in July 1995.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------------- ------------------------
1995 1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Subscription........................... $ -- $ 776 $ 3,402 $ 7,996 $ 1,499 $ 2,886
Advertising............................ -- 167 1,131 1,368 275 248
Other.................................. -- 30 230 548 124 125
----------- ----------- ----------- ----------- ----------- -----------
Total revenues....................... -- 973 4,763 9,912 1,898 3,259
Direct cost of revenues.................. 70 813 4,201 6,543 1,392 2,274
----------- ----------- ----------- ----------- ----------- -----------
Gross profit............................. (70) 160 562 3,369 506 985
Operating expenses:
General and administrative............. -- 1,084 2,298 2,482 668 703
Sales and marketing.................... -- 620 1,226 2,108 504 433
Research and development............... -- 392 254 241 35 66
Depreciation........................... -- -- 72 196 46 67
----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses............. -- 2,096 3,850 5,027 1,253 1,269
----------- ----------- ----------- ----------- ----------- -----------
Loss from operations..................... (70) (1,936) (3,288) (1,658) (747) (284)
Other income (expense), net.............. -- (26) (1,284) (504) (103) (4)
----------- ----------- ----------- ----------- ----------- -----------
Loss before income taxes................. (70) (1,962) (4,572) (2,162) (850) (288)
Income taxes............................. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net loss................................. $ (70) $ (1,962) $ (4,572) $ (2,162) $ (850) $ (288)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Pro forma basic and diluted net loss per
share.................................. $ (.01) $ (.20) $ (.47) $ (.22) $ (.09) $ (.03)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Pro forma shares used in the calculation
of basic and diluted net loss per
share(1)............................... 9,800,000 9,800,000 9,800,000 9,800,000 9,800,000 9,800,000
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................................................... $ -- $ -- $ --
Total assets....................................................................... 2,885 3,306 3,575
Long-term liabilities.............................................................. -- -- --
Total stockholders' equity......................................................... 1,064 1,080 919
</TABLE>
- ------------
(1) Pro forma shares used in the calculation of basic and diluted net loss per
share reflects shares outstanding as of March 31, 1999 as if they were
outstanding for all periods presented.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and the related notes appearing elsewhere in this prospectus. The
historical financial information included in this prospectus does not
necessarily reflect what our financial condition and results of operations would
have been had we been operated as an independent entity during the periods
presented.
OVERVIEW
Our WWW.PCQUOTE.COM Web site was first established in July 1995 and our
subscription-based Web site, MARKETSMART-REAL.PCQUOTE.COM, was introduced in
March 1996. In the second quarter of 1996, we began selling subscriptions to our
PCQuote 6.0 service, in addition to selling advertising sponsorships and
rotating advertising banners on our Web pages. In late 1996, we began offering
custom and template Internet solutions to businesses and application developers.
We were incorporated on March 19, 1999, as a wholly-owned subsidiary of
HyperFeed Technologies. Prior to that time, we operated as part of HyperFeed
Technologies. Our assets, as reflected in the financial statements included in
this prospectus, will be contributed to us by HyperFeed Technologies as an
additional capital contribution. We will assume the liabilities of HyperFeed
Technologies related to our business. These assets and liabilities will be
recorded by us using HyperFeed Technologies' historical cost basis.
We have incurred significant net losses and negative cash flows from
operations since our inception. We intend to continue to make significant
investments in marketing and promotion, content development and technology and
infrastructure development. As a result, we believe that we will incur operating
losses and negative cash flows from operations in the near future, and that such
losses and negative cash flows will increase for at least the next year.
REVENUES
We currently derive our revenues primarily from:
- subscription revenue consisting of the sale of subscriptions to PCQuote
6.0, private label versions of PCQuote 6.0 and our
MARKETSMART-REAL.PCQUOTE.COM Web site;
- advertising revenue consisting of the sale of advertising banners and
sponsorships displayed on our Web pages; and
- other revenue consisting of business-to-business services, such as the
co-branding of our Web pages, Web developer tools and content access to
businesses and developers.
Subscription and other revenue are recognized ratably over the contract term
as services are rendered by us. Advertising revenue is recognized as the
advertising is displayed on our Web sites.
DIRECT COST OF REVENUES
Our direct cost of revenues consists of:
- market data acquisition costs;
- license fees and royalties paid to software developers and content
providers;
- pass-through exchange fees paid to original market data providers;
- sales commissions based on a percentage of generated revenue; and
- amortization of previously capitalized software development costs.
Previously capitalized software development costs include the costs of
initial development of our Web site, the cost of delivering, controlling access
to, monitoring and billing for our subscription and
23
<PAGE>
advertising services, and our portion of the costs incurred to develop
analytical software for resale related to our new PCQuote Orbit service. As of
March 31, 1999, there were $2.2 million of these capitalized costs that will be
amortized through 2001. With these development efforts essentially completed, we
anticipate further costs will be related only to maintenance and will be
expensed as incurred. The balance of unamortized software development costs as
of March 31, 1999 is scheduled to be charged against operations as follows:
$800,000 in the last nine months of 1999, $900,000 in 2000 and $500,000 in 2001.
OPERATING EXPENSES
Our operating expenses consist of general and administrative expenses, sales
and marketing expenses, research and development expenses and depreciation.
- General and administrative expenses include the cost of customer service
and technical assistance for users of our subscription services, finance
and accounting costs and corporate and general administrative costs. We
anticipate hiring additional personnel to support our growth and incurring
additional costs related to being a public company, including the hiring
of our new management team. As a result, we anticipate that general and
administrative expenses will increase.
- Sales and marketing expenses include base salary compensation to our sales
and marketing employees and related costs, advertising and promotion costs
and costs related to the management of service offerings and market
development We expect sales and marketing expenses to increase
significantly as we pursue an aggressive marketing campaign to increase
the traffic to our Web sites, expand marketing of the PCQuote brand, add
to our subscription base and hire additional sales and marketing
personnel.
- Research and development expenses include expenses for research and
development of new services and maintenance costs related to existing
services We will require significant investments in content and service
development to remain competitive. Accordingly, we expect that research
and development expenses will increase in 1999.
- Depreciation expenses represent non-cash charges for the pro-rata benefit
of previously expended amounts for capital equipment purchases. We expect
that depreciation expense will increase as we purchase additional capital
equipment to build out our infrastructure and to support the growth of our
business. We also expect to incur amortization expense when we establish
our own facilities in connection with our expected growth.
AGREEMENTS WITH HYPERFEED TECHNOLOGIES
As a part of the separation from HyperFeed Technologies, HyperFeed
Technologies will contribute or license to us the intellectual property rights
related to the services that we provide. Under a maintenance agreement, we will
pay HyperFeed Technologies a service fee for future modifications, upgrades and
enhancements to PCQuote Orbit in an amount equal to 3% of our gross revenues
derived from all permitted uses and sub-licensing of PCQuote Orbit. PCQuote
Orbit is expected to be launched in the Summer of 1999. For the license to use
HyperFeed Technologies' data feed, we will pay HyperFeed Technologies monthly
fees based on the number of users and quotes accessed. If the data feed license
agreement had been in effect as of January 1, 1999, we would have paid HyperFeed
Technologies fees of approximately $245,000 for the three months ended March 31,
1999.
We have entered into an agreement with HyperFeed Technologies for the
provision of managerial, marketing, technological support, clerical, financial,
legal and administrative services. We will pay HyperFeed Technologies $1.8
million over the last nine months of 1999 and $756,000 over the first six months
of 2000 for these services. We will also pay an amount to be negotiated, if we
continue to need
24
<PAGE>
any of these services after June 30, 2000. The agreement is structured to assist
us until we are able to perform these services ourselves, which we plan to do no
later than December 31, 2000.
We believe that the amounts to be charged to us by HyperFeed Technologies
under the license agreements, maintenance agreement and services agreement are
substantially similar to the amounts included in our financial statements and
are no less favorable than costs we would incur to obtain similar intellectual
property rights and similar services from unaffiliated third parties.
AGREEMENT WITH CNNFN
On April 12, 1999, we entered into a license agreement with CNNFN under
which CNNFN granted us a license to display on our Web sites headlines from
original stories published on the CNNFN Web site at WWW.CNNFN.COM. The term of
the agreement is for 3 1/2 years. We issued to CNNFN a warrant to purchase
515,790 shares of our common stock, representing a 5% interest in our
outstanding common stock at the time the agreement was executed. One-fourth of
the shares subject to this warrant vested immediately and an additional
one-fourth vests on each anniversary date of the signing of the agreement. CNNFN
exercised the vested portion of this warrant on April 29, 1999. The estimated
value assigned to the warrant was $5.5 million and was recorded as a pre-paid
license fee and an increase in stockholders' equity. This license fee will be
amortized as a non-cash charge ratably over the term of the agreement.
AGREEMENT WITH TOWNSEND ANALYTICS
On May 28, 1999, we entered into a new license agreement with Townsend
Analytics under which they licensed to us the right to use a software
application which we market as PCQuote 6.0. We also offer private label versions
of this application. The new agreement replaced the prior agreement between
Townsend Analytics and HyperFeed Technologies. The initial term of the agreement
ends December 4, 2000. We agree to pay them 33% of the subscription revenues we
derive from our PCQuote 6.0 service and 50% of revenues relating to the private
label version that we presently sublicense to two of our customers. For certain
of our customers, Townsend Analytics provides hosting services and order
execution capabilities, and receives a license fee of 66% of our revenues
derived from these customers. Regardless of actual subscription revenues we
receive, we are required under the license agreement to make minimum license fee
payments to Townsend Analytics of $220,000 per month. We will pay $500,000 to
HyperFeed Technologies to reimburse them for a portion of the amount to be paid
by them to Townsend Analytics upon replacement of the prior agreement between
HyperFeed Technologies and Townsend Analytics. In addition, we could be required
to pay up to $2.0 million to satisfy any shortfall in the $5.0 million minimum
aggregate license fees HyperFeed Technologies anticipates it will be required to
pay to Townsend Analytics under an anticipated new agreement between those two
companies.
RESULTS OF OPERATIONS
Our results of operations have been compiled from the historical results of
operations of HyperFeed Technologies as they relate to our service offerings
prior to our separation from that company. These results of operations reflect
all revenues and costs directly attributable to our service offerings, including
costs for facilities, communications network, data feed operations, sales and
customer support and product and market development resources shared by both us
and HyperFeed Technologies and allocations of costs for certain administrative
functions and services performed by centralized departments within HyperFeed
Technologies.
For all periods presented, general and administrative expenses reflected in
the financial statements include allocations of corporate expenses from
HyperFeed Technologies. These allocations took into consideration personnel,
business volume or other appropriate bases and generally include administrative
expenses related to general management, insurance, information management and
other
25
<PAGE>
miscellaneous services. Interest expense shown in the financial statements
reflects interest expense associated with our share of the aggregate borrowings
of HyperFeed Technologies for each of the periods presented. Allocations of
corporate expenses are estimates based on our management's best assessment of
actual expenses. It is management's opinion that the expenses charged to
PCQuote.com are reasonable.
The financial statements were prepared as if PCQuote.com operated as a
stand-alone entity since inception. The financial information included herein
may not necessarily reflect the financial position, results of operation or cash
flows of PCQuote.com in the future or what the balance sheets, results of
operations or cash flows of PCQuote.com would have been if it had been a
separate, stand-alone, publicly-held corporation during the periods presented.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31,
1998
REVENUES. Total revenues increased 71.7% for the three months ended March
31, 1999 to $3.3 million from $1.9 million for the comparable 1998 period. Total
subscription-based revenue increased 92.5% to $2.9 million in the 1999 period
from $1.5 million in the 1998 period, while total advertising revenue decreased
to $248,000 in the 1999 period from $275,000 in the 1998 period. Other revenue
remained essentially unchanged. The growth in subscription revenue was primarily
attributable to an increase in the number of subscribers to our PCQuote 6.0
service and to the private label version of this service. Although ad
impressions increased, advertising revenue decreased due, in part, to the
increased sales during the 1999 period of smaller-sized advertisements for which
lower rates are charged. In addition, our advertising rates declined for
traditional size banner ads in response to generally declining ad rates within
the industry.
DIRECT COST OF REVENUES. Direct cost of revenues increased 63.3% to $2.3
million for the 1999 period from $1.4 million for the comparable 1998 period,
primarily due to increased royalties, commissions, payments to providers of
market data and data distribution costs directly attributable to the growth in
the number of subscribers to our PCQuote 6.0 service. Amortization of software
development costs increased to $268,000 in the 1999 period from $208,000 in the
1998 period, as a result of increased development efforts related to our Web
sites and other service offerings.
GROSS PROFIT. Our gross profit increased to $985,000 in the 1999 period
from $506,000 in the 1998 period.
OPERATING EXPENSES. Total operating expenses were essentially unchanged.
Increases in general and administrative, research and development and
depreciation were offset by a decrease in sales and marketing expenses. General
and administrative expenses increased to $703,000 in the 1999 period from
$668,000 in the 1998 period. This was primarily due to increases in
administrative and customer service costs. Sales and marketing expenses
decreased to $433,000 in the 1999 period from $504,000 in the 1998 period. The
decrease was due to lower sales personnel costs and a decrease in promotional
expenditures. Research and development expenses increased to $66,000 in the 1999
period from $35,000 in the 1998 period as a result of an increase in the number
of development personnel and related expenses. Depreciation expense increased to
$67,000 in the 1999 period from $46,000 in the 1998 period as the result of
acquisitions of computer equipment to support the growth associated with
increased traffic to our Web sites, and the growth in subscribers to our PCQuote
6.0 service.
INTEREST EXPENSE. Interest expense decreased to $4,000 in the 1999 period
from $106,000 in the 1998 period. The decrease was the result of a reduction in
the level of contributions required from HyperFeed Technologies to fund our
operations, coupled with a decrease in their cost of borrowing in 1999.
26
<PAGE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
REVENUES. Total revenues increased 108.1% to $9.9 million in 1998 from $4.8
million in 1997. Total subscription-based revenue increased 135.1% to $8.0
million in 1998 from $3.4 million in 1997, while total advertising revenue
increased 21.0% to $1.4 million in 1998 from $1.1 million in 1997. Other revenue
grew to $548,000 in 1998 from $230,000 in 1997. The growth in subscription
revenue was primarily attributable to an increase in the number of subscribers
to our PCQuote 6.0 service and the private label version of this service. The
increase in advertising revenues was attributable to an increase in the number
of visitors to our Web site, resulting in an increase in advertising page
impressions sold. Other revenue increased primarily due to growth in our Web
hosting and Web developer business-
to-business services.
DIRECT COST OF REVENUES. Direct cost of revenues increased 55.7% to $6.5
million in 1998 from $4.2 million in 1997, primarily due to increased royalties,
commissions, payments to providers of market data and communication costs
directly attributable to the growth in the number of subscribers. Amortization
of software development costs increased to $726,000 in 1998 from $550,000 in
1997, as a result of increased development efforts related to our Web sites and
other service offerings.
GROSS PROFIT. Our gross profit increased to $3.4 million in 1998 from
$562,000 in 1997.
OPERATING EXPENSES. Total operating expenses increased 30.6% to $5.0
million in 1998 from $3.8 million in 1997. General and administrative expenses
increased to $2.5 million in 1998 from $2.3 million in 1997. This was primarily
due to increases in customer service and technical support costs attributable to
the growth in subscribers to our services, offset, in part, by reductions in
corporate and administrative compensation and related costs. Sales and marketing
expenses increased to $2.1 million in 1998 from $1.2 million in 1997. The
increase was due to the hiring of additional sales and marketing personnel in
1998 and increased advertising and promotional expenditures. Research and
development expenditures during 1998 were essentially unchanged from 1997.
Depreciation expense increased to $196,000 in 1998 from $72,000 in 1997. The
increase was the result of increased depreciation expense associated with
acquisitions of computer equipment during the second half of 1997 and throughout
1998 to support the growth associated with increased traffic to our Web sites
and the growth in subscribers to our PCQuote 6.0 service.
INTEREST EXPENSE. Interest expense decreased to $513,000 in 1998 from $1.3
million in 1997. The decrease was the result of a reduction in the level of
contributions required from HyperFeed Technologies to fund our operations,
coupled with a decrease in their cost of borrowing in 1998.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUES. Total revenues increased to $4.8 million in 1997 from $973,000 in
1996. Total subscription-based revenue increased to $3.4 million in 1998 from
$776,000 in 1996, while total advertising revenue increased to $1.1 million in
1997 from $167,000 in 1996. Other revenue increased to $230,000 in 1997 from
$30,000 in 1996. The growth in subscription revenue was primarily attributable
to an increase in the number of subscribers to our PCQuote 6.0 service and the
private label version of this service. The increase in advertising revenue was
attributable to an increase in the number of visitors to our Web site, resulting
in an increase in advertising page impressions sold. Increases in co-branding
and Web developer business-to-business services contributed to the increase in
other revenue.
DIRECT COST OF REVENUES. Direct cost of revenues increased to $4.2 million
in 1997 from $813,000 in 1996, primarily due to increased royalties,
commissions, payments to providers of market data and communication costs
attributable to growth of our business. Amortization of software development
costs increased to $550,000 in 1997 from $267,000 in 1996, as a result of
increased Internet development efforts.
27
<PAGE>
GROSS PROFIT. Our gross profit increased to $562,000 in 1997 from $160,000
in 1996.
OPERATING EXPENSES. Total operating expenses increased to $3.8 million in
1997 from $2.1 million in 1996. General and administrative expenses increased to
$2.3 million in 1997 from $1.1 million in 1996. This growth was principally due
to additional personnel and related employee costs required for customer service
and technical support and corporate administration, as well as increased
collection costs and a higher provision for bad debts in connection with the
growth in advertising revenue. Sales and marketing expenses increased to $1.2
million in 1997 from $620,000 in 1996. The increase was due to the hiring of
additional personnel and related costs, coupled with an increase in advertising
and promotional expenditures. Research and development costs decreased to
$254,000 in 1997 from $392,000 in 1996, reflecting a decrease in development
resources required after the launch of our Internet service offerings.
Depreciation expense was $72,000 in 1997. There was no depreciation in 1996. We
switched from leasing to outright purchases in 1997 for a portion of our
equipment needs. Capital acquisitions included computer equipment to support
increased traffic to our Web sites and the growth in subscribers to our PCQuote
6.0 service and the private label version of this service.
INTEREST EXPENSE. Interest expense increased to $1.3 million for 1997 from
$26,000 in 1996. The increase reflects the substantially higher level of
contributions required from HyperFeed Technologies to fund our operations,
coupled with their significantly higher cost of borrowing in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Since 1995, our operations have been financed by contributions from
HyperFeed Technologies. Cash used in operating activities was $1.3 million in
1996, $3.0 million in 1997 and $898,000 in 1998. For each of these years, cash
was used to support growth. For the three months ended March 31, 1999, cash
provided by operating activities increased to $132,000, as a result of the
reduction of our net loss.
Cash used in investing activities was $1.3 million in 1996, $1.4 million in
1997, $1.3 million in 1998 and $258,000 for the three months ended March 31,
1999. The primary use of cash for investing activities in these periods was for
capital equipment purchases and software development. Equipment purchases of
$432,000 in 1997 and $315,000 in 1998 and $133,000 during the first three months
of 1999 were for computer equipment to support increased traffic to our Web
sites and to support the growth in the number of subscribers to our PCQuote 6.0
service. Capitalized software development costs decreased from $1.3 million in
1996 to $976,000 in 1997 and $965,000 in 1998. The decrease from 1996 to 1997
was principally due to the completion of the development efforts to launch our
Web sites and service offerings during 1996. Capitalized software development
costs decreased to $126,000 for the three months ended March 31, 1999 from
$304,000 for the three months ended March 31, 1998, as a result of lower
development costs related to our new PCQuote Orbit service.
Cash from financing activities, consisting of contributions from HyperFeed
Technologies, were $2.6 million in 1996, $4.4 million in 1997, $2.2 million in
1998 and $126,000 for the first three months of 1999, as compared to $435,000
for the first three months of 1998.
We believe that the net proceeds to us from our public offering will satisfy
our working capital and capital expenditure requirements for at least the next
24 months.
YEAR 2000 READINESS
OVERVIEW. We have relied on representations made by HyperFeed Technologies
regarding the Year 2000 readiness of the information technology systems
contributed to us as part of our separation. HyperFeed Technologies has advised
us that it implemented a plan to attempt to assess, remediate and correct any
Year 2000 critical risks relating to our systems.
28
<PAGE>
STATE OF READINESS. HyperFeed Technologies has approached the Year 2000
risks in four phases:
- assessment -- identifying Year 2000 risks;
- remediation -- taking corrective action to best mitigate identified Year
2000 risks;
- testing -- validating a specific remediation effort that we have made or
confirming a third-party capability or certification of Year 2000
compliance; and
- contingency planning -- identifying an alternate course of action and/or
procedure in the event we cannot or fail to remediate or mitigate a known
Year 2000 risk.
HyperFeed Technologies has advised us that it has completed the assessment
phase of our products, information systems and critical suppliers. We are
currently in the remediation and testing phases. This includes verifying Year
2000 compliance of outside vendors and suppliers and testing all mission
critical items. Testing also includes all personal computers, routers, modems,
phone lines, Internet service providers, commonly known as ISP's, and production
computers, known as servers, used internally. We are also checking our outbound
satellite, phone companies and ISP's distribution network, in addition to some
ISP's that our customers may use.
On May 1, 1999, HyperFeed Technologies participated in the full "end-to-end"
Year 2000 scenario test sponsored by the Financial Information Forum in
conjunction with the Securities Industry Association. This was an industry-wide
test to provide securities, options and futures exchanges and market data
providers with the ability to test their systems under simulated Year 2000
conditions. Time was essentially moved forward into the Year 2000. HyperFeed
Technologies performed the test on its mission-critical software and hardware
and reported the results to the Financial Information Forum which, in turn,
informed them that they passed.
All testing, including internal infrastructure, is scheduled to be completed
by July 31, 1999. We have not started extensive contingency planning because we
are concentrating our efforts on remediation and testing. We believe effective
contingency planning should not begin until after these phases are complete. We
expect to begin comprehensive contingency planning at the start of the third
quarter of 1999. We may or may not engage in contingency planning for individual
subproject components where successful Year 2000 remediation has been validated
through the testing process or other methods.
COSTS. As of March 31, 1999, we have spent $51,000 on Year 2000 remediation
and testing. This includes internal personnel resources, hardware, software and
equipment replacement and upgrades necessary to be Year 2000 compliant. We will
be upgrading various administrative systems that use commercial third-party
software for accounting, billing and customer management. The total remaining
cost of software, replacement equipment and internal resources for remediation
and testing to become Year 2000 compliant is not expected to exceed $250,000.
Based upon currently available information, we do not believe that the cost of
Year 2000 compliance will have a material impact on our financial condition,
results of operations or liquidity.
RISKS. Achieving Year 2000 compliance depends on many factors. Some factors
may be beyond our control because we use services of others. Should our internal
systems or the internal system of one of our critical vendors fail to achieve
Year 2000 compliance and fail in the Year 2000, our business, financial
condition and results of operations could be adversely affected.
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BUSINESS
OVERVIEW
PCQuote.com is a leading, Internet-based provider of high performance,
real-time financial data, timely business news and comprehensive research and
analytical tools. We are a leader in the online financial information industry
in terms of data speed and reliability. Many existing online financial or
business Web sites focus on financial news, quotes or analysis. We combine all
of these features into a comprehensive portfolio of services targeted at
sophisticated investors. Our investor service offerings consist of two Web
sites, WWW.PCQUOTE.COM and MARKETSMART-REAL.PCQUOTE.COM, and two
Internet-enabled desktop applications, PCQuote 6.0 and PCQuote Orbit. Our
services provide access to sophisticated and dynamic financial information that
allows users to make their own informed investment decisions. We also offer
several business-to-business services that enable clients to present financial
data and information on their Web sites or desktop applications.
INDUSTRY BACKGROUND
The Internet is experiencing dramatic growth and is an increasingly
important global medium for communication, news, information and commerce. The
Internet allows content providers to deliver information in a manner not
possible with traditional broadcast and print media.
Individuals are placing a growing percentage of their household wealth in
securities. Investors are also taking a more active role in their investments by
directly managing their portfolios, researching information on investments and
trading securities. This growing population of sophisticated investors is
relying more on the Internet to keep abreast of current business developments,
track industry and competitive trends, make informed investment decisions and
manage their financial assets. We believe sophisticated investors are
increasingly willing to pay for access to timely market data and financial
information and analysis tools delivered via the Internet.
According to Forrester Research, at the beginning of 1999, 2.7 million U.S.
households used the Internet as their primary investing tool. According to
International Data Corporation, the number of online brokerage accounts in the
United States is expected to grow from 3.5 million at the end of 1997 to
approximately 24.0 million, representing more than $1.5 trillion in assets, by
the end of 2002. With the emergence and growth of online investing in recent
years, there has also been a dramatic increase in the demand for timely,
comprehensive and accurate financial data and information. According to NFO
Worldwide, 20 million households use the Internet for investment news, quotes
and ideas.
Traditional information sources such as newspapers, magazines and
broadcasters are seeking to address this increasing demand for financial
information. However, these sources are limited in their ability to effectively
meet the sophisticated investor's need for timely business information.
Traditional media are limited to a specific location, can deliver only limited
content and do not offer real-time information or the means to interactively
analyze that information. Newspapers and magazines cannot keep pace with the
financial markets due to their publication cycles. Broadcasters are limited in
the depth and availability of their content. Neither source offers its users
analytical tools or the ability to interact with the information source or each
other. By comparison, the Internet allows users, wherever they are, to rapidly
access, search and interact with a rich repository of content.
There are a variety of specialized financial Web sites seeking to address
the growing demand for financial information. Most of these Web sites focus
heavily on either financial news, stock quotes, investment advice or analytical
tools. Few of these sites integrate two or more of these aspects to provide
sophisticated investors with a one-stop source for finding, researching and
analyzing investment options. In addition, there are Internet-enabled desktop
applications that provide real-time quotes, on-line trading or analytical tools.
Few providers combine these Internet services to provide a full-service
destination with information, decision making tools and order execution
capabilities for the online investor.
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Internet advertising permits advertisers to gather demographic information
and direct messages at specific groups of users. It also gives advertisers an
enhanced ability to measure the effectiveness of their advertising. Due in part
to these advantages, Internet advertising is growing rapidly and is projected to
experience significant growth in the future. Forrester Research estimates that
worldwide Internet advertising will grow from $1.5 billion in 1998 to $10.9
billion in 2002. Advertisers have come to realize that online investors
represent a highly attractive audience and that the Internet represents a medium
through which they can reach this audience in a focused manner.
As the Internet becomes a more popular medium for gathering, analyzing and
sharing information and the number of sophisticated investors taking an active
role in managing their finances continues to grow, we believe a significant
opportunity exists for a company to provide real-time market data, timely
financial news and comprehensive research and analytical tools via the Internet.
By integrating all of these features, an Internet-based service can provide
sophisticated investors with the financial information they require to make
their own informed investment decisions. By assembling this loyal base of online
investors, a company can create a targeted and demographically attractive
audience for advertisers.
THE PCQUOTE.COM ADVANTAGE
PCQuote.com offers online investors a combination of real-time and delayed
market data, timely worldwide financial and business news provided by CNNFN and
a wide variety of research and analytical tools. These features allow our users
to screen, research, analyze and track their investments online. All of these
resources are located or accessible from one or more of our service offerings
and are presented in a user-friendly manner. We believe that most other
Internet-based providers of financial and business information do not offer the
combination of data, news and research and analytical tools contained within our
service offerings.
ADVANTAGES TO OUR USERS
We differentiate ourselves by providing:
- Real-time, accurate financial data -- We use HyperFeed 2000 to deliver
real-time and delayed market data from all North American exchanges on
over 350,000 securities, including stocks, bonds, options, mutual funds,
currencies, indices, over the counter issues and futures. We offer
real-time quotes on our premium, subscription-based site,
MARKETSMART-REAL.PCQUOTE.COM, and real-time streaming quotes via our
desktop applications. We offer 20 minute delayed quotes on our free Web
site, WWW.PCQUOTE.COM.
- Financial and business news -- We offer users of our Web sites access to
timely, original financial news and stories from a variety of sources,
including CNNFN. Our agreement with CNNFN contains an exclusivity
provision that prohibits CNNFN from licensing CNNFN headlines to our
direct competitors, subject to several exceptions.
- Comprehensive research and analytical tools -- We provide users of our
services with a variety of research and analytical tools with which to
analyze market data, enabling them to make informed investment decisions.
We believe that our ability to provide all of these features in an effective
format differentiates us from other Internet-based providers of financial
information.
ADVANTAGES TO OUR ADVERTISERS
We provide advertisers with a growing, demographically desirable audience.
According to @plan, our third party demographics provider, the number of unique
visitors to our WWW.PCQUOTE.COM Web site grew from approximately 796,000 per
month in their Winter 1998 report (covering the months of July to September
1998) to approximately 912,000 per month in their Spring 1999 report (covering
the
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months of October to December 1998). Our Web sites attract a more sophisticated
investor than many general purpose financial Web sites. This results in a
demographic that is more attractive to potential advertisers. Our visitors are,
on average, more affluent and more likely to use the Web for online shopping
than the visitors to many other financially-oriented Web sites. Based on surveys
conducted by The Gallup Organization, @plan reports that our users and
subscribers rank in the top five of all content Web sites in the following
demographic categories:
- Men with a household income of $50,000 or more
- Men with a portfolio value of $100,000 or more
- Men with a household income of $50,000 or more who have engaged in online
shopping during the past six months
GROWTH STRATEGY
Our objective is to strengthen our position as a leading Internet-based
provider of high performance, real-time financial data, timely business news and
comprehensive research and analytical tools. We intend to achieve our objective
by pursuing the following key strategies:
BUILD BRAND AWARENESS TO ATTRACT ADDITIONAL TRAFFIC. We believe that
increased brand awareness is critical to differentiating ourselves and
attracting additional traffic and subscribers. We intend to use a portion of our
net proceeds from this offering to significantly increase our marketing
activities in order to increase our brand awareness and visibility among both
Internet users and online advertisers. We will aggressively advertise in print,
broadcast and online media and use our business-to-business relationships to
provide links to our Web sites. These marketing and brand building efforts are
intended to increase our subscriber base and enable us to significantly grow our
advertising base.
CAPITALIZE ON USER DEMOGRAPHICS ATTRACTIVE TO ADVERTISERS. We believe our
Web sites attract users who are highly desirable to companies that advertise
online. According to @plan, many of our users are affluent, male investors. A
high percentage of them shop online. We intend to increase the size of our
advertising sales force in order to capitalize on this highly desirable user
base.
CREATE UP-SELL OPPORTUNITIES THROUGH OUR SERVICE OFFERINGS. Our various
levels of service offerings provide online investors the opportunity to upgrade
from one service to the next as their investment goals and needs evolve. We
offer free content, including delayed market quotes, charts and portfolios, on
WWW.PCQUOTE.COM. We offer real-time, snapshot quotes on our subscription-based
MARKETSMART-REAL.PCQUOTE.COM site. We also offer premium desktop services for
sophisticated investors requiring streaming, real-time quotes and other
real-time information and analysis. We intend to promote our ability to offer a
range of solutions in order to create up-sell opportunities for each user. The
free content on our WWW.PCQUOTE.COM site is key to this strategy by building
traffic and thereby broadening our base of potential subscribers to our
fee-based services.
LEVERAGE RELATIONSHIPS WITH STRATEGIC PARTNERS. CNNFN is a leading provider
of global financial and business news both on and off the Web. Through our
strategic relationship with CNNFN, we offer users of our Web site access to
timely, original news, headlines and stories published by CNNFN. Our strategic
relationship with HyperFeed Technologies allows us to use HyperFeed 2000, a
real-time market data
feed, to offer timely and accurate quotes to the sophisticated investor. We plan
to enter into strategic relationships with other partners for content and other
services and to leverage our strategic relationship with these partners to
differentiate ourselves as a single source solution for online investors.
EXPAND OUR WEB SITES AS COMPREHENSIVE FINANCIAL INFORMATION
DESTINATIONS. We are continually expanding and enhancing WWW.PCQUOTE.COM and
MARKETSMART-REAL.PCQUOTE.COM so that users can satisfy their financial and
investing information needs without leaving our sites. For example, we plan to
add new personalization and community features, such as online discussion forums
where investors will be
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able to question top financial traders, managers and journalists, post messages
and read the opinions of others. We intend to provide the type of informative
and entertaining on-line experience sought by our users and thereby expand their
involvement with us.
MAINTAIN OUR SUPERIOR TECHNOLOGICAL PLATFORM. We intend to continue to
expend substantial capital and other resources developing, acquiring and
implementing technology-driven enhancements to our Web sites and other services,
including those related to HyperFeed 2000. Our intuitive user interface and
desktop services enable our users to navigate easily through an environment rich
in information. For advertisers, our systems permit the tracking and parsing of
valuable demographic information regarding the users of our Web sites. In order
to allow for our anticipated expansion in content and service offerings, we plan
to invest in the necessary back-end production systems and infrastructure, such
as hardware, software, Internet bandwidth and Web hosting facilities.
PCQUOTE.COM SERVICES
Our services consist of comprehensive financial information and market data
combined with analytical tools that can be used by both individual investors and
businesses. Our service offerings complement each other and have been developed
to use a common data feed and infrastructure.
INVESTOR SERVICES
We offer a range of services designed to meet the needs of individual
investors, regardless of their level of sophistication or information
requirements. Our investor service offerings consist of two Web sites,
WWW.PCQUOTE.COM and MARKETSMART-REAL.PCQUOTE.COM, and two Internet-enabled
desktop applications, PCQuote 6.0 and PCQuote Orbit. Our desktop services offer
the added benefit of faster data download time, enabling the delivery of
streaming quotes and a host of other real-time applications.
WEB SITES
<TABLE>
<CAPTION>
SERVICE DESCRIPTION PRICE
<S> <C> <C>
WWW.PCQUOTE.COM Provides access to delayed quotes, as Free
well as financial and business news
and a full array of research and
analytical tools.
MARKETSMART-REAL.PCQUOTE.COM Provides access to real-time quotes, $9.95 per month, plus exchange fees
as well as the financial and business
news and research and analytical tools
that are available on WWW.PCQUOTE.COM.
</TABLE>
WWW.PCQUOTE.COM. WWW.PCQUOTE.COM is our free Web site and also serves as
the primary marketing and promotions engine for the rest of the services we
provide. WWW.PCQUOTE.COM provides the following tools and information:
Delayed Quote Tools--We use HyperFeed 2000 as the source of all of the raw
data presented on WWW.PCQUOTE.COM. This site includes a variety of tools
that can be used to manipulate the raw financial data:
- DETAILED QUOTE allows users to request equity, commodity, option,
mutual and money market fund and bond quotations by ticker symbol.
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- MULTIPLE QUOTE allows users to request quotations for up to five ticker
symbols at one time.
- PORTFOLIO enables users to track up to five portfolios containing up to
ten securities each.
- MARKETS AT A GLANCE provides a basic overview of various market
indices, including their current position and net change for the day.
- DETAILED INDICES provides a detailed list of, and quotations for, the
individual securities underlying various indices.
- TOP TEN allows users to view the top ten gainers, losers and most
active stocks on the primary exchanges in North America.
- FUTURES offers market quotations from various futures and commodities
exchanges.
- OPTIONS STRINGS shows relative prices for all options related to a
particular security.
- FUNDS provides information with respect to the various mutual funds
within a particular fund family.
- SYMBOL SEARCH enables investors to enter a company's name and receive
the matching ticker symbol.
News--We provide users access to timely, original financial news and
stories:
- CNNFN headlines are provided through our strategic relationship with
CNNFN and gives users access to timely, original financial and business
news headlines and stories published by CNNFN.
- WIRE-BASED NEWS offers users access to press releases and other
wire-based news provided by COMTEX Scientific Corporation, including
feeds from PR Newswire, Business Newswire, M2 Communications and UPI
Spots.
Research and Analytical Tools--We allow users to research and analyze market
quotations with tools and information from a variety of sources:
- STOCK ANALYSIS is available through our relationship with VectorVest,
Inc. and provides users access to three free VectorVest analysis
reports per day.
- STOCK CRITERIA SEARCH is provided through our relationship with IQC,
Inc., and enables users to run search queries on various stocks that
fit user-defined investment criteria. Queries can be based on such
factors as industry, price/earnings ratio and dividend history.
- CHARTING is provided by IQC and allows users to display historical and
intra-day charts for publicly traded securities and all major indices.
- EARNINGS ANALYSIS AND REPORTING TOOLS gives users access to consensus
earnings estimates and other earnings-related reports provided by Zacks
Investment Research.
- CORPORATE PROFILES is provided by MarketGuide and gives users access to
corporate profiles for most publicly traded companies.
- THE IPO RESOURCE CENTER is provided by IPO.com and gives users the
ability to research initial public offerings, monitor the post-offering
performance of IPOs, search filings made with the SEC and receive news
stories about upcoming IPOs.
- THE WEATHER CENTER presents worldwide weather information aimed at
commodities traders and is provided by Strategic Weather Services for a
nominal fee.
- COMMODITY NEWSLETTERS enables users to receive analyses of different
commodities and is provided by the Hightower Report for a nominal fee.
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MARKETSMART-REAL.PCQUOTE.COM. MARKETSMART-REAL.PCQUOTE.COM is our
subscription-based Web site and provides real-time, snapshot market quotations,
along with all of the news, research and analytical tools available on
WWW.PCQUOTE.COM. This site is targeted toward a more sophisticated investor than
is WWW.PCQUOTE.COM and uses sparse graphics, text indices and creative
advertising to speed download times and give users faster access to the site's
content. MARKETSMART-REAL.PCQUOTE.COM can be accessed from WWW.PCQUOTE.COM.
To complement the enhanced nature of real-time market quotations available
on MARKETSMART-REAL.PCQUOTE.COM, we plan to enter into relationships with
partners to offer additional real-time research and analytical tools. We believe
these tools will provide our users with enhanced investment decision-making
capabilities and will further attract new subscribers.
DESKTOP SERVICES
<TABLE>
<CAPTION>
SERVICE DESCRIPTION PRICE
<S> <C> <C>
PCQUOTE 6.0 Provides real-time streaming quotes via a $75 to $455 per month, plus exchange fees
desktop application with order execution
capability and analytical tools
PCQUOTE ORBIT Provides real-time streaming quotes via a $55 per month, plus exchange fees
desktop application and analytical tools
</TABLE>
PCQUOTE 6.0. PCQuote 6.0 is a professional-quality, NASDAQ level II,
real-time quote system that offers users reliable, streaming real-time market
data for all North American equities and options. PCQuote 6.0 empowers
sophisticated investors by giving them the freedom to decide how and when to
trade on a daily basis. This service is online trading-enabled and offers order
execution capabilities through participating broker-dealers. Orders can be sent
directly from the user's desktop to a participating broker-dealer for execution.
PCQuote 6.0 offers desktop versions of the quote tools available on
WWW.PCQUOTE.COM. These tools are similar to those offered on our Web sites, but
work with our streaming, real-time data. In addition, PCQuote 6.0 offers all or
a portion of the following tools depending on the monthly fee paid by the user:
- QUOTE GRID enables users to create a grid of ticker symbols that displays
market quotations, such as high, low, bid, ask, last and close.
- SCROLLING TICKER enables users to display current prices and daily changes
of selected stocks on a digital ticker tape that scrolls across their
screen.
- NASDAQ LEVEL II SCREENS provides users with access to broker quotations.
- CHARTING provides high-end, tick by tick technical analysis and is
completely customizable.
- TECHNICAL ANALYSIS enables users to make use of a variety of technical
analysis formulas.
- MARKET GUIDE provides users with access to a selected, publicly-traded
company's financial and other corporate information, such as income
statements, balance sheets and contact information.
- NEWS is provided by Dow Jones and COMTEX and allows access to news stories
via a scrolling headline ticker or by keyword search.
- ALARMS enables users to set customizable alerts for one or more tickers
with a variety of parameters, such as volume, price, highs and lows.
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We also offer private label versions of PCQuote 6.0 for distribution by
third parties to their customers. For example, A.B. Watley, Inc. markets a
private label version of PCQuote 6.0 called AB Watley Ultimate Trader. Users of
this application can monitor and research their investments similar to a PCQuote
6.0 user.
PCQUOTE ORBIT. PCQuote Orbit, expected to be launched in Summer 1999, was
developed to bridge the gap between MARKETSMART-REAL.PCQUOTE.COM and PCQuote
6.0. PCQuote Orbit provides subscribers with streaming, real-time market
quotations delivered via an Internet-enabled desktop application. It provides
users with the benefits of working with a desktop application at a lower price
than many other desktop applications. PCQuote Orbit allows users access to
streaming real-time quotes and more complex research and analytical tools than
are currently available through our Web sites, because the only data we provide
over the Internet are the market quotations themselves. The analytical tools
reside within the desktop application.
PCQuote Orbit offers desktop versions of the quote tools available on
WWW.PCQUOTE.COM working with our streaming, real-time data. In addition, PCQuote
Orbit offers Quote Grid and Scrolling Ticker.
BUSINESS TO BUSINESS SERVICES
We offer several business-to-business services for clients that want to
present financial data or information on their own Web sites or desktop
applications.
