Exhibit 10.1
AMENDED AND RESTATED
SECURED CONVERTIBLE PROMISSORY NOTE
The undersigned, Hyperfeed
Technologies, Inc., a Delaware corporation (“
Borrower ”), and PICO Holdings, Inc., a
California corporation (“ Lender ”), are
parties to that certain Amended and Restated Secured Convertible
Promissory Note, dated March 28, 2005 (the “ Prior
Note ”), pursuant to which $4,102,460 remains
outstanding and unpaid as of the date hereof, which amount includes
all accrued interest and all other amounts owing from Borrower to
Lender (the “ Prior Balance ”). The
Borrower and Lender hereby agree to amend and restate the Prior
Note though this Amended and Restated Secured Convertible
Promissory Note, and Borrower hereby promises to pay to Lender the
principal sum or so much of the principal sum of Six Million
Dollars ($6,000,000) as may from time to time have been advanced
and be outstanding, together with accrued interest as provided
herein. Borrower and Lender acknowledge that the Prior Balance
hereby remains outstanding pursuant to the terms of this Amended
and Restated Secured Convertible Promissory Note (herein after the
“ Note ”) and no additional amounts
remaining owing from Borrower to Lender pursuant to either this
Note or the Prior Note as of the date hereof. Section M of
this Note contains certain defined terms used in this Note.
A. Principal .
1. Advances . Borrower
may from time to time request advances from Lender (individually an
“ Advance ” and collectively the “
Advances ”) by giving written notice to Lender
in accordance with the terms hereof, which notice shall indicate
the amount of the Advance requested and the proposed use of the
Advance proceeds. Provided that no Event of Default is in existence
and that the requested Advance would not cause an Event of Default
to occur, Lender shall make the Advance to Borrower within five
(5) days of receipt of Borrower’s notice. Lender shall
not be obligated to make an Advance to the extent that such Advance
when aggregated with all Advances would exceed Six Million Dollars
($6,000,000) in the aggregate. Borrower shall not have the right to
re-borrow any Advance to the extent that it has been repaid.
2. Use of Proceeds . The
proceeds of Advances shall be used exclusively for working capital
and operating expenses of the Borrower, and may not be used for
payment of the Senior Indebtedness (as defined below).
B. Interest . Interest on the unpaid principal
balance of this Note shall accrue at the prime rate plus two and
three-quarters percent (2.75%) per annum compounded monthly
commencing on the date Lender first makes an Advance to Borrower,
and shall be payable in a single installment at maturity as set
forth below.
C. Payment .
1. Scheduled Payment .
Subject to the provisions of Section C.4. and section F below,
the entire unpaid balance of principal (subject to conversion of
such principal as provided below) and all accrued and unpaid
interest shall be due and payable (i) on the day prior to the
first anniversary of the date hereof, or (ii) in
Lender’s sole discretion, any date after and including the
first anniversary date as Lender may declare by providing written
notice to Borrower; (the “ Maturity Date
”). If Lender elects the Maturity Date provided in
(ii) above, and not exercise its Conversion Rights (as defined
herein), Borrower shall have ten (10) business days in which
to make payment of principal and interest hereunder. Payment of
principal and interest hereunder shall be made by check delivered
to the Lender at the address furnished to the Borrower for that
purpose.
2. Prepayment . Subject
to the provisions of Section C.4. below, Borrower shall have
the right at any time and from time to time to prepay, in whole or
in part, the principal of this Note, without payment of any premium
or penalty. Any principal prepayment shall be accompanied by a
payment of all interest accrued on the amount prepaid through the
date of such prepayment.
3. Form of Payment .
Principal and interest and all other amounts due hereunder are to
be paid in lawful money of the United States of America in federal
or other immediately available funds.
4. Notice Prior to
Repayment . Borrower shall provide Lender with ten
(10) business days prior written notice of its intention to
make repayment of this Note, whether before or after the Maturity
Date, so that Lender may elect, in its sole discretion, to exercise
its Conversion Rights.
