<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Factual Data Corp.
------------------
(Name of Issuer)
Common Stock
------------
(Title of Class of Securities)
303094106
---------
(CUSIP Number)
Continental Illinois Venture Corporation,
------------------------------------------
231 South LaSalle Street 7L, Chicago, IL 60697
----------------------------------------------
(312) 828-8021
--------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 30, 1999
--------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13-1(f) or 240.13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See (S) 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 303094106 Page 2 of 6 Pages
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Continental Illinois Venture Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ]
(b) [ ]
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,112,829
NUMBER OF
SHARES -------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 1,112,829
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
-------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Continental Illinois Venture Corporation - 1,112,829
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS) [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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CUSIP No. 303094106 Page 3 of 7 Pages
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Item 1. Security and Issuer
-------------------
This statement relates to shares of common stock, no par value (the
"Common Stock") of Factual Data Corp., a Colorado corporation (the "Company"),
whose principal business and executive office is located at 5200 Hahns Peak
Drive, Loveland, Colorado, 80538.
Item 2. Identity and Background
-----------------------
This statement is being filed by Continental Illinois Venture
Corporation, a Delaware corporation ("CIVC"). CIVC's principal business is
investment activities. CIVC's principal business and executive office is
located at 231 South LaSalle Street 7L, Chicago, Illinois, 60697.
The managing directors and executive officers of CIVC are set forth on
Schedule I hereto. Schedule I sets forth the following information with respect
to each such person: (a) name, (b) business address, and (c) present principal
occupation or employment and name of employer.
All of the persons listed on Schedule I hereto are citizens of the
United States. During the past five years, none of CIVC has and, to the
knowledge of CIVC, none of the other persons listed on Schedule I hereto has
been (i) convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The 1,112,829 shares of Common Stock reported herein were purchased by
a wholly owned subsidiary of CIVC for $9,000,000 in cash. See response to Item
4 below. The cash was provided to the subsidiary by CIVC from its working
capital.
Item 4. Purpose of Transaction
----------------------
The 1,112,829 shares of Common Stock acquired by CIVC were initially
acquired by Haley LLC, a wholly owned subsidiary of CIVC, pursuant to a share
purchase agreement dated as of March 25, 1999 by and among Haley LLC, the
Company, BCI Growth V, L.P., BCI Investors, LLC and Marshall Financial Partners,
L.P. (the "Share Purchase Agreement"). A copy of the Share Purchase Agreement is
filed as Exhibit 1 under Item 7 below.
Haley LLC subsequently assigned and transferred the 1,112,829 shares
of Common Stock acquired pursuant to the Share Purchase Agreement to its parent
company, CIVC, pursuant to an assignment and assumption agreement, dated March
30, 1999 by and between Haley LLC and CIVC (the "Assignment and Assumption
Agreement"). A copy of the Assignment and Assumption Agreement is filed as
Exhibit 2 under Item 7 below.
CIVC, initially through Haley LLC, acquired the 1,112,829 shares of
Common Stock in the Share Purchase Agreement for investment purposes. In
conjunction with the execution of the Share Purchase Agreement, Daniel G. Helle,
a managing director of CIVC, was appointed to the Company's Board of Directors.
See response to Item 6 below.
In conjunction with the acquisition of the 1,112,829 shares of Common
Stock, Haley LLC and the other parties to the Share Purchase Agreement entered
into an investors agreement, dated March 25, 1999 (the "Investors Agreement").
As a result of the assignment of the Common Stock reported herein, CIVC became a
party to the Investors Agreement. A copy of the Investors Agreement is filed as
Exhibit 3 under Item 7 below. Subject to certain limited restrictions on the
disposition of the shares of Common Stock subject to the Investors Agreement,
the shares of Common Stock beneficially owned by CIVC may be sold or otherwise
disposed of from time to time.
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CUSIP No. 303094106 Page 4 of 7 Pages
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CIVC does not have any other plans or proposals which relate to or would result
in any of the matters enumerated in paragraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) Based upon information received from the Company, CIVC believes
that 5,406,060 shares of Common Stock were issued and outstanding as of the date
of this Schedule 13D. In such case, the 1,112,829 shares of Common Stock owned
by CIVC represent 20.6% of the total outstanding shares of Common Stock.
(b) CIVC has sole power to vote and to dispose of the shares
identified in paragraph (a) above.
(c) As described above, on March 30, 1999, Haley LLC, a wholly owned
subsidiary of CIVC, transferred 1,112,829 shares of Common Stock to CIVC
pursuant to the Assignment and Assumption Agreement, a copy of which is filed as
Exhibit 2 under Section 7 below.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer
---------------------------
On March 30, 1999, CIVC and Haley LLC entered the Assignment and
Assumption Agreement (as defined in Item 4). Pursuant to the Assignment and
Assumption Agreement, Haley LLC assigned, and CIVC assumed, all of Haley LLC's
rights and obligations under the Share Purchase Agreement, the Investors
Agreement and the Registration Rights Agreement (as defined below).
As a result of the Assignment and Assumption Agreement, CIVC became a
party to the Investors Agreement (as defined in Item 4). The Investors Agreement
provides that CIVC may transfer its Common Stock among its affiliates free and
clear of any contractual restrictions. In addition, the Investors Agreement
provides that CIVC may transfer 100% of its shares of Common Stock to unrelated
parties, provided that, any such transfer in excess of 20% of those shares owned
by CIVC triggers tag along rights among the other parties to the Investors
Agreement. Once triggered, the tag along rights allow the other parties to the
Investors Agreement to participate in CIVC's transfer.
Pursuant to the Investors Agreement, each party agrees to vote their
shares of common stock to elect at least one CIVC nominee to the Company's Board
of Directors, so long as CIVC owns at least 5% of the Company's total
outstanding Common Stock as of the date the Share Purchase Agreement was
executed. The Investors Agreement also provides CIVC with the right to examine
the books and records of the Company for so long as CIVC owns at least 5% of the
Company's total outstanding Common Stock as of the date the Share Purchase
Agreement was executed.
On March 25, 1999, Haley LLC entered a registration rights agreement
by and among Haley LLC, the Company, BCI Growth V, L.P., BCI Investors, LLC and
Marshall Financial Partners, L.P. (the "Registration Rights Agreement"). A copy
of the Registration Rights Agreement is filed as Exhibit 4 under Item 7 below.
As a result of the Assignment and Assumption Agreement, CIVC is now a party to
the Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, the Company is obligated to register for resale the Common Stock
issued pursuant to the Share Purchase Agreement within 90 days of the closing of
the Share Purchase Agreement. In addition, the Registration Rights Agreement
provides that a holder of a majority of those securities subject to the
Registration Rights Agreement may demand one additional long form registration
and up to three additional short form registrations by the Company.
The foregoing descriptions set forth in this Schedule 13D of the Share
Purchase Agreement, the Assignment and Assumption Agreement, the Investors
Agreement and the Registrations Rights Agreement are
<PAGE>
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CUSIP No. 303094106 Page 5 of 7 Pages
- ------------------------------ -----------------------------------
qualified in their entirety by reference to the terms of such agreements that
have been filed as exhibits to this Schedule 13D and which are incorporated
herein by reference.
Item 7. Material to be Filed as Exhibits
--------------------------------
1. Share Purchase Agreement dated as of March 25, 1999 by and among
the Company, Haley LLC, BCI Growth V, L.P., BCI Investors, LLC and Marshall
Financial Partners, L.P.
2. Assignment and Assumption Agreement dated as of March 30, 1999 by
and between Haley LLC and CIVC.
3. Investors Agreement dated March 25, 1999 by and among the Company,
Haley LLC, BCI Growth V, L.P., BCI Investors, LLC and Marshall Financial
Partners, L.P.
4. Registration Rights Agreement dated as of March 25, 1999 by and
among the Company, Haley LLC, BCI Growth V, L.P., BCI Investors, LLC and
Marshall Financial Partners, L.P.
<PAGE>
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CUSIP No. 303094106 Page 6 of 7 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
________________________________________________
(Date)
________________________________________________
(Signature)
Daniel G. Helle, Managing Director
________________________________________________
(Name/Title)
<PAGE>
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CUSIP No. 303094106 Page 7 of 7 Pages
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SCHEDULE I
----------
<TABLE>
<CAPTION>
Name Employer Title
- ---- -------- -----
Directors
- ---------
<S> <C> <C>
Daniel G. Helle Continental Illinois Venture Corporation Managing Director
Christopher J. Perry Continental Illinois Venture Corporation President and Managing Director
Marcus D. Wedner Continental Illinois Venture Corporation Managing Director
Edward J. McCaffrey Continental Illinois Venture Corporation Chief Investment Officer
Michael J. Murray Continental Illinois Venture Corporation Chairman of the Board
Terry E. Perucca Continental Illinois Venture Corporation Vice Chairman of the Board
<CAPTION>
Name Employer Title
- ---- -------- -----
Officers
- --------
<S> <C> <C>
Michael J. Murray Continental Illinois Venture Corporation Chairman of the Board
Terry E. Perucca Continental Illinois Venture Corporation Vice Chairman of the Board
Christopher J. Perry Continental Illinois Venture Corporation President and Managing Director
Matthew W. Clary Continental Illinois Venture Corporation Managing Director
Richard C. Dudley Continental Illinois Venture Corporation Managing Director
Daniel G. Helle Continental Illinois Venture Corporation Managing Director
Jeffrey M. Mann Continental Illinois Venture Corporation Managing Director
Dennis P. McCrary Continental Illinois Venture Corporation Managing Director
M. Ann O'Brien Continental Illinois Venture Corporation Managing Director
Robert F. Perille Continental Illinois Venture Corporation Managing Director
Sue C. Rushmore Continental Illinois Venture Corporation Managing Director
Baxter Sharp Continental Illinois Venture Corporation Managing Director
Thomas E. Van Pelt, Jr. Continental Illinois Venture Corporation Managing Director
Marcus D. Wedner Continental Illinois Venture Corporation Managing Director
Gregory W. Wilson Continental Illinois Venture Corporation Managing Director
Charles R. Conradi Continental Illinois Venture Corporation Senior Vice President and Tax Officer
David R. Smith Continental Illinois Venture Corporation Senior Vice President and Tax Officer
Gary S. Williams Continental Illinois Venture Corporation Senior Vice President and Tax Officer
James Wolfrom Continental Illinois Venture Corporation Senior Vice President and Tax Officer
William B. Franklin Continental Illinois Venture Corporation Controller and Treasurer
John H. Compall Continental Illinois Venture Corporation Principal
Keith H. Yamada Continental Illinois Venture Corporation Principal
Edward J. McCaffrey Continental Illinois Venture Corporation Chief Investment Officer
Susan M. Lum Continental Illinois Venture Corporation Vice President and Tax Officer
Duane L. Smith Continental Illinois Venture Corporation Vice President and Tax Officer
Edward J. Stark Continental Illinois Venture Corporation Secretary
Marlene A. Sharland Continental Illinois Venture Corporation Assistant Secretary
Christine M. Sokitch Continental Illinois Venture Corporation Assistant Secretary
Nina Tai Continental Illinois Venture Corporation Assistant Secretary
Rick M. Wacula Continental Illinois Venture Corporation Assistant Secretary
J. Darrell Nolan Continental Illinois Venture Corporation Assistant Treasurer
Stephen E. Sudhoff Continental Illinois Venture Corporation Assistant Treasurer
Gerald W. Howard Continental Illinois Venture Corporation Compliance Officer
Renee M. Ansbro Continental Illinois Venture Corporation Assistant Controller
Michael J. Hornig Continental Illinois Venture Corporation Assistant Controller
</TABLE>
The business address for each of the people listed above is
Continental Illinois Venture Corporation, 231 South LaSalle Street 7L, Chicago,
Illinois, 60697.
<PAGE>
================================================================================
Exhibit 1
SHARE PURCHASE AGREEMENT
By and Between
PURCHASERS LISTED ON EXHIBIT A,
AS THE "PURCHASERS" HEREIN
and
FACTUAL DATA CORP.
Dated as of March 25, 1999
================================================================================
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I THE SHARE PURCHASE ANCILLARY AGREEMENTS.................... 1
Section 1.1 Purchase of the Shares.................................. 1
Section 1.2 Purchase Price.......................................... 2
Section 1.3 Registration Rights..................................... 2
Section 1.4 Engagement Letter....................................... 2
ARTICLE II CLOSING.................................................... 2
Section 2.1 The Closing............................................. 2
Section 2.2 Deliveries by FDC....................................... 2
Section 2.3 Deliveries by the Purchasers............................ 3
Section 2.4 Further Assurances...................................... 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FDC...................... 3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS............... 16
ARTICLE V COVENANTS OF FDC........................................... 18
Section 5.1 Conduct of Business..................................... 18
Section 5.2 Access and Information.................................. 21
Section 5.3 Information Following Closing........................... 21
Section 5.4 Use of Proceeds......................................... 22
Section 5.5 Exclusivity............................................. 22
Section 5.6 Consents under Agreements............................... 22
Section 5.7 Actions................................................. 22
Section 5.8. Additional Disclosure................................... 23
Section 5.9. Financial Statements.................................... 23
Section 5.10 Further Assurances....... .............................. 23
ARTICLE VI POST CLOSING COVENANTS.................................... 23
Section 6.1 Post Closing Covenants................................... 23
ARTICLE VII CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE............ 24
Section 7.1 Conditions to Obligations to Close....................... 24
ARTICLE VIII CONDITIONS TO FDC'S OBLIGATION TO CLOSE................... 25
Section 8.1 Conditions to FDC's Obligation to Close.................. 25
ARTICLE IX CONDITIONS TO PURCHASERS' OBLIGATION TO CLOSE............. 25
Section 9.1 Conditions to Purchasers' Obligation to Close............ 25
ARTICLE X TERMINATION, AMENDMENT AND WAIVER......................... 29
Section 10.1 Termination............................................ 29
Section 10.2 Effect of Termination.................................. 29
Section 10.3 Amendment.............................................. 29
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 10.4 Extension; Waiver...................................... 30
ARTICLE XI INVESTMENT BANKING FEES...................................... 30
ARTICLE XII INDEMNIFICATION AND CONTRIBUTION............................ 30
Section 12.1 Indemnity.............................................. 30
Section 12.2 Notice of Proceeding................................... 31
Section 12.3 Contribution........................................... 31
Section 12.4 Other Indemnification Provisions....................... 32
ARTICLE XIII NOTICES.................................................... 32
ARTICLE XIV CERTIFICATES OF OFFICERS AND DIRECTORS...................... 33
ARTICLE XV CONFIDENTIALITY.............................................. 33
ARTICLE XVI COUNTERPARTS................................................ 34
ARTICLE XVII MERGER CLAUSE AND COSTS, FEES AND EXPENSES................. 34
ARTICLE XVIII SEVERABILITY.............................................. 34
ARTICLE XIX BENEFIT..................................................... 35
ARTICLE XX WAIVER....................................................... 35
ARTICLE XXI HEADINGS.................................................... 35
ARTICLE XXII SURVIVAL................................................... 35
ARTICLE XXIII GOVERNING LAW............................................. 36
ARTICLE XXIV MISCELLANEOUS.............................................. 36
(a) Press Releases and Public Announcements....................... 36
(b) Succession and Assignment..................................... 36
(c) Amendments.................................................... 36
(d) Expenses...................................................... 36
(e) Specific Performance.......................................... 37
</TABLE>
ii
<PAGE>
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement"), dated as of March 25,
1999, is made by and between Purchasers to be listed on Exhibit A (collectively,
the "Purchasers" or individually, a "Purchaser"), and Factual Data Corp., a
Colorado corporation ("FDC"), and Jerald H. Donnan, Marcia R. Donnan, James N.
Donnan and Russell E. Donnan (collectively the "Majority Shareholders").
RECITALS:
A. On or about February 3, 1999, FDC represented to Purchasers the
general terms on which FDC would sell to Purchasers restricted shares of FDC
Common Stock (the "Shares"), together with certain other rights to be vested in
the Purchasers; and
B. The parties contemplated that they would enter into a definitive
agreement and prepare such other documentation as the parties and their
respective legal counsel determine is appropriate; and
C. The parties intend that this Share Purchase Agreement, together
with the exhibits attached hereto, serve as the definitive agreement between the
parties with respect to the above-mentioned transaction;
THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements herein set forth, the Purchasers and FDC hereby
agree as follows:
ARTICLE I
THE SHARE PURCHASE ANCILLARY AGREEMENTS
SECTION 1.1 Purchase of the Shares. Subject to and upon the terms
and conditions hereof and the representations, warranties and covenants
contained herein, on the Closing Date (as defined below) FDC shall sell,
transfer, assign and deliver certificate(s) representing shares of Common Stock
of FDC, and the Purchasers shall purchase the Shares from FDC, free and clear of
all liens, claims and encumbrances thereon (the "Purchase Transaction"). The
aggregate number of Shares to be offered to the Purchasers shall be that number
of shares of Common Stock of FDC equal to $15 million divided by the market
price (i.e., the average of the closing prices on the SmallCap Market for each
relevant day, the "Market Price") of FDC's Common Stock for the five prior
trading days ending the day this Agreement is executed (as so calculated, the
"Purchase Price" or, with respect to the per Share price, the "Purchase Price
per Share"), provided that, in no case shall the Purchase Price per Share exceed
$8.50. If, for any reason, Shareholder approval is required, Shareholder
approval shall be obtained for a Purchase Price per Share equal to the Market
Price. The exact number of Shares to be sold to each Purchaser shall be
determined immediately prior to Closing and shall be set forth on Exhibit A
hereto.
<PAGE>
SECTION 1.2 Purchase Price.
(a) Upon the terms and subject to the conditions herein set
forth, FDC and the Purchasers agree that on the Closing Date FDC shall sell to
the Purchasers, and the Purchasers shall purchase from FDC, the Shares at the
Purchase Price per Share, for aggregate consideration of $15 million, payable in
United States currency by wire transfer in immediately available funds.
(b) At the Closing, FDC shall deliver to the Purchasers
certificates representing the Shares against delivery by the Purchasers to FDC
of the Purchase Price. Certificates for the securities comprising the Shares
shall be registered in such name or names and in such denominations as the
Purchasers may request in writing at least two full business days prior to the
Closing Date.
SECTION 1.3 Registration Rights. Contemporaneously with the
execution of this Agreement, the parties shall execute a registration rights
agreement (the "Registration Rights Agreement"), a copy of which is attached
hereto as Exhibit B and incorporated by reference herein, an investors agreement
(the "Investors Agreement"), a copy of which is attached hereto as Exhibit D,
and a voting agreement (the "Voting Agreement"), a copy of which is attached
hereto as Exhibit E.
