<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
PC Quote, Inc.
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(Name of Issuer)
Common Stock, $.001 par value per share
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(Title of Class of Securities)
693236200
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(CUSIP Number)
James F. Mosier, Corporate Secretary and General Counsel
PICO Holdings, Inc.
875 Prospect Street
Suite 301
La Jolla, CA 92037
(619) 456-6022
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 7, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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AMENDMENT NO. 2
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CUSIP NO. 693236200 SCHEDULE 13D PAGE 2 OF 30 PAGES
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<S> <C> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PICO Holdings, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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7 SOLE VOTING POWER
1,140,000 shares
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 3,746,000 shares
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
1,140,000 shares
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10 SHARED DISPOSITIVE POWER
3,746,000 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,886,400 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.1%
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14 TYPE OF REPORTING PERSON*
HC
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 693236200
2
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<TABLE>
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AMENDMENT NO. 2
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CUSIP NO. 693236200 SCHEDULE 13D PAGE 3 OF 30 PAGES
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Physicians Insurance Company of Ohio
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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7 SOLE VOTING POWER
None
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 3,746,400 shares
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
None
-------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,746,400 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,746,000 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.6%
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14 TYPE OF REPORTING PERSON*
IC
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 693236200
3
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<TABLE>
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AMENDMENT NO. 2
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CUSIP NO. 693236200 SCHEDULE 13D PAGE 4 OF 30 PAGES
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<S> <C> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
American Physicians Life Insurance Company
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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7 SOLE VOTING POWER
None
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 96,400 shares
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
None
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10 SHARED DISPOSITIVE POWER
96,400 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
96,400 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
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14 TYPE OF REPORTING PERSON*
IC
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 693236200
4
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<TABLE>
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AMENDMENT NO. 2
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CUSIP NO. 693236200 SCHEDULE 13D PAGE 5 OF 30 PAGES
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<S> <C> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Physicians Investment Company
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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7 SOLE VOTING POWER
None
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 96,400 shares
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
None
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10 SHARED DISPOSITIVE POWER
96,400 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
96,400 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
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14 TYPE OF REPORTING PERSON*
HC
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 693236200
5
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ITEM 1. SECURITY AND ISSUER.
--------------------
This Amendment No. 2 to Schedule 13D ("Amendment No. 2")
relates to the shares of Common Stock, $.001 par value (the "PC Quote Shares"),
of PC Quote, Inc. ("PC Quote"). The address of the principal executive offices
of PC Quote is 300 South Wacker Drive, Chicago, Illinois 60606.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
As described in Amendment No. 1 to the Reporting Persons' Schedule
13D, which was filed with the Securities and Exchange Commission (the "SEC") on
June 11, 1997 ("Amendment No. 1"), on May 5, 1997, Holdings and PC Quote
entered into a Loan and Security Agreement (the "Loan Agreement"), under which
Holdings agreed to make a secured loan to PC Quote in an aggregate principal
amount of up to $1,000,000 at a fixed rate equal to 14% per annum. The entire
principal balance and all accrued interest due under the Loan Agreement are
payable on September 30, 1997. All advances under the Loan Agreement are to be
secured by a pledge of substantially all of the assets of PC Quote. These liens
are subject to the prior lien of PC Quote's primary lender, Lakeside Bank.
Holdings is to be paid a "facility fee" of $40,000, plus interest at a rate
equal to 14% per annum, on the maturity date of the loan contemplated by the
Loan Agreement.
Effective August 7, 1997, Holdings and PC Quote entered into a Joint
Amendment to Agreement to Provide Insurance; Disbursement Request and
Authorization; Promissory Note; and Loan and Security Agreement (the "Joint
Amendment") pursuant to which the amount which Holdings agreed to lend to PC
Quote was increased from $1,000,000 to $2,000,000. Holdings made a secured loan
to PC Quote on August 7, 1997 in the amount of the additional $1,000,000 (the
"August 7, 1997 Loan"). No "facility fee" was payable by PC Quote to Holdings
in connection with the August 7, 1997 Loan. Other than the provisions discussed
in this paragraph, the terms and provisions of the Loan Agreement remain in
full force and effect.
