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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-13093
HYPERFEED TECHNOLOGIES, INC.
(FORMERLY PC QUOTE, INC.)
Incorporated in the State of Delaware FEIN 36-3131704
Principal Executive Offices:
300 South Wacker Drive, #300, Chicago, Illinois 60606
Telephone Number: (312) 913-2800
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par Value
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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As of February 29, 2000, the aggregate market value of the Common Stock of the
Registrant (based upon the closing price of the Common Stock as reported by the
Nasdaq National Market) on such date held by non-affiliates of the Registrant
was approximately $92,500,000.
As of February 29, 2000, there were 15,608,569 shares of Common Stock and 47,866
shares of Preferred Stock of the Registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: See Page 3
Portions of the Registrant's Definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with the 2000 Annual Meeting
of Stockholders are incorporated by reference into Part III of this report.
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PART OF FORM 10-K DOCUMENT
PART I None
PART II None
PART III
ITEM 10 Directors, Executive Officers, Company's Proxy Statement
Promoters and Control Persons; to be filed in connection with
Compliance with Section 16(a) its Annual Meeting of
of the Exchange Act Stockholders
ITEM 11 Executive Compensation Company's Proxy Statement
to be filed in connection with
its Annual Meeting of
Stockholders
ITEM 12 Security Ownership of Company's Proxy Statement
Certain Beneficial Owners to be filed in connection with
and Management its Annual Meeting of
Stockholders
ITEM 13 Certain Relationships and Company's Proxy Statement
Related Transactions to be filed in connection with
its Annual Meeting of
Stockholders
PART IV
ITEM 14 Exhibits, Financial Exhibits as specified in Item
Statement Schedules, and 14 of this Report
Reports on Form 8-K
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HYPERFEED TECHNOLOGIES, INC.
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
We were originally incorporated in the State of Illinois on June 23, 1980 as
On-Line Response, Inc. We changed our name to PC Quote, Inc. in 1983 and
incorporated in Delaware on August 12, 1987. In March 1999, we incorporated a
wholly-owned subsidiary, PCQuote.com, Inc., to focus on our web site and
consumer business. In June 1999, we changed our name to HyperFeed Technologies,
Inc. We are an Internet solutions provider servicing the business-to-business
and business-to-consumer financial marketplace. We collect financial content
directly from stock, options and commodities exchanges and other news and
financial information sources. We provide this content with a variety of
optional analytics packages to businesses for their internal use and
redistribution to their customers over the Internet, virtual private networks,
intranets, extranets, and local or wide area networks.
We use proprietary collection techniques to process financial market activity
reported to us directly from equities, options, and futures and options on
futures exchanges. We consolidate the information and update in real-time our
data warehouse of last sale, bid/ask, time and sales, and historical prices of
more than 600,000 securities and derivatives issues. The data warehouse includes
information on all North American equities, equity options, major stock indices,
Level 1 NASDAQ-quoted stocks, Level 2 NASDAQ market-maker quotes, mutual funds,
money market funds, futures contracts and options on futures contracts. We use
proprietary extraction routines and compression algorithms to create
"HyperFeed-Registered Trademark- 2000", our IP Multicast digital datafeed.
HyperFeed 2000 is created, and news and other financial content incorporated, at
our primary processing facility located at our executive offices in Chicago,
Illinois. We maintain a back up facility at our development offices in Aurora,
Illinois.
We disseminate HyperFeed 2000 to our customers over the Internet, as well as by
satellite and digital data landlines. HyperFeed 2000 populates databases
residing on computer servers at our customers' sites that are continuously and
instantaneously updated. This process is often referred to as "real-time
streaming data". Software applications on our customers' and their customers'
computers access the HyperFeed 2000 populated databases to allow the
end user to monitor securities activity and financial information on an on-going
real-time basis. PCQuote.com maintains multiple servers for customers' real-time
access, through Internet connections or through the World Wide Web. This
provides our customers the same institutional quality financial data without
the requirement of having their own server.
We derive our revenue from license fees charged for access to HyperFeed 2000 and
from license fees charged for a packaged HyperFeed 2000 plus analytical software
service. Our services are used primarily for trading analysis and as a price
engine for order routing, order matching, order execution, interactive voice
response, and alternative trading systems. Our customer base consists primarily
of financial market data redistributors: securities broker-dealers, on-line
brokerage firms, portfolio managers, other financial institutions, Internet
web-sites and financial portals. PCQuote.com services individual and
professional investors, in addition to selling advertising space on its web
site, www.pcquote.com. Our customers are located primarily in the United States
and North America.
The following is a description of the principal services that we provide.
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PART I-ITEM 1. BUSINESS
PRODUCTS AND SERVICES
HYPERFEED-Registered Trademark- 2000
HyperFeed 2000 is our IP Multicast digital real-time financial market datafeed.
We create HyperFeed 2000 by collecting, analyzing, processing, storing,
compressing, and transmitting financial content in under 70 milliseconds.
HyperFeed 2000 contains:
- Last sale, bid/ask, time and sales, and historical prices of
more than 600,000 North American securities and derivatives
issues;
- Complete options chain information;
- Equity indices, mutual funds, money market funds;
- Dynamic Nasdaq Level II market maker quotes;
- Dow Jones Composite News Service (up to 90-day retrieval of
nine wires "Broadtape", Professional Investor Report, Capital
Markets Report, International News Wire, World Equities
Report, European Corporate Report, Electronic Wall Street
Journal, International Petroleum Reports, Federal Filings);
and
- Multiple levels of fundamental data.
HyperFeed 2000 enables servers at our customers' sites to receive HyperFeed
2000 data and create real-time databases of financial markets activity, news
and fundamental security information. HyperFeed 2000 is used primarily for
trading analysis and as a price engine for order routing, order matching,
order execution, interactive voice response, and alternative trading systems.
Our customers pay monthly HyperFeed licensing fees and per-user or per-unit
charges. HyperFeed 2000 licensees consist primarily of financial market data
redistributors: securities broker-dealers, on-line brokerage firms, portfolio
managers, other financial institutions, Internet web-sites and financial
portals.
HyperFeed 2000 provides PCQuote.com's customers the benefit of institutional
quality data, accessible over the Internet. Professional and individual
investors are also able to benefit from the Internet's substantially lower costs
for service and communications, its ease of access and its worldwide
availability.
Powered by HyperFeed 2000, our other services capitalize on the speed and
completeness of HyperFeed 2000 to access, view and utilize the financial content
we provide in a variety of ways.
SOFTWARE APPLICATIONS AND SERVICES MARKETED BY REGISTRANT
HyperFeed licenses high-end applications and programming tools to subscribers
for the purpose of viewing, analyzing and manipulating HyperFeed 2000's robust
financial market content.
REALTICK-TM- FROM HYPERFEED TECHNOLOGIES, INC.
RealTick is a Microsoft Windows-based ('95, '98, NT) suite of real-time
professional securities trading tools which is powered by HyperFeed 2000 market
data. RealTick's comprehensive functionality includes: unlimited quote pages,
charting, technical analytics, searchable news, time of sale and quote, Nasdaq
Level II market maker screens, options analytical tools, dynamic data exchange
into Microsoft-TM- Excel-TM-, tickers, alerts, baskets and more. RealTick is
available with HyperFeed's satellite, landline, and Internet services.
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PART I-ITEM 1. BUSINESS
PRODUCTS AND SERVICES, CONTINUED
APOGEE-TM-
HyperFeed's proprietary display software, Apogee, is a collection of individual
financial applications which can be independently opened from the Launcher bar
on the user's desktop. User-friendly, flexible and customizable, each
application contributes to a full-scale real-time trading center. Apogee
includes quote grids, tickers, alarms, Nasdaq Level II market maker screens,
options, charts, analytics, time and sales, name look up and a spreadsheet
download feature for use with Microsoft Excel and other spreadsheet programs.
Powered by HyperFeed 2000 market data, Apogee is available for use by
individuals and corporations and can be private-labeled for internal or external
redistribution.
HYPERFEED-Registered Trademark- SDK
HyperFeed's Software Development Kit (SDK) provides developers with the
necessary tools for easy integration of HyperFeed 2000 market data into
proprietary software and web based applications. Compatible with
Microsoft-Registered Trademark- Windows NT-Registered Trademark-, LINUX, UNIX
and other operating systems, HyperFeed SDK is a complete toolkit which
includes a variety of programming interfaces, documentation, sample code and
API (Application Programming Interface), CGI (Common Gateway Interface) and
ActiveX programming tools.
HYPERSERVER-TM-
HyperFeed's Microsoft-Registered Trademark- Windows NT-Registered Trademark-
HyperServer works as an independent workhorse at the client site to effortlessly
manage the massive intake, processing and dissemination of real-time HyperFeed
2000 market data. Running proprietary HyperServer software, the HyperServer
performs three basic functions: decompress and decrypt the HyperFeed broadcast,
maintain the database, and make events/databases available to HyperFeed, third
party or the client's own applications. Designed specifically for real-time data
management, the HyperServer makes no demands on system resources and allows for
optimal client workstation performance.
PCQUOTE.COM-TM-
PCQuote.com services consist of comprehensive financial information and
market data combined with analytical tools that can be used by professional
and individual investors and businesses. Our service offerings complement
each other to provide a variety of timely market data, financial and business
news, and research and analytical tools.
WWW.PCQUOTE.COM
Our free Web site, www.pcquote.com, provides access to delayed quotes, news,
research and analytical tools and a broad range of financial information to
empower the individual investor. The site also serves as the primary
marketing and promotions engine for the rest of the services we provide.
www.pcquote.com provides the following tools and information:
Free Delayed Quote Tools Powered By HyperFeed 2000:
- Detailed Quote allows investors to request equity,
commodity, option, mutual and money market fund and
bond quotations by ticker search.
- Multiple Quote allows users to enter up to five
ticker symbols into the query at one time.
- Portfolio enables users to track up to five
portfolios of up to ten symbols each.
- Markets at a Glance provides a basic overview of
various market indices, including the current
position of the index as well as its net change for
the day.
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PART I-ITEM 1. BUSINESS
PRODUCTS AND SERVICES, CONTINUED
- Detailed Indices provides a detailed list of the
individual securities underlying various indices.
- Top Ten allows the user to view the top ten gainers,
losers, and most active stocks on the primary
exchanges in North America.
- Futures offers market quotations from various futures
and commodities exchanges in a way that is intuitive
to the commodities trader.
- Options Strings shows relative prices for all options
for a particular security.
- Funds provides information with respect to the
various mutual funds within a particular fund family.
- Symbol Search enables investors to enter a company's
name and receive the matching ticker symbol.
News - provides users access to timely, original financial news
and stories from a variety of sources:
- CNNfn Headlines, provided through our strategic
relationship with CNNfn, gives investors access to
timely, original financial and business news
headlines and stories published by CNNfn.
- Wire-based news offers investors access to press
releases and other wire-based news provided by COMTEX
Scientific Corporation, including feeds from PR
Newswire, Business Newswire, M2 Communications, and
UPI Spots.
Research and Analysis Tools - allows users to research and analyze
market quotations with tools and information from a variety of
sources:
- Stock Analysis is available through our relationship
with VectorVest, Inc. and provides investors access
to three free VectorVest analysis reports per day.
- Stock Criteria Search is provided through our
relationship with IQC, Inc., and enables the investor
to run search queries on various stocks that fit
user-defined investment criteria. Queries can be
based on such factors as industry, price earnings
ratio and dividend history.
- Charting is provided by Silicon Investor and allows
investors to display historical and intra-day charts
for publicly traded securities and all major indices.
- Earnings Analysis and Reporting Tools gives consensus
earnings estimates and other earnings-related reports
provided by Zacks Investment Research.
- Research Reports give analysts recommendations and
in-depth analysis and commentary from multiple
sources provided by Multex.com.
- Corporate Profiles is provided by MarketGuide and
gives investors access to corporate profiles for most
publicly-traded companies.
- The IPO Resource Center is provided by IPO.com and
gives investors the ability to research new initial
public offerings (IPOs), monitor the post-offering
performance of IPOs, search filings made with the SEC
and receive news stories about upcoming IPOs.
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PART I-ITEM 1. BUSINESS
PRODUCTS AND SERVICES, CONTINUED
MARKETSMART-REAL.PCQUOTE.COM
Our subscription-based Web site, www.marketsmart-real.pcquote.com, provides
real-time, snap-shot market quotations along with all of the news,
research, and analytical tools available on www.pcquote.com. This site is
targeted toward a more sophisticated investor than is www.pcquote.com.
marketsmart-real.pcquote.com uses sparse graphics, text indices, and creative
advertising to speed download times and give investors faster access to the
site's content. marketsmart-real.pcquote.com can be accessed from
www.pcquote.com.
PCQUOTE ORBIT
PCQuote Orbit provides our subscribers with streaming, real-time market
quotations delivered via an Internet-enabled desktop service. This
Internet-enabled desktop application allows users access to streaming real-time
quotes and more complex research and analytical tools.
PCQuote Orbit offers desktop versions of the quote tools available on
www.pcquote.com. These applications are similar to those offered on our Web
sites, but work with our streaming, real-time data. In addition, the following
tools are also offered:
- Quote Grid enables investors to enter into a grid hundreds of
ticker symbols for which they desire to receive market
quotations, such as high, low, bid, ask, last and close
prices.
- Charting provides high-end, tick by tick technical analysis.
- Scrolling Ticker enables investors to display current prices
and daily changes of selected stocks on a digital ticker tape
that scrolls across a user's screen.
PCQUOTE 6.0 REAL TICK
PCQuote 6.0 Real Tick is a professional-quality, NASDAQ level II, real-time
quote system that offers investors reliable, streaming real-time market data for
all North American equities and options. PCQuote 6.0 empowers sophisticated
investors by giving them the freedom to decide how and when to trade on a daily
basis. This service is online-trading enabled and offers access to order
execution through participating broker-dealers.
PCQuote 6.0 includes the same analytical tools as PCQuote Orbit, plus
the following:
- NASDAQ Level II Screens provides investors with access to
brokerage quotations.
- Technical Analysis enables subscribers to make use of a host
of technical analysis formulas through robust algorithms.
- Market Guide provides access to a company's financial and
other corporate information, such as income statements,
balance sheets and contact information.
- News allows investors to research companies through the
printed media. This service is provided by Dow Jones and
COMTEX. These news stories can be accessed via a scrolling
headline ticker or by keyword search of the database.
- Alarms enables users to set customizable alarms or alerts for
one or more stocks with a variety of parameters, such as
volume, price, highs and lows.
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PART I-ITEM 1. BUSINESS
PRODUCTS AND SERVICES, CONTINUED
OMEGA PRO SUITE
Omega Pro Suite by Omega Research, Inc. is a sophisticated analytics application
powered by HyperFeed 2000 over the Internet. It is used primarily by
professional and individual investors for technical analysis and charting.
WEB TEMPLATES
Web Template allows clients to create their own "private label" Web sites with
many of the features of our own Web sites. These templates are created, hosted
and maintained by us. Web Templates include a variety of quote tools, both
delayed and real-time, as well as a variety of news and research and analytical
tools from our third-party vendors.
We offer companies and Web sites access to our delayed or real-time data.
Utilizing standard templates, the actual Web pages that house the data
applications are hosted at PCQuote.com and accessed by the client through a
simple series of links over the Web. Similar to www.pcquote.com, our clients are
able to offer the following tools: Detailed Quote, Multiple Quote, Portfolio,
Markets at a Glance, Detailed Indices, Top Ten and Option Strings. We also offer
access to third-party research and analysis.
HYPERSCRIPT
Hyperscript is a proprietary development tool used to create data-rich Web sites
and Internet-based market data applications. Hyperscript allows
business-to-business clients to develop their own data applications using
HyperFeed 2000 data. Utilizing standard development techniques to access data
and present it on third-party Web sites, Hyperscript makes development of
complex data applications a simple task. Customers can purchase Hyperscript for
either limited or unlimited access to data.
PATENTS, TRADEMARKS AND LICENSES
We do not have patent protection for our proprietary software. Although
applicable software is readily duplicated illegally by anyone having access to
appropriate hardware, we attempt to protect our proprietary software through
license agreements with our customers and common law trade secret protection and
non-disclosure contract provisions in our agreements with our employees. We use
security measures, including a hardware key, which restricts access to our
services unless proper password identification from a HyperFeed or PCQuote.com
user is provided. As an additional safeguard, we provide only the object code on
our diskette and retain the source code.
HyperFeed-Registered Trademark- is a registered trademark of HyperFeed
Technologies. HyperServer-TM- and Apogee-TM- are trademarks of HyperFeed
Technologies.
PCQuote.com-TM- and PCQuote.com Orbit-TM- are trademarks of PCQuote.com.
COMPETITION
The market for the on-line provision of financial information such as equities,
commodities, futures and options quotations and news through services and
software applications similar to those we provide includes a large number of
competitors and is subject to rapid change. We believe our primary competitors
include Reuters, Bloomberg, Bridge Information Systems, the ILX unit of Thomson
Corporation, the AT Financial unit of Primark Corporation, the Comstock unit of
Standard & Poors, and Data Broadcasting Corporation. Many of these competitors
have significantly greater financial, technical and marketing resources and
greater name recognition than we do.
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PART I ITEM 1. BUSINESS
SEASONALITY
We have not experienced any material seasonal fluctuations in our business.
Barring any prolonged period of investor inactivity in trading securities, we do
not believe that seasonality is material to our business activities.
RESEARCH AND DEVELOPMENT
Our systems development personnel expend their time and effort developing new
software programs and high-speed data delivery systems and expanding or
enhancing existing ones. Development efforts focus on providing a solution to
the informational and analytical needs of both the professional and private
investors. Development activity has increased with the implementation of
high-level design and prototyping tools. Our investment in software development
consists primarily of:
- enhancements to our existing Windows-based private network and
Internet services;
- development of new data analysis software and programmer
tools; and
- application of new technology to increase the data volume and
delivery speed of our distribution system.
During the fiscal years ended December 31, 1999, 1998 and 1997, we expensed
$1,070,346, $634,884, and $873,579, respectively, for research and development.
ENVIRONMENT
Compliance with Federal, state, and local provisions with respect to the
environment has not had a material adverse effect on our capital expenditures,
earnings, or competitive position.
EMPLOYEES
As of December 31, 1999, we employed 82 people and PCQuote.com employed 53
people, none of whom are represented by a collective bargaining unit. We
believe we have a satisfactory relationship with our employees. From time to
time, we use the services of outside consultants on an hourly basis.
GOVERNMENT CONTRACTS
We have no material contracts with the Government.
BACKLOGS
Due to the nature of our business, backlogs are not a typical occurrence in our
industry.
MAJOR CUSTOMERS
We did not have any customers that accounted for 10% or more of total revenue in
either 1999, 1998 or 1997.
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PART I-ITEM 1. BUSINESS
ITEM 2. PROPERTIES
Our executive offices and primary data center are located in approximately
15,000 square feet of leased space on the 3rd floor of 300 South Wacker Drive,
Chicago, Illinois. The lease for the premises expires on December 31, 2004.
Lease payments are subject to escalating base rent as well as adjustment for
changes in real estate taxes and other operating expenses. (See Note 7 of the
Notes to Consolidated Financial Statements.)
We also lease approximately 5,000 square feet of office space in Aurora,
Illinois, through March 2000. We intend to renew this lease for an additional
five years. The lease for 3,000 square feet of office space in New York City
expires in July 2002. (See Note 7 of the Notes to Consolidated Financial
Statements.)
ITEM 3. LEGAL PROCEEDINGS
GRAHAM R. CLARK V. PC QUOTE INCORPORATED (HYPERFEED) 1999 C 559, High Court of
Justice, Queens Bench Division, London. This lawsuit was filed on May 10, 1999.
It claims breach of a November 18, 1992 Marketing Agreement entered into between
the plaintiff and PC Quote (UK) Limited (a former subsidiary). Mr. Clark
claims approximately $800,000 in damages and seeks his attorney's fees and
costs. We have retained U.K. counsel to defend against these claims, and are
vigorously defending the lawsuit. In addition, we have filed a counterclaim for
approximately $100,000 in receivables owed by Mr. Clark to us. Given the early
stage of this litigation, no assessment of the likely financial exposure to us
in this lawsuit can be made.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On September 23, 1999, our common stock commenced trading on the NASDAQ National
Market under the symbol "HYPR." Prior to that date, our common stock was traded
on the American Stock Exchange under the symbol "PQT."
The following tables show for 1999 and 1998 the high and low sales prices of our
common stock for the periods indicated, as reported by the American Stock
Exchange (through September 22, 1999) and the Nasdaq National Market (from
September 23, 1999 through December 31, 1999).
<TABLE>
<CAPTION>
1999 QUARTERLY INFORMATION HIGH LOW
- -------------------------- ---- ---
<S> <C> <C>
First 11-7/8 1-7/8
Second 15-1/2 6-1/2
Third 11-1/2 4-5/16
Fourth 8-5/16 4-1/8
1998 QUARTERLY INFORMATION HIGH LOW
- -------------------------- ---- ---
First 1-1/8 11/16
Second 4-15/16 11/16
Third 3-1/4 7/8
Fourth 3-3/4 1
</TABLE>
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PART II-ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, CONTINUED
As of January 31, 2000, we had 508 stockholders of record of our common stock.
DIVIDEND POLICY
We have not paid dividends on our common stock and do not currently plan to do
so in the near future. In December 1998, we issued preferred stock that has a
dividend rate of 5%. Preferred dividends are payable if, and when, we declare a
dividend payment. We have not, and currently do not plan in the near future, to
declare any preferred dividend payments. Preferred dividends are cumulative and
the entire accumulated dividend must be paid prior to the payment of any
dividends to common stockholders. The accumulated preferred dividend was
$350,000 at December 31, 1999.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
INCOME DATA:
<S> <C> <C> <C> <C> <C>
Net revenue $ 33,128,059 $ 23,045,533 $ 17,119,372 $ 17,032,164 $ 13,391,982
Operating income (loss) ($ 9,352,153) ($ 4,699,426) ($ 8,920,726) ($ 2,957,830) $ 1,559,995
Income (loss) before minority
interest and income taxes ($ 9,511,228) ($ 6,445,595) ($ 11,135,654) ($ 3,091,705) $ 1,376,597
Net income (loss) ($ 9,431,698) ($ 6,449,208) ($ 11,141,416) ($ 3,255,969) $ 1,512,239
Net income (loss) available
for common stockholders ($ 9,431,698) ($ 7,468,146) ($ 11,141,416) ($ 3,255,969) $ 1,512,239
BALANCE SHEET DATA:
Total assets $ 15,295,184 $ 10,053,367 $ 10,536,448 $ 11,554,070 $ 10,522,840
Long term obligations $ 2,290,511 $ 921,781 $ 2,833,734 $ 2,291,178 $ 712,904
Stockholders' equity $ 4,597,633 $ 2,915,271 $ 66,329 $ 5,331,577 $ 6,611,278
PER SHARE DATA:
Basic net income (loss) ($0.63) ($0.57) ($1.33) ($0.45) $ 0.21
Diluted net income (loss) ($0.63) ($0.57) ($1.33) ($0.45) $ 0.21
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION - SAFE HARBOR DISCLOSURE
The following discussion and analysis contains historical information. It also
contains forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, particularly
in reference to statements regarding our expectations, plans and objectives. You
can generally identify-forward-looking statements by the use of the words "may,"
"will," "expect," "intend," "estimate," "anticipate," "believe," or "continue,"
or similar language. Forward-looking statements involve substantial risks and
uncertainties. You should give careful consideration to cautionary statements
made in this discussion and analysis. We base our statements on our current
expectations. Forward-looking statements may be impacted by a number of factors,
risks and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. Our filings with the
Securities and Exchange Commission identify factors that could cause material
differences. Among these factors are our ability to:
(i) fund our current and future business strategies either through
continuing operations or external financing;
(ii) attract and retain key employees;
(iii) compete successfully against competitive products and
services;
(iv) maintain relationships with key suppliers and providers of
market data; and
(v) respond to the effect of economic and business conditions
generally.
RECENT BUSINESS DEVELOPMENTS
Recent Business Developments - HyperFeed Announces Internet Business Solution
Neosphere.
On February 14, 2000, we announced the launch of Neosphere, a complete
e-business solution for companies serving the online trading and financial
community. Neosphere provides financial portals and brokerage firms with the
front-end software and back-end administration required to offer online market
data display and analysis software to their clients. Neosphere seamlessly
integrates HyperFeed 2000 financial market data, a private-label version of
Apogee, HyperFeed's new proprietary trading application, customizable online
client sign-up pages and HyperFeed's Account Administration System (AAS) which
performs all administrative functions including billing, reporting, service
authorization and exchange-required VARS reporting. Ideally suited for
broker-dealers, websites and Internet portals, Neosphere's all-encompassing
system automates the customer application, authorization, data delivery and
control, billing and reporting process significantly lowering the barriers to
Internet market data redistribution. Our research indicates that the market for
Neosphere includes over 5,500 currently registered broker-dealers, approximately
300 ISP's and over 375 financial websites and search engines. According to
industry sources, the online trading market is projected to grow to 9.7 million
US households who will manage more than $3 trillion in invested assets in 20.4
million on-line accounts by 2003.
Recent Business Developments - Listing on the Nasdaq National Market.
We commenced trading of our common stock on the Nasdaq National Market on
September 23, 1999 under the symbol HYPR. Concurrent with the listing on the
Nasdaq National Market, trading in our common stock on the American Stock
Exchange under the symbol PQT was suspended.
Recent Business Developments - PCQuote.com.
In December 1998, we segregated our Internet consumer-oriented services into
a separate business unit, PCQuote.com, Inc., which was incorporated in March
1999 as a wholly-owned subsidiary. An outgrowth of our financial content web
site, www.pcquote.com, PCQuote.com's objective is to provide real-time
financial data, timely business news and comprehensive research and
analytical tools in order to allow users to make informed investment
decisions. Continued growth in page views, increasing attractive demographics
and subsequent increase in advertising revenue led to our decision to
segregate the web site into its own business unit.
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PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
On June 9, 1999, PCQuote.com filed a registration statement with the
Securities and Exchange Commission relating to a proposed initial public
offering of 7,750,000 shares of its common stock, consisting of 5,800,000
shares to be issued by PCQuote.com and 1,950,000 shares to be sold by us as
selling stockholder.
On August 30, 1999, we formally separated the business of PCQuote.com and its
associated assets and liabilities from our other businesses and operations.
We entered into agreements with PCQuote.com, effective March 31, 1999,
providing for its separation from us and governing interim and ongoing
relationships between PCQuote.com and us. These agreements include a
Contribution and Separation Agreement, Maintenance Agreement, DataFeed
License Agreement, Services Agreement, Non-Competition Agreement,
Registration Rights Agreement and Tax Indemnification and Allocation
Agreement. Under the Contribution and Separation Agreement, we transferred
assets related to our consumer Internet operations to PCQuote.com and
PCQuote.com assumed the liabilities related to those consumer Internet
operations. Under the Services Agreement, we agreed to perform transitional
services for, and provide office space to, PCQuote.com for $213,500 per month
through September 1999, $163,500 per month thereafter through December 1999,
$138,500 per month thereafter through March 2000 and $113,500 per month
thereafter through June 30, 2000. Under the Maintenance Agreement,
PCQuote.com will receive software features, upgrades and enhancements to
PCQuote Orbit and will pay us 3% of gross revenues obtained from use or
sublicensing of PCQuote Orbit. Under the Data Feed Agreement, PCQuote.com
will be entitled to use HyperFeed 2000 for a monthly fee based on the number
of users and quotes accessed.