<TABLE>
<CAPTION>
SERVICE DESCRIPTION PRICE
<S> <C> <C>
WEB TEMPLATE Provides access to delayed or real-time $250 to $2,000 per program per month
quotes and research and analysis tools
HYPERSCRIPT Provides developer access to quotes from $125 to $1,000 per month
HyperFeed 2000 via the Web
PCQUOTE SOFTWARE Allows software developers to code delayed $500 for a three month license
DEVELOPMENT KIT market data into their own software or
Web-based applications
</TABLE>
WEB TEMPLATE. Web Template allows users to create their own "private label"
Web sites with many of the features of our own Web sites. Using standard
templates, the actual Web pages that house the data applications are hosted at
PCQuote.com and accessed by the client through a simple series of links over the
Web. All servers are maintained and serviced by us. Similar to WWW.PCQUOTE.COM,
our clients are able to offer the following tools: Detailed Quote, Multiple
Quote, Portfolio, Markets at a Glance, Detailed Indices, Top Ten and Option
Strings. We also offer access to third-party research and analysis. We have
entered into agreements to allow business-to-business clients access to charting
and wire-based news for an additional fee.
The New York Times is a Web Template customer. The New York Times subscribes
to Web Template in order to offer a series of quote services to its users. By
using Web Template, The New York Times was able to create a financial area
within its Web site and provide its readers with financial quotes and tools
without any development or maintenance on its part.
HYPERSCRIPT. Hyperscript is a proprietary development tool used to create
data-rich Web sites and Internet-based market data applications. Hyperscript
allows users to develop their own applications using HyperFeed 2000 data. Using
standard development techniques to access data and present it on third-party Web
sites, Hyperscript makes development of complex data applications a simple task.
Customers can subscribe to Hyperscript for either limited or unlimited access to
data. For example,
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Pfizer, Inc. uses Hyperscript to create a customized, graphical image of its
current stock price on its Web site at WWW.PFIZER.COM.
PCQUOTE SOFTWARE DEVELOPMENT KIT AND QUOTESOCKETS. PCQuote SDK allows
third-party software developers to code delayed or real-time market data into
their own software or Web-based applications. Developers use this service to
create an interface to view market data and then codes HyperFeed 2000 data into
the application. Once completed, developers become subscribers to Quotesockets,
our related subscription plan, with monthly fees for access to delayed or
real-time data. The developers then have the ability to market the product it
has developed. Our current pricing for Quotesockets is $39 per month for delayed
data and $135 per month for real-time data.
Omega Pro Suite, Omega Research's desktop application, uses PCQuote SDK and
Quotesockets to obtain real-time data. Omega Pro Suite is used primarily by
individual investors for technical analysis and charting. The end-user pays
Omega Research a fee to use the application and pays us a monthly fee for the
market data. In order to activate the data portion of the developer's
application, the end-users must subscribe to the Quotesockets service through
PCQuote.com.
STRATEGIC RELATIONSHIPS
We believe that our strategic relationships with CNNFN, HyperFeed
Technologies and Townsend Analytics help us to differentiate ourselves as a
single-source solution for online financial information. See "Certain
Transactions" for a more complete description of our agreements with CNNFN and
HyperFeed Technologies.
CNNFN
Through our strategic relationship with CNNFN, we provide access to
original, timely global business news and stories regarding the financial
markets and other areas of interest to our users. CNNFN headlines appear on the
front pages of our Web sites and are continously updated throughout the trading
day. Our agreement with CNNFN contains an exclusivity provision that prohibits
CNNFN from licensing CNNFN headlines to our direct competitors, subject to
several exceptions.
HYPERFEED TECHNOLOGIES
Through our strategic relationship with HyperFeed Technologies, we use
HyperFeed 2000 to offer timely and accurate market data on our Web sites and
other services. HyperFeed 2000 is HyperFeed Technologies' newest generation data
feed. It delivers real-time and delayed market data from all North American
exchanges on more than 350,000 securities, including stocks, bonds, options,
mutual funds, currencies, indices, over the counter issues and futures. In
addition, we license PCQuote Orbit and Quotesockets from HyperFeed Technologies.
HyperFeed Technologies provides us with various administrative services and
technical and operational support.
TOWNSEND ANALYTICS
Through our strategic relationship with Townsend Analytics, we license the
right to use a software application that we market as PCQuote 6.0. We also
sublicense private label versions of this application. Our license agreement
with Townsend Analytics is for an initial term ending December 4, 2000 and
provides for automatic one-year renewals unless either party delivers a notice
of nonrenewal 90 days prior to the termination date.
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SALES AND MARKETING
To date, we have not broadly marketed our services. We intend to use a
portion of our net proceeds from this offering to aggressively market and
promote our Web sites and other service offerings in a variety of traditional
and online media, including:
- Web sites, including content providers, online newspapers, search engines
and portals;
- financial, business and other publications; and
- radio and television.
In addition, our marketing efforts may include establishing strategic
distribution relationships with leading Web sites, developing brand extensions
and engaging in ongoing media relations. We also intend to increase the size of
our team of in-house customer service representatives to provide our users and
subscribers with the highest level of service possible.
We believe that our marketing efforts will enable us to build brand
awareness and increase traffic to our Web sites. This is intended to create a
ready source of potential subscribers for our services and a large,
demographically desirable audience for our advertisers. We believe that our
varied service offerings provide us with the opportunity to derive increased
revenues from multiple sources, including subscriptions, advertising and
business-to-business services.
SUBSCRIPTION SALES
We offer a series of Web and Internet-enabled desktop services on a
subscription basis. Our broad range of services gives us multiple up-sell
opportunities by allowing our users to upgrade to enhanced levels of service as
their expertise, information needs and interest in investing grows. We believe
that a key component of this strategy is to build traffic on our WWW.PCQUOTE.COM
Web site, thereby broadening our base of potential subscribers. We currently
market our subscription services to investors through a variety of channels,
including the Web, telemarketing and traditional media advertising campaigns.
Certain services, including our subscription-based, business-to-business
services, are marketed by a sales staff that is contracted from HyperFeed
Technologies, as well as by our own sales staff. We pay a sales commission to
HyperFeed Technologies for these sales. Our business-to-business target clients
include online brokerages, content aggregation Web sites, large content owners,
community-based portal sites and desktop or online software developers.
As our service offerings continue to grow, we intend to build a larger, more
specialized sales team to meet the needs of our users, subscribers and
business-to-business clients. We also plan to promote online registration and
self-service where applicable.
Our largest customer, AB Watley, a private label redistributor of PCQuote
6.0, accounted for 11.1% of our total revenues in 1998 and 15.8% of our total
revenues in the three months ended March 31, 1999. No other customer accounted
for more than 2.3% of our revenues in either period.
ADVERTISING SALES
Advertisements are displayed throughout our Web sites. We have established a
demographically desirable user base that has enabled us to build a growing base
of online advertisers. In order to attract new users and further develop a loyal
audience that appeals to a broad range of advertisers and business partners, we
plan to offer improved, expanded content and features and conduct aggressive
branding and promotional campaigns.
We believe that a direct advertising sales force allows us to better
understand and meet advertisers' needs, to increase our access to potential
advertisers and to maintain strong relationships with our existing advertising
clients. We plan to develop and expand our direct sales force to attract a
greater number of advertisers and better meet the needs of existing advertisers.
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In 1998, approximately 70 companies advertised on our Web sites. In the
first quarter of 1999, approximately 43 companies advertised on our Web sites.
While many of our advertisers in the past have been from the financial services
industry, we recently have attracted advertisers from outside of this industry.
Our advertisers during 1999 have included:
<TABLE>
<CAPTION>
FINANCIAL SERVICES
ADVERTISERS OTHER ADVERTISERS
- --------------------------- --------------------------------
<S> <C>
- - Datek Online - About.com
- - Discover Brokerage - CareerBuilder.com
- - DLJdirect - Gateway 2000
- - Fidelity Investments - Hewlett-Packard
- - Mr. Stock - IBM
- - TheStreet.com - Microsoft Home Advisor
- Oracle
</TABLE>
Advertising on our Web sites ranges in price depending on the type and level
of placement provided, including whether the arrangement is based on impressions
or click-throughs. DoubleClick provides us with advertising management and
delivery services and provides our advertisers with reports describing the
delivery of their advertisements.
COMPETITION
An increasing number of financial data and information sources compete for
consumers' and advertisers' attention and spending. We expect this competition
to increase. The market for Internet services and products is relatively new,
intensely competitive and rapidly changing. The number of Web sites on the
Internet competing for consumers' attention and spending has proliferated and we
expect that competition will continue to intensify. We compete, directly and
indirectly, for advertisers, viewers, subscribers and content providers with the
following categories of companies:
- Web sites targeted to business, finance and investing needs, such as
CBS.Marketwatch.com, TheStreet.com, The Motley Fool and Quote.com;
- Web portals, such as EXCITE.COM, INFOSEEK.GO.COM, LYCOS.COM, YAHOO.COM,
and other high-traffic Web sites that offer quotes, financial news and/or
other programming, as well as links to business and finance related Web
sites;
- proprietary online services, such as America Online and Microsoft Network,
that provide access to financial and business-related content and
services;
- online brokerage firms, such as Charles Schwab and E*TRADE, many of which
provide financial and investment news and information;
- providers of terminal-based financial news and data, such as Bloomberg
Business News, Reuters News Service, Dow Jones Markets and Bridge News
Service; and
- publishers and distributors of traditional media, including television,
radio and print, such as CNBC, Marketplace on National Public Radio and
The Wall Street Journal.
Our ability to compete depends on many factors, including the timeliness,
comprehensiveness and trustworthiness of our content, the ease-of-use of our
services and the effectiveness of our sales and marketing efforts. We believe
our services compare favorably with those of our competitors.
INFRASTRUCTURE, OPERATIONS AND TECHNOLOGY
Our technological infrastructure is built and maintained for reliability,
security and flexibility. We host our servers at two distribution centers in
Chicago, Illinois. We use load balancing technology to distribute user traffic
to available servers at either of the two sites. This combined with built-in
excess capacity at both sites allows each site to operate as a backup for the
other site. In the event one site
39
<PAGE>
experiences an outage due to an ISP or other failure, traffic is seamlessly
serviced by the other site. We also use multiple high speed paths to receive
data at these two sites and we have two ISPs for distribution to our users.
INTELLECTUAL PROPERTY
We rely primarily on a combination of trademark and trade secret law and
restrictions on disclosure to protect our intellectual property, such as our
content, trademarks, trade names and trade secrets. We generally enter into
confidentiality agreements with our employees, consultants and strategic
partners, and seek to control access to and distribution of our proprietary
information. We cannot be sure that these precautions will prevent
misappropriation or infringement of our intellectual property. We also license
technology from third parties, such as software from Townsend Analytics and
DoubleClick, and data and content from third parties. Under these license
agreements, the licensors generally agree to indemnify us with respect to any
claim by a third party that the licensed software or content infringes any
person's proprietary rights. In the future, we may seek to license additional
technology or content in order to enhance our current features or to introduce
new services, such as certain of the community features we may introduce.
EMPLOYEES
As of March 31, 1999, we had 37 full time employees. No personnel are
represented under collective bargaining agreements. We consider our employee
relations to be good.
FACILITIES
Our principal administrative, sales, marketing and research development
facilities are located in approximately 8,000 square feet of office space in
Chicago, Illinois. This office space is provided to us by HyperFeed
Technologies. HyperFeed Technologies' lease expires on December 31, 2004, unless
renewed. We anticipate relocating or expanding our space due to increased
requirements resulting from our expected growth.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers, directors and director designees of PCQuote.com:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------- --- -------------------------------------------------------------
<S> <C> <C>
Jim R. Porter............................... 58 Chief Executive Officer and Chairman
Timothy K. Krauskopf........................ 35 President, Chief Operating Officer and Director
Andrew N. Peterson.......................... 47 Chief Financial Officer and Secretary
Stephen F. Rawls............................ 47 Vice President, Interactive Operations
John R. Hart................................ 39 Director
John E. Juska............................... 44 Director
Ronald J. Grabe (1)......................... 53 Director Designee
Francis J. Harvey (1)....................... 55 Director Designee
James R. Quandt (1)......................... 49 Director Designee
</TABLE>
- ------------
(1) Messrs. Quandt, Grabe and Harvey have been designated to become members of
our Board of Directors.
JIM R. PORTER has served as our Chief Executive Officer and Chairman since
March 1999. Mr. Porter is currently serving as HyperFeed Technologies' Chairman,
a position he has held since October 1997, and Chief Executive Officer, a
position he has held since July 1997. Since 1993, he has been the President and
Chief Executive Officer of New Century Investment Research & Management, Inc.
From 1990 to 1993, he was an associate of Chicago Research & Trading, Inc., a
commodity trading firm. From 1979 to 1990, Mr. Porter was a principal and Chief
Executive Officer of First Options of Chicago, Inc., a securities, futures and
options clearing firm, and a partner of Spear Leeds & Kellogg, a specialist firm
on the New York Stock Exchange.
TIMOTHY K. KRAUSKOPF has served as our President and Chief Operating Officer
since April 1999 and has been a member of our Board of Directors since March
1999. He has served as a director of HyperFeed Technologies since September
1997. Mr. Krauskopf will resign as a director of HyperFeed Technologies as of
the closing of this offering. From 1997 to 1999, Mr. Krauskopf was the Head of
Information Services at the Field Museum of Natural History in Chicago,
Illinois. From 1990 to 1997, Mr. Krauskopf held a number of positions at
Spyglass, Inc., a company he co-founded, including Vice President of Research
and Development and Chief Technology Officer. Mr. Krauskopf currently serves as
a director of Spyglass. Spyglass commercialized and marketed the Mosaic Internet
browser developed at the University of Illinois.
ANDREW N. PETERSON has served our Chief Financial Officer since April 1999
and as Secretary since May 1999. From April 1997 to October 1998, Mr. Peterson
served as Chief Financial Officer of TRO Learning, Inc., a publicly-held
developer of educational software. From May 1995 to December 1996, he served as
Chief Financial Officer of TSR, Inc., a privately-held publisher of games and
books. From 1986 to 1994, Mr. Peterson served as the Chief Financial Officer of
Duplex Products, Inc., a publicly-held manufacturer of business forms.
STEPHEN F. RAWLS has served as our Vice President, Interactive Operations,
since April 1999. From February 1998 to April 1999, Mr. Rawls was Vice
President, Marketing, for HyperFeed Technologies. From 1995 to 1998, Mr. Rawls
held a number of Internet-related positions for Ameritech Corp. From 1991 to
1995, he served as Vice President of FutureSource, a financial data provider,
and was responsible for international business development.
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JOHN R. HART has served as a member of our Board of Directors since May
1999. He has been a director of HyperFeed Technologies since 1997. He has been
President, Chief Executive Officer and a director of PICO Holdings. Inc., a
publicly held holding company since November 1996. He has also served as
President and Chief Executive Officer since 1995 and as a director since 1993 of
Physicians Insurance Company of Ohio. Mr. Hart also served as President and
Chief Executive Officer of Global Equity Corporation, an international
investment and operating company, since 1995, and as President of Quaker
Holdings Limited, an investment company since 1991. From 1982 to 1991 he served
as Principal of Detwiler, Ryan & Company Inc., an investment bank.
JOHN E. JUSKA has served as a member of our Board of Directors since March
1999. He currently serves as the Chief Financial Officer of HyperFeed
Technologies, a position he has held since July 1997. From 1994 to July 1997,
Mr. Juska served as Vice President and Chief Financial Officer for the Chicago
Mercantile Exchange. From 1986 to 1994, Mr. Juska served in various positions
for the Chicago Mercantile Exchange, including Controller and Vice President of
Finance.
RONALD J. GRABE is designated to become a member of our Board of Directors.
Mr. Grabe currently serves as Senior Vice President and Deputy General Manager,
Launch Systems Group, Orbital Sciences Corporation, a position he has held since
1996. From 1994 to 1996, he served as Vice President, Business Development,
Launch Systems Group, Orbital Sciences Corporation. From 1983 to 1993, Mr. Grabe
served in various positions at the National Aeronautics and Space
Administration, including Commander for Space Shuttle Mission STS-57
(1992-1993), Chief Operational Evaluator of Russian Soyuz Spacecraft (1992),
Commander, Space Shuttle Mission STS-42 (1990-1992) and Lead Astronaut Space
Station Development (1989-1991).
FRANCIS J. HARVEY is designated to become a member of our Board of
Directors. Dr. Harvey currently serves as an independent consultant for various
companies. From 1969 to 1997, Dr. Harvey served in various positions at
Westinghouse Electric Corporation, most recently as Chief Operating Officer,
Industries and Technology Group (1996-1997), President, Electronic Systems
(1995-1996), President, Government and Environmental Services Co. (1994-1995),
Vice President, Science and Technology Center (1993-1994) and General Manager,
Marine Division (1986-1993). Dr. Harvey currently serves as a director of GTS
Duratek, Inc.
JAMES R. QUANDT is designated to become a member of our Board of Directors.
Mr. Quandt currently serves as a Partner and Managing Director of Korn/Ferry
International, the world's largest executive search firm, a position he has held
since August 1998. From February 1996 to August 1998, he served as President and
Chief Executive Officer of National Telephone & Communication, Inc., a
telecommunications firm. From February 1995 to January 1996, Mr. Quandt served
as Chairman of the Board of Bridge Information Systems, Inc., a privately held
group of companies in the financial information and technology industry. Mr.
Quandt served as President of Standard & Poors Financial Information Services
from 1991 to 1995.
We plan to appoint two additional independent directors within 90 days after
the closing of this offering. Directors are elected by the stockholders at each
annual meeting of stockholders or until their successors are duly elected and
qualified.
All executive officers are appointed by, and serve at the discretion of, our
Board of Directors.
BOARD COMMITTEES
We intend to establish an Audit Committee and a Compensation Committee
comprised of independent directors. Our Audit Committee will have the
responsibility of reviewing our audited financial statements and accounting
practices. This committee will consider and recommend the employment of
independent accountants and approve fee arrangements with them for both audit
functions and for advisory and other consulting services. The Compensation
Committee will review and
42
<PAGE>
approve the compensation and benefits for our key executive officers, administer
our employee benefit plans and make recommendations to the full Board of
Directors regarding these matters.
DIRECTOR COMPENSATION
We reimburse our directors for all reasonable out-of-pocket expenses
incurred in connection with their attendance at Board and Board committee
meetings. Members of our Board of Directors are eligible to participate in our
1999 Combine Incentive and Non-statutory Stock Option Plan. On the same day as
each annual meeting of our stockholders, we intend to grant each non-employee,
independent director a fully vested option to purchase shares of our common
stock at the then-current market price if he has served continuously as a member
of the Board of Directors since the date of the previous annual meeting. In
addition, we intend to grant each of our non-employee, independent directors a
fully vested option to purchase shares of our common stock on the
effective date of this prospectus, having an exercise price equal to the initial
public offering price. Each of Messrs. Grabe, Harvey and Quandt will receive
this initial grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to this offering, our Board of Directors did not have a Compensation
Committee and all compensation decisions were made by the full Board of
Directors. Upon completion of this offering, it is intended that the
Compensation Committee will make all compensation decisions. No interlocking
relationship exists between the Board of Directors or Compensation Committee and
the Board of Directors or Compensation Committee of any other company, nor has
any such interlocking relationship existed in the past.
EXECUTIVE COMPENSATION
We were incorporated in March 1999 and, therefore, had no executive officers
as of the end of 1998. Effective April 1, 1999, we began paying Jim R. Porter,
our Chief Executive Officer, a base salary of $90,000 per year. Mr. Porter has
an arrangement with us under which he is required to devote only one-half of his
business time to our business. He will devote the remaining one-half of his
business time to HyperFeed Technologies. We have three executive officers, other
than our Chief Executive Officer, who we expect will earn more than $100,000
annually. Effective April 28, 1999, we began paying Timothy K. Krauskopf, our
President and Chief Operating Officer, a base salary of $150,000 per year.
Effective April 28, 1999, we began paying Andrew N. Peterson, our Chief
Financial Officer and Secretary, a base salary of $175,000 per year. Effective
April 1, 1999, we began paying Stephen F. Rawls, our Vice President, Interactive
Operations, a base salary of $100,000 per year.
EMPLOYMENT AGREEMENTS
We have entered into an employment agreement with Andrew N. Peterson. Under
the employment agreement, Mr. Peterson will be paid an annual base salary of
$175,000. The employment agreement can be terminated by either party at any
time, subject to the terms of the agreement. If we terminate Mr. Peterson
without cause or if he voluntarily terminates his employment for specified
reasons, we will be required to pay him all of his accrued base salary and
continue to pay him his base salary for twelve months following the termination.
If we terminate him for cause or if he voluntarily terminates his employment
other than for the reasons described above, we will not be obligated to pay any
continuation of base salary.
The employment agreement also contains provisions governing the benefits
payable to Mr. Peterson if there is a change in control of PCQuote.com. If Mr.
Peterson is terminated by us or our successor, other than for cause, within six
months after a change in control or if he voluntarily terminates his employment
for the reasons described above within six months after the change in control,
we are required to pay him an amount equal to his annual base salary. The
employment
43
<PAGE>
agreements contain confidentiality and nonsolicitation obligations and a
one-year covenant not to compete.
1999 COMBINED INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN
Our 1999 Combined Incentive and Non-statutory Stock Option Plan was adopted
in May 1999. There are 1,538,600 shares of common stock reserved for issuance
under this plan. The plan terminates in September 2009, unless terminated sooner
by our Board of Directors. The plan authorizes the award of options and
restricted stock purchase rights.
The plan will be administered by our Board of Directors or a committee
appointed by our Board of Directors. The administrator has the authority to
interpret the plan, grant awards and make all other determinations necessary to
administer the plan.
The plan provides for the grant of both incentive stock options, commonly
called ISOs, that qualify under Section 422 of the Internal Revenue Code, and
nonqualified stock options, commonly called NQSOs. ISOs may be granted only to
our employees or employees of a parent or subsidiary. NQSOs and restricted stock
purchase rights may be granted to our employees, directors and consultants.
Generally, the exercise price of ISOs must be at least equal to the fair market
value of our common stock on the date of grant. Any grant of an ISO to a holder
of 10% or more of our outstanding shares of common stock must have an exercise
price of at least 110% of the fair market value of our common stock on the date
of grant. The exercise price of NQSOs must be at least equal to 85% of the fair
market value of our common stock on the date of grant. Options granted under the
plan have a maximum term of ten years. Awards granted under the plan may not be
transferred other than by will or by the laws of descent and distribution. They
generally also must be exercised during the lifetime of the optionee only by the
optionee.
Options granted under the plan generally expire three months after the
termination of the optionee's service, except in the case of death or
disability, in which case the options generally may be exercised up to twelve
months following the date of death or termination of service. If PCQuote.com is
dissolved or liquidated or has a "change in control" transaction, outstanding
awards may be assumed or substituted by the successor corporation, if any. If a
successor corporation does not assume or substitute the awards, the vesting of
the awards will be accelerated.
We have granted options to purchase a total of shares of common stock
under the plan, all at an exercise price of $ per share. On , 1999,
we granted options to purchase shares of common stock at an exercise price of
$ per share to the following officers for the indicated number of shares: Mr.
Porter-- shares, Mr. Krauskopf-- shares, Mr. Peterson-- shares and Mr.
Rawls-- shares. These options vest ratably over a three-year period beginning
on , the date of the grant.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
Our Certificate of Incorporation includes a provision that eliminates the
personal liability of its directors for monetary damages for breach of fiduciary
duty as a director, except for liability:
- for any breach of the director's duty of loyalty to us or our
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- unlawful dividends and stock purchases under the section 174 of the
Delaware General Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
These provisions are permitted under Delaware law.
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Our Bylaws provide that:
- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law, subject to certain very limited exceptions;
- we may indemnify our other employees and agents to the same extent that we
indemnified our officers and directors, unless otherwise required by law,
our Certificate of Incorporation, our Bylaws or agreements; and
- we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware Law, subject to certain very limited exceptions.
Prior to the completion of this offering, we intend to enter into Indemnity
Agreements with each of our directors and executive officers to give them
additional contractual assurances regarding the scope of the indemnification
described above and to provide additional procedural protections. In addition,
we intend to obtain directors' and officers' insurance providing indemnification
for our directors, officers and certain employees for certain liabilities. We
believe that these indemnification provisions and agreements are necessary to
attract and retain qualified directors and officers.
The limitation of liability and indemnification provisions in our
Certificate of Incorporation and Bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duty. They
may also have the effect of reducing the likelihood of derivative litigation
against directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers pursuant to these
indemnification provisions.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees regarding which indemnification is sought,
nor are we aware of any threatened litigation that may result in claims for
indemnification.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of common stock as adjusted to reflect the completion of this offering
by:
- each of PCQuote.com's directors, director designees and executive
officers,
- all directors, director designees and executive officers of PCQuote.com as
a group,
- each person who is known by PCQuote.com to own beneficially more than five
percent of the outstanding shares of our common stock, and
- the selling stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO THE OFFERING(2) AFTER THE OFFERING(2)(3)
------------------------ SHARES ------------------------
NAME AND ADDRESS (1) NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
HyperFeed Technologies, Inc...................... 9,800,000 98.7% 1,950,000 7,850,000 49.9%
Jim R. Porter.................................... -- -- -- -- --
Timothy K. Krauskopf............................. -- -- -- -- --
Andrew N. Peterson............................... -- -- -- -- --
Stephen F. Rawls................................. -- -- -- -- --
John R. Hart (4)................................. -- -- -- -- --
6101 Camino de la Costa, La Jolla, California
92037
John E. Juska.................................... --
Ronald J. Grabe (5)(6)........................... --
514 Fortress Circle, Leesburg,
Virginia 20175.
Francis J. Harvey (5)(6)......................... --
116 Twin Oaks Drive, Los Gatos, California
95032-5650.
James R. Quandt (5)(6)........................... --
17 Cherry Hills Drive, Coto de Caza, California
92679.
All Directors and Executive Officers as a group
(9 persons)....................................
</TABLE>
- ------------
* Less than 1%
(1) Unless otherwise indicated, the address of each person named in the table is
300 South Wacker Drive, Suite 300, Chicago, Illinois 60606-6688.
(2) Beneficial ownership includes shares of outstanding common stock and shares
of common stock that any person has the right to acquire within 60 days
after the date of this prospectus. Except as indicated in the footnotes to
this table and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them.
(3) Assumes no exercise of the underwriters' over-allotment options. If the
over-allotment option from us is exercised in full, HyperFeed Technologies
would own 7,075,000 shares after the offering, representing 43.9% of the
outstanding common stock.
(4) Mr. Hart is Chief Executive Officer and a director of PICO Holdings, Inc.
and Physicians Insurance Company of Ohio, which collectively beneficially
own 47.9% of the outstanding common stock of HyperFeed Technologies. These
two affiliated companies may be considered to control
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HyperFeed Technologies and, as a result, may be considered to beneficially
own the shares of our common stock owned by HyperFeed Technologies. These
companies and Mr. Hart disclaim beneficial ownership of the shares of our
common stock owned by HyperFeed Technologies.
(5) Director designee.
(6) Consists of shares of our common stock issuable upon exercise of options
that will become exercisable within 60 days after the date of this
prospectus.
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CERTAIN TRANSACTIONS
HYPERFEED TECHNOLOGIES
The following includes brief summaries of the anticipated provisions of the
Contribution and Separation Agreement and ancillary agreements, including the
Maintenance Agreement, the DataFeed License Agreement, the Services Agreement,
the Non-competition Agreement, the Registration Rights Agreement and the Tax
Indemnification and Allocation Agreement. All of these agreements are between
HyperFeed Technologies and us and will be entered into contemporaneously. The
summaries of these agreements are qualified in their entirety by the agreements
themselves, copies of which are filed as exhibits to the registration statement
of which this prospectus is a part.
HISTORICAL INTERCOMPANY RELATIONSHIPS
Our WWW.PCQUOTE.COM Web site was first established in July of 1995 by PC
Quote, Inc., a provider of securities market data. PC Quote, Inc., which was
founded in 1983, approved a change of its corporate name to HyperFeed
Technologies, Inc. in April 1999. This name change is subject to stockholder
approval at their annual meeting to be held on June 16, 1999. We were initially
organized in December 1998 as a division of HyperFeed Technologies. We were
incorporated in March 1999 as a wholly-owned subsidiary of HyperFeed
Technologies.
Prior to the closing of this offering, HyperFeed Technologies intends to
separate the business of PCQuote.com and the associated assets and liabilities
from HyperFeed Technologies' other businesses and operations. HyperFeed
Technologies and we intend to enter into a Contribution and Separation Agreement
and other agreements providing for, among other things, the separation, the
contribution of certain assets to us, and the provision by HyperFeed
Technologies of licenses and interim services to us.
The Contribution and Separation Agreement will establish PCQuote.com as a
stand-alone entity with objectives separate from those of HyperFeed
Technologies. As a distinct entity, we believe we will be afforded more
flexibility in considering opportunities that are available to Internet
businesses.
CONTRIBUTION AND SEPARATION AGREEMENT
The Contribution and Separation Agreement to be entered into by HyperFeed
Technologies and us will set forth certain matters with respect to the principal
corporate transactions required to effect the contribution of assets to us, the
assumption of liabilities by us and certain other agreements governing the
relationship between HyperFeed Technologies and us.
CONTRIBUTION OF ASSETS. The Contribution and Separation Agreement provides
that HyperFeed Technologies will contribute to us as of March 31, 1999, the
assets relating to our business, including:
- all furniture, office equipment, computer equipment, machinery, equipment
and other items of personal property relating to our business;
- all records relating to the operation of our business, including financial
and business records, customer lists and files, supplier records and
personnel and payroll records;
- all accounts receivable, notes receivable and all other receivables of any
kind related to our business;
- all goodwill of our business;
- all customer lists relating to our business;
- intellectual property and technology relating to our business, including
Hyperscript, PCQuote Software Development Kit, our domain names and Web
sites, Pay Per Quote and Web Template; and
- all rights arising from the contracts and agreements relating to our
business.
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In addition, HyperFeed Technologies will grant to us a perpetual,
world-wide, non-exclusive license to use the intellectual property relating to
PCQuote Orbit, Quotesockets and HyperServer. HyperServer is a specially
configured server for receiving market data from HyperFeed 2000. Until we
terminate the DataFeed License Agreement in the event of a bankruptcy event or a
material breach by HyperFeed Technologies, we covenant to take reasonable steps
to insure that PCQuote Orbit remains compatible with Quotesockets and that
PCQuote Orbit be able to receive a data feed only from HyperFeed Technologies.
The agreement provides that if the transfer or assignment by HyperFeed
Technologies to us of any asset or the assumption by us of any liability
requires the consent of a third party, then the assignment or assumption will be
made subject to the receipt of the required consent. To the extent any contract
of HyperFeed Technologies is not assigned to us due to the absence of any
necessary consent, then we will not be entitled to receive any benefits arising
under that contract nor be required to assume any liabilities of HyperFeed
Technologies arising under that contract.
ASSUMPTION OF LIABILITIES. Under the Contribution and Separation Agreement,
we will assume:
- all of the current liabilities relating to our business as of March 31,
1999;
- any obligations arising under the contracts and agreements assigned to us
as part of the contribution;
- any other liabilities of HyperFeed Technologies, in an amount not to
exceed $500,000, relating to our business and not included in the current
liabilities relating to our business as of March 31, 1999;
- an obligation to pay $500,000, representing one-half of the amount owed by
HyperFeed Technologies to Townsend Analytics under a termination agreement
between those parties; and
- up to $2.0 million to satisfy any shortfall in the $5.0 million minimum
aggregate license fees HyperFeed Technologies anticipates it will be
required to pay to Townsend Analytics under an anticipated new agreement
between those two companies.
YEAR 2000. The Contribution and Separation Agreement includes a
representation that all computer systems and software contributed or licensed to
us under this agreement will be Year 2000 compliant.
INDEMNIFICATION. Under the Contribution and Separation Agreement, we and
HyperFeed Technologies indemnify each other for:
- any breach of any representation or warranty that survives the closing of
the separation transaction and is contained in the Contribution and
Separation Agreement or any of the ancillary agreements;
- any breach of any covenant contained in the Contribution and Separation
Agreement or any of the ancillary agreements;
- our respective liabilities; and
- the disclosure by current or former personnel of any proprietary
information of the other party.
Any representations and warranties contained in the Contribution and
Separation Agreement or any of the ancillary agreements will survive the closing
of the separation transaction solely for the purpose of the indemnification
provisions and will terminate at the close of business five years following the
date of the separation.
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SERVICES AGREEMENT
Under the Services Agreement, HyperFeed Technologies will perform the
following services for us:
- administrative services, including provision of telephones, secretarial
assistance and facilities management, use of office administrative
equipment, internal computer operations and systems and related services;
- provision of customer information, including customer billing,
collections, accounting and related services;
- technical and operational support, including assistance with the operation
and marketing of the online services (including advertising services)
offered by us;
- human resources, risk management and accounting services, including,
without limitation, assistance with legal, employee benefits, accounting
and other related issues, with such services to be provided by HyperFeed
Technologies personnel not by retained outside advisors; and
- network services, operations and management support.
In addition, we will continue to occupy a portion of the premises leased by
HyperFeed Technologies at 300 South Wacker Drive, Chicago, Illinois.
As compensation for these services and for the provision of office space, we
will pay HyperFeed Technologies the following monthly fees:
- from April 1999 to September 1999: $213,500 per month;
- from October 1999 to December 1999: $163,500 per month;
- from January 2000 to March 2000: $138,500 per month;
- from April 2000 to June 2000: $113,500 per month; and
- any month beyond June 2000: an amount to be agreed upon by the parties.
All monthly fees incurred prior to the closing of this offering will be
accrued and be payable from the net proceeds of this offering. The decrease in
monthly fees reflects the intent of the parties to reduce the amount of services
HyperFeed Technologies will provide to us as we develop the capability to
perform these services internally.
The Services Agreement will have an initial term through June 30, 2000. We
may extend the agreement for additional one-month terms on 30 days notice to
HyperFeed Technologies.
Either party has the right to terminate the Services Agreement if there is a
material breach by the other party or the other party is subject to a bankruptcy
or insolvency event.
MAINTENANCE AGREEMENT
Under the Maintenance Agreement, HyperFeed Technologies agrees to continue
to provide any software features, upgrades or enhancements to PCQuote Orbit as
they are tested and become available during the normal course of its business.
HyperFeed Technologies is not obligated to add any special features, upgrades or
enhancements to PCQuote Orbit that are requested by us. In exchange for this
maintenance obligation, we will pay HyperFeed Technologies a fee in an amount
equal to 3% of our gross revenues derived from all permitted uses, licensing and
sub-licensing of PCQuote Orbit.
This agreement is for a perpetual term. However, HyperFeed Technologies may
immediately terminate this agreement if the term of the DataFeed License
Agreement expires and is not renewed by us or if HyperFeed Technologies
terminates the DataFeed License Agreement as a result of a breach of that
agreement by us. In addition, either party may immediately terminate this
agreement if
50
<PAGE>
there is a material breach by the other party or the other party is subject to a
bankruptcy or insolvency event.
DATAFEED LICENSE AGREEMENT
The DataFeed License Agreement grants us a non-exclusive license to use
HyperFeed Technologies' data feed in both delayed and real time formats. We may
use the data feed only with HyperFeed Technologies' Hypertools. These are
modules and applications that enable us to interface with the data feed. Unless
HyperFeed Technologies agrees otherwise, we may distribute the data feed via the
Internet only and users are required to access the data feed through our
servers.
This agreement has a five-year term and will automatically renew for
additional one-year terms unless we terminate at least sixty days prior the end
of the initial or any renewal term. Either party may terminate the agreement in
the event of a material breach of the agreement by the other party that is not
cured within thirty days. HyperFeed Technologies may immediately suspend our use
of the data feed if we redistribute the data feed, either internally or
externally, to third parties without the consent of HyperFeed Technologies and
of the appropriate data feed sources. If we do not cure the breach within 15
days after notice of the breach is given to us, HyperFeed Technologies may
terminate the agreement. Either party may also immediately terminate this
agreement if the other party files a petition in bankruptcy or fails to timely
discharge any petition in bankruptcy filed against it.
We will pay HyperFeed Technologies monthly fees based on the number of users
and quotes accessed. If this agreement had been in effect as of January 1, 1999,
we would have paid HyperFeed Technologies a license fee of approximately
$245,000 for the three months ended March 31, 1999.
We are also responsible for paying all additional costs directly related to
our use of the data feed, such as:
- computer hardware and communications equipment;
- on-site training and support;
- satellite transmission;
- leased phone lines; and
- exchange fees, including indirect access fees.
These costs will be charged to us at the lowest price that HyperFeed
Technologies charges to its other data feed customers.
Prior to commencing use of the data feed, we are required to apply for and
receive approval from each data feed source whose approval is required for
receipt or dissemination of the information contained in the data feed.
NON-COMPETITION AGREEMENT
We will also enter into a Non-competition Agreement with HyperFeed
Technologies. This agreement provides that until the earlier of three years
after the closing of the separation transaction or the date on which the
DataFeed License Agreement is terminated by HyperFeed Technologies for our
breach of that agreement or expires and is not renewed, HyperFeed Technologies
will not, either by itself or through any affiliate or subsidiary directly or
indirectly:
- engage in the maintenance of a computer system designed to receive data
feed from a data feed provider and to repackage the information for the
delivery of financial market data and market analytics with financial news
services via the Internet;
- own more than five percent of the outstanding equity interest of any
entity (other than us) that engages in the maintenance of a computer
system designed to receive data feed from a data
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<PAGE>
feed provider and to repackage the information for the delivery of
financial market data and market analytics with financial news services
via the Internet;
- license, sublicense or assign to any entity engaged in the maintenance of
a computer system designed to receive data feed from a data feed provider
and to repackage the information for the delivery of financial market data
and market analytics with financial news services via the Internet, all or
any part of the intellectual property relating to PCQuote Orbit licensed
to us under the Contribution and Separation Agreement or of the software
package licensed to both us and HyperFeed Technologies by Townsend
Analytics. However, HyperFeed Technologies will remain free to license or
sublicense all or part of these intellectual properties to any licensed
broker or dealer for redistribution to persons having an account with such
broker or dealer and for other limited uses by such broker or dealer; or
- hire or solicit any person employed by us.
The agreement provides that until the later of three years after the closing
of the separation transaction or the date on which the DataFeed License
Agreement is terminated by us or expires and is not renewed, we will not, either
by ourselves or through any affiliate or subsidiary:
- engage in the business of redistributing data feed in any way other than
through a computer system designed to receive and repackage data feed,
such as the ones we currently operate;
- own more than five percent of the outstanding equity interest of any
entity that engages in the business of redistributing via the Internet
data feed in any way other than through a computer system designed to
receive and repackage data feed, such as the ones we currently operate; or
- hire or solicit any person employed by HyperFeed Technologies.
REGISTRATION RIGHTS AGREEMENT
Under the Registration Rights Agreement, we will grant to HyperFeed
Technologies unlimited piggyback and demand registration rights for the common
stock acquired by HyperFeed Technologies under the Contribution and Separation
Agreement. However, HyperFeed Technologies may exercise its demand registration
right no more than twice per year during any period in which we are not
permitted to file registration statements on Form S-3 on behalf of HyperFeed
Technologies. We are not obligated to effect a registration if securities for
which a registration is demanded can be sold within a single ninety-day period
pursuant to Rule 144 under the Securities Act. Subject to several exceptions, we
would bear all registration expenses incurred in connection with these
registrations. HyperFeed Technologies would pay all underwriting discounts and
commissions applicable to the sale of the securities sold by them.
HyperFeed Technologies has entered into a lock-up agreement pursuant to
which it has agreed not to offer or sell shares of our common stock held by it
for a period of 180 days from the date of this prospectus without the prior
written consent of Prudential Securities, on behalf of the underwriters.
We believe that the terms of each of the transactions with HyperFeed
Technologies described above, taken as a whole, were no less favorable than we
could have obtained from unaffiliated third parties. All future transactions
with our officers, directors and principal stockholders and their affiliates
will be approved by a majority of the Board of Directors, including a majority
of the independent and disinterested outside directors.
TAX INDEMNIFICATION AND ALLOCATION AGREEMENT
Under the Tax Indemnification and Allocation Agreement, HyperFeed
Technologies will indemnify us against all tax liabilities incurred by us if
their contribution of assets to us fails to qualify as a tax-free transaction.
In addition, each party will indemnify the other party for:
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<PAGE>
- all income tax liabilities for which it is held liable or required to
reimburse the other party; and
- all income tax liabilities incurred by the other party due to a breach of
any covenant under this agreement.
In addition, this agreement provides for the allocation and payment of taxes
for periods during which HyperFeed Technologies and we are included in the same
consolidated group for federal, state, local or foreign income tax purposes. For
periods during which we are included in HyperFeed Technologies' consolidated
federal, state, local or foreign income tax returns, we will be required to pay
an amount of income tax equal to the amount we would have paid had we filed a
tax return as a separate entity.
CNNFN
On April 12, 1999, we entered into a 3 1/2 year agreement with CNNFN under
which CNNFN granted us a license to display on our Web sites certain headlines
from CNNFN original stories published on the CNNFN Web site at CNNFN.COM. CNNFN
also granted us a limited non-exclusive license to use CNNFN's logo. Under the
agreement, the following items will appear on our Web sites: Web site link to
the full story, short headline, ticker symbols contained in the story, the lead
paragraph of the story and the timestamp of each story post. The CNNFN headlines
appearing on our Web sites will serve as an access point to CNNFN's Web site.
Under the agreement, no more than five CNNFN headlines may appear on any one
of our Web site pages and these pages are subject to CNNFN's reasonable
approval. We have no right to sell any advertising specifically for placement on
the CNNFN headlines. CNNFN retains exclusive editorial control over the
production and selection of the CNNFN headlines provided to us. We do not have
the right to alter the CNNFN headlines provided to us. In other words, we must
use the headlines "as is." CNNFN agreed to hold us harmless from any claims
resulting from CNNFN headlines provided to us.
