<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
PC QUOTE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
300 SOUTH WACKER DRIVE, SUITE 300
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON
JUNE 16, 1999
- ---------------------
TO THE STOCKHOLDERS OF
PC QUOTE, INC.:
Our annual meeting of stockholders will be held at 3:00 p.m. on Wednesday June
16, 1999, at 225 West Wacker Drive, 30th Floor, Chicago, Illinois, for the
following purposes:
1. To elect six members to our Board of Directors.
2. To approve and ratify the 1999 Combined Incentive and Non-Statutory Stock
Option Plan.
3. To approve and ratify the appointment of KPMG LLP as our independent auditors
for 1999.
4. To amend Article FIRST of our Certificate of Incorporation to read as
follows:
FIRST: The name of the Corporation is HyperFeed Technologies, Inc.
5. To transact such other business as may properly come before the meeting or
any adjournment or postponement.
Only holders of record of our common stock and our Series A and Series B
preferred stock at the close of business on April 19, 1999, will be entitled to
notice of, and to vote at, our annual meeting or any adjournment or postponement
thereof. A list of stockholders entitled to vote will be kept at PC Quote at 300
South Wacker Drive, Chicago, Illinois 60606, for ten days before the meeting.
By order of the Board of Directors
JOHN E. JUSKA
[SIGNATURE]
CHIEF FINANCIAL OFFICER AND
CORPORATE SECRETARY
Chicago, Illinois
May , 1999
<PAGE>
[LOGO]
300 SOUTH WACKER DRIVE, SUITE 300
CHICAGO, ILLINOIS 60606
- ------------------------------------------------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of our Board of Directors for use at
the annual meeting of our stockholders, to be held at 3:00 p.m. on Wednesday,
June 16, 1999, at 225 West Wacker Drive, 30th Floor, Chicago, Illinois. In
addition to solicitation of proxies by mail, proxies may be solicited by our
directors, officers and regular employees by personal interview, telephone or
telegram, and we will request brokers and other fiduciaries to forward proxy
soliciting material to the beneficial owners of shares which are held of record
by them. We will pay the expense of all such solicitation, including printing
and mailing. We have employed the services of Regan & Associates to assist in
the solicitation of proxies from our stockholders for a fee of $10,000.00, plus
reasonable out-of-pocket expenses. Any proxy may be revoked at any time before
its exercise, by written notice to our Secretary or by attending the meeting and
electing to vote in person. This Proxy Statement and the accompanying proxy were
initially mailed to stockholders on or about May 5, 1999.
Only holders of record of our common stock, our Series A preferred stock or our
Series B preferred stock at the close of business on April 19, 1999, will be
entitled to vote at the meeting or any adjournment or postponement thereof. As
of April 19, 1999, 14,557,402 shares of our common stock, 19,075 shares of our
Series A preferred stock and 28,791 shares of our Series B preferred stock were
outstanding. All of our Series A preferred stock is held of record by Physicians
Insurance Company of Ohio, and all of our Series B preferred stock is held of
record by PICO Holdings, Inc.
Each share of our common stock that you own entitles you to one vote. Each share
of our Series A and our Series B preferred stock is entitled to the number of
votes equal to the number of shares of our common stock into which the shares of
Series A and Series B preferred stock could be converted on the record date.
Each share of our Series A and Series B preferred stock has one hundred votes as
of the record date. Holders of shares of our voting stock are not entitled to
cumulate their votes in the election of directors. A majority of the outstanding
shares of our voting stock, represented in person or by proxy, shall constitute
a quorum at the meeting.
The directors nominated shall be elected by a plurality of the votes represented
by the shares of our common stock and our Series A and Series B preferred stock
present at the meeting in person or by proxy, voting as a single class. This
means that the director nominees with the most affirmative votes are elected to
fill the available seats. Only the number of votes "FOR" affect the outcome.
Withheld votes and abstentions have no effect on the outcome. Approval of
proposals 2 and 3 described on the proxy requires the affirmative vote of a
majority of our outstanding common stock and our outstanding Series A and Series
B preferred stock, voting as a single class. Approval of proposal 4 described on
the proxy requires the affirmative vote of two-thirds of our outstanding common
stock and our outstanding Series A and Series B preferred stock, voting as a
single class.
1
<PAGE>
In determining whether a quorum exists at the meeting for purposes of all
matters to be voted on, all votes "for" or "against," as well as all abstentions
(including votes to withhold authority to vote in certain cases), with respect
to the proposal receiving the most such votes, will be counted. Abstentions with
respect to a particular proposal will be counted as part of the base number of
votes to be used in determining if that particular proposal has received the
requisite percentage of base votes for approval, while broker non-votes will not
be counted in such base for such proposal. Thus, an abstention will have the
same effect as a vote "against" such proposal while a broker non-vote will have
no effect.
ELECTION OF DIRECTORS
On December 31, 1998, the Board of Directors elected Kenneth J. Slepicka as a
director. On July 17, 1997, the Board of Directors voted to expand the Board of
Directors to a range of between two (2) and seven (7) members.
