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Exhibit 2.4
PC QUOTE, INC.
Convertible Subordinated Debenture Due 2001
PC QUOTE, INC., a corporation duly organized and existing under the
laws of Delaware (herein called the "Company"), for value received, hereby
promises to pay to Physicians Insurance Company of Ohio ("PICO") Two Million
Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) on December 31, 2001,
at PICO's executive offices (or at such other offices or agencies designated for
that purpose by the holder of this Debenture) in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts or in shares of Common Stock of the Company
as more fully set forth on Appendix A hereof and to pay interest from a the date
hereof in cash or shares of Common Stock of the Company as more fully set forth
on Appendix A hereof, semiannually on January 1 and July 1 of each year (each an
"Interest Payment Date"), commencing on January 1, 1998, on said principal sum
at said office or agency, in like coin or currency, or at the holder's option in
Company shares of Common Stock, at a rate per annum equal to one percent (1%)
over the prime rate as announced from time to time by The Wall Street Journal
until payment of said principal sum has been paid on this Debenture.
Reference is hereby made to the further provisions of this Debenture
set forth on Appendix A, including, without limitation, provisions subordinating
the payment of principal and interest on this Debenture to the prior payment in
full of all Senior Indebtedness (as defined herein) and provisions giving the
holder of this Debenture the right to convert, and the Company the right to
redeem, this Debenture into common stock of the Company ("Common Stock") on the
terms and subject to the limitations referred to on Appendix A. Such further
provisions shall for all purposes have the same effect as though fully set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by the duly authorized officers.
Dated: November 27, 1996
Attest: `PC QUOTE, INC.
By: Darlene E. Cazja By: /s/ Louis J. Morgan
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Secretary CHAIRMAN
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APPENDIX A
PC QUOTE, INC.
Convertible Subordinated Debenture Due 2001
This Debenture (herein called the "Debenture"), is duly authorized by
the Company in the principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000), together with interest from the date hereof at an annual rate
equal to one percent (1%) over the prime rate as published from time to time by
The Wall Street Journal, the interest to be payable semiannually in cash or
shares of Common Stock of the Company at the holder's option, commencing on
January 1, 1998, with principal and any accrued but unpaid interest due and
payable on December 31, 2001, and is issued under and pursuant to that certain
Agreement dated as of November 14, 1996 (herein called the "Agreement") by and
between the Company and Physicians Insurance Company of Ohio ("PICO"). In case
an Event of Default (defined below) shall have occurred and be continuing, the
principal hereto and accrued interests thereon may be declared due and payable
by the holder hereof by giving notice in writing to the Company.
An "Event of Default," wherever used herein means any one of the
following events (whether voluntary or involuntary or pursuant to the
subordination provisions hereof, or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any installment of interest on the
Debenture as and when it becomes due and payable, whether or
not such payment is prohibited by the subordination provision
hereof, and continuance of such default for a period of 30
days; or
(2) default in the payment of principal as and when the same shall
become due and payable at maturity or in connection with any
redemption or otherwise, by declaration or otherwise and
whether or not such payment is prohibited by the subordination
provisions hereof and such default continues for a period of
15 days; or
(3) default in the Company's obligation to deliver shares of
Common Stock upon conversion; or
(4) the entry by a court having jurisdiction in the premises of
(a) a decree or order for relief in respect to the Company in
an involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other
similar law or (b) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any
applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of all or
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substantially all of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such
decree or order for relief or for any such other decree or
order unstayed and in effect for a period of 60 consecutive
days; or
(5) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or the consent
by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, other consent by it to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or of all or substantially all
of its property, or the making by it of general assignment
for the benefit of creditors.
The holder of this Debenture may waive any past default or Event of
Default and its consequences. Any such consent or waiver by the holder of this
Debenture shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and all Debentures which may be issued in
exchange for substitution therefor, irrespective of whether or not any notation
thereof is made upon this Debenture or such other debentures.
Except with respect to the rights of holders of Senior Indebtedness set
forth in this Debenture, no provision of this Debenture shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, or interest on this Debenture at the price and at the time
prescribed hereunder.
