-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, STD/IYtAV8sfuqHux20fwMeXiroHludqUEQn0TlxnKT3uqHBlFDLmzj3E7Mrs+aX 8ULDBcj6BoSOkMD3d4dy9A== 0000912057-00-011677.txt : 20000316 0000912057-00-011677.hdr.sgml : 20000316 ACCESSION NUMBER: 0000912057-00-011677 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYPERFEED TECHNOLOGIES INC CENTRAL INDEX KEY: 0000745774 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 363131704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-11108 FILM NUMBER: 570235 BUSINESS ADDRESS: STREET 1: 300 S WACKER DR STREET 2: STE 300 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129132848 MAIL ADDRESS: STREET 1: 300 SOUTH WACKER DR STREET 2: SUITE 300 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: PC QUOTE INC DATE OF NAME CHANGE: 19920703 10-K 1 FORM 10-K 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. [ ] 1 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. 2 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 3 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. 4 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. 5 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. 6 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. 7 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. 8 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. 9 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. 10 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).
1999 QUARTERLY INFORMATION HIGH LOW - -------------------------- ---- --- 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
11 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
1999 1998 1997 1996 1995 INCOME DATA: 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
12 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. 13 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 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 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 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 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 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 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 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 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 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 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 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 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 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 CONTENTS
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
28 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 HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 ASSETS 1999 1998 ---- ---- 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 ============ ============
See Notes to Consolidated Financial Statements. F-2 HYPERFEED TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED) DECEMBER 31, 1999 AND 1998 LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 ---- ---- 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 ============ ============
See Notes to Consolidated Financial Statements. F-3 HYPERFEED TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- ----------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------------------- 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 - ----------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements. F-4 HYPERFEED TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Additional Additional Paid-In Paid-In - ---------------------------------------------------------------------------------------------- Capital Additional Capital Series B Paid-In Convertible Convertible Capital Debenture Accumulated Preferred Common and Warrants Deficit Total - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements. F-5 HYPERFEED TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 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 ============== ============ ============
See Notes to Consolidated Financial Statements. F-6 HYPERFEED TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- -------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 ---- ---- ---- - -------------------------------------------------------------------------------------------------------------------- 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 --- - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements. F-7 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 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 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 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 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 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 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 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 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 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 HYPERFEED TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. FINANCING AND EQUITY TRANSACTIONS, CONTINUED
Number Remaining Life in Years of Expiration Exercise at Shares Date Price December 31, 1999 ------ ---- ----- ----------------- 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
(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:
- ---------------------------------- ------------------- -------------------------- Number Weighted- of Average Exercise Shares Price Per Share ------------------ -------------------------- - ---------------------------------- ------------------- -------------------------- 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 --------- - ---------------------------------- ------------------- --------------------------
F-18 HYPERFEED TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5. EMPLOYEE STOCK OPTIONS (CONTINUED)
Shares Exercisable Available Shares for Grant ---------------- ------------------ 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
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 $8.875 per share. The Company applies the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and provide pro forma net income and pro forma net income per share disclosures as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. Had the Company determined compensation cost based on the fair value at the grant date for its stock-based compensation plans under SFAS No. 123, the Company's net loss and net loss per share would have been for the years ended December 31, 1999, 1998 and 1997 the pro forma amounts indicated below:
Basic and Basic and Basic and Diluted Loss Diluted Loss Diluted Loss 1999 per Share 1998 Share 1997 per Share ------------- --------- ------------- --------- ------------- --------- Net loss available for common stockholders ($ 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) ============= ========= ============= ========= ============= =========
The fair value of each grant is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:
1999 1998 1997 ---- ---- ---- 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%
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 HYPERFEED TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5. EMPLOYEE STOCK OPTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------- Stock Price ______ Exercise Price - ---------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------------- Is Less Is Less Is Less Equals Exceeds Than Equals Exceeds Than Equals Exceeds Than ------ ------- ---- ------ ------- ---- ------ ------- ---- - ---------------------------------------------------------------------------------------------------------------------- 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 - ----------------------------------------------------------------------------------------------------------------------
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:
Weighted- Average Remaining Number Contractual Number Exercise Price Outstanding Life in Years Exercisable - ------------------------------ -------------- ---------------- --------------- $ 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 ========= =========
F-20 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:
1999 1998 ---- ---- 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 --- --- ========== =========
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:
1999 1998 1997 ---- ---- ---- Current: State and local $ 5,000 $ 3,613 $ 5,762 Deferred --- --- --- -------- ------- ------- Total income tax expense $ 5,000 $ 3,613 $ 5,762 ======== ======= =======
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:
1999 1998 1997 ---- ---- ---- 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 ========= =========== ============
F-21 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:
Operating Leases ------ 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 ============
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 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:
1999 1998 1997 ---- ---- ---- Amount % Amount % Amount % ------ - ------ - ------ - 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% ============ ============ ============
F-23 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 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 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 HYPERFEED TECHNOLOGIES, INC. SUPPLEMENTAL SCHEDULE II TO THE CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
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 - ------------------------------ ---------------- ----------------- ---------------- ----------------- - ------------------------------ ---------------- ----------------- ---------------- ----------------- 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 - ------------------------------ ---------------- ----------------- ---------------- -----------------
F-27 EX-3.E 2 EXHIBIT 3(E) 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 EX-4.AT 3 EXHIBIT 4(AT) EXHIBIT 4(at) STOCK AND WARRANT PURCHASE AGREEMENT BETWEEN HYPERFEED TECHNOLOGIES, INC. AND HOWARD TODD HORBERG NOVEMBER 22, 1999 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 "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 (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 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 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 (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 (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 vii 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, viii 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: ix (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. x (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. xi (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 xii 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. * * * * * xiii 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 xiv EX-4.AU 4 EXHIBIT 4(AU) EXHIBIT 4(au) STOCK AND WARRANT PURCHASE AGREEMENT BETWEEN HYPERFEED TECHNOLOGIES, INC. AND DAVID HORBERG NOVEMBER 22, 1999 xv 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. 1 "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. 2 (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 3 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 4 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. 5 (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); 6 (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 7 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, 8 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: 9 (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. 10 (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. 11 (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 12 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. * * * * * 13 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 14 EX-4.AV 5 EXHIBIT 4(AV) 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. 15 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). 16 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. 17 (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 18 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. 19 Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC., a Delaware corporation By: -------------------------------------- John E. Juska, Chief Financial Officer By: -------------------------------------- Alicia VanDeVeer, Assistant Secretary 20 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:________________ 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 1 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. 2 (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. 3 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 4 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. 5 EX-4.AW 6 EXHIBIT 4(AW) 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. 6 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). 7 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. 8 (b) NONASSUMPTION. If upon the closing of any Acquisition the successor entity does not assume the obligations of this Warrant and the Holder has not otherwise exercised this Warrant in full, then the unexercised portion of this Warrant shall be deemed to have been automatically converted pursuant to Section 4(c) and thereafter the Holder shall participate in the acquisition on the same terms as other holders of the same class of securities of the Company. 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 9 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. 10 Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC., a Delaware corporation By: -------------------------------------- John E. Juska, Chief Financial Officer By: -------------------------------------- Alicia VanDeVeer, Assistant Secretary 11 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:________________ 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 1 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. 2 (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. 3 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 4 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. 5 EX-4.AX 7 EXHIBIT 4.AX 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. 6 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). 7 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. 8 (b) NONASSUMPTION. If upon the closing of any Acquisition the successor entity does not assume the obligations of this Warrant and the Holder has not otherwise exercised this Warrant in full, then the unexercised portion of this Warrant shall be deemed to have been automatically converted pursuant to Section 4(c) and thereafter the Holder shall participate in the acquisition on the same terms as other holders of the same class of securities of the Company. 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 9 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. 10 Dated: November 30, 1999. HYPERFEED TECHNOLOGIES, INC., a Delaware corporation By: -------------------------------------- John E. Juska, Chief Financial Officer By: -------------------------------------- Alicia VanDeVeer, Assistant Secretary 11 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:________________ 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 3 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. 4 (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. 5 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 6 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. 7 EX-10.U 8 EXHIBIT 10(U) 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. 8 (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. 9 (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 10 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. 11 (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 12 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 13 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, 14 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. 15 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. 16 EX-21 9 EXHIBIT 21 EXHIBIT 21 Subsidiaries of Registrant PCQuote.com, Inc. incorporated in the State of Delaware. Does business as PCQuote.com PCQuote.com, Inc. EX-23 10 EXHIBIT 23 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 EX-27 11 EXHIBIT 27
5 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 1,452,186 0 3,094,626 442,276 0 6,029,013 6,600,908 4,189,766 15,295,184 8,407,040 0 0 48 15,593 4,581,992 15,295,184 33,128,059 33,128,059 25,471,981 25,471,981 17,008,231 650,000 120,751 (9,426,698) 5,000 (9,431,698) 0 0 0 (9,431,698) (0.63) (0.63)
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