D. Conditions of Advances .
1. Conditions Precedent to
Initial Advance . The obligation of Lender to make the initial
Advance is subject to the condition precedent that Lender shall
have received, in form and substance satisfactory to Lender, the
following:
(a) this Note;
(b) a certificate of the
Secretary of Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Note;
(c) UCC National
Form Financing Statement;
(d) payment of the fees and
Lender Expenses in an amount of up to $20,000;
(e) to provide evidence of
insurance which satisfies the requirements of Section 7
hereof; and
(f) 25,000 shares of Common
Stock of the Borrower (such shares the “ Commitment
Shares ”), which Commitment Shares were delivered by
the Borrower to the Lender on or about March 28, 2005 and the
Lender acknowledges receipt thereof;
(g) a warrant issued by the
Borrower to purchase 125,000 shares of common stock of the
Borrower; and
(h) such other documents, and
completion of such other matters, as Lender may reasonably deem
necessary or appropriate.
2. Conditions Precedent to
all Advances . The obligation of Lender to make any Advance, is
further subject to the following conditions:
(a) the representations and
warranties contained herein shall be true and correct in all
material respects on and as of the date of such request for Advance
and on the effective date of each Advance as though made at and as
of each such date, and no Event of Default shall have occurred and
be continuing, or would exist after giving effect to such Advance
(provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and
complete in all material respects as of such date). The making of
each Advance shall be deemed to be a representation and warranty by
Borrower on the date of such Advance as to the accuracy of the
facts referred to in this Section.
(b) Borrower has borrowed the
maximum amount permissible under the Senior Loan Documents (as
defined below), as amended, such amount has been outstanding for as
least forty five (45) days and Borrower has provided evidence
of the foregoing reasonably satisfactory to Lender. Lender may
waive the requirements of this Section D.2.(b) by providing
writing of such waiver to Borrower.
(c) Borrower’s tangible
net worth, as determined in accordance with U.S. general accepted
accounting principals, at the end of the calendar month prior such
Advance is at least $3,000,000.
(d) Borrower’s ratio of
EBITDA (earnings before interest, taxes, depreciation and
amortization) to debt service at the end of the calendar month
prior to such Advance is at least 3.00 to 1.00.
Notwithstanding the foregoing,
Lender may waive the requirements of Section D.2.(c) and
Section D.2.(d) by providing writing of such waiver to
Borrower.
E. Security Interest .
1. Grant of Security
Interest . Borrower grants and pledges to Lender a continuing
security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any
and all Secured Obligations and in order to secure prompt
performance by Borrower of each of its covenants and duties under
the Loan Documents. Such security interest constitutes a valid,
perfected security interest in the presently existing Collateral,
and will constitute a valid, perfected security interest in
Collateral acquired after the date hereof, in each case, subject to
any Lien permitted hereunder and Permitted Liens.
F. Subordination . Except as provided in the
immediately following sentence, for as long as no event of default
on the Senior Indebtedness (as defined below) has occurred and is
continuing, Borrower shall make no payment of principal on account
of the Senior Indebtedness until prior payment in full of the
Secured Obligations. Notwithstanding the preceding sentence, if for
any period the Borrower does not maintain (1) tangible net
worth, as determined in accordance with U.S. general accepted
accounting principals (as determined as the end of each calendar
month) of at least $3,000,000 and (2) a ratio of EBITDA
(earnings before interest, taxes, depreciation, and amortization)
to debt service (as determined at the end of each calendar month)
of at least 3.00 to 1.00, Borrower shall not be prohibited
hereunder from making payments of principal on account of the
Senior Indebtedness prior to payment in full of the Secured
Obligations during such period. After, and during the continuance
of, an event of default on the Senior Indebtedness, the
indebtedness evidenced by this Note is expressly subordinate and
subject in right of payment to the prior payment in full of all
Senior Indebtedness of Borrower.
1. Definition of Senior
Indebtedness . “ Senior Indebtedness
” means the principal of (and premium, if any), unpaid
interest on and amounts reimbursed, fees, expenses, costs of
enforcement and other amounts due in connection with any
indebtedness of Borrower with respect to that certain Promissory
Note and that certain Security Agreement, each dated as of
June 1, 2004, by and between Borrower and Lakeside Bank (the
“ Senior Loan Documents ”).