Management believes that formally separating the two entities will permit the
parent and subsidiary to focus on their relative strengths. In management's
opinion, the separation will permit each entity to better (i) attract and
retain key employees by relating compensation to relevant business
development, (ii) enter into strategic relationships with business partners,
and (iii) permit each entity to pursue its own financing avenues.
On October 18, 1999, PCQuote.com announced that it postponed its initial
public offering of common stock due to market conditions. On March 8, 2000,
PCQuote.com filed an application to withdraw the registration statement with
the Securities and Exchange Commission.
RECENT BUSINESS DEVELOPMENTS - TOWNSEND ANALYTICS.
In connection with the formation and transfer of our Internet consumer
business to our subsidiary, PCQuote.com, on May 28, 1999, we entered into an
agreement with Townsend Analytics, Ltd. to terminate the Software Distributor
Agreement dated December 4, 1995. Pursuant to the terms of the termination
agreement, we paid Townsend Analytics one million dollars. We and PCQuote.com
entered into separate new license agreements with Townsend Analytics for the
right to use the LAN and Internet versions, respectively, of the software
application that is marketed as PCQuote 6.0 RealTick. The new agreements
replaced the prior agreement between Townsend Analytics and us. The initial term
of the agreements ends December 4, 2000. Pursuant to the terms of the new
agreements, we and PCQuote.com are each required to pay a minimum royalty to
Townsend Analytics of $220,000 per month and a cumulative minimum royalty of
$5,000,000 each over the initial term of the agreements. Under the terms of our
new agreement with Townsend Analytics, we guarantee the obligation of our
subsidiary, PCQuote.com, and receive a credit towards our minimum commitment
obligations to the extent that PCQuote.com's actual royalty payments exceed its
minimum commitments.
14
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PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
RESULTS OF OPERATIONS FOR 1999 COMPARED TO 1998
Total revenue increased $10.1 million, or 43.8%, to $33.1 million in 1999 from
$23.0 million in 1998. Our HyperFeed services and PCQuote.com services both
posted increases in 1999 over 1998. HyperFeed service revenue increased $4.6
million, or 35.0%, to $17.7 million in 1999 from $13.1 million in 1998. Revenue
growth was experienced in license fees for our HyperFeed 2000 datafeed and fees
for combined analytics and HyperFeed 2000 services. Revenue from PCQuote.com
services increased $5.5 million, or 55.3%, to $15.4 million in 1999 from $9.9
million in 1998. The number of subscribers to our PCQuote.com analytical
services grew to 9,800 at the end of 1999 from 6,300 at the end of 1998.
Direct costs of services increased $8.5 million, or 49.8%, to $25.5 million in
1999 from $17.0 million in 1998. Principal components of the increase were
royalties and payments to providers of market data, directly attributable to the
growth in subscribers, in addition to a one-time $1.0 million second quarter
charge incurred in connection with the termination of our software distributor
agreement with Townsend Analytics and entering into two separate new agreements
between Townsend and ourselves and our subsidiary, PCQuote.com. Offsetting these
increases to a degree were decreases in satellite distribution and leased
equipment costs, as a result of the early termination of our old satellite
distribution contract and the expiration of customer site equipment operating
leases. We have a new lower-cost satellite distribution network and our
customers are now purchasing their own equipment. Amortization of software
development costs increased to $2.4 million in 1999 from $1.8 million in 1998.
Also included in direct costs for 1999 is a non-cash charge of $1.2 million for
amortization of prepaid license fees as a result of the value assigned to the
warrant issued in April 1999 to CNNFN in exchange for the 3 1/2 year license
agreement with PCQuote.com.
The resulting gross margin increased $1.6 million, or 26.6%, to $7.6 million
in 1999 from $6.0 million in 1998. Excluding the one-time $1.0 million
termination charge and the $1.2 million non-cash amortization of prepaid
license fees, the gross margin increased $3.8 million, or 62.9%, to an
adjusted $9.8 million in 1999 as compared to 1998. As a percentage of
revenue, the gross margin was 23.1% in 1999, 29.7% excluding the one-time
termination and non-cash license fee amortization, as compared to 26.2% in
1998.
Direct costs associated with HyperFeed services increased $2.2 million, or
21.4%, to $12.7 million in 1999 from $10.5 million in 1998. Increases in license
and exchange fees, directly attributable to the growth in subscribers and
$500,000 of the $1.0 million termination payment, and amortization of software
development costs were offset to a degree by efficiencies in distribution and
support operations. Amortization of software development costs increased
$300,000 to $1.4 million in 1999 from $1.1 million in 1998. The resulting gross
margin on HyperFeed services increased $2.3 million, or 88.2%, to $5.0 million
in 1999 from $2.7 million in 1998. HyperFeed services gross margin as a
percentage of HyperFeed services revenue increased to 28.4% in 1999 from 20.4%
in 1998.
Direct costs associated with PCQuote.com services increased $6.2 million, or
95.3%, to $12.8 million in 1999 from $6.6 million in 1998. The significant
growth we experienced resulted in corresponding increases in license fees,
exchange fees and data distribution costs. Contributing to the increase was
$500,000 of the $1.0 million termination payment and the $1.2 million
non-cash charge for amortization related to the CNNFN warrant. Amortization
of software development costs increased $400,000 to $1.1 million in 1999 from
$700,000 in 1998. Consequently, gross margin on PCQuote.com services
decreased $800,000, or 22.3%, to $2.6 million in 1999 from $3.4 million in
1998. Gross margin increased $900,000, or 27.9%, after excluding the effects
of the non-cash amortization of prepaid license fees and the one-time
termination payment.
15
<PAGE>
PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
Total operating expenses increased $6.3 million, or 58.3%, to $17.0 million in
1999 from $10.7 million in 1998. Three primary factors contributed to the
increase:
- the ramp-up of operations, including the hiring of a separate
management team, for our subsidiary, PCQuote.com, Inc., in
contemplation of its initial public offering;
- the $1.4 million charge for the early termination of our old
satellite distribution contract, which had the potential to
run through August 2006 at a cost of $56,000 per month; and
- a $1.8 million charge for costs related to the initial public
offering that we decided not to pursue at the current time due
to market conditions.
Growth related increases were experienced in general and administrative expenses
and product and market development costs, while sales costs declined slightly
and depreciation and amortization remained relatively unchanged.
Sales costs decreased 4.5%, to $3.7 million in 1999 from $3.8 million in 1998.
The decrease was the result of a change in our previous sales incentive
compensation structure, in addition to lower support costs.
General and administrative expenses increased $2.0 million, or 58.8%, to $5.3
million in 1999 from $3.3 million in 1998. The increase reflects the addition of
management personnel for our PCQuote.com subsidiary, as well as administrative
personnel required to service the growth in our operations and customer base.
Increases were also experienced in collection costs, in line with our revenue
growth, and legal, accounting and professional consulting fees.
Product and market development costs increased $1.3 million, or 54.6%, to $3.6
million in 1999 from $2.3 million in 1998. We significantly increased personnel
resources in new product development, in addition to personnel and promotional
efforts to expand our PCQuote.com web site and Internet service offerings.
Depreciation and amortization remained unchanged at $1.2 million year to year.
Interest expense decreased $1.7 million to slightly over $100,000 in 1999 from
$1.8 million in 1998. The decrease is the result of the conversion of the
convertible subordinated debenture and borrowings on the credit facility into
equity in December 1998. Interest expense in 1999 consists of interest on our
bank term loan and on PCQuote.com's $2.0 million borrowing from Motorola, Inc.
In December 1998, we converted current debt into convertible preferred stock.
The maximum conversion rates for the two series of preferred stock issued
were set at and above the closing market price of our common stock at the
time the conversion was approved by our Board in September 1998. Stockholder
approval, obtained in December, was a condition to closing the debt
conversion transactions. The market price of our common stock on the closing
date was slightly higher than the maximum conversion price agreed to in
September. Accounting and SEC pronouncements require this differential to be
treated as non-cash preferred dividends. Consequently, preferred dividends of
$1,018,938 were recognized in 1998 with a corresponding increase in
additional paid-in capital from the preferred stock issuance.
16
<PAGE>
PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
RESULTS OF OPERATIONS FOR 1998 COMPARED TO 1997
Total revenue increased 34.6% in 1998 to $23.0 million from $17.1 million in
1997. Our HyperFeed services and PCQuote.com services both posted increases in
1998 over 1997. HyperFeed service revenue increased $800,000, or 6.3%, from
$12.3 million in 1997 to $13.1 million in 1998. Revenue growth was experienced
through increased service offerings. Revenue from our PCQuote.com Internet
services increased $5.1 million, or 108%, to $9.9 million in 1998 from $4.8
million in 1997. The growth was principally due to our PC Quote 6.0 Internet
service where the number of subscribers grew from 2,500 at the end of 1997 to
4,300 at the end of 1998.
Direct costs of services increased approximately 17.6% to $17.0 million in 1998
from $14.5 million in 1997. Principal components of the increase were royalties,
leased equipment, communication costs, and compensation directly attributable to
PCQuote.com Internet services and PC Quote 6.0 subscriber growth, and payments
to providers of market data. Amortization of software development costs
decreased from $1.9 million in 1997 to $1.8 million in 1998 due to 1998 projects
not planned for release until 1999.
Direct costs associated with HyperFeed services increased from $10.3 million in
1997 to $10.5 million in 1998. Increases in license and exchange fees and the
cost of customer support were offset to a degree by efficiencies in data-feed
operations and a decrease in amortization of software development costs. The
resulting gross margin increased $600,000, or 27.3%, to $2.7 million in 1998
from $2.1 million in 1997.
Direct costs associated with PCQuote.com Internet services increased to $6.5
million from $4.2 million in 1997. The significant growth we experienced
caused us to incur increases in license and exchange fees, customer support
and operations devoted to these services. Software amortization also
increased as more resources were diverted to this portion of our business.
The gross margin on PCQuote.com services increased 500% from $562,000 in 1997
to $3.4 million in 1998, as we were able to leverage our infrastructure and
support operations.
Total operating expenses declined $840,000, or 7.2%, as a result of the
restructuring in 1997 and subsequent cost containment efforts. Decreases from
restructuring charges and in general and administrative expenses were offset
to a degree by increases in sales expenses and product and market development
costs.
Sales expenses increased 11.6% to $3.8 million in 1998 as compared to $3.4
million in 1997. The increase was due to additional sales personnel added at
the end of 1997 and early 1998, and higher total commission expense as a
result of increased sales of our PC Quote 6.0 Internet service offering.
General and administrative expenses decreased 16.2% to $3.3 million in 1998 from
$4.0 million in 1997. The decrease was principally due to reductions in
compensation and related employee costs, lower utilization of consultants and
external professionals and a decrease in bad debt expense as compared to the
prior year.
Product and market development costs increased 31.2% to $2.4 million in 1998
from $1.8 million in 1997. The increase was due to an increase in the number of
personnel devoted to these efforts and increased advertising expenditures, in
addition to costs of maintaining and enhancing previously developed products and
services.
Depreciation and amortization remained unchanged at $1.2 million year to year.
There were no restructuring charges recognized in 1998 like the $1.1 million
reported for 1997.
17
<PAGE>
PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
Interest expense was $1.8 million for 1998, a decrease of 21.6% from the $2.3
million recognized in 1997. The decrease reflects the absence of non-cash
amortization of $979,097 recognized in 1997 for the value of common stock
purchase warrants that were issued to PICO Holdings, Inc. This was offset by an
increase in interest expense amortization to $1,096,402 in 1998 from $674,992 in
1997 for the value of the $2.5 million convertible subordinated debenture's
beneficial conversion feature. Also included is interest on our bank term loan,
the convertible subordinated debenture and borrowings from PICO Holdings, Inc.
(See Note 2 and Note 3 of the Notes to Consolidated Financial Statements.)
In December 1998, we converted current debt into convertible preferred stock.
The maximum conversion rates for the two series of preferred stock issued
were set at and above the closing market price of our common stock at the
time the conversion was approved by our Board in September 1998. Stockholder
approval, obtained in December, was a condition to closing the debt
conversion transactions. The market price of our common stock on the closing
date was slightly higher than the maximum conversion price agreed to in
September. Accounting and SEC pronouncements require this differential to be
treated as non-cash preferred dividends. Preferred dividends of $1,018,938
were recognized in 1998 with a corresponding increase in additional paid-in
capital from the preferred stock issuance. (See Note 3 of the Notes to
Consolidated Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
Net cash and cash equivalents increased $300,000 to $1.5 million at the end of
1999 from the end of 1998. Expenditures for new equipment were $1.6 million in
1999, an increase of $800,000 over 1998. The increase in expenditures was to
support the growth in our business, as well as to improve our communications,
processing and distribution networks and infrastructure. Capitalized software
costs of $1.2 million were $800,000, or 39.4%, lower for the year ended December
31, 1999, compared to the prior year, principally as a result of lower
development costs associated with capitalized projects. We borrowed and repaid
$1.5 million during the year. We also repaid $300,000 of the principal balance
on our bank term loan. Additionally, our subsidiary PCQuote.com, Inc., borrowed
$2.0 million from Motorola, Inc. The promissory note bears interest at the prime
rate from time to time as announced in the Wall Street Journal. Payments are due
on a quarterly basis commencing June 30, 2000 through March 31, 2002, subject to
early repayment upon the closing of an initial public offering of PCQuote.com's
common stock. We received approximately $4.9 million in net proceeds from
(i) the sale of common stock to third-party investors in private
placements;
(ii) the purchase of common stock by third-party investors through
the exercise of previously issued warrants;
(iii) the sale of shares of common stock to employees pursuant to
our Employee Stock Purchase Plan; and
(iv) the sale of shares of common stock to employees who exercised
options previously granted to them under our Employee
Incentive Stock Option Plan.
Total revenue increased $10.1 million, or 43.8%, to $33.1 million in 1999
versus $23.0 million for the 1998 period, while direct costs of services
increased 49.8% to $25.5 million versus $17.0 million in 1998. The resulting
gross margin increased 26.6% to $7.6 million in 1999 from $6.0 million in
1999. Excluding the one-time $1.0 million contract termination charge and the
$1.2 million non-cash amortization of prepaid license fees, the gross margin
increased $3.8 million, or 62.9%, to an adjusted $9.8 million in 1999 as
compared to 1998. As a percentage of revenue, the gross margin excluding
these charges was 29.7% in 1999 as compared to 26.2% in 1998. While we
experienced an impressive 55.3% growth in revenue from PCQuote.com services,
we also experienced an even more impressive 35.0% growth, versus 8.4%
increase 1997 to 1998, in our higher margin HyperFeed services, which
includes our Internet business-to-business component. Gross margin on
HyperFeed services increased to 28.4% of HyperFeed service revenue in 1999
from 20.4% in 1998, and in dollar terms, the $2.4 million improvement
represented an 88.2% increase over the prior year. Given the projected
increases in online trading and the expected demand for financial market data
by web sites and broker-dealers for their users, we expect the trend of
revenue growth and margin improvement to continue.
18
<PAGE>
PART II - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
With the current trend, we anticipate being cash flow positive in the first
half of 2000 and profitable in the second half of 2000. We believe our
existing capital resources, our ability to access external capital, if
necessary, and cash generated from continuing operations are sufficient for
working capital purposes.
As we have previously reported, we have explored multiple alternatives that may
be available for the purpose of enhancing stockholder value, including a merger,
a spin-off or sale of part of our business, a strategic relationship or joint
venture with another technology or financial services firm and equity financing.
We continue to explore opportunities to enhance stockholder
value.
In December 1998, we segregated our web sites and consumer-oriented Internet
services into a separate internal business unit. We incorporated the business
as a wholly-owned subsidiary, PCQuote.com, Inc., on March 19, 1999. On June
9, 1999, PCQuote.com filed a registration statement with the Securities and
Exchange Commission relating to a planned initial public offering of shares
of its common stock. On October 18, 1999, PCQuote.com announced that it was
postponing the offering due to market conditions and filed an application
to withdraw the registration statement on March 8, 2000. We do not plan to
proceed with the offering for the time being.
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We will implement the provisions of Statement of Financial Accounting Standards
No. 133, ("Statement 133") "Accounting for Derivative Instruments and Hedging
Activities" which is required to be adopted for financial statements issued for
the fiscal year ending December 31, 2000. Statement 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring us to recognize those items as assets
or liabilities in the statement of financial position and measure them at fair
value. We believe that adoption of Statement 133 will not have a material impact
on our consolidated financial statements.
OTHER
We do not believe general inflation materially impacts our sales and operating
results. We do not expect that current tax legislation will significantly affect
our future financial position, liquidity or operating results.
At December 31, 1999, we had federal income tax net operating loss carryforwards
of approximately $29,908,000 for federal income tax purposes and approximately
$28,071,000 for the alternative minimum tax. The net operating loss
carryforwards will expire, if not previously utilized, as follows: 2000:
$1,370,000; 2001: $1,539,000; 2002: $560,000; 2003: $79,000; 2004: $576,000;
2005: $1,557,000; 2006: $301,000 and thereafter $23,926,000. (See Note 6 of
the Notes to Consolidated Financial Statements.)
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have a bank term loan that has an interest rate equal to the bank's prime
rate. PCQuote.com has a promissory note that has an interest rate equal to the
prime rate announced in the Wall Street Journal. We are exposed to market risk
as the prime rate is subject to fluctuations in the market. We do not believe
the market risk is material to our financial statements. At December 31, 1999 we
had excess cash invested in a money market account. We do not expect any
material loss, if at all, on this investment.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
Pursuant to Rule 12b-23 under the Securities Exchange Act of 1934, the
information called for by this Item is incorporated herein by reference to the
"Index of Financial Statements" that appears elsewhere in this report.
19
<PAGE>
PART II - ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
DISCLOSURE
There have been no changes in or disagreements with accountants that would
require disclosure in this Report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Information about HyperFeed directors and executive officers will be included
in our proxy statement for our 2000 annual meeting of stockholders. This
information is incorporated by reference to that proxy statement.
ITEM 11. EXECUTIVE COMPENSATION
Information about HyperFeed executive compensation will be included in our proxy
statement for our 2000 annual meeting of stockholders. This information is
incorporated by reference to that proxy statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information about security ownership of certain beneficial owners and management
will be included in our proxy statement for our 2000 annual meeting of
stockholders. This information is incorporated by reference to that proxy
statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information about certain relationships and related transactions will be
included in our proxy statement for our 2000 annual meeting of stockholders.
This information is incorporated by reference to that proxy statement.
20
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Our consolidated financial statements are included in Item 8 of this report.
2. Financial Statement Schedules
The consolidated financial statement schedule for the valuation and
qualifying accounts is included in Item 8 of this report.
(b) REPORTS ON FORM 8-K:
There were no reports on Form 8-K filed during the fourth quarter of the period
covered by this report.
(c) EXHIBITS
3(a) Articles of Incorporation of Company, incorporated by reference to
Appendix B of Company's Proxy Statement dated July 2, 1987.
3(b) By-laws of the Company, as amended and restated, incorporated by
reference to Exhibit 3(b) to Company's Annual Report on Form 10-K
for the year ended December 31, 1987.
3(c) Certificate of Amendment, dated as of October 22, 1997, to
Company's Certificate of Incorporation, incorporated by reference
to Exhibit 4.12 of the Company's Report on Form 10-Q for the
quarter ended September 30, 1997.
3(d) Certificate of Amendment, dated as of December 18, 1998, to
Company's Certificate of Incorporation, incorporated by reference
to Exhibit 3(d) of the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
3(e) Certificate of Amendment, dated as of June 18, 1999, to Company's
Certificate of Incorporation, located after the Consolidated
Financial Statements of this report.
4(a) Specimen Common Share Certificate of the Company, incorporated by
reference to Exhibit 4.1 of the Company's Registration Statement
on Form S-18, Commission File No. 2-90939C.
4(b) $2,500,000 Convertible Subordinated Debenture due 2001 issued by
the Company to Physicians Insurance Company of Ohio, Inc.,
incorporated by reference to Exhibit 4(b) to Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
4(c) Form of First Amendment to Convertible Subordinated Debenture and
Debenture Agreement, incorporated by reference to Exhibit 10.2 of
the Company's Report on Form 10-Q for the quarter ended June 30,
1997.
4(d) Form of Loan and Security Agreement dated as of May 5, 1997
between the Company and PICO Holdings, Inc., incorporated by
reference to Exhibit 10.1 of the Company's Report on Form 10-Q for
the quarter ended June 30, 1997.
4(e) Form of Promissory Note made by the Company to the order of PICO
Holdings, Inc., incorporated by reference to Exhibit 10.4 of the
Company's Report on Form 10-Q for the quarter ended June 30, 1997.
4(f) Form of Common Stock Purchase Warrant for 640,000 shares of the
Company's Common Stock issued to PICO Holdings, Inc., incorporated
by reference to Exhibit 10.3 of the Company's Report on Form 10-Q
for the quarter ended June 30, 1997.
21
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PART IV - ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K, CONTINUED
4(g) Form of First Amendment to Loan and Security Agreement dated as of
August 8, 1997 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 10.5 of the Company's Report
on Form 10-Q for the quarter ended June 30, 1997.
4(h) Form of Common Stock Purchase Warrant for 500,000 shares of the
Company's Common Stock issued to PICO Holdings, Inc., incorporated
by reference to Exhibit 10.6 of the Company's Report on Form 10-Q
for the quarter ended June 30, 1997.
4(i) Form of Second Amendment to Loan and Security Agreement dated as
of September 22, 1997 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 10.1 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(j) Form of Common Stock Purchase Warrant for 129,032 shares of the
Company's Common Stock issued to PICO Holdings, Inc., incorporated
by reference to Exhibit 4.1 of the Company's Report on Form 10-Q
for the quarter ended September 30, 1997.
4(k) Form of Stock and Warrant Purchase Agreement dated as of October
15, 1997 between the Company and Imprimis Investors LLC and
Wexford Spectrum Investors LLC, incorporated by reference to
Exhibit 10.2 of the Company's Report on Form 10-Q for the quarter
ended September 30, 1997.
4(l) Form of Common Stock Purchase Warrant for 350,000 shares of the
Company's Common Stock issued to Imprimis Investors LLC,
incorporated by reference to Exhibit 4.2 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(m) Form of Common Stock Purchase Warrant for 150,000 shares of the
Company's Common Stock issued to Wexford Spectrum Investors LLC,
incorporated by reference to Exhibit 4.3 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(n) Form of Common Stock Purchase Warrant for 101,500 shares of the
Company's Common Stock issued to Imprimis Investors LLC,
incorporated by reference to Exhibit 4.4 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(o) Form of Common Stock Purchase Warrant for 43,500 shares of the
Company's Common Stock issued to Wexford Spectrum Investors LLC,
incorporated by reference to Exhibit 4.5 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(p) Form of Common Stock Purchase Warrant for 38,500 shares of the
Company's Common Stock issued to Imprimis Investors LLC,
incorporated by reference to Exhibit 4.6 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(q) Form of Common Stock Purchase Warrant for 16,500 shares of the
Company's Common Stock issued to Wexford Spectrum Investors LLC,
incorporated by reference to Exhibit 4.7 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(r) Form of Common Stock Purchase Warrant for 175,000 shares of the
Company's Common Stock issued to Imprimis Investors LLC,
incorporated by reference to Exhibit 4.8 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(s) Form of Common Stock Purchase Warrant for 75,000 shares of the
Company's Common Stock issued to Wexford Spectrum Investors LLC,
incorporated by reference to Exhibit 4.9 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(t) Form of Common Stock Purchase Warrant for 35,000 shares of the
Company's Common Stock issued to Imprimis Investors LLC,
incorporated by reference to Exhibit 4.10 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
22
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PART IV - ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K, CONTINUED
4(u) Form of Common Stock Purchase Warrant for 15,000 shares of the
Company's Common Stock issued to Wexford Spectrum Investors LLC,
incorporated by reference to Exhibit 4.11 of the Company's Report
on Form 10-Q for the quarter ended September 30, 1997.
4(v) Form of Third Amendment to Loan and Security Agreement dated as of
December 30, 1997 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(v) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
4(w) Form of Fourth Amendment to Loan and Security Agreement dated as
of February 5, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(w) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
4(x) Form of Fifth Amendment to Loan and Security Agreement dated as of
March 10, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(x) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
4(y) Form of First Amendment to the Amendment of the Convertible
Subordinated Debenture Agreement, dated as of March 30, 1998,
incorporated by reference to Exhibit 4(a) of the Company's Report
on Form 10-Q for the quarter ended March 31, 1998.
4(z) Form of Sixth Amendment to Loan and Security Agreement dated as of
May 5, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(b) of the Company's Report
on Form 10-Q for the quarter ended March 31, 1998.
4(aa) Form of Amendment No. 2 to the Amendment of the Convertible
Subordinated Debenture Agreement, dated as of May 11, 1998,
incorporated by reference to Exhibit 4(c) of the Company's Report
on Form 10-Q for the quarter ended March 31, 1998.
4(ab) Form of Seventh Amendment to Loan and Security Agreement dated as
of June 1, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(a) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1998.
4(ac) Form of Amendment No. 3 to the Amendment of the Convertible
Subordinated Debenture Agreement, dated as of July 16, 1998,
incorporated by reference to Exhibit 4(b) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1998.
4(ad) Form of Eighth Amendment to Loan and Security Agreement dated as
of July 24, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(c) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1998.
4(ae) Form of Amendment No. 4 to the Amendment of the Convertible
Subordinated Debenture Agreement, dated as of July 24, 1998,
incorporated by reference to Exhibit 4(d) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1998.
4(af) Form of Ninth Amendment to Loan and Security Agreement dated as of
July 31, 1998 between the Company and PICO Holdings, Inc.,
incorporated by reference to Exhibit 4(e) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1998.
4(ag) Securities Purchase Agreement between PC Quote, Inc. and PICO
Holdings, Inc. and Physicians Insurance Company of Ohio dated as
of September 23, 1998, incorporated by reference to Exhibit 4.1 of
the Company's Report on Form 8-K dated October 6, 1998.
23
<PAGE>
PART IV - ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K, CONTINUED
4(ah) Form of Registration Rights Agreement between PC Quote, Inc. and
PICO Holdings, Inc. and Physicians Insurance Company of Ohio,
incorporated by reference to Exhibit 4.3 of the Company's Report
on Form 8-K dated October 6, 1998.
4(ai) Form of Common Stock Purchase Warrant issued to PICO Holdings,
Inc., incorporated by reference to Exhibit 4.4 of the Company's
Report on Form 8-K dated October 6, 1998.
4(aj) Form of First Amendment to Common Stock Purchase Warrant dated May
5, 1997, incorporated by reference to Exhibit 4.5 of the Company's
Report on Form 8-K dated October 6, 1998.
4(ak) Form of First Amendment to Common Stock Purchase Warrant dated
August 8, 1997, incorporated by reference to Exhibit 4.6 of the
Company's Report on Form 8-K dated October 6, 1998.
4(al) Form of First Amendment to Common Stock Purchase Warrant dated
September 22, 1997, incorporated by reference to Exhibit 4.7 of
the Company's Report on Form 8-K dated October 6, 1998.
4(am) Form of Second Amendment to Convertible Subordinated Debenture
dated as of September 23, 1998, incorporated by reference to
Exhibit 4(h) of the Company's Report on Form 10-Q for the quarter
ended September 30, 1998.