SECTION 1.4 Engagement Letter. Piper Jaffray Inc. (the "Agent")
and FDC have entered into an Engagement Letter dated January 8, 1999 Agreement
(the "Letter"). Pursuant to the terms of the Letter, the Agent shall receive
compensation comprised of a 7% cash commission and warrants to acquire a number
of shares of Common Stock of FDC equal to 3% of the number of Shares sold to the
Purchasers pursuant to this Agreement. Any compensation payable to the Agent
shall be payable by FDC.
ARTICLE II
CLOSING
SECTION 2.1 The Closing. The closing of the sale of Shares
contemplated hereby (the "Closing") shall take place at a date and time to be
specified by the Purchasers and FDC (the "Closing Date") following satisfaction
or waiver of all conditions precedent to Closing as described in Articles VI,
VII and VIII hereof, which date, pursuant to the parties' best efforts, shall be
on or before March 31, 1999. The Closing shall take place at the offices of
Hogan & Hartson L.L.P., 1200 17th Street, Suite 1500, Denver, Colorado, or any
other place mutually agreeable to the parties, subject to the right of the
parties to close by exchange of executed counterpart documents on the Closing
Date.
SECTION 2.2 Deliveries by FDC. At the Closing, FDC shall deliver
to the Purchasers or cause to be delivered to the Purchasers the following
instruments and documents:
(a) A certificate or certificates representing the Shares
registered in the name of the Purchasers or in such name as may be designated by
the Purchasers. Any sales, stock
2
<PAGE>
transfer or other stock payable in connection with the sale to the Purchasers by
FDC of the Shares shall be paid by the Purchasers;
(b) The opinion of counsel for FDC as provided in Article IX
below; and
(c) Such other documents, instruments and certificates of the
officers of FDC as are described in Article IX or as may be reasonably requested
by the Purchasers.
SECTION 2.3 Deliveries by the Purchasers. At the Closing, the
Purchasers shall deliver to FDC or cause to be delivered to FDC the following
instruments and documents:
(a) The Purchase Price as provided in Sections 1.1 and 1.2(a)
hereof;
(b) As applicable to any or all of the Purchasers, evidence
of compliance with United States securities laws for shareholders owning in
excess of 5% or 10%, as the case may be, of a publicly held entity, including
filings of a Form 3 under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and/or a Schedule 13G under Section 13 of the 1934
Act; provided, however, that none of the language set forth in this Agreement or
-------- -------
the Registration Rights Agreement shall be deemed to constitute one or more of
the Purchasers to be a "group" for purposes of reporting obligations under the
1934 Act, it being the intention of the parties that the existence of a "group"
shall only be determined by the Purchasers and their counsel and any joint
action taken hereunder shall not in and of itself constitute the Purchasers to
be a "group" as defined under the 1934 Act; and
(c) Such other documents, instruments and certificates of the
officers of the Purchasers as may be reasonably requested by FDC.
SECTION 2.4 Further Assurances. FDC shall execute and deliver on
the Closing Date or thereafter any and all such other instruments, and take or
cause to be taken all such further action as may be necessary or appropriate to
vest fully and confirm to the Purchasers title to and possession of the Shares
to be delivered hereunder by FDC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FDC
As a material inducement to the Purchasers to (i) enter into this
Agreement, and (ii) purchase and acquire the Shares, FDC and its subsidiaries
represent and warrant to the Purchasers, that, except as specifically and
expressly set forth in the disclosure schedules attached hereto (the
"Schedules"), the statements contained in this Article III are true, correct and
complete as of the date of this Agreement and will be true, correct and complete
on the Closing Date.
(A) ORGANIZATION; POWER AND AUTHORITY; SUBSIDIARIES. FDC has
been duly organized and is validly existing as a corporation in good standing
under the laws of the State of Colorado. Each subsidiary of FDC has been duly
organized and is validly existing and in good
3
<PAGE>
standing under the laws of its jurisdiction of incorporation or organization as
the case may be. Each of FDC and its subsidiaries has full corporate power and
authority to own its properties and conduct its business as currently being
carried on and is duly qualified to do business as a foreign corporation in good
standing under the corporation laws of each jurisdiction in which the conduct of
its business or ownership or lease of its properties requires such qualification
and where the failure to be so qualified could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects, assets,
results of operations or properties of FDC and its subsidiaries taken as a
whole. The copies of the Articles of Incorporation (certified by the Secretary
of the State of the state of incorporation) and the Bylaws of FDC, both as
amended to date, which have been delivered to Purchasers and attached as
Schedule 3(a) are complete and correct, and FDC is not in default under or in
violation of any provision of its Articles of Incorporation or Bylaws. The
minute books (containing the records of meeting of the shareholders, the Board
of Directors and any committees of the Board of Directors), the stock
certificate books and the stock record books of FDC, as made available to
Purchasers, are correct and complete.
(B) FINANCIAL STATEMENTS. The consolidated financial
statements of FDC, (together with the notes thereto for those years listed on
Schedule 3(b)) and the unaudited consolidated financial statements of FDC for
the interim periods after December 31, 1998, listed on Schedule 3(b) (all of
which are attached as Schedule 3(b)), fairly and accurately present the
consolidated financial condition of FDC and its consolidated subsidiaries as of
the dates indicated and the results of operations and changes in cash flows for
the periods therein specified in conformity with generally accepted accounting
principles consistently applied through the periods involved ("GAAP") and are
correct and complete.
(C) TRANSACTIONS. Except as disclosed on Schedule 3(c),
subsequent to December 31, 1998, neither FDC nor any of its subsidiaries has
incurred any Material (for purposes of this Agreement, an event or condition
shall be deemed to be "Material" if such event or condition, taken together with
all other events or conditions that are qualified by materiality, would, in the
aggregate, have an adverse effect that exceeds $150,000) liabilities or
obligations, direct or contingent, or entered into any Material transactions,
or, declared or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there has not been any change in the capital
stock, or any Material change in the short-term or long-term debt of FDC or of
FDC and its subsidiaries considered on a consolidated basis, or any Material
adverse change, or any development involving a prospective Material adverse
change, in the general affairs, condition (financial or otherwise), business,
key personnel, property, prospects, net worth or results of operations of FDC
and its subsidiaries, taken as a whole. Since December 31, 1998, FDC and its
subsidiaries have operated their business in the ordinary course, and have taken
(or not taken, as appropriate) each of the actions described in Section 5.1.
(D) LITIGATION. Except as disclosed on Schedule 3(d), there
is not pending or threatened or contemplated, any action, suit or proceeding to
which FDC or any of its subsidiaries is a party or to which either of their
assets may be subject, before or by any court or governmental agency, authority
or body, or any arbitrator, which might have a Material adverse effect on its or
their financial position, results of operations, business or prospects.
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(E) AUTHORIZATION, ETC.; CONFLICTS; CONSENTS. Each of this
Agreement, the Letter, the Registration Rights Agreement, and the Investors
Agreement has been duly authorized, executed and delivered by FDC and
constitutes a valid, legal and binding obligation of FDC, enforceable in
accordance with its terms. The execution, delivery and performance of this
Agreement, the Letter, the Registration Rights Agreement, and the Investors
Agreement and the consummation of the transactions herein or therein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or require consent or notice under
or result in the creation of any lien, charge, encumbrance, security interest,
pledge or adverse claim in respect of any property of FDC or any subsidiary
under, any statute, any agreement or instrument to which FDC or a subsidiary is
a party or by which any of them is bound or to which any of their respective
properties is subject, FDC's charter or bylaws, or any order, rule, regulation,
judgment, ruling or decree of any court, arbitrator or governmental agency or
body having jurisdiction over FDC or any subsidiary or any of the properties of
FDC or any subsidiary; no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Letter or the
Registration Rights Agreement or for the consummation of the transactions
contemplated hereby or thereby. This Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and unanimously
approved by the Board of Directors of FDC. FDC and its subsidiaries do not need
to obtain the approval of any shareholders for the execution, delivery and
performance of this Agreement, other than the approval of the shareholders who
are parties to this Agreement (and, such shareholders hereby agree to vote in
favor of the transactions contemplated by this Agreement).
(F) FDC'S CAPITAL STOCK. The authorized capitalization of
FDC consists of 10,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. As of the date hereof, 3,551,345 shares of Common Stock have
been duly authorized and validly issued and are outstanding, fully paid and
nonassessable, and no shares of Preferred Stock are issued or outstanding. All
of the issued and outstanding shares of capital stock of each of FDC's
subsidiaries have been duly and validly authorized and issued and are fully paid
and nonassessable, and FDC owns, of record and beneficially, free and clear of
any liens, all of the issued and outstanding shares of such stock. Except as set
forth in Schedule 3(f), there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from FDC or any subsidiary of
FDC any shares of the capital stock of the Company or of any subsidiary of FDC.
FDC has an authorized and outstanding capitalization as set forth in Schedule
3(f). For purposes of this agreement, "subsidiary" means any corporation (or
other entity) with respect to which a specified person (or a subsidiary thereof)
owns a 25% or more of the common stock (or other form of equity) or has the
power to vote or direct the voting of sufficient securities to elect 25% or more
of the directors (or other governing body or management). There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of FDC or any of its subsidiaries.
(G) AUTHORIZATION OF THE SHARES. The Shares have been duly
authorized by the Board of Directors of FDC and, when issued and delivered by
FDC against payment
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therefor, will be validly issued, fully paid and nonassessable, free and clear
of any liens or encumbrances; the issuance of the Shares is not subject to
preemptive or other similar rights.
(H) LICENSES, PERMITS, LAWS, ETC. FDC and each of its
subsidiaries holds, and is operating in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and order
of any governmental or self-regulatory body required for the conduct of its
business and all such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in full force and
effect; the failure to hold or operate in compliance with the foregoing or the
lack of a validity, would not be Material, and FDC and each of its subsidiaries
is and has been in compliance in all respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees, except to the
extent that the failure to comply, individually or in the aggregate, would not
have a Material adverse effect on its financial position or results of
operations. FDC has not received any notice of any violation, probable violation
or default by FDC or any of its subsidiaries under any applicable law,
regulation, franchise, permit, license, authorization or order of any
governmental department, commission, board or agency or instrumentality,
domestic or foreign, having jurisdiction over FDC's or any of its subsidiaries'
operations which could adversely affect the business, operations, financial
condition, prospects, properties or assets of FDC or its subsidiaries, or the
ability to consummate the transaction contemplated hereby. FDC and its
subsidiaries have operated their business, and will continue to operate their
business, in compliance with all applicable federal and state laws and
regulations (including but not limited to the Truth in Lending Act, Fair Credit
Reporting Act, Real Estate Settlement Procedures Act and Fair Debt Collection
Practices Act) and in compliance with all applicable state laws and regulations.
FDC has given notice and obtained approvals of the transactions contemplated by
this Agreement to all government entities that require such notice or approvals.
(I) TITLE TO PROPERTIES. FDC and its subsidiaries have good
and marketable title to all property and assets used by them, located on their
premises, shown on their financial statements, or described in Schedule 3(i) as
being owned by them, in each case free and clear of all liens except such as are
described Schedule 3(i); the property held under leases by FDC and its
subsidiaries is held by them under valid, binding, subsisting and enforceable
leases with only such exceptions with respect to any particular lease as do not
interfere in any respect with the conduct of the business of FDC or its
subsidiaries. FDC is not in default under any such lease, and no circumstances
exist which, if unremedied would, either with or without notice or the passage
of time or both, result in a default under any such lease. Attached as Schedule
3(i) is a complete and accurate list of the real property held under lease by
FDC and its subsidiaries. Schedule 3(i) sets forth the lessor, location and
termination date for each such lease. Except for the leasehold interests set
forth in Schedule 3(i), FDC and its subsidiaries do not own any real property.
FDC and each of its subsidiaries owns or possesses all patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade
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secrets and rights necessary for the conduct of the business of FDC and its
subsidiaries as currently carried on "Intellectual Property"; no name which FDC
or any of its subsidiaries uses and no other aspect of the business of FDC or
any of its subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets or other similar rights or
others to the business or prospects of FDC and neither FDC nor any of its
subsidiaries has received any notice alleging any such infringement or fee; to
the extent that FDC or each of its subsidiaries has licensed its trademarks,
service marks, tradenames and copyrights (including proprietary software) for
use by third parties, it has done so pursuant to written licenses that fully
protect and maintain FDC's or its susidiaries' rights in such trademarks,
service marks, tradenames and copyrights. All Key Technical Employees (as
defined below) of FDC and its subsidiaries have executed agreements with FDC or
its subsidiaries pursuant to which Key Technical Employees have assigned their
rights, title and interest in and to any Intellectual Property including without
limitation patents, copyrights and inventions to FDC or its subsidiaries. As
used in this Agreement, "Key Technical Employees" means all management level
employees, executives, officers, and members of the Board of Directors who have
worked in the development and/or maintenance of Intellectual Property.
(J) COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS, ETC. Neither
FDC nor any of its subsidiaries is in violation of its respective charter or
bylaws (copies of which are attached as Schedule 3(j)); none of FDC nor any of
its subsidiaries is in breach of or otherwise in default in the performance of
any obligation, agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other contract, lease or other instrument to
which it is subject or by which any of them may be bound, or to which any of the
property or assets of FDC or any of its subsidiaries is subject.
(K) TAX RETURNS; TAXES. FDC and its subsidiaries have timely
filed all tax returns that are required to have been filed in any jurisdiction,
and all such tax returns are complete and accurate, and were prepared in
compliance with applicable law. FDC and its subsidiaries have paid all taxes
due, or claimed to be due by any taxing authority, whether or not shown on a tax
return, and FDC and its subsidiaries have paid all other taxes and assessments
levied upon them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (i) the amount of
which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which FDC or a subsidiary, as the
case may be, has established adequate reserves in accordance with GAAP. There is
no basis for any other tax, assessment, interest payment or penalty that could
have a Material adverse effect. The charges, accruals and reserves on the books
of FDC and its subsidiaries in respect of Federal, state or other taxes for all
fiscal periods are adequate in all respects. Except as set forth on Schedule
3(k), neither FDC nor any of its subsidiaries is currently the beneficiary of
any extension of time within which to file any tax return. No claim has been
made by an authority in a jurisdiction where FDC or any of its subsidiaries do
not file tax returns that any of them are or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of FDC or any
of its subsidiaries that arose in connection with any failure or alleged failure
to pay any tax. FDC and its subsidiaries have withheld and paid all taxes that
any of them are required to withhold and pay in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party. No action, suit, proceeding, audit, investigation, assessment,
dispute or claim concerning any tax liability of FDC or any of its subsidiaries
has been claimed or raised by any taxing authority. FDC and its subsidiaries
have not waived any statute of limitation in respect of
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taxes or agreed to any extension of time with respect to a tax assessment or
deficiency. FDC and its subsidiaries (i) have not been a member of an affiliated
group filing a consolidated federal income tax return other than the affiliated
group of which FDC is the parent, and (ii) have no liability for the taxes of
any person (other than FDC and its subsidiaries) under Treas. Reg. (S) 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(L) ACCOUNTING PROCEDURES. FDC and its subsidiaries maintain
a system of internal accounting controls to provide that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(M) AGENT'S FEE. Other than fees payable by FDC to the
Agent, neither FDC nor its subsidiaries has incurred any liability for any
finder's or broker's fee or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(N) DISCLOSURE. FDC has fairly described, in all Material
respects, the general nature of the business and principal properties of FDC and
its subsidiaries. This Agreement (including the Schedules hereto), the
documents, certificates or other writings delivered to the Purchaser by or on
behalf of FDC in connection with the transactions contemplated hereby, taken as
a whole, do not contain any untrue statement of a Material fact or omit to state
any Material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in
this Agreement (including the Schedules), since December 31, 1998, there has
been no Material change in the financial condition, operations, business,
properties or prospects of FDC or any subsidiary. There is no Material fact
which adversely affects or may adversely affect FDC which has not been set forth
in writing in this Agreement or disclosed in the other documents, certificates
or written statements furnished to Purchasers by or on behalf of FDC in
connection herewith.
(O) COMPLIANCE WITH ERISA.
(i) FDC and each trade or business (whether or not
incorporated) that is a member of the group of which FDC is a member or is
treated as a single employer together with FDC under Section 414 of the Internal
Revenue Code of 1986, as amended (the "Code") (each such trade or business being
an "ERISA Affiliate"), have operated and administered each "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as the same may be amended from time to time, and the
rules and regulations promulgated thereunder as from time to time in effect
("ERISA")) (each such Plan being a "Plan") in compliance with all applicable
laws except for such instances of noncompliance as have not resulted in any
liability and could not reasonably be expected to be
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Material. Neither FDC nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in Section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by FDC
or any ERISA Affiliate, or in the imposition of any lien, charge or encumbrance
on any of the rights, properties or assets of FDC or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or liens, charge or encumbrance as would not be individually or in
the aggregate Material.
(ii) Each of FDC and each ERISA Affiliate do not
maintain or contribute to, and have not at any relevant time maintained,
contributed to or had any obligation to contribute to, any employee benefit plan
that is, or at such time was, subject to the provisions of title I, subtitle B,
part 3, of ERISA or Title IV of ERISA (including, without limitation, any
multiemployer plan within the meaning of ERISA (S) 3(37)(A))
(iii) Each Plan that is an employee pension benefit plan
within the meaning of Section 3(2) of ERISA is qualified in form and operation
under Code (S) 401(a), each trust for each such Plan is exempt from federal
income tax under Code (S) 401(a), each trust for each such Plan is exempt from
federal income tax under Code (S) 501(a) and FDC has applied for or obtained a
determination to such effect from the Internal Revenue Service. No event has
occurred or circumstance exists that will or could give rise to disqualification
or loss of tax-exempt status of any such Plan or trust. No Plan is a "qualified
foreign plan" (as such term is defined in Code Section 404A(e)), and no Plan is
subject to the laws of any jurisdiction other than the United States of America
or one of its political subdivisions.
(iv) FDC and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are material.
(v) The expected post-retirement benefit obligation
(determined as of the last date of FDC's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by Section
4980B of the Code) of FDC and its subsidiaries is not material.
(vi) The execution and delivery of this Agreement and
the issuance and sale of the Shares hereunder will not involve any transaction
that is subject to the prohibitions of Section 406 of ERISA or in connection
with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Code.