Interest on the Debenture shall be calculated on the basis of a
360-day year of 30-day months for the period from (and including) each Interest
Payment Date to (but not including) each following Interest Payment Date. At
the option of the holder, all or any portion of an Interest Payment may be made
in shares of Common Stock having their fair market value equal to the amount of
such Interest Payment represented by such shares.
The registered holder of this Debenture has the right, at its option,
at any time on or prior to the close of business on December 31, 2001, to
convert the principal amount hereof into 1,250,000 fully paid and non-
assessable shares of Common Stock at the conversion price of $2.00 per share (as
adjusted in accordance with this paragraph), upon surrender of this Debenture to
the Company at its executive offices, accompanied by written notice of
conversion duly executed. If the Company at any times subdivides (by any stock
split, stock dividend, recapitalization or otherwise) its outstanding shares of
Common Stock into a greater number of shares prior to conversion, the Conversion
Price shall be proportionately reduced and the number of shares of Common Stock
obtainable upon conversion shall be proportionately increased. If the Company at
any time combines (by reverse stock split or otherwise) its outstanding shares
of Common Stock into a smaller number of shares prior to conversion, the
Conversion Price shall be proportionately increased and the number of shares of
Common Stock obtainable upon conversion shall be proportionately decreased. The
Company shall not issue fractional shares or scrip representing fractions of
shares of Common Stock upon any such conversion, but shall make an adjustment
therefor in cash on the basis of the then current market value of such
fractional interest. No payment or adjustment shall be made on conversion for
interest accrued hereon or for dividends on Common Stock delivered on
conversion. In the case of a consolidation, merger, or sale or transfer of
substantially all the Company's assets with, into or to any person or entity or
related group of persons or entities which is not a subsidiary of the Company,
the Conversion Price shall be proportionately adjusted and the number of shares
of
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Common Stock obtainable upon conversion shall be proportionately adjusted so
that the rights of the holder hereof shall be equitably preserved.
Notwithstanding anything to the contrary contained in this Debenture, in no
event will there by any adjustment in the conversion price or the number of
shares of common stock deliverable upon conversion upon the Company's rights
offering contemplated by the Agreement.
The indebtedness evidenced by this Debenture is expressly subordinated
and subject to right of payment to the prior payment in full of all indebtedness
of the Company to Lakeside bank, both secured and unsecured, whether outstanding
at the date hereof or incurred after the date hereof ("Senior Indebtedness").
The provisions of this paragraph are made for the benefit of all holders of
Senior Indebtedness, and any such holder may proceed to enforce such provisions.
Each holder of this Debenture, by executing the same, agrees to and shall be
bound by such provisions.
(1) In the event of any insolvency or bankruptcy proceedings, and
any receivership, liquidation, reorganization or other similar
proceedings relative to the Company or to its creditors, or to
its property, and in the event of any and if the shares of
Common Stock to be issued conversion are to be issued to any
name other than that of the registered holder of this
Debenture by instrument of transfer, in form satisfactory to
the Company, duly executed by the registered holder or his
duly authorized attorney and, in case such surrender shall be
made during the period prior to the close of business
proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency
or bankruptcy, then the holders of Senior Indebtedness shall
be entitled to receive payment in full of all principal and
interest on all Senior Indebtedness before the holder of this
Debenture are entitled to receive any payment on account of
principal or interest on this Debenture, and to that end (but
subject to the power of a court of competent jurisdiction to
make other equitable provisions reflecting the rights
conferred in this Debenture upon the Senior Indebtedness and
its holders with respect to the subordinate indebtedness
hereunder and the holder of it by a lawful plan of
reorganization under applicable bankruptcy law), the holders
of Senior Indebtedness shall be entitled to receive for
application in payment of it any payment or distribution of
any kind or character, whether in cash or property or
securities, which may be payable or deliverable in any
proceedings in respect to this Debenture, except securities
which are subordinate and junior in right of payment to the
payment of all Senior Indebtedness then outstanding; and
(2) In the event of any default in the payment of the principal of
or interest on any Senior Indebtedness and during the
continuation of any such default, no amount shall be paid by
the Company, and the holder of this Debenture shall not be
entitled to receive any amount, in respect to the principal or
interest on this Debenture; and
(3) In the event that this Debentures is declared due and payable
before its expressed maturity because of the occurrence of an
Event of Default (under circumstances
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when the provisions of the foregoing clause (1) is
applicable), the holders of the Senior Indebtedness
outstanding at the time the Debenture becomes due and payable
because of the occurrence of an Event of Default shall be
entitled to receive payment in full of all principal and
interest on all Senior Indebtedness before the holder of this
Debenture is entitled to receive any payment on account of the
principal or interest hereon.