4(an) Form of Stock and Warrant Purchase Agreement between PC Quote,
Inc. and Howard Todd Horberg dated December 29, 1998, incorporated
by reference to Exhibit 4(an) of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
4(ao) Form of Common Stock Purchase Warrant for 120,000 shares issued to
Howard Todd Horberg, incorporated by reference to Exhibit 4(ao) of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
4(ap) Form of Stock and Warrant Purchase Agreement between PC Quote,
Inc. and Steve Levy dated December 29, 1998, incorporated by
reference to Exhibit 4(ap) of the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
4(aq) Form of Common Stock Purchase Warrant for 120,000 shares issued to
Steve Levy, incorporated by reference to Exhibit 4(aq) of the
Company's Annual Report on Form 10-K for the year ended December
31, 1998.
4(ar) Form of Stock and Warrant Purchase Agreement between PC Quote,
Inc. and Cranshire Capital, LP dated December 29, 1998,
incorporated by reference to Exhibit 4(ar) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
4(as) Form of Common Stock Purchase Warrant for 80,000 shares issued to
Cranshire Capital, LP, incorporated by reference to Exhibit 4(as)
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
4(at) Form of Stock and Warrant Purchase Agreement between HyperFeed
Technologies, Inc. and Howard Todd Horberg dated November 22,
1999, located after the Consolidated Financial Statements of
this report.
4(au) Form of Stock and Warrant Purchase Agreement between HyperFeed
Technologies, Inc. and David Horberg dated November 22, 1999,
located after the Consolidated Financial Statements of this
report.
4(av) Form of Common Stock Purchase Warrant for 125,000 shares issued to
Howard Todd Horberg, located after the Consolidated Financial
Statements of this report.
24
<PAGE>
PART IV - ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K, CONTINUED
4(aw) Form of Common Stock Purchase Warrant for 10,000 shares issued to
David Horberg, located after the Consolidated Financial
Statements of this report.
4(ax) Form of Common Stock Purchase Warrant for 30,000 shares issued to
Wildman, Harrold, Allen & Dixon, located after the Consolidated
Financial Statements of this report.
10(a) Vendor Agreement with the Option Price Reporting Authority,
incorporated by reference to Exhibit 10.4 of Company's
Registration Statement on Form S-18, Commission File No. 2-90939C.
10(b) Vendor Agreement with the New York Stock Exchange, Inc.,
incorporated by reference to Exhibit 10.5 of Company's
Registration Statement on Form S-18, Commission File No. 2-90939C.
10(c) Vendor Agreements with the National Association of Securities
Dealers, Inc. incorporated by reference to Exhibit 10(d) of
Company's Annual Report on Form 10-K for the year ended December
31, 1989.
10(d) Form of Employee Non-Disclosure Agreement, incorporated by
reference to Exhibit 10.10 of Company's Registration Statement on
Form S-18, Commission File No. 2-90939C.
10(e) Amended and Restated PC Quote, Inc. Employees' Combined Incentive
and Non-Statutory Stock Option Plan, incorporated by reference to
Appendix E to Company's Proxy Statement dated July 2, 1987 and
Company's Proxy Statement dated September 15, 1997.
10(f) Lease regarding office space at 50 Broadway, New York City, dated
January 31, 1987, as amended by First Amendatory Agreement dated
May 18, 1987, by and between Company and 50 Broadway Joint
Venture, incorporated by reference to Exhibit 10(y) to Company's
Annual Report on Form 10-K for the year ended December 31, 1987.
10(g) Satellite Service Agreement dated June 12, 1991 between Company
and SpaceCom Systems, Inc. incorporated by reference to Exhibit
10(r) to Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10(h) Amendment to satellite service agreement dated September 6, 1991
between Company and SpaceCom Systems, Inc. incorporated by
reference to Exhibit 10(s) to Company's Annual Report on Form 10-K
for the year ended December 31, 1991.
10(i) Amendment to point-to-multipoint satellite network service
agreement dated November 22, 1989 between Company and GTE SpaceNet
Satellite Services Corporation incorporated by reference to
Exhibit 10(v) to Company's Annual Report on Form 10-KSB for the
year ended December 31, 1992.
10(j) Amendment to satellite service agreement dated October 4, 1993
between Company and SpaceCom Systems, Inc. incorporated by
reference to Exhibit 10(z) to Company's Annual Report on Form
10-KSB for the year ended December 31, 1993.
10(k) Satellite Service Agreement dated September 15, 1994 between
Company and SpaceCom Systems, Inc. incorporated by reference to
Exhibit 11(a) to Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
10(l) Satellite Service Agreement dated October 15, 1993 between Company
and SpaceCom Systems, Inc. incorporated by reference to Exhibit
11(b) to Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
10(m) Satellite Service Agreement dated June 1, 1993 between Company and
SpaceCom Systems, Inc. incorporated by reference to Exhibit 11(b)
to Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
25
<PAGE>
PART IV - ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K, CONTINUED
10(n) Vendor Agreement with Global Information Systems Inc.
incorporated by reference to Exhibit 11(d) of Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10(o) Lease regarding office space at 300 South Wacker Drive, Chicago,
Illinois dated June 1, 1994, by and between Company and
Markborough 300 WJ Limited Partnership, incorporated by reference
to Exhibit 11(e) to Company's Annual Report on Form 10-KSB for the
year ended December 31, 1994.
10(p) Agreement dated November 14, 1996 between the Company and
Physicians Insurance Company of Ohio, Inc., incorporated by
reference to Exhibit 10(p) to Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
10(q) Employment agreement dated July 16, 1996 between the Company and
Howard Meltzer, incorporated by reference to Exhibit 10(q) to
Company's Annual Report on Form 10-K for the year ended December
31, 1996.
10(r) Employment agreement dated December 2, 1996 between the Company
and Louis J. Morgan, incorporated by reference to Exhibit 10(r) to
Company's Annual Report on Form 10-K for the year ended December
31, 1996.
10(s) Termination Agreement by and between Townsend Analytics, Ltd and
PC Quote, Inc., dated May 28, 1999, incorporated by reference to
Exhibit 10(a) of the Company's Report on Form 10-Q for the quarter
ended June 30, 1999.
10(t) Software Distributor Agreement dated August 9, 1999 by and between
Townsend Analytics, Ltd. and HyperFeed Technologies, Inc.,
incorporated by reference to Exhibit 10(a) of the Company's Report
on Form 10-Q for the quarter ended June 30, 1999.
10(u) PC Quote, Inc. 1999 Combined Incentive and Non-Statutory Stock
Option Plan, located after the Consolidated Financial Statements
of this report.
21 Subsidiaries of Registrant: PCQuote.com, Inc., incorporated in
the State of Delaware.
23 Consent of KPMG LLP.
27 Financial Data Schedule.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HYPERFEED TECHNOLOGIES, INC.
By:
/s/ JIM R. PORTER
---------------------------
Jim R. Porter, Chairman of the Board and
Chief Executive Officer
March 13, 2000
By:
/s/ JOHN E. JUSKA
---------------------------
John E. Juska, Chief Financial Officer and
Principal Accounting Officer
March 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ JIM R. PORTER
- ------------------------------------
Jim R. Porter, Chairman of the Board and
Chief Executive Officer
March 13, 2000
/s/ JOHN R. HART
- ------------------------------------
John R. Hart, Director
March 13, 2000
/s/ TIMOTHY K. KRAUSKOPF
- ------------------------------------
Timothy K. Krauskopf, Director
March 13, 2000
/s/ RONALD LANGLEY
- ------------------------------------
Ronald Langley, Director
March 13, 2000
/s/ LOUIS J. MORGAN
- ------------------------------------
Louis J. Morgan, Director
March 13, 2000
/s/ KENNETH J. SLEPICKA
- ------------------------------------
Kenneth J. Slepicka, Director
March 13, 2000
27
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets F-2-3
Consolidated statements of operations F-4
Consolidated statements of stockholders' equity F-5
Consolidated statements of cash flows F-6-7
Notes to consolidated financial statements F-8-24
Independent Auditors' Report on Schedule II F-25
Supplemental Schedule II F-26
</TABLE>
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
HyperFeed Technologies, Inc.:
We have audited the accompanying consolidated balance sheets of HyperFeed
Technologies, Inc. and subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of HyperFeed
Technologies, Inc. and subsidiary as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Chicago, Illinois
March 8, 2000
F-1
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS 1999 1998
---- ----
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,452,186 $ 1,139,785
Accounts receivable, less allowance for doubtful
accounts of: 1999: $442,276; 1998: $443,037 2,652,350 1,490,139
Prepaid license fees, current 1,680,000 ---
Prepaid expenses and other current assets 244,477 114,011
---------- ----------
TOTAL CURRENT ASSETS 6,029,013 2,743,935
--------- ---------
Property and Equipment
Satellite receiving equipment 436,759 525,730
Computer equipment 4,323,921 4,260,589
Communication equipment 1,173,595 1,254,010
Furniture and fixtures 263,941 252,050
Leasehold improvements 402,692 402,692
---------- ----------
6,600,908 6,695,071
Less: accumulated depreciation and amortization 4,189,766 4,613,526
---------- ----------
2,411,142 2,081,545
---------- ----------
Prepaid license fees, net of accumulated
amortization of $1,190,000 3,010,000 ---
--------- ----------
Software development costs, net of accumulated
amortization of: 1999: $6,890,526; 1998: $4,442,673 3,775,491 5,012,971
--------- ---------
Deposits and other assets 69,538 214,916
------ -------
TOTAL ASSETS $ 15,295,184 $ 10,053,367
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 1999 AND 1998
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
---- ----
<S> <C> <C>
Current Liabilities
Notes payable $1,050,000 $ 300,000
Accrued satellite termination fees 558,000 ---
Accounts payable 1,709,322 4,138,517
Accrued expenses 2,319,150 218,866
Accrued compensation 461,498 313,838
Income taxes payable 5,000 3,161
Unearned revenue 2,304,070 1,241,933
--------- ---------
TOTAL CURRENT LIABILITIES 8,407,040 6,216,315
--------- ---------
Notes payable, less current portion 1,449,634 499,634
Accrued satellite termination fees, less current portion 624,000 ---
Unearned revenue, less current portion 78,315 261,027
Accrued expenses, less current portion 134,693 161,120
Minority interest 3,869 ---
--------- ---------
TOTAL NONCURRENT LIABILITIES 2,290,511 921,781
--------- ---------
TOTAL LIABILITIES 10,697,551 7,138,096
---------- ---------
Stockholders' Equity
Preferred stock, $.001 par value; authorized 5,000,000 shares;
issued and outstanding:
Series A 5% convertible: 19,075 shares at December 31, 1999
and December 31, 1998 19 19
Series B 5% convertible: 28,791 shares at December 31, 1999
and December 31, 1998 29 29
Common stock, $.001 par value; authorized 50,000,000 shares;
issued and outstanding 15,592,690 shares at December 31, 1999
and 14,183,183 shares at December 31, 1998 15,593 14,183
Additional paid-in capital - Series A 5% convertible preferred stock 3,086,013 3,086,013
Additional paid-in capital - Series B 5% convertible preferred stock 4,664,891 4,664,891
Additional paid-in capital - common stock 25,183,631 19,950,981
Additional paid-in capital - convertible subordinated
debenture and warrants 8,630,491 2,750,491
Accumulated deficit (36,983,034) (27,551,336)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,597,633 2,915,271
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,295,184 $ 10,053,367
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
HyperFeed services $ 17,733,813 $ 13,133,422 $ 12,356,460
PCQuote.com services 15,394,246 9,912,111 4,762,912
------------ ------------ ------------
TOTAL REVENUE 33,128,059 23,045,533 17,119,372
------------ ------------ ------------
DIRECT COST OF SERVICES
HyperFeed services 12,697,106 10,456,647 10,253,756
PCQuote.com services 12,774,875 6,542,787 4,201,310
------------ ------------ ------------
TOTAL DIRECT COST OF SERVICES 25,471,981 16,999,434 14,455,066
------------ ------------ ------------
GROSS MARGIN 7,656,078 6,046,099 2,664,306
------------ ------------ ------------
OPERATING EXPENSES
Sales 3,676,887 3,848,798 3,448,151
General and administrative 5,257,617 3,310,843 3,951,437
Product and market development 3,640,457 2,354,761 1,795,045
Depreciation and amortization 1,251,048 1,231,123 1,243,722
Satellite and offering termination expense 3,182,222 --- ---
Restructuring charges --- --- 1,146,677
------------ ------------ ------------
TOTAL OPERATING EXPENSES 17,008,231 10,745,525 11,585,032
------------ ------------ ------------
LOSS FROM OPERATIONS (9,352,153) (4,699,426) (8,920,726)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 50,062 19,279 37,873
Interest expense (120,751) (1,765,448) (2,252,801)
Loss on sale of minority interest (88,386) --- ---
------------ ------------ ------------
NET OTHER EXPENSE (159,075) (1,746,169) (2,214,928)
------------ ------------ ------------
LOSS BEFORE INCOME TAXES AND
MINORITY INTEREST (9,511,228) (6,445,595) (11,135,654)
INCOME TAXES 5,000 3,613 5,762
------------ ------------ ------------
LOSS BEFORE MINORITY INTEREST (9,516,228) (6,449,208) (11,141,416)
Minority interest 84,530 --- ---
------------ ------------ ------------
NET LOSS (9,431,698) (6,449,208) (11,141,416)
Preferred dividends --- 1,018,938 ---
------------ ------------ ------------
NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS ($ 9,431,698) ($ 7,468,146) ($11,141,416)
============ ============ ============
Basic and diluted net loss per share ($0.63) ($0.57) ($1.33)
Weighted-average common shares outstanding 14,878,160 13,001,058 8,353,400
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Series A Series B Series A Series B Additional
5% 5% 5% 5% Paid-In
- ---------------------------------------------------------------------------------------------------------------------------
Convertible Convertible Convertible Convertible Capital
Preferred Preferred Preferred Preferred Common Common Series A
Stock Stock Stock Stock Stock Stock Convertible
Shares Shares Amount Amount Shares Amount Preferred
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 --- --- $--- $--- 7,355,621 $ 7,356 $---
- ---------------------------------------------------------------------------------------------------------------------------
Net loss --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Issuance of common stock --- --- --- --- 5,081,179 5,081 ---
- ---------------------------------------------------------------------------------------------------------------------------
Value assigned to
amendment of convertible
debenture and warrants
issued --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Value assigned to
employee stock options --- --- --- --- --- --- ---
issued
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 --- --- --- --- 12,436,800 12,473 ---
- ---------------------------------------------------------------------------------------------------------------------------
Net loss --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Issuance of preferred 19,075 28,791 19 29 --- --- 2,966,794
stock
- ---------------------------------------------------------------------------------------------------------------------------
Issuance of common stock --- --- --- --- 4,735,332 4,735 ---
- ---------------------------------------------------------------------------------------------------------------------------
Purchase and retirement
of common stock --- --- --- --- (2,988,949) (2,989) ---
- ---------------------------------------------------------------------------------------------------------------------------
Value assigned to
beneficial conversion
feature of convertible --- --- --- --- --- --- 119,219
preferred stock
- ---------------------------------------------------------------------------------------------------------------------------
Value assigned to
employee stock options --- --- --- --- --- --- ---
issued
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1998 19,075 28,791 19 29 14,183,183 14,183 3,086,013
- ---------------------------------------------------------------------------------------------------------------------------
Net loss --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Issuance of common stock --- --- --- --- 1,409,507 1,410 ---
- ---------------------------------------------------------------------------------------------------------------------------
Value assigned to
PCQuote.com,
Inc. warrant issued --- --- --- --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 19,075 28,791 $19 $29 15,592,690 $15,593 $3,086,013
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------
Additional Additional
Paid-In Paid-In
- ----------------------------------------------------------------------------------------------
Capital Additional Capital
Series B Paid-In Convertible
Convertible Capital Debenture Accumulated
Preferred Common and Warrants Deficit Total
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Balance at December 31, 1996 $--- $12,615,995 $1,650,000 ($8,941,774) $5,331,577
- ----------------------------------------------------------------------------------------------
Net loss --- --- --- (11,141,416) (11,141,416)
- ----------------------------------------------------------------------------------------------
Issuance of common stock --- 4,751,520 --- --- 4,756,601
- ----------------------------------------------------------------------------------------------
Value assigned to
amendment of convertible
debenture and warrants
issued --- --- 1,100,491 --- 1,100,491
- ----------------------------------------------------------------------------------------------
Value assigned to
employee stock options --- 19,076 --- --- 19,076
issued
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Balance at December 31, 1997 --- 17,386,591 2,750,491 (20,083,190) 66,329
- ----------------------------------------------------------------------------------------------
Net loss --- --- --- (6,449,208) (6,449,208)
- ----------------------------------------------------------------------------------------------
Issuance of preferred 3,765,172 --- --- --- 6,732,014
stock
- ----------------------------------------------------------------------------------------------
Issuance of common stock --- 5,432,571 --- --- 5,437,306
- ----------------------------------------------------------------------------------------------
Purchase and retirement
of common stock --- (2,985,960) --- --- (2,988,949)
- ----------------------------------------------------------------------------------------------
Value assigned to
beneficial conversion
feature of convertible 899,719 --- --- (1,018,938) ---
preferred stock
- ----------------------------------------------------------------------------------------------
Value assigned to
employee stock options --- 117,779 --- --- 117,779
issued
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Balance at December 31, 1998 4,664,891 19,950,981 2,750,491 (27,551,336) 2,915,271
- ----------------------------------------------------------------------------------------------
Net loss --- --- --- (9,431,698) (9,431,698)
- ----------------------------------------------------------------------------------------------
Issuance of common stock --- 5,232,650 --- --- 5,234,060
- ----------------------------------------------------------------------------------------------
Value assigned to
PCQuote.com, Inc.
warrant issued --- --- 5,880,000 --- 5,880,000
- ----------------------------------------------------------------------------------------------
Balance at December 31, 1999 $ 4,664,891 $ 25,183,631 $ 8,630,491 ($36,983,034) $ 4,597,633
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss ($ 9,431,698) ($ 6,449,208) ($11,141,416)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property and equipment 1,251,048 1,231,123 1,243,722
Provision for doubtful accounts 650,000 397,873 683,639
Amortization of software development costs 2,447,854 1,810,553 1,909,652
Amortization of value assigned to warrant issued in lieu of
license fees 1,190,000 --- ---
Amortization of deferred discount on convertible
subordinated debenture --- 1,096,402 674,992
Amortization of deferred debt on warrants --- --- 979,097
Interest on converted debt, net of conversion costs --- 553,761 ---
Common stock issued in lieu of cash compensation 70,204 91,522 ---
Common stock issued in lieu of cash payments for professional fees 300,000 163,725 ---
Write-off of capitalized software development costs --- 300,401 571,647
Compensation value assigned to employee stock options granted --- 117,779 19,076
Loss on sale of minority interest 88,399 --- ---
Minority interest in loss (84,530) --- ---
Changes in assets and liabilities:
Accounts receivable (1,812,211) (452,562) (1,018,836)
Income tax refunds receivable --- --- 40,000
Prepaid expenses and other current assets (130,466) (52,030) 123,090
Deposits and other assets 145,378 82,387 55,879
Accounts payable (2,429,195) 1,304,057 1,060,070
Accrued expenses 2,221,517 (676,930) 880,089
Accrued satellite termination fees 1,182,000 --- ---
Unearned revenue 879,425 424,732 (52,008)
Income taxes payable 1,839 (2,031) (1,072)
-------------- ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (3,460,436) (58,446) (3,972,379)
-------------- ------------ ------------
Cash Flows From Investing Activities:
Purchase of property and equipment (1,580,645) (810,557) (1,037,569)
Proceeds from sale of equipment --- --- 55,943
Software development costs capitalized (1,210,374) (1,997,452) (1,817,927)
-------------- ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,791,019) (2,808,009) (2,799,553)
-------------- ------------ ------------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock 4,863,856 5,182,059 4,756,601
Purchase and retirement of common stock --- (2,988,949) ---
Proceeds from issuance of notes payable 3,500,000 --- ---
Borrowings under credit facility --- 1,000,000 2,250,000
Principal payments under capital lease obligations --- --- (142,685)
Principal payments on notes payable (1,800,000) (300,000) (300,366)
-------------- ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,563,856 2,893,110 6,563,550
-------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents 312,401 26,655 (208,382)
Cash and cash equivalents:
Beginning of year 1,139,785 1,113,130 1,321,512
-------------- ------------ ------------
End of year $ 1,452,186 $ 1,139,785 $ 1,113,130
============== ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1999 1998 1997
---- ---- ----
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information:
- --------------------------------------------------------------------------------------------------------------------
Interest paid $ 67,167 $ 83,925 $ 218,531
- --------------------------------------------------------------------------------------------------------------------
Income taxes paid $ 3,161 $ 3,517 $ 6,834
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Noncash Investing and
Financing Activities:
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital - value assigned to PCQuote.com,
Inc. warrant issued in lieu of license fees $ 5,880,000 --- ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital from amendment of convertible
debenture agreement and issuance of warrants --- --- $ 1,100,491
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital from issuance of
employee stock options --- $ 117,779 $ 19,076
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Series A preferred stock issued for converted debt --- $ 19 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital - Series A preferred stock - from
conversion of convertible subordinated debenture
principal, plus accrued interest, net of conversion costs --- $ 2,966,794 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital - Series A preferred stock - value
assigned to beneficial conversion feature of
preferred stock --- $ 119,219 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Series B preferred stock issued for converted debt --- $ 29 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital - Series B preferred stock - from
conversion of credit facility borrowings, plus facility
fee and accrued interest, net of conversion costs --- $ 3,765,172 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Additional paid-in capital - Series B preferred stock - value
assigned to beneficial conversion feature of
preferred stock --- $ 899,719 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Convertible subordinated debenture principal balance
converted into Series A convertible preferred stock --- ($ 2,500,000) ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Credit facility borrowings converted into Series B
convertible preferred stock --- ($ 3,250,000) ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Common stock issued in lieu of cash compensation $ 70,204 $ 91,522 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Common stock issued in lieu of cash payments for professional
fees $ 300,000 $ 163,725 ---
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
HyperFeed Technologies, Inc. (PC Quote or the "Company") is an Internet
solutions provider servicing the business-to-business and business-to-consumer
financial marketplace. We collect financial content directly from stock, options
and commodities exchanges and other news and financial information sources. We
provide this content with a variety of optional analytics packages to businesses
for their internal use and redistribution to their customers over the Internet,
virtual private networks, intranets, extranets, and local or wide area networks.
We use proprietary collection techniques to process financial market activity
reported to us directly from equities, options, and futures and options on
futures exchanges. We consolidate the information and update in real-time our
data warehouse of last sale, bid/ask, time and sales, and historical prices of
more than 600,000 securities and derivatives issues. The data warehouse includes
information on all North American equities, equity options, major stock indices,
Level 1 NASDAQ-quoted stocks, Level 2 NASDAQ market-maker quotes, mutual funds,
money market funds, futures contracts and options on futures contracts. We use
proprietary extraction routines and compression algorithms to create
"HyperFeed-TM- 2000", our IP Multicast digital data stream.
We disseminate HyperFeed 2000 to our customers over the Internet, as well as
by satellite and digital data landlines. HyperFeed 2000 populates databases
residing on computer servers at our customers' sites that are continuously
and instantaneously updated. This is often referred to as "real-time
streaming data" within the industry. Software applications on our customers'
and their customers' computers access the HyperFeed 2000 populated databases
to allow the end user to monitor securities activity and financial
information on an on-going real-time basis. PCQuote.com maintains multiple
servers for customers' real-time access, through Internet connections or
through the World Wide Web, to equivalent institutional quality financial
data without the requirement of having their own server.
We derive our revenue from license fees charged for access to HyperFeed 2000
and from license fees charged for a packaged HyperFeed 2000 plus analytical
software service. Our services are used primarily for trading analysis and as
a price engine for order routing, order matching, order execution,
interactive voice response, and alternative trading systems. Our customer
base consists primarily of financial market data redistributors: securities
broker-dealers, on-line brokerage firms, portfolio managers, other financial
institutions, Internet web-sites and financial portals. PCQuote.com services
individual and professional investors, in addition to selling advertising
space on its web site, www.pcquote.com.
Significant accounting policies are as follows:
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of HyperFeed Technologies, Inc. (the "Company", formerly PC
Quote, Inc.) and its subsidiary, PCQuote.com, Inc., and have been prepared in
accordance with generally accepted accounting principles. The consolidated
financial statements include all adjustments, including the elimination of
all significant intercompany transactions in consolidation, which, in the
opinion of management, are necessary in order to make the financial
statements not misleading.
ACCOUNTING ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS: The Company considers all cash and cash investments
with an original maturity of three months or less to be cash equivalents. The
Company typically invests excess cash in a money market account at a financial
institution which management believes has a strong credit rating.
F-8
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Depreciation on owned assets is provided using the straight-line method over
the following estimated useful lives: satellite receiving, computer and
communications equipment: 3 to 5 years; furniture, fixtures and leasehold
improvements: 5 to 10 years. Leasehold improvements are amortized over the
lesser of the estimated useful lives or the terms of the respective leases.
Maintenance and repair costs are charged to earnings as incurred. Costs of
improvements are capitalized. Upon retirement or disposition, the cost and
related accumulated depreciation and amortization are removed from the
accounts and any gain or loss is included in the statements of operations.
SOFTWARE DEVELOPMENT COSTS: The Company's continuing investment in software
development consists primarily of enhancements to its existing Windows-based
private network and Internet services, development of new data analysis
software and programmer tools designed to afford easy access to its data-feed
for data retrieval and analysis purposes and application of new technology to
increase the data volume and delivery speed of its distribution system and
network.
Costs associated with the planning and design phase of software development,
including coding and testing activities necessary to establish technological
feasibility of computer software products to be licensed or otherwise
marketed, are charged to research and development as incurred. Once
technological feasibility has been determined, costs incurred in the
construction phase of software development including coding, testing, and
product quality assurance are capitalized.
Amortization commences at the time of capitalization or, in the case of a new
service offering, at the time the service becomes available for use.
Unamortized capitalized costs determined to be in excess of the net realizable
value of the product are expensed at the date of such determination. The
accumulated amortization and related software development costs are removed
from the respective accounts effective in the year following full
amortization.
HyperFeed Technologies, Inc.'s policy is to amortize capitalized software
costs by the greater of (a) the ratio that current gross revenue for a product
bear to the total of current and anticipated future gross revenue for that
product or (b) the straight line method over the remaining estimated economic
life of the product including the period being reported on, principally three
to five years. The Company assesses the recoverability of its software
development costs against estimated future undiscounted cash flows. Given the
highly competitive environment and technological changes, it is reasonably
possible that those estimates of anticipated future gross revenue, the
remaining estimated economic life of the product, or both may be reduced
significantly.
FINANCIAL INSTRUMENTS: The Company has no financial instruments for which the
carrying value materially differs from fair value.
INCOME TAXES: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their
tax bases. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.
F-9
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION: The Company principally derives its revenue from service
contracts for the provision of market data only ("HyperFeed-TM- 2000 license
fees"), service contracts for the provision of market data together with
analytical software ("PC Quote 6.0 license fees"), and the sale of
advertising on its web-site, www.pcquote.com. Revenue from service contracts
is recognized using the percentage-of-completion method, ratably over the
contract term as the contracted services are rendered. Revenue from the sale
of advertising is recognized as the advertising is displayed on the web-site.
HyperFeed license fees and PC Quote 6.0 license fees for satellite and
landline services are generally billed one month in advance with 30-day
payment terms. License fees for PC Quote 6.0 on the Internet are generally
paid by credit card within five days prior to the month of service. These and
other payments received prior to services being rendered are classified as
unearned revenue on the balance sheet. Revenue and the related receivable for
advance billings are not reflected in the financial statements. Customers'
deposits on service contracts are classified as either current unearned
revenue, if the contract expires in one year or less, or non-current unearned
revenue, if the contract expiration date is greater than one year.