(vii) No Plan, individually or collectively, provides
for any payment by FDC or any ERISA Affiliate to any employee or independent
contractor that is not deductible under Code Sections 162(a)(1) and (m) and 404
or that is an "excess parachute payment" pursuant to Code Section 280G. Each of
FDC and each ERISA Affiliate has the right to modify
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and terminate benefits (other than vested and accrued pension benefits) with
respect to both retired and active employees. Each Plan could be terminated as
of the Closing without material liability in excess of any amount reflected as a
liability with respect to such Plan on the financial statements of FDC that are
referred to in Article III(b) hereof.
(P) USE OF PROCEEDS; MARGIN REGULATIONS. FDC will apply the
proceeds of the sale of the Shares for the purposes described in Section 5.4 and
no other purpose. No part of the proceeds from the sale of the Shares will be
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve FDC in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of the Board (12 CFR 220).
(Q) NO DEFAULT ON DEBT. Neither FDC nor any subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any debt on which FDC or any subsidiary is obligated,
and no event or condition exists with respect to any debt of FDC or any
subsidiary that would permit (or that with notice of the lapse of time, or both,
would permit) one or more persons to cause such debt to become due and payable
before its stated maturity or before its regularly scheduled dates of payment.
(R) ENVIRONMENTAL LAWS.
(i) FDC and each of its subsidiaries have complied and
are in compliance with, and the Real Property and all improvements thereon are
in compliance with, all Environmental Laws.
(ii) Neither FDC nor any of its subsidiaries have any
liability under any Environmental Law, nor is FDC or any of its subsidiaries
responsible for any liability of any other person under Environmental Law. There
are no pending or threatened Claims or other proceedings based on, and neither
FDC nor any of its subsidiaries, nor any officer, director or stockholder
thereof has directly or indirectly received any notice of any complaint, order,
directive, citation, notice of responsibility, notice of potential
responsibility, or information request from any governmental authority or any
other person or entity or knows or suspects any fact(s) which might reasonably
form the basis for any such actions or notices arising out of or attributable
to: (A) the current or past presence, Release, or threatened Release of
Hazardous Materials at or from any part of the Real Property; (B) the off-site
disposal or treatment of Hazardous Materials originating on or from the Real
Property or the businesses or Assets of FDC or any Subsidiary; or (C) any
violation of Environmental Laws at any part of the Real Property or arising from
FDC's or any of its subsidiaries' activities (or the activities of FDC's or any
of its subsidiaries' predecessors in title) involving Hazardous Materials.
(iii) Neither FDC nor its subsidiaries owns, operates,
or has installed, and to the knowledge of FDC and its subsidiaries, the Real
Property contains no underground improvements, including but not limited to
treatment or storage tanks, or
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underground piping associated with such tanks, used currently or in the past for
the management of Hazardous Materials. Neither FDC nor its subsidiaries has
used, and to the knowledge of FDC and its subsidiaries no portion of the Real
Property is or has been used as a dump or landfill or consists of or contains
filled in land or wetlands.
(iv) No lien, superlien, or other encumbrance in favor
of any person relating to or in connection with any Claims under any
Environmental Law has been filed or has attached to the Real Property.
(v) No authorization, notification, recording, filing,
consent, waiting period, remediation, investigation, or approval is required
under any Environmental Law in order to consummate the transaction contemplated
hereby.
(vi) As used in this Agreement: "Claims" means demands,
suits, orders, legal proceedings, claims, actions or causes of action,
assessments, losses, damages (including, without limitation, diminution in
value), liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys' fees and disbursement; "Environmental Laws"
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, common law rulings, agreements or
governmental restrictions relating to pollution or the protection of human
health or the environment or the release of any materials into the environment,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (S)(S) 9601 et seq.) and those related
to hazardous substances, wastes, air emissions, or discharges to waste or public
systems; "Hazardous Material" means any and all hazardous substances,
pollutants, contaminants, toxic or hazardous wastes or any other substances or
wastes that might pose a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be restricted,
regulated, prohibited or penalized by any applicable law (including, without
limitation, asbestos, petroleum or petroleum products (including, without
limitation, crude oil or any fraction thereof), urea formaldehyde foam
insulation and polychlorinated biphenyls); "Real Property" means the real
property currently or formerly owned, operated, leased, or used by FDC or its
subsidiaries; and "Release" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal,
or release of materials from any source (including, without limitation, the Real
Property and property adjacent to the Real Property) into or upon the
environment, including the air, soil, improvements, surface water, groundwater,
the sewer, septic system, storm drain, publicly owned treatment works, or waste
treatment, storage, or disposal systems;
(S) YEAR 2000 COMPLIANCE. (i) The software and hardware
comprising the systems necessary to operate the business of FDC and its
subsidiaries ("Systems") are Year 2000 ready; (ii) are designed to be used prior
to, during, and after the calendar year 2000 A.D.; (iii) will operate
consistently, predictably and accurately, without Material interruption or
manual intervention, and in accordance with all requirements of the related
documentation, including without limitation all specification and/or
functionality and performance requirements, during each such time period, and
the transitions between them, in relation to dates it encounters or processes;
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all date recognition and processing by the Systems will include four digit year
format and will correctly recognize and process the date of February 29, and any
related data, during leap years; and (iv) all date sorting by the Systems that
includes a "year category" shall be done based on the four digit year format.
(T) ACCOUNTS. Except as described on Schedule 3(t), all contracts or
agreements between FDC and/or its subsidiaries and the customers with which FDC
does business are valid and enforceable against FDC and/or its subsidiaries and
are not currently, and will not be at Closing, in default, invalid or
unenforceable in any manner, or and are not subject to threatened or imminent
termination. FDC and/or its subsidiaries have performed all of their
obligations and responsibilities as described under each such contract or
agreement, none of such contracts or agreements are subject to any counterclaim
or setoff, and all such contracts are in full force and effect and will continue
in full force and effect following the Closing. Except as described on Schedule
3(t), FDC has no reason to believe that amounts payable under such contracts or
agreements will not be paid substantially in accordance with the terms of such
contracts or agreements. Neither FDC nor its subsidiaries have received any
notices of default, claims, or any other type of notice with respect to any such
contract or agreement.
(U) LICENSE AGREEMENTS. Attached as Schedule 3(u) is a complete and
accurate list of any license agreements to which FDC or any of its subsidiaries
is a party as of the date hereof relating to their credit reporting business
(other than customary, off-the-shelf licenses. Also stated on Schedule 3(u) is
the expiration date of each such license agreement. Except as described on
Schedule 3(u), all such license agreements are valid and enforceable against FDC
or its subsidiaries, as the case may be, and are not currently, and will not be
at Closing, in default, invalid or unenforceable. To the extent the
transactions contemplated by this Agreement requires the consent of any third
party, FDC shall use its commercially reasonable efforts to obtain such
consents. FDC has not received any written notices of default or claims with
respect to any license agreement.
(V) CONTRACTS.
(i) Neither FDC nor any of its subsidiaries is a party to, or
bound by, any contract, distributorship agreement, license agreement, agency
agreement, or any other agreement, indenture, mortgage, deed of trust, lease,
loan agreement or instrument which would be in default or which would terminate
by virtue of this Agreement.
(ii) Schedule 3(v) lists the following contracts and other
agreements to which any of FDC and its subsidiaries is a party:
(A) any agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000;
(B) any agreement concerning a partnership or joint
venture;
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(C) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $50,000 or
under which it has imposed a security interest on any of its assets, tangible or
intangible;
(D) any agreement concerning confidentiality or
noncompetition;
(E) any agreement with any of the stockholders of FDC, or
any affiliates of such stockholders;
(F) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(G) any collective bargaining agreement;
(H) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $50,000 or providing severance benefits;
(I) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(J) any agreement under which the consequences of a default
or termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of any of FDC
and its subsidiaries; or
(K) any agreement involving a license or franchise to
operate in the type of business that FDC engages.
FDC has delivered to Purchaser a correct and complete copy of each written
agreement listed in Schedule 3(v) and a written summary setting forth the terms
and conditions of each oral agreement referred to in Schedule 3(v). With
respect to each such agreement: (1) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (2) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (3) no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (4) no party has
repudiated any provision of the agreement.
(W) ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES. Except as
described in Schedule 3(d), FDC has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and
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regardless of when asserted) in excess of $25,000 in any single instance or
$150,000 in the aggregate.
(X) CONDITION OF ASSETS. The fixed assets necessary for the conduct
of FDC's and its subsidiaries' businesses are in good condition and repair,
ordinary wear and tear excepted, and are usable in the ordinary course of
business. There are no defects in such fixed assets or other conditions
relating thereto which could adversely affect the operation or value of such
fixed assets. FDC and its subsidiaries own, or lease under valid leases, all
equipment and other tangible assets necessary for the conduct of their business.
(Y) EMPLOYEES. To the best of FDC's knowledge, no significant
employee (including Key Technical Employees and Key Employees, as those terms
are defined herein) of FDC or any of its subsidiaries, or any group of their
employees, has any plan or intention to terminate his, her or its employment
following the Closing. FDC and its subsidiaries have complied with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes. FDC and its subsidiaries have no labor relations
problem pending, and their labor relations are satisfactory. There are no
workmen's compensation, sexual harassment, discrimination or claims pending
against FDC or any of its subsidiaries, and there are no facts that would give
rise to such claims. No employee of FDC or any of its subsidiaries is subject
to any secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of such
employee to carry out fully all activities of such employee in furtherance of
the business of FDC or its subsidiaries. No employee or former employee of FDC
or any of its subsidiaries has any claim with respect to any intellectual
property rights of FDC or any of its subsidiaries. None of FDC or any of its
subsidiaries is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. None of FDC or any of its
subsidiaries has committed any unfair labor practice. There are no
organizational efforts presently being made or threatened by or on behalf of any
labor union with respect to employees of any of FDC or any of its subsidiaries.
(Z) GIFTS. Neither FDC, its subsidiaries, nor any of their officers,
directors or shareholders has made or agreed to make gifts of money, other
property or similar benefits (other than incidental gifts of articles of nominal
value) to any actual or potential customer, supplier, governmental employee,
political party, candidate for office, governmental agency or instrumentality or
any other person in a position to assist or hinder FDC in connection with any
actual or proposed business transaction.
(AA) SUBSIDIARIES. Schedule 3(aa) sets forth for each subsidiary of
FDC (i) its name and jurisdiction of incorporation, (ii) the number of shares of
authorized capital stock of each class of its capital stock, (iii) the number of
issued and outstanding shares of each class of its capital stock, the names of
the holders thereof, and the number of shares held by each such holder, and (iv)
the number of shares of its capital stock held in treasury. All of the issued
and outstanding shares of capital stock of each subsidiary of FDC have been duly
authorized and are validly issued, fully paid, and nonassessable. One of FDC
and its subsidiaries holds of record and owns
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beneficially all of the outstanding shares of each subsidiary of FDC, free and
clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), taxes, security interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require any of FDC and its subsidiaries to
sell, transfer, or otherwise dispose of any capital stock of any of its
subsidiaries or that could require any subsidiary of FDC to issue, sell, or
otherwise cause to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to any subsidiary of FDC. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of any
capital stock of any subsidiary of FDC. None of FDC and its subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a subsidiary of FDC.
(BB) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of FDC and its subsidiaries are reflected properly on their books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts.
(CC) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of any of FDC and its subsidiaries.
(DD) INSURANCE. Schedule 3(dd) sets forth the following information
with respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which any of FDC and its subsidiaries has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
seven years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither any of FDC and its subsidiaries nor any other party to the
policy
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is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. Each of FDC and its subsidiaries has been
covered during the past seven years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. Schedule 3(dd) describes any self-insurance arrangements
affecting any of FDC and its subsidiaries.
(EE) PRODUCT WARRANTY. No product sold or delivered by any of FDC and
its subsidiaries is subject to any guaranty, warranty, or other indemnity.
(FF) CERTAIN BUSINESS RELATIONSHIPS WITH FDC AND ITS SUBSIDIARIES.
None of the stockholders of FDC or its subsidiaries, or their officers,
directors or employees, has been involved in any business arrangement or
relationship with any of FDC and its subsidiaries within the past 12 months, and
no such person owns any asset, tangible or intangible, which is used in the
business of any of FDC and its subsidiaries.
(GG) SMALL BUSINESS INVESTMENT COMPANY ACT MATTERS. FDC, together
with its "affiliates" (as that term is defined in Title 13, Code of Federal
Regulations, (S) 121.103), is a "small business concern" within the meaning of
Section 103(5) of the Small Business Act of 1958 and the regulations thereunder.
Each of FDC and its Subsidiaries does not presently engage in, and neither FDC
nor any of its Subsidiaries shall hereafter engage in, any activities, nor shall
FDC or any Subsidiary use directly or indirectly the proceeds from the sale of
the shares hereunder for any purpose for which a Small Business Investment
Company is prohibited from providing funds by the Small Business Investment Act
of 1958 and the regulations thereunder, including Title 13, Code of Federal
Regulations, (S) 107.720.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to FDC to enter into this Agreement and the
Registration Rights Agreement, each Purchaser severally, and not jointly,
represents and warrants to FDC that:
(a) Each Purchaser that is a corporation or other business
entity is duly organized, validly existing and in good standing under the laws
of the applicable jurisdictions of incorporation, and such corporations as
business entities are qualified to transaction business as foreign corporations
in all other jurisdictions in which the character of Purchasers' businesses
requires the Purchasers to be so qualified; such corporations or business
entities have all of the power necessary to engage in the businesses in which
they are presently engaged; and each such corporation or business entity is an
accredited investor as described in Rule 501(a) adopted under the 1933 Act.
(b) Each Purchaser warrants and represents that the Purchaser is
and was not organized or reorganized for the specific purpose of acquiring the
Shares and that the individual
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executing this Agreement has the power and authority to execute and deliver this
Agreement on behalf of such partnership, joint venture, corporation or trust.
Furthermore, in the event a Purchaser is one of the foregoing entities, such
Purchaser represents that all of the equity owners are accredited investors as
defined in (a) above or, if not, such Purchaser otherwise qualifies as an
accredited investor with total assets in excess of $5 million.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated, will conflict with or
result in the breach of, or accelerate the performance required by, any terms of
any agreement, or result in the creation of any lien, charge or encumbrance upon
any of the properties or assets of the Purchasers under the terms of any such
agreement.
(d) The Purchasers have all requisite power and authority to
execute, deliver and perform this Agreement and the Registration Rights
Agreement, and have all requisite power and authority to purchase and own the
Shares. All necessary corporate proceedings of the Purchasers have been duly
taken to authorize the execution, delivery and performance by the Purchasers of
this Agreement and the Registration Rights Agreement. This Agreement has been
duly authorized, executed and delivered by the Purchasers, and is enforceable as
to the Purchasers in accordance with its terms. No consent, authorization,
approval, order, license, certificate or permit of or from, or declaration or
filing with, any United States federal, state, local or other governmental
authority or any court or other tribunal is required by the Purchasers for the
execution, delivery or performance by the Purchasers of either this Agreement or
the Registration Rights Agreement other than (i) filings described in Section
2.3(b), (ii) filings that may be required with bank regulatory agencies, and
(iii) filings that may need to be made with the small business administration.
No consent of any party to any contract, agreement, instrument, lease, license,
arrangement or understanding to which the Purchasers are a party, or to which
any of their properties or assets are subject, is required for the execution,
delivery or performance of either this Agreement or the Registration Rights
Agreement.
(e) The Purchasers are acquiring the Shares, upon payment for and
delivery thereof, not with a view to the distribution or public resale thereof
within the meaning of the 1933 Act. The Purchasers further agree that FDC may
cause to be set forth on the certificates for the Shares, to be delivered to the
Purchasers hereunder, a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD ONLY IF REGISTERED PURSUANT TO THE PROVISIONS
OF THAT ACT OR IF, IN THE OPINION OF COUNSEL TO THE
SELLER AN EXEMPTION FROM REGISTRATION THEREUNDER IS
AVAILABLE.
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ARTICLE V
COVENANTS OF FDC
SECTION 5.1 Conduct of Business. From the date hereof until the
Closing, or as otherwise consented to by the Purchasers in writing each of FDC
and its subsidiaries :
(a) Carry on its business only in the ordinary course, in
accordance with all laws, regulations and rules in the same manner in which it
previously has been conducted but not including pursuing and implementing its
consolidation strategy (which will require the prior written consent of
Purchaser);
(b) Maintain its real and personal property in as good condition
and repair as of the date hereof, except for ordinary wear and tear;
(c) Perform in all Material respects all of its Material
obligations under all contracts to which FDC is a party;
(d) Use reasonable efforts to preserve intact its present
business organization and to keep available the services of its present officers
and employees;
(e) Not amend its charter or Bylaws or otherwise alter its
corporate existence or powers;
(f) Not take any action or engage in any transaction which would
cause any of the representations made by FDC herein to be untrue as of the
Closing Date or would cause FDC to be in breach of the terms and conditions of
this Agreement;
(g) Maintain its books, accounts and records in its usual,
regular and ordinary manner;
(h) Comply with all filing and reporting requirements of the 1934
Act;
(i) Maintain a listing of the Common Stock with The Nasdaq Stock
Market, Inc.;
(j) Not issue any shares of its capital stock, except upon the
exercise of any currently outstanding option, warrant, convertible security or
similar right which is listed on Schedule 5.1(j);
(k) Not increase, decrease, or exchange any of its outstanding
Common Stock for a different number or class of securities through
reorganization, reclassification, share dividend, share split or similar change
in the capitalization of FDC;
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(l) not enter into or become subject to any agreement,
transaction, or commitment which (i) would have a Material effect on its
business, or (ii) restrict or in any way impair its ability to comply with the
terms of this Agreement;
(m) not create, incur, assume, guarantee or otherwise become
liable with respect to any indebtedness, and not sell, pledge, encumber or
otherwise subject its assets to any security interest, claim or indebtedness not
in existence prior to the execution of this Agreement;
(n) not declare or pay any dividend, make any distribution on
shares of its capital stock or redeem, repurchase or otherwise acquire any
shares of its capital stock;
(o) promptly notify Purchasers in writing after becoming actually
aware of the occurrence or threatened occurrence of any event which would cause
or constitute a breach of any warranty, representation, covenant or agreement
contained herein, and use all commercially reasonable efforts to prevent or
promptly remedy such breach or threatened breach; and promptly notify Purchasers
in writing if it shall discover that any representation or warranty made in
Article III of this Agreement was when made, or has subsequently become, untrue;
(p) not, directly or indirectly, (i) enter into or modify
(whether in writing or orally) any employment, collective bargaining, severance
or similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination paid to, any employees, officers or
directors or consultants, or (ii) grant or promise any bonuses, salary
increases, severance or termination pay, or benefits for any officers,
employees, or directors;
(q) not adopt or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, trust, fund or arrangement for the benefit or welfare of
any employee, director, or officer;
(r) not cancel or terminate its current insurance policies or
cause any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
equal to or greater than the coverage under the canceled, terminated or lapsed
policies for substantially similar premiums are in full force and effect;
(s) use its commercially reasonable efforts to preserve intact
its business organization and goodwill, keep available the services of its
officers and employees as a group and maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships with
it up to the Closing;
(t) confer on a weekly basis with representatives of Purchasers
to report operational matters and the general status of ongoing operations;
(u) not take any action which would render, or which reasonably
would be expected to render, any representation or warranty made by it in the
Agreement untrue at the Closing;
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(v) notify Purchasers of any emergency or other change in the
normal course of its business or in the operation of its properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if, in each case,
such emergency, change, complaint, investigation or hearing would, individually
or in the aggregate, have an adverse effect on its business, operations or
financial condition or to its ability to consummate the transactions
contemplated by this Agreement;
(w) not sell any of its assets, tangible or intangible;
(x) not enter into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) either
involving more than $15,000 or outside the ordinary course of business;
(y) not make any capital expenditure (or series of related
capital expenditures) either involving more than $100,000;
(z) not make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other person (or series of
related capital investments, loans, and acquisitions) either involving more than
$15,000 or outside the ordinary course of business;
(aa) not delay or postpone the payment of accounts payable and
other liabilities outside the ordinary course of business;
(bb) not cancel, compromise, waive, or release any right or claim
(or series of related rights and claims) either involving more than $15,000 or
outside the ordinary course of business;
(cc) not grant any license or sublicense of any rights under or
with respect to any Intellectual Property;
(dd) not make any loan to, or enter into any other transaction
with, any of its directors, officers, or employees;
(ee) not make or pledge to make any charitable or other capital
contribution
(ff) maintain reasonable business insurance; commit no waste of
assets; not dispose or otherwise change the nature of any asset such that cash
or accounts receivable are increased; not create or suffer to exist any lien,
charge or encumbrance on any asset or incur any indebtedness for borrowed money;
and maintain and preserve their business organizations intact and maintain their
relationships with suppliers, employees, customers and others;
(gg) refrain from making capital expenditures or commitments for
additions to property, plant or equipment or enter into transactions which could
reasonably be expected to alter or affect their operations (unless approved in
writing in advance by Purchasers); and
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(hh) not commit to any of the foregoing.
