SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
FACTUAL DATA CORP.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a6(i)(2) or Item 22(a)(2) of Schedule 14A
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously by written materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
The Securities and Exchange Commission should contact:
Samuel E. Wing
David A. Thayer
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
303-573-1600 (telephone)
303-893-6506 (facsimile)
with respect to comments.
<PAGE>
Preliminary Proxy Material
FACTUAL DATA CORP.
5200 Hahns Peak Drive
Loveland, Colorado 80538
(970) 663-5700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 22, 1999
To the Shareholders of Factual Data Corp.:
Date: October 22, 1999
Time: 9:00 a.m.
Place: Training Room
5200 Hahns Peak Drive
Loveland, Colorado
Matters to be voted on:
1. Election of two directors;
2. To consider and vote upon a proposal to adopt our 1999 Employee Stock
Purchase Plan which will reserve 75,000 shares of common stock for
purchase by our employees;
3. To consider and vote upon a proposal to adopt our 1999 Employee
Formula Award Stock Option Plan which will reserve 100,000 shares of
common stock for purchase by our employees pursuant to options which
may be granted under the plan;
4. Ratification of Ehrhardt Keefe Steiner & Hottman PC as our independent
auditors for 1999; and
5. Any other matters properly brought before our shareholders at the
meeting.
You are cordially invited to attend the meeting in person. To ensure that
you are represented at the meeting, please fill in, sign and return the enclosed
proxy card as promptly as possible. Your early attention to the proxy statement
and proxy card will be greatly appreciated because it will reduce the cost we
incur in obtaining your voting instructions. If your shares are held in street
or nominee name, please respond to the record holder's communication with you as
soon as possible so that your shares can be represented at the meeting.
By Order of the Board of Directors
/s/ James N. Donnan
James N. Donnan, Secretary
September 20, 1999
<PAGE>
CONTENTS
Page
General Information About Voting.................................... 1
Security Ownership of Certain Beneficial Owners and Management...... 4
Proposal No. 1 Election of Two Directors........................... 6
Proposal No. 2 Approval of 1999 Employee Stock Purchase Plan....... 13
Proposal No. 3 Approval of 1999 Employee Formula Award Stock Option
Plan ............................................................. 15
Proposal No. 4 Appointment of Independent Auditors ................ 17
Other Matters....................................................... 17
Shareholder Proposals............................................... 18
<PAGE>
FACTUAL DATA CORP.
5200 Hahns Peak Drive
Loveland, Colorado 80538
PROXY STATEMENT
October 22, 1999 Annual Meeting of Shareholders
This Proxy Statement is furnished to you in connection with the
solicitation of proxies by our Board of Directors for use at our 1999 annual
meeting. This Proxy Statement and the enclosed proxy card were sent to
shareholders on or about September 20, 1999.
The following matters will be acted on at our annual meeting:
1. Election of two directors to serve three year terms;
2. Consideration and voting upon a proposal to adopt our 1999 Employee
Stock Purchase Plan which will reserve 75,000 shares of common stock
for purchase by our employees;
3. Consideration and voting upon a proposal to adopt our 1999 Employee
Formula Award Stock Option Plan which will reserve 100,000 shares of
common stock for purchase by our employees pursuant to options which
may be granted under the plan;
4. Ratification of the appointment of Ehrhardt Keefe Steiner & Hottman
PC as our independent auditors for 1999; and
5. Any other business as may properly come before our meeting.
GENERAL INFORMATION ABOUT VOTING
Who can vote?
You can vote your shares of common stock if our records show that you
owned the shares on September 10, 1999. A total of 5,463,897 shares of common
stock can vote at the annual meeting. You get one vote for each share of common
stock. The enclosed proxy card shows the number of shares you can vote.
<PAGE>
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy card
and mail it back to us in the enclosed envelope. The proxyholders named on the
proxy card will vote your shares as you instruct. If you sign and return the
proxy card but do not vote on a proposal, the proxyholders will vote for you on
that proposal. Unless you instruct otherwise, the proxyholders will vote for
each of the two director nominees and for the other proposals to be considered
at the meeting.