On August 7, 1997, in connection with the August 7, 1997 Loan by
Holdings to PC Quote, PC Quote issued a Common Stock Purchase Warrant (the
"Second Warrant") to Holdings entitling Holdings to purchase a minimum of
500,000 PC Quote Shares, at a price per share (the "Second Warrant Price")
equal to the lesser of (a) the mean of the closing bid price per share for the
20 preceding trading days (as reported by NASDAQ or such national securities
exchange as the PC Quote Shares are traded on) and (b) $2.00 per share. The
Second Warrant expires on April 30, 2000. In lieu of exercising the Second
Warrant for cash, Holdings may elect to receive PC Quote Shares equal to the
"value" of the Second Warrant determined in accordance with a formula specified
in the Second Warrant (the "Conversion Value"). The number of PC Quote Shares
subject to the Second Warrant and the Second Warrant Price will be adjusted to
reflect stock dividends; reclassifications or changes of outstanding securities
of PC Quote; any consolidation, merger or reorganization of PC Quote; stock
splits; issuances of rights, options or warrants to all holders of PC Quote
Shares exercisable at less than the current market price per share; and other
distributions to all holders of PC Quote Shares. In the event of any sale,
license or other disposition of all or substantially all of the assets of PC
Quote or any reorganization, consolidation or merger involving PC Quote in
which the holders of PC Quote securities before the transaction beneficially
own less than 50% of the outstanding voting securities of the surviving entity
(an "Acquisition"), if the successor entity does not assume the obligations of
the Second Warrant and Holdings has not fully exercised the Second Warrant, the
unexercised portion of the Second Warrant will be deemed automatically
converted into PC Quote Shares at the Conversion
6
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Value. Alternatively, Holdings may elect to cause PC Quote to purchase the
unexercised portion of the Second Warrant for cash upon the closing of any
Acquisition for an amount equal to (a) the fair market value of any
consideration that would have been received had Holdings exercised the
unexercised portion of the Second Warrant immediately before the record date for
determining stockholders entitled to participate in the proceeds of the
Acquisition, less (b) the aggregate Second Warrant Price. The Second Warrant
also provides for certain piggyback registration rights and a one-time demand
registration right.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
As described more fully in Item 3 of this Amendment No. 2 above, in
connection with the Joint Amendment, on August 7, 1997, the Second Warrant was
issued to Holdings.
John R. Hart and Jim R. Porter were elected to the Board of Directors
of PC Quote on July 17, 1997, joining Ronald Langley and Louis Morgan as
directors. Messrs. Hart and Porter were elected to the PC Quote Board of
Directors to fill vacancies in the Board. As discussed in the reporting
persons' Schedule 13D, M. Blair Hull and Alexander R. Piper had resigned their
positions as directors in December 1996. As discussed in the reporting persons'
Amendment No. 1, Paul DiBiasio resigned his position as a director in April
1997. The Board of Directors of PC Quote has no immediate plans to fill the
vacancy created by the resignation of the third director until the annual
meeting currently scheduled to be held on October 16, 1997. Mr. Hart is
President, Chief Executive Officer and a director of each of Holdings and
Physicians. Mr. Porter was elected President and Chief Executive Officer of PC
Quote in July 1997.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-------------------------------------
(A)(B) Beneficial Ownership of PC Quote Shares:
<TABLE>
<CAPTION>
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PC QUOTE SHARES WHICH
MAY BE ACQUIRED UPON
CONVERSION OF DEBENTURE TOTAL PC QUOTE PERCENT OF
PC QUOTE SHARES AND/OR UPON EXERCISE OF SHARES OUTSTANDING PC QUOTE
PERSON CURRENTLY HELD WARRANTS BENEFICIALLY OWNED SHARES (1)
------ -------------- -------- ------------------ ----------
<S> <C> <C> <C> <C>
Holdings 2,146,400 (2)(3)(4) 2,740,000 (5)(6) 4,886,400 48.1%
- ---------------------------------------------------------------------------------------------------------------------
Physicians 2,146,400 (2)(3)(4) 1,600,000 (5) 3,746,400 41.6%
- ---------------------------------------------------------------------------------------------------------------------
APL 96,400 (3) 0 96,400 1.3%
- ---------------------------------------------------------------------------------------------------------------------
PIC 96,400 (3) 0 96,400 1.3%
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</TABLE>
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(1) The percent of the outstanding PC Quote Shares is based upon
the number of PC Quote Shares outstanding (7,414,149) and the number
of PC Quote Shares that the person may acquire upon conversion of an
outstanding debenture and/or upon exercise of outstanding warrants.