HyperFeed services primarily consist of the provision of HyperFeed 2000 with
analytics to the business-to-business marketplace, while PCQuote.com services
primarily consist of analytics services, powered by HyperFeed 2000, to the
consumer marketplace. In addition, PCQuote.com sells advertising on its
web site.
The Company adopted the provisions of Statement of Position (SOP) 97-2, Software
Revenue Recognition, on January 1, 1998. SOP 97-2 specifies the following four
criteria that must be met prior to recognizing revenue: (1) persuasive evidence
of the existence of an arrangement, (2) delivery, (3) fixed or determinable fee,
and (4) probable collection. In addition, revenue earned on software
arrangements involving multiple elements is allocated to each element based on
the relative fair value of the elements. When applicable, revenue allocated to
the Company's software products (including specified upgrades/enhancements) is
recognized upon delivery of the products. Revenue allocated to post contract
customer support is recognized ratably over the term of the support and revenue
allocated to service elements (such as training and installation) is recognized
as the services are performed.
COMPUTATION OF NET INCOME (LOSS) PER SHARE: The Company applies the
provisions of SFAS No. 128, "Earnings Per Share," which established new
methods for computing and presenting earnings per share ("EPS") and replaced
the presentation of primary and fully-diluted EPS with basic ("Basic") and
diluted EPS. Basic earnings per share is based on the weighted average number
of shares outstanding and excludes the dilutive effect of unexercised common
stock equivalents. Diluted earnings per share includes the dilutive effect of
unexercised common stock equivalents. The Company has equity securities that,
if exercised, would have had a dilutive effect on EPS had the Company
generated income during 1999 and 1998. The dilutive effect of such securities
would have been an additional 9,118,000 and 225,500 average shares
outstanding during the years ended December 31, 1999 and 1998, respectively.
RECLASSIFICATIONS: Certain amounts in the consolidated financial statements
have been reclassified to conform to the 1999 presentation.
NOTE 2. NOTES PAYABLE
The Company has a $1,500,000 term loan with a bank, payable in monthly
installments of $25,000 plus interest at prime (8.5% at December 31, 1999).
The loan is collateralized by substantially all assets of the Company. At
December 31, 1999 and 1998, the outstanding balance was $499,634 and
$799,634, respectively.
On September 3, 1999, our subsidiary, PCQuote.com, Inc., borrowed $2.0
million from Motorola, Inc. The promissory note bears interest at the prime
rate from time to time as announced in the Wall Street Journal (8.5% on
December 31, 1999). Payments are due in eight equal installments on a
quarterly basis commencing June 30, 2000 through March 31, 2002, subject to
early repayment upon the closing of an initial public offering of
PCQuote.com's common stock. At December 31, 1999, the outstanding principal
balance was $2,000,000. Accrued interest is payable at the same time as the
principal installments. At December 31, 1999, accrued interest on the note
was $53,584.
F-10
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES
On November 14, 1996, the Company entered into an agreement (the "Debenture
Agreement") with Physicians Insurance Company of Ohio, ("Physicians"), a
wholly-owned subsidiary of PICO Holdings, Inc. ("PICO"), which then owned
approximately 30% of the Company's outstanding shares of common stock. Pursuant
to the Debenture Agreement, Physicians invested $2.5 million in the Company in
exchange for a Subordinated Convertible Debenture (the "Debenture") in the
principal amount of $2.5 million with interest at 1% over prime. Interest was
payable semiannually, beginning January 1, 1998. Physicians made the investment
and the Debenture was issued on December 2, 1996. The Debenture was to mature on
December 31, 2001 and was convertible at any time by Physicians into 1.25
million shares of common stock of the Company (subject to adjustment in certain
cases). Using the Black-Scholes option-pricing model, a value of $1,650,000 was
assigned by the Company to the subordinated debenture's beneficial conversion
feature and recognized as additional paid-in capital and unamortized discount
upon issuance in 1996.
On May 5, 1997, the Company and PICO entered into a Loan and Security Agreement
(the "Loan Agreement"), under which PICO agreed to make a secured loan to the
Company in an aggregate principal amount of up to $1.0 million at a fixed rate
equal to 14% per annum. Unless otherwise extended, the entire principal balance
and all accrued interest due under the Loan Agreement was payable on September
30, 1997. All advances under the Loan Agreement were secured by a pledge of
substantially all of the assets of the Company. These liens were subject to the
prior lien of the Company's primary lender, Lakeside Bank. PICO was also
entitled to be paid a "facility fee" of $40,000 on the maturity date of the loan
contemplated by the Loan Agreement.
In connection with the Loan Agreement, the Company and Physicians entered into a
First Amendment to the Debenture and Debenture Agreement (the "Debenture
Amendment"), pursuant to which the terms of the Debenture were restructured as
follows: (a) the maturity date of the Debenture was changed to April 30, 1999
instead of December 31, 2001; (b) the Debenture could not be prepaid or redeemed
without the consent of Physicians; (c) the conversion rate on the Debenture was
changed from $2.00 per share to the lower of (i) the mean of the closing bid
price per share for the 20 trading days preceding conversion of the Debenture or
(ii) $1.5625 per share (the market price of the Company's common stock on the
date of the Debenture Amendment); (d) certain negative covenants were added to
the Debenture Agreement; and (e) the rights offering contemplated by the
Debenture Agreement would be at such time as determined by the Company and at a
price as determined by Physicians. Interest under the Debenture would continue
to be payable in cash or, at the option of Physicians, in shares of the
Company's common stock at the market value of such shares at the time of
payment.
Also on May 5, 1997, in consideration of the loan by PICO to the Company, the
Company issued a Common Stock Purchase Warrant (the "Warrant") to PICO entitling
PICO to purchase a minimum of 640,000 shares of the Company's common stock at a
price per share (the "Warrant Price") equal to the lesser of (a) the mean of the
closing bid price per share for the 20 trading days preceding exercise of the
Warrant or (b) $1.5625 per share (the market value of the Company's common stock
on the date the Warrant was issued). The Warrant was to expire on April 30,
2000. In lieu of exercising the Warrant for cash, PICO may elect to receive
shares of the Company's common stock equal to the "value" of the Warrant
determined in accordance with a formula specified in the Warrant (the
"Conversion Value"). The number of shares of the Company's common stock subject
to the Warrant and the Warrant Price will be adjusted to reflect stock
dividends; reclassifications or changes of outstanding securities of the
Company; any consolidation, merger or reorganization of the Company; stock
splits; issuances of rights, options or warrants to all holders of shares of the
Company's common stock exercisable at less than the current market price per
share; and other distributions to all holders of shares of the Company's common
stock. In the event of any sale, license or other disposition of all or
substantially all of the assets of the Company or any reorganization,
consolidation or merger involving the Company in which the holders of the
Company's securities before the
F-11
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 Warrant and PICO has not fully exercised the
Warrant, the unexercised portion of the Warrant will be deemed automatically
converted into shares of the Company's common stock at the Conversion Value.
Alternatively, PICO may elect to cause the Company to purchase the unexercised
portion of the 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 PICO exercised the unexercised portion of the Warrant
immediately before the record date for determining stockholders entitled to
participate in the proceeds of the Acquisition, less (b) the aggregate Warrant
Price. The Warrant also provides for certain piggyback registration rights and a
one-time demand registration right.
In connection with the May 5, 1997 transactions, using the Black-Scholes
option-pricing model, an aggregate value of $572,192 was assigned to the value
of the Debenture Amendment and Warrant and recorded as additional
paid-in capital and discounts on the Debenture and the Loan.
In August 1997, the Company and PICO agreed to amend the Loan Agreement and
related documents to increase the amount of the secured loan from PICO to the
Company from $1.0 million up to $2.0 million. The terms of the Loan Agreement
otherwise remained substantially the same, except that the "facility fee" of
$40,000 was eliminated for new advances. In connection with the increase of the
loan amount pursuant to such amendment, the Company granted PICO an additional
Common Stock Purchase Warrant for a minimum of 500,000 shares of the Company's
common stock. The terms of the additional warrant are substantially the same as
those contained in the Warrant, except that the conversion price is the lesser
of (a) $2.00 per share or (b) the mean of the closing bid price per share for
the 20 trading days preceding exercise of the additional warrant. The additional
warrant also provides for certain piggyback registration rights and a one-time
demand registration right. Using the Black-Scholes option-pricing model, a value
of $428,640 was assigned to the value of the additional warrants issued and
recorded as paid-in capital and discount on the loan.
On September 22, 1997, the Company and PICO executed a second amendment to the
Loan Agreement to further increase the amount of the secured loan from PICO to
the Company from $2.0 million to $2.25 million. The terms of the Loan Agreement
otherwise remained substantially the same, except that the maturity date was
extended to December 31, 1997. In consideration of the amendment to the Loan
Agreement, the Company granted PICO another Common Stock Purchase Warrant for up
to 129,032 shares of common stock. The terms of such warrant are substantially
the same as contained in the Warrant, except that the conversion price is the
lesser of (a) $1.9375 per share or (b) the mean of the closing bid price per
share for the 20 trading days preceding exercise of this warrant. This warrant
also provides for certain piggyback registration rights and a one-time demand
registration right. Using the Black-Scholes option-pricing model, a value of
$99,659 was assigned to the value of the additional warrants issued and recorded
as paid-in capital and discount on the loan.
On December 30, 1997, February 5, 1998, March 10, 1998, May 5, 1998, June 1,
1998, and July 24, 1998, the Company and PICO executed the third, fourth, fifth,
sixth, seventh, and eighth amendments to the Loan Agreement, respectively,
extending the due date for borrowings by the Company, plus accrued interest, to
January 31, 1998, February 28, 1998, April 30, 1998, May 31, 1998, August 31,
1998, and December 31, 1998, respectively. No further warrants were issued in
connection with the third, fourth, fifth, sixth, seventh, or eighth amendments
to the loan agreement.
On May 19, 1998, PICO exercised a portion of one of their warrants and purchased
320,000 shares of common stock of the Company for $500,000.
F-12
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
On July 31, 1998, the Company and PICO executed the ninth amendment to the Loan
Agreement to further increase the amount of the secured loan from PICO to the
Company from $2.25 million to $3.25 million. No further warrants were issued in
connection with the ninth amendment.
On September 23, 1998, the Company entered into a Securities Purchase Agreement
(the "Securities Agreement"), subject to shareholder approval, with PICO and
Physicians. Under the terms of the Securities Agreement, the Company and
Physicians, as the holder of the Debenture in the principal amount of
$2,500,000, plus accrued interest in the amount of $423,123 as of September 23,
1998, plus interest accruing at the rate of $651 per day thereafter (such
principal and all accrued interest through the Closing Date, the "Debenture
Balance"), and PICO, to whom the Company was indebted in the principal amount of
$3,290,000, plus accrued interest in the amount of $377,742 as of September 23,
1998, plus interest accruing at the rate of $1,262 per day thereafter (such
principal and all accrued interest through the Closing Date, the "PICO
Indebtedness") provided for the purchase of Series A 5% Convertible Preferred
Stock by Physicians through the conversion of the Debenture Balance and for the
purchase of Series B 5% Convertible Preferred Stock by PICO in consideration for
the cancellation of the PICO Indebtedness.
Concurrently with the execution of the Securities Agreement, the Company and
Physicians entered into the Second Amendment to the Debenture and Debenture
Agreement to revise the conversion language therein in order to make it
consistent with the Securities Agreement.
Shareholder approval of the terms and conditions of the Securities Agreement for
the debt conversion and the transactions contemplated by the Securities
Agreement was obtained on December 17, 1998. The closing date for the Securities
Agreement transactions was December 18, 1998.
Subject to the terms and conditions of the Securities Agreement, Physicians
purchased and the Company issued to Physicians 19,075 shares of Series A 5%
Convertible Preferred Stock determined by dividing the Debenture Balance by one
hundred times $1.5625 (the Debenture conversion rate on the date of the
Securities Agreement). The Series A 5% Convertible Preferred Stock was deemed to
have a beneficial conversion feature because the fair market value of the
Company's common stock was in excess of its per share conversion price at the
date of issuance. The value of the beneficial conversion feature of $119,219 was
recorded in 1998 as an increase in additional paid-in capital Series A preferred
stock and a decrease to retained earnings (preferred dividend).
Subject to the terms and conditions of the Securities Agreement, PICO purchased
and the Company issued to PICO on December 18, 1998, 28,791 shares of Series B
5% Convertible Preferred Stock determined by dividing the PICO Indebtedness by
one hundred times $1.3125 (the market price of the Company's Common Stock on
September 21, 1998, the date the Securities Agreement was approved by the
Company's Board of Directors). The Series B 5% Convertible Preferred Stock was
deemed to have a beneficial conversion feature because the fair market value of
the Company's common stock was in excess of its per share conversion price at
the date of issuance. The value of the beneficial conversion feature of $899,719
was recorded in 1998 as an increase in additional paid-in capital Series B
preferred stock and a decrease to retained earnings (preferred dividend).
A holder of Series A Preferred is entitled to receive cash dividends, when and
as declared by the 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 is entitled to receive cash dividends, when and as declared
by the 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 shall be computed on and paid for the actual
number of days elapsed. Dividends shall accrue on each share of Preferred Stock
from the date of issue of such share of stock (the "Issuance Date").
F-13
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
No dividends shall be declared on any other series or class or classes of stock
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 such quarter-yearly period. Dividends shall be cumulative. No
interest, or sum of money in lieu of interest, shall 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, the
Company shall 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 the Company 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 the Company (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 the Company.
At any time or times on or after the Issuance Date, any holder of Preferred
Stock shall be entitled to convert any whole number of shares of Preferred Stock
into fully paid and nonassessable shares (rounded to the nearest whole share).
The number of shares of common stock issuable upon conversion of the Preferred
Stock shall be determined by multiplying the product of one hundred (100) and
the number of shares of Preferred Stock to be converted into common stock by:
(i) in the case of Series A Preferred, $1.5625 and then adding the
amount of any accrued but unpaid dividends attributable to such
Preferred Stock, and then dividing by the lower of (X) $1.5625, (Y) the
average Closing Sale Price of the common stock over the twenty-day
period immediately prior to the day the Series A Preferred is to be
converted into common stock; or (Z) the Closing Sale Price one day
prior to the day the Series A Preferred is to be converted into common
stock (the "Series A Conversion Rate").
(ii) in the case of Series B Preferred, $1.3125 and then adding the
amount of any accrued but unpaid dividends attributable to such
Preferred Stock, and then dividing by the lower of (X) $1.3125, (Y) the
average Closing Sale Price of the common stock over the twenty-day
period immediately prior to the day the Series B Preferred is to be
converted into common stock; or (Z) the Closing Sale Price one day
prior to the day the Series B Preferred is to be converted into common
stock (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 the Company, 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).
If any Preferred Stock remains outstanding on the fifth anniversary after the
Issuance Date, then such Preferred Stock shall automatically convert to common
stock on such fifth anniversary.
The holders of Series A or Series B Preferred Stock shall 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
shall have the number of votes equal to the number of shares of common stock
into which the Preferred Stock then held by such holder is convertible, as
adjusted from time to time.
F-14
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
Subject to the terms and conditions of the Securities Agreement, the Company
issued to PICO a warrant to purchase 3,106,163 shares of common stock of the
Company at an exercise price of $1.575 per share (120% of the Series B Closing
Price), and an expiration date of April 30, 2005. In lieu of exercising the
warrant for cash, the holder may elect to receive shares of the Company's common
stock equal to the "value" of the warrant determined in accordance with a
formula specified in the warrant (the "Conversion Value"). The number of shares
of the Company's common stock subject to the warrant and the exercise price will
be adjusted to reflect stock dividends; reclassifications or changes of
outstanding securities of the Company; any consolidation, merger or
reorganization of the Company; stock splits; issuances of rights, options or
warrants to all holders of shares of the Company's common stock exercisable at
less than the current market price per share; and other distributions to all
holders of shares of the Company's common stock. In the event of any sale,
license or other disposition of all or substantially all of the assets of the
Company or any reorganization, consolidation or merger involving the Company in
which the holders of the Company'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 warrant and the holder has not fully exercised the warrant,
the unexercised portion of the warrant will be deemed automatically converted
into shares of the Company's common stock at the Conversion Value.
Alternatively, the holder may elect to cause the Company to purchase the
unexercised portion of the 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
warrant immediately before the record date for determining stockholders entitled
to participate in the proceeds of the Acquisition, less (b) the aggregate
exercise price.
Subject to the terms and conditions of the Securities Agreement, the Company and
PICO, as the holder of three Common Stock Purchase Warrants to purchase an
aggregate of 949,032 shares of common stock of the Company (the "Existing
Warrants"), each of which was to expire on April 30, 2000, entered into
Amendments of the Existing Warrants to extend the term of the Existing Warrants
until April 30, 2005.
In October 1997, Imprimis Investors LLC and Wexford Spectrum Investors LLC
(collectively, the "Wexford Affiliates") purchased five million shares of common
stock and warrants to purchase five hundred thousand shares of common stock at
an exercise price of $2.00 per share, exercisable at any time prior to October
15, 2002 (the "Initial Warrants"), in exchange for $5.0 million.
The Wexford Affiliates acquired the Common Stock and the Warrants for investment
purposes pursuant to a certain Stock and Warrant Purchase Agreement dated
October 15, 1997, between PC Quote and the Wexford Affiliates (the "Purchase
Agreement"). Up to four million of the shares of Common Stock purchased by the
Wexford Affiliates were subject to repurchase by PC Quote at a purchase price of
$1.00 per share pursuant to the terms of the Purchase Agreement (the
"Repurchase"). Pursuant to the terms of the Purchase Agreement, PC Quote was
required to use its best efforts to consummate the Repurchase from the proceeds
of a rights offering.
On October 31, 1997, the Company filed a Form S-2 Registration Statement with
the Securities and Exchange Commission for the rights offering. The
Registration Statement was amended on November 20, 1997 and became effective
on November 21, 1997. The Company distributed 7,402,246 transferable
subscription rights to shareholders of record as of the close of business on
November 21, 1997, entitling them to purchase one additional share of Common
Stock for each right at a price of $1.00 per share.
On January 23, 1998, the Company completed the rights offering. The Company
received approximately $3.0 million in gross proceeds from the sale of shares
underlying exercised rights. Pursuant to the Purchase Agreement, the entire
proceeds were used to fulfill the Company's obligation to repurchase shares from
the Wexford Affiliates.
F-15
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
During the second quarter of 1998, the Wexford Affiliates exercised a portion of
their warrants and purchased 143,300 shares of Common Stock of the Company for
$286,600. During the third quarter of 1998, the Wexford Affiliates exercised a
portion of their warrants and purchased 89,500 shares of Common Stock of the
Company for $179,000.
In February 1999, the Wexford Affiliates exercised the remaining portion of
their warrants and the Company issued 267,200 shares of common stock to them in
exchange for $534,400.
NOTE 4. FINANCING AND EQUITY TRANSACTIONS
On December 29, 1998, the Company entered into Stock and Warrant Purchase
Agreements with three third-party investors. On December 30, 1998, the
investors purchased 640,000 shares of common stock and warrants to purchase
320,000 shares of common stock at an exercise price of $1.875 per share,
exercisable at any time on or prior to December 30, 2001, in exchange for
$1.0 million. The investors acquired the common stock and warrants for
investment purposes.
On April 19, 1999, a third-party investor exercised its warrant, acquired in
connection with a December 1998 private placement, and acquired 80,000 shares of
the Company's common stock in exchange for $150,000.
On April 22, 1999, the Company entered into Stock Purchase Agreements with four
third-party investors. On April 23, 1999, the investors purchased 190,476 shares
of common stock in exchange for $1,999,998. The investors acquired the common
stock for investment purposes.
On June 11, 1999, a third-party investor exercised its warrant, acquired in
connection with a December 1998 private placement, and acquired 120,000 shares
of the Company's common stock in exchange for $225,000.
On June 16, 1999, the stockholders of the Company approved the 1999 Combined
Incentive and Non-statutory Stock Option Plan, previously approved by the
Company's Board of Directors in March 1999. There are 4,000,000 shares reserved
for issuance under this plan. The plan terminates in March 2009, unless
terminated sooner by the Company's Board of Directors. The plan authorizes the
award of options and restricted stock purchase rights. The plan will be
administered by the Company's Board of Directors or a committee appointed by the
Company's Board of Directors. The administrator has the authority to interpret
the plan, grant awards and make all other determinations necessary to administer
the plan. Stock options are exercisable for a period not to exceed ten years
from the date of the grant and, to the extent determined at the time of grant,
may be paid for in cash or by a reduction in the number of shares issuable upon
exercise of the option.
In December 1998, the Company segregated its Internet consumer related services
into a separate business unit within the Company, which was incorporated in
March 1999 as PCQuote.com, Inc., a wholly-owned subsidiary. On August 30, 1999,
we formally separated the business of PCQuote.com and its associated assets and
liabilities from our other businesses and operations.
F-16
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. FINANCING AND EQUITY TRANSACTIONS, CONTINUED
On April 12, 1999, PCQuote.com, Inc. entered into a 3 1/2 year agreement with
CNNfn. Under the limited exclusive licensing agreement, CNNfn granted
PCQuote.com a license to display on PCQuote.com's web sites certain headlines
from CNNfn original stories published on the CNNfn Web site at www.cnnfn.com. In
connection with the agreement, PCQuote.com issued to CNNfn a warrant to acquire
515,790 shares (after giving effect to the 9,800-for-one stock split approved by
PCQuote.com's Board of Directors) of common stock, representing a five percent
interest in the common stock of PCQuote.com outstanding prior to its planned
initial public offering. On June 9, 1999, PCQuote.com filed a registration
statement with the Securities and Exchange Commission relating to a planned
initial public offering of 7,750,000 shares of its common stock. The Company
estimated that the warrant had a fair value of $5.88 million. The fair value was
recorded as additional paid-in capital and current and non-current prepaid
license fees, which will be amortized over the term of the agreement. The
warrant vests 25% upon execution of the agreement with an additional 25% vested
on each of the three succeeding anniversary dates after execution, and has an
aggregate exercise price of $.52. In the event PCQuote.com does not complete
an initial public offering by October 12, 2000, CNNfn has a one-time right to
convert the then value of its interest in PCQuote.com into an equivalent
interest in HyperFeed in the form of HyperFeed common stock.
On April 29, 1999, CNNfn exercised the vested portion of its warrant and
acquired 128,948 shares of PCQuote.com common stock. The minority interest
owned by CNNfn has been included in the accompanying consolidated financial
statements.
PCQuote.com adopted its 1999 Combined Incentive and Non-statutory Stock Option
Plan in May 1999. There are 1,538,600 shares of common stock reserved for
issuance under this plan. The plan terminates in September 2009, unless
terminated sooner by PCQuote.com's Board of Directors. The plan authorizes the
award of options and restricted stock purchase rights. The plan will be
administered by PCQuote.com's Board of Directors or a committee appointed by
PCQuote.com's Board of Directors. The administrator has the authority to
interpret the plan, grant awards and make all other determinations necessary to
administer the plan. Stock options are exercisable for a period not to exceed
ten years from the date of the grant and, to the extent determined at the time
of grant, may be paid for in cash or by a reduction in the number of shares
issuable upon exercise of the option. No stock options were issued under this
plan during 1999.
On June 4, 1999, PCQuote.com amended its articles of incorporation to increase
its authorized common stock to 74,000,000 shares and authorized 1,000,000 shares
of $.01 par value preferred stock for future issuance. On June 8, 1999, the
Board of Directors approved a 9,800-for-one stock split of PCQuote.com's
outstanding common stock.
On August 31, 1999, the Company borrowed $1.5 million, on an unsecured basis,
and subsequently repaid the loan on September 30, 1999. The loan had an interest
rate of 3% over the prime rate as quoted in the Wall Street Journal.
On September 15, 1999, a third-party investor exercised its warrant, acquired in
connection with the December 1998 private placement, and acquired 120,000 shares
of our common stock in exchange for $225,000.
On November 22, 1999, the Company entered into Stock and Warrant Purchase
Agreements with three third-party investors. On November 30, 1999, two of the
investors purchased 270,000 shares of common stock and warrants to purchase
135,000 shares of common stock at an exercise price of $7.50 per share,
exercisable at any time on or prior to November 30, 2001, in exchange for
$1,350,000. Also on November 30, 1999, a service provider to the Company
acquired 60,000 shares of common stock and warrants to purchase 30,000 shares of
common stock at an exercise price of $7.50 per share, exercisable at any time on
or prior to November 30, 2001, in lieu of a cash payment of $300,000 for
services previously rendered. The investors acquired the common stock and
warrants for investment purposes.
As a result of the foregoing, in connection with the Company's financing,
equity, and related party transactions, the Company has the following
warrants for purchase of shares of common stock, issued and outstanding at
December 31, 1999:
F-17
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. FINANCING AND EQUITY TRANSACTIONS, CONTINUED
<TABLE>
<CAPTION>
Number Remaining Life in Years
of Expiration Exercise at
Shares Date Price December 31, 1999
------ ---- ----- -----------------
<S> <C> <C> <C>
320,000 04/30/2005 (1) 5.33
500,000 04/30/2005 (2) 5.33
129,032 04/30/2005 (3) 5.33
3,106,163 04/30/2005 $1.575 5.33
165,000 11/30/2001 $7.50 1.92
</TABLE>
(1) lesser of the mean of the closing bid price per share for the 20 trading
days preceding exercise of the warrant or $1.5625 per share.
(2) lesser of the mean of the closing bid price per share for the 20 trading
days preceding exercise of the warrant or $2.00 per share.
(3) lesser of the mean of the closing bid price per share for the 20 trading
days preceding exercise of the warrant or $1.9375 per share.
NOTE 5. EMPLOYEE STOCK OPTIONS
The Company has an Employees' Combined Incentive and Non-Statutory Stock Option
Plan (the "Plan"). The Plan provides that at all times optional shares
outstanding plus shares available for grant equal 4,000,000 shares. Generally,
these options may be granted to key employees of the Company at a purchase price
equal to the fair value of the Company's common stock at date of grant and are
generally exercisable for a period of up to five years from the date of grant.
Other information with respect to the Plan is as follows:
<TABLE>
<CAPTION>
- ---------------------------------- ------------------- --------------------------
Number Weighted-
of Average Exercise
Shares Price Per Share
------------------ --------------------------
- ---------------------------------- ------------------- --------------------------
<S> <C> <C>
Balance, December 31, 1996 440,003 4.51
Granted 636,612 1.61
Exercised (18,833) (0.90)
Canceled (283,917) (4.64)
---------
Balance, December 31, 1997 773,865 2.16
Granted 1,192,200 1.52
Exercised (95,015) (1.19)
Canceled (76,751) (2.39)
---------
Balance, December 31, 1998 1,794,299 1.78
Granted 1,277,340 5.89
Exercised (210,514) (1.36)
Canceled (10,669) (4.66)
---------
Balance, December 31, 1999 2,850,456 3.64
---------
- ---------------------------------- ------------------- --------------------------
</TABLE>
F-18
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. EMPLOYEE STOCK OPTIONS (CONTINUED)
<TABLE>
<CAPTION>
Shares
Exercisable Available
Shares for Grant
---------------- ------------------
<S> <C> <C>
December 31, 1999 1,445,772 1,149,544
December 31, 1998 1,457,466 205,701
December 31, 1997 592,113 1,226,135
</TABLE>
Options granted under the Plan generally become exercisable at an annual
cumulative rate of one-third of the total number of options granted. The
exercise price for options outstanding at December 31, 1999 ranged from
$0.9375 to $8.875 per share.