What if other matters come up at the annual meeting?
The matters described in this proxy statement are the only matters we know
will be voted on at the annual meeting. If other matters are properly presented
at the meeting, the proxyholders will vote your shares as they see fit.
Can I change my vote after I return my proxy card?
Yes. At any time before the vote on a proposal, you can change your vote
either by giving our secretary, James N. Donnan, at our address shown above, a
written notice revoking your proxy card or by signing, dating, and returning to
us a new proxy card. We will honor the proxy card with the latest date.
Can I vote in person at the annual meeting rather than by completing the proxy
card?
Although we encourage you to complete and return the proxy card to ensure
that your vote is counted, you can attend the annual meeting and vote your
shares in person, even if you have previously completed and returned a proxy
card.
What do I do if my shares are held in "street name"?
If your shares are held by your broker, a bank or other nominee, you will
probably receive this proxy statement from them with instructions for voting
your shares. Please respond quickly so that they may represent you.
If your shares are held in the name of a broker, bank or other nominee,
and you do not tell that person how to vote your shares (so-called "broker
nonvotes"), that person can vote them as it sees fit only on matters that self
regulatory organizations determine to be routine, and not on any other proposal.
Broker nonvotes will be counted as present to determine if a quorum exists but
will not be counted as present and entitled to vote on any nonroutine proposal.
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<PAGE>
How are votes counted?
We will hold the annual meeting of holders if at least one third of the
shares of common stock entitled to vote either sign and return their proxy cards
or attend the meeting. If you sign and return your proxy card, your shares will
be counted to determine whether we have a quorum even if you abstain or fail to
vote on any of the proposals listed on the proxy card. Election of the nominees
as Directors and approval of the 1999 Employee Stock Purchase Plan, the 1999
Employee Formula Award Stock Option Plan and the appointment of independent
auditors will require the affirmative vote of a majority of the shares
represented at the meeting.
Who pays for this proxy solicitation?
We do. In addition to sending you these materials, some of our employees
may contact you by telephone, by mail, or in person. None of these employees
will receive any extra compensation for doing this.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of September 10, 1999 by:
o each person who is known by us to own beneficially more than 5% of our
common stock
o each of our executive officers and directors
o all of our executive officers and directors as a group
Common stock not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire shares within 60 days are treated as
outstanding only when determining the amount and percentage of common stock
owned by such person. Each person has sole voting and investment power with
respect to the shares shown except as noted.
Shares beneficially
owned
------------------------
Percent of
Number outstanding
---------- -----------
Executive officers and directors(1)
J. H. Donnan................................ 630,000 11.5%
Marcia R. Donnan............................ 630,000 11.5
Russell E. Donnan........................... 270,000 4.9
James N. Donnan............................. 270,000 4.9
Todd A. Neiberger(2)........................ 5,000 --
Robert J. Terry(3).......................... 5,000 --
Abdul H. Rajput(3).......................... 5,000 --
Daniel G. Helle(4).......................... 1,112,829 20.4
J. Barton Goodwin(5)........................ 556,414 --
All officers and directors
as a group (nine persons)................. 2,938,957 53.8
Other beneficial owners
Continental Illinois Venture Corporation(4). 1,112,829 20.4
BCI Growth V, L.P(5)........................ 545,286 9.9
- ------------------
(1) The address for each of the Donnans and Mr. Neiberger is 5200 Hahns Peak
Drive, Loveland, Colorado 80538; for Mr. Terry it is 5402 South Cottonwood
Court, Greenwood Village, Colorado 80121; for Mr. Rajput it is Post Office
Box 8310, Rancho Santa Fe, California 82067; for Mr. Helle and Continental
Illinois Venture Corporation it is 231 South LaSalle Street 7L, Chicago,
Illinois 60697; and for J. Barton Goodwin and BCI Growth V, L.P. it is c/o
BCI Partners, Inc., Glenpointe Centre West, Teaneck, New Jersey 07666.