(2) Includes 2,050,000 PC Quote Shares beneficially owned directly
by Physicians which is a direct subsidiary of Holdings. As a result
of Holdings' status as parent of Physicians, Physicians and Holdings
may be deemed to share voting and investment power with respect to
these PC Quote Shares.
7
<PAGE> 8
(3) Includes 96,400 PC Quote Shares beneficially owned directly by
APL, which is a direct subsidiary of PIC and an indirect subsidiary
of Physicians and of Holdings. As a result of these relationships,
APL, PIC, Physicians and Holdings may be deemed to share voting and
investment power with respect to these PC Quote Shares.
(4) Does not include PC Quote Shares which may be acquired by Physicians
as a result of a Rights offering as described in Item 4 of Amendment
No. 1.
(5) Includes 1,600,000 PC Quote Shares which may be acquired upon
conversion of an outstanding debenture beneficially owned directly by
Physicians. As a result of Holdings' status as parent of Physicians,
Holdings and Physicians may be deemed to share voting and investment
power with respect to these PC Quote Shares.
(6) Includes 1,140,000 PC Quote Shares which may be acquired upon
exercise of outstanding warrants beneficially owned directly by
Holdings.
(C) See Items 3 and 4 of this Amendment No. 2 above.
(D) See Items 5(A) and 5(B) of this Amendment No. 2 above.
(E) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
----------------------------
See Items 3 and 4 of this Amendment No. 2 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS:
---------------------------------
Exhibit A - Joint Filing Agreement, dated December 3, 1996, among PICO
Holdings, Inc., Physicians Insurance Company of Ohio,
American Physicians Life Insurance Company and Physicians
Investment Company [Incorporated herein by reference to
Exhibit A to the Reporting Persons' Schedule 13D filed with
the SEC on December 16, 1996.]
Exhibit B - Joint Amendment to Agreement to Provide Insurance;
Disbursement Request and Authorization; Promissory Note;
and Loan and Security Agreement, dated August 7, 1997,
between PICO Holdings, Inc. and PC Quote, Inc.
Exhibit C - Common Stock Purchase Warrant issued on August 7, 1997 by
PC Quote, Inc. to PICO Holdings, Inc.
8
<PAGE> 9
Signature.
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: September 12, 1997 PICO HOLDINGS, INC.
By: /s/ James F. Mosier
-----------------------------------
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ James F. Mosier
-----------------------------------
James F. Mosier,
General Counsel and Secretary
AMERICAN PHYSICIANS LIFE INSURANCE
COMPANY
By: /s/ James F. Mosier
-----------------------------------
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INVESTMENT COMPANY
By: /s/ James F. Mosier
-----------------------------------
James F. Mosier, Secretary
9
<PAGE> 10
Exhibit B
Joint Amendment to Agreement to Provide Insurance;
Disbursement Request and Authorization; Promissory
Note; and Loan and Security Agreement, dated as of
August 7, 1997, between PICO Holdings, Inc. and PC
Quote, Inc.
10
<PAGE> 11
JOINT AMENDMENT TO
AGREEMENT TO PROVIDE INSURANCE;
DISBURSEMENT REQUEST AND AUTHORIZATION;
PROMISSORY NOTE; AND
LOAN AND SECURITY AGREEMENT
This Joint Amendment to Agreement to Provide Insurance; Disbursement
Request and Authorization; Promissory Note; and Loan and Security Agreement is
entered into this 7th day of August, 1997, by and between PC Quote, Inc., a
Delaware corporation ("PC Quote") and PICO Holdings, Inc., a California
corporation ("PICO").
WHEREAS, PC Quote and PICO are parties to those certain Agreement to
Provide Insurance; Disbursement Request and Authorization; Promissory Note; and
Loan and Security Agreement all entered into in connection with that certain
Promissory Note dated May 5, 1997 in the amount of $1,000,000 payable to PICO
(collectively, the "Definitive Agreements").
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, PC Quote and PICO hereby agree to amend the
Definitive Agreements as follows:
I. Agreement To Provide Insurance, Dated May 5, 1997.
--------------------------------------------------
The Agreement to Provide Insurance, dated May 5, 1997, is hereby
amended to add the following sentence immediately before the signature blocks:
"Grantor acknowledges that this Agreement applies to the loan made to Grantor
by Lender on August 7, 1997.
II. Disbursement Request And Authorization, Dated May 5, 1997.
----------------------------------------------------------
The section entitled "Loan Type" of the Disbursement Request and
Authorization, dated May 5, 1997 is amended to delete "$1,000,000" and insert
"$2,000,000."
III. Promissory Note, Dated May 5, 1997.
-----------------------------------
The Promissory Note dated May 5, 1997 is hereby amended to delete all
references to "One Million Dollars" or "$1,000,000" and insert "Two Million
Dollars" or "$2,000,000," respectively.
IV. Loan And Security Agreement, Dated May 5, 1997.
-----------------------------------------------
The Loan and Security Agreement dated May 5, 1997 is hereby amended as
follows:
A. On page 1, in the third line of "RECITALS" delete "$1,000,000"
and insert "$2,000,000."
<PAGE> 12
B. On page 2, in the first paragraph delete "$1,000,000" and insert
"$2,000,000."
C. On page 7, add the following language at the end of Section 2.5:
"There shall be no Facility Fee owed by Borrower to Lender in
connection with Lender's $1,000,000 loan to Borrower on August 7,
1997."
V. Except as expressly provided herein, all of the terms and provisions of
the Definitive Agreements shall remain in full force and effect.
VI. This Joint Amendment may be executed in a multiple counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Joint Amendment as
of the date first written above.
PC QUOTE, INC.
By: /s/ Louis J. Morgan
-----------------------
Its: President
PICO HOLDINGS, INC.
By: /s/ James F. Mosier
-----------------------
Its: Secretary
-2-
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Exhibit C
Common Stock Purchase Warrant issued on August 7, 1997
by PC Quote, Inc. to PICO Holdings, Inc.
<PAGE> 14
Common Stock Warrant
Minimum 500,000 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.
Void after April 30, 2000
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, PICO HOLDINGS, INC., a
California corporation, is entitled to purchase a minimum of Five Hundred
Thousand (500,000) shares of Common Stock ("Warrant Shares") of PC QUOTE, INC.,
a Delaware corporation, at a price per share equal to the mean of the closing
bid price per share for the twenty (20) preceding trading days (or such fewer
number of days as such public market has existed) as reported by NASDAQ or such
national securities exchange as the Common Stock (as defined below) is traded
on, but in no event shall the price be greater than $2.00 per share ("Warrant
Price"), subject to adjustments and all other terms and conditions set forth in
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) "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 holders
of the Company's securities before the transaction beneficially own less than
50% of the outstanding voting securities of the surviving entity after the
transaction.
(c) "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
1
<PAGE> 15
(d) "Common Stock" shall mean shares of the Company's
presently or subsequently authorized Common Stock, and any stock into which
such Common Stock may hereafter be exchanged.
(e) "Company" shall mean PC QUOTE, INC., a Delaware
corporation, and any corporation which shall succeed to or assume the
obligations of PC QUOTE, INC., under this Warrant.
(f) "Date of Grant" shall mean August 7, 1997.
(g) "Exercise Date" shall mean the effective date of the
delivery of the Notice of Exercise pursuant to Sections 4 and 11 below.
(h) "Holder" shall mean any person who shall at the time be
the registered holder of this Warrant.
(i) "Notes" shall mean (i) the Convertible Subordinated
Debenture, as amended, held by Physicians Insurance of Ohio, and (ii) other
indebtedness of the Company in the aggregate principal amount of up to
$2,000,000, owed to PICO HOLDINGS, INC., which credit shall have been extended
concurrently with the issuance of this Warrant.
(j) "Shares" shall mean shares of the Company's Common
Stock, as described in the Company's Certificate of Incorporation.
2. Issuance of Warrant and Consideration Therefor. This
Warrant is issued in consideration of the loan by PICO HOLDINGS, INC. to the
Company as described in the Notes issued concurrently with this Warrant by the
Company.
3. Term. The purchase right represented by this Warrant is
exercisable only during the period commencing upon the Date of Grant and
ending on April 30, 2000.
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.
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<PAGE> 16
(c) Net Issue Exercise. Notwithstanding any provisions
herein to the contrary, in lieu of exercising this Warrant for cash, the Holder
may elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with a properly endorsed notice of
exercise and notice of such election in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the following
formula:
Y (A-B)
X = ------------
A
Where X = the number of shares of Common Stock to be issued to the Holder,
Y = the number of shares of Common Stock purchasable under the Warrant or,
if only a portion of the Warrant is being exercised, the portion of
the Warrant being canceled (at the date of such calculation),
A = the fair market value of one share of the Company's Common Stock (at
the date of such calculation), and
B = the Warrant Price (as adjusted to the date of such calculation).
For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company's Board of Directors in good faith;
provided, however, that where there exists a public market for the Company's
Common Stock at the time of such exercise, fair market value shall mean the
average over the preceding twenty trading days (or such fewer number of days as
such public market has existed) of the mean of the closing bid and asked prices
on the over-the-counter market as reported by Nasdaq, or if the Common Stock is
then traded on a national securities exchange or the Nasdaq National Market,
the average over the preceding twenty trading days (or such fewer number of
days as the Common Stock has been so traded) of the closing sale prices on the
principal national securities exchange or the National Market on which it is so
traded.
(d) 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 ten days of
delivery of the Notice of Exercise and, unless this Warrant has been fully
exercised or has expired, a new warrant 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.
(e) 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.
3
<PAGE> 17
(f) Company's Representations.
(i) 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 nonassessable, and free of any liens
and encumbrances except for restrictions on transfer under applicable federal
and state securities laws. During the period within which the purchase right
represented by this Warrant may be exercised, the Company shall at all times use
its best efforts to 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 valid and binding obligation of the Company enforceable
in 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 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 securities 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.
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<PAGE> 18
(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.
(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) Rights, Options or Warrants. If the Company issues
rights, options or warrants to all holders of its shares of Common Stock,
without any charge to such holders, entitling them (for a period expiring
within 45 days after the record date mentioned below in this paragraph (d)) to
subscribe for or to purchase shares of Common Stock at a price per share lower
than the then current market price per share of Common Stock at the record date
mentioned below (as defined in paragraph (f) below), the number of Shares
thereafter purchasable upon exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of each
Warrant by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered would purchase at the then
current market price per share of Common Stock. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become
effective retroactively to immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.
(e) Other Distributions. If the Company distributes to
all holders of its shares of Common Stock shares of stock other than Common
Stock or evidences of its indebtedness or assets (excluding cash dividends
payable out of consolidated earnings or retained earnings and dividends or
distributions referred to in paragraph (a) above) or rights, options or
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referenced in
paragraph (2) above), then in each case the number of Shares thereafter
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<PAGE> 19
issuable upon the exercise of each warrant shall be determined by multiplying
the number of Shares theretofore issuable upon the exercise of each Warrant, by
a fraction, of which the numerator shall be the current market price per share
of Common Stock (as defined in paragraph (f) below) on the record date
mentioned below in this paragraph (e), and of which the denominator shall be
the current market price per share of Common Stock on such record date, less
the then fair value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be conclusive) of the portion of the
shares of stock other than the Common Stock or assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purposes of any
computation under paragraphs (d) and (c) of this Section 5, the current market
price per share of Common Stock at any date shall be the average of the daily
closing prices for fifteen consecutive trading days commencing twenty trading
days before the date of such computation. The closing price for each day shall
be the closing sale price or in case no such reported sale takes place on such
day, the average of the closing bid and asked prices for such day, in either
case on the principal national securities exchange or the Nasdaq National
Market on which the shares are listed or admitted to trading, or if they are
not listed or admitted to trading on any national securities exchange or the
Nasdaq National Market, but are traded in the over-the-counter market, the
average of the representative closing bid and asked quotations for the Common
Stock, on the NASDAQ system or any comparable system, or if the Common Stock
or, in case no sale is publicly reported, the average of the closing bid and
asked prices as furnished by two members of the NASD selected from time to time
by the Company for that purpose.
(g) Adjustments to Warrant Price. Whenever the number
of Shares purchasable upon exercise of each 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.
(h) Certificate 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
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<PAGE> 20
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 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.
(c) Purchase Right. Notwithstanding the foregoing, at
the election of the Holder, the Company shall purchase the unexercised portion
of this Warrant for cash upon the closing of any Acquisition for an amount
equal to (a) the fair market value of any consideration that would have been
received by the Holder in consideration of the Shares had the Holder exercised
the unexercised portion of this Warrant immediately before the record date for
determining the stockholders entitled to participate in the proceeds of the
Acquisition, less (b) the aggregate Warrant Price of the Shares, but in no
event less than zero.
7. Notices; Information; Registration.
(a) Notice of Certain Events. If the Company proposes
at any time (a) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock, or other securities and whether or not a
regular cash dividend; (b) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights; (c) to effect any reclassification or recapitalization
of Common Stock; (d) 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 (e) 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 (1) at least 20 days prior
written notice of the date on which a record will be taken for such dividend,
distribution, or subscription rights (and specifying the date on which the
holders of Common Stock will be entitled thereto) or in respect of the matters
referred to in (c) and (d) above for determining rights to vote, if any; (2) in
the case of the matters referred to in (c) and (d) above at least 20 days prior
written notice of the date when the same will take place (and specifying the
date on which the holders of Common Stock will be entitled to exchange their
Common Stock for securities or other property deliverable upon the occurrence
of such event); and (3) in the case of the matter referred to in (e) above, the
same notice as is given to the holders of such registration rights.
(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
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<PAGE> 21
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.
8. 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
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. 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.
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<PAGE> 22
(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.
9. 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.
10. 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.
11. 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.
12. 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.
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13. 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.
14. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
15. 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.
16. 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: August 7, 1997. PC QUOTE, INC., a Delaware corporation
By: /s/ Louis J. Morgan
-----------------------------------
, President
By: /s/ Darlene E. Czaja
-----------------------------------
, Secretary
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EXHIBIT A
NOTICE OF EXERCISE
TO: PC QUOTE, 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 check drawn on a United States
bank and for United States funds made payable to
the Company in the amount of $_____________;
[ ] 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; or
[ ] pursuant to the Net Exercise provisions set forth in
Section 4(c) of the Warrant.
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 Ident. No.:
-------------------
HOLDER:
------------------------------
By:
----------------------------------
Date: Title:
------------------- -------------------------------
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EXHIBIT B
STATEMENT OF REGISTRATION RIGHTS
1. Definitions. For purpose 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 the Company's initial public offering 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 April 30, 2000 to register
(including for this purpose a registration effected by the Company for
stockholders other than Holder) any of its stock or other securities under the
Act in connection with the public offering 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
before April 30, 2000, receive from Holders holding 40% or more of the
outstanding Registrable Securities a written request (to be exercised only
once) that the Company effect a registration and any related qualification or
compliance with respect 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:
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<PAGE> 26
(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 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 Registrable Securities
pursuant to this Section 3 within the preceding 12 months; (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, 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.
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 SEC 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.
(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.
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<PAGE> 27
(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 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.
(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, 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.
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<PAGE> 28
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,
printers and accounting fees relating thereto, and the cost of any reasonable
fees or disbursements of counsel for Holder.
8. Underwriting Requirements. 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 therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by Holder and each other
selling stockholder.
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, and agents, any underwriter (as defined in the
Act) for Holder and each person, if any, who controls 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, 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, 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 or
directors, 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
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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, 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, 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 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 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 SEC that may at any
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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 SEC 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 SEC 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 SEC 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 SEC 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 or of
at least 400,000 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 effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
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