A board of six (6) directors will be elected to serve until the next annual
meeting, or until their successors are elected and shall have qualified. All of
such directors shall be elected by the holders of shares of our common stock and
holders of our Series A and Series B preferred stock. The proxies returned
pursuant to this solicitation will be voted by the persons named therein for the
election as directors of the persons named below, which persons constitute the
Board of Directors' nominees for election of directors. If any nominee is unable
to accept the office of director (which is not presently anticipated), the
persons named in the proxies will vote for the election of such other persons as
they shall determine.
<TABLE>
<CAPTION>
Director
Name, Age, and Principal Occupation Since
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
Jim R. Porter, 58 .................................................................................. 1997
Chairman of the Board of PC Quote since October 1997, and Chief Executive Officer since July 1997.
President and Chief Executive Officer of New Century Investment Research & Management, Inc. since
1993. Associate of Chicago Research & Trading, Inc., a commodity trading firm, from 1990 to 1993.
From 1979 to May 1990, a Principal and Chief Executive Officer of First Options of Chicago, Inc.,
a securities, futures and options clearing firm, and a Partner of Spear Leeds & Kellogg, a
specialist firm on the New York Stock Exchange. Mr. Porter has been in the securities and futures
business since 1969 and has been a member of principal exchanges such as the Chicago Board of
Trade, the Chicago Mercantile Exchange and the Chicago Board Options Exchange.
Louis J. Morgan, 62 ................................................................................ 1980
Chairman of the Board of PC Quote from May 1984 until October 1997. Mr. Morgan served as President
of PC Quote from August 1980 to May 1984, and from August 1980 to December 1997, he served as
Treasurer. From 1962-1972, Mr. Morgan was employed as a securities broker and sales manager of a
regional New York Stock Exchange member brokerage firm. He was a member of the Chicago Board
Options Exchange, Inc. from 1973 to 1986 and served on the Systems Committee of the Chicago Board
Options Exchange, Inc. from 1980 through 1983.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Director
Name, Age, and Principal Occupation Since
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
Ronald Langley, 54 ................................................................................. 1995
Chairman and director of publicly held PICO Holdings, Inc., since November 1996. Chairman since
1995, and director since 1993, of Physicians Insurance Company of Ohio, an insurance company.
Chairman of Summit Global Management, Inc., a subsidiary of PICO Holdings, Inc., which acts as a
registered investment adviser, since 1995. Chairman and director of Global Equity Corporation, an
international investment and operating company, from 1995. From 1994 to May 1998, Mr. Langley
served as Chairman of the Centurion Trust Company, a bank specializing in custodian services.
Member of the Board of Trustees of United States International University since 1990, Chairman of
the Budget and Finance Committee and Vice-chairman since 1997. Director of publicly held MC
Shipping, an international transportation company, since 1997.
John R. Hart, 39 ................................................................................... 1997
Director, President and Chief Executive Officer of publicly held PICO Holdings, Inc. since
November 1996. President and Chief Executive Officer of Physicians Insurance Company of Ohio, an
insurance company, since 1995, and director since 1993. President and Chief Executive Officer of
Global Equity Corporation, an international investment and operating company, since 1995.
President of Quaker Holdings Limited, an investment company, since 1991. Principal in Detwiler,
Ryan & Company, Inc., an investment bank, from 1982 to 1991.
Timothy K. Krauskopf, 35 ........................................................................... 1997
Head of Information Services at the Field Museum of Natural History since 1997. Co-Founder in
1990, director since 1993, Vice President of Research and Development and Chief Technology Officer
of publicly held Spyglass, Inc., a software firm, from 1990 to 1997. Mr. Krauskopf has also served
as a Trustee of Northwestern University.
Kenneth J. Slepicka, 43 ............................................................................ 1998
Vice President Financial Services, Paragon Solutions, Inc., Chicago, IL. President and Treasurer,
SBC Warburg Futures Inc. from 1994 to 1998 and Executive Director Fixed Income Trading for
O'Connor & Associates from 1985 to 1994. Mr. Slepicka is a former principal officer and member of
the Chicago Board of Trade, Chicago Mercantile Exchange, Chicago Board of Options Exchange and
Pacific Options Exchange. Mr. Slepicka has held numerous committee memberships at the each of the
exchanges and has served as a Governor of the Chicago Board of Trade Clearing Corporation, member
of the FIA Steering Committee and the Federal Reserve FCM Working Group. Mr. Slepicka has been
involved in the securities and futures business since 1979.
</TABLE>
The principal occupation of each of the above nominees for the past five years
has been set forth in the above table.
The Board of Directors has established an Audit Committee and a Compensation
Committee. The Audit Committee is comprised of Messrs. Krauskopf, Langley and
Slepicka. The Compensation Committee is comprised of Messrs. Krauskopf, Langley,
Slepicka and Porter.
During the year ended December 31, 1998, the Board of Directors held 8 meetings.
Except for Louis J. Morgan, each of the directors attended, in person or by
telephone, at least 75% of the total number of meetings of the Board of
Directors and committees thereof held during the period for which each
individual was a director.
3
<PAGE>
COMPENSATION OF DIRECTORS
On May 13, 1994, we adopted a policy of paying our non-employee directors $4,000
per year and, in addition, $750 per meeting. Although non-employee directors
were entitled to compensation during 1998, no such compensation was paid.