No present or future holder of Senior Indebtedness shall be prejudiced in the
right to enforce subordination of this debenture by any act or failure to act on
the part of the Company. The provisions of this paragraph are solely for the
purpose of defining the relative rights of the holders of Senior Indebtedness on
the one hand, and the holder of this Debenture on the other hand, and nothing
here shall impair, as between the Company and the holder of this Debenture, the
obligations of the Company, which is unconditional and absolute, to pay to the
holder of this Debenture principal and interest in accordance with its terms;
nor shall anything here prevent the holder of this Debenture from exercising all
remedies otherwise permitted by applicable law or herein, subject to the rights,
if any, under this paragraph of holders of Senior Indebtedness to received cash,
property or securities otherwise payable or deliverable to the holder of this
Debenture. The Company agrees, for the benefit of the holders of Senior
Indebtedness, that in the event that this Debenture is declared due and payable
before its expressed maturity because of the occurrence of an Event of Default
(a) the Company will give prompt notice in writing of the happening to the
holder of Senior Indebtedness, and (b) all Senior Indebtedness shall become
immediately due and payable on demand, regardless of its expressed maturity.
This Debenture may be redeemed at the option of the Company, upon a
resolution adopted by a majority of the Company's directors then in office who
are neither affiliated with PICO or designated by PICO as a nominee to the
Company's Board of Directors, solely at the closing of the Rights Offering (as
defined in the Agreement) (the "Redemption Date") in whole, prior to maturity,
upon not less than 5 nor more than 60 days' prior notice given in writing to the
holder hereof at its registered address, for 1,250,000 shares of Common Stock at
a redemption price of $2.00 per share, as adjusted pursuant to this paragraph,
together with accrued and unpaid interest to the Redemption Date. If the Company
at any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares prior to the Redemption Date, the Redemption Price shall be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of the Company's redemption option shall be proportionately increased.
If the Company at any time combines (by reverse stock split or otherwise) its
outstanding shares of Common Stock into a smaller number of shares prior to
Redemption Date, the Redemption Price shall be proportionately increased and the
number of shares of Common Stock obtainable upon exercise of the Company's
redemption option shall be proportionately decreased. In the case of a
consolidation, merger, or sale or transfer of substantially all the Company's
assets wit, into or to any person or entity or related group of persons or
entities which is not a subsidiary of the Company, the Redemption Price shall be
proportionately adjusted and the number of shares of Common Stock obtainable
upon conversion shall be proportionately adjusted so that the rights of the
holder hereof shall be equitably preserved. If the Company exercises its
redemption option, interest shall cease to accrue on this Debenture on or after
the Redemption Date.
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The Company may deem and treat the registered holder hereof as an
absolute owner of this Debenture (whether or not this Debenture shall be overdue
and notwithstanding any retention of ownership or other writing hereon made by
anyone other than the Company. For the purpose of receiving payment hereof for
conversion hereof and for all other purposes, and the Company shall not be
affected by any notice to the contrary. All such payments and conversions shall
satisfy and discharge the liability upon this Debenture to the extent of the sum
or sums so paid on the conversion so made.
No recourse for the payment of the principal of, if any, or interest on
this Debenture or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in this Debenture or because of the creation of any indebtedness represented
thereby, shall be filed against any incorporation, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
THIS DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAW OF
THE STATE OF ILLINOIS AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SAID STATE.
THIS DEBENTURE MAY NOT BE TRANSFERRED EXCEPT TO AFFILIATES OF PICO
WITHOUT THE COMPANY'S EXPRESS WRITTEN CONSENT, AND ANY SUCH TRANSFER SHALL BE
SUBJECT TO COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
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CONVERSION NOTICE
To: PC Quote, Inc.