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<PAGE>
(2) Represents options to purchase shares of common stock at $6.50 per share
which are presently exercisable.
(3) Represents options to purchase shares of common stock at $5.50 per share
which are presently exercisable.
(4) Mr. Helle is a managing director of Continental Illinois Venture
Corporation (CIVC), hence he may be deemed to be a beneficial owner of its
shares, of the shares; of the shares shown above 16,074 are held by
affiliates of CIVC.
(5) Mr. Goodwin is a general partner of BCI Partners, Inc., an investment
management company which advises BCI Growth V, L.P., hence he may be
deemed a beneficial owner of both organization's shares.
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<PAGE>
PROPOSAL NO. 1
ELECTION OF TWO DIRECTORS
Election to our Board of Directors is staggered so that:
o two directors were elected for terms expiring at this annual meeting
o three directors were elected for terms expiring at our 2000 annual meeting
o two directors were elected for terms expiring at our 2001 annual meeting
The terms of Messrs. Terry and Rajput expire at this annual meeting and we
propose that they be elected to three year terms expiring at our annual meeting
in 2002.
Your Board of Directors recommends a vote FOR the election of Messrs.
Terry and Rajput. Proxies solicited by your Board of Directors will be voted for
them unless instructions are given to the contrary.
The following sets forth certain information with respect to both of these
directors/nominees, and our other directors and executive officers.
Name Age Position
J.H. Donnan 53 Chairman of the Board, Chief
Executive Officer and President
Marcia R. Donnan 54 Executive Vice President
Todd A. Neiberger 34 Chief Financial Officer and a
Director
Russell E. Donnan 34 Vice President
James N. Donnan 27 Vice President and a Director
Robert J. Terry 58 Director/Nominee
Abdul H. Rajput 51 Director/Nominee
Daniel G. Helle 37 Director
J. Barton Goodwin 52 Director
- 6 -
<PAGE>
The following summarizes the background and experience of the officers and
directors named above.
J.H. Donnan, Chairman of the Board, Chief Executive Officer and President,
has been with us since our incorporation in January 1985. He is responsible for
oversight of corporate development and services, and is responsible for
operations, technical development and policies and procedures. Mr. Donnan's
early career experience includes 15 years with Avco Financial Services, Inc.
where he was responsible for lending and collecting a multi-hundred million
dollar portfolio and managing geographically diverse branches with many
employees. Mr. Donnan was a founding member and past president of the National
Credit Reporting Association, a trade association founded to promote ethical
standards and fair competition within the credit reporting industry.
Marcia R. Donnan, Executive Vice President, has been with us since our
incorporation in January 1985. She is responsible for compliance with the
Federal Credit Reporting Act and all other federal, state and local laws as they
apply to the gathering, processing and distribution of credit information. Staff
training and education are also areas of her primary responsibility. Ms. Donnan
spent 15 years in credit reporting with Credit Information Systems as operations
manager, prior to co-founding Factual Data Corp. in 1985. Ms. Donnan is active
in Associated Credit Bureaus, Inc., a credit reporting association, and she
concluded a second term as director in January 1997.
Todd A. Neiberger, Chief Financial Officer and a Director, joined us in
March 1995. Mr. Neiberger graduated from the University of Northern Colorado in
1987 with a degree in accounting. Mr. Neiberger has 10 years experience in
staff, senior and management level positions with various public accounting
firms. From 1994 through 1995, he served as the audit manager of Rickards & Co.
P.C., and from 1991 through 1993 he served as the tax manager for Krutchen &
Co., both Fort Collins, Colorado based certified public accounting firms. From
1988 through 1990 he was employed with Lemke, Feis & Co., P.C., a certified
public accounting firm, as a staff and senior level accountant in the audit and
tax department. Mr. Neiberger is a Certified Public Accountant and a member of
the Colorado Society of Certified Public Accountants and the American Institute
of Certified Public Accountants.