APPROVAL AND RATIFICATION OF THE 1999 COMBINED INCENTIVE AND NON-STATUTORY STOCK
OPTION PLAN
GENERAL INFORMATION
The PC Quote, Inc. 1999 Combined Incentive and Non-Statutory Stock Option Plan
was adopted by our Board of Directors (the "Board") on March 24, 1999, subject
to shareholder approval. The purposes of the 1999 Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to employees, directors and consultants and to
promote the success of our business.
SECURITIES SUBJECT TO THE 1999 PLAN
The 1999 Plan covers an aggregate of 4,000,000 shares of our common stock, which
may be unissued shares, reacquired shares or shares bought on the market. The
shares may be acquired by 1999 Plan participants through one or more offerings,
as determined by the Board in its discretion.
ADMINISTRATION
The 1999 Plan shall be administered by our Board of Directors, or a committee
appointed by our Board of Directors. Subject to the express terms of the 1999
Plan, the administrator has full and final authority, in its discretion, to:
-to determine the value of our common stock;
-to select the employees, directors or consultants to whom options
and stock purchase rights may from time to time be granted;
-to determine the number of shares of our common stock to be covered
by each award granted under the 1999 Plan;
-to approve forms of agreement for use under the 1999 Plan;
-to determine the terms and conditions of any options or stock
purchase rights granted under the 1999 Plan;
-to determine whether and under what circumstances an option may be
settled in cash instead of in our shares of common stock,
-to reduce the exercise price of any option to the then current fair
market value of our common stock, if such fair market value has
declined since the date the option was granted;
-to initiate a program whereby outstanding options are exchanged for
options with a lower exercise price;
4
<PAGE>
-to prescribe, amend and rescind rules and regulations relating to
the 1999 Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;
-to allow option holders to satisfy withholding tax obligations by
electing to have PC Quote withhold from the shares to be issued
upon exercise of an option or stock purchase right that number of
shares having a fair market value equal to the amount required to
be withheld; and
-to construe and interpret the terms of the 1999 Plan and awards
granted pursuant to the 1999 Plan.
The administrator can modify the 1999 Plan as it deems advisable, without
approval of our stockholders, except as such stockholder approval may be
required under Rule 16b-3 under the Securities Exchange Act of 1934 or under the
listing requirements of any stock exchange on which are listed any of our equity
securities.
ELIGIBILITY AND PARTICIPATION
Options may be granted under the 1999 Plan to our officers, employees, directors
and consultants at the discretion of the administrator. In selecting as well as
in determining the number of shares subject to each option, the administrator
shall take into consideration such factors as it deems relevant to accomplish
the purpose of the 1999 Plan. All of our officers, employees, directors and
consultants are eligible to receive options.
TERM
The 1999 Plan shall continue in effect for a term of ten years, unless sooner
terminated by our Board of Directors. Any termination of the 1999 Plan generally
may not affect or change options previously granted under the 1999 Plan.
OPTION EXERCISE PRICE
The per share exercise price for the shares of common stock to be issued under
the 1999 Plan shall, subject to certain restrictions, be the price as is
determined by the administrator. In no event shall the per share exercise price
be less than 85% of the fair market value of the shares of our common stock on
the date of grant.
NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS
The options and stock purchase rights to be issued under the 1999 Plan may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the holder of the option or stock purchase
right, only by such holder.
TRANSFERABILITY OF SHARES
Resale of shares acquired under the 1999 Plan by persons who are not
"affiliates" of PC Quote, as that term is defined in Rule 405 under the
Securities Act, will not be restricted by requirements of the Securities Act.
Persons who may be deemed to be affiliates of PC Quote may resell shares
acquired under the 1999 Plan pursuant to the provisions of Rule 144 promulgated
under the Securities Act.
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<PAGE>
Affiliates may also resell shares acquired under the 1999 Plan pursuant to any
other applicable exemption from registration under the Securities Act or
pursuant to a separate prospectus prepared in accordance with the requirements
of the applicable form under the Securities Act.
FEDERAL TAX CONSEQUENCES
Options granted under the 1999 Plan can be designated as "non-qualified stock
options" or "incentive stock options" for federal income tax purposes.
Generally, an employee receiving an incentive stock option does not realize any
taxable income for federal income tax purposes either at the time of grant or
upon the exercise of an incentive stock option. Upon the sale of the shares
obtained in the exercise of an incentive stock option, the excess of the fair
market value on the date of the sale over the exercise price of the option will
be taxable as a capital gain. The holding period for purposes of determining
whether the capital gain (or loss) is a long- or short-term gain (or loss) will
commence on the date the option is exercised.
WHERE YOU CAN GET COPIES OF THE PLAN
A copy of the 1999 Plan is available without charge to stockholders upon written
request to our Secretary at our principal executive office.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PLAN. THE PERSONS
NAMED ON THE ENCLOSED PROXY CARD INTEND TO VOTE THE PROXIES SOLICITED HEREBY FOR
THE PLAN UNLESS SPECIFICALLY DIRECTED OTHERWISE ON SUCH PROXY CARD.