Our agreement with CNNFN will expire on October 12, 2003, and CNNFN will
have no obligation to renew it. Either party will also have the right to
terminate this agreement if:
- there is a material breach by the other party and this breach is not
cured;
- the other party is the subject of a bankruptcy event;
- any third party reasonably considered to be a competitor of the other
party merges with or acquires all or substantially all of the assets of
the other party;
- the other party undergoes a material change in control, involving a
competitor of the terminating party; or
- the other party makes any material adverse changes in its Web site or
conducts its business in a manner that would have a material adverse
effect on the terminating party's reputation, integrity or goodwill.
The agreement with CNNFN contains an exclusivity provision under which CNNFN
agrees not to license the CNNFN headlines to any unaffiliated third party for
display on a generally accessible Web site that has as its primary purpose the
providing of investment and/or financial tools, including real-time or delayed
equity and/or futures quotes. However, this exclusivity does not apply to:
- any registered broker-dealer Web sites that are used for trading and are
accessible only by its clients;
- financial Web sites currently controlled by CNNFN or its affiliates;
- certain of CNNFN's existing relationships; and
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<PAGE>
- any sites operated by our competitors that do not have the primary purpose
of providing users with investment and/or financial tools, including
real-time or delayed equity and/or futures quotes.
CNNFN can terminate the exclusivity provisions of the agreement at any time
after the one year anniversary of the agreement, after giving us 120 days
notice, if CNNFN, its parent company (Time Warner) or one of its affiliated or
subsidiary companies:
- merges or consolidates with, acquires all or substantially all of the
assets of a company engaged in whole or in part in providing information
and services similar to those provided by us; or
- develops an information service internally which is similar to that
provided by us.
Notwithstanding the termination of the exclusivity provisions contained in
the agreement, we would retain a non-exclusive right to receive CNNFN headlines
without charge for the remainder of the term of the agreement.
In connection with the agreement, we granted CNNFN a warrant to purchase
515,790 shares of our common stock, representing a five percent interest in the
common stock of PCQuote.com outstanding prior to the offering. The warrant is
exercisable for nominal consideration. The shares subject to this warrant vest
as follows: 25% on the date of execution of the agreement with CNNFN and 25% on
each anniversary date of the agreement. CNNFN exercised the vested portion of
this warrant on April 29, 1999. If the agreement with CNNFN is terminated by us
for reasons relating to a change in control of CNNFN or a change in its Web
site, or if CNNFN terminates the exclusivity provision, the unvested portion of
this warrant is terminated. If there is a change in control of PCQuote.com and
the acquiring company does not assume CNNFN's warrant, then the unvested portion
of the warrant automatically vests and is treated as outstanding common stock.
This warrant contains customary provisions adjusting the number of shares
acquirable upon exercise of the warrant for stock splits, stock dividends and
reclassifications.
We also granted CNNFN one demand registration right and unlimited piggyback
registration rights for the common stock acquirable upon exercise of the
warrant. These registration rights terminate on October 12, 2004. We are not
obligated to effect a registration if securities for which a registration is
demanded can be sold within a single ninety-day period pursuant to Rule 144
under the Securities Act.
We would bear all registration expenses incurred in connection with these
registrations. CNNFN would pay all underwriting discounts and commissions
applicable to the sale of the securities sold by them.
CNNFN has waived any registration rights with respect to this offering and
has entered into a lock-up agreement pursuant to which it has agreed not to
offer or sell the warrant or the shares that would be received upon exercise of
the warrant for a period of 180 days from the date of this prospectus without
the prior written consent of Prudential Securities.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary description of our capital stock is not intended to be
complete. Since the terms of our capital stock must comply with the provisions
of our Certificate of Incorporation and Bylaws, which are included as exhibits
to the registration statement of which this prospectus is a part, as well as the
General Corporation Law of the State of Delaware, you should read these two
documents carefully.
We have the authority to issue up to 74,000,000 shares of common stock, par
value $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01
per share.
COMMON STOCK
There are 9,928,948 shares of common stock outstanding, held of record by
two stockholders.
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board from time to time may determine. Holders
of common stock are entitled to one vote for each share held on all matters
submitted to a vote of stockholders. Cumulative voting for the election of
directors is not authorized by our Certificate of Incorporation, which means
that the holders of a majority of the shares voted can elect all of the
directors then standing for election. The common stock is not entitled to
preemptive rights and is not subject to conversion or redemption. Upon our
liquidation, dissolution or winding-up, the assets legally available for
distribution to stockholders would be distributable ratably among the holders of
our common stock after payment of liquidation preferences, if any, on any
outstanding preferred stock and payment of our creditors. Each outstanding share
of our common stock is, and all shares of common stock to be outstanding upon
completion of this offering will be upon payment therefor, duly and validly
issued, fully paid and nonassessable.
PREFERRED STOCK
The Board is authorized, subject to any limitations under Delaware law, to
issue preferred stock in one or more series. The Board can fix the rights,
preferences and privileges of the shares of each series and any qualifications,
limitations or restrictions thereon.
The Board may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of common stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of PCQuote.com. We have no current plan to issue any shares of preferred
stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. This section prevents Delaware
corporations like us from engaging, under certain circumstances, in a "business
combination," which includes a merger or sale of more than 10% of the
corporation's assets, with any "interested stockholder," or a stockholder who
owns 15% or more of the corporation's outstanding voting stock, as well as
affiliates and associates of any such persons, for three years following the
date that such stockholder became an "interested stockholder" unless:
- the transaction in which such stockholder became an "interested
stockholder" is approved by the Board of Directors prior to the date the
"interested stockholder" attained such status;
- upon consummation of the transaction that resulted in the stockholder's
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the
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<PAGE>
corporation outstanding at the time the transaction commenced, excluding
those shares owned by persons who are directors and also officers and,
under certain circumstances, shares held in employee stock plans; or
- the "business combination" is approved by the Board of Directors and
authorized at an annual or special meeting of stockholders by the
affirmative vote of at least two-thirds of the outstanding voting stock
not owned by the "interested stockholder."
This statute could prohibit or delay mergers or other takeover or
change-in-control attempts with respect to PCQuote.com and, accordingly, may
discourage attempts to acquire us.
Our Bylaws provide that any action required or permitted to be taken by our
stockholders at an annual meeting or special meeting may only be taken if it is
properly brought before such meeting. Our Certificate of Incorporation and
Bylaws provide that special meetings of the stockholders may only be called by
the Chairman of the Board, the President, the Board or by any stockholder
holding at least 10% of our outstanding common stock. These provisions may have
the effect of delaying or preventing a change-in-control of PCQuote.com.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Certificate of Incorporation limits the liability of directors to the
fullest extent permitted by Delaware law. In addition, our Certificate of
Incorporation and Bylaws provide that we will indemnify our directors and
officers to the fullest extent permitted by Delaware law. We intend to enter
into separate indemnification agreements with our directors and executive
officers that provide them indemnification protection in the event the
Certificate of Incorporation is subsequently amended.
Our Certificate of Incorporation and Bylaws will provide that we will
indemnify officers and directors against losses that they may incur in
investigations and legal proceedings resulting from their services to us, which
may include services in connection with takeover defense measures. Such
provisions may have the effect of preventing changes in our management.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is .
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. The market price of our common stock could drop due to sales of a large
number of shares of our common stock or the perception that such sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of common stock.
After this offering, 15,728,948 shares of our common stock will be
outstanding (16,116,448 shares if the underwriters exercise their over-allotment
option from us in full and 1,925,442 shares of common stock issuable upon the
exercise of authorized options and warrants). Of these shares, the 7,750,000
shares (8,912,500 shares if the underwriters exercise their over-allotment
options in full) sold in this offering will be freely tradable without
restriction under the Securities Act, except for any shares purchased by
"affiliates" of PCQuote.com as defined in Rule 144 under the Securities Act. The
remaining 7,203,948 shares are "restricted securities" within the meaning of
Rule 144 under the Securities Act. The restricted securities generally may not
be sold unless they are registered under the Securities Act or are sold pursuant
to an exemption from registration, such as the exemption provided by Rule 144
under the Securities Act.
Our officers and directors and all stockholders, including the selling
stockholder, have entered into lock-up agreements pursuant to which they have
agreed not to offer or sell any shares of common stock for a period of 180 days
after the date of this prospectus without the prior written consent of
Prudential Securities, on behalf of the underwriters. Prudential Securities may,
at any time and without notice, waive any of the terms of these lock-up
agreements specified in the underwriting agreement. Following the lock-up
period, these shares will not be eligible for sale in the public market without
registration under the Securities Act unless such sales meet the conditions and
restrictions of Rule 144 as described below.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for a period of at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (i)
1% of the then-outstanding shares of common stock and (ii) the average weekly
trading volume of the common stock during the four calendar weeks immediately
preceding the date on which the notice of such sale on Form 144 is filed with
the SEC. Sales under Rule 144 are also subject to certain provisions relating to
notice and manner of sale and the availability of current public information
about the Company. In addition, a person (or persons whose shares are
aggregated) who has not been an affiliate of the Company at any time during the
90 days immediately preceding a sale of our common stock, and who has
beneficially owned the shares for at least two years, would be entitled to sell
their shares under Rule 144(k) without regard to the volume limitation and other
conditions described above. The foregoing summary of Rule 144 is not intended to
be a complete description.
As soon as practicable following the consummation of this offering, we
intend to file a registration statement under the Securities Act to register the
shares of our common stock available for issuance under our 1999 Combined
Incentive and Non-statutory Stock Option Plan. Shares issued under this plan
generally will be available for sale in the open market, subject to the
expiration of the 180-day lock-up period,
We have granted CNNFN one demand registration right and unlimited piggyback
registration rights covering the 128,948 shares of our common stock they own and
the 386,842 shares they may acquire upon exercise of the warrant held by them.
We intend to grant HyperFeed Technologies unlimited "piggyback" and demand
registration rights covering the 7,850,000 shares of our common stock it will
own after this offering.
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UNDERWRITING
We have entered into an underwriting agreement with the underwriters for
whom Prudential Securities Incorporated and U.S. Bancorp Piper Jaffray, Inc.,
FAC/Equities, a division of First Albany Corporation and E*OFFERING Corp. are
acting as representatives. We and the selling stockholder are obligated to sell,
and the underwriters are obligated to purchase, all of the shares offered on the
cover page of this prospectus, if any are purchased. Subject to certain
conditions of the underwriting agreement, each underwriter has severally agreed
to purchase the shares indicated opposite its name:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- --------------------------------------------------------------------------------------------------- -------------
<S> <C>
Prudential Securities Incorporated.................................................................
U.S. Bancorp Piper Jaffray, Inc....................................................................
First Albany Corporation...........................................................................
E*OFFERING Corp....................................................................................
-------------
Total.......................................................................................... 7,750,000
-------------
-------------
</TABLE>
The underwriters may sell more shares than the total number of shares
offered on the cover page of this prospectus and they have, for a period of 30
days from the date of this prospectus, over-allotment options to purchase up to
387,500 additional shares from us and up to 775,000 additional shares from the
selling stockholder. If any additional shares are purchased, the underwriters
will severally purchase the shares in the same proportion as per the table
above.
The representatives of the underwriters have advised us that the shares will
be offered to the public at the offering price indicated on the cover page of
this prospectus. The underwriters may allow to selected dealers a concession not
in excess of $ per share and such dealers may reallow a concession
not in excess of $ per share to certain other dealers. After the
shares are released for sale to the public, the representatives may change the
offering price and the concessions. The representatives have informed us that
the underwriters do not intend to sell shares to any investor who has granted
them discretionary authority.
We and the selling stockholder have agreed to pay to the underwriters the
following fees, assuming both no exercise and full exercise of the underwriters'
over-allotment options to purchase additional shares:
<TABLE>
<CAPTION>
TOTAL FEES
----------------------------------------------
FEE WITHOUT EXERCISE OF FULL EXERCISE OF
PER SHARE OVER-ALLOTMENT OPTIONS OVER-ALLOTMENT OPTIONS
------------- ---------------------- ----------------------
<S> <C> <C> <C>
Fees paid by us.................................... $ $ $
Fees paid by the selling stockholder............... $ $ $
</TABLE>
In addition, we estimate that we will spend approximately $1,400,000 in
expenses for this offering including those of the selling stockholder. We and
the selling stockholder have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act, or
contribute to payments that the underwriters may be required to make in respect
of these liabilities.
We, our officers and directors, the selling stockholder and CNNFN have
entered into lock-up agreements pursuant to which we and they have agreed not to
offer or sell any shares of common stock or securities convertible into or
exchangeable or exercisable for shares of common stock for a period of 180 days
from the date of this prospectus without the prior written consent of Prudential
Securities, on behalf of the underwriters. Prudential Securities may, at any
time and without notice, waive the terms of these lock-up agreements specified
in the underwriting agreement.
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Prior to this offering, there has been no public market for the common stock
of our Company. The public offering price, negotiated among PCQuote.com, the
selling stockholder and the representatives, is based upon various factors such
as our financial and operating history and condition, our prospects, the
prospects for the industry we are in and prevailing market conditions.
Prudential Securities, on behalf of the underwriters, may engage in the
following activities in accordance with applicable securities rules:
- Over-allotments involving sales in excess of the offering size, creating a
short position. Prudential Securities may elect to reduce this short
position by exercising some or all of the over-allotment option.
- Stabilizing and short covering. Stabilizing bids to purchase the shares
are permitted if they do not exceed a specified maximum price. After the
distribution of shares has been completed, short covering purchases in the
open market may also reduce the short position. These activities may cause
the price of the shares to be higher than would otherwise exist in the
open market.
- Penalty bids permitting the representatives to reclaim concessions from a
syndicate member for the shares purchased in the stabilizing or short
covering transactions.
Such activities, which may be commenced and discontinued at any time, may be
effected on the Nasdaq National Market, in the over-the-counter market or
otherwise.
Each underwriter has represented that it has complied and will comply with
all applicable laws and regulations in connection with the offer, sale or
delivery of the shares and related offering materials in the United Kingdom,
including:
- the Public Offers of Securities Regulations 1995;
- the Financial Services Act 1986; and
- the Financial Services Act 1986, (Investment Advertisements) (Exemptions)
Order 1996 (as amended).
We have asked the underwriters to reserve shares for sale at the same
offering price directly to our officers, directors, employees and other business
affiliates or related third parties. The number of shares available for sale to
the general public in the offering will be reduced to the extent these persons
purchase the reserved shares.
E*OFFERING Corp. is making a prospectus in electronic format available on
its Internet Web site. Other than the prospectus in electronic format, the
information on such Web site is not part of this prospectus or the registration
statement of which the prospectus forms a part and has not been approved and/or
endorsed by PCQuote.com or any underwriter in such capacity and should not be
relied on by prospective investors.
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LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Wildman, Harrold, Allen & Dixon, Chicago, Illinois. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Fulbright & Jaworski L.L.P., New York, New York.
EXPERTS
The financial statements of PCQuote.com, Inc. as of December 31, 1997 and
1998 and for each of the years in the three year period ended December 31, 1998,
have been included in this prospectus and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of our
common stock we are selling in this offering. This prospectus does not contain
all of the information set forth in the registration statement and the exhibits
filed with the registration statement. For further information with respect to
PCQuote.com and our common stock, we refer you to the registration statement and
the exhibits filed with the registration statement. Statements contained in this
prospectus regarding the contents of any contract or any other document are not
necessarily complete, and, in each instance, we refer you to the copy of such
contract or other document filed as an exhibit to the registration statement and
each such statement is qualified in all respects by the contract or other
document in question. A copy of the registration statement and the exhibits and
schedule filed with the registration statement may be inspected without charge
at the public reference facilities maintained by the SEC in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices located
at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of all or any part of the registration statement may be
obtained from these offices upon the payment of the fees charged by the SEC. The
SEC maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. The address of the site is http://www.sec.gov.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
PCQUOTE.COM, INC.
Independent Auditors' Report............................................................................. F-2
Balance Sheets as of December 31, 1997 and 1998 and March 31, 1999 (unaudited)........................... F-3
Statements of Operations for the years ended December 31, 1996, 1997 and 1998 and for the three months
ended March 31, 1998 and 1999 (unaudited).............................................................. F-4
Statements of Stockholder's Equity for the years ended December 31, 1996, 1997 and 1998 and for the three
months ended March 31, 1999 (unaudited)................................................................ F-5
Statements of Cash Flows for the years ended December 31, 1996, 1997 and 1998 and for the three months
ended March 31, 1998 and 1999 (unaudited).............................................................. F-6
Notes to Financial Statements............................................................................ F-7
</TABLE>
F-1
<PAGE>
When the transactions described in the first, third and fourth paragraphs of
Note 8 of the Notes to Financial Statements have been consummated, we will be in
a position to render the following report.
/s/ KPMG LLP
We have audited the accompanying balance sheets of PCQuote.com, Inc.
(Company), as of December 31, 1997 and 1998, and the related statements of
operations, stockholder's equity and cash flows for each of the years in the
three-year period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PCQuote.com, Inc. as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1998 in
conformity with generally accepted accounting principles.
May 21, 1999,
except as to Note 8,
which is as of
Chicago, Illinois
F-2
<PAGE>
PCQUOTE.COM, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1997 1998 1999
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, net of allowance for doubtful accounts of
$33,998, $109,036 and $135,536 as of December 31, 1997, December 31,
1998 and March 31, 1999, respectively............................... $ 400,121 $ 437,043 $ 756,141
Prepaid expenses and other current assets............................. 16,358 42,446 70,223
------------ ------------ ------------
Total current assets.................................................... 416,479 479,489 826,364
Property and equipment, net of accumulated depreciation of $71,989,
$268,205 and $335,503, as of December 31, 1997, December 31, 1998 and
March 31, 1999, respectively.......................................... 359,946 478,574 544,194
Software development costs, net of accumulated amortization of $886,373,
$1,612,293 and $1,844,650 as of December 31, 1997, December 31, 1998
and March 31, 1999, respectively...................................... 2,108,640 2,348,027 2,204,852
------------ ------------ ------------
Total assets........................................................ $ 2,885,065 $ 3,306,090 $ 3,575,410
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable...................................................... $ 1,025,360 $ 1,402,603 $ 1,468,688
Unearned revenue...................................................... 249,845 623,827 718,237
Other accrued liabilities............................................. 545,392 199,480 469,533
------------ ------------ ------------
Total current liabilities........................................... 1,820,597 2,225,910 2,656,458
------------ ------------ ------------
Stockholder's equity:
Common stock, par value $.01 per share; authorized 9,800,000 shares;
9,800,000 shares issued and outstanding............................. -- -- 98,000
Additional paid-in capital............................................ -- -- 820,952
Stockholder's investment.............................................. 1,064,468 1,080,180 --
------------ ------------ ------------
Total stockholder's equity.......................................... 1,064,468 1,080,180 918,952
------------ ------------ ------------
Total liabilities and stockholder's equity.......................... $ 2,885,065 $ 3,306,090 $ 3,575,410
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
PCQUOTE.COM, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------- --------------------------
1996 1997 1998 1998 1999
------------- ------------- ------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Subscription.......................... $ 776,282 $ 3,401,469 $ 7,995,691 $ 1,499,278 $ 2,886,146
Advertising........................... 166,497 1,131,120 1,368,463 274,789 247,633
Other................................. 30,058 230,323 547,957 123,841 124,862
------------- ------------- ------------- ------------ ------------
Total revenues.......................... 972,837 4,762,912 9,912,111 1,897,908 3,258,641
Direct cost of revenues................. 812,988 4,201,310 6,542,787 1,392,104 2,273,663
------------- ------------- ------------- ------------ ------------
Gross profit............................ 159,849 561,602 3,369,324 505,804 984,978
Operating expenses:
General and administrative............ 1,083,490 2,297,383 2,481,583 668,412 702,492
Sales and marketing................... 620,450 1,226,021 2,108,399 503,717 432,421
Research and development.............. 392,158 253,973 241,223 35,145 66,011
Depreciation.......................... -- 71,989 196,216 45,963 67,298
------------- ------------- ------------- ------------ ------------
Total operating expenses................ 2,096,098 3,849,366 5,027,421 1,253,237 1,268,222
------------- ------------- ------------- ------------ ------------
Loss from operations.................... (1,936,249) (3,287,764) (1,658,097) (747,433) (283,244)
Other income (expense):
Interest income....................... 556 10,537 8,292 3,294 --
Interest expense...................... (26,171) (1,295,090) (512,646) (105,708) (4,354)
------------- ------------- ------------- ------------ ------------
Other expense, net...................... (25,615) (1,284,553) (504,354) (102,414) (4,354)
------------- ------------- ------------- ------------ ------------
Loss before income taxes................ (1,961,864) (4,572,317) (2,162,451) (849,847) (287,598)
Income taxes............................ -- -- -- -- --
------------- ------------- ------------- ------------ ------------
Net loss................................ $ (1,961,864) $ (4,572,317) $ (2,162,451) $ (849,847) $ (287,598)
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Pro forma basic and diluted loss per
share................................. $ (0.20) $ (0.47) $ (0.22) $ (0.09) $ (0.03)
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Pro forma shares used in the
calculations of basic and diluted loss
per share............................. 9,800,000 9,800,000 9,800,000 9,800,000 9,800,000
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
PCQUOTE.COM, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------- ADDITIONAL TOTAL
PAR VALUE PAID-IN STOCKHOLDER'S STOCKHOLDER'S
SHARES AMOUNT CAPITAL INVESTMENT EQUITY
----------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995................................. -- $ -- $ -- $ 624,440 $ 624,440
Net loss for the period.................................... -- -- -- (1,961,864) (1,961,864)
Contributions from Parent, net............................. -- -- -- 2,610,827 2,610,827
----------- ---------- ----------- ------------- --------------
Balance at December 31, 1996................................. -- -- -- 1,273,403 1,273,403
Net loss for the period.................................... -- -- -- (4,572,317) (4,572,317)
Contributions from Parent, net............................. -- -- -- 4,363,382 4,363,382
----------- ---------- ----------- ------------- --------------
Balance at December 31, 1997................................. -- -- -- 1,064,468 1,064,468
Net loss for the period.................................... -- -- -- (2,162,451) (2,162,451)
Contributions from Parent, net............................. -- -- -- 2,178,163 2,178,163
----------- ---------- ----------- ------------- --------------
Balance at December 31, 1998................................. 1,080,180 1,080,180
Common stock issued upon incorporation (unaudited)......... 1,000 10 -- -- 10
Net loss for period (unaudited)............................ -- -- -- (287,598) (287,598)
Contributions from Parent, net (unaudited)................. -- -- -- 126,360 126,360
Transfer of stockholder's investment on March 31, 1999
(unaudited).............................................. -- -- 918,942 (918,942) --
Effect of 9,800-for-one stock split........................ 9,799,000 97,990 (97,990) -- --
----------- ---------- ----------- ------------- --------------
Balance at March 31, 1999 (unaudited)........................ 9,800,000 $ 98,000 $ 820,952 $ -- $ 918,952
----------- ---------- ----------- ------------- --------------
----------- ---------- ----------- ------------- --------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
PCQUOTE.COM, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------- ------------------------
1996 1997 1998 1998 1999
------------- ------------- ------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................. $ (1,961,864) $ (4,572,317) $ (2,162,451) $ (849,847) $ (287,598)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation............................ -- 71,989 196,216 45,963 67,298
Provision for doubtful accounts......... -- 95,018 148,625 38,849 30,000
Amortization of software development
costs................................. 266,671 549,698 725,920 208,488 268,693
Changes in assets and liabilities:
Accounts receivable................... (91,782) (403,357) (185,547) (330,344) (349,098)
Prepaid expenses and other current
assets.............................. (24,807) 8,449 (26,088) (2,357) (27,777)
Accounts payable...................... 284,181 741,179 377,243 374,851 66,085
Accrued expenses...................... 142,983 402,409 (345,912) 196,068 270,053
Unearned revenue...................... 98,193 151,652 373,982 293,912 94,410
------------- ------------- ------------- ----------- -----------
Net cash provided by (used in) operating
activities.............................. (1,286,425) (2,955,280) (898,012) (24,417) 132,066
INVESTING ACTIVITIES
Purchase of property and equipment........ -- (431,935) (314,844) (106,904) (132,918)
Software development costs capitalized.... (1,324,402) (976,167) (965,307) (303,669) (125,518)
------------- ------------- ------------- ----------- -----------
Net cash used in investing activities..... (1,324,402) (1,408,102) (1,280,151) (410,573) (258,436)
FINANCING ACTIVITIES
Contributions from Parent, net............ 2,610,827 4,363,382 2,178,163 434,990 126,370
------------- ------------- ------------- ----------- -----------
Cash at beginning and end of period....... $ -- $ -- $ -- $ -- $ --
------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF BUSINESS
PCQuote.com, Inc. (the "Company"), a subsidiary of PC Quote, Inc. (the
"Parent"), is an Internet-based provider of high performance, real-time
financial data, timely business news and comprehensive research and analytical
tools. PCQuote.com's service offerings consist of two Web sites, WWW.PCQUOTE.COM
and MARKETSMART-REAL.PCQUOTE.COM, and two Internet-enabled desktop applications,
PCQuote 6.0 and PCQuote Orbit. In addition, the Company offers several
business-to-business services that enable clients to present financial data and
information on their Web sites or desktop applications. The Company's principal
customers are individual investors, financial Web site advertisers and other Web
sites and businesses.
The Company's first Web site was established in July 1995 ("inception"). The
financial statements have been prepared as if the Company operated as a
stand-alone entity since inception.
On March 19, 1999, the Company was incorporated as a Delaware Corporation
and became a wholly-owned subsidiary of the Parent.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements present the results of operations,
financial condition and cash flows of the Company as a component of the Parent
prior to the consummation of the transactions contemplated by the Contribution
and Separation Agreement described in Note 8. The financial information included
herein may not necessarily reflect the financial position, results of operations
or cash flows of the Company in the future or what the balance sheets, results
of operations or cash flows of the Company would have been if it had been a
separate, stand-alone publicly-held corporation during the periods presented.
Since the Company's inception, the Parent has provided funding to the
Company for working capital. The Company participates in the Parent's cash
management process. As a part of the Parent's central cash management system,
all cash generated from and cash required to support the Company's operations
were deposited and received through the Parent's corporate operating cash
accounts. As a result, there were no separate bank accounts or accounting
records for these transactions. Accordingly, the amounts represented by the
caption "Contributions from Parent" in the Company's Statements of Cash Flows
represent the net effect of all cash transactions between the Company and the
Parent.
For all periods presented, general and administrative expenses reflected in
the financial statements include allocations of corporate expenses from the
Parent. These allocations took into consideration personnel, business volume or
other appropriate bases and generally include administrative expenses related to
general management, insurance, information management and other miscellaneous
services. Interest expense shown in the financial statements reflects interest
expense associated with the Company's share of the aggregate borrowings of the
Parent for each of the periods presented. Allocations of corporate expenses are
estimates based on management's best assessment of actual expenses. It is
management's opinion that the expenses charged to the Company are reasonable.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
F-7
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
The Company principally derives its revenue from short-term subscription
contracts for its services, including the supply of real-time financial data and
quotations from North American financial exchanges and markets, advertising that
appears on the Company's Web sites and the licensing of PCQuote 6.0 software to
customers. Revenue from such subscription contracts is recognized ratably over
the contract term as the contracted services are rendered. Revenue from the sale
of advertising is recognized as the advertising is displayed on the Web sites.
Revenue from the licensing of PCQuote 6.0 is recognized as software is
downloaded and services are rendered. Such fees are either billed one month in
advance of the month in which the service is provided or are automatically paid
by credit card within five days prior to the month of service. The majority of
PCQuote 6.0 customers pay by credit card. These and other payments received
prior to services being rendered are classified as unearned revenue on the
balance sheet. Revenue and the related receivable for advance billings are not
reflected in the financial statements.
The Company adopted the provisions of Statement of Position ("SOP") 97-2
SOFTWARE REVENUE RECOGNITION, on January 1, 1998. SOP 97-2 specifies the
following four criteria that must be met prior to recognizing revenue: (1)
persuasive evidence of the existence of an arrangement, (2) delivery, (3) fixed
or determinable fee and (4) probability of collection. In addition, revenue
earned on software arrangements involving multiple elements is allocated to each
element based on the relative fair value of the elements. In accordance with SOP
97-2, revenue allocated to the Company's software products (including specified
upgrades/enhancements) is recognized upon delivery of the products. Revenue
allocated to post contract customer support is recognized ratably over the term
of the support and revenue allocated to service elements (such as training and
installation) is recognized as the services are performed.
ACCOUNTS RECEIVABLE
Accounts receivable include amounts owed under short-term subscription
contracts, advertising arrangements and licensing agreements. A majority of the
Company's customers pay via a credit card that is authorized before delivery of
the software in connection with the performance of services. The Company
maintains an allowance for doubtful accounts to cover exposure related to
accounts that are deemed uncollectible. The Company recorded a provision for
doubtful accounts of $0, $95,000 and $149,000 and expensed $0, $61,000 and
$74,000 against the allowance during the years ended December 31, 1996, 1997 and
1998, respectively.
SOFTWARE DEVELOPMENT COSTS
The Company's investment in software development consists primarily of the
formation and enhancement to its Web sites and its other service offerings.
Costs associated with the planning and design phase of software development,
including coding and testing activities necessary to establish technological
feasibility of computer software products to be licensed or otherwise marketed,
are charged to research and development as incurred. Once technological
feasibility has been reached, costs incurred in the construction phase of
software development, including coding, testing and product quality assurance,
are capitalized.
Amortization commences at the time of capitalization or, in the case of a
new service offering, at the time the service becomes available for use.
Unamortized capitalized costs determined to be in excess of the net realizable
value of the product are expensed at the date of such determination. The
accumulated amortization and related software development costs are removed from
the respective accounts effective in the year following full amortization.
F-8
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Company's policy is to amortize capitalized software costs by the
greater of (a) the ratio of current gross revenue to the total of current and
anticipated future gross revenue for that product or (b) the straight line
method over the remaining estimated economic life of the product including the
period being reported on, principally three to five years. The Company assesses
the recoverability of its software development costs against estimated future
undiscounted cash flows. Given the highly competitive environment and
technological changes in the Company's industry, these estimates of anticipated
future gross revenue, the remaining estimated economic life of the product, or
both may be reduced significantly.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation expense is provided
using the straight line method over an estimated useful life of three years for
computer equipment and five years for communication equipment.
Office furniture, fixtures and leasehold improvements of the Company
provided by the Parent are not reflected in the accompanying balance sheets of
the Company. The Company's portion of the cost incurred by the Parent has been
included in the historical financial data presented in the accompanying
statements of operations using estimates based on personnel and or square
footage utilized by the Company in the Parent's facility.
Maintenance and repair costs are charged to expense as incurred. Costs of
improvements are capitalized. Upon retirement or disposition, the cost and
related accumulated depreciation and amortization are removed from the accounts
and any gain or loss is included in the statements of operations.
ADVERTISING COSTS
Advertising costs are charged to expense as incurred. Advertising expense
were approximately $37,000, $162,000, and $551,000 for the years ended December
31, 1996, 1997 and 1998, respectively.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) 109, ACCOUNTING FOR INCOME TAXES. The
Company is included in the income tax return of the Parent. Pursuant to a tax
sharing agreement effective as of the consummation of the transaction described
in Note 8, the provision for income taxes of the Company has been calculated as
if the Company were a stand-alone corporation filing separate tax returns.
BASIC AND DILUTED LOSS PER SHARE
The Company computes net loss per share in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"). Under the provisions of SFAS 128, basic and diluted net loss per share is
computed by dividing the net loss for the period by the weighted average number
of common shares outstanding for the period. All share and per share data have
been retroactively adjusted to reflect the incorporation of the Company on March
19, 1999 and the stock split described in Note 8 as if all shares were
outstanding for all periods presented.
BUSINESS SEGMENT INFORMATION
The Company operates in one reportable segment of financial data services.
F-9
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
One customer, a private label redistributor of the Company's PCQuote 6.0
service, accounted for 0%, 6% and 11% of the Company's revenue during the years
ended December 31, 1996, 1997 and 1998, respectively. Accounts receivable from
this customer accounted for 47% and 23% of total accounts receivable at December
31, 1997 and 1998, respectively.
BUSINESS CONCENTRATIONS
The Company is dependent upon the Parent to provide software programming
assistance, data feeds, communications lines and related facilities, network
operations and Web site management services, and certain administrative,
engineering and human resources services. The inability of the Parent to
continue to provide such services could in the near term negatively affect the
competitive position of the Company.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company believes that the carrying amounts of its financial instruments,
consisting of accounts receivable, accounts payable and accrued liabilities,
approximates the fair value of such items.
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The financial statements as of March 31, 1999 and for the three months ended
March 31, 1998 and 1999 are unaudited; however, in the opinion of management,
all adjustments, consisting solely of normal recurring adjustments, necessary
for a fair presentation of the financial statements for the interim periods have
been included. The results of operations for the three months ended March 31,
1999 are not necessarily indicative of the results to be achieved for the full
fiscal year.
(3) LIQUIDITY
Operations of the Company for the current and prior year did not generate
sufficient cash flow to cover current obligations. The Parent has funded such
obligations and has made a commitment to continue to provide financing to the
Company until the transaction described in Note 7 is consummated.
(4) RELATED PARTY TRANSACTIONS
The Company engages in transactions with the Parent in the normal course of
its business. These transactions include the purchase of Web site hosting
services from the Parent, assistance with software programming, data feeds,
communications lines and related facilities, network operations and Web site
management services and certain administrative, engineering and human resources
services.
In consideration for these services, the Parent has allocated a portion of
its overhead costs related to such services to the Company. The allocations were
estimated using proportional cost allocation methods.
Administration costs for services provided by the Parent to the Company were
determined by identifying the Parent's personnel who supported the Company.
Their pay, based on the number of hours of service provided, plus benefits, was
used to calculate these costs. Employees of the Company are eligible for various
benefits under programs maintained by the Parent. The cost related to property
usage is determined based on the square footage used by the Company. The Company
is also charged a pro-rata share, based on square footage, of the utilities,
property taxes and other costs. Internet/ telecom costs include an allocation of
monthly depreciation for all hardware and software based on usage by the
Company, as well as monthly rates for telecommunications services used by the
Company.
F-10
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In management's opinion, the methods to identify and allocate costs to the
Company for these services provided by the Parent are reasonable.
(5) PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------
1997 1998
---------- -----------
<S> <C> <C>
Computer equipment................................................... $ 431,935 $ 743,242
Communications equipment............................................. -- 3,537
---------- -----------
431,935 746,779
Less accumulated depreciation........................................ 71,989 268,205
---------- -----------
Property and equipment, net.......................................... $ 359,946 $ 478,574
---------- -----------
---------- -----------
</TABLE>
Depreciation expense recorded by the Company was $71,989 and $196,216 during
the years ended December 31, 1997 and 1998, respectively.
(6) INCOME TAXES
Income tax expense (benefit) differed from the amounts computed by applying
the U.S. Federal income tax rate of 35% to losses before income tax expense as a
result of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1997 1998
----------- ------------- -------------
<S> <C> <C> <C>
Computed "expected" tax benefit.................... $ (686,652) $ (1,600,311) $ (756,858)
Increase (decrease) in tax benefit resulting from:
Change in valuation allowance.................... 775,917 1,808,351 855,249
State and local income taxes, net of federal
benefit........................................ (89,265) (208,040) (98,392)
----------- ------------- -------------
Income tax expense (benefit)....................... $ -- $ -- $ --
----------- ------------- -------------
----------- ------------- -------------
</TABLE>
No deferred income tax expense (benefit) was recognized as the results from
temporary differences in the recognition of income and expense for income tax
and financial reporting purposes were offset
F-11
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
by a valuation allowance. The sources and tax effects of those temporary
differences are presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1998
------------- -------------
<S> <C> <C>
Deferred tax assets:
Unearned revenue.............................................. $ 98,814 $ 246,724
Allowance for doubtful accounts............................... 13,446 43,124
Accrued expenses.............................................. 7,801 16,814
Property and equipment........................................ 4,146 13,466
------------- -------------
Net operating loss............................................ 3,321,715 4,075,722
Gross deferred tax assets................................... 3,445,922 4,395,850
Less valuation allowance.................................... (2,611,955) (3,467,205)
------------- -------------
Net deferred tax assets................................... 833,967 928,645
Deferred tax liabilities:
Capitalized software.......................................... (833,967) (928,645)
------------- -------------
Gross deferred tax liabilities.............................. (833,967) (928,645)
------------- -------------
Net deferred income taxes....................................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The net change in the valuation allowance for the years ended December 31,
1997 and 1998 was an increase of $1,808,351 and $855,250, respectively. The net
operating loss carryforward will remain an asset of the Parent subsequent to the
consummation of the contribution and separation agreement described in Note 8,
and therefore will not be available to the Company to be utilized in future tax
periods.
(7) EQUITY TRANSACTIONS
On March 19, 1999, the Company was incorporated as a wholly-owned subsidiary
of the Parent and was capitalized through the authorization and issuance of
common stock to its Parent. The Company intends to file a registration statement
with the Securities and Exchange Commission to sell authorized common stock to
the public. The Company adopted the 1999 Combined Incentive and Non-statutory
Stock Option Plan in May 1999. There are 1,538,600 shares of common stock
reserved for issuance under this plan. The plan terminates in September 2009,
unless terminated sooner by the Company's Board of Directors. The plan
authorizes the award of options and restricted stock purchase rights. The plan
will be administered by the Company's Board of Directors or a committee
appointed by the Company's Board of Directors. The administrator has the
authority to interpret the plan, grant awards and make all other determinations
necessary to administer the plan. Stock options are exercisable for a period not
to exceed ten years from the date of the grant and, to the extent determined at
the time of grant, may be paid for in cash or by a reduction in the number of
shares issuable upon exercise of the option.
On April 12, 1999, the Company entered into a 3 1/2 year agreement with
CNNFN under which CNNFN granted the Company a license to display on the
Company's Web sites certain headlines from CNNFN original stories published on
the CNNFN Web site at CNNFN.COM. In connection with the agreement, the Company
issued to CNNFN a warrant to acquire 515,790 shares of common stock,
representing a five percent interest in the common stock of the Company
outstanding prior to the offering. The warrant is exercisable for nominal
consideration. On April 29, 1999, CNNFN exercised the
F-12
<PAGE>
PCQUOTE.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
vested portion of this warrant and acquired 128,948 shares of common stock. The
estimated value of the warrant, as of the date of the agreement, will be
amortized over the term of the agreement.
(8) CERTAIN TRANSACTIONS
On , 1999, the Company and its Parent entered into certain
agreements, effective March 31, 1999, governing various interim and ongoing
relationships, including a Contribution and Separation Agreement, Maintenance
Agreement, DataFeed License Agreement, Services Agreement, Non-Competition
Agreement, Registration Rights Agreement and Tax Indemnification and Allocation
Agreement. Under the Contribution and Separation Agreement, the Parent
transferred certain assets to the Company and the Company assumed certain
liabilities of the Parent. Under the Services Agreement, which has an initial
term ending June 30, 2000, the Parent will perform certain services and provide
office space for $213,500 per month through September 1999, $163,500 per month
thereafter through December 1999, $138,500 per month thereafter through March
2000 and $113,500 per month thereafter. Under the Maintenance Agreement, the
Company will receive software features, upgrades and enhancements to PCQuote
Orbit and will pay the Parent 3% of gross revenues obtained from use or
sublicensing of PCQuote Orbit. Under the Data Feed Agreement, the Company will
be entitled to use the Parent's data feed for a monthly fee based on the number
of users and quotes accessed. The rates or amounts to be paid by the Company
under these agreements are not expected to be materially different than the
rates or amounts currently being charged by the Parent.
On May 28, 1999, the Company entered into a new license agreement with
Townsend Analytics for the right to use a software application which is marketed
as PCQuote 6.0. The Company also offers private label versions of this
application. The new agreement replaced the prior agreement between Townsend
Analytics and the Parent. The initial term of the agreement ends December 4,
2000. The Company agrees to pay them 33% of the subscription revenue derived
from its PCQuote 6.0 service and 50% of revenues relating to the private label
version that it presently sublicenses to two of its customers. For certain of
its customers, Townsend Analytics provides hosting services and order execution
capabilities and receives a license fee of 66% of the Company's revenues derived
from these customers. Regardless of actual subscription revenues it receives,
the Company is required under the license agreement to make minimum license fee
payments to Townsend Analytics of $220,000 per month. The Company will pay
$500,000 to the Parent to reimburse them for a portion of the amount to be paid
by them to Townsend Analytics upon replacement of the prior agreement between
the Parent and Townsend Analytics. In addition, the Company could be required to
pay up to $2.0 million to satisfy any shortfall in the $5.0 million minimum
aggregate license fees the Parent anticipates it will be required to pay to
Townsend Analytics under an anticipated new agreement between those two
companies.
On June , 1999, the Board of Directors approved a 9,800-for-one stock
split of the Company's outstanding Common Stock. All common shares and per share
data have been retroactively adjusted to reflect this stock split.
On June , 1999, the Company granted options to purchase shares of
common stock at the initial public offering price.
On June 4, 1999, the Company authorized 1,000,000 shares of $.01 par value
preferred stock for future issuance. In addition, the Company amended its
articles of incorporation to increase its authorized common stock to 74,000,000
shares.
F-13
<PAGE>
[Logos and text descriptions of PCQuote.com's services;
pictures of PCQuote Orbit and Web Template services]
<PAGE>
- --------------------------------------------------------------------------------
Until , 1999, all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
- --------------------------------------------------------------------------------
[LOGO]
PRUDENTIAL SECURITIES
U.S. BANCORP PIPER JAFFRAY
FAC/EQUITIES
E*OFFERING
[Diagram and text descriptions of PCQuote.com features]
- -----------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by us in connection with this offering are as
follows. All amounts other than the SEC registration fee, NASD filing fee and
Nasdaq National Market application fee are estimates.