SECTION 5.2 Access and Information. FDC shall give to the Purchasers
and their representatives full access at all reasonable times prior to the
Closing to the properties, books and records of FDC and to furnish such
information and documents in its possession relating to FDC as the Purchasers
may reasonably request.
SECTION 5.3 Information Following Closing. Beginning with execution
of this Agreement and continuing beyond Closing for so long as Purchasers own
more than five percent of the common stock of FDC, FDC shall furnish Purchasers,
without charge, the following documents:
(a) As soon as practicable after they have been filed with the
Commission, one copy of each annual and interim financial and other report or
communication filed with the Commission;
(b) Such additional publicly filed documents and publicly
available information with respect to FDC and its affairs as the Purchasers may
from time to time reasonably request;
(c) as soon as available, and in any event within 90 days after
the end of each fiscal year of FDC, duplicate copies of the audited financial
statements of FDC and its subsidiaries reported on by a firm of independent
certified public accountants of national recognition, and stating in comparative
form the figures as of the end of and for the previous fiscal year, accompanied
by a report thereon containing an opinion by such independent certified public
accountants that the financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied, except as may be
noted otherwise;
(d) as soon as available, and in any event within 30 days after
the end of each month commencing with the end of the month of January 1999, a
copy of the consolidated interim financial statements of FDC and its
subsidiaries, consisting at a minimum of: (i) the balance sheet as of the end of
the month, and (ii) a statement of income for the month and for the partial or
full fiscal year ended as of the end of the month, all in reasonable detail and,
in the case of a month which is the end of FDC's fiscal quarter, setting forth
in comparative form corresponding budgeted figures for such partial or full
fiscal year prepared in accordance with generally accepted accounting principles
consistently applied, except as may be noted otherwise;
(e) by December 1 of each year copies of the FDC budget for
operations for the next fiscal year;
(f) as soon as available, and in any event within 45 days after
the end of a fiscal year, a report of the financial information of FDC on an
actual versus as budgeted basis;
(g) within 30 days of filing, copies of all returns and
documents filed by FDC and its subsidiaries with any federal governmental
authority, including, without limitation, the
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U.S. Internal Revenue Service, the U.S. Environmental Protection Agency, the
U.S. Occupational Safety & Health Administration, the Small Business
Administration and the Securities and Exchange Commission;
(h) within 30 days of receipt thereof, a copy of the complaint,
motion for judgment or other such pleadings served on or by FDC and its
subsidiaries or any of their respective officers or directors, as the case may
be, relating to any litigation to which any of FDC and its subsidiaries, or any
of their respective officers or directors is made a party after the date of this
Agreement by mailing to the Purchasers; and
(i) within ten days of receipt thereof, notice of any default
declared with respect to any lease, contract or loan of any of FDC and its
subsidiaries or any judgment entered against any of FDC and its subsidiaries if
such default or judgment involves an amount exceeding $10,000.
SECTION 5.4 Use of Proceeds. FDC will use the proceeds from the sale
of the Shares hereunder (a) to consummate future acquisitions by the Company,
and (b) as corporate working capital in the ordinary course of business.
ADDITIONAL PRE-CLOSING COVENANTS
--------------------------------
SECTION 5.5 Exclusivity. Prior to the Closing, none of FDC, its
subsidiaries, or any of their officers or directors, or those FDC shareholders
who are party to this Agreement, shall cause FDC to, directly or indirectly,
through any officer, director, agent or otherwise, solicit, initiate or
encourage submission of any proposal or offer from any person or entity
(including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or acquisition
or the purchase of all or any portion of the assets of, or any equity interest
in, FDC or any similar transaction or business combination involving FDC, or
participate in any negotiations regarding, or furnish to any other person, any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing. FDC shall within one
business day notify Purchasers of any such proposal or offer, or any inquiry
from or contact with any person with respect thereto, and shall promptly provide
Purchasers with such information regarding such proposal, offer, inquiry or
contact as Purchasers may request.
SECTION 5.6 Consents under Agreements. FDC agrees that, prior to the
Closing, it and its subsidiaries will secure the approval under all agreements
(if any) as to which consent to the transactions contemplated hereunder is
required.
SECTION 5.7 Actions. Prior to the Closing, none of FDC, its
shareholders who are parties to this Agreement, and its subsidiaries will take
or permit to be taken any action that would be in breach of the terms or
provisions of this Agreement or that would cause any of their representations
and warranties contained herein to be or become untrue.
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SECTION 5.8. Additional Disclosure. Prior to the Closing, FDC will
promptly advise Purchasers of each event that occurs after execution of this
Agreement, if such event would have had to be disclosed on any schedule to this
Agreement had it occurred prior to the execution of this Agreement, or if such
event otherwise would lead to a breach or inaccuracy of any representation,
warranty, or covenant of FDC or its subsidiaries.
SECTION 5.9. Financial Statements. Prior to the Closing, FDC will
deliver monthly financial statements to Purchasers within 10 days of the end of
each month after the date hereof.
SECTION 5.10 Further Assurances. Prior to Closing, each of the
parties will use its reasonable best efforts to take all action and to do all
things necessary, proper, or advisable in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in this Agreement).
ARTICLE VI
POST CLOSING COVENANTS
Section 6.1 Post Closing Covenants.
(A) NONCOMPETE/NON-SOLICIT.
(i) During the five year period commencing with the
date hereof (the "Non-Compete Period"), Jerald H. Donnan, Marcia R. Donnan,
James N. Donnan and Russell E. Donnan (the "Key Employees") agree that they
shall not (and shall not direct or assist others to contact or solicit, offer
employment to, hire, or otherwise attempt to hire any person employed by the
Company. The Key Employees shall not encourage, induce or assist others in
inducing any employee of the Company to terminate his or her employment with the
Company or in any way interfere with the Company's respective relationships with
their employees.
(ii) During the Non-Compete Period, the Key Employees
agree that they shall not contact or solicit, or direct or assist others to
contact or solicit any customers, suppliers or other business associates of the
Company existing prior to Closing, shall not engage in the diversion of good-
will regarding the activities conducted by the Company prior to Closing; and
shall not otherwise interfere in any way with the relationships between the
Company and their customers, suppliers or business associates, existing prior to
Closing.
(iii) During the Non-Compete period, the Key Employees
shall not directly or indirectly compete with the Company in any manner in any
state where the Company is engaged or presently proposes to engage in business;
provided that such restriction on competition will be limited to those
businesses of the Company in which the Company was engaged prior to the date of
this Agreement; provided further that, notwithstanding the foregoing, any Key
Employee may make passive investments of not more than 5% of the outstanding
shares of, or 5% of any other equity interest in, any company or entity listed
or traded on a national securities exchange or in an over-the-counter securities
market. Without limiting the generality of
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this paragraph, each Key Employee agrees that the restrictions on competition
contained herein shall also prohibit serving as a consultant to any entity if
such consulting services would help such entity compete against the Company.
Additionally, except as expressly set forth in this Agreement, no Key Employee
shall have any interest (as owner, principal, general or limited partner, agent,
employee, officer, director, or stockholder) in any entity which competes with
the Company. The Key Employees agree that this covenant not to compete is made
in connection with the Purchasers' acquisition of the Company's common stock.
(B) FURTHER ASSURANCES. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor under
this Agreement).
(C) KEY MAN LIFE INSURANCE. FDC shall acquire key man life
insurance policies on those persons, in such amounts, and with designated
beneficiaries as determined from time to time and at any time by the Special
Committee (as defined in the Investors Agreement).
(D) INTELLECTUAL PROPERTY. Within 30 days of Closing, FDC shall
cause all FDC employees, all employees of FDC subsidiaries, and all independent
contractors who have worked in the development and/or maintenance of
Intellectual Property (as defined in Section 3(i)) to execute agreements with
FDC or its subsidiaries to assign their rights, title and interest in and to any
Intellectual Property including, without limitation, patents, copyrights and
inventions to FDC or its subsidiaries.
ARTICLE VII
CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE
SECTION 7.1 Conditions to Obligations to Close.
In addition to those specific conditions set forth in Articles VIII
and IX below, the obligations of the Purchasers and FDC to consummate the
transactions described herein shall be subject to the following:
(a) No government regulatory body or agency shall have
instituted court action or legal proceedings seeking preliminary or permanent
injunctive relief prohibiting purchase of the Shares.
(b) The performance of all conditions precedent to Closing set
forth in Articles VIII and IX below.
(c) From the date of this Agreement to the Closing Date, there
shall have been no Material adverse change (i) in the business or properties of
FDC, or (ii) in the
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financial condition of FDC, and the property, business and operations of FDC
shall have not been Materially and adversely affected due to any fire, accident
or other casualty or by any act of God, whether or not insured.
ARTICLE VIII
CONDITIONS TO FDC'S OBLIGATION TO CLOSE
SECTION 8.1 Conditions to FDC's Obligations to Close.
FDC's obligation to complete the transaction is provided for herein
shall be subject to the performance by the Purchasers of all their agreements to
be performed hereunder on or before the Closing, and to the further conditions
that:
(a) The representations and warranties of the Purchasers
contained in Article IV hereof are true and correct in all Material respects as
of the Closing with the same effect as if made on and as of such date and the
officers or managing directors of the Purchasers shall so certify thereto.
(b) The Purchasers shall have performed and complied with all the
terms and conditions required by this Agreement to be performed or complied with
by them prior to the Closing.
ARTICLE IX
CONDITIONS TO PURCHASERS' OBLIGATION TO CLOSE
SECTION 9.1 Conditions to Purchasers' Obligation to Close.
The Purchasers' obligation to complete the transactions provided for herein
shall be subject to the performance by FDC of all agreements to be performed
hereunder on or before the Closing, and to the further conditions that:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of FDC contained in Article III and the covenants of FDC contained in
Article V hereof are true and correct and have been performed or satisfied in
all respects as of the Closing with the same effect as if made or performed on
and as of such date and FDC shall so certify to the Purchasers.
(B) NO ADVERSE CHANGES. There shall have been no event or change
occurring between the execution of this Agreement and the Closing which in the
aggregate may be deemed to have an adverse effect on the business, operations,
financial condition or properties of FDC or its subsidiaries. There shall have
been no adverse changes in the operating results or financial condition of FDC
since December 31, 1998, except as described in Schedule 9(b) and FDC shall so
certify in writing to the Purchasers.
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(C) OPINION. The Purchasers shall have received from counsel to FDC,
an opinion dated the Closing, to the following effect:
(i) FDC is a corporation duly organized, validly existing and in
good standing under the laws of Colorado.
(ii) FDC has all corporate power and authority necessary to
engage in the business in which it is presently engaged and to execute, deliver
and perform its obligations under this Agreement. There are no options, puts,
calls, or other rights outstanding to purchase or sell FDC's securities, other
than as contemplated in this Agreement or as disclosed in the Schedules.
(iii) FDC's authorized capitalization consists of 10,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock. At the Closing
Date and prior to the issuance of the Shares, there will be 3,551,346 shares of
Common Stock issued and outstanding, and no shares of Preferred Stock issued and
outstanding. All of such outstanding shares of capital stock have been duly
authorized and are validly issued and are fully paid and nonassessable, subject
to certain escrow provisions.
(iv) Execution and delivery of this Agreement and the
Registration Rights Agreement, and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all necessary
action, corporate or otherwise, by FDC. This Agreement and the Registration
Rights Agreement are legal, valid and binding obligations of FDC, enforceable
against FDC in accordance with their terms except as enforcement may be limited
by general equitable principles or bankruptcy, insolvency or similar laws
affecting creditors' rights generally. FDC has all requisite power and authority
to execute, deliver and perform this Agreement and the Registration Rights
Agreement. All necessary corporate proceedings of FDC have been taken to
authorize the execution, delivery and performance by FDC of this Agreement and
the Registration Rights Agreement.
(v) There are no preemptive rights to acquire FDC's Common Stock
or Preferred Stock.
(vi) The Shares, when issued in accordance with the terms and
conditions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and will be free and clear of any adverse claim, security
interest, lien, pledge, option, encumbrance or restriction; provided, however,
that the Shares will be "restricted securities" as such term is defined under
the 1933 Act (unless registered for sale as described in the Registration Rights
Agreement) and the certificates representing the Shares will contain a legend to
reflect such status; and provided further that any Purchaser, if deemed an
"affiliate" under the 1933 Act, may be subject to certain restrictions as
provided in the 1933 Act, the 1934 Act or the rules and regulations thereunder.
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(vii) To the best knowledge of such counsel, FDC is not in
violation or default of any provision of its Articles of Incorporation, Bylaws
or of any provision of any instrument or contract to which it is a party or by
which it is bound or, of any provision of any federal, state or local judgment,
writ, decree, order, law, statute, rule or government regulation, applicable to
it. To the best knowledge of such counsel, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a violation or default under any such provision or an event which results in the
creation of any lien, charge of encumbrance upon any asset of FDC. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with any federal, state, local or other governmental
authority or any court or other tribunal is required by FDC for the execution,
delivery or performance by FDC of this Agreement or the Registration Rights
Agreement. To the best knowledge of such counsel, except for obligations under
its listing agreement with The Nasdaq Stock Market, Inc., no consent of any
party to any contract, agreement, instrument, lease, license, arrangement or
understanding to which FDC is a party, or to which any of its properties or
assets are subject, is required for the execution, delivery or performance of
this Agreement or the Registration Rights Agreement.
(viii) The Shares shall have been approved for additional
listing by The Nasdaq Stock Market, Inc.
(ix) Except as disclosed in this Agreement or the
Schedules, such counsel is not aware of any pending or threatened action, suit,
proceeding or investigation before any court or any public, regulatory, or
governmental agency, authority or body, involving FDC or any of its existing
officers or directors and such counsel do not know of any legal matter or
government proceedings regarding FDC.
In rendering such an opinions counsel for FDC may rely (i) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of FDC; and (ii) to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of FDC, provided that copies of any such statements or certificates shall be
delivered to counsel for the Purchasers.
(D) PERFORMANCE OF CONDITIONS. FDC shall have performed and
complied with all the terms and conditions required by this Agreement and the
Registration Rights Agreement to be performed or complied with by it on or
before the Closing.
(E) ACTION. All action necessary to authorize the execution,
delivery and performance of this Agreement by FDC and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by FDC.
FDC shall have furnished Purchasers with copies of all consents or resolutions
adopted or executed by FDC in connection with such actions.
(F) NO ACTION OR PROCEEDING. As of the Closing, no action, suit
or proceeding shall be pending or threatened before any court or administrative
body, and there shall
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<PAGE>
have been no threats, to (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, (iii) affect adversely
the right of Purchasers to own the Shares and to exercise their ownership rights
with respect to the Shares, or (iv) affect adversely the right of any of FDC and
its subsidiaries to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect).
(G) CONSENTS & APPROVALS. FDC shall have obtained and given each
consent and notice required in connection with the transactions contemplated
herein (as specified in Schedule 3(e).
(H) GOVERNMENTAL FILINGS. All governmental filings, authorizations
and approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained by FDC and its
subsidiaries.
(I) DISCOVERY OF FACTS OR CIRCUMSTANCES. Purchasers shall not have
discovered any fact or circumstance existing as of the date of this Agreement
which has not been disclosed to Purchasers as of the date of this Agreement
regarding the business, assets, liabilities, properties, condition (financial or
otherwise), results of operations or prospects of FDC which is, individually or
in the aggregate with other such facts and circumstances, adverse to FDC, its
financial position, results of operations or the value of its assets.
(J) DAMAGE. There shall have been no damage, destruction or loss of
or to any property or properties owned or used by FDC, or to its assets, whether
or not covered by insurance which, in the aggregate, has or would be reasonably
likely to have, an adverse effect on FDC.
(K) CONFIDENTIALITY AGREEMENT. FDC shall have entered into a
confidentiality agreement with Russell E. Donnan in form and substance as set
forth in Exhibit C, and the same shall be in full force and effect;
(L) INVESTORS AGREEMENT. FDC shall have entered into the Investors
Agreement with the Purchasers in form and substance as set forth in Exhibit D,
and the same shall be in full force and effect;
(M) VOTING AGREEMENT. Certain shareholders of FDC (as identified in
Exhibit E) shall have entered the Voting Agreement with the Purchasers in form
and substance as set forth in Exhibit E, and the same shall be in full force and
effect;
(O) ACQUISITIONS. There shall have been no adverse changes from that
contemplated on March 12, 1999, with respect to the valuation of, or the terms
of the transactions with, FDC's proposed acquisition targets, United Data
Services, Inc., Imfax, Inc., Jeffrey S. Lively and Denise R. Lively d/b/a
Quality Credit Reporting of Texas, Mortgage Credit Services, Inc. (Oklahoma),
and Credit Mark, Inc.