APPROVAL AND RATIFICATION OF INDEPENDENT AUDITORS FOR 1999
In August 1997, our Board of Directors appointed KPMG LLP, a certified public
accounting firm, as our independent auditors for the year ending December 31,
1997. The appointment of KPMG LLP as independent auditors for the year ending
December 31, 1997 was ratified by our stockholders at our annual meeting held on
October 16, 1997.
KPMG LLP was appointed by our Board of Directors as our independent auditors for
the year ending December 31, 1998 on April 20, 1998 and ratified by our
stockholders at our annual meeting on June 22, 1998.
On March 24, 1999 our Board of Directors appointed KPMG LLP as our independent
auditors for the year ending December 31, 1999. A representative of KPMG LLP is
expected to be present at the annual meeting and will have an opportunity to
make an independent statement if he or she desires to do so. The representative
is expected to be available to respond to appropriate questions.
If the stockholders do not ratify KPMG LLP as our independent auditors, the
Board of Directors will reconsider, but is not obligated to change its decision
appointing that firm as our independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL AND
RATIFICATION OF KPMG LLP AS OUR INDEPENDENT AUDITORS FOR 1999. THE PERSONS NAMED
ON THE ENCLOSED PROXY CARD INTEND TO VOTE THE PROXIES SOLICITED HEREBY FOR THE
APPROVAL AND RATIFICATION OF KPMG LLP UNLESS SPECIFICALLY DIRECTED OTHERWISE ON
SUCH PROXY CARD.
6
<PAGE>
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
In December 1998, we segregated our Internet related services into a separate
business unit within our company. We are transferring such Internet-related
services to PCQuote.com, Inc., which was incorporated in February 1999 as our
wholly-owned subsidiary. Formally separating the two entities will permit us and
our subsidiary to focus on our relative strengths. The separation will permit
each entity to better (i) attract and retain key employees by relating
compensation to relevant business performance, (ii) enter into strategic
relationships with business partners such as the relationship between
PCQuote.com, Inc. and CNNfn described later in this proxy statement under the
heading "Certain Transactions," and (iii) permit each entity to pursue its own
financing avenues.
In view of the separation, our Board of Directors has determined that it is in
our best interest to change our name to HyperFeed Technologies, Inc. to avoid
confusion in the marketplace between our business and operations and those of
our subsidiary. Because our business will be primarily related to our
proprietary datafeed, HyperFeed-TM- 2000, we believe the name HyperFeed
Technologies, Inc. is more descriptive of the services we offer, while the PC
Quote brand name is more descriptive of the services offered by our subsidiary.
If the proposed name change is approved by two-thirds or more of the outstanding
shares of our common stock and our Series A and Series B preferred stock, voting
as a single class, it will become effective immediately following our annual
meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NAME CHANGE. THE
PERSONS NAMED ON THE ENCLOSED PROXY CARD INTEND TO VOTE THE PROXIES SOLICITED
HEREBY FOR THE NAME CHANGE UNLESS SPECIFICALLY DIRECTED OTHERWISE ON SUCH PROXY
CARD.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Position Age
- ------------------------------------------------- ----------------------------------------------- ---
<S> <C> <C>
Jim R. Porter.................................... Chairman and Chief Executive Officer 58
John E. Juska (1)................................ Chief Financial Officer and Secretary 44
Kurt K. Klein (2)................................ Senior Vice President and Chief Operating 46
Officer
Michael J. Kreutzjans (3)........................ Senior Vice President and Chief Technology 45
Officer
</TABLE>
- ---------
(1)Chief Financial Officer of PC Quote since July 1997, Mr. Juska served as Vice
President and Chief Financial Officer for the Chicago Mercantile Exchange
from 1994 to July 1997. Between 1986 and 1994, Mr. Juska served in various
other positions for the Chicago Mercantile Exchange, including Controller and
Vice President of Finance. Mr. Juska also previously served as Treasurer of
CME Depository Trust Company and GFX Corporation, both wholly-owned
subsidiaries of the Chicago Mercantile Exchange, and as a trustee of the CME
Pension Trust.
(2)Mr. Klein joined PC Quote in November 1996 as the Vice President of Client
Services and in December of 1998 was named Senior Vice President and Chief
Operating Officer. Mr. Klein began his career in the financial market data
industry in 1986 as MIS Manager for FutureSource in Chicago, IL and went on
to serve FutureSource in numerous capacities as Customer Service Manager,
Director of Operations, Vice President Sales & Marketing. In 1995 Mr. Klein
accepted the position of Vice President Product Management & Business
Development.
(3)Senior Vice President and Chief Technology Officer, PC Quote, Inc. since
1998, Mr. Kreutzjans was one of the original founders of PC Quote and has
over 19 years experience in the financial industry. Mr. Kreutzjans began his
career in 1980 as a programmer for On-Line Response, Inc., the predecessor to
PC Quote, Inc., and in 1982 was promoted to Senior Analyst. In 1984, Mr.