The Company applies the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," which
permits entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and
provide pro forma net income and pro forma net income per share disclosures as
if the fair-value-based method defined in SFAS No. 123 had been applied. The
Company has elected to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of SFAS No. 123. Had the Company determined
compensation cost based on the fair value at the grant date for its stock-based
compensation plans under SFAS No. 123, the Company's net loss and net loss per
share would have been for the years ended December 31, 1999, 1998 and 1997 the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
Basic and Basic and Basic and
Diluted Loss Diluted Loss Diluted Loss
1999 per Share 1998 Share 1997 per Share
------------- --------- ------------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net loss available for common
stockholders ($ 9,431,698) ($ 0.63) ($ 7,468,146) ($ 0.57) ($11,141,416) ($ 1.33)
Compensation expense related
to stock options granted (1,504,536) (0.10) (1,254,336) (0.10) (523,646) (0.06)
------------- --------- ------------- --------- ------------- ---------
Pro forma net loss available
for common stockholders ($10,936,234) ($ 0.73) ($ 8,722,482) ($ 0.67) ($11,665,062) ($ 1.39)
============= ========= ============= ========= ============= =========
</TABLE>
The fair value of each grant is estimated using the Black-Scholes option-pricing
model with the following weighted-average assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected life 5.00 years 7.18 years 6.83 years
Dividend rate 0% 0% 0%
Risk-free interest rate 5.45% 5.16% 6.11%
Volatility factors 117% 134% 123%
</TABLE>
The weighted-average exercise price and weighted-average fair value of options
granted during 1999, 1998 and 1997 where the market price equals, exceeds or is
less than the exercise price at the time of grant is as follows:
F-19
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. EMPLOYEE STOCK OPTIONS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Stock Price ______ Exercise Price
- ----------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
Is Less Is Less Is Less
Equals Exceeds Than Equals Exceeds Than Equals Exceeds Than
------ ------- ---- ------ ------- ---- ------ ------- ----
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Exercise price $5.89 --- --- $1.29 $1.59 $1.75 $1.53 $1.69 $1.70
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fair value of option $4.91 --- --- $1.09 $2.01 $1.10 $1.29 $2.00 $0.96
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
No compensation expense from stock-based compensation awards was recognized in
the Statement of Operations for 1999. Compensation expense from stock-based
compensation awards recognized in the Statement of Operations for 1998 and 1997
was $117,779 and $19,076, respectively.
A further summary about options outstanding at December 31, 1999, is as follows:
<TABLE>
<CAPTION>
Weighted-
Average
Remaining
Number Contractual Number
Exercise Price Outstanding Life in Years Exercisable
- ------------------------------ -------------- ---------------- ---------------
<S> <C> <C> <C>
$ 0.9375 16,667 3.11 ---
$ 1.0000 17,612 1.85 10,945
$ 1.1250 110,000 3.68 39,999
$ 1.3750 571,235 6.72 537,901
$ 1.4375 255,168 3.28 235,494
$ 1.5000 26,183 3.05 12,516
$ 2.0000 487,901 7.45 487,901
$ 2.9375 5,000 3.38 1,666
$ 5.2500 97,500 4.63 10,000
$ 5.3750 25,000 1.58 25,000
$ 5.8125 205,000 4.97 ---
$ 5.9375 958,840 4.21 15,000
$ 6.3750 64,350 0.82 64,350
$ 8.8750 10,000 4.72 5,000
--------- ---------
2,850,456 5.10 1,445,772
========= =========
</TABLE>
F-20
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES
The deferred tax assets and liabilities consist of the following components as
of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Unearned revenue $ 833,835 $ 526,036
Receivable allowances 154,797 155,063
Property and equipment 306,380 266,800
Accrued expenses 88,418 54,231
Other 1,033,541 ---
Net operating loss carryforwards 10,467,671 9,101,895
Research and development credit carryforward 106,000 106,000
---------- ---------
12,990,642 10,210,025
Valuation allowance (11,571,671) (8,455,486)
---------- ---------
1,418,971 1,754,539
Deferred tax liabilities:
Software capitalization (1,321,422) (1,754,539)
Other (97,549) ---
---------- ----------
(1,418,971) (1,754,539)
--------- ---------
Net current deferred tax asset --- ---
========== =========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion, or all, of the deferred
tax assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the scheduled
reversal of the capitalized software, management believes it is more likely
than not that the Company will realize the benefits of these deductible
differences, net of the existing valuation allowance at December 31, 1999.
Income tax expense for the years ended December 31, 1999, 1998, and 1997,
consists of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current:
State and local $ 5,000 $ 3,613 $ 5,762
Deferred --- --- ---
-------- ------- -------
Total income tax expense $ 5,000 $ 3,613 $ 5,762
======== ======= =======
</TABLE>
Reconciliations of income tax expense computed at the statutory federal income
tax rate to the Company's income tax expense for the years ended December 31,
1999, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory rate provision ($3,299,344) ($ 2,257,223) ($ 3,899,496)
Increase (decrease) resulting from:
Nondeductible expenses 12,303 393,613 8,468
State income taxes (net of Federal benefit) 3,250 2,348 3,745
Change in valuation allowance 3,116,185 1,701,895 3,907,331
Other 172,606 162,980 (14,286)
--------- ----------- ------------
$ 5,000 $ 3,613 $ 5,762
========= =========== ============
</TABLE>
F-21
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES (CONTINUED)
At December 31, 1999, the Company had federal income tax net operating loss
carryforwards of approximately $29,908,000 for federal income tax purposes and
approximately $28,071,000 for the alternative minimum tax. Approximately
$1,058,000 of these net operating losses relates to exercise of incentive
employee stock options and will be credited directly to stockholders' equity
when realized. The Company also had research and development credits of $106,000
which will expire in years 2010 to 2011 if not previously utilized. The future
utilization of these net operating losses and research and development credits
will be limited due to changes in Company ownership. The net operating loss
carryforwards will expire, if not previously utilized, as follows: 2000:
$1,370,000; 2001: $1,539,000; 2002: $560,000; 2003: $79,000; 2004: $576,000;
2005: $1,557,000; 2006: $301,000 and thereafter $23,926,000.
NOTE 7. LEASE COMMITMENTS
The Company is obligated, as lessee under certain noncancelable operating
leases, for lease payments for equipment and office space, as well as insurance,
maintenance and other executory costs associated with the leases. On September
1, 1994, the Company entered into a lease agreement in conjunction with the move
of its corporate headquarters, which is subject to escalating base rent, as well
as adjustments for changes in real estate taxes and other operating expenses.
Expense under the lease is recognized on a straight-line basis.
Future minimum lease payments for the Company as lessee as of December 31, 1999
are as follows:
<TABLE>
<CAPTION>
Operating
Leases
------
<S> <C>
Years ending December 31:
2000 $ 363,363
2001 197,480
2002 162,450
2003 100,827
2004 94,684
2005 and thereafter ---
------------
Total minimum lease payments $ 918,804
============
</TABLE>
Rental expense for operating leases was $1,806,350, $3,187,945 and $3,314,402
for the years ended December 31, 1999, 1998 and 1997, respectively.
NOTE 8. OTHER COMMITMENTS
In connection with the formation and transfer of its consumer-oriented
Internet business to its subsidiary, PCQuote.com, on May 28, 1999, the
Company and Townsend Analytics, Ltd. ("Townsend") entered into an agreement
to terminate their Software Distributor Agreement dated December 4, 1995.
Pursuant to the terms of the termination agreement, the Company was obligated
to pay Townsend $1.0 million within ninety days after execution of the
agreement. The Company paid the $1.0 million to Townsend in the third quarter
of 1999. The Company and PCQuote.com subsequently entered into separate new
license agreements with Townsend for the right to use the LAN and Internet
versions, respectively, of the software application which is marketed as
PCQuote 6.0 RealTick. The new agreements replaced the prior agreement between
Townsend and the Company. The initial term of the agreements ends December 4,
2000. Pursuant to the terms of the new agreements, the Company
F-22
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. OTHER COMMITMENTS, CONTINUED
and PCQuote.com are each required to pay a minimum royalty to Townsend of
$220,000 per month and a cumulative minimum royalty of $5,000,000 each over the
initial term of the agreements. Under the terms of its new agreement with
Townsend, the Company guarantees the obligation of its subsidiary, PCQuote.com,
and receives a credit towards its minimum commitment obligations to the extent
that PCQuote.com's actual royalty payments exceed its minimum commitments. The
Company and its subsidiary recognized a combined $4.9 million of royalty
expense for the year ended December 31, 1999 pursuant to the terms of the new
agreements.
The Company and SpaceCom Systems, Inc. ("SpaceCom") entered into a settlement
agreement as of November 1, 1999 related to the lease of satellite transmission
space by the Company from SpaceCom. The lease was for 112 kilobits ("kb") of
transmission capacity for payment of approximately $56,000 per month until,
under certain circumstances, either August 1, 2002 or January 1, 2006. The
Company and SpaceCom agreed to terminate the lease, and any and all claims or
obligations thereunder, in exchange for the Company's agreement to pay SpaceCom
an aggregate of $1,411,245 as follows: $179,245 on November 1, 1999, and ten
equal monthly installments of $50,000 each from December 1, 1999 through
September 1, 2000, and twelve equal monthly installments of $36,000 each from
October 1, 2000 through September 1, 2001, and twelve equal monthly installments
of $25,000 each from October 1, 2001 and ending on September 1, 2002. The
Company ceased utilizing the SpaceCom satellite transmission services in the
third quarter of 1999, and accordingly recorded the entire settlement amount as
a charge against operations and the related payment liability as current and
non-current accrued satellite termination fees. The Company expensed, as
direct cost of services, $346,102, $679,680 and $677,347 for the years ended
December 31, 1999, 1998 and 1997, respectively, for services utilized prior to
termination of the agreement.
NOTE 9. SEGMENT INFORMATION
While the Company operates in one industry, financial services, in applying
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", the Company has identified two industry segments within which
it operates. The parent Company's services are principally in the
business-to-business sector, while its subsidiary, PCQuote.com, Inc.,
operates in the business-to-consumer marketplace. The Company evaluates
performance and allocates resources based on operating profitability and
growth potential. The accounting policies and products of the reportable
segments are the same as those described in Note 1. Financial information
relating to industry segments for the years ended December 31, 1999, 1998,
and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers:
HyperFeed services $ 17,733,813 53.5% $ 13,133,422 57.0% $ 12,356,461 72.2%
PCQuote.com services 15,394,246 46.5% 9,912,111 43.0% 4,762,912 27.8%
------------ ------------ ------------
Total revenue $ 33,128,059 100.0% $ 23,045,533 100.0% $ 17,119,373 100.0%
============ ============ ============
Operating loss:
HyperFeed services ($ 2,420,796) 25.9% ($ 3,041,329) 64.7% ($ 5,632,960) 63.1%
PCQuote.com services (6,931,357) 74.1% (1,658,097) 35.3% (3,287,764) 36.9%
------------ ------------ ------------
Total operating loss ($ 9,352,153) 100.0% ($ 4,699,426) 100.0% ($ 8,920,724) 100.0%
============ ============ ============
Identifiable assets:
HyperFeed services $ 7,057,029 46.1% $ 6,747,277 67.1% $ 7,651,383 72.6%
PCQuote.com services 8,238,155 53.9% 3,306,090 32.9% 2,885,065 27.4%
------------ ------------ ------------
Total identifiable assets $ 15,295,184 100.0% $ 10,053,367 100.0% $ 10,536,448 100.0%
============ ============ ============
</TABLE>
F-23
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. DEFINED CONTRIBUTION PLAN
In 1993, the Company established a 401(k) retirement savings plan for employees
meeting certain eligibility requirements. Under the plan, the Company is
required to match employee contributions at 25% of the first 5% contributed by
an employee. The Company recorded expenses related to its matching of
contributions of $58,356, $49,205 and $36,200 for the years ended December 31,
1999, 1998 and 1997, respectively.
NOTE 11. EMPLOYEE STOCK PURCHASE PLAN
In 1995, the Company established an employee stock purchase plan. The plan
allows employees to have up to 10% of their annual salary withheld to purchase
common stock of HyperFeed Technologies, Inc. on the final day of each quarter at
85% of the market price on either the first or last day of the quarter,
whichever is lower. The Company has reserved 1,000,000 shares of common stock
for issuance pursuant to the terms of the plan. Shares sold to employees totaled
79,874, 288,513 and 60,610 for the years ended December 31, 1999, 1998 and
1997, respectively.
NOTE 12. LITIGATION
The Company is a defendant in the lawsuit GRAHAM R. CLARK V. PC QUOTE
INCORPORATED (HYPERFEED) 1999 C 559, High Court of Justice, Queens Bench
Division, London, filed on May 10, 1999. The lawsuit claims breach of a November
18, 1992 Marketing Agreement entered into between the plaintiff and PC Quote
(UK) Limited, a former subsidiary of the Company. Mr. Clark claims approximately
$800,000 in damages and seeks his attorney's fees and costs. The Company has
retained U.K. counsel to defend against these claims, and is vigorously
defending the lawsuit. In addition, the Company has filed a counterclaim for
approximately $100,000 in receivables owed by Mr. Clark to the Company. Given
the early stage of this litigation, no assessment of the likely financial
exposure to the Company in this lawsuit can be made. Management believes the
claim is without merit; accordingly, no provision has been made in the financial
statements for any loss that may result from this litigation.
The Company is a party to various other legal proceedings incidental to its
business operations, none of which is expected to have a material effect on the
financial condition or results of operations of the Company.
NOTE 13. OFFERING TERMINATION AND RESTRUCTURING
On October 18, 1999, PCQuote.com announced that it postponed its initial
public offering of common stock due to market conditions. Management believes
that the shift in market sentiment from PCQuote.com's Internet
business-to-consumer model to HyperFeed's business-to-business model
significantly reduces the likelihood of a PCQuote.com offering occurring in
the near future. Given this uncertainty, and to avoid the added cost of
maintaining the registration statement, the Company filed an application to
withdraw the S-1 Registration Statement for the initial public offering of
PCQuote.com, Inc. on March 8, 2000. The Company recorded approximately $1.8
million of costs associated with the preparation and filing of the S-1
Registration Statement and the initial public offering as a charge against
operations in the fourth quarter of its year ended December 31, 1999.
F-24
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. OFFERING TERMINATION AND RESTRUCTURING, CONTINUED
In June 1997, the Board of Directors of the Company approved a plan to
restructure the operations of the Company. The plan provided for the exiting of
certain activities and the termination of three senior executive's employment
agreements. The activities exited by the Company resulted in a write off of
approximately $572,000 of unamortized software development costs for previously
capitalized software projects that were discontinued and a payment of $150,000
for early termination of a contractual arrangement. The management
reorganization resulted in the Company incurring employment related termination
costs of $425,000. Management classified these costs as "restructuring expense,"
as the costs at the time of recognition: 1) were not associated with or did not
benefit activities that would be continued, 2) were not associated with or
incurred to generate future revenue, and 3) represented amounts to be incurred
by the Company under a contractual arrangement. Total restructuring costs
recognized by the Company in 1997, as a result of its reorganization plan, was
$1.1 million. There was $97,195 of restructuring costs included in accrued
expenses at December 31, 1997, and subsequently paid in 1998.
NOTE 14. RESEARCH AND DEVELOPMENT
During the fiscal years ended December 31, 1999, 1998 and 1997, the Company
expensed $1,070,346, $634,884 and $873,579, respectively, for research and
development. These expenses are included in product and market development
costs in the statements of operations.
F-25
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
SUPPLEMENTAL SCHEDULE II OF CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE
The Board of Directors
HyperFeed Technologies, Inc.:
Under date of March 8, 2000, we reported on the consolidated balance sheets
of HyperFeed Technologies, Inc. and subsidiary as of December 31, 1999 and
1998 and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1999. In connection with our audits of the aforementioned
financial statements, we also audited the related consolidated
financial statement schedule of valuation and qualifying accounts. This
financial schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG LLP
Chicago, Illinois
March 8, 2000
F-26
<PAGE>
HYPERFEED TECHNOLOGIES, INC.
SUPPLEMENTAL SCHEDULE II TO THE CONSOLIDATED FINANCIAL STATEMENTS
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Years Ended December 31, 1999, 1998 and 1997
- ------------------------------ ---------------- ----------------- ---------------- -----------------
Balance at
Beginning of Charged to Deductions Balance at
Description Year Operations From Reserves End of Year
- ------------------------------ ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
- ------------------------------ ---------------- ----------------- ---------------- -----------------
Allowance for doubtful
- ------------------------------ ---------------- ----------------- ---------------- -----------------
accounts
- ------------------------------ ---------------- ----------------- ---------------- -----------------
1999 $443,037 $650,000 ($650,761) $442,276
- ------------------------------ ---------------- ----------------- ---------------- -----------------
1998 $346,000 $397,873 ($300,836) $443,037
- ------------------------------ ---------------- ----------------- ---------------- -----------------
1997 $234,000 $683,639 ($571,639) $346,000
- ------------------------------ ---------------- ----------------- ---------------- -----------------
</TABLE>
F-27
<PAGE>
EXHIBIT 3(e)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PC QUOTE, INC.
-------------
PC QUOTE, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of the Corporation approved and adopted
the following resolution for amending its Certificate of Incorporation,
declaring it advisable and recommended that the amendment be submitted
to the stockholders for their consideration:
RESOLVED, that Article First of the Company's Certificate of
Incorporation be amended in its entirety, to read as follows:
"FIRST: The name of the corporation is:
HYPERFEED TECHNOLOGIES, INC."
SECOND: The amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware at the Annual Meeting of Stockholders held on June 16,
1999.
IN WITNESS WHEREOF, PC QUOTE, INC. has caused this Certificate to be
executed by its Chief Executive Officer this 18th day of June, 1999.
PC QUOTE, INC.
By:
--------------------------------------
Jim R. Porter, Chief Executive Officer
<PAGE>
EXHIBIT 4(at)
STOCK AND WARRANT PURCHASE AGREEMENT
BETWEEN
HYPERFEED TECHNOLOGIES, INC.
AND
HOWARD TODD HORBERG
NOVEMBER 22, 1999
<PAGE>
STOCK AND WARRANT PURCHASE AGREEMENT
Agreement entered into as of November 22, 1999, by and between Howard
Todd Horberg (the "Buyer") and HyperFeed Technologies, Inc., a Delaware
corporation (the "Seller"). Buyer and Seller are referred to collectively herein
as the "Parties."
This Agreement contemplates a transaction in which Buyer will purchase
from Seller, and Seller will sell to Buyer, an aggregate of 250,000 shares of
Seller's common stock, par value $0.001 per share (the "Common Stock"), for an
aggregate purchase price of One Million Two Hundred Fifty Thousand Dollars
($1,250,000).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys' fees and
expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Code ss.1504.
"BUYER" has the meaning set forth in the preface above.
"CLOSING DATE" shall mean November 30, 1999 or such other time as the
parties may mutually agree.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Seller that is not already generally available to the
public.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4g below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
i
<PAGE>
"INCOME TAX" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8 below.
"KNOWLEDGE" means actual knowledge without independent investigation.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any entity similar to
any of the foregoing.
"PURCHASE PRICE" has the meaning set forth in Section 2 below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SHARES" means Seller's shares of Common Stock.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8 below.
2. PURCHASE AND SALE OF SHARES AND Warrant
2.1 PURCHASE AND SALE OF SHARES. On the Closing Date, in the manner set
forth in this ss.2, upon the terms set forth in this Agreement, Seller will
sell, transfer and deliver to Buyer, and Buyer will purchase from Seller,
250,000 Shares for an aggregate purchase price of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) (the "Purchase Price"), in all cases free and
clear of all interests, liens, charges, encumbrances, equities, claims,
assessments and options of whatever nature.
ii
<PAGE>
(a) On the Closing Date, as a condition precedent to such closing,
Seller shall deliver to Buyer stock certificates representing an aggregate of
250,000 Shares in such names and denominations as buyer shall instruct Seller.
(b) Buyer shall deliver to Seller a certified check or wire transfer in
the amount of $1,250,000.
2.2 Purchase and Sale of Warrant. Subject to the terms and conditions
of this Agreement, the Company shall issue to Buyer a warrant (the "Warrant") to
purchase 125,000 Shares at an exercise price of $7.50 per Share, which Warrant
shall be substantially in the form attached hereto as EXHIBIT A.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that the statements contained in this Section 3 are true,
correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made on and as of such
Closing Date as if such Closing Date were substituted for the date of this
Agreement throughout this Section 3).
(a) BUYER'S QUALIFICATIONS. Buyer (a) has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in Seller and (b) has
had the opportunity to ask questions of, and receive answers from,
Seller and its management concerning the terms and conditions of the
offering of the Shares hereunder and to obtain additional information;
and (c) is an Accredited Investor.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms.
Buyer is not required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
Buyer is subject or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which
it is bound or to which any of its assets is subject.
(d) BROKERS' FEES. Buyer does not have any liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which Seller could become liable or obligated.
(e) INVESTMENT. Buyer is acquiring the Shares for investment
purposes and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer that the statements contained in this Section 4 are true,
correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made on and as of such
Closing Date as if such Closing Date were substituted for the date of this
Agreement throughout this Section 4).
(a) AUTHORIZATION OF TRANSACTION. Seller has full corporate power and
authority to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by Seller pursuant to this Agreement
and the transactions contemplated hereby and to perform its obligations
hereunder and thereunder. This Agreement and the other documents and instruments
to be executed and delivered by Seller
iii
<PAGE>
pursuant to this Agreement and the transactions contemplated hereby constitute
the valid and legally binding obligations of Seller enforceable in accordance
with their respective terms.
(b) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Seller is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not have a
material adverse effect on the condition (financial or otherwise) of Seller.
Seller has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties and assets owned and used
by it. Seller has no subsidiaries.
(c) CAPITALIZATION. The entire authorized capital stock of Seller
consists of 50,000,000 Shares, of which 15,195,031 Shares are issued and
outstanding and no Shares are held in treasury; and 5,000,000 Shares of
undesignated Preferred Stock, of which 19,075 and 28,791 shares designated as
Series A and Series B, respectively, Convertible Preferred Stock are
outstanding. All of the issued and outstanding Shares and Preferred Stock have
been duly authorized, are validly issued, fully paid, and nonassessable. Except
as set forth in Schedule 4(c) hereto, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Seller to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
All such options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments and the Shares
issuable upon exercise thereof have been duly authorized, and when issued in
accordance with their terms will be validly issued, fully paid and
non-assessable. There are no preemptive or first refusal or similar rights
binding on Seller to subscribe for or purchase from Seller any Shares pursuant
to any provisions of law, the Certificate of Incorporation or By-laws of Seller
or by agreement or otherwise. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Shares.
(d) NONCONTRAVENTION. Except as set forth in Schedule 4(d) hereto, to
the Knowledge of Seller, neither the execution and delivery of this Agreement,
nor consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Seller is subject or any provision of the Certificate of
Incorporation or By-laws of Seller or (ii) conflict with, result in breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Seller is a party or by which Seller is bound or to which Seller or its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the condition
(financial or otherwise) of Seller or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. Except as set forth
in Schedule 4(d) hereto, Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the condition (financial or otherwise) of Seller or
on the ability of the Parties to consummate the transactions contemplated by
this Agreement.
(e) BROKERS' FEES. Seller does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) TITLE TO TANGIBLE ASSETS. Seller has good title to, or a valid
leasehold interest in, the tangible assets it uses regularly in the conduct of
its businesses.
(g) FINANCIAL STATEMENTS. Attached hereto are copies of Seller's annual
report on Form 10-K for the year ended December 31, 1998 and its Quarterly
Report on Form 10-Q for each of the quarters ended March 31, 1999, June 30, 1999
and September 30, 1999. Included in such reports are the following financial
statements (collectively the "Financial Statements"): (i) audited consolidated
balance sheets for the years ending December 31, 1998 and 1997 and statements of
income, changes in stockholders' equity, and cash flow as of and
iv
<PAGE>
for the years ended December 31, 1998, 1997 and 1996 for the Company; and
(ii) unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the quarters ended March
31, 1999, June 30, 1999 and September 30, 1999 (the "QUARTERLY FINANCIAL
STATEMENTS"). The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the financial
condition of Seller as of such dates and the results of operations of Seller
for such periods; PROVIDED, HOWEVER, that the Quarterly Financial Statements
are subject to normal year-end adjustments and lack footnotes and other
presentation items.
(h) TAX MATTERS.
(i) Seller has filed all Income Tax Returns that it was
required to file, and has paid all Income Taxes shown thereon as owing,
except where the failure to file Income Tax Returns or to pay Income
Taxes would not have a material adverse effect on the condition
(financial or otherwise) of Seller.
(ii) Seller has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with respect
to an Income Tax assessment or deficiency.
(iii) Except as set forth in Schedule 4(h), Seller is not a
party to any Income Tax allocation or sharing agreement.
(i) REAL PROPERTY
Seller does not own any real property.
(j) INTELLECTUAL PROPERTY. Except as set forth in Schedule 4(j), the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and proprietary rights necessary for its business as now conducted without
any conflict with, or infringement of, the rights of others. The Company has
not received any communication alleging that the Company has violated or, by
conducting its business, would violate any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights of any other person or entity. The Company is not aware that any of
its employees are obligated under any contract (including licenses, covenants
or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of such employee's best efforts to promote the interest of the
Company or that would conflict with the Company's business. Neither the
execution or delivery of this Agreement, nor the carrying on of the Company's
business as now conducted by the employees of the Company, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated. The
Company does not believe it is or will be necessary to use any inventions of
any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company. To the Company's knowledge, its officers and
employees are not making improper use of any confidential information or
trade secrets of others, including those of any former employer.
(k) POWERS OF ATTORNEY. Except as set forth in Schedule 4(k), there
are no outstanding powers of attorney executed on behalf of Seller.
(l) LITIGATION. Schedule 4(l) hereto sets forth each instance in
which Seller (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction,
except where the injunction, judgment, order, decree, ruling, action, suit,
proceeding, hearing, or investigation would not have a material adverse
effect on the condition (financial or otherwise), assets, liabilities,
earnings or business of Seller.
v
<PAGE>
(m) Employee Benefits.
(i) Schedule 4(m) hereto lists each Employee Benefit Plan that
is sponsored, maintained or contributed to or required to be
contributed to by the Seller or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), that together with the Seller
would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements of
ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the condition (financial
or otherwise) of Seller.
(B) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(C) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan has received a determination
letter from the Internal Revenue Service to the effect that it
meets the requirements of Code Section 401(a).
(D) Seller has made available to Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(E) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted.
(F) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending, except
where the action, suit, proceeding, hearing, or investigation
would not have a material adverse effect on the condition
(financial or otherwise) of Seller.
(G) Neither Seller nor any ERISA Affiliate has
incurred any liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
(H) The aggregate withdrawal liability of Seller and
any and all ERISA Affiliates, computed as if a complete
withdrawal by Seller and such ERISA Affiliates had occurred
under each Multiemployer Plan on the date hereof, would not
exceed $10,000.
