Exhibit 10.9
SECURED CONVERTIBLE PROMISSORY NOTE
$10,000,000
March 30, 2006
     The undersigned, HyperFeed Technologies, Inc., a Delaware corporation
(“Borrower”), hereby promises to pay to PICO Holdings, Inc., a California
corporation, (“Lender”), the principal sum or so much of the principal sum of
Ten Million Dollars ($10,000,000) as may from time to time have been advanced
and be outstanding, together with accrued interest as provided herein.
     Borrower and Lender acknowledge that PICO Holdings, Inc. loaned the
principal sum of $4,160,000 to HyperFeed Technologies, Inc. on March 15, 2006 by
means of a Promisorry Note. The parties agree that the unpaid principal and
accrued interest under said March 15, 2006 Promissory Note shall be included in
the $10,000,000 principal sum of this Secured Convertible Promissory Note
(“Note”), and that accordingly $4,160,000 principal and accrued interest has
been advanced under the terms of this Note. The parties also agree that said
March 15, 2006 Promissory Note is hereby cancelled.
     Section L 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 Ten Million Dollars
($10,000,000) 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 of the Borrower, and not for acquisitions of business or
technology.
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. 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 second anniversary of the date hereof, or (ii) in
Lender’s sole discretion, any date after and including the second 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

 

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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) to provide evidence of insurance which satisfies the
requirements of Section G.6. hereof;
               (e) a warrant, attached as Exhibit 1, issued by the Borrower to
purchase 125,000 shares of common stock of the Borrower; and
               (f) 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.

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               (b) Borrower’s tangible net worth, as determined in accordance
with U.S. generally accepted accounting principals, at the end of the calendar
month prior such Advance is at least $3,000,000.
               (c) 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.(b) and Section D.2.(c) by providing writing of such waiver to
Borrower.
E. Security Interest.
     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. 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 L.3. hereof. All Borrower’s inventory and equipment are
located at the address located in Section L.3 and the addresses in New York (50
Broadway, Suite 2900, New York, NY 10004),

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California (388 Market St, Suite 1050, San Francisco, CA 94111), Aurora (600 N.
Commons Drive, Suite 100, Aurora, IL 60504), Savvis Data Center (587 McDonnell
Blvd, Savvis Hazelwood Data Center, Hazelwood, MO 63042) and 700 District Drive,
Itasca, IL 60143.
     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.
G. 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. 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.
     2. 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.
     3. 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.
     4. 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.
     5. 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.

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     6. 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.
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.
     7. 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.
     8. 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.
     9. 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.
H. Negative Covenants. Borrower covenants and agrees that, until payment in full
of all Secured Obligations, and until such time as Lender has no further
obligation to make an Advance, Borrower will not do any of the following without
express written consent of Lender:
     1. Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a “Transfer”), all or any part of its business or property, other
than: (i) Transfers of inventory in the

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ordinary course of business; (ii) Transfers of non-exclusive licenses for the
use of the property of Borrower in the ordinary course of business; or
(iii) Transfers of worn-out or obsolete equipment.
     2. Change in Business; Change in Control or Executive Office. Engage in any
business other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto); or
without thirty (30) days prior written notification to Lender, relocate its
chief executive office or state of incorporation; or without Lender’s prior
written consent, change the date on which its fiscal year ends.
     3. Mergers or Acquisitions. Merge or consolidate or agree to 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.
     4. Indebtedness. Create, incur, assume or be or remain liable with respect
to any indebtedness for borrowed money (other than trade debt), other than the
indebtedness evidenced by this Note.
     5. Encumbrances. Create, incur, assume or suffer to exist any Lien with
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any accounts, except for Permitted Liens
and Liens disclosed on the Schedule. Agree with any Person other than Lender not
to grant a security interest in, or otherwise encumber, any of its property.
     6. 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 that Borrower may repurchase the stock of former employees
pursuant to stock repurchase agreements as long as an Event of Default does not
exist prior to such repurchase or would not exist after giving effect to such
repurchase.
     7. Investments. Directly or indirectly acquire or own, or make any
investment in or to any Person, or permit any of its subsidiaries to do so,
other than investments set forth on the Schedule; or maintain or invest any of
its property with a Person unless such Person has entered into a control
agreement with Lender, in form and substance satisfactory to Lender; or suffer
or permit any subsidiary to be a party to, or be bound by, an agreement that
restricts such subsidiary from paying dividends or otherwise distributing
property to Borrower.
     8. Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any affiliate of Borrower except
for transactions that are in the ordinary course of Borrower’s business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.
     9. Negative Pledge Agreements. Permit the inclusion in any contract to
which it becomes a party of any provisions that could restrict or invalidate the
creation of a security interest in any of Borrower’s property.
I. Events of Default.
     1. Definition of Event of Default. The occurrence of any one or more of the
following events shall constitute an “Event of Default” hereunder:

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               (a) Borrower’s breach of the obligation to pay any amount of the
Secured Obligations on the date that it is due and payable;
               (b) Borrower’s failure to perform, keep or observe any of its
covenants, conditions, promises, agreements or obligations under any of the Loan
Documents or any other agreement with any Person if such failure may have a
material adverse effect on Borrower’s assets, operations or condition, financial
or otherwise;
               (c) Borrower’s commencement of voluntary bankruptcy proceedings,
or Borrower’s filing of a petition or answer or consent seeking reorganization
or release, under the federal Bankruptcy Code, or any other applicable federal
or state law relating to creditor rights and remedies, or Borrower’s consent to
the filing of any such petition or the appointment of a receiver, liquidator,
assignee, trustee or other similar official of Borrower or of any substantial
part of its property, or Borrower’s making of an assignment for the benefit of
creditors, or the taking of corporate action in furtherance of such action;
               (d) the loss, theft, damage or destruction of, or sale (other
than in the ordinary course of business), lease or furnishing under a contract
of service of, any material portion of the Collateral;
               (e) the creation (whether voluntary or involuntary) of, or any
attempt to create, any Lien upon any of the Collateral, other than the Permitted
Liens, or any levy, seizure or attachment of any material portion thereof;
               (f) the occurrence and continuance of any default under any lease
or agreement for borrowed money that gives the lessor or the creditor of such
indebtedness, as applicable, the right to accelerate the lease payments or the
indebtedness, as applicable, or the right to exercise any rights or remedies
with respect to any of the Collateral; or
               (g) the entry of any judgment or order against Borrower which
remains unsatisfied or undischarged and in effect for thirty (30) days after
such entry without a stay of enforcement or execution.

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     2. Rights and Remedies on Event of Default.
               (a) During the continuance of an Event of Default, Lender shall
have the right, itself or through any of its agents, with or without notice to
Borrower (as provided below), as to any or all of the Collateral, by any
available judicial procedure, or without judicial process (provided, however,
that it is in compliance with the UCC), to exercise any and all rights afforded
to a secured party under the UCC or other applicable law. Without limiting the
generality of the foregoing, Lender shall have the right to sell or otherwise
dispose of all or any part of the Collateral, either at public or private sale,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such terms and conditions, all as Lender, in its
reasonable discretion, may deem advisable, and it shall have the right to
purchase at any such sale. Borrower agrees that a notice sent at least fifteen
(15) days before the time of any intended public sale or of the time after which
any private sale or other disposition of the Collateral is to be made shall be
reasonable notice of such sale or other disposition. The proceeds of any such
sale, or other Collateral disposition shall be applied, first to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, and the
like, and to Lender’s reasonable attorneys’ fees and legal expenses, and then to
the Secured Obligations and to the payment of any other amounts required by
applicable law, after which Lender shall account to Borrower for any surplus
proceeds. If, upon the sale or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which Lender is legally entitled,
Borrower shall be liable for the deficiency, together with interest thereon, and
the reasonable fees of any attorneys Lender’s employs to collect such
deficiency; provided, however, that the foregoing shall not be deemed to require
Lender to resort to or initiate proceedings against the Collateral prior to the
collection of any such deficiency from Borrower. To the extent permitted by
applicable law, Borrower waives all claims, damages and demands against Lender
arising out of the retention or sale or lease of the Collateral or other
exercise of Lender’s rights and remedies with respect thereto.
               (b) To the extent permitted by law, Borrower covenants that it
will not at any time insist upon or plead, or in any manner whatever claim or
take any benefit or advantage of, any stay or extension law now or at any time
hereafter in force, nor claim, take or insist upon any benefit or advantage of
or from any law now or hereafter in force providing for the valuation or
appraisal of the Collateral or any part thereof, prior to any sale or sales
thereof to be made pursuant to any provision herein contained, or the decree,
judgment or order of any court of competent jurisdiction; or, after such sale or
sales, claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and, to the full extent legally permitted, hereby expressly waives all
benefit and advantage of any such law or laws, and covenants that it will not
invoke or utilize any such law or laws or otherwise hinder, delay or impede the
execution of any power herein granted and delegated to Lender, but will suffer
and permit the execution of every such power as though no such power, law or
laws had been made or enacted.
               (c) Any sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall operate to divest all Borrower’s right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the Collateral sold, and shall be a perpetual bar, both at law and in equity,
against Borrower, its successors and assigns, and against all persons and
entities claiming the Collateral sold or any part thereof under, by or through
Borrower, its successors or assigns.
               (d) Borrower appoints Lender, and any officer, employee or agent
of Lender, with full power of substitution, as Borrower’s true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of Borrower, during the continuance of an Event of Default, to
endorse any notes, checks, drafts, money orders, or other instruments of payment
in respect of the Collateral that may come into Lender’s possession, to sign and
endorse any drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to