Kreutzjans was asked to join PC Quote as the firm's Vice President
Development & Operations and as the lead developer. In 1989, Mr. Kreutzjans
was named Vice President Systems Development. In 1994 he assumed
responsibility for overseeing and guiding all development functions and
managed the firm's separate development center as Senior Vice President
Development. Mr. Kreutzjans has a B.S. in Computer Science from Indiana
University.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation for our Chairman and Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief
Technology Officer for the term of the positions held.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Awards
-----------
Annual Compensation Shares
--------------------- Underlying
Name and Principal Position Year Salary Bonus Options
- ----------------------------------------------------------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Jim Porter ................................................ 1998 $ 148,000 -- 676,200
Chairman of the Board and Chief Executive Officer 1997 (1) -- 299,603
John Juska ................................................ 1998 $ 175,000 $ 25,000 185,000
Senior Vice President and Chief Financial Officer 1997 $38,820 (2) -- 10,000
Kurt Klein ................................................ 1998 $ 137,113 $ 15,000 100,000
Senior Vice President and Chief Operating Officer
Michael Kreutzjans ........................................ 1998 $ 175,258 -- 50,000
Senior Vice President and Chief Operating Officer
</TABLE>
- ---------
(1)Payment of Mr. Porter's minimum annual salary of $98,000 was deferred into
1998 pursuant to a deferred compensation agreement.
(2)Mr. Juska was employed by us in July of 1997. Represents amounts paid to Mr.
Juska from July 1997 through December 1997.
The following table shows the total number of Options granted to each of the
named persons during 1998 (both as the number of shares of common stock subject
to such Options and as a percentage of all Options granted to employees during
1998) and, for each of these grants, the exercise price per share of common
stock and option expiration date. No SARs were granted in 1998.
OPTION/SAR GRANTS IN 1998 FISCAL YEAR
<TABLE>
<CAPTION>
% of Total Potential Realizable
Options Value at Assumed
Number of Granted to Annual Rates of Price
Securities Employees in Exercise or Appreciation for
Underlying Options Fiscal Year Base Price Expiration Option
Name Granted (#) Granted ($/Sh) Date 5%(1) 10%(1)
- ------------------- ------------------- ------------- --------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jim Porter......... 338,100 28.3% $ 1.375 06/13/07 $ 308,054 $ 698,212
Jim Porter......... 338,100 28.3% $ 2.000 06/13/07 $ 96,741 $ 486,900
John Juska......... 175,000 14.7% $ 1.4375 04/20/03 $ 69,510 $ 153,580
Kurt Klein......... 50,000 4.2% $ 1.4375 04/20/03 $ 19,860 $ 43,880
Kurt Klein......... 50,000 4.2% $ 1.125 09/02/03 $ 15,540 $ 34,340
Michael
Kreutzjans........ 50,000 4.2% $ 1.125 09/02/03 $ 15,540 $ 34,340
</TABLE>
- ---------
(1)The dollar amounts under these columns are the result of calculations at the
5% appreciation and 10% appreciation rates for the full term of the options
as required by the SEC. The dollar amounts presented are not intended to
forecast possible future appreciation, if any, of the price of our common
stock.
The following table sets forth, for each of the named persons, the number of
shares they acquired on exercise of Options in 1998, the aggregate dollar value
realized upon exercise, the total number of
8
<PAGE>
shares of common stock underlying unexercised Options and the aggregate dollar
value of unexercised, in-the-money Options, separately identifying the
exercisable and unexercisable Options. No SARs were outstanding in 1998.
AGGREGATED OPTION/SAR EXERCISES IN 1998
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)(1)
Shares Value
Acquired on Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable
- --------------------------------------- ------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
Louis J. Morgan........................ 28,500 14,812 30,000/0 0/0
</TABLE>
- ---------
(1)These values represent the excess, if any, of the fair market value of the
shares of common stock subject to Options on December 31, 1998 over the
respective option prices.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS.
In June 1997, PC Quote and Mr. Porter entered into an Employment Agreement (the
"Porter Agreement") which provided for (i) the employment of Mr. Porter as the
Chief Executive Officer of PC Quote, (ii) an annual base salary for Mr. Porter
of $98,000, subject to semi-annual review and adjustment by the Board of
Directors, and (iii) the granting to Mr. Porter of an option to purchase shares
of our common stock up to a maximum amount of 5% of the outstanding shares of
our common stock (the "Maximum Amount"). Pursuant to the Porter Agreement, the
Maximum Amount was to increase to 6.88% of our outstanding shares upon the
occurrence of certain events. Vesting of the shares up to the Maximum Amount was
to occur according to certain quarterly installments scheduled in the Porter
Agreement. The exercise price for the shares underlying the option granted was
to be equal to the market price of our common stock as of June 14, 1997 or, in
certain circumstances, be $2.00 per share. The Porter Agreement also provided
for accelerated vesting upon a change in control of PC Quote.
In July 1997, PC Quote and Mr. Juska entered into an Employment Agreement (the
"Juska Agreement") which provided for (i) the employment of Mr. Juska as the
Chief Financial Officer of PC Quote, (ii) a minimum annual base salary for Mr.
Juska of $80,000, and (iii) the granting to Mr. Juska of an option to purchase
up to an aggregate of 10,000 shares of common stock at an exercise price of
$1.50 per share.
STOCK PLANS
EMPLOYEE STOCK PURCHASE PLAN. As of April 19, 1999, our Board of Directors had
approved and we had reserved an aggregate of 1,000,000 shares of common stock
for issuance under our 1995 Employee Stock Purchase Plan (the "Purchase Plan").