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(P) OFFICER'S CERTIFICATE. The President of FDC and its subsidiaries
shall have delivered to Purchasers a certificate to the effect that each of the
conditions specified above in Sections VIII(a), (b), (d), (e), (f), (g), (h),
and (j) is satisfied in all respects.
(Q) PRESIDENT'S CERTIFICATE. A certificate of the President of FDC,
certifying that FDC is not in violation or default without knowledge qualifier.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1 Termination. This Agreement and each agreement contemplated
hereby may be terminated at any time prior to the Closing:
(A) MUTUAL CONSENT. By the mutual written consent of the Purchasers
and FDC.
(B) BREACH. By FDC if there has been a breach of any representation,
warranty or agreement on the part of the Purchasers set forth in this Agreement,
or by the Purchasers if there has been a breach of any representation, warranty,
covenant or agreement on the part of FDC set forth in this Agreement.
(C) NO CONSUMMATION. By either FDC or the Purchasers if the Purchase
Transaction shall not have been consummated on or before April 21, 1999, by
reason of the failure of any condition precedent under Article VIV (with respect
to Purchasers) or Article VIII (with respect to FDC), unless the failure of such
condition precedent results primarily from the party seeking to terminate being
in breach of any representation, warranty, or covenant contained in this
Agreement; provided, however, that if the consummation of the Purchase
Transaction requires Shareholder approval or consent, then such date shall
automatically be extended to sixty days from the date on which determination is
made that such Shareholder approval or consent is required, and provided further
that such date may be extended at any time upon mutual agreement of the Parties.
(D) LITIGATION. By either FDC or the Purchasers if any litigation or
proceeding has been instituted with a view of restraining or prohibiting
consummation of the transaction contemplated by this Agreement.
SECTION 10.2 Effect of Termination. In the event of termination of this
Agreement or any agreement contemplated hereby, or to be executed simultaneously
herewith, this Agreement or any such other agreements shall forthwith become
void and there shall be no liability or obligation hereunder or thereunder on
the part of any party hereto, except for liability of any party for breaches of
this agreement and liability under Section 24(d).
SECTION 10.3 Amendment. This Agreement may be amended by the parties hereto
at any time before or after approval hereof. This Agreement or any agreement
contemplated hereby may not be amended except by an instrument in writing signed
on behalf of each of the parties thereto.
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SECTION 10.4 Extension; Waiver. At any time prior to the Closing
the parties hereto may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument signed on behalf of such party.
ARTICLE XI
INVESTMENT BANKING FEES
FDC and the Purchasers each represent that, except as described in the
referenced Letter, neither has employed any broker or agent or entered into any
agreement for the payment of any fees or compensation to any other person, firm
or corporation in connection with this transaction.
ARTICLE XII
INDEMNIFICATION AND CONTRIBUTION
SECTION 12.1 Indemnity. Subject to the conditions set forth below,
FDC agrees to indemnify and hold harmless the Purchasers, their members,
managers, officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Purchasers within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage and expense whatsoever (which shall include, for all
purposes of this Article XII, but not be limited to, attorneys' fees and any and
all expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation), arising out of,
resulting from, based upon, or in connection with any breach of any Material
representation, warranty, covenant, or agreement of FDC contained in this
Agreement. Notwithstanding anything to the contrary, FDC shall indemnify the
Purchasers for their proportionate share (based on the percentage of the total
outstanding Common Stock owned by the Purchasers) any Material taxes, tax costs,
assessments, penalties or interest incurred by FDC in conjunction with or as a
result of any acquisitions or other transactions entered into prior to the date
of this Agreement by FDC or its subsidiaries. The foregoing agreement to
indemnify shall be in addition to any liability FDC may otherwise have,
including liabilities arising under this Agreement. Any amount paid to
Purchasers under this Section 12 shall be grossed up by multiplying the amount
of any such claim by an amount equal to (i) one, plus (ii) (A) the number of
shares owned by Purchasers, divided by (B) the number of shares that are owned
by persons other than Purchasers. The Purchasers agree to indemnify and hold
harmless FDC, its officers, directors, partners, employees, agents, and counsel
and each person, if any, who controls FDC within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Article XII, but not be limited to, attorneys' fees and any and
all expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in
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settlement of any claim or litigation), arising out of, resulting from, based
upon, or in connection with any breach of any Material representation, warranty,
covenant, or agreement of Purchasers contained in this Agreement.
Except as otherwise agreed by the parties in Article XI hereof, (i)
FDC shall indemnify the Purchasers for any broker's or finder's fees which may
become payable as a result of any promise or contract which may have been made
by FDC to or with any such broker or finder and (ii) the Purchasers shall
indemnify FDC for any broker's or finder's fees which may become payable as a
result of any promise or contract which may have been made by the Purchasers to
or with any such broker or finder.
SECTION 12.2 Notice of Proceeding. If any action is brought
against FDC, the Purchasers or any of their members, managers, officers,
directors, employees, agents or counsel, or any controlling persons (an
"Indemnified Party" or collectively "Indemnified Parties"), in respect of which
indemnity may be sought against the other party (the "Indemnifying Party")
pursuant to the foregoing paragraph, such Indemnified Party or Parties shall
promptly notify the Indemnifying Party in writing of the institution of such
action (but the failure so to notify shall not relieve the Indemnifying Party
from any liability it may have) and the Indemnifying Party shall promptly assume
the defense of such action including the employment of counsel satisfactory to
such Indemnified Party or Parties and payment of expenses. Such Indemnified
Party or Parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties, unless (1) the employment of such counsel
shall have been authorized in writing by the Indemnifying Party in connection
with the defense of such action or (2) the Indemnifying Party shall not have
promptly employed counsel satisfactory to the Indemnified Party or Parties to
have charge of the defense of such action or (3) such Indemnified Party or
Parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or other indemnified parties which are
different from or additional to those available to the Indemnifying Party or (4)
the Indemnifying Party does not provide the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party of that the Indemnifying Party
will have the financial resources to defend against the claim and fulfill its
indemnification obligations hereunder, such evidence to be provided within 5
business days after the Indemnified Party requests such evidence, (5) the claim
involves only money damages and does not seek an injunction or other equitable
relief, and (6) the Indemnifying Party conducts the defense of the claim
actively and diligently, in any of which events such fees and expenses shall be
borne by the Indemnifying Party and the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party or
Parties.
SECTION 12.3 Contribution. To provide for just and equitable
contribution if (i) an Indemnified Party makes a claim for indemnification
pursuant to the language set forth in Sections 12.1 and 12.2 above, but it is
found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
Indemnified Parties seek contribution under the 1933 Act, the 1934 Act, or
otherwise, then the parties shall contribute to any and all losses, liabilities,
claims, damages and expenses whatsoever to which any of them may be subject, in
accordance with the relative fault of the parties in connection with the facts
which result in such
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losses, liabilities, claims, damages and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by FDC or the Purchasers, the parties' relative intent, access to information
and the opportunity to correct such statement, alleged statement, omission or
alleged omission. The parties agree that it would be unjust and inequitable if
the respective obligations of each of the parties for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to herein. No
persons guilty of a fraudulent misrepresentation within the meaning of Section
11(f) of the 1933 Act shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
SECTION 12.4 Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any party may have for breach of
representation, warranty, or covenant.
ARTICLE XIII
NOTICES
Any notice given under this Agreement shall be deemed to have been
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, by receipt confirmed facsimile
transmission, or by tested telex, telegram or cable addressed as follows:
If to FDC: Factual Data Corp.
5200 Hahns Peak Drive
Loveland, Colorado 80538
With a copy to: Samuel E. Wing
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
John P. Fitzgerald
Hogan & Hartson L.L.P.
1200 Seventeenth Street
Suite 1500
Denver, Colorado 80202
and, if to the Purchasers, at such address as appears on Exhibit A hereto, or to
any other address or addresses which may hereafter be designated by any party by
notice given in such manner. All notices shall be deemed to have been given as
of the date of receipt.
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ARTICLE XIV
CERTIFICATES OF OFFICERS AND DIRECTORS
The Purchasers and FDC shall provide to each other certificates at the
Closing verifying the representations and warranties made by each party hereto.
Any certificate or other document executed by any officer of FDC or the
Purchasers and delivered to the other party or their counsel shall be deemed a
representation and warranty by such officer on behalf of FDC or the Purchasers
as to the statements made therein.
ARTICLE XV
CONFIDENTIALITY
In connection with this Agreement, the Purchasers acknowledge that
they have received from FDC certain proprietary information, trade secrets,
financial statements and supporting information, together with statistics,
analyses, compilations, studies and other documents or records prepared by any
person including the Purchasers, their agents, advisors, affiliates or
representatives (collectively "Representatives") which contain or otherwise
reflect or are generated from such information (collectively the "Confidential
Material"). The Purchasers agree to take commercially reasonable measures to
ensure that the Confidential Material has not and will not be used other than in
connection with the purchase of the Shares. The Purchasers have and will make
all commercially reasonable efforts to safeguard the Confidential Material from
disclosure to anyone other than as permitted hereby. Without the prior written
consent of FDC, the Purchasers will not, except as required by law, and will
direct their representatives not to, disclose to any person the fact that the
Confidential Material has been made available to the Purchasers or that the
Purchasers have inspected any portion of the Confidential Material. The term
"person" as used herein shall be broadly interpreted to include without
limitation, any corporation, company, partnership and individual or group.
In the event that any Purchasers or any of their Representatives are
requested or required (by oral question or request for information or documents
in legal proceedings, interrogatories, subpoena, civil investigative demand or
similar process) to disclose any information supplied to such Purchaser in the
course of its dealings with FDC or its Representatives, it is agreed that any
such Purchaser will provide FDC with prompt notice of any request or requirement
so that either the Purchaser or FDC or both of them may seek an appropriate
protective order and/or, by mutual written agreement, waive the Purchaser's
compliance with the provisions of this Agreement. It is further agreed that if,
in the absence of a protective order or receipt of a waiver, any of the
Purchasers or any of their Representatives is nonetheless, in the reasonable
written opinion of their counsel, compelled to disclose information concerning
FDC to any court or else stand liable for contempt or suffer other censure, the
Purchasers or such Representative may make disclosure of such information to
such court. In any event, the Purchasers will not oppose action by, and will
cooperate (to the extent commercially reasonable) with, FDC to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded to such information.
The term "Confidential Material" does not include information (i)
which was known to the Purchasers or that the Purchasers had in their possession
prior to the disclosure of
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confidential information by FDC hereunder, (ii) which becomes generally
available to the public other than as a result of a disclosure by the Purchasers
or their Representatives, (iii) which becomes available to the Purchasers on a
non-confidential basis from a source other than FDC or its Representatives,
provided that such source is not bound by a confidentiality agreement with FDC
or its Representatives or otherwise prohibited from transmitting the information
to the Purchasers by a contractual, legal or fiduciary obligation, or (iv) which
otherwise becomes known to the Purchasers in a manner which does not violate the
proprietary rights of FDC.
Any of the Confidential Material shall be the property of FDC and, if
the transactions, upon request of FDC, all such Confidential Material shall be
returned to FDC or furnished to FDC without the Purchasers retaining any copy
thereof. The obligation of Purchasers under this Article XV will terminate two
years after the Closing.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this Article XV by the Purchasers or their
Representatives. FDC shall be entitled to seek injunctive and any other such
relief as maybe necessary to enforce the terms of this Article XV in the event
of a breach by the Purchasers or their Representatives. Injunctive relief shall
not be deemed to be an exclusive remedy for the Purchasers' breach of this
Article XV, but shall be in addition to all of the remedies available at law or
equity to FDC.
ARTICLE XVI
COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all of such
counterparts shall constitute one and the same instrument.
ARTICLE XVII
MERGER CLAUSE AND COSTS, FEES AND EXPENSES
This Agreement supersedes all prior agreements and understandings
between the parties, and may not be changed or terminated orally, and no
attempted change, termination or waiver of any of the provisions hereof shall be
binding unless in writing and signed by the parties hereto. Each party shall
pay its own expenses incident to the preparation, execution and delivery of this
Agreement and the consummation of the transactions described herein including,
without limitation, all fees of counsel, accountants and other professional fees
and expenses.
ARTICLE XVIII
SEVERABILITY
In the event that any provision of this Agreement is determined to be
partially or wholly invalid, illegal or unenforceable, then such provision shall
be deemed to be modified or restricted to the extent necessary to make such
provision valid, binding and enforceable or, if such a provision cannot be
modified or restricted in a manner so as to make such provision valid, binding
and enforceable, then such provision shall be deemed to be excised from this
Agreement and the
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validity, binding effect and unenforceability of the remaining provisions of
this Agreement shall not be affected or impaired in any manner.
ARTICLE XIX
BENEFIT
The terms and conditions of this Agreement shall inure to the benefit
of, and shall be binding upon, the successors and assigns of the parties hereto,
and the persons and entities referred to in Article XI who are entitled to
indemnification or contribution and their respective successors, legal
representatives and assigns and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement, the Registration Rights Agreement, or the Letter or
any provision herein or therein contained.
ARTICLE XX
WAIVER
The failure of any party to insist upon the strict performance of any
of the provisions of this Agreement shall not be considered as a waiver of any
subsequent default of the same or similar nature. Time is of the essence in
this Agreement.
ARTICLE XXI
HEADINGS
The headings for the sections of this Agreement are inserted for
convenience in reference only and shall not constitute a part hereof.
ARTICLE XXII
SURVIVAL
The respective agreements, representations, warranties, covenants and
other statements of the Purchasers and FDC set forth in this Agreement shall
survive and remain in full force and effect for a period of fifteen months from
the Closing; provided that the representations in Sections 3(a), 3(e), and 3(g)
shall survive indefinitely and the representations in Sections 3(k) (Tax), 3(o)
(ERISA) and 3(r) (Environmental) shall survive until the expiration of all
statues of limitation, in each case regardless of any investigation or
inspection made on behalf of the Purchasers or FDC; notwithstanding the
foregoing, if the party seeking indemnification makes a written claim for
indemnification within such survival period, then the indemnifying party agrees
to indemnify the party seeking indemnification from and against the entirety of
any adverse consequences party seeking indemnification may suffer through and
after the date of the claim for indemnification (including any adverse
consequences the party seeking indemnification may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach).
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ARTICLE XXIII
GOVERNING LAW
This Agreement shall be governed by and construed according to the
laws of the State of Illinois, without giving effect to conflict of laws.
ARTICLE XXIV
MISCELLANEOUS
(A) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of FDC and the Purchasers;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will advise and consult with the other parties prior to making the disclosure).
(B) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchasers and FDC; provided, however, that Purchasers
may (i) assign any or all of their rights and interests hereunder to one or more
of their affiliates and (ii) designate one or more of their affiliates to
perform their obligations hereunder.
(c) AMENDMENTS. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by FDC and the
Purchasers.
(D) EXPENSES. Each of the parties will bear its own costs and
expenses (including, without limitation, attorneys', accountants' and agents'
fees and disbursements) incurred in connection with this Agreement and the
transactions contemplated hereby; provided, however, FDC agrees to reimburse
Purchasers for all reasonable out-of-pocket expenses (including, without
limitation, attorneys', accountants' and agents' fees and disbursements)
incurred by Purchasers in connection with this proposed investment and in its
facilitation of the acquisition financing line, if either:
(i) Purchasers elect not to complete the purchase of
securities from FDC due to (A) the disclosure of materially adverse information
about FDC or its subsidiaries not known to Purchasers as of March 12, 1999
(which is the date of the letter of intent, which letter of intent was
countersigned by FDC on March 13, 1999) (the "Letter of Intent"), (B) a Material
adverse change in FDC's or its subsidiaries' condition (financial or otherwise)
from that reflected in its most recent financial statements, as had been
provided to Purchasers prior to March 12, 1999, (C) FDC's failure to comply with
the provisions of the Letter of Intent, the Term Sheet attached to the Letter of
Intent, or this Agreement, or (D) FDC's inability to obtain shareholder approval
of the transaction (to the extent required) within 60 days from which a
determination is made that such shareholder approval is required, or
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<PAGE>
(ii) FDC elects not to complete the issuance of securities to
Purchasers for any reason other than Purchasers' failure to comply in with the
provisions of the Letter of Intent, the Term Sheet that is attached to the
Letter of Intent, or this Agreement.
(E) SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter , in addition to any other remedy
to which they may be entitled, at law or in equity
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
HALEY LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
MARSHALL FINANCIAL PARTNERS, L.P.
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI INVESTORS, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
FACTUAL DATA CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: Jerald H. Donnan
By: _____________________________
Name: Marcia R. Donnan
By: _____________________________
Name: James N. Donnan
By: _____________________________
Name: Russell E. Donnan
<PAGE>
EXHIBITS
No. Description
- --- -----------
A Schedule of Purchasers
B Registration Rights Agreement
C Confidentiality Agreement
D Investors Agreement
E Voting Agreement
<PAGE>
EXHIBIT A
INFORMATION RELATING TO PURCHASERS
Number of Shares
Name and Address of Purchaser To be Purchased
- ----------------------------- ---------------
Haley LLC
c/o Continental Illinois Venture Corporation
231 South La Salle Street 7L
Chicago, IL 60697
BCI Growth V, L.P.
c/o BCI Advisors, Inc.
Glenpointe Centre West
Teaneck, NJ 07666
BCI Investors, LLC
c/o BCI Advisors, Inc.
Glenpointe Centre West
Teaneck, NJ 07666
Marshall Financial Partners, L.P.
c/o Marshall Ventures, L.L.C.
903 N. Third Street, Suite 300
Minneapolis, MN 55401
<PAGE>
FACTUAL DATA CORP.