Russell E. Donnan, Vice President, has been employed by us since August
1993. He is responsible for technical project management for software and
support services. Before joining us, he was a senior design engineer at Apple
Computer in the Power Book division from February 1992 to August 1993. He is
experienced in the super computer field and was previously employed by Convex
Computer (1990-1992) and as a founding member and employee of Key Computer
(1988-1990), now a subsidiary of Amdahl Corporation. Mr. Donnan graduated from
Ohio State University in 1987 with a degree in electrical engineering.
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<PAGE>
James N. Donnan, Vice President and a Director, has been employed by us on
a full-time basis since 1994, and prior to that, on a part-time basis since
1986. He is responsible for management of our internally operated mortgage
credit reporting production offices and EMPfacts employment screening
operations. His duties also include overall sales, growth and customer service
development. Mr. Donnan graduated from Colorado State University in 1994 with a
degree in history.
Robert J. Terry has been a Director since February 1998. From February
1994 to his retirement in January 1998, Mr. Terry served as a director,
president and chief operating officer of Mail-Well, Inc., a publicly traded
envelope manufacturer and printing company. From January 1992 to February 1994,
Mr. Terry served as executive vice president of Mail-Well Envelope, a subsidiary
of Georgia Pacific. From June 1989 to December 1991, Mr. Terry served as
regional vice president for Butler Paper in Englewood, Colorado. Mr. Terry
obtained a Bachelor of Science degree in Business from DePaul University in 1963
and attended the Executive Program at the University of Michigan in 1988.
Abdul H. Rajput has been a Director since February 1998. From 1991 to
September 1998, Mr. Rajput was employed in San Diego, California, by Bank of
America, a federal savings bank and a subsidiary of Bank America Corp., where he
held the position of executive vice president, administrative services.
Presently, Mr. Rajput is executive vice president of national operations of
GreenPoint Credit Corp. From 1990 and until its acquisition by us in August,
1998, Mr. Rajput owned and operated Factual Data Minnesota, Inc., one of our now
former franchises which operates in Minnesota and Iowa. From 1980 to 1989, Mr.
Rajput was employed by Green Tree Financial Corp., St. Paul, Minnesota,
initially as vice president and then senior vice president for administration.
Mr. Rajput also serves on the board of directors of GreenPoint Credit Corp. Mr.
Rajput obtained a Bachelor of Science degree in Mathematics and a Master of
Science degree in Statistics from the University of Sind, Pakistan, in 1968 and
1970, respectively.
Daniel G. Helle has been a Director since March 1999. Since 1992, Mr.
Helle has been a Managing Director of CIVC Partners and its predecessor,
Continental Illinois Venture Corporation, a private equity investment subsidiary
of Bank of America. From 1989 to 1992, Mr. Helle was a vice president of
Continental Illinois Venture Corporation. Mr. Helle is also a director of
several private companies, including First Franklin Financial Corporation, a
mortgage banking company based in San Jose, California. Mr. Helle obtained a
Bachelor of Science degree from Western Illinois University in 1982 and a Master
of Science degree in Finance from the University of Illinois in 1984.
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<PAGE>
J. Barton Goodwin has been a Director since July 1999. Since 1986, Mr.
Goodwin has been a General Partner of BCI Partners, Inc., an investment
management company to Bridge Capital Investors II. Mr. Goodwin is currently a
director of Memorial Operations, a private company involved in the funeral home
and cemetery industry. He is also a director of Baker Fentress & Co., a closed
end equity mutual fund traded on the NYSE. In addition, Mr. Goodwin serves as an
Advisor of the business school at Washington & Lee University. From 1974 to
1986, Mr. Goodwin was a shareholder and Vice President with Kidder, Peabody &
Co., Inc. where he performed corporate finance services. Mr. Goodwin graduated
from Washington & Lee University with a degree in Business Administration and he
obtained a MBA from Columbia University.