The undersigned registered owner of this Debenture hereby irrevocably
exercises the option to convert this Debenture into shares of Common Stock of PC
QUOTE INC., in accordance with the terms of this Debenture, and directs that the
shares issuable and deliverable upon the conversion, together with any check in
payment for fractional shares be issued and delivered to the registered holder
hereof unless a different name has been indicated below.
Dated:____________________________ ---------------------------
Signature
Fill in for registration of shares to be delivered, and Debentures if to be
issued, other than to and in the name of the registered holder (Please Print):
- --------------------------------------
(Name)
- --------------------------------------
(Street Address)
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(City, State and Zip Code)
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Social security or other Taxpayer identification number
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A G R E E M E N T
THIS AGREEMENT is made this 14th day of November, 1996, by and between
PC Quote Inc., a Delaware corporation, and Physicians Insurance Company of Ohio,
an Ohio corporation ("PICO").
1. Agreement:
A. PICO agrees to purchase from PC Quote a Convertible Subordinated
Debenture in substantially the form attached hereto (the "Debenture")
in the principal amount of $2,500,000 due December 31, 2001 with
interest at an annual rate of one percent (1%) over the prime rate as
announced from time to time by The Wall Street Journal. Principal will
be payable in full on December 31, 2001. Interest shall accrue from the
Closing Date and be payable semi-annually beginning January 1, 1998.
Interest shall be payable in cash or, at the option of PICO, in shares
of Common Stock of PC Quote at their fair market value at the time of
such payment. The Debenture shall be convertible at the election of
PICO at any time into 1,250,000 shares of Common Stock of PC Quote (the
"Common Stock"), subject to adjustment as set forth therein; and the
Debenture shall be redeemable by PC Quote solely at the conclusion of
the Rights offering described below in paragraph 7 for 1,250,000 shares
of Common Stock of PC Quote (the "Common Stock"), subject to adjustment
as set forth therein; and the Debenture shall be redeemable by PC Quote
solely at the conclusion of the Rights offering described below in
paragraph 7 for 1,250,000 shares of Common Stock, subject to
adjustment. The agreement also provides that PC Quote shall, (i) at the
closing of the Debenture offering, provide for a five member Board of
Directors composed of Ronald Langley, Louis Morgan, Paul
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DiBiasio, John Hart, and Michael Ellis. Messrs. Morgan, DiBiasio and
Langley are current members of the Board of Directors. Messrs. Hart and
Ellis have been proposed as nominees to the Board by PICO; and (ii)
establish an Executive Committee of the Board having full powers
authorized by the Delaware General Corporation Law consisting of Louis
Morgan, Ronald Langley and John Hart. The Debenture offering is
expected to close on or before November 21, 1996.
2. Representations and Warranties of PC Quote: PC Quote hereby represents
and warrants to PICO as follows:
A. PC Quote presently has authorized 10,000,000 shares of Common Stock,
of which 7,350,000 shares are outstanding, 1,000,000 shares are
reserved for outstanding options under the Company's Incentive Stock
Option Plan and up to 100,000 shares are reserved for issuance under
the Company's Employee Stock Purchase Plan.
B. PC Quote has taken all requisite corporate action to authorize the
execution and delivery of this Agreement, the Debenture and the
transactions contemplated hereby and thereby, including the reservation
of an aggregate of 2,500,000 shares of Common Stock for issuance upon
conversion of the Debenture and the Rights offering described in
paragraph 7 below.
C. The shares of Common Stock to be issued upon conversion or
redemption of the Debenture and in payment of any interest thereon,
when so delivered, will be duly and validly authorized, fully paid and
non-assessable.
D. Except as disclosed by the Company to PICO, the execution and
delivery of this Agreement, the Debenture and the transactions
contemplated hereby and thereby do not conflict with, or cause a
default under, any material indenture, loan agreement, or other
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contract or agreement to which PC Quote is a party or by which its
property may be bound or affected, nor any judgment or order of any
court or governmental agency to which PC Quote or its property is
subject; nor is the consent of any governmental agency required for PC
Quote's execution and delivery of this Agreement, the Debenture or
performance of the transactions contemplated hereby and thereby except
for compliance with applicable federal and state securities laws.
3. Closing Date: The Closing Date shall be November 21, 1996, at 10:00
o'clock Chicago time, at the Company's executive offices in Chicago,
Illinois or at such other time and place as the parties may agree.