The Purchase Plan is intended to qualify under Section 423 of the Internal
Revenue Code of 1986 and permits our eligible employees to purchase common stock
through payroll deductions of up to 10% of their annual salary in any calendar
year to a maximum of $5,000 per offering. The Purchase Plan has four three-month
offering periods beginning on the first day of each quarter. No employee may
purchase more than 5% of our outstanding voting capital stock or an amount more
than $20,000 worth of stock in any calendar year. The purchase price of common
stock purchased under the Purchase Plan equals 85% of the market value of the
common
9
<PAGE>
stock, as calculated in the Purchase Plan, on the first or last day of an
offering period, whichever is lower. During 1998, 288,513 shares were sold to
employees in accordance with the Plan.
INCENTIVE STOCK PLAN. We have reserved an aggregate of 2,000,000 shares of
common stock for issuance under our 1987 Combined Incentive and Non-Statutory
Stock Option Plan, which may be granted to our employees and officers. The 1987
Plan is administered by our Incentive Stock Committee. Generally, Options may be
granted to our employees and officers at a purchase price equal to the fair
market value (as defined in the Plan) of our common stock at the date of grant,
vest ratably over a three year period, and are exercisable for a period of up to
five years from the date of grant. During the past fiscal year, options for
1,192,200 shares were granted under the 1987 Plan. If the 1999 Plan is approved
at our annual meeting of stockholders, the outstanding options under the 1987
Plan shall be canceled and replaced by options issued under our 1999 Plan. The
replacement options shall have the same vesting schedule, exercise prices and
exercise periods as those granted under the 1987 Plan.
401(K) PLAN. We maintain a 401(k) retirement savings plan for employees meeting
certain eligibility requirements. Under the Plan, we match contributions made by
employees to the 401(k) Plan up to 25% of the first 5% contributed by an
employee. During the last fiscal year, we made matching contributions of
approximately $49,205 under the 401(k) Plan.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 31, 1999 regarding the
beneficial ownership of shares of our common stock by each director and by all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
Beneficial
Ownership
of Shares of Percent of
Name Common Stock Class
- ------------------------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Jim R. Porter (1)........................................................ 1,537,537 9.7%
Louis J. Morgan (2)...................................................... 55,000 0.4%
Timothy K. Krauskopf..................................................... 100,000 0.7%
Ronald Langley (3)....................................................... 11,211,795 47.9%
John Hart (3)............................................................ 11,211,795 47.9%
Kenneth J. Slepicka...................................................... 3,000 0.0%
All Directors and Officers as a Group (6 persons) (3) (4)................ 13,564,193 53.6%
</TABLE>
- ---------
(1)Includes 1,276,486 shares of common stock, which may be acquired upon
exercise of presently exercisable options.
(2)Includes 30,000 shares of common stock, which may be acquired upon exercise
of presently exercisable options.
(3)Mr. Langley, a Director of PC Quote since 1995, is a Director of PICO
Holdings, Inc. ("Holdings"). Mr. Hart, a Director of PC Quote since July
1997, is President and Chief Executive Officer of Holdings. As such, Mr.
Langley and Mr. Hart each may be deemed to beneficially own the 11,211,795
shares of our common stock beneficially owned by Holdings. This number of
shares deemed beneficially owned includes i) 1,907,500 shares of common stock
which are issuable to Physicians Insurance Company of Ohio, a wholly-owned
subsidiary of Holdings, upon conversion of its 19,075 shares of Series A
Convertible Preferred Stock, ii) 2,879,100 shares of common stock which are
issuable to Holdings upon conversion of its 28,791 shares of Series B
Preferred Stock, and iii) 4,055,195 shares of common stock upon exercise of
common stock Purchase Warrants issued to Holdings in connection with various
PC Quote financings. Such shares are deemed outstanding for computing the
percentage beneficially owned by Holdings, but are not deemed outstanding for
computing the percentage beneficially owned by any other person. See
"Principal Stockholders." Mr. Langley and Mr. Hart each disclaim beneficial
ownership of these shares within the meaning of 13d-3 of the Securities and
Exchange Act of 1934.
10
<PAGE>
(4)Includes 2,228,393 shares of common stock, which may be acquired upon
exercise of presently exercisable options.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 1999, regarding each
person other than our directors who were known by us to own beneficially more
than 5% of the outstanding shares of common stock. Each person named has sole
voting and investment power with respect to the shares beneficially owned by
such person.
<TABLE>
<CAPTION>
Number of Shares
Beneficial Percent of
Ownership as of Outstanding
Name and Address of Beneficial Owner March 31, 1999 Shares(1)
- ------------------------------------------------------------------------ ----------------- -------------
<S> <C> <C>
PICO Holdings, Inc...................................................... 11,211,795 (2 (3) 47.9%
875 Prospect Street, Suite 301
La Jolla, California 92037
Physicians Insurance Company of Ohio.................................... 3,957,500 (3) 24.0%
875 Prospect Street, Suite 301
La Jolla, California 92037
</TABLE>
- ---------
(1)The percent of the outstanding shares is based upon the number of common
shares outstanding as of March 31, 1999 (14,549,155); plus the number of
common shares that the selling security holder may acquire upon exercise of
warrants; plus the minimum number of common shares that the selling security
holder may acquire upon conversion of outstanding Series A preferred stock or
Series B preferred stock.
