CUSIP No. 303094 10 6 Page 1 of 9 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )1
FACTUAL DATA CORP.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
303094 10 6
(CUSIP Number)
Lorelei C. Koran Robert A. Schwed, Esq.
BCI Partners, Inc. Reboul, MacMurray, Hewitt,
Glenpointe Centre West Maynard & Kristol
Teaneck, New Jersey 07666 45 Rockefeller Plaza
Tel. (201) 836-3900 New York, New York 10111
Tel. (212) 841-5700
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 25, 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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
___________________
1 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 or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act.
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CUSIP No. 303094 10 6 Page 2 of 9 Pages
1) Name of Reporting Person BCI Growth V, L.P.
I.R.S. Identification
No. of Above Person
(If an Entity)
2) Check the Appropriate Box (a) [x]
if a Member of a Group (b) [ ]
3) SEC Use Only
4) Source of Funds WC
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
6) Citizenship or Place
of Organization Delaware
Number of 7) Sole Voting 545,286 shares of
Shares Beneficially Power Common Stock
Owned by Each
Reporting Person
With
8) Shared Voting
Power -0-
9) Sole Disposi- 545,286 shares of
tive Power Common Stock
10) Shared Dis-
positive Power -0-
11) Aggregate Amount Beneficially 545,286 shares of
Owned by Each Reporting Person Common Stock
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
13) Percent of Class
Represented by 10.0%
Amount in Row (11)
14) Type of Reporting
Person PN
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CUSIP No. 303094 10 6 Page 3 of 9 Pages
1) Name of Reporting Person BCI Investors, LLC
I.R.S. Identification
No. of Above Person
(If an Entity)
2) Check the Appropriate Box (a) [x]
if a Member of a Group (b) [ ]
3) SEC Use Only
4) Source of Funds WC
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
6) Citizenship or Place
of Organization Delaware
Number of 7) Sole Voting 11,128 shares of
Shares Beneficially Power Common Stock
Owned by Each
Reporting Person
With
8) Shared Voting
Power -0-
9) Sole Disposi- 11,128 shares of
tive Power Common Stock
10) Shared Dis-
positive Power -0-
11) Aggregate Amount Beneficially 11,128 shares of
Owned by Each Reporting Person Common Stock
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
13) Percent of Class
Represented by 0.2%
Amount in Row (11)
14) Type of Reporting
Person OO
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CUSIP No. 303094 10 6 Page 4 of 9 Pages
SCHEDULE 13D
Item 1. SECURITY AND ISSUER.
This statement relates to the Common Stock of Factual Data Corp., a
Colorado corporation ("FDC" or the "Issuer")(the "Common Stock"). The principal
executive offices of the Issuer are located at 5200 Hahns Peak Drive, Loveland,
Colorado 80538.
Item 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rules 13d-1(k)(1)-(2) of Regulation 13D-G of the
General Rules and Regulations under the Securities Act of 1934, as amended (the
"Act"), the undersigned hereby file this Schedule 13D on behalf of BCI Growth V,
L.P., a Delaware limited partnership ("BCI V"), and BCI Investors, LLC, a
Delaware limited liability company ("BCII"). BCI V and BCII are sometimes
hereinafter referred to as the "Reporting Persons". The Reporting Persons are
making this single joint filing because they may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Act. The agreement between
the Reporting Persons to file as a group (the "Group Agreement") is attached
hereto as Exhibit A.
(b)-(c) BCI V is a Delaware limited partnership and BCII is a Delaware
limited liability company. The principal business of both BCI V and BCII is that
of a private investment entity. The sole general partner of BCI V is Glenpointe
Associates V, LLC, a Delaware limited liability company ("GA V"). The principal
business of GA V is that of acting as the general partner of BCI V. The
following individuals, who are citizens of the United States, are the managing
members of GA V and BCII:
(i) J. Barton Goodwin
(ii) Theodore T. Horton, Jr.
(iii) Hoyt J. Goodrich
(iv) Donald P. Remey
(v) Stephen J. Eley
(vi) Peter O. Wilde
(vii) Mark E. Hastings
(viii) Thomas J. Cusick
The principal business and principal office address of each entity and
person named in this paragraph is Glenpointe Centre West, Teaneck, New Jersey
07666.
(d) None of the entities or persons identified in this Item 2 has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
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CUSIP No. 303094 10 6 Page 5 of 9 Pages
(e) None of the entities or persons identified in this Item 2 has,
during the last five years, been 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.
This statement relates to the acquisition by the Reporting Persons of
an aggregate 556,414 shares of Common Stock (the "Shares"), at a purchase price
of $8.08 per share, pursuant to a Share Purchase Agreement dated as of March 25,
1999 by and among the purchasers named therein, including the Reporting Persons,
and the Issuer (the "Purchase Agreement"). The Purchase Agreement is attached
hereto as Exhibit B, and any description thereof is qualified in its entirety by
reference thereto. The source of funds for the purchase described herein was the
working capital, or funds available for investment, of the Reporting Persons.
Item 4. PURPOSE OF TRANSACTION.
The Reporting Persons have acquired securities of the Issuer for
investment purposes.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
The following information is based on a total of 5,463,897 shares of
Common Stock outstanding as of August 13, 1999, as reported in the Issuer's
Report on Form 10-QSB for the quarterly period ended June 30, 1999, as filed
with the Securities and Exchange Commission on August 16, 1999.
(a)
BCI V
BCI V owns 545,286 shares of Common Stock, or approximately
10.0% of the Common Stock outstanding. GA V, as the general partner of
BCI V, may be deemed to beneficially own the shares of Common Stock
owned by BCI V.
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CUSIP No. 303094 10 6 Page 6 of 9 Pages
BCII
BCII owns 11,128 shares of Common Stock, or approximately 0.2%
of the Common Stock outstanding.