FULLY DILUTED SHARES OUTSTANDING (3/9/99)
<TABLE>
<CAPTION>
FULLY-DILUTED
ASSUMES ALL SHARES SHARES
EXERCISED OUTSTANDING
--------- -----------
<S> <C> <C> <C> <C>
Common Shares Outstanding 3,551,346 3,551,346
Warrants, $7.15 exercise price 1,380,000 24,866
Warrants, $9.15 exercise price 120,000
Option, IPO Underwriter, $7.04 exercise price 120,000 3,975
Options, 1997 Stock Incentive Plan (200,000
authorized)
10,000 shares at $5.60 10,000 2,309
5,000 shares at $6.50 5,000 536
17,000 shares at $5.60 17,000 3,925
--------- ---------
TOTAL 5,203,346 71.03% 3,586,958 62.83%
Piper Jaffray Warrants, assumes $7.2812 exercise 61,803 0.84% 61,803 1.08%
price
Private Placement Common Shares at $7.2812 2,060,100 28.12% 2,060,100 36.09%
--------- ---------
Fully-diluted shares outstanding 7,325,249 100.00% 5,708,861 100.00%
Market Price as of 3/9/99 $7.2812
Assumes $15,000,000 Common Stock Private Placement
</TABLE>
<PAGE>
EXHIBIT C
CONFIDENTIALITY AGREEMENT
<PAGE>
EXHIBIT D
INVESTORS AGREEMENT
<PAGE>
EXHIBIT E
VOTING AGREEMENT
<PAGE>
Exhibit 2
================================================================================
ASSIGNMENT AND ASSUMPTION AGREEMENT
================================================================================
THIS ASSIGNMENT AND ASSUMPTION (the "Assignment") is made and entered
into as of March 30, 1999 by and between Haley LLC, a Delaware limited liability
company ("Assignor") and Continental Illinois Venture Corporation, a Delaware
corporation (the "Assignee").
RECITALS
--------
A. Assignor purchased 1,112,829 shares of common stock from Factual
Data Corp. (the "Company") on March 30, 1999, pursuant to a purchase agreement
(the "Purchase Agreement") among the Assignor, the Company and certain other
investors in the Company (the "Minority Investors").
B. Assignor is a party to an investors agreement (the "Investors
Agreement"), and a registration rights agreement (the "Registration Rights
Agreement") both dated March 30, 1999, by and between Assignor, the Company and
the Minority Investors.
C. Assignor wishes to assign and Assignee wishes to assume all of the
Assignor's rights and obligations under the Purchase Agreement, the Investors
Agreement and the Registration Rights Agreement.
AGREEMENT
---------
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby assign, and
Assignee does hereby assume, all of Assignor's rights and obligations under the
Purchase Agreement, the Investors Agreement and the Registration Rights
Agreement.
* * * * *
IN WITNESS WHEREOF, the Assignor and Assignee have caused this
Assignment to be executed on the day and year first above written.
HALEY LLC CONTINENTAL ILLINOIS VENTURE
CORPORATION
By:_________________________ By:____________________________
Name:_______________________ Name:__________________________
Title:______________________ Title:_________________________
<PAGE>
Exhibit 3
________________________________________________________________________________
INVESTORS AGREEMENT
OF
FACTUAL DATA CORP.
________________________________
MARCH 25, 1999
________________________________
CONFIDENTIAL
________________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CONTENTS
- ------------------------------------------------------------------------------
Page
<S> <C>
1. RESTRICTIONS ON TRANSFER OF COMMON STOCK............................ 1
(a) Transfer of Common Stock........................................ 1
(b) Right to Purchase Upon Bankruptcy............................... 2
(c) Repurchase Upon Divorce......................................... 2
(d) Repurchase Upon Death or Disability............................. 3
(e) Termination of Restrictions..................................... 3
2. TRANSFERS IN ACCORDANCE WITH THIS AGREEMENT......................... 3
3. LEGEND.............................................................. 3
4. TRANSFER............................................................ 3
5. TAG ALONG RIGHTS.................................................... 4
6. APPROVAL OF MATERIAL COMPANY TRANSACTIONS AND ACTIONS............... 5
7. SMALL BUSINESS MATTERS.............................................. 5
8. BOARD OF DIRECTORS.................................................. 7
(a) Representation.................................................. 7
(b) Liability Insurance............................................. 7
(c) Reimbursement of Expenses....................................... 7
9. INFORMATION RIGHTS.................................................. 7
(a) Access and Information.......................................... 7
(b) Information Following Effective Date............................ 7
10. DEFINITIONS......................................................... 9
11. MISCELLANEOUS....................................................... 13
(a) No Third Party Beneficiaries..................................... 13
(b) Entire Agreement................................................. 13
(c) Succession and Assignment........................................ 13
(d) Counterparts..................................................... 13
(e) Headings......................................................... 13
(f) Notices.......................................................... 13
(g) Governing Law.................................................... 14
(h) Amendments and Waivers........................................... 14
(i) Disclaimer of Rights............................................. 15
(j) Severability..................................................... 15
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
(k) Construction.................................................... 15
(l) Specific Performance............................................. 15
</TABLE>
-ii-
<PAGE>
================================================================================
INVESTORS AGREEMENT
================================================================================
THIS INVESTORS AGREEMENT (this "AGREEMENT") is made March 25, 1999
("EFFECTIVE DATE") by and among Factual Data Corp., a Colorado corporation (the
"COMPANY"), Haley LLC, a Delaware limited liability company ("HALEY"), the
"MINORITY INVESTORS" to be listed on Exhibit A, and those certain individuals
listed on the signature pages hereto (the "INDIVIDUAL INVESTORS"). The Company,
Haley, the Minority Investors and the Individual Investors are individually
referred to herein as an "INVESTOR" and collectively as the "INVESTORS."
Capitalized terms used herein are defined in Section 11 hereof.
----------
RECITALS
--------
A. Pursuant to that certain purchase agreement dated March 25, 1999
between Haley and the Company (the "PURCHASE AGREEMENT"), Haley owns [___%] of
the Company's common stock, par value $____ per share, (the "COMMON STOCK").
B. The Individual Investors own, in the aggregate, [___%] of the
Common Stock.
C. The parties hereto desire to enter into this Agreement for the
purposes of (i) assuring continuity in the ownership of the Company, (ii)
limiting the manner and terms by which Common Stock held by the Investors may be
transferred, and (iii) establishing the composition of the Company's Board of
Directors (the "BOARD").
AGREEMENT
---------
THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. RESTRICTIONS ON TRANSFER OF COMMON STOCK .
-----------------------------------------
(A) TRANSFER OF COMMON STOCK. Notwithstanding anything to the
------------------------
contrary in this Agreement, neither the Individual Investors nor the Minority
Investors shall sell, transfer, assign, pledge or otherwise dispose of
("TRANSFER") any Common Stock without the prior written consent of Haley,
provided that, subject to the terms of this Agreement (including but not limited
to Section 5(b)): (i) on any date after six months from the Effective Date
------------
until five years after the Effective Date, each Donnan Investor (as defined in
Section 10) may Transfer in any three month period an amount of Common Stock not
to exceed the average weekly reported trading volume of the Common Stock for the
four calendar weeks preceding such Transfer without the consent of Haley
provided that, in no case shall the aggregate number of shares of Common Stock
transferred by any Donnan Investor exceed 20% of the number of
<PAGE>
shares of Common Stock held by such Donnan Investor as of the Effective Date;
(ii) for three years following the Effective Date, each Minority Investor may
Transfer up to 20% of the shares of Common Stock owned by such Minority Investor
as of the Effective Date without the consent of Haley, and (iii) following such
three year period, each Minority Investor may transfer (without the consent of
Haley), in any three month period, an amount of Common Stock not to exceed the
average weekly reported trading volume of the Common Stock for the four calendar
weeks preceding such Transfer. Haley and its Affiliates may Transfer (a
"PERMITTED TRANSFER") their Common Stock: (i) subject to the terms of this
Agreement, or (ii) to any Person that is an Affiliate or otherwise associated
with Haley, or (iii) to any Person Haley may select, provided, however, that not
more than 20% of Haley's and its Affiliates' Common Stock may be transferred
pursuant to the provisions of this clause (iii), and provided further that Haley
------------
shall obtain a proxy prior to making any Permitted Transfer.
(B) RIGHT TO PURCHASE UPON BANKRUPTCY. Upon the Bankruptcy of
---------------------------------
any Investor, such Investor (or its Trustee, as defined below) shall, within
five (5) days, give notice of the Bankruptcy to the Company and the other
Investors (for purposes of this Section 1(b), the "OTHER INVESTORS") pursuant to
------------
the notice provisions of this Agreement. Within 30 days of receipt of such
notice, the Company shall have the right (but not the obligation), in its sole
and absolute discretion, to notify the Trustee that it intends to redeem for all
cash or for the Purchase Note, any or all of the Common Stock owned by the
bankrupt Investor from the trustee or bankruptcy estate of such Investor (the
"TRUSTEE"). If the Company gives such a notice of intent to redeem, it shall
consummate the redemption within thirty (30) days after providing the notice of
intent to redeem. If any Common Stock held by such Trustee is not purchased by
the Company, then during the sixty (60) day period after receipt of the notice
of the bankruptcy, the Other Investors shall have the right (but not the
obligation), in their sole and absolute discretion, to purchase for all cash on
a pro rata basis any of the Common Stock owned by the bankrupt Investor from the
Trustee. The price for the Common Stock shall equal the Fair Market Value of the
Common Stock.
(C) REPURCHASE UPON DIVORCE. The Company shall have the right
-----------------------
(but not the obligation), for ninety (90) days from the date the Company learns
of the subject divorce, in its sole and absolute discretion, to redeem for all
cash or for the Purchase Note any or all of the Common Stock from any ex-spouse
acquiring Common Stock from any Investor pursuant to a divorce, for the Fair
Market Value of the Common Stock. If any Common Stock owned by the acquiring
spouse are not purchased by the Company, then the Other Investors shall have the
right for the next thirty (30) days (but not the obligation), in their sole and
absolute discretion, to purchase for all cash on a pro rata basis any of the
Common Stock from any person acquiring Common Stock from any Investor pursuant
to a divorce for the Fair Market Value. Any Investor who transfers their Common
Stock pursuant to a divorce shall, within ten (10) days of the entry of any
decree or order of divorce or any settlement in which such Investor's Common
Stock is transferred, give notice of such transfer pursuant to the notice
provisions of this Agreement.
-2-
<PAGE>
(D) REPURCHASE UPON DEATH OR DISABILITY. In the event of the
-----------------------------------
death or Disability of an Investor other than Haley or its Affiliates, such
Investor's Common Stock may be held by members of such Investor's Family Group
(and such Common Stock will continue to be subject to this Agreement).
(E) TERMINATION OF RESTRICTIONS. The restrictions set forth
---------------------------
in this Section 1 will continue with respect to the Common Stock until Haley and
---------
its Affiliates own, in the aggregate, less than 5% of the Company's total
outstanding Common Stock as of the Effective Date, giving effect to those
transactions contemplated in the Purchase Agreement (the "PRIMARY SHARES").
2. TRANSFERS IN ACCORDANCE WITH THIS AGREEMENT. Each Investor
-------------------------------------------
agrees that the Common Stock held by such Investor will not be transferred in
violation of this Agreement, the Securities Act, or any other applicable law.
3. LEGEND. Each certificate evidencing Common Stock held by Haley,
------
the Individual Investors and the Minority Investors and each certificate issued
in exchange for or upon the transfer of any such Common Stock (if such Common
Stock remains subject to the terms of this Agreement after such transfer) shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON _________________. THE TRANSFER OF SUCH
SECURITIES IS SUBJECT TO THE SECURITIES ACT OF 1933, THE
APPLICABLE STATE SECURITIES LAWS, AND CERTAIN RESTRICTIONS
SET FORTH IN AN INVESTORS AGREEMENT DATED MARCH 25, 1999 BY
AND AMONG THE ISSUER OF THIS SECURITY (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S SECURITY HOLDERS. A COPY OF THE
INVESTORS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
4. TRANSFER. Prior to Haley, any Minority Investor or any
--------
Individual Investor transferring any Common Stock (other than in a Public Sale)
to any person or entity, the transferring Investor will cause the prospective
transferee to execute and deliver to the Company an agreement to be bound by the
terms of this Agreement, in the form attached hereto as Exhibit B.
---------
5. TAG ALONG RIGHTS.
----------------
(A) At least thirty (30) business days prior to any Transfer of
Common Stock by Haley (other than a Permitted Transfer), the Minority Investors
or the Individual Investors, the transferring party (the "TRANSFEROR") shall
deliver a written notice (the "SALE NOTICE") to the Company, Haley, the Minority
Investors and the Individual Investors (for this
-3-
<PAGE>
Section 5, the "OTHER INVESTORS"), specifying in reasonable detail the identity
- ---------
of the prospective transferee(s), the number of shares to be transferred and the
terms, the conditions of the Transfer, and the price and form of consideration.
The Sale Notice shall also include copies of all of the agreements and other
documents that will be used in connection with such Transfer. The Other
Investors may elect to participate in the contemplated Transfer, at the same
price per share and on the same terms, by delivering written notice to the
Transferor within ten (10) business days after delivery of the Sale Notice.
Subject to Section 5(c), if any Other Investors have elected to participate in
------------
such Transfer, the Transferor and such Other Investors shall be entitled to sell
in the contemplated Transfer, at the same price and on the same terms, a number
of shares of Common Stock equal to the product of (i) the fraction determined by
dividing the percentage of Common Stock owned by such Person by the aggregate
percentage of Common Stock owned by the Transferor and the Other Investors
participating in such sale and (ii) the number of shares of Common Stock to be
sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 shares
-----------
by Haley, and if Haley at such time owns 30% of all Common Stock
and if one Other Investor elects to participate and owns 20% of
all Common Stock, Haley would be entitled to sell 60 shares
((30%50%) x 100 shares of Common Stock) and the Other Investor
would be entitled to sell 40 shares ((20%50%) x 100 shares of
Common Stock).
Each Investor transferring Common Stock pursuant to this Section shall pay its
pro rata share (based on the number of shares to be sold) of the expenses
incurred by the Investors in connection with such transfer (if and to the extent
not paid or payable by another person or entity) and shall be obligated to join
on a pro rata basis (based on the number of shares of Common Stock to be sold)
in any indemnification or other obligations that the Transferor agrees to
provide in connection with such Transfer.
(B) Notwithstanding the foregoing, (i) neither the Individual
Investors nor the Minority Investors shall have the right under Section 5(a) to
------------
participate in a Transfer by Haley until the aggregate number of shares of
Common Stock owned by Haley (after giving effect to the transfer contemplated by
Section 5(a)) equals less than 80% of the total number of shares of Common Stock
- ------------
owned by Haley as of the Effective Date; (ii) neither Haley nor the Minority
Investors shall have the right under Section 5(a) to participate in a Transfer
------------
by the Individual Investor until either (A) the aggregate number of shares of
Common Stock owned by the Individual Investors (after giving effect to the
transfer contemplated by Section 5(a)) equals less than 80% of the total number
------------
of shares of Common Stock owned by the Individual Investors as of the Effective
Date, or (B) any Transfer by the Individual Investors, in conjunction with any
other events, transactions, Transfers or occurrences, results in a Loss of
Control; and (iii) neither Haley nor the Individual Investors shall have the
right under Section 5(a) to participate in a Transfer by the Minority Investors
------------
until the number of shares of Common Stock owned by the Minority Investor making
such Transfer (after giving effect to the transfer contemplated by Section 5(a))
------------
equals less than 80% of the total number of shares of Common Stock owned by such
Minority Investor as of the Effective Date.
-4-
<PAGE>
(C) If any Transfer by Haley results in Haley having transferred
shares of Common Stock which, in the aggregate, constitute more than 20% of the
Common Stock owned by Haley as of the Effective Date (a "Triggering Event"),
then the Individual Investors shall be permitted to participate in any such
Transfer on the following terms: (i) for any such Transfer made in the first
year following such Triggering Event, the Individual Investors shall be
permitted to contribute 25% of those shares of Common Stock being transferred;
(ii) for any such Transfer made in the second year following such Triggering
Event, the Individual Investors shall be permitted to contribute 35% of those
shares of Common Stock being transferred; and (iii) for any such Transfer made
in the third year following the Triggering Event or thereafter, the Individual
Investors shall be allowed to participate on a pro rata basis with Haley.
6. APPROVAL OF MATERIAL COMPANY TRANSACTIONS AND ACTIONS. The
-----------------------------------------------------
Company will not liquidate, dissolve or enter into any merger, consolidation,
joint venture, recapitalization, partnership or other combination, or sell,
lease or dispose of or permit any Subsidiary to sell, lease or otherwise dispose
of, more than 50% of the consolidated assets of the Company and its Subsidiaries
(computed on the basis of book value, determined in accordance with generally
accepted accounting principles consistently applied, or fair value, determined
by the Company's board of directors in its reasonable good faith judgment) in
any transaction or series of related transactions (other than sales goods in the
ordinary course of business) without prior approval of the Special Committee of
the Board of Directors (as defined in Section 10).
7. SMALL BUSINESS MATTERS.
----------------------
(A) The Company shall enter into a Plan of Divestiture (as defined
in the SBIC Regulations) with each SBIC Holder as and when required by the SBIC
Regulations.
(B) Within seventy-five (75) days after the Closing and each
subsequent Financing hereunder by an SBIC Holder, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the Financing hereunder by the Company and its Subsidiaries. In addition to
any other rights granted hereunder, the Company shall grant each SBIC Holder and
the United States Small Business Administration (the "SBA") access to the
Company's records for the purpose of verifying the use of proceeds.
(C) The Company acknowledges that Continental Illinois Venture
Corporation is a federally licensed SBIC under the SBIC Act. The Company,
together with its "affiliates" (as that term is defined in 13 CFR (S)121.103),
is a "small business concern" within the meaning of the SBIC Regulations,
including 13 CFR (S)121.301. The information regarding the Company and its
affiliates set forth in SBA Form 480, Form 652 and Parts A and B of Form 1031
are accurate and complete. Neither the Company nor any Subsidiary presently
engages in, or shall hereafter engage in, any activities, nor shall the Company
or any Subsidiary use the proceeds of the Financing for any purpose, for which
an SBIC is prohibited from providing funds by SBIC Regulations (including 13 CFR
(S)107.720).
-5-
<PAGE>
(D) Upon the occurrence of any Regulatory Violation or in the
event that the SBIC Holder determines in its reasonable good faith judgment that
a Regulatory Violation has occurred, in addition to any other rights and
remedies to which it may be entitled (whether under this Agreement or any other
agreement), the SBIC Holder shall have the right, to the extent required under
SBIC regulations, to demand the immediate repurchase of all of the outstanding
Company Interests owned by the SBIC Holder at a price equal to the greater of
the Fair Market Value of such Company Interests or the purchase price paid for
such Company Interests hereunder by delivering written notice of such demand to
the Company. The Company shall deliver a cashier's or certified check or by wire
transfer of immediately available funds to the SBIC Holder within thirty (30)
days after the Company's receipt of the demand notice, and, upon such payment,
such SBIC Holder shall deliver the certificates evidencing the Company Interests
being repurchased duly endorsed for transfer or accompanying duly executed forms
of assignment.