(2)Includes 2,050,000 common shares beneficially owned directly by Physicians
Insurance Company of Ohio, which is a direct subsidiary of PICO Holdings,
Inc. As a result of the status of PICO Holdings, Inc. as the parent of
Physicians Insurance Company of Ohio, Physicians Insurance Company of Ohio
and PICO Holdings, Inc. may be deemed to share voting and investment power
with respect to these common shares. Also includes 4,055,195 common shares
which may be acquired upon exercise of common stock purchase warrants. Also
includes 2,879,100 common shares which may be acquired upon conversion of the
Series B preferred stock previously issued to PICO Holdings, Inc.
(3)Includes 1,907,500 common shares which may be acquired upon conversion of the
Series A preferred stock previously issued to Physicians Insurance Company of
Ohio.
CERTAIN TRANSACTIONS
On December 17, 1998, our stockholders approved an agreement to convert $6.7
million of our debt owned by PICO Holdings, Inc. and its affiliate, Physicians
Insurance Company of Ohio, into convertible preferred stock and a warrant to
purchase shares of our common stock. The following day, we completed the
conversion of the $6.7 million debt, and issued:
(a)19,075 shares of our Series A preferred stock, convertible into a minimum
of 1,907,500 shares of our common stock, to Physicians Insurance Company
of Ohio;
(b)28,791 shares of our Series B preferred stock, convertible into a minimum
of 2,879,100 shares of our common stock, to PICO Holdings, Inc.; and
11
<PAGE>
(c)a warrant expiring April 30, 2005 to purchase up to 3,106,163 shares of
our common stock at $1.575 per share, to PICO Holdings, Inc.
In addition, we extended the expiration date of warrants to purchase 949,032
shares of our common stock previously acquired by PICO Holdings, Inc. to April
30, 2005.
Prior to the conversion of the $6.7 million debt, PICO Holdings, Inc. and
Physicians Insurance Company of Ohio owned or had the right to acquire
approximately 30.9% of our then outstanding common stock. After the completion
of the transactions described above, PICO Holdings, Inc. and Physicians
Insurance Company of Ohio own or have the right to acquire approximately 48% of
our presently outstanding common stock.
In March 1999, we formed a wholly-owned subsidiary, PCQuote.com, Inc., which
subsequently entered into a license agreement with CNNfn, in which our Web site,
www.pcquote.com, was granted the right to use the CNNfn name and logo as well as
CNNfn news. CNNfn headlines appear with the CNNfn logo on one or more pages of
our Web site and serve as a link to the full stories on the CNNfn Web site home
page. CNNfn has retained exclusive control over the selection and presentation
of its headlines provided to our Web site.
During the term of the license, CNNfn has agreed, subject to certain exceptions,
not to license its headlines to any unaffiliated third party for use, display
and/or transmission on a generally accessible Web site that has as its primary
purpose to provide users investment and/or financial tools including real time
or delayed equity and/or futures quotes. As a part of the agreement, CNNfn will
acquire a minority equity position in PCQuote.com.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of a registered
class of our equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
common stock and our other equity securities. Officers, directors and greater
than ten-percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.
To our knowledge, based solely on review of the copies of such reports furnished
to us during the two fiscal years ended December 31, 1998, our officers,
directors and greater than ten-percent beneficial owners complied with all
applicable Section 16(a) filing requirements except Mr. Morgan who has filed one
late report.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
TO OUR STOCKHOLDERS:
In October 1997, the Board of Directors established a Compensation Committee for
administering our executive compensation programs. Prior to that time, the
entire Board of Directors was generally responsible for administering the
programs. The Compensation Committee also assumed responsibility for
administering our Option Plans from our Incentive Stock Committee.
COMPENSATION PHILOSOPHY
Our executive compensation program is intended to attract, develop, reward and
retain quality management talent. It is our philosophy that executive
compensation should recognize an individuals' contribution to us and be
competitive with compensation offered by other computer software and
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<PAGE>
service companies. To further align executive officers' interests with those of
the stockholders, our executive compensation program also relies on stock option
awards.
COMPENSATION COMPONENTS
The components of our executive compensation program are as follows: base
salary, bonus and stock option awards.
BASE SALARY. In 1997 the Board determined the base salaries of Messrs. Porter
and Juska upon their employment with us. The Board has established annual
increases to base salaries to be paid to our executive officers. In setting each
increase, the Committee takes into account several factors such as an
individual's experience, responsibilities, management and leadership abilities
and job performance in the prior year.
BONUS. We do not have a formal bonus program, however, the Board of Directors
may, at its discretion, award bonuses based on our performance and individual
merit. Except for Messrs. Juska and Klein, none of our executives, including our
Chief Executive Officer, received a bonus during 1998.
STOCK OPTIONS. The Board of Directors believes stock options are a key
long-term incentive vehicle because they provide executives with the opportunity
to acquire or increase an equity interest in us and to share in the appreciation
of the value of our common stock. Stock option grants, therefore, directly align
the executive's interest with those of the stockholders.
Stock options are granted to the executive officers and other key managers by
our Compensation Committee (formerly our Incentive Stock Committee) under our
Incentive Stock Option Plan generally every 12 months. Options are generally
granted with a three year vesting and a five year exercise period in order to
encourage executives and managers to take a long-term view of the impact of
their individual contributions to us. In determining the number of options to be
awarded to each individual, the Committee considers the executive's level of
management responsibility and potential impact on our profitability and growth.
During the 1998 fiscal year, options were granted to our Chief Operating
Officer, Chief Technology Officer, and Chief Financial Officer at an option
price equal to the fair market value of our stock on the date of grant. During
the last fiscal year, options were granted to our Chief Executive Officer
pursuant to his employment agreement.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Board of Directors established 1997 compensation of Jim R. Porter, our Chief
Executive Officer, based upon his employment agreement which initially
established his annual base salary. Mr. Porter agreed to defer receipt of
payment of his 1997 salary initially until May 1998. On June 22, 1998, the Board
of Directors and Mr. Porter agreed that he would accept shares of common stock
at market price in lieu of previously deferred and future cash compensation.
Ronald Langley Timothy K. Krauskopf
13
<PAGE>
COMPARATIVE CUMULATIVE SHAREHOLDER RETURN
The graph presented below compares the five year cumulative total return of PC
Quote, Inc., the AMEX Market Value index, and the Standard & Poor's Computer
Software index from December 31, 1993 to December 31, 1998. Total return is
based on an assumed investment of $100 on December 31, 1993.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIVE YEAR TOTAL RETURN
<S> <C> <C> <C>
PQT AMEX Market Value Index S&P Computer Software Index
1993 $100.00 $100.00 $100.00
1994 $70.59 $93.30 $117.91
1995 $747.06 $120.05 $165.44
1996 $111.76 $121.96 $256.98
1997 $47.06 $152.50 $357.88
1998 $100.00 $162.68 $649.07
FISCAL YEARS DOLLARS
</TABLE>
14
<PAGE>
ANNUAL REPORT
Our annual report to stockholders for the fiscal year ended December 31, 1998,
including financial statements, accompanies this Proxy Statement. However, no
action is proposed to be taken at the meeting with respect to the annual report,
and it is not to be considered as constituting any part of the proxy soliciting
material.
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals which may be proper
subjects for inclusion in the proxy statement and for consideration at the
annual meeting. To be considered, proposals must be submitted on a timely basis.
Proposals for the 2000 stockholders' meeting must be received by us no later
than February 28, 2000. Any such proposals, as well as any questions related
thereto, should be directed to our Secretary.
OTHER MATTERS
Management knows of no other business likely to be brought before the meeting.
If other matters do come before the meeting, the persons named in the form of
proxy or their substitute will vote said proxy according to their best judgment.
A copy of our annual report on Form 10-K for the fiscal year ended December 31,
1998 is available without charge to stockholders upon written request to our
Chief Financial Officer.
By order of the Board of Directors
[SIGNATURE]
JOHN E. JUSKA
CHIEF FINANCIAL OFFICER AND CORPORATE
SECRETARY
15
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PC QUOTE, INC.
300 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
THE UNDERSIGNED HEREBY APPOINTS JIM R. PORTER AND JOHN E. JUSKA AS PROXIES, EACH
WITH THE POWER TO APPOINT A SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRESENT
AND TO VOTE, AS DESIGNATED BELOW, ALL THE COMMON STOCK OF PC QUOTE, INC. HELD OF
RECORD BY THE UNDERSIGNED ON APRIL 19, 1999 AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JUNE 16, 1999 OR ANY ADJOURNMENT THEREOF.
<TABLE>
<S> <C> <C> <C>
(1) ELECTION OF DIRECTORS
/ / FOR all nominees listed below (except as marked to / / the / /
contrary below)
<CAPTION>
(1)
<S> <C>
WITHHOLD AUTHORITY to vote for all nominees listed below.
</TABLE>
Jim R. Porter, Louis J. Morgan, Ronald Langley, John R. Hart, Timothy K.
Krauskopf, Kenneth J. Slepicka
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
(2) The approval and ratification of the 1999 Combined Incentive and Non-Statutory
Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
(3) The approval and ratification of KPMG LLP as our independent auditors for 1999.
/ / FOR / / AGAINST / / ABSTAIN
(4) The amendment to Article FIRST of our Certificate of Incorporation to read as
follows:
FIRST: The name of the Corporation is HyperFeed Technologies, Inc.
/ / FOR / / AGAINST / / ABSTAIN
(5) In their discretion, the Proxies are authorized to vote upon such other business as
may properly come before the meeting.
<CAPTION>
(2)
(3)
(4)
(5)
<CAPTION>
</TABLE>
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY ENDORSED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. FOR JOINT ACCOUNTS, ALL TENANTS
SHOULD SIGN. IF SIGNING FOR AN ESTATE, TRUST, CORPORATION, PARTNERSHIP OR OTHER
ENTITY, TITLE OR CAPACITY SHOULD BE STATED.
DATED: ____________________ , 1999
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED RETURN ENVELOPE