<TABLE>
<S> <C>
SEC registration fee............................................ $34,687.00
NASD filing fee................................................. $12,977.50
Nasdaq National Market listing fee.............................. $ *
Printing........................................................ $ *
Legal fees and expenses......................................... $ *
Accounting fees and expenses.................................... $ *
Blue sky fees and expenses...................................... $ *
Transfer agent and registrar fees............................... $ *
Miscellaneous................................................... $ *
---------
Total........................................................... $ *
---------
---------
</TABLE>
- ------------
* To be provided by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").
As permitted by the Delaware General Corporation Law, our certificate of
incorporation includes a provision that eliminates the personal liability of our
directors for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to us
or our stockholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of the General Corporation Law of the State of Delaware (regarding
unlawful dividends and stock purchases) or (iv) for any transaction from which
the director derived an improper personal benefit.
As permitted by the General Corporation Law of the State of Delaware, our
Bylaws provide that (i) we are required to indemnify our directors and officers
to the fullest extent permitted by the General Corporation Law of the State of
Delaware, subject to certain very limited exceptions, (ii) we may indemnify our
other employees and agents as set forth in the General Corporation Law of the
State of Delaware, (iii) we are required to advance expenses, as incurred, to
our directors and executive officers in connection with a legal proceeding to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, subject to certain very limited exceptions and (iv) the rights
conferred in our Bylaws are not exclusive.
We intend to enter into Indemnification Agreements with each of our
directors and executive officers to give them additional contractual assurances
regarding the scope of the indemnification set forth in our certificate of
incorporation and to provide additional procedural protections. At present,
there is no pending litigation or proceeding involving one of our directors,
officers or employees regarding which indemnification is sought, nor are we
aware of any threatened litigation that may result in claims for
indemnification.
II-1
<PAGE>
Reference is also made to Section 8 of the Underwriting Agreement, which
provides for the indemnification of our officers, directors and controlling
persons against certain liabilities. The indemnification provision in our
certificate of incorporation, Bylaws and the Indemnification Agreements entered
into between us and each of our directors and executive officers may be
sufficiently broad to permit indemnification of our directors and executive
officers for liabilities arising under the Securities Act.
We expect, with approval by our Board of Directors, to obtain directors' and
officers' liability insurance.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
<TABLE>
<CAPTION>
DOCUMENT EXHIBIT NUMBER
- ----------------------------------------------------------------------------- -----------------
<S> <C>
Form of Underwriting Agreement............................................... 1.1
Amended and Restated Articles of Incorporation of PCQuote.com................ 3.1
Bylaws of PCQuote.com........................................................ 3.2
Form of Indemnification Agreement............................................ 10.12
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
We issued 9,800,000 shares of our common stock to HyperFeed Technologies on
March 19, 1999.
On April 12, 1999, we granted CNNFN a warrant to purchase 515,790 shares of
our common stock exercisable for nominal consideration. On April 29, 1999, CNNFN
purchased 128,948 shares of our common stock upon exercise of the vested portion
of this warrant.
All issuances of securities were made in reliance on Section 4(2) of the
Securities Act.
The above share numbers reflect an anticipated 9,800-for-1 split of our
common stock.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Amended and Restated Certificate of Incorporation*
3.2 By-laws
4.1 Specimen Stock Certificate*
4.2 Warrant issued by Registrant to CNNFN
4.3 Statement of Registration Rights by and between registrant and CNNFN (included in Exhibit 4.2)
4.4 Form of Registration Rights Agreement to be entered into by and between registrant and HyperFeed
Technologies, Inc.
5.1 Opinion of Wildman, Harrold, Allen & Dixon regarding legality of the securities being
registered*
10.1 Form of Contribution and Separation Agreement to be entered into by and between registrant and
HyperFeed Technologies, Inc.
10.2 Form of Services Agreement to be entered into by and between registrant and HyperFeed
Technologies, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ------------------------------------------------------------------------------------------------
<C> <S>
10.3 Form of Maintenance Agreement to be entered into by and between registrant and HyperFeed
Technologies, Inc.
10.4 Form of Datafeed License Agreement to be entered into by and between registrant and HyperFeed
Technologies, Inc.
10.5 Form of Non-Competition Agreement to be entered into by and between registrant and HyperFeed
Technologies, Inc.
10.6 Form of Tax Indemnification and Allocation Agreement to be entered into by and between
registrant and HyperFeed Technologies Inc.*
10.7 Agreement dated April 12, 1999 by and between registrant and CNNFN*
10.8 Software License and Distributor Agreement dated May 28, 1999 by and between registrant and
Townsend Analytics, Ltd.*
10.9 Executive Employment Agreement dated June 8, 1999 by and between registrant and Andrew Peterson
10.10 1999 Combined Incentive and Non-statutory Stock Option Plan
10.11 Internet Trading Access Agreement dated December 21,1998 by and between registrant and AB
Watley*
10.12 Form of Indemnification Agreement to be entered into by and between registrant and its directors
and executive officers
23.1 Consent of KPMG LLP*
23.2 Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
27.1 Financial Data Schedule
99.1 Consent of James R. Quandt
99.2 Consent of Francis J. Harvey
99.3 Consent of Ronald J. Grabe
</TABLE>
- ------------
* To be filed by amendment
(b) Financial Statement Schedules
No financial statement schedules are provided because the information called
for is not required or is shown either in the financial statements or the notes
thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being
II-3
<PAGE>
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on the 9th day of June, 1999.
<TABLE>
<S> <C> <C>
PCQuote.com, INC.
By: /s/ JIM R. PORTER
-----------------------------------------
Jim R. Porter
CHIEF EXECUTIVE OFFICER
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
immediately below constitutes and appoints Timothy K. Krauskopf or Andrew N.
Peterson or any of them, his or her true and lawful attorney-in-fact and agent,
with full power of substitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his or her substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 9, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------- --------------------------------------
<C> <S>
/s/ JIM R. PORTER
- -------------------------------------- Chairman of the Board and Chief
Jim R. Porter Executive Officer
/s/ TIMOTHY K. KRAUSKOPF
- -------------------------------------- President, Chief Operating Officer and
Timothy K. Krauskopf Director
/s/ ANDREW N. PETERSON
- -------------------------------------- Chief Financial Officer and Secretary
Andrew N. Peterson
/s/ JOHN E. JUSKA
- -------------------------------------- Director
John E. Juska
/s/ JOHN R. HART
- -------------------------------------- Director
John R. Hart
</TABLE>
II-5
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
PCQUOTE.COM, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I - CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 REGISTERED OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 OTHER OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - MEETINGS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . .1
2.1 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.3 SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . .1
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . . . . .2
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.7 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . . . . . . . .2
2.8 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. . . . . . . . . .3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. . . . . . . .3
2.12 PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE. . . . . . . . . . . . . . . . . . .4
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.2 NUMBER OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. . . . . . . . . .5
3.4 RESIGNATION AND VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . .5
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . . . . . . . .6
3.6 FIRST MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.7 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.8 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . .6
3.9 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.10 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.11 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . . . . . . . .7
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. . . . . . . . . . . . .7
3.13 FEES AND COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . .7
3.14 REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . .7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV - COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.1 COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . .8
4.2 COMMITTEE MINUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.3 MEETINGS AND ACTION OF COMMITTEES. . . . . . . . . . . . . . . . . . . . .8
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.1 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.4 REMOVAL AND RESIGNATION OF OFFICERS. . . . . . . . . . . . . . . . . . . .9
5.5 VACANCIES IN OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.6 CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.7 PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 VICE PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.11 ASSISTANT SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.12 ASSISTANT TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13 AUTHORITY AND DUTIES OF OFFICERS . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI - INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . 11
6.2 INDEMNIFICATION OF OTHERS. . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 NON-EXCLUSIVITY OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 SURVIVAL OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.7 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII - RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 MAINTENANCE AND INSPECTION OF RECORDS. . . . . . . . . . . . . . . . . . 13
7.2 INSPECTION BY DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 ANNUAL STATEMENT TO STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . 14
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS . . . . . . . . . . . . . 14
ARTICLE VIII - GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 CHECKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS . . . . . . . . . . . . 15
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
8.4 SPECIAL DESIGNATION ON CERTIFICATES. . . . . . . . . . . . . . . . . . . 15
8.5 LOST CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6 CONSTRUCTION; DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.9 TRANSFER OF STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.10 STOCK TRANSFER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 17
8.11 REGISTERED STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IX - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE X - DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XI - CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES. . . . . . . . . . . . . . . 18
11.2 DUTIES OF CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
iii
<PAGE>
BYLAWS
OF
PCQUOTE.COM, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE. The registered office of the corporation shall be
fixed in the certificate of incorporation of the corporation.
1.2 OTHER OFFICES. The board of directors may at any time establish other
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS. Meetings of stockholders shall be held at any
place, within or outside the State of Delaware, designated by the board of
directors. In the absence of any such designation, stockholders' meetings shall
be held at the registered office of the corporation.
2.2 ANNUAL MEETING. The annual meeting of stockholders shall be held each
year on a date and at a time designated by the board of directors. In the
absence of such designation, the annual meeting of stockholders shall be held on
the 1st of March in each year at 9:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected
and any other proper business may be transacted.
2.3 SPECIAL MEETING. A special meeting of the stockholders may be called,
at any time for any purpose, by the chairman of the Board (if there be such an
officer appointed), the president, the board of directors or by any stockholder
holding at least 10% of the outstanding common stock of the corporation.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS. All notices of meetings with
stockholders shall be in writing and shall be sent or otherwise given in
accordance with Section 2.5 of these bylaws not less than ten (10) nor more than
sixty (60) days before the date of the meeting to each stockholder entitled to
vote at such meeting. The notice shall specify the place, date, and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called.
<PAGE>
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any meeting
of stockholders shall be given either personally or by mail, telecopy, telegram
or other electronic or wireless means. Notices not personally delivered shall
be sent charges prepaid and shall be addressed to the stockholder at the address
of that stockholder appearing on the books of the corporation or given by the
stockholder to the corporation for the purpose of notice. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or sent by telecopy, telegram or other electronic or wireless means.
2.6 QUORUM. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
Subject to the provisions of the Delaware general corporation laws in
respect of the vote that shall be required for a specified action, the
certificate of incorporation or bylaws of any corporation authorized to issue
stock may specify the number of shares and/or the amount of other securities
having voting power the holders of which shall be present or represented by
proxy at any meeting in order to constitute a quorum for, and the votes that
shall be necessary for, the transaction of any business, but in no event shall a
quorum consist of less than one-third of the shares entitled to vote at the
meeting. In the absence of such specification in the certificate of
incorporation or bylaws of the corporation, (i) a majority of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of stockholders; (ii) the affirmative vote of the majority
of shares present in person or represented by proxy at the meeting and entitled
to vote on the subject matter shall be the act of the stockholders; and,
(iii) where a separate vote by class is required, the affirmative vote of the
majority of shares of such class present in person or represented by proxy at
the meeting shall be the act of such class.
2.7 ADJOURNED MEETING; NOTICE. When a meeting is adjourned to another
time or place, unless these bylaws otherwise require, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
corporation may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.8 VOTING. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of
Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218
of the General Corporation Law of Delaware (relating to voting rights of
fiduciaries, pledgors and joint owners of stock and to voting trusts and other
voting agreements).
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Except as provided in the last paragraph of this Section 2.8, or as may be
otherwise provided in the certificate of incorporation, each stockholder shall
be entitled to one vote for each share of capital stock held by such
stockholder.
2.9 WAIVER OF NOTICE. Whenever notice is required to be given under any
provision of the General Corporation Law of Delaware or of the certificate of
incorporation or these bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the certificate of incorporation or these
bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless
otherwise provided in the certificate of incorporation, any action required by
this chapter to be taken at any annual or special meeting of stockholders of a
corporation, or any action that may be taken at any annual or special meeting of
such stockholders, may be taken without a meeting, without prior notice, and
without a vote if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or entitled to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
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(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held.
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by a
written proxy, signed by the stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge of
the stock ledger of a corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS. Subject to the provisions of the General Corporation Law of
Delaware and any limitations in the certificate of incorporation or these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the
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corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS. The authorized number of directors shall be
four (4). This number may be changed by a duly adopted amendment to the
certificate of incorporation or by an amendment to this bylaw adopted by the
vote or written consent of the holders of a majority of the stock issued and
outstanding and entitled to vote or by resolution of the board of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. Except as
provided in Section 3.4 of these bylaws, directors shall be elected at each
annual meeting of stockholders to hold office until the next annual meeting.
Directors need not be stockholders unless so required by the certificate of
incorporation or these bylaws, wherein other qualifications for directors may be
prescribed. Each director, including a director elected to fill a vacancy,
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES. Any director may resign at any time upon
written notice to the corporation. When one or more directors so resigns and
the resignation is effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(a) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(b) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the .directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of
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Chancery for a decree summarily ordering an election as provided in Section
211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent (10%) of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. The board of directors of
the corporation may hold meetings, both regular and special, either within or
outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
3.7 REGULAR MEETINGS. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
3.8 SPECIAL MEETINGS; NOTICE. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board, the president, any vice president, the secretary or any two (2)
directors.
Notice of the time and place of special meetings shall be delivered to each
director personally or by telephone (including a voice messaging system or other
system or technology designed to record and communicate messages), telegram,
facsimile, electronic mail or other electronic means. Alternatively, notice may
be sent by first-class mail, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the
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time of the holding of the meeting. If the notice is delivered personally or
by telephone (including a voice messaging system or other system or
technology designed to record and communicate messages), telegram, facsimile,
electronic mail or other electronic means, it shall be delivered at least
forty-eight (48) hours before the time of the holding of the meeting. Any
oral notice given personally or by telephone may be communicated either to
the director or to a person at the office of the director who the person
giving the notice has reason to believe will promptly communicate it to the
director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of
the corporation.
3.9 QUORUM. At all meetings of the board of directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE. Whenever notice is required to be given under any
provision of the General Corporation Law of Delaware or of the certificate of
incorporation or these bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the certificate of incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE. If a quorum is not present at any meeting
of the board of directors, then the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the board of directors, or
of any committee thereof, may be taken without a meeting if all members of the
board or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the board or
committee.
3.13 FEES AND COMPENSATION OF DIRECTORS. Unless otherwise restricted by
the certificate of incorporation or these bylaws, the board of directors shall
have the authority to fix the compensation of directors.
3.14 REMOVAL OF DIRECTORS. Unless otherwise restricted by statute, by the
certificate of incorporation or by these bylaws, any director or the entire
board of directors may
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be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration. of such director's term of
office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, with
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors or in the bylaws of the
corporation, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority to (i) amend the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the General Corporation Law of Delaware, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation), (ii) adopt an agreement of merger or consolidation under
Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or (v) amend
the bylaws of the corporation; and, unless the board resolution establishing the
committee, the bylaws or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of committees
shall be governed by, and held and taken in accordance with, the provisions of
Article III of these bylaws, Section 3.5 (place of meetings and meetings by
telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and
notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11
(adjournment and notice of adjournment), and Section 3.12
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(action without a meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular
meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees shall also be
given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS. The officers of the corporation shall be a president, one
or more vice presidents, a secretary, and a treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more assistant vice presidents, assistant secretaries, assistant treasurers,
and any such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.
5.2 ELECTION OF OFFICERS. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Sections 5.3
or 5.5 of these bylaws, shall be chosen by the board of directors, subject to
the rights, if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS. The board of directors may appoint, or empower
the president to appoint, such other officers and agents as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority, and perform such duties as are provided in these bylaws or as
the board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any,
of an officer under any contract of employment, any officer may be removed,
either with or without cause, by an affirmative vote of the majority of the
board of directors at any regular or special meeting of the board or, except in
the case of an officer chosen by the board of directors, by any officer upon
whom such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
5.6 CHIEF EXECUTIVE OFFICER. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the board of
directors and at all meetings of the
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shareholders and shall exercise and perform such other powers and duties as
may from time to time be assigned to him by the board of directors or as may
be prescribed by these bylaws. The Chief Executive Officer shall also be the
chief executive officer of the corporation and shall, subject to the control
of the board of directors, have general supervision, direction, and control
of the business and the officers of the corporation. He shall have the
general powers and duties of management usually vested in the office of chief
executive officer of a corporation and shall have such other powers and
duties as may be prescribed by the board of directors or these bylaws. The
titles "Chairman of the Board" and "Chief Executive Officer" may be used
interchangeably and shall be one and the same officer.
5.7 PRESIDENT. Subject to such supervisory powers given by the board of
directors to the chief executive officer, the president shall be the chief
operating officer of the corporation and shall, subject to the control of the
board of directors and the chief executive officer, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall have the general powers and duties of management usually vested in the
office of president of a corporation and shall have such other powers and duties
as may be prescribed by the board of directors or these bylaws. The titles
"President" and "Chief Operating Officer" may be used interchangeably and shall
be one and the same officer.
5.8 VICE PRESIDENT. In the absence or disability of the president, the
vice presidents, if any, in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these bylaws, the president or the chairman of the board.
5.9 SECRETARY. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the board
of directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and shareholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if special,
how authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
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5.10 TREASURER. The treasurer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The treasurer shall deposit all money and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws. The titles "Treasurer" and Chief Financial Officer"
may be used interchangeably and shall be one and the same officer.
5.11 ASSISTANT SECRETARY. The assistant secretary, or, if there is more
than one, the assistant secretaries in the order determined by the stockholders
or board of directors (or if there be no such determination, then in the order
of their election) shall, in the absence of the secretary or in the event of his
or her inability or refusal to act, perform the duties and exercise the powers
of the secretary and shall perform such other duties and have such other powers
as the board of directors or the stockholders may from time to time prescribe.
5.12 ASSISTANT TREASURER. The assistant treasurer, or, if there is more
than one, the assistant treasurers, in the order determined by the stockholders
or board of directors (or if there be no such determination, then in the order
of their election), shall, in the absence of the treasurer or in the event of
his or her inability or refusal to act, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors or the stockholders may from time to time
prescribe.
5.13 AUTHORITY AND DUTIES OF OFFICERS. In addition to the foregoing
authority and duties, all officers of the corporation shall respectively have
such authority and perform such duties in the management of the business of the
corporation as may be designated from time to time by the board of directors or
the stockholders.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall, to
the maximum extent and in the manner permitted by the General Corporation Law of
Delaware, indemnify each of its directors and officers against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.1, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation,
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partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of
the corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS. The corporation shall have the power, to
the extent and in the manner permitted by the General Corporation Law of
Delaware, to indemnify each of its employees and agents (other than directors
and officers) against expenses (including attorneys' fees), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section 6.2, an "employee" or
"agent" of the corporation (other than a director or officer) includes any
person (i) who is or was an employee or agent of the corporation, (ii) who is or
was serving at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (iii) who
was an employee or agent of a corporation which was a predecessor corporation of
the corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of the General Corporation Law of Delaware.
6.4 EXPENSES. The corporation shall advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding, upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this bylaw or otherwise; provided, however, that the corporation shall not be
required to advance expenses to any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless the proceeding was
authorized in advance by the board of directors of the corporation.
The corporation may advance to any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was an employee or agent (other than
directors or officers) of the corporation prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
employee or agent (other than directors or officers) in connection with such
proceeding, upon receipt of an undertaking by or on behalf of such person to
repay said amounts if it should be determined ultimately that such person is not
entitled to be indemnified under this bylaw or otherwise;
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provided, however, that the corporation shall not advance expenses to any
employee or agent (other than directors or officers) in connection with any
proceeding (or part thereof) initiated by such person unless the proceeding
was authorized in advance by the board of directors of the corporation.
Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 6.5, no advance shall be made by the corporation to an employee, agent
or officer of the corporation (except by reason of the fact that such person is
or was a director of the corporation in which event this paragraph shall not
apply) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and promptly
made (i) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to the proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to the best interests of the
corporation.
6.5 NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
bylaw shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the General Corporation Law of
Delaware.
6.6 SURVIVAL OF RIGHTS. The rights conferred on any person by this bylaw
shall continue as to a person who has ceased to be a director, officer, employee
or other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
6.7 AMENDMENTS. Any repeal or modification of this bylaw shall only be
prospective and shall not affect the rights under this bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS. The corporation shall, either
at its principal executive office or at such place or places as designated by
the board of directors, keep a record of its shareholders listing their names
and addresses and the number and class of shares held by each shareholder, a
copy of these bylaws as amended to date, accounting books, and other records.
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Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS. Any director shall have the right to examine
the corporation's stock ledger, a list of its stockholders, and its other books
and records for a purpose reasonably related to his position as a director. The
Court of Chancery is hereby vested with the exclusive jurisdiction to determine
whether a director is entitled to the inspection sought. The Court may
summarily order the corporation to permit the director to inspect any and all
books and records, the stock ledger, and the stock list and to make copies or
extracts therefrom. The Court may, in its discretion, prescribe any limitations
or conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS. The board of directors shall
present at each annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of the
board, the president, any vice president, the treasurer, the secretary or
assistant secretary of this corporation, or any other person authorized by the
board of directors or the president or a vice president, is authorized to vote,
represent, and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
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ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS. From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS. The board of
directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES. The shares of a corporation
shall be represented by certificates, provided that the board of directors of
the corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the corporation. Notwithstanding the adoption of
such a resolution by the board of directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the chairman or vice-chairman of the board of directors, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is authorized
to issue more than one class of stock or more than one series of any class, then
the powers, the designations, the preferences, and the relative, participating,
optional or other special
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rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate that the
corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements there may
be set forth on the face or back of the certificate that the corporation
shall issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests
the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
8.5 LOST CERTIFICATES. Except as provided in this Section 8.5, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and canceled at
the same time. The corporation may issue a new certificate of stock or
uncertificated shares in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise, the
general provisions, rules of construction, and definitions in the Delaware
General Corporation Law shall govern the construction of these bylaws. Without
limiting the generality of this provision, the singular number includes the
plural, the plural number includes the singular, and the term "person" includes
both a corporation and a natural person.
8.7 DIVIDENDS. The directors of the corporation, subject to any
restrictions contained in the certificate of incorporation, may declare and pay
dividends upon the shares of its capital stock pursuant to the General
Corporation Law of Delaware. Dividends may be paid in cash, in property, or in
shares of the corporation's capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR. The fiscal year of the corporation shall be fixed by
resolution of the board of directors and may be changed by the board of
directors.
8.9 TRANSFER OF STOCK. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction in its books.
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8.10 STOCK TRANSFER AGREEMENTS. The corporation shall have power to enter
into and perform any agreement with any number of shareholders of any one or
more classes of stock of the corporation to restrict the transfer of shares of
stock of the corporation of any one or more classes owned by such stockholders
in any manner not prohibited by the General Corporation Law of Delaware.
8.11 REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, shall be entitled to
hold liable for calls and assessments the person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of another person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of directors
of the corporation that the corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with
Section 103 of the General Corporation Law of Delaware. Upon such certificate's
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent in
writing, either in person or by duly authorized attorney, to a dissolution, no
meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming
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effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved. If the consent is signed by an
attorney, then the original power of attorney or a photocopy thereof shall be
attached to and filed with the consent. The consent filed with the Secretary
of State shall have attached to it the affidavit of the secretary or some
other officer of the corporation stating that the consent has been signed by
or on behalf of all the stockholders entitled to vote on a dissolution; in
addition, there shall be attached to the consent a certification by the
secretary or some other officer of the corporation setting forth the names
and residences of the directors and officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES. The Court of Chancery,
upon application of any stockholder, may appoint one or more persons to be
custodians and, if the corporation is insolvent, to be receivers, of and for the
corporation when:
(a) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(b) the business of the corporation is suffering or is threatened
with irreparable injury because the directors are so divided respecting the
management of the affairs of the corporation that the required vote for action
by the board of directors cannot be obtained and the stockholders are unable to
terminate this division; or
(c) the corporation has abandoned its business and has failed within
a reasonable time to take steps to dissolve, liquidate or distribute its assets.
11.2 DUTIES OF CUSTODIAN. The custodian shall have all the powers and
title of a receiver appointed under Section 291 of the General Corporation Law
of Delaware, but the authority of the custodian shall be to continue the
business of the corporation and not to liquidate its affairs and distribute its
assets, except when the Court of Chancery otherwise orders and except in cases
arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of
Delaware.
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EXHIBIT 4.2
Common Stock Purchase Warrant
52.6316 Shares
(subject to adjustment)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CABLE NEWS NETWORK LP, LLLP, a limited
liability limited partnership organized under the laws of the State of Delaware
("CNN") is entitled to purchase up to Fifty-two and 6316/10000 (52.6316) Shares
of Common Stock of PCQUOTE.COM, INC., a Delaware corporation, at a price of Zero
and 01/100 Dollars ($ 0.01) per Share (the "Warrant Price"), subject to
adjustments and all other terms and conditions set forth in the Agreement (as
defined below) and this Warrant.
1. DEFINITIONS. As used herein, the following terms, unless the context
otherwise requires, shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
(b) "Agreement" shall mean that certain Agreement dated April 12,
1999 by and among CNN, the Company and PC QUOTE, INC. a Delaware corporation
("PC QUOTE").
(c) "Acquisition" shall mean any sale, license, or other disposition
of all or substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the Company or an affiliate of the
Company is not the surviving entity, or the holders of the securities of the
Company or an affiliate of the Company before the transaction beneficially own
less than 50% of the outstanding voting securities of the surviving entity after
the transaction; PROVIDED, the term "Acquisition" shall not include an initial
public offering of the Company's securities
<PAGE>
(d) "Commission" shall mean the Securities and Exchange Commission,
or any other Federal agency at the time administering the Act.
(e) "Common Stock" shall mean shares of the Company's presently or
subsequently authorized common stock, par value $0.01, and any stock for which
such common stock may hereafter be exchanged.
(f) "Company" shall mean PCQUOTE.COM, INC., a Delaware corporation,
and any corporation which shall succeed to or assume the obligations of
PCQUOTE.COM, INC., under this Warrant.
(g) "Date of Grant" shall mean April 12, 1999.
(h) "Exercise Date" shall mean the effective date of the delivery of
the Notice of Exercise pursuant to Section 4 below.
(i) "Holder" shall mean any person who shall at the time be the
registered holder of this Warrant.
(j) "Shares" shall mean shares of Common Stock.
2. ISSUANCE OF WARRANT AND CONSIDERATION THEREFOR. This Warrant is
issued in consideration of CNN entering into the Agreement.
3. TERM AND VESTING.
(a) Subject to the provisions of Section 3(b) below, the purchase
right represented by this Warrant is exercisable only during the period
commencing upon the Date of Grant and ending on October 12, 2002 in the
following amounts at the following times:
(i) to the extent of 13.1579 Shares anytime on or after the
Date of Grant;
(ii) to the extent of an additional 13.1579 Shares anytime on
or after one (1) year from the Date of Grant;
(iii) to the extent of an additional 13.1579 Shares anytime on
or after two (2) years from the Date of Grant; and
(iv) to the extent of an additional 13.1579 Shares anytime on
or after three (3) years from the Date of Grant.
(b) In the event that the Agreement is terminated by the Company as
set forth in the last sentence of Section 7(b) of the Agreement, any right to
purchase Shares under
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Section 3(a) above which has not vested at the time of such termination of
the Agreement shall immediately become void and unexercisable.
4. METHOD OF EXERCISE AND PAYMENT.
(a) METHOD OF EXERCISE. Subject to Section 3 hereof and compliance
with all applicable Federal and state securities laws, the purchase right
represented by this Warrant may be exercised, in whole or in part and from time
to time, by the Holder by (i) surrender of this Warrant and delivery of the
Notice of Exercise (the form of which is attached hereto as Exhibit A), duly
executed, at the principal office of the Company and (ii) payment to the Company
of an amount equal to the product of the then applicable Warrant Price
multiplied by the number of Shares then being purchased pursuant to one of the
payment methods permitted under Section 4(b) below.
(b) METHOD OF PAYMENT. Payment shall be made either (1) by check
drawn on a United States bank and for United States funds made payable to the
Company, or (2) by wire transfer of United States funds for the account of the
Company.
(c) DELIVERY OF CERTIFICATE. In the event of any exercise of the
purchase right represented by this Warrant, certificates for the Shares so
purchased shall be delivered to the Holder within five days of delivery of the
Notice of Exercise and, unless this Warrant has been fully exercised or has
expired, a new warrant in substantially identical form representing the portion
of the Shares with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder within such ten day period.
(d) NO FRACTIONAL SHARES. No fractional shares shall be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value per Share as of the date of exercise.
(e) COMPANY'S REPRESENTATIONS.
(i) From and after the date hereof, all Shares which may be
issued upon the exercise of the purchase right represented by this Warrant
shall, upon issuance, be duly authorized, validly issued, fully paid and
non-assessable, and free of any liens and encumbrances except for restrictions
on transfer under applicable federal and state securities laws. No later than
April 16, 1999 the Company shall amend its certificate of incorporation and from
such time forward during the period within which the purchase right represented
by this Warrant may be exercised, the Company shall at all times have
authorized, and reserved for the purpose of issuance upon exercise of the
purchase right represented by this Warrant, a sufficient number of Shares to
provide for the exercise of the purchase right represented by this Warrant;
(ii) This Warrant has been duly authorized and executed by the
Company and is a legal, valid and binding obligation of the Company enforceable
in
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accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditors' rights;
(iii) The execution and delivery of this Warrant are not, and
from and after the date hereof, the issuance of the Shares upon exercise of this
Warrant in accordance with the terms hereof will not be, inconsistent with the
Company's Certificate of Incorporation or Bylaws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to the
Company, and do not and will not conflict with or contravene any provision of,
or constitute a default under, any material indenture, mortgage, contract or
other instrument of which the Company is a party or by which it is bound, or
require the registration or filing with or the taking of any action in respect
of or by, any federal, state or local government authority or agency (other than
such consents, approvals, notices, actions, or filings as have already been
obtained or made, as the case may be).
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number of
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) ADJUSTMENT FOR DIVIDENDS IN STOCK. In case at any time or from
time to time on or after the date hereof the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock of the
Company by way of dividend then, and in each case, the Holder of this Warrant
shall, upon the exercise hereof, be entitled to receive, in addition to the
number of shares of Common Stock receivable thereupon, and without payment of
any additional consideration therefor, the amount of such other or additional
stock of the Company which such Holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this Section 5.
(b) ADJUSTMENT FOR RECLASSIFICATION OR REORGANIZATION. In case of
any reclassification or change of the outstanding securities of the Company or
of any consolidation, merger or reorganization of the Company on or after the
date hereof, then and in each such case the Holder of this Warrant, upon the
exercise hereof at any time after the consummation of such reclassification,
change, consolidation, merger or reorganization, shall be entitled to receive,
in lieu of or in addition to the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in subparagraphs (a) and
(c); in each such case, the terms of this Paragraph 5 shall be applicable to the
shares of stock or other securities property receivable upon the exercise of
this Warrant after such consummation.
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(c) STOCK SPLITS AND REVERSE STOCK SPLITS. If, at any time on or
after the date hereof, the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall thereby be proportionately reduced
and the number of shares receivable upon exercise of this Warrant shall thereby
be proportionately increased; and, conversely, if at any time on or after the
date hereof the outstanding number of shares of Common Stock shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall thereby be proportionately increased and the number of
shares receivable upon exercise of the Warrant shall be proportionately
decreased.
(d) ADJUSTMENTS TO WARRANT PRICE. Whenever the number of Shares
purchasable upon exercise of this Warrant is adjusted, as herein provided, the
Warrant Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so purchasable immediately thereafter.
(e) CERTIFICATES AS TO ADJUSTMENTS. Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish the Holder with a certificate of its Chief Financial
Officer setting forth such adjustment and the facts upon which such adjustment
is based. The Company shall, upon written request, furnish the Holder a
certificate setting forth the Warrant Price in effect upon the date thereof and
the series of adjustments leading to such Warrant Price.
6. ACQUISITIONS.
(a) ASSUMPTION OF WARRANT. If upon the closing of any Acquisition
the successor entity assumes the obligations of this Warrant, then this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on the record date for the
Acquisition and subsequent closing.
(b) NONASSUMPTION. If upon the closing of any Acquisition the
successor entity does not assume the obligations of this Warrant and the Holder
has not otherwise exercised this Warrant in full, then the unexercised portion
of this Warrant (whether or not then vested) shall be deemed to have been
automatically converted pursuant to Section 4(c) and thereafter the Holder shall
participate in the acquisition on the same terms as other holders of the same
class of securities of the Company.
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7. PARTICIPATION IN FUTURE PRIVATE OFFERINGS. CNN shall have the right
to participate on a pro rata basis (I.E., to maintain relative equity position
as considered on a fully vested basis) in future private offerings of the
Company on the same terms as any other person or entity at any time up to but
not including an initial public offering of the Company's securities.
8. NOTICES; INFORMATION; REGISTRATION.
(a) NOTICE OF CERTAIN EVENTS. If the Company proposes at any time
(a) to effect any reclassification or recapitalization of Common Stock; (b) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (c) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give the
Holder at least 14 days prior written notice of the date on which a record will
be taken for such action.
(b) INFORMATION RIGHTS. So long as the Holder holds this Warrant
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly
after mailing, copies of all notices or other written communications to the
stockholders of the Company, (b) within ninety days after the end of each fiscal
year of the Company, the annual audited financial statements of the Company
audited by independent public accountants of recognized standing and (c) within
forty-five days after the end of each of the first three quarters of each fiscal
year, the Company's quarterly, unaudited financial statements.
(c) REGISTRATION UNDER SECURITIES ACT OF 1933. The Company agrees
that the Shares shall be subject to the registration rights set forth on
Exhibit B.
9. COMPLIANCE WITH ACT; TRANSFERABILITY AND NEGOTIABILITY OF WARRANT;
DISPOSITION OF SHARES.
(a) COMPLIANCE WITH ACT. The Holder, by acceptance hereof, agrees
that this Warrant and the Shares to be issued upon the exercise hereof are being
acquired solely for its own account and not as a nominee for any other party and
not with a view toward the resale or distribution thereof and that it will not
offer, sell or otherwise dispose of this Warrant or any Shares to be issued upon
the exercise hereof except under circumstances which will not result in a
violation of the Act. This Warrant and the Shares to be issued upon the
exercise hereof (unless registered under the Act) shall be imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
6
<PAGE>
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
In addition, this Warrant and the Shares to be issued upon the exercise hereof
shall bear any legends required by the securities laws of any applicable states.
(b) TRANSFERABILITY AND NEGOTIABILITY OF WARRANT. This Warrant may
not be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions satisfactory to the Company, if requested by the Company and the
transfer is to a person other than a general partner or affiliate of the initial
Holder). Subject to the provisions of this Warrant with respect to compliance
with the Act, title to this Warrant may be transferred by endorsement and
delivery in the same manner as a negotiable instrument transferable by
endorsement and delivery; PROVIDED, no Holder shall transfer this Warrant to any
entity reasonably believed by the Company to be a competitor of the Company
without the prior written consent of the Company upon 14 days prior written
notice by such Holder of its intent to transfer this Warrant. The Company shall
act promptly to record transfers of this Warrant on its books, but the Company
may treat the registered holder of this Warrant as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
(c) DISPOSITION OF SHARES. With respect to any offer, sale, transfer
or other disposition of any Shares acquired pursuant to the exercise of this
Warrant prior to registration of such Shares, except for any such offer, sale,
transfer or other disposition of Shares to an affiliate of the initial Holder,
the Holder and each subsequent holder of this Warrant agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof, and
if such transfer is not pursuant to Rule 144, a written opinion of legal counsel
for such holder, if requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
of such Shares. Notwithstanding the foregoing, such Shares may be offered, sold
or otherwise disposed of in accordance with Rule 144, provided that the Company
shall have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144 have
been satisfied. Each certificate representing the Shares thus transferred
(except a transfer pursuant to Rule 144) shall bear a restrictive legend as to
the applicable restrictions on transferability in order to insure compliance
with the Act, unless in the aforesaid opinion of legal counsel for the holder,
such legend is not required in order to insure compliance with the Act.
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<PAGE>
10. RIGHTS OF STOCKHOLDERS. No Holder shall be entitled to vote or
receive dividends or be deemed the holder of Shares or any other securities of
the Company which may at any time be issuable on the exercise of this Warrant
for any purpose, nor shall anything contained herein be construed to confer upon
the Holder, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, consolidation, merger, transfer of assets or
otherwise) or, except as expressly required herein, to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares issuable upon exercise hereof
shall have become deliverable, as provided herein.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
12. EXCHANGE OF WARRANT. Subject to the other provisions of this Warrant,
on surrender of this Warrant for exchange, and subject to the provisions of this
Warrant with respect to compliance with the Act, the Company at its expense
shall issue to or on the order of the Holder a new warrant or warrants of like
tenor, in the name of the Holder or as the Holder (on payment by the Holder of
any applicable transfer taxes) may direct, for the number of Shares issuable
upon exercise thereof.
13. NOTICES. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such Holder from time
to time.
14. WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
15. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
16. TITLES AND SUBTITLES; FORMS OF PRONOUNS. The titles of the Sections
and Subsections of this Warrant are for convenience only and are not to be
considered in construing this Warrant. All pronouns used in this Warrant shall
be deemed to include masculine, feminine and neuter forms.
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<PAGE>
17. ATTORNEYS' FEES. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
Dated: April 12, 1999 . PCQUOTE.COM, INC.,
a Delaware corporation
By: /s/ Jim R. Porter
----------------------------------------
Jim R. Porter, Chief Executive Officer
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<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: PCQUOTE.COM, INC.
1. The undersigned Holder of the attached Common Stock Purchase Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
________________ Shares, as defined in the Warrant.
2. The undersigned Holder elects to pay the aggregate Warrant Price for
such Shares (the "Exercise Shares") in the following manner:
[ ] by the enclosed cashier's or certified check drawn on a United
States bank and for United States funds made payable to the
Company in the amount of $_____________; or
[ ] by wire transfer of United States funds to the account of the
Company in the amount of $___________, which transfer has been
made before or simultaneously with the delivery of this Notice
pursuant to the instructions of the Company.
3. Please issue a stock certificate or certificates representing the
appropriate number of Shares in the name of the undersigned or in such other
names as is specified below:
Name:
----------------------------------------------
Address:
----------------------------------------------
----------------------------------------------
Tax ID No.:
---------------
HOLDER:
------------------------------------------------
By:
----------------------------------------
Date: Title:
------------------------ ---------------------------
<PAGE>
EXHIBIT B
STATEMENT OF REGISTRATION RIGHTS
1. DEFINITIONS. For purposes of the Warrant to which this Statement of
Registration Rights is attached as Exhibit B:
(a) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Registrable Securities" means the shares of Common
Stock issued or issuable upon exercise of the Warrant;
(c) The term "Holder" means the original holder of the Warrant and
any transferee of the Warrant; and
(d) The term "Warrant" means the original Warrants issued in
connection with that certain Agreement dated April 12, 1999 by and among CNN,
the Company and PC QUOTE, and all Warrants issued as a result of the transfer of
such original Warrants.
2. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes at any time before the earlier of (A) October 12, 2004, or (B)
the second anniversary of the expiration date of the Warrant pursuant to Section
3 thereof, to register (including for this purpose (i) a registration effected
by the Company for stockholders other than Holder, and (ii) a registration of an
initial public offering where stockholders other than Holder are registering
securities) any of its stock or other securities under the Act in connection
with the public offering whether or not for its own account of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give Holder
written notice of such registration. Upon the written request of Holder given
within twenty days after mailing of such notice by the Company, the Company
shall, subject to the provisions of Section 8 hereof and Section 5 of the
Warrant, cause to be registered under the Act all of the Registrable Securities
that each such Holder has requested to be registered.
3. DEMAND REGISTRATION. In case the Company shall, at any time after an
initial public offering of the Company's securities and before the earlier of
(A) October 12, 2004, or (B) the second anniversary of the expiration date of
the Warrant pursuant to Section 3 thereof, receive from Holders holding 30% or
more of the outstanding Registrable Securities a written request (to be
exercised only once collectively for all Holders) that the Company effect a
registration and any related qualification or compliance with respect
<PAGE>
to all or a part of the Registrable Securities (which registration shall at the
election of Holder either be for a registration for a primary issuance of the
Shares upon the exercise of the Warrant or the resale of the Shares previously
issued upon exercise of the Warrant at the election of Holder) owned by such
Holder, the Company will promptly notify each other Holder (if any) of such
request and will:
(a) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution, in accordance with such plan of
distribution or method of sale as Holder notifies the Company, of all or such
portion of a Holder's Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
holder of registration rights joining in such request as are specified in a
written request given within 20 days after receipt of such written notice from
the Company; PROVIDED, HOWEVER, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 3: (1) if the Company has effected a registration of its securities
within the preceding 6 months (other than registration statements on Form S-3
(or any similar short-form registration statement) or any successor or similar
forms or any registration statement relating to equity securities issuable upon
exercise of employee stock options or in connection with any employee benefit or
similar plan of the Company or in connection with an acquisition by the Company
of another company); (2) if the Company shall furnish to Holder a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration to be effected at such
time and setting forth the general reasons for such judgment, in which event the
Company shall have the right to defer the filing of the registration statement
for a period of not more than 60 days after receipt of the request of Holder
under this Section 3; PROVIDED, HOWEVER, that the Company shall not utilize this
right more than once in any twelve-month period; or (3) in any jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance; and,
(b) subject to the foregoing, file a registration statement covering
the Registrable Securities and other securities so requested to be registered
promptly after receipt of the request or requests of Holder, and in any event
within 30 days of receipt of such request.