2. Insolvency
Proceedings . If there shall occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization, or arrangements with creditors (whether or not
pursuant to bankruptcy or other insolvency laws), sale of all or
substantially all of the assets, dissolution, liquidation, or any
other marshaling of the assets and liabilities of Borrower, no
amount shall be paid by Borrower in respect of the principal of,
interest on or other amounts due with respect to this Note at the
time outstanding, unless and until the principal of and interest on
the Senior Indebtedness then outstanding shall be paid in full.
3. Subrogation . After,
and during the continuance of, an event of default on the Senior
Indebtedness, subject to the payment in full of all Senior
Indebtedness, Lender’s rights under this Note shall be
subrogated to the rights of the holder(s) of such Senior
Indebtedness (to the extent of the payments or distributions made
to the holder(s) of such Senior Indebtedness pursuant to the
provisions of this Section) to receive payments and distributions
of assets of Borrower applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior
Indebtedness shall, as between Borrower and its creditors, other
than the holders of Senior Indebtedness and Lender, be deemed to be
a payment by Borrower to or on account of this Note; and for
purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness to which Lender would be
entitled except for the provisions of this Section shall, as
between Borrower and its creditors, other than the holders of
Senior Indebtedness and Lender, be deemed to be a payment by
Borrower to or on account of the Senior Indebtedness.
G. Representations and Warranties . Borrower
represents and warrants to Lender that:
1. Collateral . Borrower
is the true and lawful owner of the Collateral, having good and
marketable title thereto, free and clear of any and all Liens other
than Liens and security interests granted to Lender hereunder and
the Permitted Liens set forth on the Schedule. Borrower shall not
create or assume or permit to exist any such Lien on or against any
of the Collateral except as created or permitted by the Loan
Documents and Permitted Liens, and Borrower shall promptly notify
Lender of any such other Lien against the Collateral and shall
defend the Collateral against, and take all such action as may be
necessary to remove or discharge, any such Lien.
2. Due Authorization; No
Conflict . The execution, delivery, and performance of the Loan
Documents are within Borrower’s powers, have been duly
authorized, and are not in conflict with nor constitute a breach of
any provision contained in Borrower’s Certificate of
Incorporation or Bylaws, nor will they constitute an event of
default under any material agreement to which Borrower is a party
or by which Borrower is bound. Borrower is not in default under any
material agreement to which it is a party or by which it is
bound.
3. Intellectual Property
Collateral . Borrower is the sole owner of the Intellectual
Property Collateral, except for non-exclusive licenses granted by
Borrower to its customers in the ordinary course of business. No
part of the Intellectual Property Collateral has been judged
invalid or unenforceable, in whole or in part, and no claim, to the
knowledge of Borrower, has been made that any part of the
Intellectual Property Collateral violates the rights of any third
party. Except as set forth in the Schedule of Exceptions, Borrower
is not a party to, or bound by, any agreement that restricts the
grant by Borrower of a security interest in Borrower’s rights
under such agreement.
4. Name; Location of Chief
Executive Office . Except as set forth in this Section 4,
Borrower has not done business under any name other than that
specified on the signature page hereof and under the names of
PCQuote.com and PCQuote, Inc. (through June 30, 2003) and
under the name of HYPRWare, Inc. since June 30, 2003. The
chief executive office of Borrower is located at the address listed
in Section M.3. hereof. All Borrower’s inventory and
equipment are located at the address located in Section M.3
and the addresses in New York (50 Broadway, Suite 2900, New
York, NY 10004), California (388 Market St, Suite 1050, San
Francisco, CA 94111), Aurora (600 N. Commons Drive, Suite 100,
Aurora, IL 60504) and 4313 Western Avenue, Lisle, IL 60532.
5. Litigation . There
are no actions or proceedings pending by or against Borrower before
any court or administrative agency in which an adverse decision
could have a material adverse effect, or a material adverse effect
on the business assets or financial condition of Borrower, or a
material adverse effect on Borrower’s interest or
Lender’s security interest in the Collateral (collectively, a
“ Material Adverse Effect ”).
6. Solvency, Payment of
Debts . Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
7. Taxes . Borrower has
filed or caused to be filed all tax returns required to be filed by
Borrower, and has paid, or has made adequate provision for the
payment of, all taxes reflected in such tax returns.
8. Government Consents .
Borrower has obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices
to, all governmental authorities that are necessary for, and the
absence of which would not cause a material adverse effect upon,
the continued operation of Borrower’s business as currently
conducted.