Russell and James Donnan are sons of J.H. and Marcia Donnan who
are husband and wife.
Director Compensation
Our directors who are also employees do not receive any fixed compensation
for their services as directors while non-employee directors presently receive
compensation of $7,500 annually plus a $500 travel allowance per meeting. We
held five board meetings in 1998 at which all members were present. We also
acted on several resolutions by written consent after telephonic conferences.
Board Committees
We have two Committees, an Audit Committee and Compensation Committee,
which were formed in mid 1998. Messrs. Terry and Rajput, two of our independent
directors, serve on each committee. Mr. J.H. Donnan, President, also serves on
each committee. No matters were considered by either committee in 1998. It is
expected that each committee will meet at least once in 1999.
The primary function of our Compensation Committee is to review and make
recommendations to the Board with respect to the compensation, including
bonuses, of our officers and to administer our present Stock Incentive Plan.
They will also administer the two plans proposed in this proxy statement, if
approved by shareholders, under the overall guidance and supervision of the full
Board of Directors.
The function of our Audit Committee is to review and approve the scope of
audit procedures employed by our independent auditors, to review and approve the
audit reports rendered by our independent auditors and to approve their audit
fees. The Audit Committee reports to the Board of Directors with respect to such
matters and recommends the selection of independent auditors.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on a review of the record, we believe that all reports required to
be filed during our most recent fiscal year by our officers, directors and
principal shareholders under Section 16(a) of the Securities Exchange Act of
1934 have been timely filed.
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<PAGE>
Executive Compensation
The following table sets forth compensation we have paid to J.H. Donnan,
our Chief Executive Officer and President, and Marcia R. Donnan, our Executive
Vice President, for services rendered during fiscal 1996, 1997 and 1998. No
other persons serving as an executive officer during the reported years received
compensation in excess of $100,000 during any of those years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------
Annual Compensation Awards Payouts
-------------------------- ---------------------- -------
All
Other Restricted Securities Other
Name Annual Stock Underlying LTIP Compen-
and Principal Fiscal Salary Bonus Compen- Award(s) Options/ Payouts sation*
Position Year ($) ($) sation ($) SARs ($) ($)
- --------------- -------- ------- ------- ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.H. Donnan 1998 105,100 9,300 -- -- -- -- 3,061
President, Chief 1997 82,445 -- -- -- -- -- 10,265
Executive Officer 1996 48,031 -- -- -- -- -- 10,220
Marcia R. Donnan 1998 105,100 9,300 -- -- -- -- 4,107
Executive Vice 1997 93,773 -- -- -- -- -- 6,093
President 1996 89,217 -- -- -- -- -- 8,137
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</TABLE>
* Consists of certain health and accident insurance benefits and automobile
expense reimbursements.
Employment Agreements
J.H. Donnan and Marcia R. Donnan are parties to employment agreements with
us which expire on July 1, 2000. Each of Mr. and Ms. Donnan is entitled to
health and accident insurance benefits and certain automobile reimbursements.
Both employment agreements also provide that if the employee is terminated due
to a change in our control, then they are entitled to severance pay equal to the
product of 2.99 times the previous year's pay including bonuses. The employment
agreements contain customary provisions as to death, disability and termination
for cause.
Stock Incentive Plan
In April 1997, we adopted our 1997 Stock Incentive Plan. The purpose of
the plan is to provide continuing incentives to our key employees, which may
include officers and members of the Board of Directors. The Stock Incentive Plan
provides for 200,000 shares of common stock available for grant under the plan.
The plan is administered by the Compensation Committee of our Board of
Directors. Subject to the terms of the plan, the Compensation Committee
determines:
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<PAGE>
o the persons to whom awards are granted
o the type of award granted
o the number of shares granted
o the vesting schedule
o employment requirements or performance goals relating to restricted stock
awards
o the type of consideration to be paid upon exercise of options
o the terms of any option, which cannot exceed ten years
The exercise price may be paid in cash, in shares of our common stock
valued at fair market value at the date of exercise, by delivery of a promissory
note or by a combination of such means of payment, as may be determined by our
Compensation Committee.