(n) ABSENCE OF CERTAIN CHANGES. With respect to the business of
Seller, except as and to the extent set forth in the Company's reports on
Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September
30, 1999, since December 31, 1998, Seller has not:
(i) suffered any material adverse change in its condition
(financial or otherwise), assets, liabilities (absolute, accrued,
contingent or otherwise), business, prospects or operations, or
experienced any labor difficulty, or suffered any casualty loss
(whether or not insured);
vi
<PAGE>
(ii) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due), other than claims, liens,
encumbrances or liabilities (i) which are reflected or reserved against
in the Financial Statements, and which were paid, discharged or
satisfied since the date of the most recent Financial Statements in the
ordinary course of business and consistent with past practice, or (ii)
which were incurred and paid, discharged or satisfied since the date of
the most recent Financial Statements in the ordinary course of business
and consistent with past practice;
(iii) permitted or allowed any of the properties or assets,
real, principal or mixed, tangible or intangible, of or used by Seller,
to be mortgaged, pledged or subjected to any lien or encumbrance;
(iv) written down or written up the value of any inventory, or
written off as uncollectible any notes or accounts receivable or any
portion thereof, except for write-downs, write-ups and write-offs in
the ordinary course of business consistent with past practice;
(v) cancelled any other debts or claims, or waived any rights
of substantial value, or sold, transferred or otherwise disposed of any
of the properties or assets, real, personal or mixed, tangible or
intangible, except in the ordinary course of business and consistent
with past practice;
(vi) disposed of or permitted to lapse any patent, trademark,
assumed name, service mark, trade name or copyright application or
license or under which Seller has any right or license, or disposed of
or disclosed to any person any trade secret, formula, process or
know-how of Seller or under which Seller has any right or license;
(vii) granted any general uniform increase in the compensation
of employees (including, without limitation, any increase or change
pursuant to any bonus, pension, profit-sharing, retirement or other
plan or commitment);
(viii) made any change in any method of accounting or
accounting practice or policy; made any loan or advance (other than
advances to employees in the ordinary course of business or travel and
expenses disbursement in accordance with the past practice, but not in
excess of $10,000 at any one time outstanding) to any person who is an
officer, director or employee of Seller;
(ix) declared or paid any dividend or purchased any of its
outstanding shares of capital stock;
(x) agreed, whether in writing or otherwise, to take any of
the actions set forth in this Section 4(n);
(o) INSURANCE. The Company holds and maintains valid policies
covering such casualties and contingencies and of such types and amounts as
is customary for companies similarly situated. The Company has no reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not have a material adverse effect.
(q) ENVIRONMENTAL PROTECTION.
In connection with its business operations, Seller has
obtained all permits, licenses and other authorizations which are required
under federal, state and local laws relating to pollution or protection of
the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants or hazardous or toxic materials or wastes; to the best of its
knowledge after
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due investigation, Seller is in compliance in all material respects with all
terms and conditions of the required permits, licenses and authorizations,
and is also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any regulation, code, plan, order, decree, judgment, notice or demand latter
issued, entered, promulgated or approved thereunder. Seller is not aware of,
and has not received notice of, past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim,
action, suit, proceeding, hearing or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the omission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing Date or
(ii) termination of this Agreement.
(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take any action and to do all things reasonably necessary in order
to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the conditions
precedent to closing.
(b) NOTICES AND CONSENTS. Each party will give any notices to third
parties, and will use its reasonable best efforts to obtain any third party
consents, that Buyer reasonably may request in connection with the matters
referred to in Sections 3 and 4 above.
(c) OPERATION OF BUSINESS. Except for transactions contemplated
hereby, Seller will not engage in, take any action, or enter into any
transaction outside the Ordinary Course of Business.
(d) FULL ACCESS. Seller will permit representatives of Buyer to have
full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Seller, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents
of or pertaining to Seller. Buyer will treat and hold as such any
Confidential Information received from Seller in the course of the reviews
contemplated by this Section 5(d), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement
is terminated for any reason whatsoever, will return to Seller all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
(e) NOTICE OF DEVELOPMENTS. Seller shall notify Buyer of any
development causing a breach of any of the representations and warranties in
Section 4 above. Unless Buyer have the right to terminate this Agreement
pursuant to Section 9(a)(ii) below by reason of the development and exercise
that right within the period referred to in Section 9(a)(ii) below, the
written notice pursuant to this Section 5(e)(i) will be deemed to have amended
the relevant Schedule, if any, to have qualified the representations and
warranties contained in Section 4 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after any Closing Date any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting Party is entitled to indemnification therefor under Section 8
below).
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status,
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condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to any Closing Date involving
Seller, each of the other Parties shall cooperate with him or it and his or
its counsel in the defense or contest, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the defense or contest (unless the contesting or
defending Party is entitled to indemnification therefor under ss.8 below).
(c) REGISTRATION RIGHTS. Buyer shall be afforded such registration
rights as are set forth in the Registration Rights Agreement, substantially
in the form attached hereto as EXHIBIT B.
(d) NEGATIVE COVENANTS. Seller covenants and agrees that, until the
Closing Date, Seller will not do any of the following without the prior
written consent of Buyer, which shall not be unreasonably withheld:
(i) DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (each of the foregoing, a "Transfer"), all or any part of
its business or property, other than: (i) Transfers of non-exclusive
licenses and similar arrangements for the use of Seller's services; or
(ii) Transfers of worn-out or obsolete equipment; or (iii) sales of
shares of its subsidiary, PC Quote.com, Inc.
(ii) MERGERS OR ACQUISITIONS. Merge or consolidate with or
into any other business organization, or acquire all or substantially
all of the capital stock or property of another Person.
(iii) DISTRIBUTIONS. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or
purchase of any capital stock except with respect to any obligations in
existence as of the date hereof and set forth on Schedule 6(h) hereto.
(iv) TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any material transaction with any
Affiliate of Seller except for transactions involving agreements that
are in place at the date hereof or that are in the ordinary course of
Seller's business, upon fair and reasonable terms that are no less
favorable to Seller than would be obtained in an arm's length
transaction with a nonaffiliated Person.
7. ADDITIONAL CONDITIONS PRECEDENT.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(i) the representations and warranties of Seller set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date ;
(iii) there shall not be any injunction, judgment, order, or
decree enjoining the transactions contemplated by this Agreement;
(iv) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to Buyer.
Buyer may waive any condition specified in this Section 7(a) upon execution
of a writing so stating at or prior to the Closing Date.
(b) CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
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(i) the representations and warranties of Buyer set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.
Seller may waive any condition specified in this Section 7(b) if it executes
a writing so stating at or prior to the Closing Date.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Buyer and Seller contained in Section 3 and
Section 4, respectively above, shall survive this Agreement and continue in
full force and effect for a period of one year thereafter.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event
Seller breaches any of its representations, warranties, or covenants
contained herein, it shall so notify Buyer and provided that Buyer makes a
written claim for indemnification against Seller pursuant to Section 10 below
within such survival period, then Seller agrees to indemnify Buyer from and
against the entirety of any Adverse Consequences Buyer shall suffer through
and after the date of the claim for indemnification caused by the breach.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the event
Buyer breaches any of its representations, warranties, or covenants contained
herein, it shall so notify Seller and provided that Seller makes a written
claim for indemnification against Buyer pursuant to Section 10 below within
such survival period, then buyer agrees to indemnify Seller from and against
the entirety of any Adverse Consequences Seller shall suffer through and
after the date of the claim for indemnification caused by the breach.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this Section 8, then the
Indemnified Party shall promptly (and in any event within five business
days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing.
(ii) Any Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the Indemnified Party;
provided, HOWEVER, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified
Party.
(iii) Unless and until an Indemnifying Party assumes the
defense of the Third Party Claim as provided in Section 8(c)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner he or it reasonably may deem appropriate.
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(iv) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of each of the
Indemnifying Parties, not to be unreasonably withheld.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage in
determining Adverse Consequences for purposes of this Section 8. All
indemnification payments under this Section 8 shall be deemed adjustments to
the Purchase Price.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
as provided below
(i) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
(ii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing Date in the event (A)
Seller has given Buyer any notice pursuant to Section 5(e) above and
(B) the development that is the subject of the notice has had, or
reasonably believes will have, a material adverse effect upon the
condition (financial or otherwise) of Seller;
(iii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing Date (A) in the event
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Buyer have
notified Seller of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before November 30, 1999, by
reason of the failure of any condition precedent Section 7 hereof
(unless the failure results primarily from any breach by Buyer of any
material representation, warranty, or covenant contained in this
Agreement); and
(iv) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing Date (A) in the event
either Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, Seller
has notified each Buyer of the breach, and the breach has continued
without cure for a period of 10 days after the notice of breach or (B)
if the Closing shall not have occurred on or before November 30, 1999,
by reason of the failure of any condition precedent Section 7 hereof
(unless the failure results primarily from Seller breaching any
material representation, warranty, or covenant contained in this
Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other
Party (except for any liability of any Party then in breach); PROVIDED,
HOWEVER, that the confidentiality provisions contained in Section 5(d) above
shall survive termination.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing Date, without the prior written approval of
Buyer and Seller; PROVIDED, HOWEVER, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
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(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the other.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller:
HyperFeed Technologies, Inc.
300 South Wacker, Suite 300
Chicago, Illinois 60606
Attn: John E. Juska
If to Buyer:
Howard Todd Horberg
100 Sheridan Road
Highland Park, Illinois 60035
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
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hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each Party bears its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) THE CLOSING. The closing of the transactions contemplated by this
Agreement shall take place at the offices of the Company in Chicago, Illinois,
on the Closing Date or on such other time, date and location mutually agreed by
the Parties.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
HYPERFEED TECHNOLOGIES, INC.
A Delaware corporation
By:__________________________ By:_____________________________
Name: John E. Juska Name: Howard Todd Horberg
Senior Vice President & Chief
Financial Officer
Seller Buyer
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EXHIBIT 4(au)
STOCK AND WARRANT PURCHASE AGREEMENT
BETWEEN
HYPERFEED TECHNOLOGIES, INC.
AND
DAVID HORBERG
NOVEMBER 22, 1999
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STOCK AND WARRANT PURCHASE AGREEMENT
Agreement entered into as of November 22, 1999, by and between David
Horberg (the "Buyer") and HyperFeed Technologies, Inc., a Delaware corporation
(the "Seller"). Buyer and Seller are referred to collectively herein as the
"Parties."
This Agreement contemplates a transaction in which Buyer will purchase
from Seller, and Seller will sell to Buyer, an aggregate of 20,000 shares of
Seller's common stock, par value $0.001 per share (the "Common Stock"), for an
aggregate purchase price of One Hundred Thousand Dollars ($100,000).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys' fees and
expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Code Section 1504.
"BUYER" has the meaning set forth in the preface above.
"CLOSING DATE" shall mean November 30, 1999 or such other time as the
parties may mutually agree.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Seller that is not already generally available to the
public.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4g below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
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"INCOME TAX" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8 below.
"KNOWLEDGE" means actual knowledge without independent investigation.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any entity similar to
any of the foregoing.
"PURCHASE PRICE" has the meaning set forth in Section 2 below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SHARES" means Seller's shares of Common Stock.
"THIRD PARTY CLAIM" has the meaning set forth in ss.8 below.
2. PURCHASE AND SALE OF SHARES AND Warrant
2.1 PURCHASE AND SALE OF SHARES. On the Closing Date, in the manner set
forth in this Secion 2, upon the terms set forth in this Agreement, Seller will
sell, transfer and deliver to Buyer, and Buyer will purchase from Seller, 20,000
Shares for an aggregate purchase price of One Hundred Thousand Dollars
($100,000) (the "Purchase Price"), in all cases free and clear of all interests,
liens, charges, encumbrances, equities, claims, assessments and options of
whatever nature.
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(a) On the Closing Date, as a condition precedent to such closing,
Seller shall deliver to Buyer stock certificates representing an aggregate of
20,000 Shares in such names and denominations as buyer shall instruct Seller.
(b) Buyer shall deliver to Seller a certified check or wire transfer in
the amount of $100,000.
2.2 Purchase and Sale of Warrant. Subject to the terms and conditions
of this Agreement, the Company shall issue to Buyer a warrant (the "Warrant") to
purchase 10,000 Shares at an exercise price of $7.50 per Share, which Warrant
shall be substantially in the form attached hereto as EXHIBIT A.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that the statements contained in this Section 3 are true,
correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made on and as of such
Closing Date as if such Closing Date were substituted for the date of this
Agreement throughout this Section 3).
(a) BUYER'S QUALIFICATIONS. Buyer (a) has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in Seller and (b) has
had the opportunity to ask questions of, and receive answers from,
Seller and its management concerning the terms and conditions of the
offering of the Shares hereunder and to obtain additional information;
and (c) is an Accredited Investor.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms.
Buyer is not required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
Buyer is subject or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which
it is bound or to which any of its assets is subject.
(d) BROKERS' FEES. Buyer does not have any liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which Seller could become liable or obligated.
(e) INVESTMENT. Buyer is acquiring the Shares for investment
purposes and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer that the statements contained in this Section 4 are true,
correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made on and as of such
Closing Date as if such Closing Date were substituted for the date of this
Agreement throughout this Section 4).
(a) AUTHORIZATION OF TRANSACTION. Seller has full corporate power and
authority to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by Seller pursuant to this Agreement
and the transactions contemplated hereby and to perform its obligations
hereunder and thereunder. This Agreement and the other documents and instruments
to be executed and delivered by Seller
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pursuant to this Agreement and the transactions contemplated hereby
constitute the valid and legally binding obligations of Seller enforceable in
accordance with their respective terms.
(b) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Seller is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not have a
material adverse effect on the condition (financial or otherwise) of Seller.
Seller has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties and assets owned and used
by it. Seller has no subsidiaries.
(c) CAPITALIZATION. The entire authorized capital stock of Seller
consists of 50,000,000 Shares, of which 15,195,031 Shares are issued and
outstanding and no Shares are held in treasury; and 5,000,000 Shares of
undesignated Preferred Stock, of which 19,075 and 28,791 shares designated as
Series A and Series B, respectively, Convertible Preferred Stock are
outstanding. All of the issued and outstanding Shares and Preferred Stock have
been duly authorized, are validly issued, fully paid, and nonassessable. Except
as set forth in Schedule 4(c) hereto, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Seller to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
All such options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments and the Shares
issuable upon exercise thereof have been duly authorized, and when issued in
accordance with their terms will be validly issued, fully paid and
non-assessable. There are no preemptive or first refusal or similar rights
binding on Seller to subscribe for or purchase from Seller any Shares pursuant
to any provisions of law, the Certificate of Incorporation or By-laws of Seller
or by agreement or otherwise. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Shares.
(d) NONCONTRAVENTION. Except as set forth in Schedule 4(d) hereto, to
the Knowledge of Seller, neither the execution and delivery of this Agreement,
nor consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Seller is subject or any provision of the Certificate of
Incorporation or By-laws of Seller or (ii) conflict with, result in breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Seller is a party or by which Seller is bound or to which Seller or its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the condition
(financial or otherwise) of Seller or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. Except as set forth
in Schedule 4(d) hereto, Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the condition (financial or otherwise) of Seller or
on the ability of the Parties to consummate the transactions contemplated by
this Agreement.
(e) BROKERS' FEES. Seller does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) TITLE TO TANGIBLE ASSETS. Seller has good title to, or a valid
leasehold interest in, the tangible assets it uses regularly in the conduct of
its businesses.
(g) FINANCIAL STATEMENTS. Attached hereto are copies of Seller's annual
report on Form 10-K for the year ended December 31, 1998 and its Quarterly
Report on Form 10-Q for each of the quarters ended March 31, 1999, June 30, 1999
and September 30, 1999. Included in such reports are the following financial
statements (collectively the "Financial Statements"): (i) audited consolidated
balance sheets for the years ending December 31, 1998 and 1997 and statements of
income, changes in stockholders' equity, and cash flow as of and
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for the years ended December 31, 1998, 1997 and 1996 for the Company; and (ii)
unaudited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the quarters ended March 31, 1999, June 30,
1999 and September 30, 1999 (the "QUARTERLY FINANCIAL STATEMENTS"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of Seller as of such
dates and the results of operations of Seller for such periods; PROVIDED,
HOWEVER, that the Quarterly Financial Statements are subject to normal year-end
adjustments and lack footnotes and other presentation items.
(h) TAX MATTERS.
(i) Seller has filed all Income Tax Returns that it was
required to file, and has paid all Income Taxes shown thereon as owing,
except where the failure to file Income Tax Returns or to pay Income
Taxes would not have a material adverse effect on the condition
(financial or otherwise) of Seller.
(ii) Seller has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with respect
to an Income Tax assessment or deficiency.
(iii) Except as set forth in Schedule 4(h), Seller is not a
party to any Income Tax allocation or sharing agreement.
(i) REAL PROPERTY
Seller does not own any real property.
(j) INTELLECTUAL PROPERTY. Except as set forth in Schedule 4(j), the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights necessary for its business as now conducted without any
conflict with, or infringement of, the rights of others. The Company has not
received any communication alleging that the Company has violated or, by
conducting its business, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights of any
other person or entity. The Company is not aware that any of its employees are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interest of the Company or that would
conflict with the Company's business. Neither the execution or delivery of this
Agreement, nor the carrying on of the Company's business as now conducted by the
employees of the Company, will, to the Company's knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any contract, covenant or instrument under which any such
employee is now obligated. The Company does not believe it is or will be
necessary to use any inventions of any of its employees (or persons it currently
intends to hire) made prior to their employment by the Company. To the Company's
knowledge, its officers and employees are not making improper use of any
confidential information or trade secrets of others, including those of any
former employer.
(k) POWERS OF ATTORNEY. Except as set forth in Schedule 4(k), there
are no outstanding powers of attorney executed on behalf of Seller.
(l) LITIGATION. Schedule 4(l) hereto sets forth each instance in
which Seller (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction,
except where the injunction, judgment, order, decree, ruling, action, suit,
proceeding, hearing, or investigation would not have a material adverse
effect on the condition (financial or otherwise), assets, liabilities,
earnings or business of Seller.
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(m) Employee Benefits.
(i) Schedule 4(m) hereto lists each Employee Benefit Plan that
is sponsored, maintained or contributed to or required to be
contributed to by the Seller or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), that together with the Seller
would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements of
ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the condition (financial
or otherwise) of Seller.
(B) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(C) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan has received a determination
letter from the Internal Revenue Service to the effect that it
meets the requirements of Code Section 401(a).
(D) Seller has made available to Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(E) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted.
(F) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending, except
where the action, suit, proceeding, hearing, or investigation
would not have a material adverse effect on the condition
(financial or otherwise) of Seller.
(G) Neither Seller nor any ERISA Affiliate has
incurred any liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
(H) The aggregate withdrawal liability of Seller and
any and all ERISA Affiliates, computed as if a complete
withdrawal by Seller and such ERISA Affiliates had occurred
under each Multiemployer Plan on the date hereof, would not
exceed $10,000.
(n) ABSENCE OF CERTAIN CHANGES. With respect to the business of Seller,
except as and to the extent set forth in the Company's reports on Form 10-Q for
the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999, since
December 31, 1998, Seller has not:
(i) suffered any material adverse change in its condition
(financial or otherwise), assets, liabilities (absolute, accrued,
contingent or otherwise), business, prospects or operations, or
experienced any labor difficulty, or suffered any casualty loss
(whether or not insured);
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(ii) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due), other than claims, liens,
encumbrances or liabilities (i) which are reflected or reserved against
in the Financial Statements, and which were paid, discharged or
satisfied since the date of the most recent Financial Statements in the
ordinary course of business and consistent with past practice, or (ii)
which were incurred and paid, discharged or satisfied since the date of
the most recent Financial Statements in the ordinary course of business
and consistent with past practice;
(iii) permitted or allowed any of the properties or assets,
real, principal or mixed, tangible or intangible, of or used by Seller,
to be mortgaged, pledged or subjected to any lien or encumbrance;
(iv) written down or written up the value of any inventory, or
written off as uncollectible any notes or accounts receivable or any
portion thereof, except for write-downs, write-ups and write-offs in
the ordinary course of business consistent with past practice;
(v) cancelled any other debts or claims, or waived any rights
of substantial value, or sold, transferred or otherwise disposed of any
of the properties or assets, real, personal or mixed, tangible or
intangible, except in the ordinary course of business and consistent
with past practice;
(vi) disposed of or permitted to lapse any patent, trademark,
assumed name, service mark, trade name or copyright application or
license or under which Seller has any right or license, or disposed of
or disclosed to any person any trade secret, formula, process or
know-how of Seller or under which Seller has any right or license;
(vii) granted any general uniform increase in the compensation
of employees (including, without limitation, any increase or change
pursuant to any bonus, pension, profit-sharing, retirement or other
plan or commitment);
(viii) made any change in any method of accounting or
accounting practice or policy; made any loan or advance (other than
advances to employees in the ordinary course of business or travel and
expenses disbursement in accordance with the past practice, but not in
excess of $10,000 at any one time outstanding) to any person who is an
officer, director or employee of Seller;
(ix) declared or paid any dividend or purchased any of its
outstanding shares of capital stock;
(x) agreed, whether in writing or otherwise, to take any of
the actions set forth in this Section 4(n);
(o) INSURANCE. The Company holds and maintains valid policies covering
such casualties and contingencies and of such types and amounts as is customary
for companies similarly situated. The Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse effect.
(q) ENVIRONMENTAL PROTECTION.
In connection with its business operations, Seller has
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes; to the best of its knowledge after
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due investigation, Seller is in compliance in all material respects with all
terms and conditions of the required permits, licenses and authorizations, and
is also in compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand latter
issued, entered, promulgated or approved thereunder. Seller is not aware of,
and has not received notice of, past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim,
action, suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the omission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing Date or (ii)
termination of this Agreement.
(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take any action and to do all things reasonably necessary in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the conditions precedent to closing.
(b) NOTICES AND CONSENTS. Each party will give any notices to third
parties, and will use its reasonable best efforts to obtain any third party
consents, that Buyer reasonably may request in connection with the matters
referred to in Sections 3 and 4 above.
(c) OPERATION OF BUSINESS. Except for transactions contemplated hereby,
Seller will not engage in, take any action, or enter into any transaction
outside the Ordinary Course of Business.
(d) FULL ACCESS. Seller will permit representatives of Buyer to have
full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Seller, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents
of or pertaining to Seller. Buyer will treat and hold as such any
Confidential Information received from Seller in the course of the reviews
contemplated by this Section 5(d), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement
is terminated for any reason whatsoever, will return to Seller all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
(e) NOTICE OF DEVELOPMENTS. Seller shall notify Buyer of any
development causing a breach of any of the representations and warranties in
Section 4 above. Unless Buyer have the right to terminate this Agreement
pursuant to Section 9(a)(ii) below by reason of the development and exercise
that right within the period referred to in Section 9(a)(ii) below, the
written notice pursuant to this Section 5(e)(i) will be deemed to have
amended the relevant Schedule, if any, to have qualified the representations
and warranties contained in Section 4 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after any Closing Date any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting Party is entitled to indemnification therefor under Section 8
below).
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status,
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condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to any Closing Date involving
Seller, each of the other Parties shall cooperate with him or it and his or
its counsel in the defense or contest, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the defense or contest (unless the contesting or
defending Party is entitled to indemnification therefor under Section 8
below).
(c) REGISTRATION RIGHTS. Buyer shall be afforded such registration
rights as are set forth in the Registration Rights Agreement, substantially in
the form attached hereto as EXHIBIT B.
(d) NEGATIVE COVENANTS. Seller covenants and agrees that, until the
Closing Date, Seller will not do any of the following without the prior written
consent of Buyer, which shall not be unreasonably withheld:
(i) DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (each of the foregoing, a "Transfer"), all or any part of
its business or property, other than: (i) Transfers of non-exclusive
licenses and similar arrangements for the use of Seller's services; or
(ii) Transfers of worn-out or obsolete equipment; or (iii) sales of
shares of its subsidiary, PC Quote.com, Inc.
(ii) MERGERS OR ACQUISITIONS. Merge or consolidate with or
into any other business organization, or acquire all or substantially
all of the capital stock or property of another Person.
(iii) DISTRIBUTIONS. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or
purchase of any capital stock except with respect to any obligations in
existence as of the date hereof and set forth on Schedule 6(h) hereto.
(iv) TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any material transaction with any
Affiliate of Seller except for transactions involving agreements that
are in place at the date hereof or that are in the ordinary course of
Seller's business, upon fair and reasonable terms that are no less
favorable to Seller than would be obtained in an arm's length
transaction with a nonaffiliated Person.
7. ADDITIONAL CONDITIONS PRECEDENT.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(i) the representations and warranties of Seller set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date ;
(iii) there shall not be any injunction, judgment, order, or
decree enjoining the transactions contemplated by this Agreement;
(iv) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to Buyer.
Buyer may waive any condition specified in this Section 7(a) upon execution
of a writing so stating at or prior to the Closing Date.
(b) CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
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(i) the representations and warranties of Buyer set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.
Seller may waive any condition specified in this Section 7(b) if it executes a
writing so stating at or prior to the Closing Date.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Buyer and Seller contained in Section 3 and
Section 4, respectively above, shall survive this Agreement and continue in
full force and effect for a period of one year thereafter.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event
Seller breaches any of its representations, warranties, or covenants contained
herein, it shall so notify Buyer and provided that Buyer makes a written claim
for indemnification against Seller pursuant to Section 10 below within such
survival period, then Seller agrees to indemnify Buyer from and against the
entirety of any Adverse Consequences Buyer shall suffer through and after the
date of the claim for indemnification caused by the breach.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the event
Buyer breaches any of its representations, warranties, or covenants contained
herein, it shall so notify Seller and provided that Seller makes a written
claim for indemnification against Buyer pursuant to Section 10 below within
such survival period, then buyer agrees to indemnify Seller from and against
the entirety of any Adverse Consequences Seller shall suffer through and after
the date of the claim for indemnification caused by the breach.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this Section 8, then the
Indemnified Party shall promptly (and in any event within five
business days after receiving notice of the Third Party Claim) notify
each Indemnifying Party thereof in writing.
(ii) Any Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the Indemnified Party;
provided, HOWEVER, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified
Party.
(iii) Unless and until an Indemnifying Party assumes the
defense of the Third Party Claim as provided in Section 8(c)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner he or it reasonably may deem appropriate.
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(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of each of the
Indemnifying Parties, not to be unreasonably withheld.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage in determining
Adverse Consequences for purposes of this Section 8. All indemnification
payments under this Section 8 shall be deemed adjustments to the Purchase Price.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
as provided below
(i) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing Date;
(ii) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing Date in the event (A) Seller
has given Buyer any notice pursuant to ss.5(e) above and (B) the
development that is the subject of the notice has had, or reasonably
believes will have, a material adverse effect upon the condition
(financial or otherwise) of Seller;
(iii) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing Date (A) in the event
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Buyer have
notified Seller of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before November 30, 1999, by
reason of the failure of any condition precedent ss.7 hereof (unless
the failure results primarily from any breach by Buyer of any material
representation, warranty, or covenant contained in this Agreement); and
(iv) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing Date (A) in the event either
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Seller has
notified each Buyer of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before November 30, 1999, by
reason of the failure of any condition precedent ss.7 hereof (unless
the failure results primarily from Seller breaching any material
representation, warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); PROVIDED, HOWEVER, that
the confidentiality provisions contained in Section 5(d) above shall survive
termination.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing Date, without the prior written approval of
Buyer and Seller; PROVIDED, HOWEVER, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
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(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the other.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller:
HyperFeed Technologies, Inc.