H. Affirmative Covenants . Borrower covenants and
agrees that, until payment in full of all Secured Obligations, and
until such time that Lender has no further obligation to make an
Advance, Borrower shall do all of the following
1. Repayment of Other
Indebtedness . Borrower hereby agrees that it will not make any
payment of principal in connection with the Senior Indebtedness, or
permit any of its subsidiaries to make any such payment, except in
accordance with Section F hereof. With respect to indebtedness
other than the Senior Indebtedness, Borrower hereby agrees that it
will not repay any indebtedness, or permit any of its subsidiaries
to make any such payment, incurred after the date hereof.
2. Perfection of Security
Interest . Borrower agrees to take all actions requested by
Lender and reasonably necessary to perfect, to continue the
perfection of, and to otherwise give notice of, the Lien granted
hereunder, including, but not limited to, execution of financing
statements.
3. Good Standing .
Borrower shall maintain its corporate existence in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in
which the failure to be so qualified could have a material adverse
effect upon the Borrower. Borrower shall maintain in force all
licenses, approvals and agreements, the loss of which could have a
Material Adverse Effect.
4. Government Compliance
. Borrower shall meet the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA.
Borrower shall comply with all statutes, laws, ordinances and
government rules and regulations to which it is subject,
noncompliance with which could have a Material Adverse Effect.
5. Financial Statements,
Reports, Certificates . Borrower shall deliver to Lender such
budgets, projections, operating plans, financial statements and
other financial information as Lender may reasonably request from
time to time, including, but not limited to monthly variance
reports and monthly cash flow reports.
6. Taxes . Borrower
shall make due and timely payment or deposit of all federal and
state taxes, and all material local taxes, assessments, or
contributions required of it by law.
7. Insurance .
(a) Borrower, at its expense,
shall keep the Collateral insured against loss or damage in such
amounts as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s
business is conducted on the date hereof. Borrower shall also
maintain insurance relating to Borrower’s business, ownership
and use of the Collateral in amounts and of a type that are
customary to businesses similar to Borrower’s.
(b) All such policies of
insurance shall be in such form, with such companies, and in such
amounts as are reasonably satisfactory to Lender. Subject to the
Lien in favor of the Senior Indebtedness, all such policies of
property insurance shall contain a lender’s loss payable
endorsement, in a form satisfactory to Lender, showing Lender as an
additional loss payee thereof, and all liability insurance policies
shall show Lender as an additional insured and shall specify that
the insurer must give at least twenty (20) days notice to
Lender before canceling its policy for any reason. Upon
Lender’s request, Borrower shall deliver to Lender certified
copies of such policies of insurance and evidence of the payments
of all premiums therefor. All proceeds payable under any such
policy shall, at the option of Lender, be payable to Lender to be
applied on account of the obligations under the Loan Documents.
8. Registration of
Intellectual Property Rights .
(a) (intentionally left
blank)
(b) Borrower shall
(i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights which are
necessary to the conduct of its business, (ii) use its
reasonable efforts to detect infringements of the Trademarks,
Patents and Copyrights and promptly advise Lender in writing of
infringements detected and (iii) not allow any Trademarks,
Patents or Copyrights to be abandoned, forfeited or dedicated to
the public without the written consent of Lender, which shall not
be unreasonably withheld.
(c) Lender may audit
Borrower’s Intellectual Property Collateral to confirm
compliance with this Section, provided such audit may not occur
more often than twice per year, unless an Event of Default has
occurred and is continuing. Lender have the right, but not the
obligation, to take, at Borrower’s sole reasonable expense,
any actions that Borrower is required under this Section to take
but which Borrower fails to take, after fifteen (15) calendar
days’ notice to Borrower. Borrower shall reimburse and
indemnify Lender for all reasonable costs and reasonable expenses
incurred in the exercise of its rights under this Section.
9. Filings . Borrower
shall file all reports and other information and documents which it
is required to file with the Securities and Exchange Commission or
the over-the-counter market, in connection with this Note or
otherwise.
10. Further Assurances .
At any time and from time to time Borrower shall execute and
deliver such further instruments and take such further action as
may reasonably be requested by Lender to effect the purposes of
this Note.
I. Negative Covenants . Borrower covenants and
agrees that, unt