(E) Promptly after the end of each fiscal year, the Company shall
deliver to the SBIC Holder a written assessment of the economic impact of the
SBIC Holder's investment in the Company, specifying the full-time equivalent
jobs created or retained in connection with the investment, the impact of such
SBIC Holder's Financing on the revenues and profits of the Company and its
Subsidiaries and on taxes paid by the Company and its employees.
(F) In the event that the SBIC Holder determines that it has a
Regulatory Problem, the SBIC Holder shall have the right to transfer its Common
Stock without regard to any restriction on transfer set forth in this Agreement,
and the Company shall take all such actions as are reasonably requested by the
SBIC Holder in order to (i) effectuate and facilitate any transfer by the SBIC
Holder of any Common Stock then held by the SBIC Holder to any Person designated
by the SBIC Holder, (ii) permit the SBIC Holder (or any of its Affiliates) to
exchange all or any portion of any voting Common Stock then held by it on a
share-for-share basis for shares of nonvoting Common Stock, which nonvoting
Common Stock shall be identical in all respects to the voting Common Stock
exchanged for it, except that it shall be nonvoting and shall be convertible
into voting Common Stock on such terms as are requested by the SBIC Holder in
light of regulatory considerations then prevailing, (iii) continue and preserve
the respective allocations of the voting Common Stock with respect to the
Company arising out of the SBIC's aggregate ownership of voting securities
before the transfers and amendments referred to above (including entering into
such additional agreements as are requested by the SBIC Holder to permit any
Persons designated by the SBIC Holder to exercise any voting power which is
relinquished by the SBIC Holder), and (iv) amend this Agreement, and related
agreements and instruments to effectuate and reflect the foregoing. The parties
to this Agreement agree to vote their securities in favor of such amendments and
actions.
8. BOARD OF DIRECTORS.
------------------
(A) REPRESENTATION. From and after the Effective Date and until
--------------
the
-6-
<PAGE>
provisions of this Agreement cease to be effective, each Investor shall vote all
his Common Stock and shall take all other necessary or desirable actions within
his control (whether in his capacity as an equity owner, director, member of a
board committee or officer of the Company or otherwise, and including without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary or desirable actions within its control
(including without limitation, calling special Board and shareholder meetings),
so that:
(I) at least one Person nominated by Haley to serve on the
Board (a "HALEY DIRECTOR") is elected to the Board and appointed to serve
on the Board's compensation and audit committees and Special Committee and
that at least one Haley Director remains on the Board so long as Haley is a
holder of at least 5% of the Primary Shares.
(II) the composition of the board of directors of each of the
Company's subsidiaries shall be the same as that of the Company's Board.
(B) LIABILITY INSURANCE. The Company will provide director and
-------------------
officer liability insurance coverage, in an amount satisfactory to Haley, to the
Haley Director and any officer of the Company who is also an employee of Haley.
(C) REIMBURSEMENT OF EXPENSES. The Company will reimburse
-------------------------
reasonable fees and expenses incurred by the Haley Director in the course of
fulfilling such director's duties to the Company, including costs associated
with attending meetings of the Board.
9. INFORMATION RIGHTS.
------------------
(A) ACCESS AND INFORMATION. The Company will provide Haley and
----------------------
their representatives full access at all reasonable times prior to the Effective
Date to the properties, books and records of the Company and to furnish such
information and documents in its possession relating to the Company as Haley may
reasonably request.
(B) INFORMATION FOLLOWING EFFECTIVE DATE. Beginning with
------------------------------------
execution of this Agreement and continuing beyond the Effective Date for so long
as Haley owns at least 5% of the Primary Shares, the Company shall furnish
Haley, without charge, the following documents:
(I) As soon as available, and in any event, before or
simultaneous with their filing with the Commission, one copy of each annual
and interim financial and other report or communication filed with the
Commission;
(II) Such additional publicly filed documents and publicly
available information with respect to the Company and its affairs as Haley
may from time to time reasonably request;
-7-
<PAGE>
(III) as soon as available, and in any event within ninety
(90) days after the end of each fiscal year of the Company, duplicate
copies of the audited financial statements of the Company and its
Subsidiaries reported on by a firm of independent certified public
accountants of national recognition, and stating in comparative form the
figures as of the end of and for the previous fiscal year, accompanied by a
report thereon containing an opinion which contains no exceptions or
qualifications (except for qualifications regarding specified contingent
liabilities) by such independent certified public accountants that the
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied, except as may be noted
otherwise;
(IV) as soon as available, and in any event within thirty
(30) days after the end of each month commencing with the end of the month
of January 1999, a copy of the consolidated interim financial statements of
the Company and its Subsidiaries, consisting at a minimum of: (A) the
balance sheet as of the end of the month, and (B) a statement of income for
the month and for the partial or full fiscal year ended as of the end of
the month, all in reasonable detail and, in the case of a month which is
the end of the Company's fiscal quarter, setting forth in comparative form
corresponding budgeted figures for such partial or full fiscal year
prepared in accordance with generally accepted accounting principles
consistently applied, except as may be noted otherwise;
(V) within thirty (30) days of filing, copies of all
returns and documents filed by the Company or its Subsidiaries with any
federal governmental authority, including, without limitation, the U.S.
Internal Revenue Service, the U.S. Environmental Protection Agency, the
U.S. Occupational Safety & Health Administration, the Small Business
Administration and the Securities and Exchange Commission;
(VI) within thirty (30) days of receipt thereof, a copy of
any complaint, motion for judgment or other such pleadings served on or by
the Company or its Subsidiaries or any of their respective officers or
directors, as the case may be, relating to any litigation to which any of
the Company and its Subsidiaries, or any of their respective officers or
directors is made a party after the date of this Agreement by mailing to
Haley; and
-8-
<PAGE>
(VII) within ten (10) days of receipt thereof, notice of any
default declared with respect to any lease, contract or loan of any of the
Company or its Subsidiaries or any judgment entered against any of the
Company or its Subsidiaries if such default or judgment involves an amount
exceeding $10,000.
10. DEFINITIONS.
-----------
"AFFILIATE" means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the Person in question.
"AVERAGE CLOSING PRICE" means, as of any date, (i) if the Common
Stock is listed or admitted for trading on a national securities exchange, the
average of the composite prices therefor as reported in the Wall Street Journal
on the principal national securities exchange on which such Common Stock is
traded, on the last five (5) trading days before such date, (ii) if the Common
Stock is not listed or admitted for trading on a national securities exchange,
but is quoted through the NASDAQ National Market System, the average of the
closing prices therefor on the last five (5) trading days before such date, or
(iii) if the Common Stock is not listed on either a national securities exchange
or quoted through the NASDAQ National Market System, but is publicly traded, the
average of the bid and asked prices therefor on the last twenty (20) trading
days before such date.
"BANKRUPTCY" means anytime (i) a Person makes an assignment for
the benefit of creditors or admits in writing its inability to pay its debts
generally as the become due, (ii) an order, judgment or decree is entered
adjudicating a Person bankrupt or insolvent, (iii) any order for relief with
respect to a Person is entered under the Federal Bankruptcy Code, (iv) a Person
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of a Person, or of any substantial part of the
assets of a Person, or commences any proceeding (other than a proceeding for the
voluntary liquidation and dissolution of any Subsidiary) relating to a Person
under any bankruptcy reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction or (v) any such
petition or application is filed, or any such proceeding is commenced, against a
Person and either (A) a Person by any act indicates its approval thereof,
consent thereto or acquiescence therein or (B) such petition, application or
proceeding is not dismissed within 45 days.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY INTERESTS" means (i) any interests in the Company or any
of its Subsidiaries whether in the form of Common Stock, preferred stock,
options, warrants, unit appreciation rights, voting rights or other equity
securities, and (ii) any instruments convertible into any of the aforementioned
interests.
"DISABILITY" means physical or mental incapacity resulting in an
Investor being unable to perform his duties in a manner satisfactory to the
Board for any consecutive three
-9-
<PAGE>
(3) month period, or for any six (6) non-consecutive months in any consecutive
twelve (12) month period. Any question as to the existence of the Disability of
an Investor as to which the Investor and the Company cannot agree shall be
determined in writing by the Board upon consultation with a qualified
independent physician.
"DONNAN INVESTOR" means each of (i) James N. Donnan, (ii) Russell
E. Donnan, and (iii) Marcia R. Donnan and Jerald H. Donnan (together, Marcia and
Jerald representing one Donnan Investor).
"Fair Market Value" shall have the following meaning:
(I) debt securities shall be valued at par, plus accrued
and unpaid interest and any applicable prepayment premium;
(II) if, on the date of determination, any portion of the
Common Stock shall be publicly traded, the Fair Market Value of the publicly
traded Common Stock shall be the Average Closing Price on such date;
(III) if, on the date of determination, none of the Common
Stock shall be publicly traded or if the Common Stock consists of some which are
publicly traded and some which are not, then the Fair Market Value of the non-
traded Common Stock shall be determined using the following procedure:
First, the Company shall deliver in writing to the owner of
-----
the Common Stock a proposed price for the Common Stock as of the date of
termination under this Agreement, such price to be determined by the Company's
Board (excluding the owner of such Common Stock if he or she is a member of the
Board), and supply a reasonably detailed explanation of the basis for such
proposal. Upon the written request of the owner of the Common Stock, the Company
shall provide the owner of the Common Stock, his attorneys, agents and
representatives, reasonable access to the information used by the Company in
calculating its proposed price for the Common Stock.
Second, if the owner of the Common Stock does not in good
------
faith agree with the proposed price, within thirty (30) days of receipt thereof
he shall deliver written notice of such disagreement to the Company, which
notice shall set forth his proposed price for the Common Stock. During such 30-
day period, upon the written request of the owner of the Common Stock, the
Company shall provide the owner of the Common Stock, his attorneys, agents and
representatives, reasonable access to such information as they may reasonably
require in order to determine their proposed price for the Common Stock.
Third, the Company may either accept the price of the owner
-----
of the Common Stock or, within thirty (30) days of receipt thereof, deliver
written notice of its disagreement therewith to the owner of the Common Stock.
-10-
<PAGE>
Fourth, if the Company delivers written notice of
------
disagreement within the time period provided above, the owner of the Common
Stock, at the owner's sole expense, shall appoint a qualified independent
appraiser. The appraiser appointed pursuant to this subsection Fourth, shall
------
render his or her conclusions of the valuation of any Common Stock which are
equity securities at the Initial Fair Market Value of such Common Stock.
Fifth, the Initial Fair Market Value of such equity
-----
securities plus the par value (and any accrued and unpaid interest and any
applicable prepayment premium) of any such Common Stock which are debt
securities shall be the Fair Market Value for purposes of this subsection Fifth.
-----
If such Fair Market Value is between the prices proposed by the Company and the
owner of the Common Stock, then such Fair Market Value shall establish
conclusively the price of the Common Stock for the purpose of this Agreement.
Otherwise, the proposed price closest to such fair market value of the appraiser
shall govern.
"FAMILY GROUP" means an Investor's parents, siblings, spouse and
descendants (whether natural or adopted), any trust or retirement account for
the benefit of the Investor and/or the Investor's spouse and descendants, and
any charitable entity, established by Investor.
"FINANCING" means the purchase of Company Interests by the SBIC
Holder hereunder.
"INITIAL FAIR MARKET VALUE" means the value of any of Company
Interests which are equity securities determined by an appraiser appointed as
provided in this Agreement utilizing the following principles, and adjusted as
provided below. Such appraiser shall render his or her conclusion of the fair
market value of the issuer of each such Company Interest on a willing buyer-
willing seller basis, both being reasonably and commercially motivated to buy or
sell, but neither being under any compulsion to buy or sell, each having
reasonable knowledge of the relevant facts, and taking into account assets which
may not appear on the issuer's balance sheet (including but not limited to
going concern value and goodwill). The appraiser shall then derive the "Initial
Fair Market Value" of any such Company Interest by multiplying (a) the fair
market value of the issuer of such Company Interest, by (b) the percentage of
the equity securities of such issuer represented by the Investor's equity in
such issuer. The Initial Fair Market Value shall be the aggregate of the
individual Initial Fair Market Values of all Company Interests which are to be
transferred.
"LOSS OF CONTROL" means any event, transaction, Transfer or
occurrence which individually, or in conjunction with other events,
transactions, Transfers or occurrences, results in a reduction of control of the
Individual Investors over the affairs of the Company. Such reductions shall
include, but not be limited to (i) a reduction in the percentage of voting stock
held, in the aggregate, by the Individual Investors, below 30% of the total
voting stock outstanding, (ii) a loss of Board control by the Individual
Investors, (iii) the creation of covenants which could have the effect of
significantly reducing the voting, operational, or Board control of the
Individual Investors, or (iv) any combination of the foregoing events that could
result in a
-11-
<PAGE>
significant reduction of the power of the Individual Investors to exercise
control, or a controlling influence, over the Company.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"PURCHASE NOTE" shall mean a seven (7) year subordinated
promissory note issued by the Company or one of its Affiliates to the holder of
the Common Stock (provided that if any note is issued by an Affiliate, such note
will be guaranteed by the Company). The principal amount of the note shall
accrue interest at the prime rate on an annual basis, and the note shall be due
and payable, in its entirety, on a date seven (7) years after its date of
issuance. If any senior lenders object to the above terms, the Company agrees to
reformulate the terms of the promissory note to make it reasonably acceptable to
such lenders.
"REGULATORY PROBLEM" means any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency (or the SBIC
Holder believes that there is a substantial risk of such assertion) that the
SBIC Holder is not entitled to hold, or exercise any significant right with
respect to any Company Interests.
"REGULATORY VIOLATION" means a change in the principal business
activity of the Company and its Subsidiaries to an ineligible business activity
(within the meaning of the SBIC Regulations).
"SBA" means the United States Small Business Administration, and
any other successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Company licensed by an
SBA under the SBIC Act.
"SBIC ACT" means the Small Business Investment Act of 1958, as
amended.
"SBIC HOLDER" means Haley and any Person whose Company Interests
are aggregated with Haley's Company Interests under SBIC Regulations.
"SBIC REGULATIONS" means the SBIC Act and the regulations issued
by the SBA thereunder, codified at Title 13 of the Code of Federal Regulations,
Parts 107 and 121.
"SPECIAL COMMITTEE" means a committee of the Company's Board of
Directors consisting of the Haley Director and two other members of the Board
who are (I) "outside" directors and (II) appointed to serve on the Special
Committee by the Haley Directors. All action taken by the Special Committee
shall be taken pursuant to a unanimous vote of its Members.
-12-
<PAGE>
"SUBSIDIARY" means any entity with respect to which a specified
Person (or a subsidiary thereof) owns a majority of the equity or has the power
to vote or direct the voting of sufficient securities to control the management
of such entity.
11. MISCELLANEOUS.
-------------
(A) NO THIRD PARTY BENEFICIARIES. This Agreement shall not
----------------------------
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns. Any entity or person to whom the
Investors transfer Common Stock pursuant to this Agreement shall have all of the
Investors' rights and obligations under this Agreement.
(B) ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
agreement among the parties and supersedes any prior understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
conflict in any way with the subject matter hereof.
(C) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
-------------------------
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No Investor may assign either this Agreement
or any of his or its rights, interests, or obligations hereunder without the
prior written approval of Haley; provided, however, pursuant to Section 4, a
-------- ---------
permitted transferee of Common Stock shall receive all of the rights and
obligations of the transferring party.
(D) COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(E) HEADINGS. The section headings contained in this Agreement
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(F) NOTICES. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if personally
delivered, sent by facsimile (with hard copy to follow) or express overnight
courier service, or if mailed by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Individual Investors: Copy to:
------------------------------ --------
Jerald H. Donnan Sam E. Wing
c/o Factual Data Corp. 1625 Broadway, Suite 1600
5200 Hahns Peak Drive Jones & Keller, P.C.
Loveland, CO 80525 Denver, CO 80202
-13-
<PAGE>
Fax: (970) 663-7533 Fax: (303) 893-6506
If to Haley: Copy to:
----------- -------
Daniel G. Helle John P. Fitzgerald
Continental Illinois Venture Corp. Hogan & Hartson L.L.P.
231 S. LaSalle St. 1200 17th St., Ste. 1500
Chicago, IL 60697 Denver, CO 80202
Fax: (312) 987-0887 Fax: (303) 899-7333
and Copy to:
--- -------
Keith Yamada John P. Fitzgerald
Continental Illinois Venture Corp. Hogan & Hartson L.L.P.
231 S. LaSalle St. 1200 17th St., Ste. 1500
Chicago, IL 60697 Denver, CO 80202
Fax: (312) 987-0887 Fax: (303) 899-7333
Any Investor may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Investor may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
(G) GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of the State of Illinois without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
(H) AMENDMENTS AND WAIVERS. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and approved by
Haley. No waiver by any Investor of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence. No course of dealing between or
among any persons having any interest in this Agreement will be deemed effective
to modify, amend or discharge any part of this Agreement.
(i) DISCLAIMER OF RIGHTS. No provision in this Agreement shall be
--------------------
construed to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way with any
contractual or other right or authority of the Company or any Affiliate either
to increase or decrease the compensation or other payments to any individual at
any time, or to terminate any employment between any individual and the Company
or an Affiliate.
-14-
<PAGE>
(J) SEVERABILITY. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(K) CONSTRUCTION. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any Investor by virtue of the authorship of any of
the provisions of this Agreement.
(L) SPECIFIC PERFORMANCE. Each of the parties acknowledges and
--------------------
agrees that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
HALEY LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
MARSHALL FINANCIAL PARTNERS, L.P.
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI INVESTORS, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
FACTUAL DATA CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: Jerald H. Donnan
By: _____________________________
Name: Marcia R. Donnan
By: _____________________________
Name: James N. Donnan
By: _____________________________
Name: Russell E. Donnan
<PAGE>
================================================================================
EXHIBIT A
____________________
MINORITY INVESTORS
================================================================================
<TABLE>
<CAPTION>
Name and Address Number of Shares
- ---------------- ----------------
<S> <C>
Haley LLC 1,112,829
c/o Continental Illinois Venture Corporation
231 South La Salle Street 7L
Chicago, IL 60697
BCI Growth V, L.P. 545,286
c/o BCI Advisors, Inc.
Glenpointe Centre West
Teaneck, NJ 07666
BCI Investors, LLC 11,128
c/o BCI Advisors, Inc.