The Holders who hold a majority of the Registrable Securities requested to be
registered under this Section 3 may, at any time prior to the effective date of
the registration statement relating to such registration, revoke such request
(but not the registration statement), without liability (except as set forth in
Section 7 hereof), by providing a written notice to the Company revoking such
request.
The Company shall have the right to select the underwriters (if any) for any
registration pursuant to this Section 3, subject to the approval of such
selection by the Holders of a
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<PAGE>
majority of the Registrable Securities requested to be registered (which
approval by such Holders shall not be unreasonably withheld).
4. OBLIGATION OF THE COMPANY. Subject to the terms of the Warrant, in
the event that the Company is to effect the registration of any Registrable
Securities pursuant to Section 2 or 3 hereof, the Company shall promptly:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days, or
such shorter period as is required to dispose of all securities covered by such
registration statement; PROVIDED, that if after any registration statement
requested pursuant to Section 3 becomes effective (i) such registration
statement is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court solely due
to the actions or omissions to act of the Company and (ii) less than 50% of the
Registrable Securities included in such registration have been sold thereunder,
such registration statement shall be at the sole expense of the Company and
shall not be counted as a registration which may be requested pursuant to
Section 3.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by Holder.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Holder, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions or to agree to any restrictions as
to the conduct of its business in the ordinary course thereof.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Holder shall also enter
into and perform its obligations under such underwriting agreement.
(f) Notify Holder at any time when a prospectus relating to
Registrable Securities of Holder covered by such registration statement is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such
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<PAGE>
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances under which they were made and furnish to such Holder a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus shall not
contain an untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading..
(g) Furnish, at the request of Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to the Warrant, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to Holder and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder.
5. AVAILABILITY OF RULE 144. Notwithstanding anything in the Warrant or
this Statement of Registration Rights to the contrary, the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to Section 2 or 3, if application of Rule 144 would allow Holder requesting a
registration under Section 2 or 3 to dispose of the Registrable Securities for
which a registration is demanded within a single 90-day period.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to the Warrant that the
selling Holder shall furnish to the Company such information regarding itself as
a Holder, the Registrable Securities held by Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
7. EXPENSES. The Company shall bear and pay all expenses (other than
underwriting discounts and commissions) incurred in connection with any
registration, filing or qualification of Registrable Securities, including
(without limitation) all registration, filing, and qualification fees, legal
(not to exceed one law firm for the Holders of all Registrable Securities),
printers and accounting fees relating thereto, and the cost of any reasonable
fees or disbursements of counsel for Holder. The Company shall not be liable
for registration expenses in connection with a registration that shall not have
become effective due to a revocation by the Holders requesting such registration
under this Section 3. In such event, the obligation to pay the registration
expenses in connection with such revoked registration shall be due and payable
by the Holders who initially requested and revoked such registration, and such
expenses shall be borne by them in proportion with the number of shares of
Registrable Securities requested by them to be registered.
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<PAGE>
8. UNDERWRITING REQUIREMENTS.
(a) In connection with any registrations in which Registrable
Securities have a right to be included pursuant to Section 2 hereof and which
involves an underwriting of securities being issued by the Company, the Company
shall not be required, under Section 2 hereof, to include any of Holder's
securities in such underwriting unless Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering, the securities so included to be apportioned pro rata
among the selling Holder and other shareholders holding contractual registration
rights according to the total amount of securities entitled to be included
herein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by Holder and each other selling stockholder.
(b) If a requested registration pursuant to Section 3 involves an
underwritten offering and the total amount of securities (including securities
which the Company may request to be included) requested to be included in such
offering exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities which
the underwriters believe will not jeopardize the success of the offering, the
securities so included to be apportioned pro rata among the selling Holder and,
if securities remain unapportioned, such remaining securities to be sold by the
Company. If at lease 50% of the Registrable Securities requested to be
registered by the Holders are not included in such registration, then the
Holders may request that the Company effect an additional registration under the
Act of all or part of the Holders' Registrable Securities in accordance with the
provisions of Section 3, and the Company shall effect, and pay the registration
expenses in connection with, such additional registration requested pursuant to
this Section 8.
9. INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement filed by the Company:
(a) The Company will indemnify and holder harmless Holder, its
officers, directors, partners, and agents, any underwriter (as defined in the
Act) for Holder and each person, if any, who controls, is controlled by or is
under common control with any such Holder or underwriter within the meaning of
the Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"),
against any losses, claims, damages, expense, or liabilities (joint or several)
asserted by a third party to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
expense, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following
5
<PAGE>
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii)
the 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 (iii) any violation or alleged violation of the Company of the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will reimburse Holder, any of its officers, directors, partners, or
agents, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this Section 9(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by such Holder, underwriter or controlling person.
(b) Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company with the meaning of the Act, any
underwriter and any other shareholder selling securities in such registration
statement or any of its directors or officers or any person who controls such
shareholder, against any losses, claims, damages, expense, or liabilities (joint
or several) asserted by a third party to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
shareholder or director, officer or controlling person may become subject, under
the Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, expense, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Holder expressly for use in connection with
such registration; and Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or controlling person, other shareholder, officer, director,
or controlling person, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED, HOWEVER,
that the obligations of Holder hereunder shall be limited to an amount equal to
the net proceeds (equal to the offering price less the exercise price, expenses
and underwriting commissions and discounts) to such Holder of Shares sold as
contemplated herein. Notwithstanding the foregoing, the indemnity agreement
contained in this Section 9(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of Holder, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such
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<PAGE>
indemnified party will, if a claim in respect thereof is to be made against
any indemnifying part under this Section 9, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an indemnified party shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 9.
10. REPORTS UNDER THE 1934 ACT. With a view to making available to Holder
the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the Commission that may at any time permit Holder to sell
securities of the Company to the public without registration the Company will
endeavor to:
(a) make and keep public information available, as those terms are
understood and defined in Commission Rule 144;
(b) take such action as is necessary to enable Holder to utilize an
abbreviated registration statement for the sale of its Registrable Securities;
(c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Commission Rule 144, the Act
and the 1934 Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing Holder of any rule or regulation of the
Commission which permits the selling of any such securities without registration
or pursuant to such form.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to the Warrant may be assigned by
Holder to a permitted transferee or assignee of the Warrant of all 52.6316
Shares, provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; and provided, further, that such assignment shall be
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<PAGE>
effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act.
8
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EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of __________________________, 1999 (the "Effective Date") by and
between PCQUOTE.COM, INC., a Delaware corporation (the "Company"), and HYPERFEED
TECHNOLOGIES, INC., a Delaware corporation.
R E C I T A L S
WHEREAS, the Company and Holder (as defined below) have entered into that
certain Contribution and Separation Agreement (the "Separation Agreement") dated
as of the date hereof, which provides, among other things, that Holder shall
contribute certain assets to the Company in exchange for (i) all of the capital
stock of the Company and (ii) the assumption of certain liabilities of Holder;
WHEREAS, pursuant to a Pre-Incorporation Subscription Agreement dated as of
March 18, 1999, Holder received 1,000 shares of the Common Stock of the Company,
par value $0.01 per share;
WHEREAS, as a condition to Holder agreeing to enter into the Separation
Agreement, the Company has agreed to grant Holder certain registration rights
with respect to the Registrable Shares (as defined below);
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and Holder hereby, intending to be legally bound by
the terms hereof, agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement:
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Registrable Securities" means the shares of Common
Stock received by Holder pursuant to the Separation Agreement; and
(c) The term "Holder" means HyperFeed Technologies, Inc., as the
original holder of the Registrable Securities and any transferee of the
Registrable Securities.
SECTION 2. COMPANY REGISTRATION. If (but without any obligation to
do so) the Company proposes at any time to register (including for this
purpose (i) a registration effected by the Company for Holders other than
<PAGE>
Holder, and (ii) a registration of an initial public offering where Holders
other than Holder are registering securities) any of its stock or other
securities under the Act in connection with the public offering whether or
not for its own account of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give Holder written notice of such
registration. Upon the written request of Holder given within twenty days
after mailing of such notice by the Company, the Company shall cause to be
registered under the Act all of the Registrable Securities that each such
Holder has requested to be registered.
SECTION 3. DEMAND REGISTRATION. In case the Company shall, at any
time after an initial public offering of the Company's securities, receive
from Holders holding 30% or more of the outstanding Registrable Securities a
written request (provided that while the Holders shall have an unlimited
number of demand registration rights, such rights may be exercised no more
than twice per year during any periods in which the Company is not permitted
to file registration statements on behalf of the Holders on Form S-3 or any
similar short-form registration statement or any successor or similar forms)
that the Company effect a registration and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned
by such Holder, the Company will promptly notify each other Holder (if any)
of such request and will:
(a) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution, in accordance with such plan of
distribution or method of sale as Holder notifies the Company, of all or such
portion of a Holder's Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
holder of registration rights joining in such request as are specified in a
written request given within 20 days after receipt of such written notice from
the Company; PROVIDED, HOWEVER, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 3: (1) if the Company has effected a registration of its securities
within the preceding 6 months (other than registration statements on Form S-3
(or any similar short-form registration statement) or any successor or similar
forms or any registration statement relating to equity securities issuable upon
exercise of employee stock options or in connection with any employee benefit or
similar plan of the Company or in connection with an acquisition by the Company
of another company); (2) if the Company shall furnish to Holder a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its Holders for such registration to be effected at such time
and setting forth the general reasons for such judgment, in which event the
Company shall have the right to defer the filing of the registration statement
for a period of not more than 60 days after receipt of the request of Holder
under this Section 3; PROVIDED, HOWEVER, that the Company shall not utilize this
right more than once in any twelve-month period; or (3) in any jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance; and,
(b) subject to the foregoing, file a registration statement
covering the Registrable Securities and other securities so requested to be
registered promptly after receipt
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of the request or requests of Holder, and in any event within 30 days of
receipt of such request.
The Holders who hold a majority of the Registrable Securities requested to be
registered under this Section 3 may, at any time prior to the effective date of
the registration statement relating to such registration, revoke such request
(but not the registration statement), without liability (except as set forth in
Section 7 hereof), by providing a written notice to the Company revoking such
request.
The Company shall have the right to select the underwriters (if any) for any
registration pursuant to this Section 3, subject to the approval of such
selection by the Holders of a majority of the Registrable Securities requested
to be registered (which approval by such Holders shall not be unreasonably
withheld).
SECTION 4. OBLIGATIONS OF THE COMPANY. In the event that the Company
is to effect the registration of any Registrable Securities pursuant to
Section 2 or 3 hereof, the Company shall promptly:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the holders of a majority of the securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days, or
such shorter period as is required to dispose of all securities covered by such
registration statement; PROVIDED, that if after any registration statement
requested pursuant to Section 3 becomes effective (i) such registration
statement is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court solely due
to the actions or omissions to act of the Company and (ii) less than 50% of the
Registrable Securities included in such registration have been sold thereunder,
such registration statement shall be at the sole expense of the Company and
shall not be counted as a registration which may be requested pursuant to
Section 3.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by Holder.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Holder, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general
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<PAGE>
consent to service of process in any such states or jurisdictions or to agree
to any restrictions as to the conduct of its business in the ordinary course
thereof.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Holder shall
also enter into and perform its obligations under such underwriting agreement.
(f) Notify Holder at any time when a prospectus relating to
Registrable Securities of Holder covered by such registration statement is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made and furnish to such Holder a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an untrue statement of material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(g) Furnish, at the request of Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of counsel representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to Holder and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder.
SECTION 5. AVAILABILITY OF RULE 144. Notwithstanding anything in the
Separation Agreement or this Statement of Registration Rights to the contrary,
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to Section 2 or 3, if application of
Rule 144 would allow Holder requesting a registration under Section 2 or 3 to
dispose of the Registrable Securities for which a registration is demanded
within a single 90-day period.
SECTION 6. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the selling Holder shall furnish to the Company such information regarding
itself as a Holder, the Registrable Securities held by Holder, and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
SECTION 7. EXPENSES. The Company shall bear and pay all expenses
(other than underwriting discounts and commissions) incurred in connection with
any registration, filing or qualification of Registrable Securities, including
(without limitation) all registration, filing, and
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<PAGE>
qualification fees, legal (not to exceed one law firm for the Holders of all
Registrable Securities), printers and accounting fees relating thereto, and
the cost of any reasonable fees or disbursements of counsel for Holder (the
"Expenses"); provided that, in the event that the Company has previously
complied with a request by the Holders for a demand registration during any
periods in which the Company is not permitted to file registration statements
on behalf of the Holders on Form S-3 or any similar short-form registration
statement or any successor or similar forms ("Long-form Periods"), the
Holders requesting a demand registration shall bear and pay all Expenses for
subsequent demand registrations during any Long-form Periods. The Company
shall not be liable for registration expenses in connection with a
registration that shall not have become effective due to a revocation by the
Holders requesting such registration under this Section 3. In such event,
the obligation to pay the registration expenses in connection with such
revoked registration shall be due and payable by the Holders who initially
requested and revoked such registration, and such expenses shall be borne by
them in proportion with the number of shares of Registrable Securities
requested by them to be registered.
SECTION 8. UNDERWRITING REQUIREMENTS.
(a) In connection with any registrations in which Registrable
Securities have a right to be included pursuant to Section 2 hereof and which
involves an underwriting of securities being issued by the Company, the Company
shall not be required, under Section 2 hereof, to include any of Holder's
securities in such underwriting unless Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
Holders to be included in such offering exceeds the amount of securities sold
other than by the Company that the underwriters reasonably believe compatible
with the success of the offering, then the Company shall be required to include
in the offering only that number of such securities, including Registrable
Securities, which the underwriters believe will not jeopardize the success of
the offering, the securities so included to be apportioned pro rata among the
selling Holder and other shareholders holding contractual registration rights
according to the total amount of securities entitled to be included herein owned
by each selling Holder or in such other proportions as shall mutually be agreed
to by Holder and each other selling Holder.
(b) If a requested registration pursuant to Section 3 involves
an underwritten offering and the total amount of securities (including
securities which the Company may request to be included) requested to be
included in such offering exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such securities
which the underwriters believe will not jeopardize the success of the offering,
the securities so included to be apportioned pro rata among the selling Holder
and, if securities remain unapportioned, such remaining securities to be sold by
the Company. If at lease 50% of the Registrable Securities requested to be
registered by the Holders are not included in such registration, then the
Holders may request that the Company effect an additional registration under the
Act of all or part of the Holders' Registrable Securities in accordance with the
provisions of Section 3, and the Company shall effect, and pay the registration
expenses in connection with, such additional registration requested pursuant to
this Section 8.
SECTION 9. INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement filed by the Company:
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(a) The Company will indemnify and holder harmless Holder, its
officers, directors, partners, and agents, any underwriter (as defined in the
Act) for Holder and each person, if any, who controls, is controlled by or is
under common control with any such Holder or underwriter within the meaning of
the Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"),
against any losses, claims, damages, expense, or liabilities (joint or several)
asserted by a third party to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
expense, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the 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 (iii) any violation or alleged
violation of the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will reimburse Holder, any of its officers,
directors, partners, or agents, underwriter or controlling person for any legal
or other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability, or action;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder,
underwriter or controlling person.
(b) Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company with the meaning of
the Act, any underwriter and any other shareholder selling securities in such
registration statement or any of its directors or officers or any person who
controls such shareholder, against any losses, claims, damages, expense, or
liabilities (joint or several) asserted by a third party to which the Company
or any such director, officer, controlling person, or underwriter or
controlling person, or other such shareholder or director, officer or
controlling person may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, expense, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Holder expressly for use in connection with such registration;
and Holder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person, underwriter or
controlling person, other shareholder, officer, director, or controlling
person, as incurred, in connection with investigating or defending any such
loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
obligations of Holder hereunder shall be limited to an amount equal to the
net proceeds (equal to the offering price less expenses and underwriting
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<PAGE>
commissions and discounts) to such Holder of Shares sold as contemplated
herein. Notwithstanding the foregoing, the indemnity agreement contained in
this Section 9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of Holder, which consent shall not be unreasonably
withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 9.
SECTION 10. REPORTS UNDER THE 1934 ACT. With a view to making available
to Holder the benefits of Rule 144 promulgated under the Act and any other rule
or regulation of the Commission that may at any time permit Holder to sell
securities of the Company to the public without registration the Company will
endeavor to:
(a) make and keep public information available, as those terms
are understood and defined in Commission Rule 144;
(b) take such action as is necessary to enable Holder to utilize
an abbreviated registration statement for the sale of its Registrable
Securities;
(c) file with the Commission in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Commission Rule 144, the Act
and the 1934 Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing Holder of any rule or regulation of the
Commission which permits the selling of any such securities without registration
or pursuant to such form.
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SECTION 11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned by Holder to a permitted transferee or assignee of all of the
Registrable Securities, provided the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
SECTION 12. GENERAL PROVISIONS.
(a) Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if deposited in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
(i) if to the Company, at:
PCQuote.com, Inc.
300 South Wacker Drive, Suite 300
Chicago, IL 60606
Attention: Andrew Peterson
(ii) if to Holder, at:
HyperFeed Technologies, Inc.
300 South Wacker Drive, Suite 300
Chicago, IL 60606
Attention: John Juska
(iii) If to any other Holder, at such Holder's respective address
as set forth in the Company's share register.
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or five days
after when deposited in the mail in the manner set forth above.
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(b) Entire Agreement. This Agreement constitutes and contains
the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
(c) Amendment of Rights. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company, and any Holder (and /or any of their permitted
successors or assigns) affected by such amendment or waiver. In the event the
rights of a Holder are sought to be waived, then the Holders of a majority of
the Registrable Securities owned by such Holders may waive such rights on behalf
of all of such other Holders.
(d) Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of Delaware,
excluding that body of law relating to conflict of laws.
(e) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
(f) Third Parties. Except as expressly provided herein, nothing
in this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their successors and assigns, any rights or
remedies under or by reason of this Agreement.
(g) Successors And Assigns. The provisions of this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.
(h) Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
PCQUOTE.COM, INC., HYPERFEED TECHNOLOGIES, INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
By: ____________________________ By: ________________________________
Timothy K. Krauskopf, John Juska,
its President its Chief Financial Officer
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EXHIBIT 10.1
CONTRIBUTION AND SEPARATION AGREEMENT
CONTRIBUTION AND SEPARATION AGREEMENT (this "Agreement") dated as of
______________________, 1999, among HYPERFEED INC., a Delaware corporation
("HyperFeed"), and PCQUOTE.COM, INC., a Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, prior to the execution and delivery of this Agreement, HyperFeed
formed the Company as a wholly-owned subsidiary of HyperFeed;
WHEREAS, simultaneously herewith, HyperFeed and the Company are entering
into the Maintenance Agreement, in the form attached as EXHIBIT A hereto (the
"Maintenance Agreement"), the DataFeed License Agreement, in the form
attached as EXHIBIT B hereto (the "DataFeed License Agreement"), the Services
Agreement in the form attached as EXHIBIT C hereto (the "Services
Agreement"), the Noncompetition Agreement in the form attached as EXHIBIT D
hereto (the "Noncompetition Agreement"), the Registration Rights Agreement,
in the form attached as EXHIBIT E hereto (the "Registration Rights
Agreement"), and the Tax Indemnification and Allocation Agreement, in the
form attached as Exhibit F hereto (the "Tax Indemnification and Allocation
Agreement"); and
WHEREAS, HyperFeed desires to contribute certain assets to the Company as
an additional capital contribution to the Company, and the Company desires to
assume certain of the liabilities of HyperFeed.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound by the terms hereof applicable to each of them, hereby agree as follows:
ARTICLE I
CONTRIBUTION TRANSACTION
SECTION 1.01. HYPERFEED CONTRIBUTION. On the terms and subject to the
conditions of this Agreement, HyperFeed hereby sells, assigns, transfers,
conveys and delivers to the Company as an additional capital contribution to the
Company, and the Company hereby acquires from HyperFeed, effective as of the
date hereof, all the right, title and interest of HyperFeed in, to and under the
HyperFeed Contributed Assets (as defined below); and HyperFeed hereby grants to
the Company as an additional capital contribution to the Company a perpetual,
worldwide, non-exclusive right and license to use, execute, reproduce,
distribute, perform, display, modify, enhance, create derivative works, and
market without payment to any other person all of the HyperFeed Licensed Assets
(as defined below) and related documentation. The contribution and acquisition
of the HyperFeed Assets (as defined below) and the assumption of the Assumed
HyperFeed Liabilities (as set forth in Section 1.02 below) is collectively
referred to in this Agreement as the "Contribution Transaction."
<PAGE>
The term "Business" means the businesses conducted by HyperFeed and related
to (i) the Internet websites owned by HyperFeed and known as www.pcquote.com and
marketsmart-real.pcquote.com, (ii) the internet enabled desktop applications
owned or licensed by HyperFeed, and (iii) third-party site development enabling
end-users to receive data via the internet. The term "HyperFeed Contributed
Assets" means the business, properties, assets, goodwill and rights of
HyperFeed, of whatever kind and nature, real or personal, tangible or
intangible, related to the Business that are owned, leased or licensed by
HyperFeed and are set forth on the attached Schedule 1.01(a). "The term
HyperFeed Licensed Assets" means business, properties, assets, goodwill and
rights of HyperFeed, of whatever kind and nature, real or personal, tangible or
intangible, related to the Business that are owned, leased or licensed by
HyperFeed and are set forth on the attached Schedules 1.01(b). The term
"HyperFeed Assets" means, collectively, the HyperFeed Contributed Assets and the
HyperFeed Licensed Assets".
SECTION 1.02. ASSUMPTION OF CERTAIN LIABILITIES.
(a) On the terms and subject to the conditions of this Agreement,
the Company hereby assumes, effective as of the date hereof, and from and after
the date hereof the Company agrees to pay, perform and discharge when due, any
liability, obligation or commitment of HyperFeed under the following
(collectively, the "Assumed HyperFeed Liabilities"), other than any Excluded
HyperFeed Liabilities:
(i) all of the Current Liabilities as set forth on the First
Quarter Balance Sheet (as defined below) as of March 31, 1999, including
without limitation, (A) all accounts payable, notes payable (and any
security therefor) and all other payables of any kind related to the
Business; and (B) all obligations arising under the contracts, leases,
licenses, indentures, agreements, commitments and other legally binding
arrangements, whether oral or written ("Contracts"), relating to the
Business and specifically listed on Exhibit B to Schedule 1.01(a) attached
hereto (the "HyperFeed Contracts");
(ii) any other liabilities of HyperFeed, not to exceed
$500,000.00, whether known or unknown, relating to the Business and not set
forth as Current Liabilities on the First Quarter Balance Sheet as of March
31, 1999;
(iii) $500,000 representing one-half of the $1,000,000 owed by
HyperFeed to Townsend Analytics, Ltd. ("Townsend") pursuant to Section 1 of
the Termination Agreement dated May 28, 1999 by and between HyperFeed and
Townsend; and
(iv) an amount not to exceed $2,000,000, representing the
difference between (A) the $5,000,000 minimum aggregate license fee payment
HyperFeed anticipates it will be required to guarantee to Townsend under
an anticipated new agreement by and between HyperFeed and Townsend; and
(B) the amount of license fees actually paid by HyperFeed to Townsend
during the period commencing April 1, 1999 and ending February 28, 2001.
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(b) Notwithstanding Section 1.02(a), or any other provision of
this Agreement or any of the other agreements and instruments executed and
delivered in connection herewith and the transactions contemplated hereby,
including, but not limited to, the Maintenance Agreement, the DataFeed
License Agreement, the Services Agreement, the Noncompetition Agreement, the
Registration Rights Agreement and the Tax Indemnification and Allocation
Agreement (the "Ancillary Agreements"), and regardless of any disclosure to
HyperFeed or the Company, the Company shall not assume any Excluded HyperFeed
Liability, each of which shall be retained and paid, performed and discharged
when due by HyperFeed. The term "Excluded HyperFeed Liability" means:
(i) any liability, obligation or commitment of any of
HyperFeed not specifically assumed pursuant to Section 1.02(a);
(ii) any liability, obligation or commitment of HyperFeed,
whether express or implied, liquidated, absolute, accrued, contingent or
otherwise, or known or unknown, arising out of the operation or conduct by
HyperFeed or any of its affiliates of any business other than the Business;
(iii) any liability, obligation or commitment of HyperFeed
arising out of (A) any suit, action or proceeding ("Proceeding") pending
or, to the knowledge of HyperFeed, threatened as of the date hereof or
(B) any actual or alleged violation by HyperFeed or any of its affiliates
of any Applicable Law (as defined in Section 3.03) prior to April 1, 1999;
(iv) any liability, obligation or commitment for Taxes (as
defined in Section 3.12), whether or not accrued, assessed or currently
due and payable);
(v) except as provided in Section 4.02(b), any liability,
obligation or commitment for transfer, documentary, sales, use,
registration, value-added and other similar Taxes and related amounts
(including any penalties, interest and additions to Tax) incurred in
connection with this Agreement, the Ancillary Agreements, the Contribution
Transaction and the other transactions contemplated hereby and thereby
("Transfer Taxes");
(vi) any liability, obligation or commitment of HyperFeed
arising under any HyperFeed Benefit Plan (as defined in Section 3.14(a))
except with respect to any liability arising with respect to any Company
employee to the extent any such Company employee participates in such
HyperFeed Benefit Plan after March 31, 1999;
(vii) Any liability, obligation or commitment of HyperFeed
that relates to, or that arises out of, products or services shipped or
sold by or on behalf of HyperFeed on or prior to the date hereof (including
claims of negligence, personal injury, product damage, product liability,
product warranties, promotional obligations, strict liability, product
recall or any other claims (including workers' compensation, employer's
liability or otherwise)), whether such liability, obligation or commitment
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relates to or arises out of accidents, injuries or losses occurring on or
prior to or after the date hereof;
(viii) any liability, obligation or commitment of HyperFeed
that relates to, or that arises out of, the employment or the termination
of the employment with HyperFeed of any employee or former employee of the
Business (including as a result of the transactions contemplated by this
Agreement); and
(ix) any liability, obligation or commitment of HyperFeed to
any of its respective affiliates.
(c) The Company shall acquire HyperFeed Assets free and clear of
all liabilities, obligations and commitments of HyperFeed, other than the
Assumed HyperFeed Liabilities, and free and clear of all Liens (as defined in
Section 3.05), other than Permitted Liens (as defined in Section 3.05).
SECTION 1.03. CONSENTS OF THIRD PARTIES.
(a) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any asset or any
claim or right or any benefit arising under or resulting from such asset if an
attempted assignment thereof, without the consent of a third party, would
constitute a breach or other contravention of the rights of such third party,
would be ineffective with respect to any party to an agreement concerning such
asset, or would in any way adversely affect the rights of HyperFeed or, upon
transfer, the Company under such asset. If any transfer or assignment by
HyperFeed to, or any assumption by the Company of, any interest in, or
liability, obligation or commitment under, any asset requires the consent of a
third party, then such assignment or assumption shall be made subject to such
consent being obtained. To the extent any HyperFeed Contract may not be
assigned to the Company by reason of the absence of any such consent, the
Company shall not be required to assume any Assumed HyperFeed Liabilities and if
not assigned shall not be entitled to receive benefits arising under such
HyperFeed Contract.
(b) In connection with those consents that have not been obtained
as of the date hereof, HyperFeed and the Company hereby agree that, until any
such required consent is obtained, HyperFeed, or one or more of its
subsidiaries, as appropriate, shall, with the reasonable and necessary
cooperation of the Company, and at the Company's direction, continue to fulfill
any and all obligations and commitments, and enforce any and all rights, of
HyperFeed in connection with any asset, claim or right that constitutes a
HyperFeed Asset but for which any required consent has not been obtained, and
that the Company shall be entitled to all of the economic claims, rights and
benefits under such asset, claim or right and HyperFeed shall pay or cause to be
paid to the Company all such economic benefits as promptly as practicable
following receipt by HyperFeed or any of its subsidiaries; provided that the
Company shall be responsible for the Assumed HyperFeed Liabilities, if any,
arising under such asset, claim or right, to the extent that the Company has
received the economic benefit of such asset, claim or right, and further
provided that the Company shall reimburse HyperFeed for its costs to fulfill any
such obligations, commitments or enforcement of rights.
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ARTICLE II
THE CLOSING
SECTION 2.01. THE CLOSING. The closing of the Contributions (the
"Closing") is taking place at the offices of Wildman, Harrold, Allen & Dixon,
225 West Wacker Drive, Chicago, Illinois 60606, on the date hereof.
SECTION 2.02. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the Closing:
(a) HyperFeed is delivering (i) appropriately executed copies of
this Agreement and each Ancillary Agreement to which it is specified to be a
party, (ii) such appropriately executed bills of sale, assignments and other
instruments of transfer relating to HyperFeed Assets in form and substance
reasonably satisfactory to HyperFeed and the Company and (iii) such other
documents as the Company has reasonably requested to demonstrate compliance with
the terms and provisions of this Agreement;
(b) the Company is delivering (i) appropriately executed copies of
this Agreement and each Ancillary Agreement to which it is specified to be a
party, (ii) such appropriately executed assumption agreements and other
instruments of assumption providing for the assumption of the Assumed HyperFeed
Liabilities in form and substance reasonably satisfactory to HyperFeed and
(iii) such other documents as HyperFeed has reasonably requested to demonstrate
compliance with the terms and provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HYPERFEED
HyperFeed hereby represents and warrants to the Company, as of the date of
this Agreement, as follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. HyperFeed is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct the Business and its other businesses as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, have not had and
could not reasonably be expected to have a material adverse effect (i) on the
business, assets, condition (financial or otherwise) or results of operations or
prospects of HyperFeed and its subsidiaries, taken as a whole, or of the
Business, (ii) on the ability of HyperFeed to perform its obligations under this
Agreement and the Ancillary Agreements or (iii) on the ability of HyperFeed to
consummate the Contribution Transaction and the other transactions contemplated
hereby and thereby (a "HyperFeed Material Adverse Effect"). HyperFeed is duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of HyperFeed Assets held by it or the nature of the Business make such
qualification necessary for it to conduct the Business as
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currently conducted by it or the failure to so qualify has had or could
reasonably be expected to have a HyperFeed Material Adverse Effect. HyperFeed
has delivered to the Company true and complete copies of the certificate of
incorporation and by-laws of HyperFeed, as amended through the date of this
Agreement.
SECTION 3.02. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
HyperFeed has full power and authority to execute this Agreement and the
Ancillary Agreements to which it is a party. HyperFeed has full power and
authority to consummate the Contribution Transaction and the other transactions
contemplated hereby and thereby. The execution and delivery by HyperFeed of
this Agreement and the Ancillary Agreements to which it is a party and the
consummation by HyperFeed of the Contribution Transaction and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action. HyperFeed has duly executed and delivered this
Agreement and each Ancillary Agreement to which it is a party, and this
Agreement, and each Ancillary Agreement to which it is a party, constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms except as enforcement may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or equitable principles
relating to or limiting creditors' rights generally.
SECTION 3.03. NO CONFLICTS; CONSENTS. The execution and delivery by
HyperFeed of this Agreement and each Ancillary Agreement to which it is a party
and the consummation of the Contribution Transaction and the other transactions
contemplated hereby and thereby and compliance by HyperFeed with the terms
hereof and thereof do not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of HyperFeed under, any provision of (i) the
certificate of incorporation or by-laws of HyperFeed, (ii) any Contract to which
HyperFeed or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (iii) any judgment, order or decree
("Judgment") or statute, law, ordinance, rule or regulation ("Applicable Law")
applicable to HyperFeed or its properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and could not reasonably be expected to have a HyperFeed
Material Adverse Effect. No consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
required to be obtained or made by or with respect to HyperFeed in connection
with (A) the execution, delivery and performance of this Agreement or any
Ancillary Agreement or the consummation of the Contribution Transaction or the
other transactions contemplated hereby and thereby or (B) the conduct by the
Company of the Business following the Closing as conducted on the date hereof.
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SECTION 3.04. FINANCIAL STATEMENTS.
(a) Schedule 3.04 sets forth for the Business (i) a Statement of
Assets as of December 31, 1998 (the "Year End Balance Sheet"), (ii) a Statement
of Assets as of March 31, 1999 (the "First Quarter Balance Sheet"), (iii) an
Income Statement for the twelve months ended December 31, 1998 (the "Full Year
Income Statement"), and (iv) an Income Statement for the three months ended
March 31, 1999 (the "First Quarter Income Statement"). The Year End Balance
Sheet and the Full Year Income Statement were derived from the audited financial
statements of HyperFeed for the year ended December 31, 1998, as audited and
opined upon by KPMG LLP in their report dated March 12, 1999. The term
"Financial Statements" shall mean the Year End Balance Sheet, the First Quarter
Balance Sheet, the Full Year Income Statement and the First Quarter Income
Statement. The Financial Statements have been prepared from the books and
records of HyperFeed relating to the Business and fairly present the financial
condition and results of operations of the Business as of the respective dates
and for the respective periods indicated.
(b) The Business does not have any material liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
otherwise), except for items set forth in Schedule 3.04.
SECTION 3.05. HYPERFEED ASSETS. HyperFeed has good and valid title to all
HyperFeed Assets free and clear of all mortgages, liens, security interests,
charges, easements, leases, subleases, covenants, rights of way, options,
claims, restrictions or encumbrances of any kind (collectively, "Liens"), except
(i) such as are set forth in Schedule 3.05 (all of which shall be discharged
prior to the Closing), (ii) mechanics', carriers', workmen's, repairmen's or
other like Liens arising or incurred in the ordinary course of business, Liens
arising under original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of business and
liens for Taxes that are not due and payable or that may thereafter be paid
without penalty, and (iii) other imperfections of title or encumbrances, if any,
that do not, individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate in the conduct of the
Business as presently conducted (the Liens described in clauses (ii) and (iii)
above are referred to collectively as "Permitted Liens").
SECTION 3.06. INTELLECTUAL PROPERTY.
(a) Schedule 3.06 sets forth a true and complete list of all
patents (including all reissues, divisions, continuations and extensions
thereof), patent applications, patent rights, trademarks, trademark
registrations, trademark applications, servicemarks, trade names, trade secrets,
business names, brand names, domain names, copyrights, copyright registrations
and renewals, designs, design registrations, software (together with all related
source code(s) and applicable documentation) and all owned, used, filed by or
licensed to HyperFeed and used, held for use or intended to be used in the
operation or conduct of the Business (collectively, the "Intellectual
Property"), other than unregistered designs and copyrights that, individually
and in the aggregate, are not material to the conduct of the Business as
presently conducted. With
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respect to all Intellectual Property constituting HyperFeed Assets (the
"Contributed Intellectual Property") that is registered or subject to an
application for registration, Schedule 3.06 sets forth a list of all
jurisdictions in which such Contributed Intellectual Property is registered or
registrations applied for and all registration and application numbers. Except
as set forth in Schedule 3.06 (i) all the Contributed Intellectual Property has
been duly registered in, filed in or issued by the appropriate Governmental
Entity where such registration, filing or issuance is necessary or appropriate
for the conduct of the business as presently conducted, (ii) HyperFeed is the
sole and exclusive owner of and has the right to use, execute, reproduce,
display, perform, modify, enhance, distribute, prepare derivative works of and
sublicense, without payment to any other person, all the Contributed
Intellectual Property and the consummation of the Contribution Transaction and
the other transactions contemplated hereby does not and will not conflict with,
alter or impair any such rights, and (iii) during the past three years,
HyperFeed has received any written or oral communication from any person
asserting any ownership interest in any Contributed Intellectual Property.
(b) HyperFeed has not granted any license of any kind relating to
any trade secrets, confidential information, inventions, know-how, formulae,
processes, procedures, research records, records of inventions, test
information, market surveys, subscriber lists and marketing know-how of
HyperFeed constituting HyperFeed Assets (the "Technology"), or to any
Contributed Intellectual Property or the marketing or distribution thereof,
except nonexclusive licenses to end-users in the ordinary course of business.
HyperFeed is not bound by or a party to any option, license or agreement of any
kind relating to the Intellectual Property of any other person for the use of
such Intellectual Property in the conduct of the Business, except as set forth
in Schedule 3.06 and except for so-called "shrink-wrap" license agreements
relating to computer software licensed in the ordinary course of the Business.
The conduct of the Business as presently conducted does not violate, conflict
with or infringe the Intellectual Property of any other person. Except as set
forth in Schedule 3.06, (i) no claims are pending or, to the knowledge of
HyperFeed, threatened, as of the date of this Agreement against HyperFeed by any
person with respect to the ownership, validity, enforceability, effectiveness or
use in the Business of any Intellectual Property and (ii) during the past three
years HyperFeed and its affiliates have not received any written or oral
communication alleging that HyperFeed or any of its affiliates has in the
conduct of the Business violated any rights relating to Intellectual Property of
any person.
(c) All material Technology has been maintained in confidence in
accordance with protection procedures customarily used in the industry to
protect rights of like importance. All former and current members of management
and key personnel of HyperFeed or any of its affiliates, including all former
and current employees, agents, consultants and independent contractors who have
contributed to or participated in the conception and development of material
Technology (collectively, "Personnel") either (i) have been party to a
"work-for-hire" arrangement or agreement with HyperFeed, in accordance with all
Applicable Laws, that has accorded HyperFeed full, effective, exclusive and
original ownership of all tangible and intangible property thereby arising or
(ii) have executed appropriate instruments of assignment in favor of HyperFeed
as assignee that have conveyed to HyperFeed full, effective and exclusive
ownership of all tangible and intangible property thereby arising. No
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former or current Personnel have any claim against HyperFeed in connection with
such person's involvement in the conception and development of any Technology
and no such claim has been asserted or is threatened. None of the current
officers and employees of HyperFeed has any patents issued or applications
pending for any device, process, design or invention of any kind now used or
needed by HyperFeed in the furtherance of the business, which patents or
applications have not been assigned to HyperFeed, with such assignment duly
recorded in the United States Patent and Trademark Office.
SECTION 3.07. CONTRACTS.
(a) Except as set forth in Schedule 3.07, and except for Contracts
relating solely to assets that do not constitute HyperFeed Assets, HyperFeed is
not a party to or bound by any Contract that is used, held for use or intended
for use in, or that arises out of, the operation or conduct of the Business and
that is:
(i) an employment agreement or employment Contract;
(ii) a collective bargaining agreement or other Contract with
any labor organization, union nor association;
(iii) a covenant not to compete or other covenant of HyperFeed
restricting the development, manufacture, marketing or distribution of the
products and services of the Business;
(iv) a Contract with (A) any shareholder or affiliate of
HyperFeed or (B) any current or former officer, director or employee of
HyperFeed or any of its affiliates;
(v) a lease, sublease or similar Contract with any person
under which (A) HyperFeed is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any person
or (B) HyperFeed is a lessor or sublessor of, or makes available for use by
any person, any tangible personal property owned or leased by HyperFeed, in
any such case has an aggregate future liability or receivable, as the case
may be, in excess of $5,000;
(vi) (A) a continuing Contract for the future purchase of
materials, supplies or equipment, (B) a management, service, consulting or
other similar Contract or (C) an advertising agreement or arrangement, in
any such case that has an aggregate future liability to any person in
excess of $5,000;
(vii) a material license, option or other Contract relating in
whole or in part to the Contributed Intellectual Property (including any
license or other Contract under which HyperFeed is licensee or licensor of
any Contributed Intellectual Property) or to any Technology;
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(viii) (A) a Contract under which HyperFeed has borrowed any
money from, or issued any note, bond, debenture or other evidence of
indebtedness to, any person or (B) any other note, bond, debenture or other
evidence of indebtedness issued to any person;
(ix) a Contract (including any so-called take-or-pay or
keepwell agreement) under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of HyperFeed or (B) or
HyperFeed has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any other person (in each case other than endorsements
for the purpose of collection in the ordinary course of business);
(x) a Contract under which HyperFeed has, directly or
indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any person (other than extensions
of trade credit in the ordinary course of the Business);
(xi) a Contract granting a Lien upon any HyperFeed Asset;
(xii) a Contract providing for indemnification of any person
with respect to material liabilities relating to any current or former
business of HyperFeed or any predecessor person;
(xiii) a Contract not made in the ordinary course of the
Business;
(xiv) a confidentiality agreement;
(xv) a Contract for the sale of any HyperFeed Asset or the
grant of any preferential rights to purchase any HyperFeed Asset or
requiring the consent of any party to the transfer thereof;
(xvi) a Contract for any joint venture, partnership or similar
arrangement;
(xvii) other Contract that has an aggregate future liability to
any person in excess of $5,000 and is not terminable by HyperFeed by notice
of not more than 60 days for a cost of less than $5,000; or
(xviii) a Contract other than as set forth above to which
HyperFeed is a party or by which it or any of its assets or businesses is
bound or subject that is material to the Business or the use or operation
of HyperFeed Assets.
(b) Except as set forth in Schedule 3.07, all HyperFeed Contracts
are valid, binding and in full force and effect and are enforceable by HyperFeed
in accordance with their terms except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
equitable principles relating to or limiting creditors'
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rights generally. Except as set forth in Schedule 3.07, HyperFeed has performed
all material obligations required to be performed by them to date under
HyperFeed Contracts, and they are not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder and, to the knowledge of HyperFeed, no other party to any HyperFeed
Contract is (with or without the lapse of time or the giving of notice, or both)
in breach or default in any material respect thereunder. HyperFeed has not,
except as disclosed in the applicable Schedule, received any notice of the
intention of any party to terminate any HyperFeed Contract. Complete and
correct copies of all Contracts listed in the Schedules, together with all
modifications and amendments thereto, have been delivered to HyperFeed and the
Company.
(c) Schedule 3.07 sets forth each HyperFeed Contract with respect
to which the Consent of the other party or parties thereto is required by virtue
of the execution and delivery of this Agreement or the consummation of the
Contribution Transaction to avoid the invalidity of the transfer of such
Contract, the termination thereof, a breach, violation or default thereunder or
any other change or modification to the terms thereof, each of which has been or
will be obtained.
SECTION 3.08. PERSONAL PROPERTY. Each material item of tangible personal
property and interests therein, including all machinery, equipment, furniture
and vehicles, of HyperFeed that constitute HyperFeed Assets (the "Personal
Property") is in good working order (ordinary wear and tear excepted), is free
from any material defect and has been maintained in all material respects in
accordance with the past practice of the Business, and no repairs, replacements
or regularly scheduled maintenance relating to any such item has been deferred.
All leased personal property of the Business is in all respects in the condition
required of such property by the terms of the lease applicable thereto.
SECTION 3.09. PERMITS.
(a) Schedule 3.09 sets forth all material certificates, licenses,
permits, authorizations and approvals ("Permits") issued or granted to HyperFeed
by Governmental Entities that are necessary or desirable for the conduct of the
Business. Except as set forth in Schedule 3.09, (i) all such Permits are
validly held by HyperFeed, and HyperFeed has complied in all material respects
with all terms and conditions thereof, (ii) during the past three years,
HyperFeed has not received notice of any Proceedings relating to the revocation
or modification of any such Permits the loss of which, individually or in the
aggregate, has had or could reasonably be expected to have a HyperFeed Material
Adverse Effect, and (iii) none of such Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and delivery
of this Agreement or the consummation of the Contribution Transaction.
(b) HyperFeed possesses all material Permits to own or hold under
lease and operate HyperFeed Assets and to conduct the Business as currently
conducted.
SECTION 3.10. INSURANCE. HyperFeed maintains policies of fire and
casualty, liability and other forms of insurance with respect to the Business in
such amounts, with such
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deductibles and against such risks and losses as are, in HyperFeed's judgment,
reasonable for the Business. The material insurance policies maintained by
HyperFeed with respect to the Business are listed in Schedule 3.10. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid, and no notice of cancellation or termination has been received with
respect to any such policy which has not been replaced on substantially similar
terms prior to the date of such cancellation. To the knowledge of HyperFeed,
the Business has been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies.
SECTION 3.11. SUFFICIENCY OF HYPERFEED ASSETS. The HyperFeed Assets,
together with the services and licenses to be provided by HyperFeed under the
Services Agreement, the Maintenance Agreement, and the DataFeed License
Agreement are sufficient for the conduct of the Business immediately following
the Closing in the same manner as currently conducted. There are not any assets
used, held for use or intended to be used in the operation or conduct of the
Business that do not constitute HyperFeed Assets or which are not to be made
available to the Company pursuant to the Services Agreement.
SECTION 3.12. TAXES.
(a) For purposes of this Agreement:
"Tax" means (i) any tax, governmental fee or other like
assessment or charge of any kind whatsoever (including any tax imposed
under Subtitle A of the Code and any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, withholding tax on amounts
paid, payroll, employment, excise, severance, stamp, capital stock,
occupation, property, environmental or windfall profit tax, premium,
custom, duty or other tax), together with any interest, penalty, addition
to tax or additional amount due, imposed by any Governmental Entity
(domestic or foreign) responsible for the imposition of any such tax (a
"Taxing Authority"), (ii) any liability for the payment of any amount of
the type described in clause (i) above as a result of a party to this
Agreement being a member of an affiliated, consolidated or combined group
with any other corporation at any time on or prior to the date hereof and
(iii) any liability of any person with respect to the payment of any
amounts of the type described in clause (i) or (ii) above as a result of
any express or implied obligation of such person to indemnify any other
person.
"Code" means the Internal Revenue Code of 1986, as amended.
(b) Except as set forth in Schedule 3.12, (i) HyperFeed, and any
affiliated group, within the meaning of Section 1504 of the Code, of which
HyperFeed is or has been a member, has filed or caused to be filed in a timely
manner (within any applicable extension periods) all material Tax returns,
reports and forms required to be filed by the Code or by applicable state, local
or foreign Tax laws, (ii) all Taxes shown to be due on such returns, reports and
forms have been timely paid in full or will be timely paid in full by the due
date
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thereof, and (iii) no material Tax Liens have been filed and no material claims
are being asserted in writing with respect to any Taxes.
(c) Except as set forth in Schedule 3.12, (i) neither HyperFeed nor
any of its affiliates has made with respect to HyperFeed, or the assets of the
Business, any consent under Section 341 of the Code, (ii) HyperFeed Assets is
"tax exempt use property" within the meaning of Section 168(h) of the Code, and
(iii) HyperFeed Assets is a lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954.
(d) HyperFeed is not a "foreign person" within the meaning of
Section 1445 of the Code.
SECTION 3.13. PROCEEDINGS. Schedule 3.13 sets forth a list of all pending
Proceedings or claims with respect to which HyperFeed has been contacted in
writing by counsel for the plaintiff or claimant, arising out of the conduct of
the Business or against or affecting any HyperFeed Asset and that (a) relate to
or involve more than $5,000, (b) seek any material injunctive relief or (c) may
give rise to any legal restraint on or prohibition against the transactions
contemplated by this Agreement. Except as set forth in Schedule 3.13, none of
the Proceedings or claims listed in Schedule 3.13 as to which there is at least
a reasonable possibility of adverse determination would have, if so determined,
individually or in the aggregate, a HyperFeed Material Adverse Effect. Except
as set forth in Schedule 3.13, to the knowledge of HyperFeed, there are no
unasserted claims of the type that would be required to be disclosed in
Schedule 3.13 if counsel for the claimant had contacted HyperFeed that if
asserted would have at least a reasonable possibility of an adverse
determination. Except as set forth in Schedule 3.13, HyperFeed is not a party
or subject to or in default under any material Judgment applicable to the
conduct of the Business or any HyperFeed Asset or Assumed HyperFeed Liability.
Except as set forth in Schedule 3.13, there is not any Proceeding or claim by
HyperFeed pending, or which HyperFeed intends to initiate, against any other
Person arising out of the conduct of the Business. Except as set forth in
Schedule 3.13, to the knowledge of HyperFeed, there is no pending or threatened
investigation of or affecting the conduct of the Business or any HyperFeed Asset
or Assumed HyperFeed Liability.
SECTION 3.14. BENEFIT PLANS.
(a) Schedule 3.14 contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained or
contributed to by HyperFeed for the benefit of any officers or employees of the
Business ("HyperFeed Pension Plans") and all "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA), bonus, stock option, stock purchase,
deferred compensation plans or arrangements and other employee fringe benefit
plans maintained, or contributed to, by HyperFeed for the benefit of any
officers or employees of the Business (all the foregoing, including HyperFeed
Pension Plans, being herein called "HyperFeed Benefit Plans"). HyperFeed has
made available to the Company true, complete and correct copies of (i) each
HyperFeed Benefit Plan (or, in the case of any unwritten HyperFeed Benefit
Plans, descriptions thereof), (ii) the two most recent annual
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reports on Form 5500 (including all schedules and attachments thereto) filed
with the Internal Revenue Service with respect to each HyperFeed Benefit Plan
(if any such report was required), (iii) the most recent summary plan
description for each HyperFeed Benefit Plan for which such a summary plan
description is required and (iv) each trust agreement, group annuity contract or
other funding and financing arrangement relating to any HyperFeed Benefit Plan.
(b) Each HyperFeed Benefit Plan has been administered in all
material respects in accordance with its terms. HyperFeed and all HyperFeed
Benefit Plans are in compliance in all material respects with the applicable
provisions of ERISA, the Code, all other Applicable Laws and all applicable
collective bargaining agreements. Except as set forth in Schedule 3.14, all
material reports, returns and similar documents with respect to HyperFeed
Benefit Plans required to be filed with any Governmental Entity or distributed
to any HyperFeed Benefit Plan participant have been duly and timely filed or
distributed. Except as set forth in Schedule 3.14, there are no Proceedings
pending or, to the knowledge of HyperFeed, threatened against or involving any
HyperFeed Benefit Plan and there are no investigations by any Governmental
Entity or other claims (except routine claims for benefits payable in the normal
operation of HyperFeed Benefit Plans) pending or, to the knowledge of HyperFeed,
threatened against or involving any HyperFeed Benefit Plan or asserting any
rights to benefits under any HyperFeed Benefit Plan.
(c) Except as set forth in Schedule 3.14, no employee or former
employee of the Business will become entitled to any bonus, severance, job
security or similar benefit or any enhanced benefit solely as a result of the
transactions contemplated hereby.
SECTION 3.15. ABSENCE OF CHANGES OR EVENTS. Except as set forth in
Schedule 3.15, since the date of the First Quarter Balance Sheet, there has not
been any material adverse change in the business, assets, condition (financial
or otherwise), results of operations or prospects of the Business, taken as a
whole. Except as set forth in Schedule 3.15, since the date of the First
Quarter Balance Sheet, HyperFeed has caused the Business to be conducted in the
ordinary course and in substantially the same manner as previously conducted and
has made all reasonable efforts consistent with past practices to preserve the
relationships of the Business with customers, suppliers and others with whom the
Business deals.
SECTION 3.16. COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
Schedule 3.16, the Business is in compliance in all material respects with all
Applicable Laws, including those relating to occupational health and safety.
Except as set forth in Schedule 3.16, HyperFeed has not received any written or
oral communication during the past three years from a Governmental Entity that
alleges that the Business is not in compliance in any material respect with any
Applicable Laws. HyperFeed has not received any written notice that any
investigation or review by any Governmental Entity with respect to any HyperFeed
Asset or the Business is pending or that any such investigation or review is
contemplated. This Section 3.16 does not relate to matters with respect to
Taxes, which are the subject of Section 3.12.
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SECTION 3.17. TRANSACTIONS WITH AFFILIATES. Except as set forth in
Schedule 3.17, none of the Contracts set forth in Schedule 3.07 between the
Business, on the one hand, and HyperFeed or any of its affiliates, on the other
hand, will continue in effect subsequent to the Closing.
SECTION 3.18. EFFECT OF TRANSACTION. Except as set forth in
Schedule 3.18, no creditor, employee, client, customer or other person having a
material business relationship with the Business has informed HyperFeed that
such person intends to change such relationship because of the contribution of
the Business or the consummation of any other transaction contemplated hereby.
SECTION 3.19. YEAR 2000 COMPLIANCE. All computer systems and software
being contributed or licensed hereunder are and will be accurately able to:
(i) process any date rollover, (ii) process calculations or computations
regardless of the dates used in such calculations whether before, on or after
January 1, 2000, (iii) accept and respond to two digit year date input in a
manner that resolves any ambiguities as to the century to which such two
digit year date input relates in an appropriate manner and (iv) store and
display date data in a manner that is unambiguous as to the century to which
such two digit year date input relates. None of the above-referenced systems,
software or products will malfunction, cease to function, generate incorrect
data or provide incorrect results when providing and/or receiving data in
connection with any valid date, whether occurring before, on or after January
1, 2000.
SECTION 3.20. DISCLOSURE. No representation or warranty of HyperFeed
contained in this Agreement or in any Ancillary Agreement, and no statement
contained in any document, certificate or Schedule furnished or to be furnished
by or on behalf of HyperFeed to the Company or any of their representatives
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading or necessary in order to fully
and fairly provide the information required to be provided in any such document,
certificate or Schedule.
ARTICLE IV
COVENANTS
SECTION 4.01. REASONABLE BEST EFFORTS. Each party shall, and shall cause
its affiliates to, use its reasonable best efforts (at its own expense) to
obtain, and to cooperate in obtaining, all consents from third parties necessary
or appropriate to permit the Contributions to be completed.
SECTION 4.02. EXPENSES; TRANSFER TAXES.
(a) Except as set forth in Section 4.02(b) below and in
Section 4.03 and 6.03, all costs and expenses incurred in connection with this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall be paid by the party incurring such expense.
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(b) Each party shall be responsible for and shall pay, as and when
incurred, all Transfer Taxes, documentary Taxes and filing or recording fees and
applicable to the Contributions that such party incurs. Each party shall use
reasonable effort to avail itself of any available exemptions from any such
Taxes or fees, and to cooperate with the other parties in providing any
information and documentation that may be necessary to obtain such exemptions.
SECTION 4.03. POST-CLOSING COOPERATION.
(a) HyperFeed and the Company shall cooperate with each other, and
shall cause their respective officers, employees, agents, auditors and
representatives to cooperate with each other, after the Closing to ensure the
orderly transition of the Business from HyperFeed to the Company and to minimize
any disruption to the Business that might result from the transactions
contemplated hereby. After the Closing, upon reasonable written notice,
HyperFeed and the Company shall furnish or cause to be furnished to each other
and to their respective employees, counsel, auditors and representatives access,
during normal business hours, to such information and assistance relating to the
Business (to the extent within the control of such party) as is reasonably
necessary for financial reporting and accounting matters.
(b) After the Closing, upon reasonable written notice, HyperFeed
and the Company shall furnish or cause to be furnished to each other, as
promptly as practicable, such information and assistance relating to HyperFeed
Assets (including, access to books and records) and the Contributions, to the
extent within the control of such party, as is reasonably necessary for the
filing of all Tax returns, and making of any election related to Taxes, the
preparation for any audit by any Taxing Authority, and the prosecution or
defense of any claim, suit or proceeding related to any Tax return. HyperFeed
and the Company shall cooperate with each other party in the conduct of any
audit or other proceeding relating to Taxes involving the Business.
(c) Each party shall reimburse the others for reasonable
out-of-pocket costs and expenses incurred in assisting such party pursuant to
this Section 4.03. No party shall be required by this Section 4.03 to take any
action which would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations.
SECTION 4.04. FURTHER ASSURANCES. From time to time, as and when
requested by any party, each party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to Section 4.01),
as such other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements,
including, in the case of HyperFeed, executing and delivering to the Company
such assignments, deeds, bills of sale, consents and other instruments as the
Company or its counsel may reasonably request as necessary or desirable for such
purpose.
SECTION 4.05. QUOTESOCKET COMPATIBILITY. The Company agrees and covenants
that until such time as the DataFeed License Agreement is terminated by the
Company
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pursuant to Section 8B thereof, the Company shall take reasonable steps to
insure that Orbit (as defined in Schedule 1.02 to this Agreement) shall remain
solely compatible with QuoteSockets (as defined in Schedule 1.02 to this
Agreement) such that at all times Orbit will only be able to receive Data Feed
(as defined below) from HyperFeed and from no other source. As used in this
Section 4.05 Data Feed shall mean any market datafeed provided via the internet,
satellite or land line containing market data information obtained, selected and
consolidated under the authority of various agencies and other information
providers.
SECTION 4.06. NON-DISCLOSURE OF CUSTOMER LISTS. HyperFeed agrees and
covenants that it shall disclose, sell, lease, rent the other the customer lists
of HyperFeed relating to the Business which are being contributed to the Company
hereunder to any third party without the prior written consent of the Company.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. INDEMNIFICATION BY HYPERFEED. HyperFeed shall indemnify the
Company and each of its affiliates and each of its officers, directors,
employees, stockholders, agents and representatives against, and hold them
harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) ("Losses"), as incurred (payable promptly
upon written request), arising from, in connection with or otherwise with
respect to:
(i) any breach of any representation or warranty of HyperFeed that
survives the Closing and is contained in this Agreement, in any Ancillary
Agreement or in any document delivered in connection herewith;
(ii) any breach of any covenant of HyperFeed contained in this
Agreement or in any Ancillary Agreement;
(iii) any Excluded HyperFeed Liability;
(iv) the disclosure by any current or former personnel of HyperFeed
of any proprietary information of the Company and its affiliates; and
(v) any fees, expenses or other payments incurred or owed by
HyperFeed to any brokers, financial advisors or comparable other persons
retained or employed by it in connection with the transactions contemplated by
this Agreement.
SECTION 5.02. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
the HyperFeed and each of its respective affiliates and each of its officers,
directors, employees, stockholders, agents and representatives against, and hold
them harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses)
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("Losses"), as incurred (payable promptly upon written request), arising from,
in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of the Company
that survives the Closing and is contained in this Agreement, in any Ancillary
Agreement or in any document delivered in connection herewith;
(ii) any breach of any covenant of the Company contained in this
Agreement or in any Ancillary Agreement;
(iii) any Assumed HyperFeed Liability; and
(iv) the disclosure by any current or former personnel of the
Company of any proprietary information of HyperFeed and its affiliates.
SECTION 5.03. CALCULATION OF LOSSES. The amount of any Loss for which
indemnification is provided under this Article V shall be net of any amounts
actually recovered by the indemnified party under insurance policies with
respect to such Loss and shall be (i) increased to take account of any net Tax
cost incurred by the indemnified party arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss.
SECTION 5.04. TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless any party, (i) pursuant to Section 5.01(i) or
5.02(i) shall terminate when the applicable representation or warranty
terminates pursuant to Section 5.06 and (ii) pursuant to the other clauses of
Section 5.01 or 5.02 shall not terminate; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basis of such claim)
pursuant to Section 5.05 to the party to be providing the indemnification.
SECTION 5.05. PROCEDURES.
(a) In order for a party (the "indemnified party"), to be entitled
to any indemnification provided for under this Agreement in respect of, arising
out of or involving a claim made by any person against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the indemnifying party
in writing of the Third Party Claim promptly following receipt by such
indemnified party of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall have been
actually and materially prejudiced as a result of such failure. Thereafter, the
indemnified party shall deliver to the indemnifying party, promptly following
the indemnified party's receipt
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thereof, copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third Party Claim and not also
addressed to the indemnifying party.
(b) If a Third Party Claim is made against an indemnified party,
the indemnified party shall be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected by
the indemnifying party; provided, however, that such counsel is not reasonably
objected to by the indemnified party. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party shall not be
liable to the indemnified party for any legal expenses subsequently incurred by
the indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof. If the indemnifying party chooses to defend or
prosecute a Third Party Claim, all the indemnified parties shall cooperate in
the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information that are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party assumes the defense of a Third Party Claim, the indemnified party shall
not admit any liability with respect to, or settle, compromise or discharge,
such Third Party Claim without the indemnifying party's prior written consent
(which consent shall not be unreasonably withheld). If the indemnifying party
assumes the defense of a Third Party Claim, the indemnified party shall agree to
any settlement, compromise or discharge of a Third Party Claim that the
indemnifying party may recommend and that by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnified party completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the indemnified party. Notwithstanding the foregoing, the indemnifying
party shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the fees and expenses of counsel incurred by the indemnified
party in defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the indemnified party that the indemnified party reasonably
determines, after conferring with its outside counsel, cannot be separated from
any related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the defense of the
portion relating to money damages.
(c) OTHER CLAIMS. In the event any indemnified party should have
a claim against any indemnifying party under Section 5.01 or 5.02 that does not
involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the
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indemnified party shall deliver notice of such claim with reasonable promptness
to the indemnifying party. The failure by any indemnified party so to notify
the indemnifying party shall not relieve the indemnifying party from any
liability that it may have to such indemnified party under Section 5.01 or 5.02,
except to the extent that the indemnifying party demonstrates that it has been
materially prejudiced by such failure. If the indemnifying party does not
notify the indemnified party within 15 calendar days following its receipt of
such notice that the indemnifying party disputes its liability to the
indemnified party under Section 5.01 or 5.02, such claim specified by the
indemnified party in such notice shall be conclusively deemed a liability of the
indemnifying party under Section 5.01 or 5.02 and the indemnifying party shall
pay the amount of such liability to the indemnified party on demand or, in the
case of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
SECTION 5.06. SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
representations and warranties contained in this Agreement, in any Ancillary
Agreement or in any document delivered in connection herewith shall survive
the Closing solely for purposes of Article V and shall terminate at the close
of business five years following the date hereof. The covenants of the
Company and of HyperFeed contained in Sections 4.05 and 4.06 of this
Agreement shall be perpetual in nature and shall indefinitely survive the
Closing, subject to the earlier termination of Section 4.05 in accordance
with its terms.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by either party without the
prior written consent of the other party hereto; provided, however, that
HyperFeed may assign this Agreement and its rights and obligations hereunder to
any entity controlling, controlled by or under common control with, HyperFeed,
or to any entity that acquires HyperFeed by purchase of stock or by merger or
otherwise, or by acquiring all or substantially all of HyperFeed's assets,
provided that any such assignee succeeds to all of the rights and is subject to
all of the obligations of HyperFeed under this Agreement. Any attempted
assignment in violation of this Section 6.01 shall be null and void ab initio.
SECTION 6.02. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Article V, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
SECTION 6.03. ATTORNEY FEES. A party in breach of this Agreement shall,
on demand, indemnify and hold harmless each other party for and against all
reasonable out-of-
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pocket expenses, including legal fees, incurred by such other party by reason of
the enforcement and protection of its rights under this Agreement. The payment
of such expenses is in addition to any other relief to which such other party
may be entitled.
SECTION 6.04. NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so delivered
by hand, or if mailed, three days after mailing (one business day in the case of
express mail or overnight courier service), as follows:
(i) if to the Company,
PCQuote.com, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attention: Andrew Peterson
(ii) if to HyperFeed,
HyperFeed Technologies, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attention: John Juska
SECTION 6.05. INTERPRETATION; EXHIBITS AND SCHEDULES; CERTAIN DEFINITIONS.
(a) The headings contained in this Agreement, in any Exhibit or
Schedule hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All Exhibits and Schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
When a reference is made in this Agreement to a Section, Exhibit or Schedule,
such reference shall be to a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated.
(b) For all purposes hereof:
"affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person.
"including" means including, without limitation.
"person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or
other entity.
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"subsidiary" of any person means another person, in which an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 6.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to each of the other parties.
SECTION 6.07. ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements, along with the Schedules and Exhibits thereto, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the Ancillary Agreements.
SECTION 6.08. SEVERABILITY. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 6.09. AMENDMENTS AND WAIVERS. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 6.10. CONSENT TO JURISDICTION. Each of HyperFeed and the Company
irrevocably submits to the exclusive jurisdiction of (a) the Superior Court of
the State of Illinois, Cook County, and (b) the United States District Court for
the Northern District of Illinois, for the purposes of any suit, action or other
proceeding arising out of this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each of HyperFeed and the Company
agrees to commence any such action, suit or proceeding either in the United
States District Court for the Northern District of Illinois or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Superior Court of the State of Illinois, Cook County. Each of
HyperFeed and the Company further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in Illinois with respect to any matters to which it has submitted to
jurisdiction in this Section 7.10. Each of HyperFeed and the Company
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement, any Ancillary
Agreement or the transactions contemplated hereby and thereby in (i) the
Superior Court of the State of Illinois, Cook County, or (ii) the
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United States District Court for the Northern District of Illinois, and hereby
and thereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 6.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
IN WITNESS WHEREOF, HyperFeed and the Company have duly executed this
Agreement as of the date first written above.
HYPERFEED TECHNOLOGIES, INC.,
a Delaware corporation
By:
--------------------------------------
John E. Juska
Senior Vice President
PCQUOTE.COM, INC. ,
a Delaware corporation
By:
--------------------------------------
Timothy K. Krauskopf
President
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SCHEDULE 1.01(a)
HYPERFEED CONTRIBUTED ASSETS
The HyperFeed Contributed Assets shall mean all of the Assets as set forth on
the First Quarter Balance Sheet as of March 31, 1999, including without
limitation the following:
(A) EQUIPMENT. All of the furniture, office equipment, computer
equipment, machinery, equipment, and other items of personal property owned and
used by HyperFeed in connection with the Business;
(B) RECORDS. Copies of all books, documents and records of, or relating
to any material necessary to the operation of the Business (including all
financial and business records, customer lists and files, supplier records,
insurance policies and any claims or credits thereunder and copies of all
personnel records and payroll records for the current and last two calendar
years for all employees who will become employees of the Company as of the
Closing);
(C) ACCOUNTS RECEIVABLE. All accounts receivable, notes receivable (and
any security therefor) and all other receivables of any kind related to the
Business;
(D) GOODWILL. All goodwill of the Business;
(E) CUSTOMER LISTS. All customer lists of HyperFeed relating to the
Business;
(F) INTELLECTUAL PROPERTY. All Intellectual Property (including,
without limitation, the copyrights and rights of copyright) and technology
relating to the Business and listed on Exhibit A attached hereto; and
(G) CONTRACTS. All rights and privileges arising from the contracts and
agreements relating to the Business and specifically listed on Exhibit B
attached hereto.
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EXHIBIT A TO SCHEDULE 1.01(a)
HYPERTOOLS:
HyperTools, including including object code, source code, application
documentation and source code documentation, as described in the documentation.
HyperTools includes any one of a variety of programming interfaces which "talks"
or interfaces with a a HyperFeed 2000 Quote Server. HyperTools assist
developers in writing programs that "pull" out only the unique data desired from
the entire HyperFeed 2000 data stream. HyperTools include the following:
HYPERSCRIPT LIMITED:
A Do-it-Yourself toolkit, which provides developers with everything needed
to quickly and easily integrate the HyperFeed 2000 datafeed into web sites,
Intranets and Internet-based financial applications. HyperScript Limited
allows a user to cap the number of symbols a web site visitors or
application users can access. HyperScript Limited allows a user to
pre-select up to 30 ticker symbols.
HYPERSCRIPT UNLIMITED:
A Do-it-Yourself toolkit, HyperScript Unlimited which provides developers
with everything needed to quickly and easily integrate the HyperFeed 2000
datafeed into web sites, Intranets and Internet-based financial
applications. HyperScript Unlimited allows developers to provide their web
site visitors or application users with unlimited access to all of
HyperFeed 2000's price and fundamental data. HyperScript Unlimited
provides application portability and, end-users can submit queries as many
times as they wish.
MARKETSMART:
MarketSmart service including all applicable object code, source code,
application documentation and source code documentation, as described in the
documentation. MarketSmart Real-Time is HyperFeed's PC Quote branded real-time
Web Presence. Located within www.pcquote.com, the site functions as a real-time
quote source for Web based clients. The site also includes partnerships with
various content providers who supply research and analysis to PC Quote's end
user. MarketSmart delivers real-time HyperFeed quote data to the end user.
MarketSmart allows users to organize this data in a variety of fashions that
suit their investment needs. The user can conduct research on their investments
through a variety of third party applications and content.
WEB TEMPLATES:
Web site developments products known as Web Templates, including all applicable
object code, source code, application documentation and source code
documentation, as described in the documentation. Web Templates are used to
enhance the content of customer web sites, and are co-branded. Web Templates
allow customers to quickly add financially-enriched web pages that are formatted
to compliment the customer's web site, without having to buy expensive servers
and development resources.
PAY PER QUOTE:
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The Pay Per Quote server based application product including all applicable
object code, source code, application documentation and source code
documentation, as described in the documentation.
DOMAIN NAME AND WEBSITE:
The Internet Universal Resource Locator and domain name, including all
sub-domain names, known and identified as:
http://www.pcquote.com
Including all html, java, scripts and other languages used to create the
pcquote.com web site, including all applicable object code, source code,
application documentation and source code documentation, as described in the
documentation.
HYPERFEED SOFTWARE DEVELOPMENT KIT FOR QUOTESOCKETS:
QuoteSockets Software Development Kit ("SDK"), including documentation, as
described in the documentation. QuoteSockets SDK is a software tool which
enables a programmer to develop applications for a specific platform and
integrate HyperFeed 2000's market data. The SDK includes one or more programming
interfaces and programming tools (including API and Active X Controls),
documentation, sample code, access to technical support, and a 3-month
subscription to the delayed HyperFeed 2000 datafeed over the Internet.
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EXHIBIT B TO SCHEDULE 1.01(a)
DoubleClick Network Affiliate Agreement by and between PC Quote, Inc. and
DoubleClick, Inc. dated April 19, 1999
D.A.R.T. Service Agreement by and between PC Quote, Inc. and DoubleClick, Inc.
dated September 30, 1998
Internet Information Access Agreement by and between PC Quote, Inc. and @Plan,
Inc. dated April 30, 1998
Representative Agreement by and between PC Quote, Inc. and Fairclough &
Associates dated August 20, 1998
Mutual License Agreement for Limited Redistribution by and between PC Quote,
Inc. and VectorVest, Inc. dated June 1, 1998
Web Site Content Agreement by and between PC Quote, Inc. and IQC Corporation
dated February 1, 1999, as amended by Amendment 1 dated March 2, 1999
Web Site Content Agreement by and between PC Quote, Inc. and and IQ Net dated
April 23, 1997
Agreement by and between PC Quote, Inc. and Comtex Scientific Corporation dated
September 21, 1988, as amended by Amendment 1 to Agreement dated June 8, 1994,
as further amended by Amendment II to Agreement dated August 1, 1995, as further
amended by Amendment to Advertising and Promotions dated August 15, 1995, as
further amended by Amendment III dated July 10, 1997
DataFeed License Agreement by and between PC Quote, Inc. and Zacks Investment
Research dated September 3, 1998
Internet Distribution License by and between PC Quote, Inc. and Market Guide,
Inc dated February 4, 1998
The Market Guide Database Distribution Agreement by and between PC Quote, Inc.
and Market Guide, Inc. dated June 1, 1994
Internet Co-Branding Agreement by and between PC Quote, Inc. and IPO.COM Inc.
dated December 29, 1998
Master Agreement for InterNetworking Service by and between PC Quote, Inc. and
GTE Internetworking Incorporated dated August 31, 1998, as amended by letter
agreement
27
<PAGE>
Data Acquisition and Distribution Agreement by and between PC Quote, Inc. and
Strategic Weather Services dated September 16, 1998
Data Acquisition and Distribution Agreement by and between PC Quote, Inc. and
Hartfield Management, Inc. dated October 7, 1998
Dow Jones Financial News Services Composite Feed Master Distribution Agreement
by and between PC Quote, Inc. and Dow Jones & Company dated August 23, 1994, as
amended by letter agreement dated August 8, 1996, as further amended by letter
agreement dated July 15, 1998
Content Distribution Agreement by and between PC Quote, Inc. and Dow Jones &
Company dated January 9, 1998
Multex Investor Network Affiliate Operating agreement by and between PC Quote,
Inc. and Multex.com, Inc. dated December 22, 1999
Web Site Data License Agreement by and between PC Quote, Inc. and Pfizer, Inc.
dated November 20, 1997
Internet Trading Access Agreement by and between PC Quote, Inc. and AB Watley,
Inc. dated December 21, 1998
All of the existing Web Template and HyperScript customer contracts to which
HyperFeed is a party
All of the existing advertising contracts to which HyperFeed is a party
All of the existing Omega SDK contracts to which HyperFeed is a party
28
<PAGE>
SCHEDULE 1.01(b)
HYPERFEED LICENSED ASSETS
The HyperFeed Licensed Assets shall mean all of the Intellectual Property
related to the following:
ORBIT:
Orbit, including object code, source code, application documentation and
source code documentation as described in the documentation. Orbit is a
software product comprised of a set of modular, front-end, financial market
software applications, created by HyperFeed used as a real-time market tool
for the online investor. These applications are tailored specifically for use
with HyperFeed, and utilize the Quote Socket application programming
interface ("API"). Orbit is written in C++ utilizing Microsoft Foundation
classes, each application is self contained, and loosely coupled to the other
applications through propriety API's.
QUOTESOCKETS:
QuoteSockets object code and documentation, as described in the documentation.
QuoteSockets is the marketing name given to the propriety middle-ware layer that
provides connectivity from the user applications to HyperFeed data stored on a
quote server. Connectivity between client and server is achieved using the
TCP/IP protocol. Each Client workstation communicates to the server what data it
requires by subscribing to the Quote Server. The server maintains a per client
interest list and publishes data to the client as required. Quote Sockets was
written in C++ utilizing Microsoft Foundation Classes (MFC).
HYPERSERVER:
Configuration specifications and documentation for HyperServer, as described in
the documentation. HyperServer is a server specially configured according to
HyperFeed specifications to receive HyperFeed 2000 market data directly from the
HyperFeed 2000 ticker plant via satellite or landline. HyperServer configured
servers can be integrated into a LAN, Ethernet, or Internet Service Provider to
disseminate data onto multiple desktops. End-users are able to view and
manipulate robust market data through any program or web application written
specifically to read and display the HyperFeed 2000 data.
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<PAGE>
EXHIBIT 10.2
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") made this _____ day of
____________, 1999, by and between HYPERFEED TECHNOLOGIES, INC., a Delaware
corporation ("HyperFeed") and PCQUOTE.COM, INC., a Delaware corporation (the
"Company").
R E C I T A L S
WHEREAS, the Company and HyperFeed have entered into that certain
Contribution and Separation Agreement (the "Separation Agreement") dated as
of the date hereof, which provides, among other things, that HyperFeed shall
contribute certain assets to the Company as an additional capital
contribution to the Company, and the Company shall assume certain liabilities
of HyperFeed;
WHEREAS, as a condition to agreeing to enter into the Separation
Agreement, the Company has required that the parties execute and deliver this
Services Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and HyperFeed hereby,
intending to be legally bound by the terms hereof, agree as follows:
ARTICLE I
SERVICES PROVIDED
SECTION 1.1 SERVICES. During the term of this Agreement, subject to
the terms and conditions stated herein and unless such services are
terminated pursuant to Section 3.2 hereof, HyperFeed will assist in
performing the following services (the "Services") for the Company:
(a) administrative services, including telephones, secretarial
assistance, facilities management, use of office administrative equipment,
internal computer operations and systems, and related services;
(b) provision of customer information and services, including
customer billing, collections, financial accounting, and related services;
(c) technical and operational support, including assistance with
the operation and marketing of the on-line services (including advertising
services) offered by the Company;
(d) internal legal, human resources, risk management and
accounting services, including assistance with legal, employee benefits,
accounting and other related issues,
<PAGE>
with such assistance to be provided by HyperFeed personnel but not to include
any company retained outside advisors;
(e) network services, operations and management support;
(f) access to all records of HyperFeed relevant to the ongoing
operations of the Company for use solely by the Company, its agents and
advisors;
(g) provision of office space in HyperFeed's main offices at 300
South Wacker Drive, Suites 300 and 1130, Chicago, Illinois in an amount
reasonably sufficient to allow the Company to conduct its administrative
functions, subject to the terms and conditions of HyperFeed's current lease for
such offices; provided that HyperFeed shall at all times remain responsible for
all charges and expenses under such lease.
HyperFeed will provide all Services in a professional manner, consistent with
industry standards.
SECTION 1.2 PERSONNEL. HyperFeed shall engage or employ personnel to
service the Company (the "Provided Employees") on a full-time or part-time basis
as needed in sufficient amounts to provide the Services. HyperFeed shall
provide all compensation, benefits and/or related payments or
deductions/withholdings related to the Provided Employees. The Provided
Employees shall at all times be considered the employees of HyperFeed.
ARTICLE II
COMPENSATION
SECTION 2.1 COMPENSATION. During the term of this Agreement, subject
to the terms and conditions stated herein the Company shall pay HyperFeed
monthly in advance on the first business day of each month the amount
specified on the attached EXHIBIT A for such month as the monthly charge for
the Services.
ARTICLE III
TERM
SECTION 3.1 TERM. The term of this Agreement shall begin and be
effective as of April 1, 1999 and shall continue in full force and effect for a
period of fifteen months, unless it is terminated earlier in accordance with the
terms and conditions contained herein; provided, however, the Company may extend
this Agreement for additional one month terms by delivery of written notice to
HyperFeed no less than thirty (30) days prior to the end of the term of this
Agreement or any one month extension as the case may be.
2
<PAGE>
ARTICLE IV
WARRANTIES; REPRESENTATIONS
SECTION 4.1 HYPERFEED REPRESENTATIONS AND WARRANTIES. HyperFeed
represents and warrants that:
(a) it has full power and authority to enter into and fully
perform this Agreement.
(b) all materials and services furnished to the Company or the use
thereof will not violate any applicable law, or violate or infringe upon the
rights of any third party.
(c) at all times, HyperFeed will comply with all applicable
federal, state and local laws.
SECTION 4.2 COMPANY REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants that:
(a) it has full power and authority to enter into and fully
perform this Agreement.
(b) all materials and services furnished to the Company or the use
thereof will not violate any applicable law, or violate or infringe upon the
rights of any third party.
(c) at all times, the Company will comply with all applicable
federal, state and local laws.
ARTICLE V
INDEMNITIES
SECTION 5.1 INDEMNITIES. Each party shall at all times indemnify,
hold harmless and defend the other party in accordance with the
indemnification provisions (applicable to such party) set forth in Article 5
of the Contribution and Separation Agreement
SECTION 5.2 LIMITATION ON LIABILITY. Neither the Company nor
HyperFeed shall be liable for any loss resulting from a cause over which such
entities do not have direct control, including but not limited to the failure
of electronic or mechanical equipment or communication lines, telephone or
other interconnect problems, unauthorized access or theft.
ARTICLE VI
REMEDIES
SECTION 6.1 TERMINATION. Either party shall have the right to
terminate this Agreement if:
3
<PAGE>
(a) the other party breaches any material term or condition of
this Agreement and has failed to cure such breach within ten (10) days after
delivery of written notice of default.
(b) the other party makes an assignment for the benefit of its
creditors; (ii) is the subject of a voluntary petition in bankruptcy or any
voluntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if such petition or proceeding is
not dismissed within sixty (60) days of filing; (iii) becomes the subject of
any involuntary petition in bankruptcy or any involuntary proceeding relating
to insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing; or (iv) is liquidated or dissolved; or
(c) the other party is dissolved.
SECTION 6.2 PROCEDURE. The non-terminating party may exercise its
rights pursuant to Section 6.1 by sending the defaulting party the
appropriate notice. No exercise of rights under Section 6.1 will limit the
non-defaulting party's right to exercise any other remedy at law or equity.
ARTICLE VII
GENERAL
SECTION 7.1 ASSIGNMENT. Neither party may assign this Agreement, or
their respective rights and obligations hereunder, in whole or in part
without the other party's prior written consent which consent shall not be
unreasonably withheld. Any attempt to assign this Agreement without such
consent shall be void and of no effect whatsoever. Notwithstanding the
foregoing, the either party assign this Agreement or any of its rights and
obligations hereunder without the other party's consent to any entity
controlling, controlled by or under common control with such assigning party,
or to any entity that acquires the assigning party by purchase of stock or by
merger or otherwise, or by obtaining substantially all of the assigning
party's assets (a "the Company Assignee"), provided that any such Company
Assignee, or any division thereof, thereafter succeeds to all of the rights
and is subject to all of the obligations of the assigning party under this
Agreement.
SECTION 7.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware;
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
SECTION 7.3 JURISDICTION. Each party hereto irrevocably submits to
the exclusive jurisdiction of (a) the Superior Court of the State of
Illinois, Cook County, and (b) the United States District Court for the
Northern District of Illinois, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated
hereby or thereby. Each of HyperFeed and the Company agrees to commence any
such action, suit or proceeding either in the United States District Court
for the Northern District of Illinois or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons,
4
<PAGE>
in the Superior Court of the State of Illinois, Cook County. Each of
HyperFeed and the Company further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's
respective address set forth below shall be effective service of process for
any action, suit or proceeding in Illinois, with respect to any matters to
which it has submitted to jurisdiction in this Section 7.3. Each of
HyperFeed and the Company irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby and thereby in
(i) the Superior Court of the State of Illinois, Cook County, or (ii) the
United States District Court for the Northern District of Illinois, and
hereby and thereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 7.4 COMPLIANCE WITH LAW. Each party shall comply in all
material respects with all laws and regulations applicable to its activities
under this Agreement.
SECTION 7.5 PARTIAL INVALIDITY. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to either party or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof (or the remaining portion thereof).
SECTION 7.6 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so
delivered by hand, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:
(a) if to the Company:
PCQuote.com, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attn: Andrew Peterson
(b) if to HyperFeed,
HyperFeed Technologies, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attn: John Juska
SECTION 7.7 INDEPENDENT CONTRACTORS. The parties to this Agreement
are independent contractors. There is no relationship of partnership, joint
venture, employment, franchise, or agency between the parties. Neither party
shall have the power to bind the other or incur obligations on the other's
behalf without the other's prior written consent.
5
<PAGE>
SECTION 7.8 NO WAIVER. No failure of either party to exercise or
enforce any of its rights under this Agreement shall act as a waiver of such
right.
SECTION 7.9 ENTIRE AGREEMENT. This Agreement, along with the
Exhibits thereto, contains the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter. Neither
party shall be liable or bound to any other part, in any manner by any
representations, warranties or covenants relating to such subject matter
except as specifically set forth herein.
SECTION 7.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to each of the other parties.
SECTION 7.11 EFFECTIVENESS. This Agreement shall not become effective
until executed by all proposed Parties hereto.
SECTION 7.12 AMENDMENT. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. By
an instrument in writing, any two parties hereto may waive compliance by the
third partly with any term or provision of this Agreement that such third
party was or is obligated to comply with or perform.
SECTION 7.13 NO THIRD PARTY BENEFIT. Except as provided in the
Contribution and Separation Agreement, this Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.
SECTION 7.14 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When a reference is made in this Agreement
to a Section such reference shall be to a Section of this Agreement unless
otherwise indicated.
* * * * *
6
<PAGE>
* * * * *
IN WITNESS WHEREOF, the parties have caused this Services Agreement to be
executed by their duly authorized representatives as of the date first above
written.
HYPERFEED TECHNOLOGIES, INC., PCQUOTE.COM, INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
By: By:
------------------------------------ ------------------------------------
John E. Juska, Senior Vice President Timothy K. Krauskopf, President
7
<PAGE>
EXHIBIT A
TO THE SERVICES AGREEMENT
<TABLE>
<CAPTION>
Period Payment
------ -------
<S> <C>
April 1999 $ 213,500
May 1999 $ 213,500
June 1999 $ 213,500
July 1999 $ 213,500
August 1999 $ 213,500
September 1999 $ 213,500
October 1999 $ 163,500
November 1999 $ 163,500
December 1999 $ 163,500
January 2000 $ 138,500
February 2000 $ 138,500
March 2000 $ 138,500
April 2000 $ 113,500
May 2000 $ 113,500
June 2000 $ 113,500
Any month beyond June 2000 an amount reasonably
agreeable to the parties
</TABLE>
<PAGE>
EXHIBIT 10.3
MAINTENANCE AGREEMENT
THIS MAINTENANCE AGREEMENT (this "Agreement") is being entered into as of
the ____ day of ________________, 1999 and is entered into by and between
HYPERFEED TECHNOLOGIES, INC., a Delaware corporation ("HyperFeed") and
PCQUOTE.COM, INC., a Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, the Company and HyperFeed have entered into that certain
Contribution and Separation Agreement (the "Separation Agreement") dated as of
the date hereof, which provides, among other things, that HyperFeed shall
contribute certain assets to the Company as an additional capital contribution
to the Company, and the Company shall assume certain liabilities of HyperFeed;
WHEREAS, as a condition to agreeing to enter into the Separation Agreement,
the Company has required that the parties execute and deliver this Maintenance
Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and HyperFeed hereby, intending to be legally bound by
the terms hereof, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement the follow terms
shall have the meaning set forth herein:
"Intellectual Property" means the intellectual property rights
relating to the items listed on the attached EXHIBIT A.
"Intellectual Property Gross Revenues" means the gross revenues of
Company and its subsidiaries derived from all permitted uses, licensing and
sub-licensing of any of the Intellectual Property.
"Person" means any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
<PAGE>
ARTICLE II
MAINTENANCE AGREEMENT
SECTION 2.1 MAINTENANCE SERVICES. HyperFeed agrees and covenants that
at all times during the term of this Agreement HyperFeed shall continue to
provide software features, upgrades and enhancements to the Intellectual
Property as such features, upgrades and enhancements are tested and become
available during the normal course of HyperFeed's business. HyperFeed is under
no obligation to add special features, upgrades or enhancements requested by the
Company. Such special requests, if HyperFeed agrees to perform, shall be
subject to a separate agreement, acceptable to the parties. HyperFeed is under
no obligation to make any features, upgrades or enhancements compatible with any
features, upgrades or enhancements to the Intellectual Property made by the
Company.
ARTICLE III
TERM
SECTION 3.1 TERM. The term of this Agreement shall begin on the
Effective Date and shall be perpetual in nature unless it is otherwise
terminated in accordance with this Article 3.
SECTION 3.2 TERMINATION BY HYPERFEED HyperFeed shall have the right
(but not the obligation) to immediately terminate this Agreement:
(a) if the term of that certain DataFeed License Agreement dated
as of the date hereof by and between the Company and HyperFeed (the "DataFeed
License Agreement") expires and is not renewed by the Company or HyperFeed
terminates such agreement pursuant to Section 8 thereof;
(b) if Company is in material breach of any of its obligations or
representations hereunder, which breach is not cured within 20 days of receipt
of written notice from HyperFeed of such breach;
(c) if Company is the subject of a voluntary petition in
bankruptcy or any voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors, if such petition or
proceeding is not dismissed within sixty (60) days of filing; or (iii) becomes
the subject of any involuntary petition in bankruptcy or any involuntary
proceeding relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing;
(d) if the business of the Company is liquidated or otherwise
terminated for insolvency or any other basis; or
(e) if Company becomes insolvent or unable to pay its debts as
they mature or makes an assignment for the benefit of its creditors.
2
<PAGE>
SECTION 3.3 TERMINATION BY THE COMPANY. The Company shall have the right
(but not the obligation) to immediately terminate this Agreement:
(a) if HyperFeed is in material breach of any of its obligations
or representations hereunder, which breach is not cured within 20 days of
receipt of written notice from Company of such breach,
(b) if HyperFeed is the subject of a voluntary petition in
bankruptcy or any voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors, if such petition or
proceeding is not dismissed within sixty (60) days of filing, or becomes the
subject of any involuntary petition in bankruptcy or any involuntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing, or
(c) if the business of HyperFeed is liquidated or otherwise
terminated for insolvency or any other basis.
SECTION 3.4 PROCEDURE FOR TERMINATION. A party may exercise its right to
terminate pursuant to this Article 3 by sending appropriate notice to the other
party. No exercise by a party of its rights under this Article 3 will limit its
remedies by reason of the other party's default, the party's rights to exercise
any other rights under this Article 3, or any of that party's other rights.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 SOFTWARE UPDATES. HyperFeed agrees and covenants that at
all times during the term of this Agreement HyperFeed shall continue to
provide and license to the Company software updates to the Intellectual
Property as features are tested and become available.
SECTION 4.2 OWNERSHIP. As between HyperFeed and the Company: the Company
shall be the exclusive owner and shall retain all right, title and interest to
any new features to the Intellectual Property created by the Company.
SECTION 4.3 COOPERATION. Each party agrees to take all action and to
cooperate as is reasonably necessary, at the other party's request and expense,
to protect the other's respective rights, titles, and interests in the
Intellectual Property, and further agrees to execute any documents that might be
necessary to perfect each party's ownership of such rights, titles, and
interests.
ARTICLE V
COMPENSATION
SECTION 5.1 PAYMENT FOR MAINTENANCE SERVICES. Pursuant to the procedures
set forth in this Article 5, the Company shall pay HyperFeed a service fee for
the maintenance services
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<PAGE>
provided under this Agreement equal to three percent (3%) of Intellectual
Property Gross Revenue.
SECTION 5.2 COMPUTING INTELLECTUAL PROPERTY GROSS REVENUE. The Company
will compute Intellectual Property Gross Revenue for each calendar month.
Within thirty (30) days after each calendar month, the Company will deliver to
HyperFeed a statement indicating Intellectual Property Gross Revenue for such
month and will pay HyperFeed the maintenance fee amount as computed in
accordance with Section 5.1.
SECTION 5.3 BOOKS AND RECORDS. The Company will maintain accurate books
and records which report the recognition of Intellectual Property Gross Revenue.
HyperFeed may, at its own expenses, examine and copy those books and records, as
provided in this paragraph. HyperFeed may make such an examination for a
particular statement within three (3) years after the date when Company sends
HyperFeed the statement concerned. HyperFeed may make those examinations only
during the Company's usual business hours, and at the place where it keeps the
books and records. HyperFeed will be required to notify the Company at least
ten (10) days before the date of planned examination. If an examination has not
been completed within two months from commencement, the Company may require
HyperFeed to terminate it on seven (7) days notice to HyperFeed at any time,
provided that Company has cooperated with HyperFeed in the examination of such
books and records.
ARTICLE VI
WARRANTIES; REPRESENTATIONS
SECTION 6.1 HYPERFEED REPRESENTATIONS AND WARRANTIES. HyperFeed
represents and warrants that:
(a) it has full power and authority to enter into this Agreement;
(b) the execution, delivery and performance by HyperFeed of this
Agreement will not conflict with, or result in a breach or termination of or
constitute a default under, any lease, agreement, commitment or other instrument
to which HyperFeed is a party; and
(c) this Agreement constitutes the valid and binding obligations
of HyperFeed enforceable against it in accordance with its terms.
SECTION 6.2 COMPANY REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants that:
(a) it is has the full power and authority to enter into and
fully perform this Agreement; and
(b) this Agreement constitutes the valid and binding obligations
of Company enforceable against it in accordance with its terms; and
(c) the execution, delivery and performance by the Company of
this
4
<PAGE>
Agreement will not conflict with, or result in a breach or termination of or
constitute a default under, any lease, agreement, commitment or other instrument
to which the Company is a party.
ARTICLE VII
GENERAL
SECTION 7.1 ASSIGNMENT. Neither HyperFeed nor Company may assign this
Agreement, or its respective rights and obligations hereunder, in whole or in
part without the other party's prior written consent. Any attempt to assign
this Agreement without such consent shall be void and of no effect ab initio.
Notwithstanding the foregoing, any party may assign this Agreement or any of its
rights and obligations hereunder to any entity controlled by it or to any entity
that acquires it by purchase of stock or by merger or otherwise, or by obtaining
substantially all of its assets (a "Permitted Assignee"), provided that any such
Permitted Assignee, or any division thereof, thereafter succeeds to all of the
rights and is subject to all of the obligations of the assignor under this
Agreement.
SECTION 7.2 CHOICE OF LAW AND VENUE. Each party hereto irrevocably
submits to the exclusive jurisdiction of (a) the Superior Court of the State of
Illinois, Cook County, or (b) the United States District Court for the Northern
District of Illinois, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby or thereby.
Each party agrees to commence any such action, suit or proceeding either in the
United States District Court for the Northern District of Illinois or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Superior Court of the State of Illinois, Cook
County. Each party further agrees that service of any process, summons, notice
or documents by U.S. registered mail to such party's respective address set
forth above shall be effective service of process for any action, suit or
proceeding in Illinois with respect to any maters to which it has submitted to
jurisdiction in this Section 7.2. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby and
thereby in (i) the Superior Court of the State of Illinois, Cook County, or
(ii) the United States District Court for the Northern District of Illinois, and
hereby and thereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 7.3 COMPLIANCE WITH LAWS AND REGULATIONS Each party shall comply
with all laws and regulations applicable to its activities under this Agreement.
SECTION 7.4 PARTIAL INVALIDITY. If any provision of this Agreement (or
any portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforcability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other Persons or circumstances.
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<PAGE>
SECTION 7.5 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so delivered
by hand, or if mailed, three days after mailing (one business day in the case of
express mail or overnight courier service), as follows:
(i) if to Company,
PCQuote.com, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attention: Andrew Peterson
(ii) if to HyperFeed,
HyperFeed Technologies, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attention: John Juska
SECTION 7.6 INDEPENDENT CONTRACTOR STATUS. The parties to this Agreement
are independent contractors. There is no relationship of partnership, joint
venture, employment, franchise, or agency between the parties. No party shall
have the power to bind any other or incur obligations on any other's behalf
without the other's prior written consent.
SECTION 7.7 NO WAIVER. No failure of any party to exercise or enforce
any of its rights under this Agreement shall act as a waiver of such right.
SECTION 7.8 ENTIRE AGREEMENT. This Agreement, along with the Exhibits
hereto, contains the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to such subject matter. No party shall be liable or
bound to any other party in any manner by any representations, warranties or
covenants relating to such subject matter except as specifically set forth
herein.
SECTION 7.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to each of the other parties.
SECTION 7.10 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 7.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois
applicable to agreements made and to be
6
<PAGE>
performed entirely within such State, without regard to the conflicts of law
principles of such State.
SECTION 7.12 NO THIRD PARTY RIGHTS. This Agreement is for the sole
benefit of the parties hereto and nothing herein expressed or implied shall give
or be construed to give to any person, other than the parties hereto any legal
or equitable rights hereunder.
SECTION 7.13 HEADINGS. The headings contained in this Agreement or in any
Exhibit hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Any capitalized terms used in any Exhibit but
not otherwise defined therein, shall have the meaning as defined in this
Agreement. When a reference is made in this Agreement to a Section or an
Exhibit, such reference shall be to a Section of, or an Exhibit to, this
Agreement unless otherwise indicated.
* * * * *
7
<PAGE>
* * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
HYPERFEED TECHNOLOGIES, INC., PCQUOTE.COM, INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
By: By:
------------------------------------ -------------------------------
John E. Juska, Senior Vice President Timothy K. Krauskopf, President
8
<PAGE>
EXHIBIT A
TO MAINTENANCE AGREEMENT
ORBIT:
Orbit, including object code, source code, application documentation and
source code documentation as described in the documentation. Orbit is a
software product comprised of a set of modular, front-end, financial market
software applications, created by HyperFeed used as a real-time market tool
for the online investor. These applications are tailored specifically for
use with HyperFeed, and utilize the Quote Socket application programming
interface ("API"). Orbit is written in C++ utilizing Microsoft Foundation
classes, each application is self contained, and loosely coupled to the other
applications through propriety API's.
<PAGE>
EXHIBIT 10.4
PCQUOTE, INC.
- -------------------------------------------------------------------------------
DATAFEED LICENSE AGREEMENT
This Agreement is made effective April 1st, 1999 by and between PC QUOTE, INC.
(hereinafter referred to as "HTI" to be named HyperFeed Technologies, Inc.), a
Delaware corporation with its principal place of business at 300 South Wacker
Drive, Suite 300, Chicago, Illinois 60606, and PCQuote.com (hereinafter referred
to as "LICENSEE"), a DELAWARE CORPORATION, with its principal place of business
at 300 South Wacker Drive, Suite 300, Chicago, Illinois 60606.
HTI and LICENSEE agree as follows:
1. Parties. This Agreement shall apply to said LICENSEE and all of its
subsidiaries and related companies ("affiliates").
2. Definitions
A. HYPERTOOLS, API, and/or SDK
HTI's programming interface software licensed to LICENSEE for development
of market data applications. The HYPERTOOLS which are subject to this
License Agreement are set forth in the attached Schedule of Services and
Fees (the "Schedule") attached hereto and incorporated herein by reference
and as may be amended by agreement, in writing, of the parties.
B. HTI's DATAFEED
A digital market datafeed provided via Internet, Satellite or land line
containing market data information obtained, selected and consolidated
under the authority of various agencies and other information providers
listed in Section 10 of this Agreement, and transmitted to LICENSEE in
accordance with the Schedule.
3. Scope of Use. LICENSEE's and its affiliates' permitted use of the DATAFEED
and HYPERTOOLS is limited as set forth in the attached Schedule.
4. HYPERTOOLS and the DATAFEED
A. The HYPERTOOLS includes existing HTI modules and applications that
enable LICENSEE to interface with the DATAFEED. As new modules and
applications become available for those HYPERTOOLS licensed to LICENSEE
hereunder, or existing modules and applications are enhanced, these may be
made available to LICENSEE without cost (other than the license fee(s)
specified in the Schedule), but shall not include additional services.
B. The DATAFEED includes financial market information obtained by HTI
from institutions, exchanges and other information providers listed in
Section 10 of this Agreement. This market data information includes stock
quotes, option prices and other related information. Data content may be
modified from time to time due to policy and/or content changes implemented
by the original information providers.
5. Grant of License
A. HTI grants to LICENSEE and LICENSEE accepts on the terms and
conditions set forth in this Agreement, a non-transferable and
non-exclusive license to use the DATAFEED in conjunction with the
HYPERTOOLS according the Scope of Use in the attached Schedule.
B. HTI shall consolidate, update and transmit the DATAFEED to LICENSEE
according to the attached Schedule as the information becomes available
from the various original information providers, including, but not limited
to, the time in which the various institutions and exchanges are open for
trading.
<PAGE>
C. HTI shall retain title and all copyrights or proprietary rights to the
HYPERTOOLS and DATAFEED provided to LICENSEE pursuant to this Agreement.
LICENSEE shall have a non-exclusive license to use the DATAFEED only with
the HYPERTOOLS.
D. LICENSEE shall not, except as expressly permitted in this Agreement,
copy, sell, distribute, assign, publish, disseminate, store as part of any
database or file, nor convey, nor allow access by a third party to the
DATAFEED and HYPERTOOLS nor any derivation, revision or re-combination
thereof, nor shall LICENSEE use HYPERTOOLS and DATAFEED to produce
end-of-day, end-of-week, end-of-month, or other files or database of
non-contemporaneous data.
E. LICENSEE agrees to notify HTI in writing of any new developments in
LICENSEE's dissemination system of the DATAFEED, including but not limited
to new software, that fall outside of the Scope of Use in the attached
Schedule. Violation of this provision shall constitute a material breach of
this Agreement.
6. Data Use Requirements
A. LICENSEE agrees that all displays of market data information provided
by HTI on any of LICENSEE's display devices will include attribution to
HyperFeed 2000. When possible, attribution to HTI will be in the form of (1) a
HTI "Powered by Hyperfeed-TM- 2000" logo and (2) copy describing HTI and
HyperFeed-SM- as the original provider of market data.
B. LICENSEE agrees that all displays of delayed market data information
provided by HTI will include the following delayed data notice or such notice(s)
as the original information provider(s) may require: "Market data 20 minutes
delayed," as well as text indicating that the information is provided by PC
Quote, Inc.
7. Technical Support. HTI agrees to use reasonable efforts to provide
LICENSEE with technical support via telephone, as LICENSEE may
reasonably require for the DATAFEED and HYPERTOOLS during the term of
this Agreement. HTI shall not be obligated to provide support to
LICENSEE's customers.
8. Term
A. The initial term of this License Agreement shall be five (5) years
from the effective date of this Agreement specified in the Schedule, unless
sooner terminated as provided in Section 8.B. Thereafter, this Agreement
shall automatically renew for additional one (1) year terms unless written
notice of termination is delivered by LICENSEE to HTI at least sixty (60)
days prior to the end of the initial term or any renewal term.
B. Either party may terminate this Agreement upon thirty (30) days
written notice of a material breach of this Agreement by the other party,
provided, however, that such breach has not been cured within such thirty
(30) day period. Notwithstanding any provision in this Agreement to the
contrary, in the event that LICENSEE is in breach of Section 10.B., HTI
shall have the right to immediately suspend LICENSEE's use of the DATAFEED
and HYPERTOOLS. If such breach is not cured within thirty (30) days after
suspension of service or notice of breach to LICENSEE, HTI may then
immediately terminate this Agreement and if so terminated, LICENSEE shall,
in addition to any outstanding amounts due hereunder, become immediately
liable for, and pay HTI, the license fee(s) payable hereunder for the
remaining term, discounted at six percent (6%). If either party files a
petition in bankruptcy or fails to discharge within thirty (30) days any
petition in bankruptcy filed against it, the other party may terminate this
Agreement immediately.
C. In the event of any termination of this Agreement for any reason,
LICENSEE shall cease all further use or distribution of the DATAFEED and
HYPERTOOLS and shall promptly return the software, documentation and all
copies thereof to HTI. LICENSEE shall also purge all copies of HYPERTOOLS
software installed on any of its systems and all machine readable data and
information in its possession or control related to the DATAFEED and
HYPERTOOLS from its data storage facilities. LICENSEE shall, upon request,
certify in writing to HTI LICENSEE's compliance with this paragraph. HTI,
on three (3) business days notice retains the right to audit LICENSEE's
compliance with this Section 8.C.
9. Payment for Service
A. Beginning with the effective date specified on the attached Schedule,
LICENSEE will pay HTI the license fee(s) specified in the Schedule for use
of HYPERTOOLS with the DATAFEED; provided, however, in
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<PAGE>
the event that HIT enters into an agreement with any other person or entity
which provides for lower monthly fees for any item on the Schedule than the
fee for such item set forth on the Schedule, the Schedule shall be amended
to lower the price for that item to the price being charged such person or
entity.
B. LICENSEE will pay all additional direct costs directly related to
LICENSEE's receipt of the DATAFEED including but not limited to:
Computer hardware and communication equipment
Onsite training or support
Satellite transmission
Leased phone lines
Exchange fees, including indirect access fees
C. The charges for the services set forth in this Agreement shall be
payable monthly, in advance. LICENSEE agrees to pay said charges by the
5th day of the month of service, including the prorated additions of
service for the month prior.
D. All payments will be made in U.S. Dollars drawn on a U.S. bank. Any
payments which have not been received by HTI prior to the due date shall be
subject to a late payment charge of the lesser of one and one half percent
(1.5%) per month on the outstanding balance or the highest interest rate
allowed by applicable law.
E. (Intentionally left blank)
F. Any sales, use, excise, value added, personal property or similar
taxes or duties which may be assessed in connection with this license will
be borne by and shall be the sole responsibility of LICENSEE (but excluding
taxes on HTI's income). LICENSEE agrees to indemnify and hold harmless HTI
from and against any such taxes, including penalties and interest thereon.
The provisions of this Section 9.F. shall survive any termination of this
Agreement.
G. Notwithstanding any provision in this Agreement to the contrary, in
the event that any monthly payment that is not paid by LICENSEE within
fifteen (15) days after the due date, after giving notice to LICENSEE, HTI
may terminate this Agreement and LICENSEE's access to and use of HYPERTOOLS
and DATAFEED unless LICENSEE pays such monthly payment prior to the
termination date specified in the termination notice. Upon such
termination, LICENSEE shall, in addition to any outstanding amounts due
hereunder, become immediately liable for, and pay HTI, the license fee(s)
payable hereunder for the remaining term, discounted at six percent (6%).
The remedies contained herein are cumulative and are in addition to all
other rights and remedies available to HTI under this Agreement, by
operation of law, or otherwise.
10. Exchange Authorization
A. LICENSEE hereby acknowledges and agrees that the DATAFEED provided
under this Agreement may contain market information obtained, selected and
consolidated by HTI under the authority of various agencies and other
information providers, including but not limited to, the New York Stock
Exchange, American Stock Exchange, Pacific Stock Exchange, Midwest Stock
Exchange, Chicago Board Options Exchange, the Options Price Reporting
Authority, the Consolidated Tape Association, Chicago Board of Trade,
Chicago Mercantile Exchange/International Monetary Market, Kansas City
Board of Trade, Minneapolis Grain Exchange, Commodities Exchange,
Commodities Exchange Center, New York Mercantile Exchange, Mid-America
Commodity Exchange, and the Canadian Exchange Group ("Data Feed Sources"),
and that the LICENSEE's use of the DATAFEED for internal or external
redistribution of data is authorized and regulated by the Data Feed Sources
whose data LICENSEE receives. HTI's rights to distribute information
contained in the DATAFEED is limited to rights granted to it by the Data
Feed Sources. Furthermore, the data content provided by HTI may change
during the course of this Agreement due to modifications made by the Data
Feed Sources. HTI shall not be obligated to provide any information of the
Data Feed Sources that is not provided to HTI by the Data Feed Sources for
any reason whatsoever.
B. LICENSEE shall, prior to commencing any use of the DATAFEED, submit an
application to and receive written approval from each and every Data Feed
Source whose approval is required for receipt or dissemination of
information contained in the DATAFEED. The use of the DATAFEED by LICENSEE
is subject,
3
<PAGE>
where applicable, to separate agreements with the Data Feed Sources and
LICENSEE shall comply with any conditions, restrictions or limitations
imposed by such Data Feed Sources, including the payment of all such
fees or charges as the Data Feed Sources may impose with respect
thereto. LICENSEE shall direct all Data Feed Sources to provide HTI
with written notification that LICENSEE has executed any required
agreement with such Data Feed Source, and HTI may withhold providing the
DATAFEED until it receives such notification. In all events, it shall
remain the sole responsibility of LICENSEE to confirm with the
applicable Data Feed Sources whether or not and under what conditions
such portion of the DATAFEED may be distributed to third parties; and it
shall be the sole responsibility of LICENSEE to ensure that all
applicable written approvals from the appropriate Data Feed Sources are
obtained by LICENSEE and/or such third parties prior to LICENSEE
commencing distribution of the DATAFEED to such third party. LICENSEE
IS EXPRESSLY PROHIBITED FROM ANY REDISTRIBUTION, EITHER INTERNALLY OR
EXTERNALLY, OF THE DATAFEED TO THIRD PARTIES (OTHER THAN TO AB WATLEY,
AN EXISTING CUSTOMER OF LICENSEE) WITHOUT THE EXPRESS WRITTEN CONSENT
OF THE APPROPRIATE DATA FEED SOURCES AND HTI; PROVIDED, LICENSEE IS
PERMITTED TO ALLOW ACCESS BY END USERS TO THE DATAFEED ON SERVERS HOSTED
BY LICENSEE OR BY TOWNSEND ANALYTICS, LTD. LICENSEE IS FURTHER PROHIBITED
FROM PERMITTING ANY REDISTRIBUTION OF THE DATAFEED, EITHER INTERNALLY OR
EXTERNALLY, BY ANY THIRD PARTY TO ANY OTHER PARTY WITHOUT THE EXPRESS
WRITTEN CONSENT OF THE APPROPRIATE DATAFEED SOURCES AND HTI.
C. LICENSEE hereby acknowledges and agrees that Data Feed Sources may
have the right to unilaterally terminate provision of the DATAFEED, or
portions thereof, to HTI and/or LICENSEE with or without notice and that
neither any such Data Feed Sources nor HTI shall have any liability in
connection therewith.
D. LICENSEE agrees to indemnify and hold harmless HTI for all losses,
damages, liabilities, costs, charges and expenses (including reasonable
attorney's fees), arising out of any breach by LICENSEE of this Section 10
or arising out of any unauthorized use of the DATAFEED by LICENSEE or any
third party supplied such data by LICENSEE. The provisions of this Section
10 shall survive any termination of this Agreement.
11. Right to Audit. LICENSEE hereby grants to HTI the right to audit
LICENSEE's use of the DATAFEED and HYPERTOOLS, including dissemination
systems, software display applications, subscriber databases, data
authorization systems, and any applicable financial market exchange
reporting, at any time, during normal business hours.
12. Limited Warranty; Limitations of Liability
A. Subject to Section 10 hereof, HTI represents and warrants that it is
the owner of, or has the right under U.S. law, to license the DATAFEED and
HYPERTOOLS to LICENSEE for the purposes described in the Schedule. HTI
further represents and warrants that the DATAFEED and HYPERTOOLS software
(and, to the best of its knowledge, the data feed from the Data Feed
Sources) do not contain any instructions designed to modify, delete, damage
or disable other software, data or hardware, and that the DATAFEED and
HYPERTOOLS software (and, to the best of its knowledge, the data feed from
the Data Feed Sources) do not contain any hidden passwords to allow access
by HTI or another third party.
B. The information and data used in the DATAFEED and HYPERTOOLS provided
under this Agreement, including option prices, stock prices, commodity
prices, dividends, dividend dates, volatilities, deltas and other
variables, are obtained by HTI from the Data Feed Sources which are
believed to be reliable and HTI agrees to run reasonable control checks
thereon to verify that the data transmitted by HTI is the same as the data
received from the Data Feed Sources. However, HTI shall not be subject to
liability for truth, accuracy, or completeness of the information received
by HTI from the various exchanges and other sources and conveyed to
LICENSEE or for errors, mistakes or omissions therein or in transmission
thereof by HTI to LICENSEE or for any delays or interruptions of the
DATAFEED or HYPERTOOLS from whatever cause. NEITHER HTI, NOR ANY DATA FEED
SOURCES, NOR ANY OF THEIR RESPECTIVE LICENSORS, EMPLOYEES OR AGENTS,
WARRANTS THAT PROVISION OF THE DATAFEED OR HYPERTOOLS WILL BE EITHER
UNINTERRPUTED OR ERROR FREE. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 10.A.
ABOVE, THE DATAFEED AND HYPERTOOLS TO BE PROVIDED HEREUNDER, AND ANY OTHER
MATERIALS OR SERVICES PROVIDED IN CONNECTION THEREWITH, ARE PROVIDED "AS
IS," WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY OR
4
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FITNESS FOR ANY PARTICULAR PURPOSE. LICENSEE EXPRESSLY AGREES THAT USE OF
THE DATAFEED AND HYPERTOOLS IS AT LICENSEE'S SOLE RISK.
C. EXCEPT FOR BREACH OF SECTION 12.A., NEITHER HTI, NOR ANY DATA FEED
SOURCE, NOR ANYONE ELSE INVOLVED IN CREATING, PRODUCING, DELIVERING OR
INSTALLING THE DATAFEED OR THE HYPERTOOLS SHALL BE LIABLE TO LICENSEE OR TO
ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING LOST PROFITS, ARISING OUT OF USE THEREOF OR
OUT OF ANY BREACH OF ANY WARRANTY HEREUNDER. LIABILITY OF HTI IN ANY AND
ALL CATEGORIES, WHETHER ARISING FROM MISTAKES, OMISSIONS, INTERRUPTIONS,
DELAYS, ERRORS OR DEFECTS OR UPON CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE), OR OTHERWISE, EVEN IF HTI HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES SHALL IN NO EVENT EXCEED, IN THE AGGREGATE, ONE (1) MONTH'S
FEE APPLICABLE TO THAT PORTION OF THE DATAFEED OR HYPERTOOLS DIRECTLY
AFFECTED BY THE MISTAKE, OMISSION, DELAY, ERROR OR DEFECT.
D. The provisions of Section 12 shall survive any termination of this
Agreement.
13. Confidentiality of Proprietary Information
A. LICENSEE understands and acknowledges the proprietary nature of the
DATAFEED and HYPERTOOLS provided by HTI and that said DATAFEED and
HYPERTOOLS have been developed as a trade secret of HTI and at its expense.
LICENSEE agrees to hold said information in the same manner as LICENSEE
deals with its own proprietary information and trade secrets. LICENSEE
agrees not to use the DATAFEED or the HYPERTOOLS except as expressly
provided hereunder. Furthermore, LICENSEE agrees not to attempt any
reverse engineering of the DATAFEED or HYPERTOOLS to decode the signals
used by HTI in transmitting the information or for any other purpose.
B. HTI understands the proprietary nature of any information belonging to
LICENSEE and recognizes the harm that can be occasioned to LICENSEE by
disclosure of information relative to LICENSEE's activities. HTI agrees to
hold such information in the same manner as HTI deals with its own
proprietary information and trade secrets.
14. Preservation of Intellectual Property
LICENSEE acknowledges and agrees that (a) HTI is and shall continue to be
the absolute owner of the HYPERTOOLS and DATAFEED, (b) LICENSEE's right to
use the HYPERTOOLS and DATAFEED is derived solely from this Agreement and
(c) such right is expressly limited pursuant to this Agreement. LICENSEE
shall at no time assert any claim of ownership of the HYPERTOOLS or
DATAFEED by reason of its use thereof and shall not grant or create or
suffer to exist any lien or other security interest in the HYPERTOOLS or
DATAFEED or any of its rights hereunder. If any of LICENSEE's clients take
actions which could materially impair HTI's proprietary rights to the
HYPERTOOLS or in the DATAFEED, LICENSEE shall (upon HTI's request) cease
delivery of the HYPERTOOLS and/or DATAFEED to such client.
15. Indemnification
A. LICENSEE agrees to defend, indemnify and hold harmless HTI, its
employees, agents, successors and assigns from and against all actions,
claims, damages, liabilities, costs, losses or other expenses (including
reasonable attorney's fees) resulting from or arising out of LICENSEE's
negligence, willful misconduct, misrepresentation, breach of any of its
representations or warranties or nonperformance of any of its covenants or
obligations under this Agreement.
B. HTI hereby agrees to defend, indemnify and hold harmless LICENSEE, its
affiliates and their respective employees, agents, successors and assigns,
from and against all actions, claims, damages, liabilities, costs, losses
or other expenses (including reasonable attorney's fees) resulting from or
arising out of HTI's breach of its warranty set forth in Section 12.A. In
addition, HTI agrees to indemnify and hold harmless LICENSEE and its
affiliates and employees and agents, against any and all actions, claims,
damages, liabilities, costs, losses or other expenses (including reasonable
attorney's fees) arising out of or related to any claim that LICENSEE's use
or possession of the license granted hereunder of either DATAFEED or
HYPERTOOLS infringes or violates the copyright, trade secret or other
proprietary right of any third party.
5
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LICENSEE must give HTI prompt written notice of any such claim and allow
HTI to control the defense and all related settlement negotiations. HTI
shall not be responsible for any compromise or settlement made without
its consent. HTI shall also have the right to obtain a license for
LICENSEE to continue to use the infringing data or to modify the
DATAFEED or HYPERTOOLS so that they do not infringe. THE FOREGOING
STATES LICENSEE'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS FOR
INFRINGEMENT.
C. The provisions of this Section 15 shall survive any termination of
this Agreement.
16. Assignment
This Agreement or any rights or obligations granted hereunder may not be
assigned by either party without the prior written consent of the other
party, such consent is not to be unreasonably denied.
17. Applicable Law and Venue.
This Agreement shall be interpreted, construed and enforced in all respects
in accordance with the laws of the State of Illinois. Each party
irrevocably consents to the jurisdiction of the courts of the State of
Illinois and the federal courts situated in the State of Illinois, in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under this Agreement,
or otherwise arising under or by reason of this Agreement.
18. Severability and Survival
A. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
B. The provisions in this Agreement dealing with indemnification and
confidentiality, unless specifically stated otherwise, shall survive the
completion, expiration, termination or cancellation of this Agreement.
19. Miscellaneous Provisions
A. The parties to this Agreement are independent contractors with
requisite corporate power and authority to enter into this Agreement and
carry out the transactions contemplated hereby. Neither party is an agent
or representative of the other party. Neither party shall have any right,
power or authority to enter into any agreement for or on behalf of, or
incur any obligation or liability of, or to otherwise bind, the other
party. This Agreement shall not be interpreted or construed to create an
association, joint venture or partnership between the parties or to impose
any partnership obligation or liability upon either party.
B. Any notice, approval, request, authorization, direction or other
communication under this Agreement shall be given in writing and shall be
deemed to have been delivered and given for all purposes, (i) on the
delivery date if delivered personally to the party to whom the same is
directed, or (ii) three business days after the mailing date, whether or
not actually received, if sent by certified U.S. mail postage and charges
prepaid, to the address of the party to whom the same is directed as set
forth in the introductory paragraph of this Agreement. Either party may
change its address specified above by giving the other party notice of such
change in accordance with this Section.
All notices delivered to HTI shall be delivered to the address above,
attention: CHIEF EXECUTIVE OFFICER; COPY TO CORPORATE SECRETARY.
All notices delivered to LICENSEE shall be delivered to the address
above, attention: PRESIDENT; COPY TO THE CHIEF FINANCIAL OFFICER.
C. Neither LICENSEE nor HTI shall be responsible for, nor be in default
under this Agreement due to delays or failure of performance resulting from
acts or causes beyond its control, including but not limited to: acts of
God, strikes, lockouts, communications line or equipment failures, power
failures, earthquakes, or other disasters. Should such an occurrence
render the DATAFEED or HYPERTOOLS inoperable or
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unavailable for a period over ten (10) days, then all fees charged by HTI
shall be discounted prorata for the time of DATAFEED nonavailability.
D. The failure of either party to insist upon or enforce strict
performance by the other party of any provision of this Agreement or to
exercise any right under this Agreement shall not be construed as a waiver
or relinquishment to any extent of such party's right to assert or rely
upon any such provision of right in that or any other instance; rather, the
same shall be and remain in full force and effect.
E. HTI shall deliver the software to the site designated by LICENSEE.
HTI acknowledges for itself, its employees, agents and subcontractors, that
none of its employees, agents and subcontractors are entitled to
participate in any benefit plans of LICENSEE or its affiliates. HTI
further acknowledges that none of its employees, agents and subcontractors
are eligible to participate in any such benefit plans even if it is later
determined that the status of any of them was that of an employee of
LICENSEE during the period of this engagement of HTI by LICENSEE. HTI, on
behalf of itself, its employees, agents and subcontractors hereby expressly
waives any claim for benefits coverage attributable to the services
provided under this Agreement.
20. Entire Agreement
A. As used herein, the term "Agreement" includes any written amendments,
modifications or supplements made in accordance herewith.
B. LICENSEE and HTI acknowledge that they have read this Agreement,
understand it, and agree to be bound by its terms and further acknowledge
and agree that it constitutes the entire agreement of the parties hereto
and supersedes all other proposals, oral or written, and all other
communications between the parties relating to the subject matter hereof
and this Agreement may not be modified or terminated orally. No amendment
to this Agreement shall be effective unless it is in writing and signed by
duly authorized representatives of both parties. The language used in this
Agreement shall be deemed to be language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied
against any party hereto.
IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement.
HYPERFEED TECHNOLOGIES, INC.
By:
------------------------------------
John E. Juska, Senior Vice President
Date:
------------------------------------
PCQUOTE.COM, INC.
By:
------------------------------------
Timothy K. Krauskopf, President
Date:
------------------------------------
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SCHEDULE OF SERVICES AND FEES
TO THE LICENSEE AGREEMENT BETWEEN
PC QUOTE, INC. AND PCQUOTE.COM, INC.
MONTHLY FEES
<TABLE>
<S> <C>
MONTHLY MINIMUM $30,000
HyperFeed 2000 Site Fee $795
Delayed Site Flat Fee $7000
Real-Time Request Response
Per User Fee $2
Per Quote Fee $.0050
Per News Fee $.0020
Real-Time Request Response Cap $25,000
Real-Time Dynamic Access Per User Fees
Equities, Futures, Indicies, Canadian,
& News Access $10
Options $2
NASDAQ Level II $5
</TABLE>
Scope of Use: LICENSEE is permitted to distribute HyperFeed 2000 in both
delayed and real time formats via the Internet only and users (other than AB
Watley, an existing customer of LICENSEE) are required to access the datafeed
via PCQuote.com Servers at PCQuote.com locations.
Usage fees are due by and not exceeding the 5th day of the month of service.
LICENSEE will provide a monthly user report for the previous month with a check
for additional amounts due for the prior month mailed to HyperFeed Technologies,
Inc., 300 South Wacker Drive, Suite 300, Chicago, Illinois 60606, Attention: VP
Administration.
LICENSEE agrees to file the requisite Vendor Agreements and System Description
with the above-mentioned exchanges within two weeks of executing this Agreement.
LICENSEE will cover all additional direct costs directly related to LICENSEE's
receipt of the DATAFEED including but not limited to:
- - Computer and communication equipment
- - Satellite transmission & Hardware
- - Leased phone line, FOB Chicago
- - Exchanges fees, including indirect access fees
BY:
PC Quote Licensee
Name Name
----------------------------------- -----------------------------------
Title Title
---------------------------------- ----------------------------------
Date Date
----------------------------------- -----------------------------------
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EXHIBIT 10.5
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is entered into as of
_____________________, 1999, by and between HYPERFEED TECHNOLOGIES, INC., a
Delaware corporation ("HyperFeed"), and PCQUOTE.COM, INC., a Delaware
corporation (the "Company").
R E C I T A L S
WHEREAS, the Company and HyperFeed have entered into that certain
Contribution and Separation Agreement (the "Separation Agreement") dated as of
the date hereof, which provides, among other things, that HyperFeed shall
contribute certain assets to the Company as an additional capital contribution
to the Company, and the Company shall assume certain liabilities of HyperFeed;
WHEREAS, as a condition to agreeing to enter into the Separation Agreement,
the Company has required that the parties execute and deliver this
Non-Competition Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and HyperFeed hereby, intending to be legally bound by
the terms hereof, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
"Company Business" shall mean a business, or component of a business, that
is engaged in the maintenance of one or more Internet Server Farms for the
delivery of financial market data and market analytics with financial news
services via the Internet.
"Company Non-Compete Termination Date" shall mean that date that is the
later of (i) the date that is three (3) years from the date hereof or (ii)
the date on which that certain DataFeed License Agreement dated as of the
date hereof by and between the Company and HyperFeed (the "DataFeed License
Agreement") is rightfully terminated by the Company under Section 8B thereof
or such agreement expires and is not renewed.
<PAGE>
"Data Feed" shall mean any digital market datafeed provided via the
Internet, satellite or land line containing market data information obtained,
selected and consolidated under the authority of various agencies and other
information providers.
"HyperFeed Non-Compete Termination Date" shall mean that date that is
the earlier of (i) the date that is three (3) years from the date hereof or
(ii) the date on which the DataFeed License Agreement expires and is not
renewed or is rightfully terminated by HyperFeed under Section 8B thereof.
"Intellectual Property" shall mean (i) the intellectual property listed on
the attached Exhibit A which was licensed to the Company pursuant to the
Separation Agreement, and (ii) that certain software package licensed to both
the Company and HyperFeed by Townsend Analytics, Ltd., together with any
modifications to or derivations of such software package and source code.
"Internet" shall mean the global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit content that is directly or indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such content is delivered through on-line browsers, off-line
browsers, or through "internet push" technology.
"Internet Server Farm" shall mean a computer system designed to receive
Data Feed from a Data Feed provider and repackage the information delivered in
the Data Feed into various formats for redistribution via the Internet to other
users.
"Person" shall mean any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
ARTICLE II
NON-COMPETITION RESTRAINTS
SECTION 2.1 HYPERFEED NON-COMPETITION RESTRAINTS. HyperFeed shall not
either by itself or through any controlled affiliate or subsidiary:
(a) during the period commencing with the date hereof and
terminating on the HyperFeed Non-Compete Termination Date (i) engage in the
Company Business, or (ii) own more than five percent (5%) of the outstanding
equity interest of any entity (other than the Company) that engages in the
Company Business; provided that HyperFeed shall not be deemed to be engaged in
the Company Business merely by providing Data Feed to a Person who is engaged in
the Company Business.
(b) during the period commencing with the date hereof and
terminating on the HyperFeed Non-Compete Termination Date license,
sublicense, assign or otherwise transfer all or any part of the Intellectual
Property to any entity that directly or indirectly engages in the
redistribution of such Intellectual Property via the Internet (unless such
redistribution or use of the Intellectual Property via the Internet occurs
solely pursuant to a separate arrangement that such entity has with the
Company); or
(c) during the period commencing with the date hereof and
terminating on the HyperFeed Non-Compete Termination Date directly or
indirectly for its own account or for or with any other person or entity of
any kind whatsoever without the consent and cooperation of the Company (i)
hire, solicit or endeavor to entice away
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from the Company, any person who at the time of such solicitation or attempted
solicitation was employed by the Company, in order for such person to accept
employment or association with another person, or entity of any kind whatsoever,
or (ii) approach any such person for any such purpose or authorize or knowingly
cooperate with the taking of any such action by any other individual, person or
entity.