4. PICO Representations and Warranties: PICO represents and warrants to PC
Quote as follows:
A. PICO has taken all requisite corporate action to authorize the
execution and delivery of this Agreement, the purchase of the Debenture
and the transactions contemplated hereby and thereby, including its
agreement in connection with the Rights offering described in paragraph
7 below.
B. The execution and delivery of this Agreement, the purchase of the
Debenture and the transactions contemplated hereby and thereby
including its agreement in connection with the Rights offering
described in paragraph 7 below, do not conflict with, or cause a
default under, any material indenture, loan agreement, or other
contract or agreement to which PICO is a party or by which its property
may be bound or affected, nor any judgment or order of any court or
governmental agency to which PICO or its property is subject; nor is
the consent of any governmental agency required for PICO's execution
and delivery of this Agreement, purchase of the Debenture or
performance of the
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transactions contemplated hereby and thereby including PICO's agreement
in connection with the Rights offering described in paragraph 7 below,
except requisite compliance with applicable federal and state
securities laws.
5. PICO Investment Representations:
PICO represents and warrants to PC Quote that (i) it is in receipt of
PC Quote's Forms 10-Q for the periods ended March 31, 1996 and June 30,
1996 and the draft Form 10-Q for the quarter ended September 30, 1996;
(ii) it is familiar with the business, prospects and financial
condition of PC Quote; (iii) it understands that the Debenture and all
shares of Common Stock to be received by it upon conversion or
redemption of the Debenture or upon payment of interest will not be
registered under applicable federal or state securities laws until such
time as they are included in a Registration Statement filed by PC Quote
with the Securities Exchange Commission; (iv) the Debenture and all
such shares of Common Stock are being acquired by PICO for its own
account, for investment purposes only, and not with a view to
distribution or resale; (v) the Debenture and all such shares of Common
Stock cannot be sold or transferred except under a registration
statement, or applicable SEC exemption (such as Rule 144), and the
Debenture and certificates for such shares will contain a legend to
such effect; (vi) representatives of PICO have had an opportunity to
review any additional documents requested and to ask questions of, and
receive answers from officers of PC Quote concerning this investment;
(vii) PICO and its representatives have such knowledge and experience
in financial and business matters that PICO is capable of evaluating
the merits and risks of an investment in PC Quote; and (viii) PICO's
financial situation is such that it can comfortably hold the Debenture
and all the shares of Common Stock to be received for the required
period
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without selling them and can even sustain a complete loss with respect
to such Debenture and/or shares of Common Stock.
6. Stockholder Approval: As promptly as practicable PC Quote agrees to
prepare and submit for its shareholders' approval (i) an amendment to
its Certification of Incorporation to increase its authorized shares of
Common Stock to 20,000,000 shares and (ii) ratification of the
transactions contemplated by this Agreement. Such shareholder approval
may be by written consent of the holders of 51% or more of PC Quote's
outstanding shares or at the 1997 annual shareholders' meeting.
7. Rights Offering: PC Quote and PICO each agree as follows: A. PC Quote
agrees to prepare and file with the Securities and Exchange Commission
a Registration Statement (the "Registration Statement"), and use its
best efforts to have such Registration Statement declared effective,
for a Rights offering to be made pro rata to all its Shareholders
except PICO consisting of 1,250,000 shares of Common Stock at an
exercise price of $2.00 per share. Such Rights will be
non-transferable, exercisable solely in cash, will expire 30 days after
issuance, and will provide that PICO shall, at no cost to PICO,
exercise for $2.00 cash per share any such Right which expires
unexercised.
B. PICO agrees within three (3) business days from receipt of written
notice from PC Quote to such effect, to purchase for $2.00 cash all
shares of Common Stock deliverable upon the exercise of all Rights
which have expired unexercised.
C. To the extent permissible under applicable Federal and State
Securities Laws, PC Quote agrees to include in the Registration
Statement those shares of Common Stock
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issuable to PICO upon conversion or redemption of the Debenture and any
other shares of PC Quote common stock then owned by PICO.
PC QUOTE INC.
By: /s/ Louis J. Morgan
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Its Chairman
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PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ John R. Hart
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Its President and CEO
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