As of September 10, 1999, options to purchase 31,500 shares of common
stock had been granted to several of our employees and two non-executive
directors at an exercise price of $5.50 per share for 26,500 shares and $6.50
per share for 5,000 shares.
Certain Relationships and Related Transactions
J.H. Donnan and Marcia R. Donnan personally guaranteed a $500,000 loan we
had taken from a financial institution in 1995. No separate consideration was
paid for such guarantee. The balance of the loan of $435,000 was paid using a
portion of the proceeds from our initial public offering completed May 13, 1998.
On September 16,1998, we closed our acquisition of the assets of Factual
Data Minnesota, Inc. Since 1990, FD Minnesota had been one of our franchisees
located in the Saint Paul, Minnesota area and operating in Minnesota and Iowa.
We acquired the fixed assets, contract rights, intellectual property rights to
trade names and computer software, personnel files, books and records, deposits,
prepaid assets and the goodwill of FD Minnesota in exchange for $353,243 cash
and a non-interest bearing promissory note in the principal amount of $353,243
payable in twenty-four equal monthly installments commencing September 1, 1998.
The note is secured by a lien on all of the assets purchased. We also assumed
the lease obligations on the FD Minnesota facility and continue operations of FD
Minnesota at such facility. In connection with the purchase, we obtained two
year non-competition agreements with the two shareholders of FD Minnesota.
Abdul Rajput, one of the shareholders of FD Minnesota, has been one of our
directors since February 1998. Mr. Rajput disclosed all of the material facts as
to his relationship and interest in FD Minnesota and abstained from voting on
the acquisition. The acquisition was approved by all of our other remaining
directors and the acquisition was made on terms believed by the Board to be no
less favorable than could have been obtained from an unaffiliated party. We
retained an independent firm of certified public accountants to appraise the
fair market value of the operating assets, excluding cash and accounts
receivable, of FD Minnesota. Based on such firm's study and analytical review
procedures it concluded that a reasonable estimate of the fair market value of
the operating assets, excluding cash and accounts receivable, of FD Minnesota as
of May 31, 1998 was $720,000.
- 11 -
On March 26, 1999, we entered into a stock purchase and sale agreement
with four institutional investors, including Continental Illinois Venture
Corporation. Mr. Helle is a managing director of that company which purchased
$10 million of the placement at $8.08 per share. As part of the placement, Mr.
Helle became one of our directors and the four members of the Donnan family
agreed to vote for Continental Illinois' nominee as a director so long as it
owns a number of shares equal to or greater than 5% of our then outstanding
shares.
Mr. Goodwin is a general partner of BCI Partners, Inc.
Affiliates of that company purchased approximately $4.5 million of
the private placement described above.
We have adopted a policy that all transactions between us and our
officers, directors and 5% or more shareholders are subject to approval by a
majority of the disinterested independent directors. Any such transactions will
be on terms believed to be no less favorable than could be obtained from
unaffiliated parties.
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<PAGE>
PROPOSAL NO. 2
APPROVAL OF OUR 1999 EMPLOYEE STOCK PURCHASE PLAN
Our Board of Directors approved our 1999 Employee Stock Purchase Plan on
August ___, 1999. Most of our full-time employees who work for us or one of our
designated subsidiaries will be eligible to participate in the Purchase Plan,
and it is intended that the Purchase Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code.
The purpose of the Purchase Plan is to provide our employees with an
opportunity to purchase our common stock through accumulated payroll deductions.
Our Board of Directors believes that the Purchase Plan will help create in our
employees a direct interest to increase shareholder value and provide them with
additional compensation. The Purchase Plan will be administered by either our
Board of Directors or by a committee of the Board of Directors, and the Purchase
Plan grants the administrator broad powers, including the ability to amend the
plan, subject to tax laws which require shareholder approval for limited types
of material amendments, such as increasing the number of shares available under
the plan.
The Purchase Plan provides eligible employees the right to purchase our
common stock on a semi-annual basis through payroll deductions. Up to 75,000
shares of our common stock are reserved under the plan. These shares may be pro
ratably adjusted in case of stock splits, dividends, or stock reclassifications.
We intend to register the shares with the Securities and Exchange Commission so
that they will be freely tradeable when purchased and issued to eligible
employees, although by law, our executive officers, directors and significant
shareholders will be subject to resale limitations on the number of shares that
they can sell. The right to purchase shares will not begin until the shares are
registered. The price per share of the common stock under the plan is 90% of the
fair market value of the stock at either the beginning or end of each
semi-annual stock purchase period, depending on which value is lower. All
full-time employees that complete one year of employment will be eligible to
participate in the Purchase Plan, subject to tax law limitations which limit
participation for employees who own or have the option to purchase 5% or more of
our stock or who have the right to purchase over $25,000 worth of our stock
under all employee stock purchase plans under Section 423 of the Internal
Revenue Code. The Purchase Plan is not subject to the requirements of the
Employee Retirement Income Security Act of 1974, nor is it a qualified plan
under Section 401(a) of the Internal Revenue Code.
When an eligible employee's employment is terminated, he or she will be
deemed to have elected to withdraw from the Purchase Plan, and all funds not yet
used to purchase stock will be returned to that person.
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<PAGE>
If we liquidate or dissolve, any semi-annual stock purchase period in
progress will terminate immediately prior to the liquidation or dissolution, and
the appropriate amount of stock will be purchased for each participant based
upon the amount of withheld funds in the participant's account.
If we merge with or into another company and the surviving company agrees
to assume the Purchase Plan, then each participant in the Purchase Plan will
have the equivalent right to purchase securities in the surviving company. If
the surviving company refuses to assume or substitute equivalent rights, then
any semi-annual stock purchase period in progress will terminate immediately
prior to the sale or merger, and the appropriate amount of stock will be
purchased for each participant based upon the amount of withheld funds in the
participant's account.
We intend to register the shares underlying the Purchase Plan with the
Securities and Exchange Commission so that they will be freely tradeable when
purchased and issued by eligible employees, although by law, our executive
officers, directors and significant shareholders will be subject to resale
limitations on the number of shares that they can sell.
Our Board of Directors may terminate the Purchase Plan at any time,
although any semi-annual stock purchase period in progress may not be canceled.
We recommend a vote FOR the approval of our 1999 Employee Stock Purchase
Plan. Proxies given to us will be voted FOR this proposal unless a vote against
this proposal or abstention is specifically indicated.
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<PAGE>
PROPOSAL NO. 3
APPROVAL OF OUR 1999 EMPLOYEE FORMULA AWARD STOCK OPTION PLAN
Our Board of Directors approved our 1999 Employee Formula Award Stock
Option Plan on August ___, 1999. All of our full-time employees who have worked
for us or one of our designated subsidiaries for at least one year will be
eligible to participate in the Formula Award Plan. The Formula Award Plan will
be administered by either our Board of Directors or by a committee of the Board
of Directors, and the Formula Award Plan grants the administrator broad powers,
including the ability to amend the plan.
The purpose of the Formula Award Plan is to provide our employees with an
opportunity acquire our common stock pursuant to options granted under the plan.
The options will automatically be issued under the Formula Award Plan based on a
formula which takes into account both an employee's salary or wage and number of
years of service. Our Board of Directors believes that the Formula Award Plan
will provide increased incentive to employees to exert maximum effort to our
business, to attract talented employees and to retain current employees, and to
align the interests of our stockholders with our employees.
Up to 100,000 shares of our common stock may be issued under the Formula
Award Plan upon the exercise of options granted to eligible employees. These
shares may be pro ratably adjusted in the case of stock splits, dividends, or
stock reclassifications.