300 South Wacker, Suite 300
Chicago, Illinois 60606
Attn: John E. Juska
If to Buyer:
David Horberg
100 Sheridan Road
Highland Park, Illinois 60035
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
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hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each Party bears its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) THE CLOSING. The closing of the transactions contemplated by this
Agreement shall take place at the offices of the Company in Chicago, Illinois,
on the Closing Date or on such other time, date and location mutually agreed by
the Parties.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
HYPERFEED TECHNOLOGIES, INC.,
A Delaware corporation
By:__________________________ By:_______________________________
Name: John E. Juska Name: David Horberg
Senior Vice President & Chief
Financial Officer
Seller Buyer
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EXHIBIT 4(av)
Common Stock Purchase Warrant
125,000 Shares
(subject to adjustment)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Void after November 30, 2001
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Howard Todd Horberg (hereinafter
referred to as "Purchaser") is entitled to purchase up to One Hundred
Twenty-Five Thousand (125,000) Shares of Common Stock of HYPERFEED TECHNOLOGIES,
INC., a Delaware corporation, at a price of $7.50 per Share (the "Warrant
Price"), subject to adjustments and all other terms and conditions set forth in
this Warrant.
1. DEFINITIONS. As used herein, the following terms, unless the context
otherwise requires, shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(b) "Acquisition" shall mean any sale, license, or other
disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the
Company's securities before the transaction beneficially own less than 50% of
the outstanding voting securities of the surviving entity after the transaction.
(c) "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
(d) "Common Stock" shall mean shares of the Company's
presently or subsequently authorized common stock, par value $0.001, and any
stock for which such common stock may hereafter be exchanged.
(e) "Company" shall mean HYPERFEED TECHNOLOGIES, INC., a
Delaware corporation, and any corporation which shall succeed to or assume the
obligations of HYPERFEED TECHNOLOGIES, INC., under this Warrant.
(f) "Date of Grant" shall mean November 30, 1999.
(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 Common Stock.
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2. ISSUANCE OF WARRANT AND CONSIDERATION THEREFOR. This Warrant is
issued in consideration of the purchase price paid by Purchaser to the Company
as set forth in that certain Stock and Warrant Purchase Agreement dated as of
the date hereof and made and entered into by and between the Company and
Purchaser.
3. TERM. The purchase right represented by this Warrant is exercisable
only during the period commencing upon the Date of Grant and ending on November
30, 2001.
4. METHOD OF EXERCISE AND PAYMENT.
(a) METHOD OF EXERCISE. Subject to Section 3 hereof and
compliance with all applicable Federal and state securities laws, the purchase
right represented by this Warrant may be exercised, in whole or in part and from
time to time, by the Holder by (i) surrender of this Warrant and delivery of the
Notice of Exercise (the form of which is attached hereto as Exhibit A), duly
executed, at the principal office of the Company and (ii) payment to the Company
of an amount equal to the product of the then applicable Warrant Price
multiplied by the number of Shares then being purchased pursuant to one of the
payment methods permitted under Section 4(b) below.
(b) METHOD OF PAYMENT. Payment shall be made either (1) by
certified check drawn on a United States bank and for United States funds made
payable to the Company, or (2) by wire transfer of United States funds for the
account of the Company.
(c) DELIVERY OF CERTIFICATE. In the event of any exercise of
the purchase right represented by this Warrant, certificates for the Shares so
purchased shall be delivered to the Holder within five days of delivery of the
Notice of Exercise and, unless this Warrant has been fully exercised or has
expired, a new warrant representing the portion of the Shares with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such ten day period.
(d) NO FRACTIONAL SHARES. No fractional shares shall be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value per Share as of the date of exercise.
(e) COMPANY'S REPRESENTATIONS.
(i) All Shares which may be issued upon the exercise
of the purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable, and free of any liens
and encumbrances except for restrictions on transfer under applicable federal
and state securities laws. During the period within which the purchase right
represented by this Warrant may be exercised, the Company shall at all times use
its best efforts to have authorized, and reserved for the purpose of issuance
upon exercise of the purchase right represented by this Warrant, a sufficient
number of Shares to provide for the exercise of the purchase right represented
by this Warrant;
(ii) This Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights;
(iii) The execution and delivery of this Warrant are
not, and the issuance of the Shares upon exercise of this Warrant in accordance
with the terms hereof will not be, inconsistent with the Company's Certificate
of Incorporation or Bylaws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a default
under, any material indenture, mortgage, contract or other instrument of which
the Company is a party or by which it is bound, or require the registration or
filing with or the taking of any action in respect of or by, any federal, state
or local government authority or agency (other than such consents, approvals,
notices, actions, or filings as have already been obtained or made, as the case
may be).
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5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number of
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) ADJUSTMENT FOR DIVIDENDS IN STOCK. In case at any time or
from time to time on or after the date hereof the holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received or, on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
of the Company by way of dividend then, and in each case, the Holder of this
Warrant shall, upon the exercise hereof, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of such other or additional
stock of the Company which such Holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this Section 5.
(b) ADJUSTMENT FOR RECLASSIFICATION OR REORGANIZATION. In case
of any reclassification or change of the outstanding securities of the Company
or of any consolidation, merger or reorganization of the Company on or after the
date hereof, then and in each such case the Holder of this Warrant, upon the
exercise hereof at any time after the consummation of such reclassification,
change, consolidation, merger or reorganization, shall be entitled to receive,
in lieu of or in addition to the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in subparagraphs (a) and
(c); in each such case, the terms of this Paragraph 5 shall be applicable to the
shares of stock or other securities property receivable upon the exercise of
this Warrant after such consummation.
(c) STOCK SPLITS AND REVERSE STOCK SPLITS. If, at any time on
or after the date hereof, the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall thereby be proportionately reduced
and the number of shares receivable upon exercise of this Warrant shall thereby
be proportionately increased; and, conversely, if at any time on or after the
date hereof the outstanding number of shares of Common Stock shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall thereby be proportionately increased and the number of
shares receivable upon exercise of the Warrant shall be proportionately
decreased.
(d) ADJUSTMENTS TO WARRANT PRICE. Whenever the number of
Shares purchasable upon exercise of this Warrant is adjusted, as herein
provided, the Warrant Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
(e) CERTIFICATES AS TO ADJUSTMENTS. Upon each adjustment of
the Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish the Holder with a certificate of its Chief Financial
Officer setting forth such adjustment and the facts upon which such adjustment
is based. The Company shall, upon written request, furnish the Holder a
certificate setting forth the Warrant Price in effect upon the date thereof and
the series of adjustments leading to such Warrant Price.
6. ACQUISITIONS.
(a) ASSUMPTION OF WARRANT. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing.
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(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.
7. NOTICES; INFORMATION; REGISTRATION.
(a) NOTICE OF CERTAIN EVENTS. If the Company proposes at any
time (a) to effect any reclassification or recapitalization of Common Stock; (b)
to merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (c) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give the
Holder at least 14 days prior written notice of the date on which a record will
be taken for such action.
(b) INFORMATION RIGHTS. So long as the Holder holds this
Warrant and/or any of the Shares, the Company shall deliver to the Holder (a)
promptly after mailing, copies of all notices or other written communications to
the stockholders of the Company, (b) within ninety days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company audited by independent public accountants of recognized standing and (c)
within forty-five days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
(c) REGISTRATION UNDER SECURITIES ACT OF 1933. The Company
agrees that the Shares shall be subject to the registration rights set forth on
Exhibit B.
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
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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 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 Delaware.
15. TITLES AND SUBTITLES; FORMS OF PRONOUNS. The titles of the Sections
and Subsections of this Warrant are for convenience only and are not to be
considered in construing this Warrant. All pronouns used in this Warrant shall
be deemed to include masculine, feminine and neuter forms.
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Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC.,
a Delaware corporation
By:
--------------------------------------
John E. Juska, Chief Financial Officer
By:
--------------------------------------
Alicia VanDeVeer, Assistant Secretary
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APPENDIX A
NOTICE OF EXERCISE
TO: HYPERFEED TECHNOLOGIES, 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 certified check drawn on a United
States bank and for United States funds made payable
to the Company in the amount of $_____________; or
/ / by wire transfer of United States funds to the
account of the Company in the amount of $___________,
which transfer has been made before or simultaneously
with the delivery of this Notice pursuant to the
instructions of the Company.
3. Please issue a stock certificate or certificates representing the
appropriate number of Shares in the name of the undersigned or in such other
names as is specified below:
Name: _____________________________________
Address: _____________________________________
_____________________________________
Tax ID No.:_______________________________
HOLDER:
________________________________
By:_________________________
Date:_____________________________________ Title:________________
<PAGE>
EXHIBIT B
STATEMENT OF REGISTRATION RIGHTS
1. DEFINITIONS. For purposes of the Stock and Warrant Purchase
Agreement to which this Statement of Registration Rights is attached as Exhibit
B:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means the shares of
Common Stock issued in connection with the Agreement and shares issued or
issuable upon exercise of the Warrant;
(c) The term "Holder" means the original holder of the Shares
and Warrant and any transferee of the Warrant; and
(d) The term "Warrant" means the original Warrant issued in
connection with the Stock and Warrant Purchase Agreement, dated as of November
22, 1999, between the Company, as Seller, and Howard Todd Horberg, as Buyer, and
all Warrants issued as a result of the transfer of such original Warrant.
2. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes at any time before November 30, 2001 to register (including for
this purpose a registration effected by the Company for stockholders other than
Holder) any of its stock or other securities under the Act in connection with
the public offering for its own account of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give Holder written
notice of such registration. Upon the written request of Holder given within
twenty days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 8 hereof and Section 5 of the Warrant,
cause to be registered under the Act all of the Registrable Securities that each
such Holder has requested to be registered.
3. DEMAND REGISTRATION. In case the Company shall, at any time before
November 30, 2001, receive from Holders holding 40% or more of the outstanding
Registrable Securities a written request (to be exercised only once) that the
Company effect a registration (such date of receipt of written request is
referred to herein as the "Demand Registration Date") and any related
qualification or compliance with respect to all or a part of the Registrable
Securities (which registration shall at the election of Holder either be for a
registration for a primary issuance of the Shares upon the exercise of the
Warrant or the resale of the Shares previously issued upon exercise of the
Warrant at the election of Holder) owned by such Holder, the Company will
promptly notify each other Holder (if any) of such request and will:
(a) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of a Holder's
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder of registration
rights joining in such request as are specified in a written request given
within 20 days after receipt of such written notice from the Company; PROVIDED,
HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3: (1) if
the Company has effected a registration of Registrable Securities pursuant to
this Section 3 within the preceding 12 months; (2) if the Company shall furnish
to Holder a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the registration statement for a
period of not more than 30 days after receipt of the request of Holder under
this Section 3; PROVIDED, HOWEVER, that the
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Company shall not utilize this right more than once in any twelve-month
period; or (3) in any jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; and,
(b) subject to the foregoing, file a registration statement
covering the Registrable Securities and other securities so requested to be
registered promptly after receipt of the request or requests of Holder, and in
any event within 30 days of receipt of such request; and,
(c) if the registration statement is not (i) filed within 30
days of the Demand Registration Date for the Shares (the "Scheduled Filing
Date") or (ii) declared effective by the SEC on or before 90 days after the
Demand Registration Date for the Shares (the "Scheduled Effective Date"), then,
the Company shall pay to each Holder demanding registration an amount, per each
Share demanded to be registered by such Holder as of the relevant date, in cash
equal to the product of (i) $50 multiplied by (ii) the sum of (A) .002, if the
registration statement is not filed by the Scheduled Filing Date, plus (B) .002,
if the registration statement is not declared effective by the SEC by the
Scheduled Effective Date, plus (C) the product of (I) .000067 multiplied by (II)
the sum of (x) the number of days after the Scheduled Filing Date that the
relevant registration statement has not been filed with the SEC, and (y) the
number of days after the Scheduled Effective Date and prior to the date that the
relevant Registration Statement has not been declared effective by the SEC,
PROVIDED, HOWEVER, that in the event that the Company's subsidiary, PCQuote.com,
initial public offering precludes the Company from filing or declaring effective
the registration statement, then the Scheduled Filing Date and Scheduled
Effective Date shall be extended by 30 days. The payments to which a holder
shall be entitled pursuant to this Section 3(c) are referred to herein as
"Registration Delay Payments." The aggregate amount then owing upon any
Registration Delay Payments shall be paid within five business days of the
earlier of (A) the first day of each month following the occurrence of the event
resulting in the requirement to make such Registration Delay Payments, or (B)
the date on which the event resulting in the requirement to make Registration
Delay Payments is cured. In the event the Company fails to make Registration
Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of 2.0% per month (or the maximum rate permitted by law),
prorated for partial months, until paid in full. If the Company fails to pay the
Registration Delay Payments, including any interest thereon, within 15 business
days of the applicable payment date, then the holder entitled to such payments
shall have the right at any time, so long as the Company continues to fail to
make such payments, to require the Company, upon written notice, to immediately
issue, in lieu of the Registration Delay Payments, including any interest
thereon, the number of shares of Common Stock equal to the quotient of (X) the
sum of the Registration Delay Payments and all interest accrued thereon divided
by (Y) the closing price on the Nasdaq National Market System (or such other
stock exchange as the Common Stock may then be quoted) on the date the holder
delivers written notice to the Company of its election to receive shares of
Common Stock in lieu of the Registration Delay Payments.
4. OBLIGATION OF THE COMPANY. Subject to the terms of the Warrant, in
the event that the Company is to effect the registration of any Registrable
Securities pursuant to Section 2 or 3 hereof, the Company shall promptly:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days, or
such shorter period as is required to dispose of all securities covered by such
registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by Holder.
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(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions or to agree to any
restrictions as to the conduct of its business in the ordinary course thereof.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Holder shall
also enter into and perform its obligations under such underwriting agreement.
(f) Notify Holder at any time when a prospectus relating to
Registrable Securities of Holder covered by such registration statement is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
(g) Furnish, at the request of Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to the Warrant, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to Holder and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder.
5. AVAILABILITY OF RULE 144. Notwithstanding anything in the Warrant or
this Statement of Registration Rights to the contrary, the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to Section 2 or 3, if application of Rule 144 would allow Holder requesting a
registration under Section 2 or 3 to dispose of the Registrable Securities for
which a registration is demanded within a single 90-day period.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to the Warrant that the
selling Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
7. EXPENSES. The Company shall bear and pay all expenses (other than
underwriting discounts and commissions) incurred in connection with any
registration, filing or qualification of Registrable Securities, including
(without limitation) all registration, filing, and qualification fees, legal,
printers and accounting fees relating thereto.
8. UNDERWRITING REQUIREMENTS. In connection with any registrations in
which Registrable Securities have a right to be included pursuant to Section 2
hereof and which involves an underwriting of securities being issued by the
Company, the Company shall not be required, under Section 2 hereof, to include
any of Holder's securities in such underwriting unless Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering, the securities so included to be apportioned pro rata
among the selling Holder and other shareholders holding contractual registration
rights according to the total amount of securities entitled to be included
herein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by Holder and each other selling stockholder.
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9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement filed by the Company:
(a) The Company will indemnify and holder harmless Holder, its
officers, directors, and agents, any underwriter (as defined in the Act) for
Holder and each person, if any, who controls Holder or underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), against any losses, claims, damages, or liabilities (joint or several)
asserted by a third party to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation of the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse Holder, any of its officers or directors,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, underwriter or controlling person.
(b) Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company with the meaning of the
Act, any underwriter and any other shareholder selling securities in such
registration statement or any of its directors or officers or any person who
controls such shareholder, against any losses, claims, damages, or liabilities
(joint or several) asserted by a third party to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such shareholder or director, officer or controlling person may become
subject, under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by Holder expressly for use in
connection with such registration; and Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or controlling person, other shareholder,
officer, director, or controlling person, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability, or action;
PROVIDED, HOWEVER, that the obligations of Holder hereunder shall be limited to
an amount equal to the net proceeds (equal to the offering price less the
exercise price, expenses and underwriting commissions and discounts) to such
Holder of Shares sold as contemplated herein. Notwithstanding the foregoing, the
indemnity agreement contained in this Section 9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Holder, which consent shall not be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying part under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to deliver
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written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 9.
10. REPORTS UNDER THE 1934 ACT. With a view to making available to
Holder the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit Holder to sell securities of
the Company to the public without registration the Company will endeavor to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;
(b) take such action as is necessary to enable Holder to
utilize an abbreviated registration statement for the sale of its Registrable
Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Act and the
1934 Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to the Warrant may be assigned by
Holder to a permitted transferee or assignee of the Warrant of at least 125,000
Shares, provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; and provided, further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
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EXHIBIT 4(aw)
Common Stock Purchase Warrant
10,000 Shares
(subject to adjustment)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Void after November 30, 2001
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, David Horberg (hereinafter referred
to as "Purchaser") is entitled to purchase up to Ten Thousand (10,000) Shares
of Common Stock of HYPERFEED TECHNOLOGIES, INC., a Delaware corporation, at a
price of $7.50 per Share (the "Warrant Price"), subject to adjustments and
all other terms and conditions set forth in this Warrant.
1. DEFINITIONS. As used herein, the following terms, unless the context
otherwise requires, shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(b) "Acquisition" shall mean any sale, license, or other
disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the
Company's securities before the transaction beneficially own less than 50% of
the outstanding voting securities of the surviving entity after the transaction.
(c) "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
(d) "Common Stock" shall mean shares of the Company's
presently or subsequently authorized common stock, par value $0.001, and any
stock for which such common stock may hereafter be exchanged.
(e) "Company" shall mean HYPERFEED TECHNOLOGIES, INC., a
Delaware corporation, and any corporation which shall succeed to or assume the
obligations of HYPERFEED TECHNOLOGIES, INC., under this Warrant.
(f) "Date of Grant" shall mean November 30, 1999.
(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 Common Stock.
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2. ISSUANCE OF WARRANT AND CONSIDERATION THEREFOR. This Warrant is
issued in consideration of the purchase price paid by Purchaser to the Company
as set forth in that certain Stock and Warrant Purchase Agreement dated as of
the date hereof and made and entered into by and between the Company and
Purchaser.
3. TERM. The purchase right represented by this Warrant is exercisable
only during the period commencing upon the Date of Grant and ending on November
30, 2001.
4. METHOD OF EXERCISE AND PAYMENT.
(a) METHOD OF EXERCISE. Subject to Section 3 hereof and
compliance with all applicable Federal and state securities laws, the purchase
right represented by this Warrant may be exercised, in whole or in part and from
time to time, by the Holder by (i) surrender of this Warrant and delivery of the
Notice of Exercise (the form of which is attached hereto as Exhibit A), duly
executed, at the principal office of the Company and (ii) payment to the Company
of an amount equal to the product of the then applicable Warrant Price
multiplied by the number of Shares then being purchased pursuant to one of the
payment methods permitted under Section 4(b) below.
(b) METHOD OF PAYMENT. Payment shall be made either (1) by
certified check drawn on a United States bank and for United States funds made
payable to the Company, or (2) by wire transfer of United States funds for the
account of the Company.
(c) DELIVERY OF CERTIFICATE. In the event of any exercise of
the purchase right represented by this Warrant, certificates for the Shares so
purchased shall be delivered to the Holder within five days of delivery of the
Notice of Exercise and, unless this Warrant has been fully exercised or has
expired, a new warrant representing the portion of the Shares with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such ten day period.
(d) NO FRACTIONAL SHARES. No fractional shares shall be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value per Share as of the date of exercise.
(e) COMPANY'S REPRESENTATIONS.
(i) All Shares which may be issued upon the exercise
of the purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable, and free of any liens
and encumbrances except for restrictions on transfer under applicable federal
and state securities laws. During the period within which the purchase right
represented by this Warrant may be exercised, the Company shall at all times use
its best efforts to have authorized, and reserved for the purpose of issuance
upon exercise of the purchase right represented by this Warrant, a sufficient
number of Shares to provide for the exercise of the purchase right represented
by this Warrant;
(ii) This Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights;
(iii) The execution and delivery of this Warrant are
not, and the issuance of the Shares upon exercise of this Warrant in accordance
with the terms hereof will not be, inconsistent with the Company's Certificate
of Incorporation or Bylaws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a default
under, any material indenture, mortgage, contract or other instrument of which
the Company is a party or by which it is bound, or require the registration or
filing with or the taking of any action in respect of or by, any federal, state
or local government authority or agency (other than such consents, approvals,
notices, actions, or filings as have already been obtained or made, as the case
may be).
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5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number of
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) ADJUSTMENT FOR DIVIDENDS IN STOCK. In case at any time or
from time to time on or after the date hereof the holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received or, on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
of the Company by way of dividend then, and in each case, the Holder of this
Warrant shall, upon the exercise hereof, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of such other or additional
stock of the Company which such Holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this Section 5.
(b) ADJUSTMENT FOR RECLASSIFICATION OR REORGANIZATION. In case
of any reclassification or change of the outstanding securities of the Company
or of any consolidation, merger or reorganization of the Company on or after the
date hereof, then and in each such case the Holder of this Warrant, upon the
exercise hereof at any time after the consummation of such reclassification,
change, consolidation, merger or reorganization, shall be entitled to receive,
in lieu of or in addition to the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in subparagraphs (a) and
(c); in each such case, the terms of this Paragraph 5 shall be applicable to the
shares of stock or other securities property receivable upon the exercise of
this Warrant after such consummation.
(c) STOCK SPLITS AND REVERSE STOCK SPLITS. If, at any time on
or after the date hereof, the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall thereby be proportionately reduced
and the number of shares receivable upon exercise of this Warrant shall thereby
be proportionately increased; and, conversely, if at any time on or after the
date hereof the outstanding number of shares of Common Stock shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall thereby be proportionately increased and the number of
shares receivable upon exercise of the Warrant shall be proportionately
decreased.
(d) ADJUSTMENTS TO WARRANT PRICE. Whenever the number of
Shares purchasable upon exercise of this Warrant is adjusted, as herein
provided, the Warrant Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
(e) CERTIFICATES AS TO ADJUSTMENTS. Upon each adjustment of
the Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish the Holder with a certificate of its Chief Financial
Officer setting forth such adjustment and the facts upon which such adjustment
is based. The Company shall, upon written request, furnish the Holder a
certificate setting forth the Warrant Price in effect upon the date thereof and
the series of adjustments leading to such Warrant Price.
6. ACQUISITIONS.
(a) ASSUMPTION OF WARRANT. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing.
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(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.
7. NOTICES; INFORMATION; REGISTRATION.
(a) NOTICE OF CERTAIN EVENTS. If the Company proposes at any
time (a) to effect any reclassification or recapitalization of Common Stock; (b)
to merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (c) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give the
Holder at least 14 days prior written notice of the date on which a record will
be taken for such action.
(b) INFORMATION RIGHTS. So long as the Holder holds this
Warrant and/or any of the Shares, the Company shall deliver to the Holder (a)
promptly after mailing, copies of all notices or other written communications to
the stockholders of the Company, (b) within ninety days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company audited by independent public accountants of recognized standing and (c)
within forty-five days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
(c) REGISTRATION UNDER SECURITIES ACT OF 1933. The Company
agrees that the Shares shall be subject to the registration rights set forth on
Exhibit B.
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
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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 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 Delaware.
15. TITLES AND SUBTITLES; FORMS OF PRONOUNS. The titles of the Sections
and Subsections of this Warrant are for convenience only and are not to be
considered in construing this Warrant. All pronouns used in this Warrant shall
be deemed to include masculine, feminine and neuter forms.
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Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC.,
a Delaware corporation
By:
--------------------------------------
John E. Juska, Chief Financial Officer
By:
--------------------------------------
Alicia VanDeVeer, Assistant Secretary
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APPENDIX A
NOTICE OF EXERCISE
TO: HYPERFEED TECHNOLOGIES, 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 certified check drawn on a United
States bank and for United States funds made payable
to the Company in the amount of $_____________; or
/ / by wire transfer of United States funds to the
account of the Company in the amount of $___________,
which transfer has been made before or simultaneously
with the delivery of this Notice pursuant to the
instructions of the Company.
3. Please issue a stock certificate or certificates representing the
appropriate number of Shares in the name of the undersigned or in such other
names as is specified below:
Name: _____________________________________
Address: _____________________________________
_____________________________________
Tax ID No.:_______________________________
HOLDER:
________________________________
By:_________________________
Date:_____________________________________ Title:________________
<PAGE>
EXHIBIT B
STATEMENT OF REGISTRATION RIGHTS
1. DEFINITIONS. For purposes of the Stock and Warrant Purchase
Agreement to which this Statement of Registration Rights is attached as Exhibit
B:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means the shares of
Common Stock issued in connection with the Agreement and shares issued or
issuable upon exercise of the Warrant;
(c) The term "Holder" means the original holder of the Shares
and Warrant and any transferee of the Warrant; and
(d) The term "Warrant" means the original Warrant issued in
connection with the Stock and Warrant Purchase Agreement, dated as of November
22, 1999, between the Company, as Seller, and David Horberg, as Buyer, and
all Warrants issued as a result of the transfer of such original Warrant.
2. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes at any time before November 30, 2001 to register (including for
this purpose a registration effected by the Company for stockholders other than
Holder) any of its stock or other securities under the Act in connection with
the public offering for its own account of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give Holder written
notice of such registration. Upon the written request of Holder given within
twenty days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 8 hereof and Section 5 of the Warrant,
cause to be registered under the Act all of the Registrable Securities that each
such Holder has requested to be registered.
3. DEMAND REGISTRATION. In case the Company shall, at any time before
November 30, 2001, receive from Holders holding 40% or more of the outstanding
Registrable Securities a written request (to be exercised only once) that the
Company effect a registration (such date of receipt of written request is
referred to herein as the "Demand Registration Date") and any related
qualification or compliance with respect to all or a part of the Registrable
Securities (which registration shall at the election of Holder either be for a
registration for a primary issuance of the Shares upon the exercise of the
Warrant or the resale of the Shares previously issued upon exercise of the
Warrant at the election of Holder) owned by such Holder, the Company will
promptly notify each other Holder (if any) of such request and will:
(a) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of a Holder's
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder of registration
rights joining in such request as are specified in a written request given
within 20 days after receipt of such written notice from the Company; PROVIDED,
HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3: (1) if
the Company has effected a registration of Registrable Securities pursuant to
this Section 3 within the preceding 12 months; (2) if the Company shall furnish
to Holder a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the registration statement for a
period of not more than 30 days after receipt of the request of Holder under
this Section 3; PROVIDED, HOWEVER, that the
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Company shall not utilize this right more than once in any twelve-month
period; or (3) in any jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; and,
(b) subject to the foregoing, file a registration statement
covering the Registrable Securities and other securities so requested to be
registered promptly after receipt of the request or requests of Holder, and in
any event within 30 days of receipt of such request; and,
(c) if the registration statement is not (i) filed within 30
days of the Demand Registration Date for the Shares (the "Scheduled Filing
Date") or (ii) declared effective by the SEC on or before 90 days after the
Demand Registration Date for the Shares (the "Scheduled Effective Date"), then,
the Company shall pay to each Holder demanding registration an amount, per each
Share demanded to be registered by such Holder as of the relevant date, in cash
equal to the product of (i) $50 multiplied by (ii) the sum of (A) .002, if the
registration statement is not filed by the Scheduled Filing Date, plus (B) .002,
if the registration statement is not declared effective by the SEC by the
Scheduled Effective Date, plus (C) the product of (I) .000067 multiplied by (II)
the sum of (x) the number of days after the Scheduled Filing Date that the
relevant registration statement has not been filed with the SEC, and (y) the
number of days after the Scheduled Effective Date and prior to the date that the
relevant Registration Statement has not been declared effective by the SEC,
PROVIDED, HOWEVER, that in the event that the Company's subsidiary, PCQuote.com,
initial public offering precludes the Company from filing or declaring effective
the registration statement, then the Scheduled Filing Date and Scheduled
Effective Date shall be extended by 30 days. The payments to which a holder
shall be entitled pursuant to this Section 3(c) are referred to herein as
"Registration Delay Payments." The aggregate amount then owing upon any
Registration Delay Payments shall be paid within five business days of the
earlier of (A) the first day of each month following the occurrence of the event
resulting in the requirement to make such Registration Delay Payments, or (B)
the date on which the event resulting in the requirement to make Registration
Delay Payments is cured. In the event the Company fails to make Registration
Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of 2.0% per month (or the maximum rate permitted by law),
prorated for partial months, until paid in full. If the Company fails to pay the
Registration Delay Payments, including any interest thereon, within 15 business
days of the applicable payment date, then the holder entitled to such payments
shall have the right at any time, so long as the Company continues to fail to
make such payments, to require the Company, upon written notice, to immediately
issue, in lieu of the Registration Delay Payments, including any interest
thereon, the number of shares of Common Stock equal to the quotient of (X) the
sum of the Registration Delay Payments and all interest accrued thereon divided
by (Y) the closing price on the Nasdaq National Market System (or such other
stock exchange as the Common Stock may then be quoted) on the date the holder
delivers written notice to the Company of its election to receive shares of
Common Stock in lieu of the Registration Delay Payments.