(b) The managing members of GA V and BCII may be deemed to share the
power to vote or direct the voting of and to dispose or to direct the
disposition of the Common Stock owned by BCI V and BCII. Each of the managing
members of GA V and BCII disclaims beneficial ownership of all shares of Common
Stock other than the shares of Common Stock he may own directly or by virtue of
his indirect pro rata interest, as a managing member of GA V and BCII, in the
Common Stock owned by BCI V and BCII.
(c) Not applicable.
(d) Except as described in this statement, no person has the power to
direct the receipt of dividends on, or the proceeds from sales of, the shares of
Common Stock owned by BCI V or BCII.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Reporting Persons and the Issuer have entered into a Registration
Rights Agreement dated as of March 25, 1999 (the "Registration Rights
Agreement"), pursuant to which the Reporting Persons received certain rights
with respect to the registration of the Shares for public resale. Among other
things, the Issuer agreed to file a registration statement covering the Shares
with the Securities and Exchange Commission within ninety days after the closing
of the transactions contemplated by the Purchase Agreement. The Registration
Rights Agreement is attached hereto as Exhibit C, and any description thereof is
qualified in its entirety by reference thereto.
The Reporting Persons have also entered into an Investors Agreement
dated March 25, 1999 by and among the Issuer and its various investors (the
"Investors Agreement"), for the purposes of assuring continuity in the ownership
of FDC, establishing certain limitations on the transfer of Common Stock held by
such investors, and establishing the composition of the Issuer's Board of
Directors. The Investors Agreement is attached hereto as Exhibit D and any
description thereof is qualified in its entirety by reference thereto.
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CUSIP No. 303094 10 6 Page 7 of 9 Pages
Contemporaneously with the execution of the Purchase Agreement, the
Registration Rights Agreement and the Investors Agreement, the Reporting Persons
also entered into a Voting Agreement with respect to the Shares.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Group Agreement
Exhibit B - Purchase Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Investors Agreement
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CUSIP No. 303094 10 6 Page 8 of 9 Pages
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.
Dated: October 6, 1999
BCI GROWTH V, L.P.
By: Glenpointe Associates V, LLC,
General Partner
By /s/ J. Barton Goodwin
Managing Member
BCI INVESTORS, LLC
By /s/ J. Barton Goodwin
Managing Member
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CUSIP No. 303094 10 6 Page 9 of 9 Pages
EXHIBIT A
AGREEMENT OF
BCI GROWTH V, L.P.
AND
BCI INVESTORS, LLC
PURSUANT TO RULE 13d-1(k)
The undersigned hereby agree that the Statement on Schedule 13D to
which this Agreement is annexed as Exhibit A is filed on behalf of each of them
in accordance with the provisions of 13d-1(k) under the Securities Exchange Act
of 1934, as amended.
Dated: October 6, 1999
BCI GROWTH V, L.P.
By: Glenpointe Associates V, LLC,
General Partner
By /s/ J. Barton Goodwin
Managing Member
BCI INVESTORS, LLC
By /s/ J. Barton Goodwin
Managing Member
<PAGE>
EXHIBIT B
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.
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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:
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(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 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.
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(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 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
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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.
(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.
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(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 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 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
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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
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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 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. Section 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
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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 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 Section 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 Section 401(a), each trust for each such Plan is exempt from federal
income tax under Code Section 401(a), each trust for each such Plan is exempt
from federal income tax under Code Section 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.
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(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 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.
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(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 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. Sections 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
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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;
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:
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(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;
(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.
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(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 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
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been duly authorized and are validly issued, fully paid, and nonassessable. One
of FDC and its subsidiaries holds of record and owns 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
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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 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, Section 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, Section 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
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Shares and that the individual 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 U.S. Internal Revenue Service, the U.S.
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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.
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
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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 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,
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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 financial condition of FDC, and the property, business and
operations of FDC shall have not been Materially and adversely affected due to
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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.
(vii) To the best knowledge of such counsel, FDC is not in
violation or default of any provision of its Articles of Incorporation, Bylaws
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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 have been no threats, to (i) prevent consummation of any
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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
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agreement contemplated hereby may not be amended except by an instrument in
writing signed on behalf of each of the parties thereto.
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,
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<PAGE>
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 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
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<PAGE>
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 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.
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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 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
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<PAGE>
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 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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<PAGE>
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
(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: _____________________________
37
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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>
<TABLE>
<CAPTION>
FACTUAL DATA CORP.
FULLY DILUTED SHARES OUTSTANDING (3/9/99)
SSUMES ALL SHARES FULLY-DILUTED
EXERCISED SHARES
OUTSTANDING
<S> <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 price 61,803 0.84% 61,803 1.08%
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
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
registration statement to permit the public offering and sale of the
Registrable Securities on one additional occasion. The Registration
<PAGE>
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 Registration, (i) shall agree
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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 selling
price of each holder's securities included therein to the aggregate
selling price of all securities to be so registered.
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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,
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
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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 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
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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.
(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).
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(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 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
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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 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
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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 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
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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, 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.
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(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 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.
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(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.
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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: ___________________________________
<PAGE>
EXHIBIT D
- --------------------------------------------------------------------------------
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 shares of Common
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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.
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(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
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Investors and the Individual Investors (for this 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.
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(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 Section
121.103), is a "small business concern" within the meaning of the SBIC
Regulations, including 13 CFR Section 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 Section 107.720).
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(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 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
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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;
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(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
(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.
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"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 (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).
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"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.
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
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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 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
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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.
"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
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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
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
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<PAGE>
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.
(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
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<PAGE>
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.
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<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
NAME AND ADDRESS NUMBER OF SHARES
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
<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:
_____________________________
_____________________________