Glenpointe Centre West
Teaneck, NJ 07666
Marshall Financial Partners, L.P. 185,471
c/o Marshall Ventures, L.L.C.
903 N. Third Street, Suite 300
Minneapolis, MN 55401
</TABLE>
<PAGE>
================================================================================
EXHIBIT B
____________________
ADDITIONAL INVESTORS
================================================================================
The undersigned hereby consent to and agree to be bound by the terms,
covenants and provisions of the Investors Agreement dated March 25, 1999 (the
"AGREEMENT") applicable to Investors of the Company, and take the Common Stock
and/or Company Interests (as defined in the Agreement) subject to all of the
rights, obligations, and restrictions described in the Agreement. Except as
otherwise provided in the Agreement, the term "INVESTOR" shall be deemed to
include the undersigned.
_____________________________
Address:
_____________________________
_____________________________
<PAGE>
Exhibit 4
================================================================================
REGISTRATION RIGHTS AGREEMENT
________________________________
MARCH 25, 1999
________________________________
CONFIDENTIAL
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT dated as of March 25, 1999 among FACTUAL
DATA CORP., a Colorado corporation (the "Company"), and Purchasers to be listed
on Exhibit A (collectively, the "Purchasers" or individually, a "Purchaser")
under that certain Share Purchase Agreement between the Company and the
Purchasers dated as of March 25, 1999 (the "Share Purchase Agreement").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
-----------
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of effectiveness of
such registration statement or document;
(b) The term "Registrable Securities" means (i) the Shares, as defined
under the Share Purchase Agreement, between the Company and Purchasers
(collectively, the "Shares"), and (ii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution, merger, consolidation, recapitalization, reclassification or
similar transaction with respect to, or in exchange for or in replacement
of, the Shares, in each case held by any Holder (as defined in clause (c)
below);
(c) The term "Holder" or "Holders" means Purchasers and any of their
successors or assigns which hold Registrable Securities; and
(d) The term "Closing Date" is used herein as defined in Article II of
the Share Purchase Agreement.
Section 2. Registration Rights.
-------------------
(a) Within 90 days after the Closing Date, the Company shall file
with the Securities and Exchange Commission ("SEC") a registration
statement sufficient to permit the public offering and sale of the
Registrable Securities, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to
become effective as promptly as practicable. The Company shall be
obligated to file such post effective amendments or supplements as may be
necessary to enable the Holders to deliver prospectuses which comply with
the Securities Act for a period of two years from such effective date. The
Registration Expenses (defined below) of this registration statement shall
be borne by the Company. In addition to the registration provided for
hereinabove, the Holders of the Registrable Securities who, in the
aggregate, own a majority of the total number of Shares issued or issuable
upon exercise of the Registrable Securities may request that the Company
prepare and file a
<PAGE>
registration statement to permit the public offering and sale of the
Registrable Securities on one additional occasion. The Registration
Expenses of such additional registration statement shall be borne by the
holders of Registrable Securities included in such registration. Holders of
the Registrable Securities who, in the aggregate, own a majority of the
total number of Shares issued or issuable upon exercise of the Registrable
Securities may also request that the Company prepare and file a
registration statement on Form S-2 or S-3, if available, to permit the
public offering and sale of Registrable Securities (each, a "Short Form
Registration"). The Holders may request a maximum of three (3) Short Form
Registrations. The Registration Expenses of any such Short Form
Registration shall be borne by the Company.
(b) Any such registration of Registrable Securities requested pursuant
to this Section 2 shall be referred to as a Demand Registration. No Demand
Registration shall be deemed to have been effected if (i) such registration
statement, after it has become effective, is the subject of any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court for any reason not primarily attributable to the selling
Holders of Registrable Securities, (ii) the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in
connection with such registration statement are not satisfied, other than
by reason of a failure on the part of the selling Holders of Registrable
Securities; or (iii) the holders of Registrable Securities are not able to
register and sell at least ninety percent (90%) of the Registrable
Securities requested to be included in such registration.
(c) If at any time or from time to time during the time period
applicable to Demand Registrations any of the Holders of the Registrable
Securities covered by a registration statement desire to sell Registrable
Securities in a public offering, the investment banker or investment
bankers that will manage the offering will be selected by the Holders of at
least a majority of the Registrable Securities included in such offering;
provided that the selection of any such investment banker or investment
bankers is subject to consent by the Company, which consent shall not be
unreasonably withheld.
(d) Whenever the Company shall effect a registration pursuant to this
Section 2 in connection with a public offering of Registrable Securities,
securities other than Registrable Securities shall be reduced to the extent
determined necessary by the managing underwriter of such offering if such
managing underwriter shall have advised the selling Holders in writing
(with a copy to the Company) that, in their opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold within a price range acceptable to the selling Holders of
a majority of the Registrable Securities requested to be included in such
registration. If no such notice or letter is provided, the Company may
include Common Stock for its own account or for the account of other
shareholders of the Company, if and to the extent consented to by the
Holders of at least a majority of the Registrable Securities included in
such offering.
(e) In the event of a Demand Registration, the Company, if requested
by the Holders of at least a majority of the Registrable Securities to be
included in such Demand
2
<PAGE>
Registration, (i) shall agree not to, and shall cause its executive
officers and directors not to, effect any public sale or distribution of
its Common Stock or similar securities or securities convertible into, or
exchangeable or exercisable for, Common Stock during the 90-day period
following the effective date of a registration statement relating to a
public offering of Registrable Securities if the managing underwriter or
underwriters determine such public sale or distribution would have a
material adverse effect on such offering and (ii) shall (x) cause each
securityholder of the Company's privately placed equity securities issued
in connection with a financing transaction involving at least 5% of the
Company's then outstanding equity securities at any time after the date
hereof and (y) use its reasonable best efforts to cause each other
securityholder of the Company owning at least 10% of the Company's then
outstanding equity securities (other than a securityholder permitted to
file a Schedule 13G under the Exchange Act) to agree, not to effect a
public sale or distribution of the Common Stock during the 90-day period
following the effective date of a registration statement relating to a
public offering of the Registrable Securities if the managing underwriter
or underwriters determine such public sale or distribution would have a
material adverse effect on such offering.
(f) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and disbursements of custodians, and fees and disbursements
of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne as provided in this Agreement,
except that the Company shall, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on
each securities exchange on which similar securities issued by the Company
are then listed or on, the NASD automated quotation system.
(g) In connection with each Demand Registration and each Piggyback
Registration (defined below), the Company shall reimburse the holders of
Registrable Securities included in such registration for the reasonable
fees and disbursements of one counsel chosen by the holders of a majority
of the Registrable Securities included in such registration and for the
reasonable fees and disbursements of each additional counsel retained by
any holder of Registrable Securities for the purpose of rendering a legal
opinion on behalf of such holder in connection with any underwritten Demand
Registration or Piggyback Registration.
(h) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration
hereunder shall pay its proportionate share of all Registration Expenses
based upon the ratio of the aggregate
3
<PAGE>
selling price of each holder's securities included therein to the aggregate
selling price of all securities to be so registered.
Section 3. Piggyback Registration
----------------------
(a) Participation. Subject to Section 3(b) below, if at any time from
-------------
and after the date hereof, the Company proposes to file or files a
registration statement under the Securities Act with respect to any
offering of securities of the same type as the Registrable Securities for
its own account (other than a registration statement on Form S-8 or Form S-
4 or any successor form thereto), or for the account of any securityholder
of securities of the same type as the Registrable Securities, then, as
promptly as practicable, the Company shall give written notice of such
proposed filing to each Holder of Registrable Securities and such notice
shall offer the Holders of Registrable Securities the opportunity to
include in such registration such number of Registrable Securities as each
such Holder may request (a "Piggyback Registration"), provided that, any
Holder of Registrable Securities may only participate in a Piggyback
Registration to the extent (based on the number of shares included) that
the Holder of a majority of the Registrable Securities elects to
participate. The Company shall include in such registration statement all
Registrable Securities requested within 20 days after the receipt of any
such notice (which request shall specify the Registrable Securities
intended to be disposed of by such Holder) to be included in the
registration for such offering pursuant to a Piggyback Registration. Each
Holder electing to participate in such Piggyback Registration shall do so
pursuant to the terms of such proposed registration and shall execute such
usual and customary custody agreements, powers of attorney, underwriting
agreements or other documents as are reasonably requested or required by
the Company and any underwriter of such offering; provided, however, that
-------- -------
such Holders shall not be required to represent and warrant to, or to
indemnify, any party with respect to any matters other than as to the
Holder's ownership of the Registrable Securities and with respect to any
other information provided by Holder and required to be included in the
registration statement pursuant to SEC rules and regulations. Each Holder
of Registrable Securities shall be permitted to withdraw all or part of
such Holder's Registrable Securities from a Piggyback Registration at any
time prior to the effective date thereof. The Registration Expenses of the
holders of Registrable Securities shall be paid by the Company in all
Piggyback Registrations.
(b) Underwriter's Cutback. The Company shall use its best efforts to
---------------------
cause the managing underwriter or underwriters of a proposed public
offering to permit the Registrable Securities requested to be included in
the registration for such offering under Section 3(a) above (the "Piggyback
Securities") to be included on the same terms and conditions as any similar
securities included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters participating in such offering advises
each of the Holders in writing (with a copy to the Company) that the total
amount of securities requested to be included in such Piggyback
Registration exceeds the amount which can be sold in (or during the time
of) such offering without delaying or jeopardizing the success of the
offering (including the price per share of the securities to be sold),
then,
4
<PAGE>
after including all shares proposed to be sold by the Company in a Company-
initiated registration, the amount of securities to be offered for the
account of the Holders shall be reduced pro rata with all other holders
participating in such offering on the basis of the number of shares to be
registered by all stockholders participating in such offering; provided,
--------
however, that the managing underwriter or underwriters may not limit the
-------
Registrable Securities or other securities to be included in such
Registration to less than 25% of the securities included therein.
Section 4. Registration Procedure. Whenever required under this Agreement
----------------------
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as is reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or
by the Securities Act or rules and regulations otherwise necessary to keep
the registration statement effective for a period of not less than twelve
months (or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold or
withdrawn); and cause the prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act of 1934 with respect
to the disposition of all securities covered by such registration statement
during the applicable period in accordance with the intended methods of
disposition by the selling Holders thereof set forth in such registration
statement or supplement to the prospectus.
(b) Furnish to the Holders of the Registrable Securities covered by
such registration statement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of the Registrable Securities owned
by them.
(c) Use its best efforts to register and qualify the securities
covered by such registration statement under such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company has no
obligation to qualify Registrable Securities where such qualification would
cause any unreasonable delay or expenditure by the Company, but the Company
may be required to file a consent to service substantially in the form of
the Uniform Consent to Service of Process Form U-2.
(d) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(e) Notify each Holder of Registrable Securities covered by such
registration statement, (i) at any time when a prospectus relating thereto
covered by such registration
5
<PAGE>
statement is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; and (iii)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose.
(f) Furnish to each Holder of Registrable Securities on the date that
such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such
securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective (i) an opinion,
dated such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
(g) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of any registration statement covering
Registrable Securities.
(h) Cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Securities to the underwriters.
(i) Use its best efforts to cause the Registrable Securities covered
by the applicable registration statement to be registered with or approved
by such other foreign governmental agencies or authorities, and the NASD or
any other applicable exchange or regulatory authority, as may be necessary
to enable the seller or selling Holders thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities.
(j) Cause all Registrable Securities covered by the registration
statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed if requested by the
Holders of at least 50% of such Registrable Securities or the managing
underwriters, if any.
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<PAGE>
(k) Cooperate and assist in any filings required to be made with the
NASD in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
(l) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
(m) Permit any holder of Registrable Securities, which holder, in the
Company's sole and exclusive judgment, might be deemed to be an underwriter
or a controlling Person of the Company, to participate in the preparation
of such registration or comparable statement and to require the insertion
therein of material furnished to the Company in writing, which in the
reasonable judgment of such holder and its counsel should be included.
Section 5. Furnish Information. The selling Holders shall promptly
-------------------
furnish to the Company in writing such reasonable information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
Section 6. Indemnification and Contribution. In the event any Registrable
--------------------------------
Securities are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder, and each
person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934 (the "Exchange
Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse each such Holder, officer or director, underwriter
or controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity
-------- -------
agreement contained in this Section 6(a) shall not apply to amounts paid in
settlement of
7
<PAGE>
any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon an untrue statement or omission made in
such registration statement, preliminary prospectus or final prospectus or
any amendment or supplement thereto in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person;
provided, further, however, that if any losses, claims, damages or
-------- -------
liabilities arise out of or are based upon any untrue statement of a
material fact, or omission to state a material fact required to be stated
therein or necessary to make the statements there not misleading in any
preliminary prospectus, and made in reliance upon and in conformity with
written information furnished by such Holder expressly for use therein,
which did not appear in the final prospectus, the Company shall not have
any such liability with respect thereto to such Holder, any person who
controls such Holder within the meaning of the Securities Act, or any
director of such Holder, if such Holder delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or
liabilities and failed to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or supplemented, to such
person at or prior to the written confirmation of the sale to such person,
provided that such Holder had an obligation to deliver a copy of the final
prospectus to such person; and
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officer or any person who controls
such Holder or underwriter, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officers, controlling person, or underwriter or controlling person, or
other such Holder or director, officer or controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any untrue
statement or of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, if the untrue statement or omission in respect of which such
loss, claim, damage or liability is asserted was made in reliance upon and
in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, controlling person, underwriter or controlling
person, or other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
-------- -------
contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action, if such
settlement is effected without the
8
<PAGE>
consent of the Holder (which consent shall not be unreasonably withheld);
provided, further that the maximum liability of any selling Holder under
-------- -------
this Section 6(b) in regard to any registration statement shall in no event
exceed the amount of the net proceeds received by such selling Holder from
the sale of securities under such registration statement; provided,
--------
further, however, that if any losses, claims, damages or liabilities arise
-------
out of or are based upon an untrue statement, or omission to state a
material fact require to be stated therein or necessary to make the
statements therein not misleading in any preliminary prospectus which did
not appear in the final prospectus, such seller shall not have any such
liability with respect thereto to the Company, any person who controls the
Company within the meaning of the Securities Act, any officer of the
Company who signed the registration statement or any director of the
Company, if the Company delivered a copy of the preliminary prospectus to
the person alleging such losses, claims, damages or liabilities and failed
to deliver a copy of the final prospectus, as amended or supplemented if it
has been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person, provided that the Company had an
obligation to deliver a copy of the final prospectus to such person.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to
be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel mutually satisfactory to the parties. An indemnified party shall
have the right to retain its own counsel, however, the fees and expenses of
such counsel shall be at the expense of the indemnified party, unless (i)
the employment of such counsel has been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party has failed to assume
the defense and employ counsel, or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified party
and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
for all indemnified parties). The failure to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient (other than for reason of exceptions provided
in this Section 6) to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities or
9
<PAGE>
actions in respect thereof referred to therein, then each indemnifying
party shall in lieu of indemnifying such indemnified party contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or actions in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand,
and selling Holders, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
actions as well as any other relevant equitable considerations, including
the failure to give any required notice. The relative fault shall be
determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Company, on the one hand, or by such
selling Holders on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The parties hereto acknowledge and agree that it would not be
just and equitable if contribution pursuant to this subparagraph (d) were
determined by pro rata allocation (even if all of the selling Holders were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subparagraph (d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages,
liabilities or actions in respect thereof referred to above in this
subparagraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subparagraph (d), the amount the selling Holders shall
be required to contribute shall not exceed the amount, if any, by which the
total price at which the securities sold by each of them were offered to
the public exceeds the amount of any damages which they would have
otherwise been required to pay by reason of such untrue statement or
omission, or other violation of law. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of fraudulent misrepresentation.
Section 7. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon and shall
--------------
inure to the benefit of the original parties hereto and each person who
becomes a party hereto, and their respective successors and assigns.
(b) Notices. Except as otherwise provided herein, any notice, consent
-------
or request to be given in connection with any term or provision of this
Agreement shall be deemed to have been given sufficiently if sent by hand,
registered or certified mail, postage prepaid, facsimile transmission or
courier (next day delivery), to the Company or to Purchasers at their
addresses as designated in, or from time to time pursuant to, Article XII
of the Share Purchase Agreement.
(c) Integration. This Agreement contains the entire agreement between
-----------
the parties with respect to the transactions contemplated hereby and no
party shall be bound by, nor shall any party be deemed to have made, any
covenants, representations,
10
<PAGE>
warranties, undertakings or agreements except those contained in such
entire Agreement. The section and paragraph headings contained in this
Agreement are for the reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same agreement.
(e) Amendment. Except as otherwise provided herein, the provisions of
---------
this Agreement may be amended or waived only upon the prior written consent
of the Company and the holders of a majority of all Registrable Securities;
provided, however, that no amendment or waiver which materially and
adversely effects the rights of a Purchaser or its affiliates hereunder
without also correspondingly materially and adversely effecting the rights
of the other holders of Registrable Securities may be made without the
consent of such Purchaser.
(f) Governing Law. This Agreement and the rights and remedies of the
-------------
parties hereto shall be governed by and construed in accordance with the
laws of the State of Colorado.
(g) Specific Performance. Each of the parties hereto, in addition to
--------------------
being entitled to exercise all rights provided herein, in the Share
Purchase Agreement and granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Agreement.
Each of the parties hereto agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(h) Rule 144. The Company covenants that it will file the reports
--------
required to be filed by it under the Exchange Act of 1934 and the rules and
regulations adopted by the SEC thereunder, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such information and
requirements.
(i) No Inconsistent Agreements. The Company shall not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(j) New Parties. During the term of this Agreement, the Company may,
-----------
with the consent of the Company's Board of Directors and CIVC, allow other
persons to
11
<PAGE>
become parties to this Agreement by executing a joinder agreement, and the
Schedule of Holders attached hereto as Exhibit A shall be revised and
------------------- ---------
updated accordingly.
(k) Other Registration Rights. Except as provided in this Agreement,
-------------------------
the Company shall not grant to any Persons the right to request the Company
to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities,
without the prior written consent of the holders of a majority of the
Registrable Securities.
(l) Adjustments Affecting Registrable Securities. The Company shall
--------------------------------------------
not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Securities in any such
registration.
12
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date first above written.
HALEY LLC
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
MARSHALL FINANCIAL PARTNERS, L.P.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By:___________________________
Name:_________________________
Title:________________________
BCI INVESTORS, LLC
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
FACTUAL DATA CORP.
By:___________________________
Name:_________________________
Title:________________________