4. OBLIGATION OF THE COMPANY. Subject to the terms of the Warrant, in
the event that the Company is to effect the registration of any Registrable
Securities pursuant to Section 2 or 3 hereof, the Company shall promptly:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days, or
such shorter period as is required to dispose of all securities covered by such
registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by Holder.
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<PAGE>
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions or to agree to any
restrictions as to the conduct of its business in the ordinary course thereof.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Holder shall
also enter into and perform its obligations under such underwriting agreement.
(f) Notify Holder at any time when a prospectus relating to
Registrable Securities of Holder covered by such registration statement is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
(g) Furnish, at the request of Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to the Warrant, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to Holder and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder.
5. AVAILABILITY OF RULE 144. Notwithstanding anything in the Warrant or
this Statement of Registration Rights to the contrary, the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to Section 2 or 3, if application of Rule 144 would allow Holder requesting a
registration under Section 2 or 3 to dispose of the Registrable Securities for
which a registration is demanded within a single 90-day period.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to the Warrant that the
selling Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
7. EXPENSES. The Company shall bear and pay all expenses (other than
underwriting discounts and commissions) incurred in connection with any
registration, filing or qualification of Registrable Securities, including
(without limitation) all registration, filing, and qualification fees, legal,
printers and accounting fees relating thereto.
8. UNDERWRITING REQUIREMENTS. In connection with any registrations in
which Registrable Securities have a right to be included pursuant to Section 2
hereof and which involves an underwriting of securities being issued by the
Company, the Company shall not be required, under Section 2 hereof, to include
any of Holder's securities in such underwriting unless Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering, the securities so included to be apportioned pro rata
among the selling Holder and other shareholders holding contractual registration
rights according to the total amount of securities entitled to be included
herein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by Holder and each other selling stockholder.
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9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement filed by the Company:
(a) The Company will indemnify and holder harmless Holder, its
officers, directors, and agents, any underwriter (as defined in the Act) for
Holder and each person, if any, who controls Holder or underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), against any losses, claims, damages, or liabilities (joint or several)
asserted by a third party to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation of the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse Holder, any of its officers or directors,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, underwriter or controlling person.
(b) Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company with the meaning of the
Act, any underwriter and any other shareholder selling securities in such
registration statement or any of its directors or officers or any person who
controls such shareholder, against any losses, claims, damages, or liabilities
(joint or several) asserted by a third party to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such shareholder or director, officer or controlling person may become
subject, under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by Holder expressly for use in
connection with such registration; and Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or controlling person, other shareholder,
officer, director, or controlling person, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability, or action;
PROVIDED, HOWEVER, that the obligations of Holder hereunder shall be limited to
an amount equal to the net proceeds (equal to the offering price less the
exercise price, expenses and underwriting commissions and discounts) to such
Holder of Shares sold as contemplated herein. Notwithstanding the foregoing, the
indemnity agreement contained in this Section 9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Holder, which consent shall not be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying part under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to deliver
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written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 9.
10. REPORTS UNDER THE 1934 ACT. With a view to making available to
Holder the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit Holder to sell securities of
the Company to the public without registration the Company will endeavor to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;
(b) take such action as is necessary to enable Holder to
utilize an abbreviated registration statement for the sale of its Registrable
Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Act and the
1934 Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to the Warrant may be assigned by
Holder to a permitted transferee or assignee of the Warrant of at least 10,000
Shares, provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; and provided, further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
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EXHIBIT 4(ax)
Common Stock Purchase Warrant
30,000 Shares
(subject to adjustment)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Void after November 30, 2001
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Wildman, Harrold, Allen & Dixon
(hereinafter referred to as "Purchaser") is entitled to purchase up to Thirty
Thousand (30,000) Shares of Common Stock of HYPERFEED TECHNOLOGIES, INC., a
Delaware corporation, at a price of $7.50 per Share (the "Warrant Price"),
subject to adjustments and all other terms and conditions set forth in this
Warrant.
1. DEFINITIONS. As used herein, the following terms, unless the context
otherwise requires, shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(b) "Acquisition" shall mean any sale, license, or other
disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the
Company's securities before the transaction beneficially own less than 50% of
the outstanding voting securities of the surviving entity after the transaction.
(c) "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
(d) "Common Stock" shall mean shares of the Company's
presently or subsequently authorized common stock, par value $0.001, and any
stock for which such common stock may hereafter be exchanged.
(e) "Company" shall mean HYPERFEED TECHNOLOGIES, INC., a
Delaware corporation, and any corporation which shall succeed to or assume the
obligations of HYPERFEED TECHNOLOGIES, INC., under this Warrant.
(f) "Date of Grant" shall mean November 30, 1999.
(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 Common Stock.
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2. ISSUANCE OF WARRANT AND CONSIDERATION THEREFOR. This Warrant is
issued in consideration of the purchase price paid by Purchaser to the Company
as set forth in that certain Stock and Warrant Purchase Agreement dated as of
the date hereof and made and entered into by and between the Company and
Purchaser.
3. TERM. The purchase right represented by this Warrant is exercisable
only during the period commencing upon the Date of Grant and ending on November
30, 2001.
4. METHOD OF EXERCISE AND PAYMENT.
(a) METHOD OF EXERCISE. Subject to Section 3 hereof and
compliance with all applicable Federal and state securities laws, the purchase
right represented by this Warrant may be exercised, in whole or in part and from
time to time, by the Holder by (i) surrender of this Warrant and delivery of the
Notice of Exercise (the form of which is attached hereto as Exhibit A), duly
executed, at the principal office of the Company and (ii) payment to the Company
of an amount equal to the product of the then applicable Warrant Price
multiplied by the number of Shares then being purchased pursuant to one of the
payment methods permitted under Section 4(b) below.
(b) METHOD OF PAYMENT. Payment shall be made either (1) by
certified check drawn on a United States bank and for United States funds made
payable to the Company, or (2) by wire transfer of United States funds for the
account of the Company.
(c) DELIVERY OF CERTIFICATE. In the event of any exercise of
the purchase right represented by this Warrant, certificates for the Shares so
purchased shall be delivered to the Holder within five days of delivery of the
Notice of Exercise and, unless this Warrant has been fully exercised or has
expired, a new warrant representing the portion of the Shares with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such ten day period.
(d) NO FRACTIONAL SHARES. No fractional shares shall be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value per Share as of the date of exercise.
(e) COMPANY'S REPRESENTATIONS.
(i) All Shares which may be issued upon the exercise
of the purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable, and free of any liens
and encumbrances except for restrictions on transfer under applicable federal
and state securities laws. During the period within which the purchase right
represented by this Warrant may be exercised, the Company shall at all times use
its best efforts to have authorized, and reserved for the purpose of issuance
upon exercise of the purchase right represented by this Warrant, a sufficient
number of Shares to provide for the exercise of the purchase right represented
by this Warrant;
(ii) This Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights;
(iii) The execution and delivery of this Warrant are
not, and the issuance of the Shares upon exercise of this Warrant in accordance
with the terms hereof will not be, inconsistent with the Company's Certificate
of Incorporation or Bylaws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a default
under, any material indenture, mortgage, contract or other instrument of which
the Company is a party or by which it is bound, or require the registration or
filing with or the taking of any action in respect of or by, any federal, state
or local government authority or agency (other than such consents, approvals,
notices, actions, or filings as have already been obtained or made, as the case
may be).
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5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number of
Shares issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) ADJUSTMENT FOR DIVIDENDS IN STOCK. In case at any time or
from time to time on or after the date hereof the holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received or, on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
of the Company by way of dividend then, and in each case, the Holder of this
Warrant shall, upon the exercise hereof, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of such other or additional
stock of the Company which such Holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this Section 5.
(b) ADJUSTMENT FOR RECLASSIFICATION OR REORGANIZATION. In case
of any reclassification or change of the outstanding securities of the Company
or of any consolidation, merger or reorganization of the Company on or after the
date hereof, then and in each such case the Holder of this Warrant, upon the
exercise hereof at any time after the consummation of such reclassification,
change, consolidation, merger or reorganization, shall be entitled to receive,
in lieu of or in addition to the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in subparagraphs (a) and
(c); in each such case, the terms of this Paragraph 5 shall be applicable to the
shares of stock or other securities property receivable upon the exercise of
this Warrant after such consummation.
(c) STOCK SPLITS AND REVERSE STOCK SPLITS. If, at any time on
or after the date hereof, the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall thereby be proportionately reduced
and the number of shares receivable upon exercise of this Warrant shall thereby
be proportionately increased; and, conversely, if at any time on or after the
date hereof the outstanding number of shares of Common Stock shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall thereby be proportionately increased and the number of
shares receivable upon exercise of the Warrant shall be proportionately
decreased.
(d) ADJUSTMENTS TO WARRANT PRICE. Whenever the number of
Shares purchasable upon exercise of this Warrant is adjusted, as herein
provided, the Warrant Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
(e) CERTIFICATES AS TO ADJUSTMENTS. Upon each adjustment of
the Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish the Holder with a certificate of its Chief Financial
Officer setting forth such adjustment and the facts upon which such adjustment
is based. The Company shall, upon written request, furnish the Holder a
certificate setting forth the Warrant Price in effect upon the date thereof and
the series of adjustments leading to such Warrant Price.
6. ACQUISITIONS.
(a) ASSUMPTION OF WARRANT. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing.
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(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.
7. NOTICES; INFORMATION; REGISTRATION.
(a) NOTICE OF CERTAIN EVENTS. If the Company proposes at any
time (a) to effect any reclassification or recapitalization of Common Stock; (b)
to merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (c) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give the
Holder at least 14 days prior written notice of the date on which a record will
be taken for such action.
(b) INFORMATION RIGHTS. So long as the Holder holds this
Warrant and/or any of the Shares, the Company shall deliver to the Holder (a)
promptly after mailing, copies of all notices or other written communications to
the stockholders of the Company, (b) within ninety days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company audited by independent public accountants of recognized standing and (c)
within forty-five days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
(c) REGISTRATION UNDER SECURITIES ACT OF 1933. The Company
agrees that the Shares shall be subject to the registration rights set forth on
Exhibit B.
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
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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 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 Delaware.
15. TITLES AND SUBTITLES; FORMS OF PRONOUNS. The titles of the Sections
and Subsections of this Warrant are for convenience only and are not to be
considered in construing this Warrant. All pronouns used in this Warrant shall
be deemed to include masculine, feminine and neuter forms.
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Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC.,
a Delaware corporation
By:
--------------------------------------
John E. Juska, Chief Financial Officer
By:
--------------------------------------
Alicia VanDeVeer, Assistant Secretary
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APPENDIX A
NOTICE OF EXERCISE
TO: HYPERFEED TECHNOLOGIES, 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 certified check drawn on a United
States bank and for United States funds made payable
to the Company in the amount of $_____________; or
[ ] by wire transfer of United States funds to the
account of the Company in the amount of $___________,
which transfer has been made before or simultaneously
with the delivery of this Notice pursuant to the
instructions of the Company.
3. Please issue a stock certificate or certificates representing the
appropriate number of Shares in the name of the undersigned or in such other
names as is specified below:
Name: _____________________________________
Address: _____________________________________
_____________________________________
Tax ID No.:_______________________________
HOLDER:
________________________________
By:_________________________
Date:_____________________________________ Title:________________
<PAGE>
EXHIBIT B
STATEMENT OF REGISTRATION RIGHTS
1. DEFINITIONS. For purposes of the Stock and Warrant Purchase
Agreement to which this Statement of Registration Rights is attached as Exhibit
B:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means the shares of
Common Stock issued in connection with the Agreement and shares issued or
issuable upon exercise of the Warrant;
(c) The term "Holder" means the original holder of the Shares
and Warrant and any transferee of the Warrant; and
(d) The term "Warrant" means the original Warrant issued in
connection with the Stock and Warrant Purchase Agreement, dated as of
November 22, 1999, between the Company, as Seller, and Wildman, Harrold,
Allen & Dixon, as Buyer, and all Warrants issued as a result of the transfer
of such original Warrant.
2. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes at any time before November 30, 2001 to register (including for
this purpose a registration effected by the Company for stockholders other than
Holder) any of its stock or other securities under the Act in connection with
the public offering for its own account of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give Holder written
notice of such registration. Upon the written request of Holder given within
twenty days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 8 hereof and Section 5 of the Warrant,
cause to be registered under the Act all of the Registrable Securities that each
such Holder has requested to be registered.
3. DEMAND REGISTRATION. In case the Company shall, at any time before
November 30, 2001, receive from Holders holding 40% or more of the outstanding
Registrable Securities a written request (to be exercised only once) that the
Company effect a registration (such date of receipt of written request is
referred to herein as the "Demand Registration Date") and any related
qualification or compliance with respect to all or a part of the Registrable
Securities (which registration shall at the election of Holder either be for a
registration for a primary issuance of the Shares upon the exercise of the
Warrant or the resale of the Shares previously issued upon exercise of the
Warrant at the election of Holder) owned by such Holder, the Company will
promptly notify each other Holder (if any) of such request and will:
(a) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of a Holder's
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder of registration
rights joining in such request as are specified in a written request given
within 20 days after receipt of such written notice from the Company; PROVIDED,
HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3: (1) if
the Company has effected a registration of Registrable Securities pursuant to
this Section 3 within the preceding 12 months; (2) if the Company shall furnish
to Holder a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the registration statement for a
period of not more than 30 days after receipt of the request of Holder under
this Section 3; PROVIDED, HOWEVER, that the
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Company shall not utilize this right more than once in any twelve-month
period; or (3) in any jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; and,
(b) subject to the foregoing, file a registration statement
covering the Registrable Securities and other securities so requested to be
registered promptly after receipt of the request or requests of Holder, and in
any event within 30 days of receipt of such request; and,
(c) if the registration statement is not (i) filed within 30
days of the Demand Registration Date for the Shares (the "Scheduled Filing
Date") or (ii) declared effective by the SEC on or before 90 days after the
Demand Registration Date for the Shares (the "Scheduled Effective Date"), then,
the Company shall pay to each Holder demanding registration an amount, per each
Share demanded to be registered by such Holder as of the relevant date, in cash
equal to the product of (i) $50 multiplied by (ii) the sum of (A) .002, if the
registration statement is not filed by the Scheduled Filing Date, plus (B) .002,
if the registration statement is not declared effective by the SEC by the
Scheduled Effective Date, plus (C) the product of (I) .000067 multiplied by (II)
the sum of (x) the number of days after the Scheduled Filing Date that the
relevant registration statement has not been filed with the SEC, and (y) the
number of days after the Scheduled Effective Date and prior to the date that the
relevant Registration Statement has not been declared effective by the SEC,
PROVIDED, HOWEVER, that in the event that the Company's subsidiary, PCQuote.com,
initial public offering precludes the Company from filing or declaring effective
the registration statement, then the Scheduled Filing Date and Scheduled
Effective Date shall be extended by 30 days. The payments to which a holder
shall be entitled pursuant to this Section 3(c) are referred to herein as
"Registration Delay Payments." The aggregate amount then owing upon any
Registration Delay Payments shall be paid within five business days of the
earlier of (A) the first day of each month following the occurrence of the event
resulting in the requirement to make such Registration Delay Payments, or (B)
the date on which the event resulting in the requirement to make Registration
Delay Payments is cured. In the event the Company fails to make Registration
Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of 2.0% per month (or the maximum rate permitted by law),
prorated for partial months, until paid in full. If the Company fails to pay the
Registration Delay Payments, including any interest thereon, within 15 business
days of the applicable payment date, then the holder entitled to such payments
shall have the right at any time, so long as the Company continues to fail to
make such payments, to require the Company, upon written notice, to immediately
issue, in lieu of the Registration Delay Payments, including any interest
thereon, the number of shares of Common Stock equal to the quotient of (X) the
sum of the Registration Delay Payments and all interest accrued thereon divided
by (Y) the closing price on the Nasdaq National Market System (or such other
stock exchange as the Common Stock may then be quoted) on the date the holder
delivers written notice to the Company of its election to receive shares of
Common Stock in lieu of the Registration Delay Payments.
4. OBLIGATION OF THE COMPANY. Subject to the terms of the Warrant, in
the event that the Company is to effect the registration of any Registrable
Securities pursuant to Section 2 or 3 hereof, the Company shall promptly:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days, or
such shorter period as is required to dispose of all securities covered by such
registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as Holder may reasonably request in order to
facilitate the disposition of Registrable Securities owned by Holder.
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(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions or to agree to any
restrictions as to the conduct of its business in the ordinary course thereof.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Holder shall
also enter into and perform its obligations under such underwriting agreement.
(f) Notify Holder at any time when a prospectus relating to
Registrable Securities of Holder covered by such registration statement is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.
(g) Furnish, at the request of Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to the Warrant, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to Holder and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder.
5. AVAILABILITY OF RULE 144. Notwithstanding anything in the Warrant or
this Statement of Registration Rights to the contrary, the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to Section 2 or 3, if application of Rule 144 would allow Holder requesting a
registration under Section 2 or 3 to dispose of the Registrable Securities for
which a registration is demanded within a single 90-day period.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to the Warrant that the
selling Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
7. EXPENSES. The Company shall bear and pay all expenses (other than
underwriting discounts and commissions) incurred in connection with any
registration, filing or qualification of Registrable Securities, including
(without limitation) all registration, filing, and qualification fees, legal,
printers and accounting fees relating thereto.
8. UNDERWRITING REQUIREMENTS. In connection with any registrations in
which Registrable Securities have a right to be included pursuant to Section 2
hereof and which involves an underwriting of securities being issued by the
Company, the Company shall not be required, under Section 2 hereof, to include
any of Holder's securities in such underwriting unless Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering, the securities so included to be apportioned pro rata
among the selling Holder and other shareholders holding contractual registration
rights according to the total amount of securities entitled to be included
herein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by Holder and each other selling stockholder.
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9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement filed by the Company:
(a) The Company will indemnify and holder harmless Holder, its
officers, directors, and agents, any underwriter (as defined in the Act) for
Holder and each person, if any, who controls Holder or underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), against any losses, claims, damages, or liabilities (joint or several)
asserted by a third party to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation of the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse Holder, any of its officers or directors,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, underwriter or controlling person.
(b) Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company with the meaning of the
Act, any underwriter and any other shareholder selling securities in such
registration statement or any of its directors or officers or any person who
controls such shareholder, against any losses, claims, damages, or liabilities
(joint or several) asserted by a third party to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such shareholder or director, officer or controlling person may become
subject, under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by Holder expressly for use in
connection with such registration; and Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or controlling person, other shareholder,
officer, director, or controlling person, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability, or action;
PROVIDED, HOWEVER, that the obligations of Holder hereunder shall be limited to
an amount equal to the net proceeds (equal to the offering price less the
exercise price, expenses and underwriting commissions and discounts) to such
Holder of Shares sold as contemplated herein. Notwithstanding the foregoing, the
indemnity agreement contained in this Section 9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Holder, which consent shall not be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying part under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to deliver
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written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 9.
10. REPORTS UNDER THE 1934 ACT. With a view to making available to
Holder the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit Holder to sell securities of
the Company to the public without registration the Company will endeavor to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;
(b) take such action as is necessary to enable Holder to
utilize an abbreviated registration statement for the sale of its Registrable
Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Act and the
1934 Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to the Warrant may be assigned by
Holder to a permitted transferee or assignee of the Warrant of at least 30,000
Shares, provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; and provided, further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
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EXHIBIT 10(u)
PC QUOTE, INC.
1999 COMBINED INCENTIVE AND NON-STATUTORY
-----------------------------------------
STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of PC Quote, Inc.'s business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees
as shall be administering the Plan in accordance with Section 4 hereof.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(c) "BOARD" means the Board of Directors of PC Quote, Inc.
(d) "CODE" means the Internal Revenue Code of 1986, as
amended.
(e) "COMMITTEE" means a committee of Directors appointed by
the Board in accordance with Section 4 hereof.
(f) "COMMON STOCK" means the Common Stock of PC Quote, Inc.
(g) "COMPANY" means PC Quote, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person who is engaged by PC Quote,
Inc. or any Parent or Subsidiary to render consulting or advisory services to
such entity.
(i) "DIRECTOR" means a member of the Board of Directors of PC
Quote, Inc.
(j) "DISABILITY" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and
Directors, employed by PC Quote, Inc. or any Parent or Subsidiary of PC Quote,
Inc. A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by PC Quote, Inc. or (ii) transfers between locations
of PC Quote, Inc. or between PC Quote, Inc., its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by PC Quote, Inc. is not so guaranteed, on the 181st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
PC Quote, Inc. shall be sufficient to constitute "employment" by PC Quote, Inc.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
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(m) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of PC Quote,
Inc. within the meaning of Section 16 of the Exchange Act and the rules `and
regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the
Plan.
(r) "OPTION AGREEMENT" means a written or electronic agreement
between PC Quote, Inc. and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(s) "OPTION EXCHANGE PROGRAM" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.
(t) "OPTIONED STOCK" means the Common Stock subject to an
Option or a Stock Purchase Right.
(u) "OPTIONEE" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
(v) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(w) "PLAN" means this 1999 Stock Plan.
(x) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(y) "SECTION 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.
(z) "SERVICE PROVIDER" means an Employee, Director or
Consultant.
(aa) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
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(bb) "STOCK PURCHASE RIGHT" means a right to purchase Common
Stock pursuant to Section 11 below.
(cc) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is four million Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by PC Quote,
Inc. at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by the Board
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered
by each such award granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions of any
Option or Stock Purchase Right granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(e) instead of
Common Stock,
(vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax
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treatment under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax
obligations by electing to have PC Quote, Inc. 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. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by Optionees
to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of PC Quote, Inc. and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with PC Quote, Inc., nor shall it
interfere in any way with his or her right or PC Quote, Inc.'s right to
terminate such relationship at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. TERM OF OPTION. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to in Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of PC Quote, Inc. or any Parent or Subsidiary, the term of the Options
shall be five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be the price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of PC Quote, Inc. or any Parent or
Subsidiary, the exercise price shall be no leas than 110% of the Fair Market
Value per Share on the date of grant.
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(B) granted to any other Employee, the per
Share exercise Price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of PC Quote, Inc. or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted any other Service Provider, the
per Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by PC Quote,
Inc. under a cashless exercise program implemented by PC Quote, Inc. in
connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit PC Quote, Inc.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Except in the case of Options granted to
Officers, Directors and Consultants, Options shall become exercisable at a rate
of no less than 33 1/3% per year over three (3) years from the date the Options
are granted. Unless the Administrator provides otherwise, vesting of Options
granted hereunder shall be tolled during any unpaid leave of absence. An Option
may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when PC Quote,
Inc. receives: (1) written or electronic notice of exercise (in accordance with
the Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares an issued (as evidenced by the appropriate entry on the books
of PC Quote, Inc. or of a duly authorized transfer agent of PC Quote, Inc.), no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Shares, notwithstanding the exercise of the Option. PC
Quote, Inc. shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least three (3) days) to the extent that the Option is vested on the date of
termination (but in no
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event later than the expiration of the term of the Option as set forth in the
Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee`s termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the uninvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (of at least six (6) months) to the extent that the
Option is vested on the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) by the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, at the time of death, the Optionee is not vested
as to the entire Option, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant PC Quote, Inc. a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with PC Quote, Inc. for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to PC Quote, Inc. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers. Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 33 1/3% per year over three (3) years from the date
of purchase.
(c) OTHER PROVISIONS. The Restricted Stock purchase agreement
shall contain such other
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terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.
(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a stockholder
and shall be a stockholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of PC Quote, Inc. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the stockholders of PC Quote, Inc., the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by PC Quote, Inc. The conversion of any
convertible securities of PC Quote, Inc. shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by PC Quote, Inc.
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of PC Quote, Inc., the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option or Stock Purchase Right
until fifteen (15) days prior to such transaction as to all of the Optioned
Stock covered thereby, including Shares as to which the Option or Stock Purchase
Right would not otherwise be exercisable. In addition, the Administrator may
provide that any PC Quote, Inc. repurchase option applicable to any Shares
purchased upon exercise of an Option or Stock Purchase Right shall lapse as to
all such Shares, provided the proposed dissolution or liquidation takes place at
the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of PC
Quote, Inc. with or into another corporation, or the sale of substantially all
of the assets of PC Quote, Inc., each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation,
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provide for the consideration to be received upon the exercise of the Option
or Stock Purchase Right, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
13. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Service Provider to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) STOCKHOLDER APPROVAL. The Board shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
PC Quote, Inc. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for PC Quote, Inc. with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for PC Quote, Inc., such a
representation is required.
16. INABILITY TO OBTAIN AUTHORITY. The inability of PC Quote, Inc. to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by PC Quote, Inc.'s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve PC Quote, Inc. of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. RESERVATION OF SHARES. PC Quote, Inc., during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of PC Quote, Inc. within twelve (12) months after the date the Plan
is adopted. Such stockholder approval shall be obtained in the degree and manner
required under Applicable Laws.
19. INFORMATION TO OPTIONEES AND PURCHASERS. PC Quote, Inc. shall
provide to each Optionee and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
PC Quote, Inc. shall not be required to provide such statements to key employees
whose duties in connection with PC Quote, Inc. assure their access to equivalent
information.
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20. NOTICE. Any notice to PC Quote, Inc. required under this Plan shall
be in writing and shall either be delivered in person or sent by registered or
certified mail, return receipt requested, postage prepaid, to PC Quote, Inc. at
its principal executive offices, Attention: Benefits Plan Administrator.
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EXHIBIT 21
Subsidiaries of Registrant
PCQuote.com, Inc. incorporated in the State of Delaware.
Does business as
PCQuote.com
PCQuote.com, Inc.
<PAGE>
EXHIBIT 23
Consent of KPMG LLP
The Board of Directors
HyperFeed Technologies, Inc.:
We consent to the incorporation by reference in the registration statements
on Form S-3 (No. 333-89799, No. 333-94273, No. 333-76291 and No. 333-49833)
and Form S-8 (No. 333-87801 and No. 333-51901) of HyperFeed Technologies,
Inc. of our reports dated March 8, 2000, relating to the consolidated balance
sheets of HyperFeed Technologies, Inc. and subsidiary as of December 31, 1999
and 1998, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1999, and the related consolidated financial
statement schedule of valuation and qualifying accounts, which reports appear
in the December 31, 1999 annual report on Form 10-K of HyperFeed
Technologies, Inc.
/s/ KPMG LLP
Chicago, Illinois
March 13, 2000
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