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Collateral; to pay or discharge taxes or Liens at any time levied or placed on
or threatened against the Collateral; to demand, collect, issue receipt for,
compromise, settle and sue for monies due in respect of the Collateral; to
notify persons and entities obligated with respect to the Collateral to make
payments directly to Lender; and, generally, to do, at Lender’s option and at
Borrower’s expense, at any time, or from time to time, all acts and things which
Lender deems necessary to protect, preserve and realize upon the Collateral and
Lender’s security interest therein to effect the intent of the Loan Documents,
all as fully and effectually as Borrower might or could do; and Borrower hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable as long as any of the
Secured Obligations are outstanding.
               (e) All of Lender’s rights and remedies with respect to the
Collateral, whether established hereby or by any other agreements, instruments
or documents or by law shall be cumulative and may be exercised singly or
concurrently.
J. Conversion Right.
     1. Conversion Right. Lender shall have the right (the “Conversion Right”),
in its sole discretion, at any time and from time to time to elect to convert
all or any part of the Secured Obligations into that number of shares of Common
Stock of Borrower as is obtained by dividing (a) the total amount of Secured
Obligations by (b) the conversion price (the “Conversion Price”), which is equal
to the lesser of (i) eighty percent (80%) of the five-day moving average price
per share of the Common Stock (on the date of the Lender’s election to exercise
its Conversion Right or (ii) 80% of $1.05. If the Borrower at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise,
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and if the Borrower at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
     2. Exercise of Conversion Right. To convert any of the Secured Obligations
into shares of Common Stock, Lender shall deliver to Borrower a written notice
of election to exercise the Conversion Right (the “Conversion Notice”). Borrower
shall, as soon as practicable thereafter, issue and deliver to Lender a
certificate or certificates, registered in Lender’s name, for the number of
shares of Common Stock to which Lender shall be entitled by virtue of such
exercise. The conversion of the Secured Obligations shall be deemed to have been
made on the date that Borrower receives the Conversion Notice (the “Conversion
Date”) and Lender shall be treated for all purposes as the record holder of the
Conversion Shares as of such date.
     3. Fractional Shares. Borrower shall not issue fractional shares of Common
Stock or scrip representing fractional shares of Common Stock upon exercise of
the Conversion Right. As to any fractional share of Common Stock which Lender
would otherwise be entitled to purchase from Borrower upon such exercise,
Borrower shall purchase from Lender such fractional share at a price equal to an
amount calculated by multiplying such fractional share (calculated to the
nearest 1/100th of a share) by the price per share of Common Stock on the
Conversion Date. Payment of such amount shall be made in cash or by check
payable to the order of Lender at the time of delivery of any certificate or
certificates arising upon such exercise.
K. Registration Rights. Concurrent with the execution and delivery of this Note,
Borrower shall take all actions necessary to cause Lender, upon the exercise of
the Conversion Right provided for herein, to have similar registration and
similar liquidity rights as the rights granted to the participants in
HyperFeed’s Private Placement dated May 15, 2003, and during the term of this
Note no stockholder of

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Borrower shall have more favorable registration or other liquidity rights than
the rights granted to Lender pursuant to this Section.
L. Other Provisions.
     1. Definitions. As used herein, the following terms shall have the
following meanings:
     “Lender Expenses” means all reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents;
reasonable Collateral audit fees; and Lender’s reasonable attorneys’ fees and
expenses incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.
     “Collateral” means the Intellectual Property Collateral and the property
described on Exhibit A attached hereto.
     “Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.
     “Intellectual Property Collateral” means all of Borrower’s right, title,
and interest in and to the following:
               (a) Copyrights, Trademarks and Patents;
               (b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
               (c) Any and all design rights which may be available to Borrower
now or hereafter existing, created, acquired or held;
               (d) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to sue for and collect such damages for said use or infringement
of the intellectual property rights identified above;
               (e) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
               (f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
               (g) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
     “Insolvency Proceeding” means any proceeding commenced by conforms to
J.1(c) any Person under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments
for the benefit of creditors, formal or informal moratoria,