An eligible employee is a person who:
o has been employed with us or with another company we acquire for at least
one year; and
o is a full-time employee at the time of grant.
Subject to the discretion of the administrator, beginning upon the
effective date of the plan, and on each anniversary date thereafter, each
eligible employee will be granted an option to purchase our common stock. The
exercise price for shares underlying an option will be the fair market value of
our stock as of the particular anniversary date. Each option granted under the
Formula Award Plan will vest and become exercisable to the extent of 20% of the
total number of shares covered by the option on each of the first five
anniversary dates after the grant date of the option. Each option will expire 10
years from its grant date.
The number of shares underlying each option granted to each eligible
employee will be calculated by a formula which includes two components: (1) the
amount of the employee's salary, wages and commissions for the preceding year,
and (2) the number of years of service with us (which number shall include
service with a company which we acquire). The formula weighs the employee's
salary or wage more heavily than it does for the number of years of service.
Thus, our more highly paid employees, such as our executive officers, will
likely receive options with significantly more underlying stock than other
employees. If at any anniversary date there are not enough shares reserved under
the Formula Award Plan to cover the grant of options for that year, then all
options for that year will be pro ratably reduced. In addition, our Board of
Directors has the right to suspend the Formula Award Plan or modify the formula
at any time.
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<PAGE>
If we merge or reorganize with another company, all outstanding options
under the Formula Award Plan will become fully and immediately exercisable,
although our Board of Directors may subsequently terminate all outstanding
options by giving option holders a 20 day advance written notice. During the 20
day period, option holders may exercise their options.
We intend to register the shares underlying the options with the
Securities and Exchange Commission so that they will be freely tradeable when
purchased and issued by eligible employees, although by law, our executive
officers, directors and significant shareholders will be subject to resale
limitations on the number of shares that they can sell.
Our Board of Directors may terminate the Formula Award Plan at any time,
although any options outstanding at the date of termination will continue to be
in full force and effect.
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<PAGE>
PROPOSAL NO. 4
APPOINTMENT OF INDEPENDENT AUDITORS
We have engaged the firm of Ehrhardt Keefe Steiner & Hottman PC as
independent auditors to audit and report to our shareholders on our financial
statements for the years 1996 through 1998. During all three years, there were
no disagreements with Ehrhardt Keefe Steiner & Hottman PC on any matter of
accounting principle or practice, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the satisfaction of Ehrhardt Keefe
Steiner & Hottman PC, would have caused them to make a reference to the subject
matter of the disagreement in connection with its reports. Representatives of
the firm are expected to be present at the annual meeting and will have the
opportunity make a statement if they desire to do so and will be available to
respond to appropriate questions. Although your approval of the engagement of
independent auditors is not required by law, we desire to solicit your reaction.
If the appointment of Ehrhardt Keefe Steiner & Hottman PC is not approved by a
majority of the shares represented at the meeting, we will consider the
appointment of other independent auditors for 1999.
We recommend a vote FOR the approval of the appointment of Ehrhardt Keefe
Steiner & Hottman PC as our independent auditors for the year 1999. Proxies
given to us will be voted FOR this proposal unless a vote against this proposal
or abstention is specifically indicated.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting, any
proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of our Annual Report on Form 10-KSB for the year
ended December 31, 1998 at no charge by writing to us at 5200 Hahns Peak Drive,
Loveland, Colorado 80538, Attention:
Shareholder Relations--Robb Copp.
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<PAGE>
SHAREHOLDER PROPOSALS
To be considered for inclusion in our proxy statement for the 2000 annual
meeting, proposals of shareholders must be received by us no later than February
10, 2000. Such proposals should be directed to the Secretary of Factual Data.
By Order of the
Board of Directors
By /s/ James N. Donnan
James N. Donnan, Secretary
Loveland, Colorado
September 10, 1999
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<PAGE>
PROXY PROXY
FACTUAL DATA CORP.
5200 Hahns Peak Drive
Loveland, