<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)*
PC Quote, Inc.
---------------
(Name of Issuer)
Common Stock, $.001 par value per share
-----------------------------------------
(Title of Class of Securities)
693236200
----------------
(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
-------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 18, 1998
-------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including exhibits. See Section 240.13d-7(b) for other
parties to whom copies are to be sent.
*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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CUSIP NO. 693236200 AMENDMENT NO. 5
TO
SCHEDULE 13D
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY):
PICO Holdings, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(SEE INSTRUCTIONS): (a) [X]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 7,254,295 shares
8. SHARED VOTING POWER: 3,957,500 shares
9. SOLE DISPOSITIVE POWER: 7,254,295 shares
10. SHARED DISPOSITIVE POWER: 3,957,500 shares
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,211,795 shares
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
50.8%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
HC
2
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CUSIP NO. 693236200 AMENDMENT NO. 5
TO
SCHEDULE 13D
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY):
Physicians Insurance Company of Ohio
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(SEE INSTRUCTIONS): (a) [X]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
OO
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: None
8. SHARED VOTING POWER: 3,957,500 shares
9. SOLE DISPOSITIVE POWER: None
10. SHARED DISPOSITIVE POWER: 3,957,500 shares
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
3,957,500 shares
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
24.6%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
IC
3
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ITEM 1. SECURITY AND ISSUER.
This Amendment No. 5 to Schedule 13D ("Amendment No. 5") 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 2. IDENTITY AND BACKGROUND.
The persons filing this Amendment No. 5 are PICO Holdings, Inc.
("Holdings") and Physicians Insurance Company of Ohio ("Physicians").
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Please see Item 4 below.
ITEM 4. PURPOSE OF TRANSACTION.
PURCHASE AND SALE OF PREFERRED STOCK; ISSUANCE OF NEW WARRANT
On September 23, 1998, PC Quote entered into a Securities Purchase
Agreement (the "Purchase Agreement") with Holdings and Physicians (collectively,
the "Reporting Persons") providing for the conversion of the PC Quote debt owned
by Holdings and Physicians into convertible preferred stock and a warrant to
purchase PC Quote Shares. The PC Quote shareholders approved the transactions
contemplated by the Purchase Agreement on December 17, 1998 and the closing of
such transactions occurred on December 18, 1998 (the "Closing").
As described in the Reporting Persons' Amendment No. 4 to Schedule
13D ("Amendment No. 4"), Physicians was the holder of a Subordinated Convertible
Debenture dated November 14, 1996, as amended (the "Debenture"), in the original
principal amount of $2,500,000. On September 23, 1998, Physicians and PC Quote
entered into a Second Amendment to Convertible Subordinated Debenture Due 2001
(the "Second Amendment") pursuant to which the conversion provisions of the
Debenture were amended as additional consideration for Physicians entering into
the Purchase Agreement. Pursuant to the Second Amendment, Physicians had the
right, at any time on or before April 30, 1999 or the full payment of the
Debenture, to convert the principal amount of the Debenture, plus all accrued
interest as of the date of such conversion (collectively, the "Conversion Date
Debenture Balance"), into shares of Series A Preferred Stock of PC Quote
determined by dividing the following by 100: the number calculated from the
division of the Conversion Date Debenture Balance by the lowest of the following
numbers: (i) 1.5625; (ii) the closing sale price of the PC Quote Shares as
reported on the American Stock Exchange ("AMEX") one day prior to the conversion
date; or (iii) the average AMEX closing price of the PC Quote Shares over the
20-day period immediately preceding the conversion date. The other terms of the
Debenture, as described in Amendment No. 4 remained the same.
Also as described in Amendment No. 4, PC Quote was indebted to
Holdings and its wholly-owned subsidiaries, Sequoia Insurance Company and
Citation Insurance Company (the "Subsidiary Lenders"), in the aggregate original
principal amount of $3,290,000.
Pursuant to the terms of the Purchase Agreement, Physicians acquired
19,075 shares of Series A 5% Convertible Preferred Stock (the "Series A
Preferred Stock") through the conversion of
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the Debenture and Holdings was issued 28,791 shares of Series B 5% Convertible
Preferred Stock (the "Series B Preferred Stock") in consideration for the
cancellation of the indebtedness from PC Quote to Holdings and the Subsidiary
Lenders.
At the Closing, PC Quote issued to Holdings a warrant (the "New
Warrant") to purchase 3,106,163 PC Quote Shares. The New Warrant has an exercise
price of $1.575, subject to anti-dilution adjustment (the "New Warrant Exercise
Price"), and an expiration date of April 30, 2005.
EXTENSION OF TERM OF EXISTING WARRANTS
At the Closing, PC Quote and Holdings entered into amendments of
three Common Stock Purchase Warrants to purchase an aggregate of 949,032 PC
Quote Shares (the "Existing Warrants") held by Holdings to extend the term
thereof from April 30, 2000 to April 30, 2005.
DIVIDENDS
A holder of Series A Preferred Stock will be entitled to receive cash
dividends, when and as declared by the PC Quote Board out of funds legally
available for such purpose, in the annual amount of 5% of the per share purchase
price, payable quarterly on the 15th day of September, December, March and June,
in each year. A holder of Series B Preferred Stock will be entitled to receive
cash dividends, when and as declared by the PC Quote Board out of funds legally
available for such purpose, in the annual amount of 5% of the per share purchase
price, payable quarterly on the 15th day of September, December, March and June,
in each year. Dividends payable for any period less than a full quarter will be
computed on and paid for the actual number of days elapsed. Dividends will
accrue on each share of Series A Preferred Stock and each share of Series B
Preferred Stock from December 18, 1998 (the "Issuance Date").
No dividends may be declared on any other series or class or classes
of stock of PC Quote unless there shall be or have been declared on all shares
of Preferred Stock then outstanding the dividends for all quarter-yearly periods
coinciding with or ending before each quarter-yearly period. Dividends will be
cumulative. No interest, or sum of money in lieu of interest, will be payable in
respect of any dividend payment which is in arrears. If in any quarter-yearly
dividend period, dividends in the annual amount have not been declared and paid
or set apart for payment for such quarter-yearly dividend period and all
preceding such periods from the first day from which dividends are cumulative,
then, until the aggregate deficiency is declared and fully paid or set apart for
payment, PC Quote may not (i) declare or pay or set apart for payment any
dividends or make any other distribution on any other capital stock or
securities having an equity interest in PC Quote ranking junior to or on a
parity with the Preferred Stock with respect to the payment of dividends or
distribution of assets on liquidation, dissolution or winding up of PC Quote
(the "Secondary Stock") (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase Secondary Stock)
or (ii) make any payment on account of the purchase, redemption, other
retirement or acquisition of any Secondary Stock with respect to the payment of
dividends or distribution of assets on liquidation, dissolution or winding up of
PC Quote.
CONVERSION OF PREFERRED STOCK
A holder of Preferred Stock will have the right, at such holder's
option, to convert the Preferred Stock into PC Quote Shares. If any Preferred
Stock remains outstanding on the fifth anniversary after the Issuance Date, then
such Preferred Stock will automatically convert to PC Quote Shares on such fifth
anniversary.
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At any time or times on or after the Issuance Date, any holder of
Preferred Stock will be entitled to convert any whole number of shares of
Preferred Stock into fully paid and nonassessable PC Quote Shares (rounded to
the nearest whole share). The number of PC Quote Shares issuable upon conversion
of the Preferred Stock will be determined by multiplying the product of one
hundred (100) and the number of shares of Preferred Stock to be converted into
PC Quote Shares by:
(i) in the case of Series A Preferred Stock, (A) $1.5625
PLUS (B) the amount of any accrued but unpaid dividends attributable to such
Series A Preferred Stock, DIVIDED BY the lower of (X) $1.5625, (Y) the average
Closing Sale Price (as defined) of the PC Quote Shares over the twenty-day
period immediately prior to the day the Series A Preferred Stock is to be
converted into PC Quote Shares; or (Z) the Closing Sale Price one day prior to
the day the Series A Preferred Stock is to be converted into PC Quote Shares
(the "Series A Conversion Rate").
(ii) in the case of Series B Preferred Stock, (A) $1.3125
PLUS (B) the amount of any accrued but unpaid dividend attributable to such
Series B Preferred Stock, DIVIDED BY the lower of (X) $1.3125, (Y) the average
Closing Sale Price of the PC Quote Shares over the twenty-day period immediately
prior to the date the Series B Preferred Stock is to be converted into PC Quote
Shares; or (Z) the Closing Sale Price one day prior to the day the Series B
Preferred Stock is to be converted into PC Quote Shares (the "Series B
Conversion Rate").
In order to prevent dilution of the rights granted, the Series A and
Series B Conversion Rates will be subject to adjustment for issuance of
additional securities of PC Quote, including common stock, options or
convertible securities, and reclassifications or changes of outstanding
securities (by any stock split, reverse stock split, combination, stock
dividend, recapitalization or otherwise).
VOTING RIGHTS OF PREFERRED STOCK
The holders of Preferred Stock will be entitled to notice of any
shareholders' meeting and to vote upon any matter submitted to the shareholders
for a vote on the following basis. Each holder of Preferred Stock will have the
number of votes equal to the number of PC Quote Shares into which the Preferred
Stock then held by such holder is convertible, as adjusted from time to time.
Holders of Preferred Stock will have the exclusive right to elect two
of the five directors to the PC Quote Board. Ronald Langley, the Chairman of the
Board of Holdings and Physicians, and John R. Hart, the President and Chief
Executive Officer of Holdings and Physicians, have been elected to the Board of
Directors of PC Quote.
NEW WARRANT EXERCISE AND ADJUSTMENTS
The holder of the New Warrant will have the right, at such holder's
option, to exercise the New Warrant, or any portion thereof, and to purchase the
corresponding whole number of PC Quote Shares, at the New Warrant Exercise
Price, at any time after the Issuance Date until April 30, 2005. In lieu of
exercising the New Warrant for cash, the holder may elect to receive PC Quote
Shares equal to the "value" of the New Warrant determined in accordance with a
formula specified in the New Warrant (the "Conversion Value"). The number of PC
Quote Shares subject to the New Warrant and the New Warrant Exercise 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 shares of PC Quote exercisable at less than the current market price
per share; and other distributions
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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's 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 New Warrant and
the holder has not fully exercised the New Warrant, the unexercised portion of
the New Warrant will be deemed automatically converted into PC Quote Shares at
the Conversion Value. Alternatively, the holder may elect to cause PC Quote to
purchase the exercised portion of the New 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 the holder exercised the
unexercised portion of the New Warrant immediately before the record date for
determining stockholders entitled to participate in the proceeds of the
Acquisition, less (b) the aggregate New Warrant Exercise Price.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(A) (B) Beneficial Ownership of PC Quote Shares:
<TABLE>
<CAPTION>
PC Quote Shares
which may be
Acquired upon
Exercise of Existing
Warrants or New
Warrant or upon
Conversion of
Series A Preferred Total PC Quote Percent of
PC Quote Shares Stock or Series B Shares Bene- Outstanding PC
Person Currently Held Preferred Stock ficially Owned Quote Shares (1)
------ -------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Holdings 2,370,000 (2) (3) 8,841,795 (4) (5) 11,211,795 50.8%
Physicians 2,050,000 (2) (3) 1,907,500 (5) 3,957,500 24.6%
<FN>
- -------------------
(1) The percent of the outstanding PC Quote Shares is based upon the
number of PC Quote Shares outstanding as of February 3, 1999
(14,183,182), the number of PC Quote Shares that the person may
acquire upon exercise of the Existing Warrants or the New Warrant and
the number of PC Quote Shares that the person may acquire upon
conversion of the Series A Preferred Stock or the Series B Preferred
Stock.
(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.
(3) 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 to Schedule 13D filed by the Reporting Persons on June 11,
1997.
(4) Includes 4,055,195 PC Quote Shares which may be acquired upon
exercise of the Existing Warrants and the New Warrant beneficially
owned directly by Holdings. Also includes 2,879,100 PC Quote Shares
which may be acquired upon conversion of the Series B Preferred Stock
beneficially owned directly by Holdings.
</TABLE>
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(5) Includes 1,907,500 PC Quote Shares which may be acquired upon
conversion of the Series A Preferred Stock beneficially owned by
Physicians.
(C) See Item 4.
(D) See Items 5(A) and 5(B) of this Amendment No. 5 above.
(E) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
See Item 4 of this Amendment No. 5 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Joint Filing Agreement, dated February 5, 1999, between
PICO Holdings, Inc. and Physicians Insurance Company of
Ohio
Exhibit B - Securities Purchase Agreement, made as of September
23, 1998, among PC Quote, Inc., PICO Holdings, Inc. and
Physicians Insurance Company of Ohio [Incorporated
herein by reference to Exhibit 4.1 to PC Quote's
Current Report on Form 8-K, dated October 6, 1998 and
filed on October 6, 1998 (the "PC Quote Form 8-K")]
Exhibit C - Form of Certificate of Designations of Series A and
Series B Preferred Stock of PC Quote [Incorporated
herein by reference to Exhibit 4.2 to the PC Quote Form
8-K]
Exhibit D - Form of Registration Rights Agreement among PC
Quote, Inc., PICO Holdings, Inc. and Physicians
Insurance Company of Ohio [Incorporated herein by
reference to Exhibit 4.3 to the PC Quote Form 8-K]
Exhibit E - Common Stock Purchase Warrant issued to PICO Holdings,
Inc. by PC Quote, Inc. on December 18, 1998
Exhibit F - Form of First Amendment to Common Stock Purchase
Warrant between PC Quote, Inc. and PICO Holdings, Inc.
with respect to Common Stock Purchase Warrant granted
on May 5, 1997 [Incorporated herein by reference to
Exhibit 4.5 to the PC Quote Form 8-K]
Exhibit G - Form of First Amendment to Common Stock Purchase
Warrant between PC Quote, Inc. and PICO Holdings, Inc.
with respect to Common Stock Purchase Warrant granted
on August 8, 1997 [Incorporated herein by reference to
Exhibit 4.6 to the PC Quote Form 8-K]
Exhibit H - Form of First Amendment to Common Stock Purchase
Warrant between PC Quote, Inc. and PICO Holdings, Inc.
with respect to Common Stock Purchase Warrant granted
on September 22, 1997 [Incorporated herein by
reference to Exhibit 4.7 to the PC Quote Form 8-K]
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Exhibit I - Second Amendment to Convertible Subordinated
Debenture Due 2001, dated as of September 23, 1998,
between Physicians Insurance Company of Ohio and PC
Quote, Inc.
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SIGNATURES
----------
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: February 5, 1999 PICO HOLDINGS, INC.
By: /s/ James F. Mosier
----------------------------------
James F. Mosier,
General Counsel and Secretary
Date: February 5, 1999 PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ James F. Mosier
----------------------------------
James F. Mosier,
General Counsel and Secretary
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EXHIBIT A
JOINT FILING AGREEMENT
----------------------
In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act
of 1934, the persons named below hereby agree to the joint filing on behalf of
each of them of a statement on Schedule 13D (including any amendments thereto)
with respect to the shares of Common Stock of PC Quote, Inc. beneficially owned
by each of them and further agree that this Joint Filing Agreement be included
as an exhibit to such joint filings.
IN WITNESS WHEREOF, the undersigned hereby execute this Joint Filing
Agreement as of the 5th day of February, 1999.
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
<PAGE> 1
EXHIBIT E
Common Stock Purchase Warrant issued to PICO Holdings, Inc.
by PC Quote, Inc. on December 18, 1998
<PAGE> 2
Common Stock Warrant
3,106,163 Shares
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, 2005
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, PICO HOLDINGS, INC., a
California corporation, is entitled to purchase a minimum of Three Million One
Hundred Six Thousand One Hundred Sixty-Three (3,106,163) shares of Common Stock
of PC QUOTE, INC., a Delaware corporation, at a price per share (the "Warrant
Price") equal to $1,575, 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.
(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.
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(f) "Date of Grant" shall mean December 18, 1998.
(g) "Exercise Date" shall mean the effective date of the
delivery of the Notice of Exercise pursuant to Section 4 below.
(h) "Holder" shall mean any person who shall at the time be
the registered holder of this Warrant.
(i) "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 for the renegotiation of the terms of a promissory
note issued by the Company and held by PICO HOLDINGS, INC. ("PICO") and the
purchase of preferred stock in the Company by PICO pursuant to that certain
Securities Purchase Agreement (the "Purchase Agreement") dated September 23,
1998 by and among the Company, PICO and PHYSICIANS INSURANCE COMPANY OF OHIO
("PHYSICIANS").
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, 2005.
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, to the principal office of the Company and (ii) payment to the Company
of an amount equal to the product of the Warrant Price, as adjusted under
Section 5, 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) NET ISSUE EXERCISE. Notwithstanding any provisions herein
to the contrary, in lieu of payment of the exercise price in 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 computed using the following formula:
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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.
For purposes of the above calculation, fair market value of one Share 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 American Stock Exchange, or if the Common
Stock is then traded on a national securities exchange other than the American
Stock Exchange, 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.
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(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 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 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.
5
<PAGE> 6
(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 paragraphs (a) and
(c); in each such case, the terms of this Section 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
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 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, 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 at a price per share lower than the then current market price per Share
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 outstanding on such record date plus the number of additional
Shares offered for subscription or purchase, and of which the denominator shall
be the number of Shares outstanding on such record date plus the number of
Shares which the aggregate offering price of the total number of Shares so
offered would purchase at the then current market price per Share. 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 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
(excluding those referenced in Section (2) above), then in each case the number
of Shares thereafter 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 (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 on such record date, less
6
<PAGE> 7
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. 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 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 American Stock
Exchange or such other principal national securities exchange or 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 National
Association of Securities Dealers Automated Quotation ("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, in case no sale is publicly
reported, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers selected by the
Company for that purpose.
(g) 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 Warrant 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 this
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 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.
7
<PAGE> 8
(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 acquired on exercise of this Warrant, 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 underlying this Warrant shall be "Registrable Securities"
under that certain Registration Rights Agreement, dated December 18, 1998, among
the Company, PICO and PHYSICIANS.
8
<PAGE> 9
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.
(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
9
<PAGE> 10
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.
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 California.
10
<PAGE> 11
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: December 18, 1998. PC QUOTE, INC., a Delaware corporation
By: /s/ Jim R. Porter
--------------------------------------
Jim R. Porter, Chairman of the Board
and Chief Executive Officer
By: /s/ John E. Juska
--------------------------------------
John E. Juska, Secretary
11
<PAGE> 12
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:_____________________________
_____________________________________
_____________________________________
TIN:_________________________________
HOLDER:
By:__________________________________
Name:
Title:
Date: _______________________
<PAGE> 1
EXHIBIT I
Second Amendment to Convertible Subordinated Debenture
Due 2001, dated as of September 23, 1998, between
Physicians Insurance Company of Ohio and PC Quote, Inc.
<PAGE> 2
SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED
DEBENTURE DUE 2001
THIS SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED DEBENTURE DUE 2001 is
entered into as of this 23rd day of September, 1998, by and between PHYSICIANS
INSURANCE COMPANY OF OHIO, an Ohio corporation ("Physicians"), and PC QUOTE,
INC., a Delaware corporation (the "Company").
RECITALS
--------
A. Physicians is the holder of that certain Convertible Subordinated
Debenture Due 2001, in the principal amount of $2,500,000, plus accrued
interest, issued by the Company on November 14, 1996, as amended by the First
Amendment to Convertible Subordinated Debenture Due 2001 and Debenture
Agreement, dated May 5, 1997, and as further amended by Amendments Nos. 1-4 of
the First Amendment to Convertible Subordinated Debenture Due 2001 and Debenture
Agreement. The Convertible Subordinated Debenture Due 2001, as amended, is
hereinafter referred to as the "Debenture."
B. Concurrently herewith, the Company, Physicians and PICO Holdings,
Inc., are entering into a Securities Purchase Agreement, pursuant to which
certain debt obligations of the Company held by Physicians and PICO Holdings,
Inc. will be converted into equity.
C. As additional consideration for Physicians entering into the
Securities Purchase Agreement, the Company has agreed to amend the conversion
provisions of the Debenture as provided in this Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and in the Debenture, and for other good and valuable
consideration, the receipt and sufficiency which is hereby acknowledged, the
parties hereto agree as follows:
1. The fourth full paragraph of page 2 of APPENDIX A of the Debenture,
is hereby amended and restated in its entirety as follows:
The registered holder of this Debenture has the right, at its
option, at any time on or prior to the later to occur of the
close of business on April 30, 1999 or the full payment of
this Debenture, to convert the principal amount hereof, plus
all accrued interest as of the date of such conversion
(collectively, the "Debenture Balance"), into the number of
fully paid and nonassessable shares of Series A Preferred
Stock of the Company determined by dividing the following by
100: the number calculated from the division of the Debenture
Balance by the lowest of the following numbers (i) 1.5625,
(ii) the closing sale price of the Company's Common
<PAGE> 3
Stock as reported by the American Stock Exchange ("AMEX") one day
prior to the conversion date (the "AMEX Closing Price") or (iii) the
average AMEX Closing Price of the Company's Common Stock over the
20-day period immediately preceding the conversion date (the
"Average AMEX Price"). The number resulting from the above
calculation which is to be divided by 100 is hereinafter referred to
as the "Conversion Price." Such conversion shall require surrender
of this Debenture to the Company at its executive offices
accompanied by written notice of conversion duly executed. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Common
Stock into a greater number of shares prior to conversion, the
Conversion Price shall be proportionately reduced and the number of
shares of Common Stock obtainable upon conversion shall be
proportionately increased. If the Company at any time combines (by
reverse stock split or otherwise) its outstanding shares of Common
Stock into a smaller number of shares prior to conversion, the
Conversion Price shall be proportionately increased and the number
of shares of Common Stock obtainable upon conversion shall be
proportionately decreased. The Company shall not issue fractional
shares or script representing fractions of shares of Common Stock
upon any such conversion, but shall make an adjustment therefor in
cash on the basis of the current market value of such fractional
interest. In the case of consolidation, merger, or sale or transfer
of substantially all of the Company's assets with, into or to any
person or entity or related group of persons or entities which is
not a subsidiary of the Company, the Conversion Price shall be
proportionately adjusted and the number of shares of Common Stock
obtainable upon conversion shall be proportionately adjusted so that
the rights of the holder hereof shall be equitably preserved.
Notwithstanding, anything to the contrary contained in this
Debenture, in no event will there be any adjustment in the
Conversion Price or the number of shares of Common Stock deliverable
upon conversion upon the Company's rights offering contemplated by
the Agreement.
2. Except as expressly provided herein, all of the terms and provisions
of the Debenture shall remain in full force and effect.
3. The provisions of this Amendment shall be performed and interpreted
in accordance with the laws of the State of Illinois without reference to
conflicts of laws principles.
4. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Convertible Subordinated Debenture Due 2001 as of the date first above written.
PC QUOTE, INC.
By: /s/ John E. Juska
--------------------------------------
Name: John E. Juska
Title: Chief Financial Officer
PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ James F. Mosier
--------------------------------------
Name: James F. Mosier
Title: Secretary
-4-