10

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compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
     “Lien” means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, security interest, charge, claim
or other encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any agreement to give or refrain from giving a lien,
mortgage, pledge, hypothecation, assignment, deposit arrangement, security
interest, charge, claim or other encumbrance of any kind.
     “Loan Documents” means, collectively, this Note, any note or notes executed
by Borrower and issued to Lender, and any other agreement entered into in
connection with this Note, all as amended or extended from time to time.
     “Patents” means all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.
     “Permitted Liens” means: (i) Liens imposed by law, such as carriers’,
warehousemen’s, materialmen’s and mechanics’ liens, or Liens arising out of
judgments or awards against Borrower with respect to which Borrower at the time
shall currently be prosecuting an appeal or proceedings for review; (ii) Liens
for taxes not yet subject to penalties for nonpayment and Liens for taxes the
payment of which is being contested in good faith and by appropriate proceedings
and for which, to the extent required by U.S. generally accepted accounting
principles then in effect, proper and adequate book reserves relating thereto
are established by Borrower; (iii) liens securing the purchase price or lease of
any goods, which liens attached only to the goods being purchased or leased;
(iv) liens securing security bonds, bid bonds, performance bonds, and other
similar items; (v) liens in the form of deposits or pledges in connection with
worker’s compensation, social security unemployment compensation or other
similar matter; and (vi) liens existing as of the date hereof.
     “Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, person or governmental agency.
     “Secured Obligations” means all debt, principal, interest, Lender Expenses
and other amounts owed to Lender by Borrower pursuant to the Loan Documents,
whether absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an
Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Lender may have obtained by assignment or
otherwise.
     “Trademarks” means any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.
     “UCC” means the Uniform Commercial Code in effect from time to time in the
relevant jurisdiction.
     2. Governing Law; Venue. The Loan Documents shall be governed by the laws
of the State of California, without giving effect to conflicts of law
principles. Borrower and Lender agree that all actions or proceedings arising in
connection with the Loan Documents shall be tried and litigated only in the
state and federal courts located in the City of San Diego, County of San Diego,
State of California or,

11

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at Lender’s option, any court in which Lender determines it is necessary or
appropriate to initiate legal or equitable proceedings in order to exercise,
preserve, protect or defend any of its rights and remedies under the Loan
Documents or otherwise or to exercise, preserve, protect or defend its Lien, and
the priority thereof, against the Collateral, and which has subject matter
jurisdiction over the matter in controversy. Borrower waives any right it may
have to assert the doctrine of forum non conveniens or to object to such venue,
and consents to any court ordered relief. Borrower waives personal service of
process and agrees that a summons and complaint commencing an action or
proceeding in any such court shall be promptly served and shall confer personal
jurisdiction if served by registered or certified mail to Borrower. The choice
of forum set forth herein shall not be deemed to preclude the enforcement of any
judgment obtained in such forum, or the taking of any action under the Loan
Documents to enforce the same, in any appropriate jurisdiction.
     3. Notices. Any notice or communication required or desired to be served,
given or delivered hereunder shall be in the form and manner specified below,
and shall be addressed to the party to be notified as follows:

     
If to Lender:
  James F. Mosier, Esq.
 
  General Counsel and Secretary
 
  PICO Holdings, Inc.
 
  875 Prospect Street, Suit 301
 
  La Jolla, CA 92037
 
  Phone:   858.456.6022
 
  Fax:     858.456.6480  
If to Borrower:
  Gemma R. Lahera
 
  Principal Accounting Officer and Treasurer
 
  HyperFeed Technologies, Inc.
 
  300 South Wacker Drive, #300
 
  Chicago, IL 60606

or to such other address as each party designates to the other by notice in the
manner herein prescribed. Notice shall be deemed given hereunder if
(i) delivered personally or otherwise actually received, (ii) sent by overnight
delivery service, (iii) mailed by first-class United States mail, postage
prepaid, registered or certified, with return receipt requested, or (iv) sent
via telecopy machine with a duplicate signed copy sent on the same day as
provided in clause (ii) above. Notice mailed as provided in clause (iii) above
shall be effective upon the expiration of three (3) business days after its
deposit in the United States mail, and notice telecopied as provided in clause
(iv) above shall be effective upon receipt of such telecopy if the duplicate
signed copy is sent under clause (iv) above. Notice given in any other manner
described in this section shall be effective upon receipt by the addressee
thereof; provided, however, that if any notice is tendered to an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
     4. Lender’s Rights; Borrower Waivers. Lender’s acceptance of partial or
delinquent payment from Borrower hereunder, or Lender’s failure to exercise any
right hereunder, shall not constitute a waiver of any obligation of Borrower
hereunder, or any right of Lender hereunder, and shall not affect in any way the
right to require full performance at any time thereafter. Borrower waives
presentment, diligence, demand of payment, notice, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note. In any action on this Note, Lender need not produce or
file the original of this Note, but need only file a photocopy of this Note
certified by Lender be a true and correct copy of this Note in all material
respects.