Notwithstanding anything in this Section 2.1 to the contrary, HyperFeed shall at
all times remain free, either by itself or through any controlled affiliate or
subsidiary, to (A) license or sublicense, all or part of the Intellectual
Property (i) to any licensed Broker or Dealer (as those terms are defined under
Section 202(a) of the Investment Advisers Act of 1940) for redistribution to
Persons having an account with such Broker or Dealer, (ii) to employees,
correspondents, or agents of such Broker or Dealer, or (iii) in relation to such
Broker or Dealer's promotional efforts not to exceed thirty (30) days; and (B)
own more than five percent (5%) of the outstanding equity interest of such
Broker or Dealer.
SECTION 2.2 COMPANY NON-COMPETITION RESTRAINTS. The Company shall not
either by itself or through any affiliate or subsidiary:
(a) during the period commencing with the date hereof and
terminating on the Company Non-Compete Termination Date (i) engage in the
business of redistributing Data Feed (other than to AB Watley, an existing
customer of the Company) in any way other than through Internet Server Farms
owned and hosted by the Company or by Townsend Analytics Ltd., (ii) own more
than five percent (5%) of the outstanding equity interest of any entity that
engages in the business of redistributing a Data Feed in any way, other than
an entity that redistributes Data Feed via the Internet through Internet
Server Farms owned and hosted by the Company; or
(b) during the period with the date hereof and terminating on
the Company Non-Compete Termination Date, directly or indirectly for its own
account or for or with any other person or entity of any kind whatsoever
without the consent and cooperation of HypeFeed (i) hire, solicit or endeavor
to entice away from HyperFeed, any person who at the time of such
solicitation or attempted solicitation was employed by HyperFeed in order for
such person to accept employment or association with another person, or
entity of any kind whatsoever, or (ii) approach any such person for any such
purpose or authorize or knowingly cooperate with the taking of any such
action by any other individual, person or entity.
ARTICLE III
TERM
SECTION 3.1 TERM OF AGREEMENT. The term of this Agreement shall be the
period commencing on the date hereof and terminating on the later of the Company
Non-Compete Termination Date and the HyperFeed Non-Compete Termination
Date.
ARTICLE IV
MISCELLANEOUS
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<PAGE>
SECTION 4.1 JUDICIAL MODIFICATION OF TERMS. In the event any of the
terms of this Agreement are deemed to be unreasonable by a court of competent
jurisdiction, the parties expressly authorize such court to modify any such
terms as necessary to make the restrictions in this Agreement reasonable.
SECTION 4.2 REMEDIES. The parties agree that this Agreement is intended
to protect and preserve legitimate business interests of each respective party.
It is further agreed that any breach of this Agreement may render irreparable
harm to the non-breaching party. In the event of a breach of this Agreement,
the non-breaching party, in addition to the indemnity and other remedy
provisions of the Separation Agreement, shall have available to it all remedies
provided by law and equity, including, but not limited to, temporary and
permanent injunctive relief to restrain the breaching party from violating this
Agreement.
SECTION 4.3 NOTICES. Any notice to be given hereunder shall be in
writing and delivered personally or sent by certified mail, postage prepaid,
return receipt requested, telefax or overnight mail, addressed as follows:
(a) if to the Company:
PCQuote.com, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attn: Andrew Peterson
(b) if to HyperFeed:
HyperFeed Technologies, Inc.
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606
Attn: John Juska
SECTION 4.4 AMENDMENT; MODIFICATION; WAIVER. No provision in this
Agreement may be modified, amended or waived unless such modification, amendment
or waiver is agreed to in writing, signed by both parties, or a person
authorized thereby. Except as otherwise specifically provided in this
Agreement, no waiver by any party hereto or any breach by another party hereto
of any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of a similar or dissimilar provision or condition
at the same or any prior or subsequent time.
SECTION 4.5 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
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SECTION 4.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement shall not
be assigned to any third party without the prior written consent of the other
party. This Agreement shall inure to the benefit of and shall be binding upon
the parties' respective successors and assigns.
SECTION 4.7 GOVERNING LAW. This Agreement shall be deemed a contract
made under, and for all purposes shall be construed in accordance with, the laws
of the State of Illinois without reference to the principles of conflict of
laws.
SECTION 4.8 ENTIRE AGREEMENT. This Agreement contains all of the
understandings and representations between the parties hereto pertaining to the
subject matter hereof and supersedes all undertakings, terms and agreements,
whether oral or in writing, if any, previously entered into by them with respect
thereto.
SECTION 4.9 COUNTERPARTS. This instrument may be executed in one or more
counterparts, each of which shall be an original and together shall constitute
one and the same instrument.
SECTION 4.10 CONFIDENTIALITY. Each party agrees not to disclose to any
third party other than its legal counsel and financial advisers any information
delivered pursuant to this Agreement without the prior written consent of the
other party.
* * * * *
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* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HYPERFEED TECHNOLOGIES, INC.,
a Delaware corporation
By:
---------------------------------------------
John E. Juska, Senior Vice President
PCQUOTE.COM, INC.,
a Delaware corporation
By:
---------------------------------------------
Timothy K. Krauskopf, President
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Exhibit A
to Non-Competition Agreement
ORBIT:
Orbit, including object code, source code, application documentation and
source code documentation as described in the documentation. Orbit is a
software product comprised of a set of modular, front-end, financial market
software applications, created by HyperFeed used as a real-time market tool
for the online investor. These applications are tailored specifically for use
with HyperFeed, and utilize the Quote Socket application programming
interface ("API"). Orbit is written in C++ utilizing Microsoft Foundation
classes, each application is self contained, and loosely coupled to the other
applications through propriety API's.
7
<PAGE>
EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "AGREEMENT"), entered into as
of June 8, 1999, 1999 (the "COMMENCEMENT DATE"), by PCQuote.com, Inc., a
Delaware corporation (the "COMPANY") and Andrew Peterson (the "EXECUTIVE").
1. TERM OF EMPLOYMENT: The term of employment of Executive by the
Company hereunder shall commence on the Commencement Date and shall
continue thereafter on the same terms and conditions until terminated
pursuant to Sections 6 or 7.
2. TITLE; DUTIES: The Executive shall serve as Chief Financial Officer
of the Company reporting to the President of the Company. Executive
shall perform those duties and responsibilities inherent in such
position including such duties and responsibilities as the President
shall assign. The Executive agrees to devote his full time and best
efforts, attention and energies to the business and interests of the
Company. Executive shall serve the Company faithfully and to the best
of his ability in such capacities, devoting his full business time,
attention, knowledge, energy and skills to such employment; provided,
however, the Company acknowledges that Executive may serve on the
board of directors of other companies with the prior approval of the
Chief Executive Officer. Executive shall travel as reasonably
required in connection with the performance of his duties hereunder.
3. COMPENSATION: The Company shall pay and Executive shall accept as
full consideration for the his services hereunder, compensation
consisting of the following:
3.1 BASE SALARY. $175,000 per year base salary. Base Salary is
payable in installments in accordance with the Company's normal
payroll practices, less such deductions or withholdings as are
required by law.
3.2 BONUS. At the sole discretion of the Compensation Committee
of the Board of Directors or the Board of Directors, annual
target bonus, if any, at the rate and in accordance with
criterion established by the Compensation Committee of the Board
of Directors or the Board of Directors.
3.3 EQUITY OPTION. Executive will be eligible to participate in the
company's stock option plan. Option grants, if any, will be
determined by the Compensation Committee of the Board of
Directors or the Board of Directors.
4. BENEFITS: Subject to all applicable eligibility requirements, and
legal limitations, Executive will be able to participate in any and
all 401(k), vacation, medical, dental, life and long-term disability
insurance and/or other benefit
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plans which from time to time may be established for other employees
of the Company.
5. REIMBURSEMENT OF EXPENSES: The Company will reimburse Executive for
all reasonable travel, entertainment and other expenses incurred or
paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement subject to review by the Board or its compensation
committee, if applicable.
6. BENEFIT UPON TERMINATION OF EMPLOYMENT:
6.1 DISABILITY. In the event of the permanent disability (as
hereinafter defined) of Executive during the Employment Period,
the Company shall have the right, upon written notice to
Executive, to terminate Executive's employment hereunder,
effective upon the 30th calendar day following the giving of such
notice (or such later day as shall be specified in such notice).
Upon the effectiveness of such termination, (i) the Company shall
have no further obligations hereunder, except to pay and provide,
subject to applicable withholding, (A) all amounts of Base Salary
accrued, but unpaid, at the effective date of termination, and
(B) all reasonable unreimbursed business-related expenses and
(ii) Executive shall have no further obligations hereunder other
than those provided for in Sections 9 and 10 hereof. All amounts
payable to Executive pursuant to this Section 6.1 shall be
payable within 30 days following the effectiveness of the
termination of Executive's employment. For purposes of this
Agreement, "PERMANENT DISABILITY" shall be defined as any
physical or mental disability or incapacity which renders
Executive incapable in any material respect of performing the
services required of him in accordance with his obligations under
Section 2 for a period of 180 consecutive days, or for 180 days
in any 360 day period.
6.2 DEATH. In the event of the death of Executive during the
Employment Period, this Agreement shall automatically terminate
and the Company shall have no further obligations hereunder,
except to pay and provide to Executive's beneficiary or other
legal representative, subject to applicable withholding, (i) all
amounts of Base Salary accrued but unpaid, at the date of death,
and (ii) all reasonable unreimbursed business-related expenses.
All amounts payable to Executive pursuant to this Section 6.2
shall be payable within 30 days following the date of death.
6.3 TERMINATION WITHOUT CAUSE. In the event of the termination of
Executive's employment by the Company without Cause (as defined
below) or upon the Executive's voluntary termination of his
employment for Good Reason (as defined below), (i) all amounts of
Base Salary
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accrued but unpaid on the date of termination shall be paid by
the Company within 30 days following the date of termination,
and (ii) an amount equal to Executive's Base Salary on the
date of termination for a period of twelve months shall be
paid by the Company in twelve equal installments.
6.4 CIRCUMSTANCES UNDER WHICH TERMINATION BENEFITS WOULD NOT BE PAID.
The Company shall only be obligated to pay the amounts of Base
Salary accrued but unpaid on the date of termination, and shall
not be obligated to pay Executive the termination benefits or
continue the option vesting described in subparagraphs 6.1
through 6.3 above if the Employment Period is terminated for
Cause or if Executive voluntarily terminates his employment other
than for Good Reason (as defined below). For purposes of this
Agreement, "CAUSE" shall be limited to:
(A) Willful failure by Executive to substantially perform his
duties hereunder, other than a failure resulting from his
complete or partial incapacity due to physical or mental
illness or impairment;
(B) A material and willful violation of a federal or state law
or regulation applicable to the business of the company or
that adversely affects the image of the Company;
(C) Commission of a willful act by Executive which constitutes
gross misconduct and is injurious to the Company; or
(D) A willful breach of a material provision of this Agreement.
6.5 CONSTRUCTIVE TERMINATION. Notwithstanding anything in this
Section 6 to the contrary, for purposes of this Agreement the
Employment Period will be deemed to have been terminated and
Executive will be deemed to have Good Reason for voluntary
termination of the Employment Period ("GOOD REASON"), if there
should occur:
(A) A material adverse change in Executive's position causing it
to be of materially less stature or responsibility without
Executive's written consent;
(B) A reduction, without Executive's written consent, in his
level of base compensation (including base salary and fringe
benefits); or
(C) A relocation of Executive's principal place of employment
outside the Chicago Area without Executive's consent.
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7. CHANGE IN CONTROL BENEFITS:
Should there occur a Change in Control (as defined below), then the
following provisions shall become applicable:
(A) During the period (if any) following a Change in Control
that Executive shall continue to remain employed, then the
terms and provisions of this Agreement shall continue in
full force and effect, and Option grants, if any, shall
continue to vest and become and remain exercisable in
accordance with the terms of the Option grant(s); or
(B) In the event of (i) a termination of the Executive's
employment by the Company or its successor other than for
Cause within six (6) months after a Change in Control or
(ii) Executive voluntarily terminates his employment for
Good Reason within six (6) months after a Change in Control
the Company shall pay to Executive an amount equal to 100%
of Executive's annual Base Salary.
For purposes of this Section 7, the term "CHANGE IN CONTROL" shall
mean:
(x) The sale, lease, conveyance, liquidation or other
disposition of all or substantially all of the
Company's assets as an entirety or substantially as an
entirety to any person, entity or group of persons
acting in concert.
(y) Any transaction or series of related transactions (as a
result of a tender offer, merger, consolidation or
otherwise) that results in any Person (as defined in
Section 13(h)(8)(E) under the Securities Exchange Act
of 1934) becoming the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of more than 50% of the
aggregate voting power of all classes of common equity
securities or membership interests, as the case may be,
of the Company, except if such Person is (A) a
subsidiary of the Company, (B) an employee stock
ownership plan for
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employees of the Company, (C) a company formed to
hold the Company's common equity securities or
membership interests, as the case may be, and whose
shareholders constituted, at the time such company
became such holding company, substantially all the
equity owners or shareholders of the Company, or (D)
HyperFeed or its affiliates.
In the event that the severance and other benefits provided to
Executive pursuant to Section 6 of this Agreement (i) constitute
"parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "CODE") and (ii) but
for this Section 7, such severance and benefits would be subject to
the excise tax imposed by Section 4999 of the Code, then Executive's
severance benefits under this Section 7 shall be payable either:
(a) in full in twelve equal monthly installments, or
(b) as to such lesser amount which would result in no portion of such
severance and other benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the
greatest amount of severance benefits under this Agreement.
Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 7 shall be made in writing
by independent public accountants agreed to by the Company and
Executive (the "ACCOUNTANTS"), whose determination shall be conclusive
and binding upon Executive and the Company for all purposes. For
purposes of making the calculations required by this Section 7, the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999
of the Code. The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
Section 7. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by
this Section 7.
8. DISPUTE RESOLUTION: The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement shall be
decided by confidential, final and binding arbitration conducted by
the American Arbitration Association ("AAA") under the then-existing
AAA rules, rather than by litigation in court, trial by jury,
administrative proceeding, or in any other forum.
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9. COOPERATION WITH THE COMPANY AFTER TERMINATION OF THE EMPLOYMENT:
Following termination of the Employment by Executive, Executive shall
fully cooperate with the Company in all matters relating to the
winding up of his pending work on behalf of the Company and the
orderly transfer of any such pending work to other employees of the
Company as may be designated by the Company.
10. CONFIDENTIALITY; RETURN OF PROPERTY; NONSOLICITATION:
(a) The Executive acknowledges that during the Employment he will
receive confidential information from the Company and
subsidiaries of the Company and the respective clients thereof
(each a "RELEVANT ENTITY"). Accordingly, the Executive agrees
that during the Employment and thereafter for a period of two
years, the Executive and his affiliates shall not, except in the
performance of his obligations to the Company hereunder or as may
otherwise be approved in advance by the Company, directly or
indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has
learned by reason of his association with any Relevant Entity.
Upon termination of employment, the Executive shall promptly
return to the Company any and all properties, records or papers
of any Relevant Entity, that may have been in his possession at
the time of termination, whether prepared by the Executive or
others, including, but not limited to, confidential information
and keys. For purposes of this Agreement, "confidential
information" includes all data, analyses, reports,
interpretations, forecasts, documents and information concerning
a Relevant Entity and its affairs, including, without limitation
with respect to clients, products, policies, procedures,
methodologies, trade secrets and other intellectual property,
systems, personnel, confidential reports, technical information,
financial information, business transactions, business plans,
prospects or opportunities, (i) that the Company reasonably
believes are confidential or (ii) the disclosure of which could
be injurious to a Relevant Entity or beneficial to competitors of
a Relevant Entity, but shall exclude any information that (x) the
Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or
other process of law, (y) is or becomes publicly available prior
to the Executive's disclosure or use of the information in a
manner violative of the second sentence of this Section 10(a), or
(z) is rightfully received by Executive without restriction or
disclosure from a third party legally entitled to possess and to
disclose such information without restriction (other than
information that he may learn or has learned by reason of his
association with any
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Relevant Entity). For purposes of this Agreement, "affiliate"
means any entity that, directly or indirectly, is controlled
by, or under common control with, the Executive. For purposes
of this definition, the terms "controlled" 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 such person, whether through the ownership of
voting stock, by contract or otherwise.
(b) For a period of one (1) year following the termination of
Executive's employment with the Company for any reason, he will
not, without the Company' express written consent, either on his
own behalf or on behalf of another, solicit employees of the
Company or any subsidiary of the Company for the purpose of
hiring them. General employment advertising shall not be deemed
to be a solicitation.
(c) During the course of Executive's employment and for a period of
one (1) year following the termination of Executive's employment
with the Company for any reason (the "Noncompetition Period"),
Executive shall not directly or indirectly, without the prior
written consent of the Company, (i) engage anywhere in the world
in (whether as an employee, agent, consultant, advisor,
independent contractor, proprietor, partner, officer, director or
otherwise), or have any ownership interest in (except for
ownership of five percent (5%) or less of any entity whose
securities have been registered under the Securities Act of 1933
or Section 12 of the Securities Exchange Act of 1934), or
participate in the financing, operation, management or control
of, any firm, partnership, corporation, limited liability
company, entity or business that directly competes with the
Company in the financial data information industry; or
(ii) approach, contact, solicit or interfere with the business of
the Company, the Company's subsidiaries or customers which are
presently existing, or which are existing on the date of
termination of Executive's employment with the Company, in
connection with a competing business purpose.
11. GENERAL:
11.1 INDEMNIFICATION. In the event Executive is made, or threatened
to be made, a party to any legal action or proceeding, whether
civil or criminal, by reason of the fact that Executive is or was
a director or officer of the Company or serves or served any
other corporation fifty percent (50%) or more owned or controlled
by the Company in any capacity at the Company's request,
Executive shall be indemnified by the Company, and the Company
shall pay Executive's related expenses when and as incurred,
all to the fullest extent permitted by law.
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11.2 WAIVER. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have
waived any breach by the other party of any of the provisions of
this Agreement. Further, the waiver by either party of a
particular breach of this Agreement by the other shall neither be
construed as, nor constitute a, continuing waiver of such breach
or of other breaches by the same or any other provision of this
Agreement.
11.3 SEVERABILITY. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement
to be unenforceable, the provision shall be deemed amended as
necessary to conform to applicable laws or regulations, or if it
cannot be so amended without materially altering the intention of
the parties, the remainder of the Agreement shall continue in
full force and effect as if the offending provision were not
contained herein.
11.4 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing
and shall be considered effective upon personal service or upon
transmission of a facsimile or the deposit with Federal Express
or in Express Mail and addressed to the Chairman of the Board of
the Company at its principal corporate address, and to Executive
at his most recent address shown on the Company's corporate
records, or at any other address which he may specify in any
appropriate notice to the Company.
11.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all
of which taken together constitutes one and the same instrument
and in making proof hereof it shall not be necessary to produce
or account for more than one such counterpart.
11.6 ENTIRE AGREEMENT. The parties hereto acknowledge that each has
read this Agreement, understands it, and agrees to be bound by
its terms. The parties further agree that this Agreement shall
constitute the complete and exclusive statement of the agreement
between the parties and supersedes all proposals (oral or
written), understandings, representations, conditions, covenants,
and all other communications between the parties relating to the
subject matter hereof.
11.7 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Illinois.
11.8 ASSIGNMENT AND SUCCESSORS. The Company shall have the right to
assign its rights and obligations under this Agreement to an
entity which acquires substantially all of the assets of the
Company, whether by merger or otherwise. The rights and
obligations of the
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Company under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PCQUOTE.COM, INC.,
a Delaware corporation
By: /s/ Jim Porter
--------------------------------------------
Name: Jim Porter
------------------------------------------
Title: Chairman
------------------------------------------
EXECUTIVE
/s/ Andrew Peterson
------------------------------------------------
Andrew Peterson
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EXHIBIT 10.10
PCQUOTE.COM, INC.
1999 COMBINED INCENTIVE AND NON-STATUTORY
STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of PCQuote.com, Inc.'s business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan In accordance with Section 4 hereof.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(c) "BOARD" means the Board of Directors of PCQuote.com, Inc.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the Board
in accordance with Section 4 hereof.
(f) "COMMON STOCK" means the Common Stock of PCQuote.com, Inc.
(g) "COMPANY" means PCQuote.com, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person who is engaged by PCQuote.com, Inc.
or any Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "DIRECTOR" means a member of the Board of Directors of
PCQuote.com, Inc.
(j) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by PCQuote.com, Inc. or any Parent or Subsidiary of PCQuote.com, Inc.
A Service
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Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by PCQuote.com, Inc. or (ii) transfers between locations of
PCQuote.com, Inc. or between PCQuote.com, Inc., its Parent, any Subsidiary,
or any successor. For purposes of Incentive Stock Options, no such leave may
exceed ninety days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by PCQuote.com, Inc. is not so guaranteed, on the
181st day of such leave any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option. Neither service as a Director nor
payment of a director's fee by PCQuote.com, Inc. shall be sufficient to
constitute "employment" by PCQuote.com, Inc.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of PCQuote.com, Inc.
within the meaning of Section 16 of the Exchange Act and the rules 'and
regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
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(r) "OPTION AGREEMENT" means a written or electronic agreement
between PCQuote.com, Inc. and an Optionee evidencing the terms and conditions of
an individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(s) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.
(t) "OPTIONED STOCK" means the Common Stock subject to an Option or a
Stock Purchase Right.
(u) "OPTIONEE" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(v) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "PLAN" means this 1999 Stock Plan.
(x) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 11 below.
(y) "SECTION 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(z) "SERVICE PROVIDER" means an Employee, Director or Consultant.
(aa) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(bb) "STOCK PURCHASE RIGHT" means a right to purchase Common Stock
pursuant to Section 11 below.
(cc) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is One Hundred Fifty-Seven Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan,
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except that if Shares of Restricted Stock are repurchased by PCQuote.com,
Inc. at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by the Board or a
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option or
Stock Purchase Right granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(e) instead of Common Stock,
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations
by electing to have PCQuote.com, Inc. withhold from the Shares to be issued upon
exercise of an
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Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
(b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of PCQuote.com, Inc. and any Parent or Subsidiary) exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options. For purposes of
this Section 5(b), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with PCQuote.com, Inc., nor shall it
interfere in any way with his or her right or PCQuote.com, Inc.'s right to
terminate such relationship at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option
granted to in Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of PCQuote.com, Inc. or any Parent or Subsidiary, the term of the Options
shall be five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.
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8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be the price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of PCQuote.com, Inc. or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any other Employee, the per Share
exercise Price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of PCQuote.com, Inc. or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by PCQuote.com,
Inc. under a cashless exercise program implemented by PCQuote.com, Inc. in
connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit PCQuote.com, Inc.
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9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 25% per year over four years from the date the Options are granted. Unless
the Administrator provides otherwise, vesting of Options granted hereunder shall
be tolled during any unpaid leave of absence. An Option may not be exercised
for a fraction of a Share.
An Option shall be deemed exercised when PCQuote.com, Inc.
receives: (1) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares an issued (as evidenced by the appropriate entry on the books
of PCQuote.com, Inc. or of a duly authorized transfer agent of PCQuote.com,
Inc.), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding the exercise
of the Option. PCQuote.com, Inc. shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent
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<PAGE>
the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the
Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the uninvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The offer shall be accepted by execution of a
Restricted Stock purchase agreement in the form determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant PCQuote.com, Inc.
a repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with PCQuote.com, Inc. for any reason (including death
or disability). The purchase price for
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Shares repurchased pursuant to the Restricted Stock purchase agreement shall
be the original price paid by the purchaser and may be paid by cancellation
of any indebtedness of the purchaser to PCQuote.com, Inc. The repurchase
option shall lapse at such rate as the Administrator may determine. Except
with respect to Shares purchased by Officers. Directors and Consultants, the
repurchase option shall in no case lapse at a rate of less than 25% per year
over four years from the date of purchase.
(c) OTHER PROVISIONS. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a stockholder
and shall be a stockholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of PCQuote.com, Inc. No adjustment shall
be made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of PCQuote.com, Inc., the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by PCQuote.com, Inc. The conversion of any convertible
securities of PCQuote.com, Inc. shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by PCQuote.com, Inc. of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option
or Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of PCQuote.com, Inc., the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option or Stock Purchase Right
until fifteen (15) days prior to such transaction as to all of the Optioned
Stock covered thereby, including Shares as to which the Option or Stock Purchase
Right would not
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otherwise be exercisable. In addition, the Administrator may provide that
any PCQuote.com, Inc. repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the
time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of PCQuote.com,
Inc. with or into another corporation, or the sale of substantially all of the
assets of PCQuote.com, Inc., each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
13. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
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14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) STOCKHOLDER APPROVAL. The Board shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and PCQuote.com,
Inc. Termination of the Plan shall not affect the Administrator's ability to
exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for PCQuote.com, Inc. with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for PCQuote.com, Inc., such
a representation is required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of PCQuote.com, Inc. to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by PCQuote.com, Inc.'s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve PCQuote.com, Inc. of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
17. RESERVATION OF SHARES. PCQuote.com, Inc., during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of PCQuote.com, Inc. within twelve (12) months after the date the
Plan is adopted. Such stockholder approval shall be obtained in the degree and
manner required under Applicable Laws.
19. INFORMATION TO OPTIONEES AND PURCHASERS. PCQuote.com, Inc. shall
provide to each Optionee and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more
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Options or Stock Purchase Rights outstanding, and, in the case of an
individual who acquires Shares pursuant to the Plan, during the period such
individual owns such Shares, copies of annual financial statements.
PCQuote.com, Inc. shall not be required to provide such statements to key
employees whose duties in connection with PCQuote.com, Inc. assure their
access to equivalent information.
20. NOTICE. Any notice to PCQuote.com, Inc. required under this Plan
shall be in writing and shall either be delivered in person or sent by
registered or certified mail, return receipt requested, postage prepaid, to
PCQuote.com, Inc. at its principal executive offices, Attention: Benefits Plan
Administrator.
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EXHIBIT 10.12
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement"), dated as of
___________________, 1999, is made by and between PCQuote.com, Inc., a
Delaware corporation (the "Company"), and _________________, a director
and/or officer of the Company (the "Indemnitee").
R E C I T A L S
WHEREAS, the Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations
unless they are protected by comprehensive liability insurance and/or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that
the exposure frequently bears no reasonable relationship to the compensation
of such directors and officers;
WHEREAS, based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and
attract talented and experienced individuals to serve as officers and
directors of the Company, and to encourage such individuals to take the
business risks necessary for the success of the Company, it is necessary for
the Company contractually to indemnify officers and directors and to assume
for itself maximum liability for expenses and damages in connection with
claims against such officers and directors in connection with their service
to the Company;
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, under which the Company is organized ("Section 145"), empowers the
Company to indemnify by agreement its officers, directors, employees and
agents, and persons who serve, at the request of the Company, as directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive; and
WHEREAS, the Company desires and has requested the Indemnitee to serve
or continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to
the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the meaning set forth herein:
<PAGE>
"AGENT" of the Company means any person who is or was a director or
officer of the Company or a subsidiary of the Company; or is or was serving
at the request of, for the convenience of, or to represent the interest of
the Company or a subsidiary of the Company as a director or officer of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise or an affiliate of the Company; or was a director or officer
of another enterprise or affiliate of the Company at the request of, for the
convenience of, or to represent the interests of such predecessor
corporation. The term "enterprise" includes any employee benefit plan of the
Company, its subsidiaries, affiliates and predecessor corporations.
"EXPENSES" includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements and other out-of-pocket costs) actually and reasonably
incurred by the Indemnitee in connection with the investigation, defense or
appeal of a proceeding or establishing or enforcing a right to
indemnification or advancement of expenses under this Agreement, Section 145
or otherwise; provided, however, that expenses shall not include any
judgments, fines, ERISA excise taxes or penalties or amounts paid in
settlement of a proceeding.
"PROCEEDING" means any threatened, pending or completed action,
suit or other proceeding, whether civil, criminal, administrative,
investigative or any other type whatsoever.
"SUBSIDIARY" means any corporation of which more than 50% of the
outstanding voting securities is owned directly or indirectly by the Company,
by the Company and one or more of its subsidiaries or by one or more of the
Company's subsidiaries.
ARTICLE II
AGREEMENT TO SERVE
SECTION 2.1 AGREEMENT TO SERVE. The Indemnitee agrees to serve
and/or continue to serve as an agent of the Company, at the will of the
Company (or under separate agreement, if such agreement exists), in the
capacity the Indemnitee currently serves as an agent of the Company,
faithfully and to the best of his ability, so long as he is duly appointed or
elected and qualified in accordance with the applicable provisions of the
charter documents of the Company or any subsidiary of the Company; provided,
however, that the Indemnitee may at any time and for any reason resign from
such position (subject to any contractual obligation that the Indemnitee may
have assumed apart from this Agreement), and the Company or any subsidiary
shall have no obligation under this Agreement to continue the Indemnitee in
any such position.
ARTICLE III
INSURANCE AND INDEMNITY
SECTION 3.1 DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to
the extent that the Board determines it to be economically reasonable, maintain
a policy of directors' and
2
<PAGE>
officers' liability insurance ("D&O Insurance"), on such terms and conditions
as may be approved by the Board.
SECTION 3.2 MANDATORY INDEMNIFICATION. Subject to Section 3.7 below,
the Company shall indemnify the Indemnitee:
(a) if the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or
in the right of the Company) by reason of the fact that he is or was an agent
of the Company, or by reason of anything done or not done by him in any such
capacity, against any and all expenses and liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of
such proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful; and
(b) if the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Company; except that
no indemnification under this subsection shall be made in respect of any
claim, issue or matter as to which such person shall have been finally
adjudged to be liable to the Company by a court of competent jurisdiction due
to willful misconduct of a culpable nature in the performance of his duty to
the Company, unless and only to the extent that the Court of Chancery or the
court in which such proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the Court of Chancery or such other court
shall deem proper; and
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) to the extent such have been paid
directly to the Indemnitee by D&O Insurance.
SECTION 3.3 PARTIAL INDEMNIFICATION AND CONTRIBUTION.
(a) If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a proceeding but is not entitled, however, to indemnification for all of the
total amount thereof,
3
<PAGE>
then the Company shall nevertheless indemnify the Indemnitee for such total
amount except as to the portion thereof to which the Indemnitee is not
entitled to indemnification.
(c) If the Indemnitee is not entitled to the indemnification
provided in Section 3.2 for any reason other than the statutory limitations
set forth in the Delaware General Corporation Law, then in respect of any
threatened, pending or completed proceeding in which the Company is jointly
liable with the Indemnitee (or would be if joined in such proceeding), the
Company shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by the Indemnitee in such proportion
as is appropriate to reflect (i) the relative benefits received by the
Company on the one hand and the Indemnitee on the other hand from the
transaction from which such proceeding arose and (ii) the relative fault of
the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines
or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Indemnitee on the other hand shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such
expenses, judgments, fines or settlement amounts. The Company agrees that it
would not be just and equitable if contribution pursuant to this Section 3.3
were determined by pro rata allocation or any other method of allocation
which does not take account of the foregoing equitable considerations.
SECTION 3.4 MANDATORY ADVANCEMENT OF EXPENSES.
(a) Subject to Section 3.7 below, the Company shall advance
all expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding to which the Indemnitee is a
party or is threatened to be made a party by reason of the fact that the
Indemnitee is or was an agent of the Company or by reason of anything done or
not done by him in any such capacity. The Indemnitee hereby undertakes to
promptly repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the General
Corporation Law of Delaware or otherwise. The advances to be made hereunder
shall be paid by the Company to the Indemnitee within thirty (30) days
following delivery of a written request therefor by the Indemnitee to the
Company.
(b) Notwithstanding the foregoing provisions of this Section
3.4, the Company shall not be obligated to advance any expenses to the
Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
3.6(c), 3.6(d) and 3.6(e) hereof, with all references therein to
"indemnification" being deemed to refer to "advancement of expenses," and
4
<PAGE>
the burden of proof shall be on the Company to demonstrate clearly and
convincingly that, based on the facts known at the time, the Indemnitee acted
in bad faith. The Company may not avail itself of this Section 3.4(b) as to a
given lawsuit if, at any time after the occurrence of the activities or
omissions that are the primary focus of the lawsuit, the Company has
undergone a change in control. For this purpose, a change in control shall
mean a given person or group of affiliated persons or groups increasing their
beneficial ownership interest in the Company by at least twenty (20)
percentage points without advance Board approval.
SECTION 3.5 NOTICE AND PROCEDURES.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 3.5(a) hereof, the Company
has D&O Insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on
behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such D&O Insurance policies.
(c) In the event the Company shall be obligated to advance
the expenses for any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the Indemnitee (which approval shall not be unreasonably
withheld), upon the delivery to the Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that: (i) the Indemnitee shall have the right to employ
his own counsel in any such proceeding at the Indemnitee's expense; (ii) the
Indemnitee shall have the right to employ his own counsel in connection with
any such proceeding, at the expense of the Company, if such counsel serves in
a review, observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding; and
(iii) if (A) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (B) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the
Indemnitee in the conduct of any such defense or (C) the Company shall not,
in fact, have employed counsel to assume the defense of such proceeding, then
the fees and expenses of the Indemnitee's counsel shall be at the expense of
the Company.
SECTION 3.6 DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in Section
3.4(a) or 3.4(b) of this Agreement
5
<PAGE>
or in the defense of any claim, issue or matter described therein, the
Company shall indemnify the Indemnitee against expenses actually and
reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.
(b) In the event that Section 3.6(a) is inapplicable, or does
not apply to the entire proceeding, the Company shall nonetheless indemnify
the Indemnitee unless the Company shall prove by clear and convincing
evidence to a forum listed in Section 8.3 below that the Indemnitee has not
met the applicable standard of conduct required to entitle the Indemnitee to
such indemnification.
(c) The Indemnitee shall be entitled to select the forum in
which the validity of the Company's claim under Section 3.6(b) hereof that
the Indemnitee is not entitled to indemnification will be heard from among
the following, except that the Indemnitee can select a forum consisting of
the stockholders of the Company only with the approval of the Company:
(i) A quorum of the Board consisting of directors who are
not parties to the proceeding for which indemnification is being sought;
(ii) The stockholders of the Company;
(iii) Legal counsel mutually agreed upon by the Indemnitee
and the Board, which counsel shall make such determination in a written
opinion;
(iv) A panel of three arbitrators, one of whom is selected
by the Company, another of whom is selected by the Indemnitee and the last
of whom is selected by the first two arbitrators so selected; or
(v) The Court of Chancery of Delaware or other court having
jurisdiction of subject matter and the parties.
(d) As soon as practicable, and in no event later than thirty
(30) days after the forum has been selected pursuant to Section 3.6(c) above,
the Company shall, at its own expense, submit to the selected forum its claim
that the Indemnitee is not entitled to indemnification, and the Company shall
act in the utmost good faith to assure the Indemnitee a complete opportunity
to defend against such claim.
(e) If the forum selected in accordance with Section 3.c(c)
hereof is not a court, then after the final decision of such forum is
rendered, the Company or the Indemnitee shall have the right to apply to the
Court of Chancery of Delaware, the court in which the proceeding giving rise
to the Indemnitee's claim for indemnification is or was pending or any other
court of competent jurisdiction, for the purpose of appealing the decision of
such forum, provided that such right is executed within sixty (60) days after
the final decision of such forum is rendered. If the forum selected in
accordance with Section 3.6(c) hereof is a court, then the
6
<PAGE>
rights of the Company or the Indemnitee to appeal any decision of such court
shall be governed by the applicable laws and rules governing appeals of the
decision of such court.
(f) Notwithstanding any other provision in this Agreement to
the contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by
the Indemnitee in connection with any other proceeding between the Company
and the Indemnitee involving the interpretation or enforcement of the rights
of the Indemnitee under this Agreement unless a court of competent
jurisdiction finds that each of the material claims and/or defenses of the
Indemnitee in any such proceeding was frivolous or not made in good faith.
SECTION 3.7 EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) to indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to proceedings
specifically authorized by the Board or brought to establish or enforce a
right to indemnification and/or advancement of expenses arising under this
Agreement, the charter documents of the Company or any subsidiary or any
statute or law or otherwise, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board finds
it to be appropriate; or
(b) to indemnify the Indemnitee hereunder for any amounts
paid in settlement of a proceeding unless the Company consents in advance in
writing to such settlement, which consent shall not be unreasonably withheld;
or
(c) to indemnify the Indemnitee on account of any suit in
which judgment is rendered against the Indemnitee for an accounting of
profits made from the purchase or sale by the Indemnitee of securities of the
Company pursuant to the provisions of Section l6(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law; or
(d) to indemnify the Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the
Indemnitee have been advised that the Securities and Exchange Commission
takes the position that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication.
SECTION 3.8 NON-EXCLUSIVITY. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any
provision of law, the Company's Certificate of Incorporation or Bylaws, the
vote of the Company's stockholders or disinterested directors, other
agreements or otherwise, both as to action in the Indemnitee's official
capacity and to action in another capacity
7
<PAGE>
while occupying his position as an agent of the Company, and the Indemnitee's
rights hereunder shall continue after the Indemnitee has ceased acting as an
agent of the Company and shall inure to the benefit of the heirs, executors
and administrators of the Indemnitee.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1 INTERPRETATION OF AGREEMENT. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification and advancement of expenses to the Indemnitee to the
fullest extent now or hereafter permitted by law, except as expressly limited
herein.
SECTION 4.2 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever, then: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision
held to be invalid, illegal or unenforceable that are not themselves invalid,
illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraphs of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable and to give effect to
Section 4.1 hereof.
SECTION 4.3 MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
SECTION 4.4 SUBROGATION. In the event of full payment under this
Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indemnitee, who shall execute all
documents required and shall do all acts that may be necessary or desirable
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.
SECTION 4.5 COUNTERPARTS. This Agreement may be executed in one or
more counter-parts, which shall together constitute one agreement.
SECTION 4.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
SECTION 4.7 NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given: (a) if delivered by hand and receipted for by the party
addressee; or (b) if mailed by certified or registered mail, with postage
8
<PAGE>
prepaid, on the third business day after the mailing date. Addresses for
notice to either party are as shown on the signature page of this Agreement
or as subsequently modified by written notice.
SECTION 4.8 GOVERNING LAW. This Agreement shall be governed
exclusively by and construed according to the laws of the State of Delaware,
as applied to contracts between Delaware residents entered into and to be
performed entirely within Delaware.
SECTION 4.9 CONSENT TO JURISDICTION. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the
State of Illinois for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement.
SECTION 4.10 ATTORNEYS' FEES. In the event Indemnitee is required to
bring any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 3, the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing
and pursuing such action, unless a court of competent jurisdiction finds each
of the material claims of the Indemnitee in any such action was frivolous and
not made in good faith.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.
PCQUOTE.COM, INC. INDEMNITEE:
By:
----------------------------- ---------------------------------
Name: Name:
---------------------- ---------------------------
Title:
----------------------
Address: Address:
300 South Wacker Drive, Suite 300
Chicago, Illinois 60606 ---------------------------------
---------------------------------
9
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<PAGE>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1998 JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<CASH> 0 0 0
<SECURITIES> 0 0 0
<RECEIVABLES> 437,043 400,121 91,782
<ALLOWANCES> (109,036) (33,998) 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 479,489 416,479 116,589
<PP&E> 746,779 431,935 0
<DEPRECIATION> (268,205) (71,989) 0
<TOTAL-ASSETS> 3,306,090 2,885,065 1,798,760
<CURRENT-LIABILITIES> 2,225,910 1,820,597 525,357
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 1,080,180 1,064,468 1,273,403
<TOTAL-LIABILITY-AND-EQUITY> 3,306,090 2,885,065 1,798,760
<SALES> 0 0 0
<TOTAL-REVENUES> 9,912,111 4,762,912 972,837
<CGS> 0 0 0
<TOTAL-COSTS> 6,542,787 4,201,310 812,988
<OTHER-EXPENSES> 5,027,421 3,849,366 2,096,098
<LOSS-PROVISION> 148,625 9,528 0
<INTEREST-EXPENSE> 512,646 1,295,090 26,171
<INCOME-PRETAX> (2,162,451) (4,572,317) (1,961,864)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (2,162,451) (4,572,317) (1,961,864)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,162,451) (4,572,317) (1,961,864)
<EPS-BASIC> (.20) (.47) (.22)
<EPS-DILUTED> (.20) (.47) (.22)
</TABLE>
<PAGE>
EXHIBIT 99.1
CONSENT
I hereby consent to the use of my name as it appears in the Registration
Statement on Form S-1 and related prospectus of PCQuote.com, Inc. and affirm
that the information contained therein, as it relates to me, is accurate as
of the date hereof.
/s/ James R. Quandt
-------------------------------------
(Signature)
James R. Quandt
-------------------------------------
(Name)
June 5, 1999
-------------------------------------
(Date)
<PAGE>
EXHIBIT 99.2
CONSENT
I hereby consent to the use of my name as it appears in the Registration
Statement on Form S-1 and related prospectus of PCQuote.com, Inc. and affirm
that the information contained therein, as it relates to me, is accurate as
of the date hereof.
/s/ Francis J. Harvey
-------------------------------------
(Signature)
Francis J. Harvey
-------------------------------------
(Name)
June 7, 1999
-------------------------------------
(Date)
<PAGE>
EXHIBIT 99.3
CONSENT
I hereby consent to the use of my name as it appears in the Registration
Statement on Form S-1 and related prospectus of PCQuote.com, Inc. and affirm
that the information contained therein, as it relates to me, is accurate as
of the date hereof.
/s/ Ronald J. Grabe
-------------------------------------
(Signature)
Ronald J. Grabe
-------------------------------------
(Name)
June 7, 1999
-------------------------------------
(Date)