12

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     5. Enforcement Costs. Borrower shall pay all reasonable costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses Lender
expends or incurs in connection with the enforcement of the Loan Documents, the
collection of any sums due thereunder, any actions for declaratory relief in any
way related to the Loan Documents, or the protection or preservation of any
rights of the holder thereunder.
     6. Severability. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision is prohibited by or invalid under applicable law, it shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of the provision or the remaining provisions of this
Note.
     7. Amendment Provisions. This Note may not be amended or modified, nor may
any of its terms be waived, except by written instruments signed by Borrower and
Lender.
     8. Binding Effect. This Note shall be binding upon, and shall inure to the
benefit of, Borrower and the holder hereof and their respective successors and
assigns; provided, however, that Borrower’s rights and obligations shall not be
assigned or delegated without Lender’s prior written consent, given in its sole
discretion, and any purported assignment or delegation without such consent
shall be void ab initio.
     9. Time of Essence. Time is of the essence of each and every provision of
this Note.
     10. Headings. Section headings used in this Note have been set forth herein
for convenience of reference only. Unless the contrary is compelled by the
context, everything contained in each section hereof applies equally to this
entire Note.
[The remainder of this page is intentionally left blank.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Note to be executed
as of the date first above written.

                  BORROWER:         HYPERFEED TECHNOLOGIES, INC.    
 
           
 
  By:   /s/ Gemma R. Lahera    
 
     
 
   
 
           
 
  Title:   Principal Accounting Officer & Treasurer    
 
           
 
                LENDER:         PICO HOLDINGS, INC.    
 
           
 
  By:   /s/ James F. Mosier    
 
           
 
           
 
  Title:   General Counsel & Secretary    
 
           

 

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DEBTOR:
  HyperFeed Technologies, Inc.

SECURED PARTY:
  PICO Holdings, Inc.

EXHIBIT A
COLLATERAL DESCRIPTION ATTACHMENT
TO AMENDED AND RESTATED SECURED CONVERTIBLE PROMISSORY NOTE
     All personal property of Borrower (herein referred to as “Borrower” or
“Debtor”) whether presently existing or hereafter created or acquired, and
wherever located, including, but not limited to:
          (a) all accounts (including health-care-insurance receivables),
chattel paper (including tangible and electronic chattel paper), deposit
accounts, documents (including negotiable documents), equipment (including all
accessions and additions thereto), general intangibles (including payment
intangibles and software), goods (including fixtures), instruments (including
promissory notes), inventory (including all goods held for sale or lease or to
be furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor’s books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;
          (b) all common law and statutory copyrights and copyright
registrations, applications for registration, now existing or hereafter arising,
in the United States of America or in any foreign jurisdiction, obtained or to
be obtained on or in connection with any of the forgoing, or any parts thereof
or any underlying or component elements of any of the forgoing, together with
the right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to sue in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;
          (c) all trademarks, service marks, trade names and service names and
the goodwill associated therewith, together with the right to trademark and all
rights to renew or extend such trademarks and the right (but not the obligation)
of Secured Party to sue in its own name and/or in the name of the Debtor for
past, present and future infringements of trademark;
          (d) all (i) patents and patent applications filed in the United States
Patent and Trademark Office or any similar office of any foreign jurisdiction,
and interests under patent license agreements, including, without limitation,
the inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Debtor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing;
          (e) the Intellectual Property Collateral, as defined in the Amended
and Restated Secured Convertible Promissory Note; and

 

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          (f) any and all cash proceeds and/or noncash proceeds of any of the
foregoing, including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time, including revised Division 9 of
the Uniform Corrunercial Code-Secured Transactions, added by Stats. 1999, c.991
(S.B. 45), Section 35, operative July 1, 2004.

 

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EXHIBIT B
Copyrights

              Registration   Registration Description   Number   Date
None
       

 

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EXHIBIT C
Patents

              Registration/   Registration/     Application   Application
Description   Number   Date
None
       

 

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EXHIBIT D
Trademarks

              Registration/   Registration/     Application   Application
Description   Number   Date
None
       

 

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Schedule of Exceptions
None

 

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EXHIBIT 1
     THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (1) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR
(III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
     THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON THE THIRD
ANNIVERSARY OF THE CLOSING DATE (THE “EXPIRATION DATE”).
HYPERFEED TECHNOLOGIES, INC.
WARRANT TO PURCHASE 125,000 SHARES OF
COMMON STOCK, PAR VALUE [$0.001] PER SHARE
     PICO Holdings, Inc., a California corporation, (“Warrantholder”), and
HyperFeed Technologies, Inc., a Delaware corporation (“Company”), are parties to
that certain Amended and Restated Convertible Secured Promissory Note, as of
even date herewith (the “Note”). This Warrant certifies that, in consideration
of the Note and for other valuable received, Warrantholder is entitled to
purchase, subject to the provisions of this Warrant, from the Company at any
time not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined
above), at an exercise price per share equal to $1.05 (the exercise price in
effect being herein called the (“Warrant Price”), 125,000 shares (“Warrant
Shares”) of the Company’s Common Stock, par value [$0.001] per share (“Common
Stock”). The number of Warrant Shares purchasable upon exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time as
described herein.
     Section 1. Registration. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of this Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
     Section 2. Transfers. As provided herein, this Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act of
1933, as amended (the “Secutities Act”), or an exemption from such registration.
Subject to such restrictions, the Company shall transfer this Warrant from time
to time upon the books to be maintained by the Company for that purpose, upon
surrender thereof for transfer, properly endorsed or accompanied by appropriate
instructions for transfer and such other documents as may be reasonably required
by the Company, including, if required by the Company, an opinion of its counsel
to the effect that such transfer is exempt from the registration requirements of
the Securities Act, to establish that such transfer is being made in accordance
with the terms hereof, and a new Warrant shall be issued to the transferee and
the surrendered Warrant shall be canceled by the Company.
     Section 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant, in whole or in part, at any time prior
to its expiration upon surrender of the Warrant, together with delivery of a
duly executed Warrant exercise form, in the form attached hereto as Appendix A
(the “Exercise Agreement”) and payment by cash, certified check or wire transfer
of immediately available funds (or, in certain circumstances, by cashless
exercise as provided in Section 17 below) of the aggregate Warrant Price for
that number of Warrant Shares then being purchased, to the Company during normal
business hours on any business day at the Company’s principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the Warrantholder). The

 

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Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or
the Warrantholder’s designee, as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered
(or the date evidence of loss, theft or destruction thereof and security or
indemnity satisfactory to the Company has been provided to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered. Certificates for the Warrant Shares so purchased shall be
delivered to the Warrantholder within a reasonable time, not exceeding three
(3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the Warrantholder and shall be registered in the name of the Warrantholder or
such other name as shall be designated by the Warrantholder, as specified in the
Exercise Agreement. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the Warrantholder a new
Warrant representing the right to purchase the number of shares with respect to
which this Warrant shall not then have been exercised. As used herein, “business
day” means a day, other than a Saturday or Sunday, on which banks in New York
City are open for the general transaction of business.
     Section 4. Compliance with the Securities Act of 1933. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant, and a similar legend on any security issued or issuable upon
exercise of this Warrant, unless counsel for the Company is of the opinion as to
any such security that such legend is unnecessary.
     Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
or assignment involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the Warrantholder in respect of
which such shares are issued or any substitute or balance Warrant, and in such
case, the Company shall not be required to issue or deliver any certificate for
Warrant Shares or any substitute or balance Warrant until the person requesting
the same has paid to the Company the amount of such tax or has established to
the Company’s reasonable satisfaction that such tax has been paid. The
Warrantholder shall be responsible for income taxes due under federal, state or
other law, if any such tax is due.
     Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon surrender and cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
     Section 7. Reservation of Common Stock. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved until issued (if necessary) as contemplated by this
Section 7, out of the authorized and unissued shares of Common Stock, sufficient
shares to provide for the exercise of the rights of purchase represented by this
Warrant. The Company agrees that all Warrant Shares issued upon due exercise of
the Warrant shall be, at the time of delivery of the certificates for such
Warrant Shares, duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of the Company.
     Section 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.

2

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          (a) If the Company shall, at any time or from time to time while this
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event upon payment of a Warrant
Price that has been adjusted to reflect a fair allocation of the economics of
such event to the Warrantholder. Such adjustments shall be made successively
whenever any event listed above shall occur.
          (b) If any capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor or becomes a
subsidiary of another entity or a sale, transfer or other disposition of all or
substantially all of the Company’s assets to another corporation shall be
effected (other than a pledge or hypothecation to a lender as security for a
bona fide loan to the Company), then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each Warrantholder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, such shares of
stock, securities or assets as would have been issuable or payable with respect
to or in exchange for a number of Warrant Shares equal to the number of Warrant
Shares immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of each Warrantholder to the end
that the provisions hereof (including, without limitation, provision for
adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company shall not
effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets, or
other appropriate corporation or entity, shall assume the obligation to deliver
to the Warrantholder, at the last address of the Warrantholder appearing on the
books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Warrantholder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
          (c) In case the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior
to such payment date, less the fair market value (as determined by the Company’s
Board of Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which

3

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shall be the total number of shares of Common Stock outstanding multiplied by
such Market Price per share of Common Stock immediately prior to such payment
date. “Market Price” as of a particular date (the “Valuation Date”) shall mean
(i) the closing sale price on the last trading day prior to the Valuation Date
of one share of Common Stock as listed on The Nasdaq Stock Market, Inc.
(“Nasdaq”), the National Association of Securities Dealers, Inc., OTC Bulletin
Board (the “Bulletin Board”) or such similar quotation system or association, or
a national stock exchange, or, if no such closing sale price is available
therefor, the average of the high bid and the low asked price on the last
trading day prior to the Valuation Date; or (ii) if the Common Stock is not then
or quoted on Nasdaq, the Bulletin Board or similar quotation system or
association, or listed on a national stock exchange, the fair market value of
one share of Common Stock as of the Valuation Date, as determined in good faith
by the Board of Directors of the Company and the Warrantholder. If the Common
Stock is not then listed on a national securities exchange, the Bulletin Board
or such other quotation system or association, the Board of Directors of the
Company shall respond promptly, in writing, to an inquiry by the Warrantholder
prior to the exercise hereunder as to the fair market value of a share of Common
Stock as determined by the Board of Directors of the Company. In the event that
the Board of Directors of the Company and the Warrantholder are unable to agree
upon the fair market value in respect of subpart (c) of this paragraph, the
Company and the Warrantholder shall jointly select an appraiser, who is
experienced in such matters. The decision of such appraiser shall be final and
conclusive, and the fee payable to such appraiser shall be borne equally by the
Company and the Warrantholder. Such adjustment shall be made successively
whenever such a payment date is fixed.
          (d) An adjustment to the Warrant Price shall become effective
immediately after the payment date in the case of each dividend or distribution
and immediately after the effective date of each other event which requires an
adjustment.
          (e) In the event that, as a result of an adjustment made pursuant to
this Section 8, the Warrantholder shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the number of
such other shares so receivable upon exercise of this Warrant shall be subject
thereafter to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Warrant.
     Section 9. Fractional Interest. The Company shall not be required to issue
fractions of Warrant Shares or other capital stock upon the exercise of this
Warrant. If any fractional share of Common Stock or other capital stock would,
except for the provisions of the first sentence of this Section 9, be
deliverable upon such exercise, the Company, in lieu of delivering such
fractional share, shall pay to the exercising Warrantholder an amount in cash
equal to the Market Price of such fractional share of Common Stock or other
capital stock on the date of exercise.
     Section 10. Benefits. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
     Section 11. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.
     Section 12. Identity of Transfer Agent. The Transfer Agent for the Common
Stock is Computershare. Upon the appointment of any subsequent transfer agent
for the Common Stock or other

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shares of the Company’s capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant, the Company will mail to the
Warrantholder a statement setting forth the name and address of such transfer
agent.
     Section 13. Notices. Any notice or communication required or desired to be
served, given or delivered hereunder shall be in the form and manner specified
below, and shall be addressed to the party to be notified as follows:

     
If to Warrantholder:
  James F. Mosier, Esq.
 
  General Counsel and Secretary
 
  PICO Holdings, Inc.
 
  875 Prospect Street, Suite 301
 
  La Jolla, CA 92037
 
  Phone: 858.456.6022
 
  Fax: 858.456.6480
 
   
With a copy to:
  DLA Piper Rudnick Gray Cary US LLP
 
  4365 Executive Drive, Suite 1100
 
  San Diego, CA 92121
 
  Attention: Marty B. Lorenzo, Esq.
 
  Fax: 858.677.1401
 
   
If to the Company:
  Gemma R. Lahera
 
  Principal Accounting Officer and Treasurer
 
  HyperFeed Technologies, Inc.
 
  300 South Wacker Drive, #300
 
  Chicago, IL 60606

or to such other address as each party designates to the other by notice in the
manner herein prescribed. Notice shall be deemed given hereunder if
(i) delivered personally or otherwise actually received, (ii) sent by overnight
delivery service, (iii) mailed by first-class United States mail, postage
prepaid, registered or certified, with return receipt requested, or (iv) sent
via telecopy machine with a duplicate signed copy sent on the, same day as
provided in clause (ii) above. Notice mailed as provided in clause (iii) above
shall be effective upon the expiration of three (3) business days after its
deposit in the United States mail, and notice telecopied as provided in clause
(iv) above shall be effective upon receipt of such telecopy if the duplicate
signed copy is sent under clause (iv) above. Notice given in any other manner
described in this section shall be effective upon receipt by the addressee
thereof; provided, however, that if any notice is tendered to an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
     Section 14. Registration Rights. The Warrantholder and any subsequent
Warrantholder is entitled to the benefit of certain registration rights with
respect to the shares of Common Stock issuable upon the exercise of this Warrant
as set forth on Appendix C hereto.
     Section 15. Successors. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
     Section 16. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of California, without reference to the choice of law
provisions thereof. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably submits to the exclusive jurisdiction of the
courts of the State of California in San Diego County and the United States
District Court for the Southern District of

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California for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Warrant and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto by the same methods as are specified for the giving
of notices under this Warrant. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably consents to the jurisdiction of any such court
in any such suit, action or proceeding and to the laying of venue in such court.
The Company and, by accepting this Warrant, the Warrantholder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE
WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
     Section 17. Cashless Exercise. Notwithstanding any other provision
contained herein to the contrary, from and after the first anniversary of the
Closing Date (as defined in the Purchase Agreement) and so long as the Company
is required under the Registration Rights Agreement to have effected the
registration of the Warrant Shares for resale to the public pursuant to a
Registration Statement (as such term is defined in the Registration Rights
Agreement), if the Warrant Shares may not be freely sold to the public for any
reason (including, but not limited to, the failure of the Company to have
effected the registration of the Warrant Shares or to have a current prospectus
available for delivery or otherwise, but excluding the period of any Allowed
Delay (as defined in the Registration Rights Agreement), the Warrantholder may
elect to receive, without the payment by the Warrantholder of the aggregate
Warrant Price in respect of the shares of Common Stock to be acquired, shares of
Common Stock of equal value to the value of this Warrant, or any specified
portion hereof, by the surrender of this Warrant (or such portion of this
Warrant being so exercised) together with a Net Issue Election Notice, in the
form annexed hereto as Appendix B, duly executed, to the Company. Thereupon, the
Company shall issue to the Warrantholder such number of fully paid, validly
issued and nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A - B)
      A
where
                    X = the number of shares of Common Stock to which the
Warrantholder is entitled upon such cashless exercise;
                    Y = the total number of shares of Common Stock covered by
this Warrant for which the Warrantholder has surrendered purchase rights at such
time for cashless exercise (including both shares to be issued to the
Warrantholder and shares as to which the purchase rights are to be canceled as
payment therefor);
                    A = the “Market Price” of one share of Common Stock as at
the date the net issue election is made; and
                    B = the Warrant Price in effect under this Warrant at the
time the net issue election is made.
     Section 18. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.

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     Section 19. Section Headings. The section headings in this Warrant are for
the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as
of the 30th day of March, 2006.

                  HYPERFEED TECHNOLOGIES, INC.    
 
           
 
  By:   /s/ Gemma R. Lahera    
 
     
 
   
 
  Name:   Gemma R. Lahera    
 
     
 
   
 
  Title:   Principal Accounting Officer & Treasurer    
 
     
 
   

* Authorized signatory under corporate resolutions to borrow or an authorized
signer under a resolution covering warrants must sign the warrant.

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APPENDIX A
HYPERFEED TECHNOLOGIES, INC.
WARRANT EXERCISE FORM
To HyperFeed Technologies, Inc:
     The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
the payment of the Warrant Price and surrender of the Warrant,
                                                    shares of Common Stock
(“Warrant Shares”) provided for therein, and requests that certificates for the
Warrant Shares be issued as follows:

         
 
       
 
  Name    
 
       
 
       
 
  Address    
 
       
 
       
 
  Federal Tax ID or Social Security No.    

     and delivered by certified mail to the above address, or electronically
provide DWAC Instructions or other specify:
                                                            .
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned’s Assignee as below
indicated and delivered to the address stated below.
Dated:                                         ,                     

     
Note:
  The signature must correspond with
 
  Signature:                                         

the name of the Warrantholder as written on the first page of the Warrant in
every particular, without alteration or enlargement or any change whatever,
unless the Warrant has been assigned.

   
Name (please print)
 
 
 
 
Address
 
 
Federal Identification or
Social Security No.
 
Asignee:
 
 
 
 
 
 

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APPENDIX B
HYPERFEED TECHNOLOGIES, INC.
NET ISSUE ELECTION NOTICE
To: HyperFeed Technologies, Inc.
Date: [                                        ]
     The undersigned hereby elects under Section 17 of this Warrant to surrender
the right to purchase [                    ] shares of Common Stock pursuant to
this Warrant and hereby requests the issuance of
[                                        ] shares of Common Stock. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.

           
Signature
   
 
         
Name for Registration
   
 
         
Mailing Address
   

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APPENDIX C
REGISTRATION RIGHTS.
     The common stock issuable upon exercise of this warrant, shall be deemed
“registrable securities” or otherwise entitled to “piggy back” registration
rights in accordance with the terms of the following agreement (the “Agreement”)
between the Company and its investor(s):

                   
 
  [Identify Agreement by date, title and parties. If no Agreement exists,
indicate
by “none.”]    

     The Company agrees that no amendments will be made to the Agreement, which
would have an adverse impact on Warrantholder’s registration rights thereunder
without the consent of Warrantholder. By acceptance of the Warrant to which this
Appendix C is attached, Warrantholder shall be deemed to be a party to the
Agreement.
If no Agreement exists, then the Company and the Holder shall enter into
Holder’s standard form of Registration Rights Agreement as in effect on the
issue date of the Warrant.

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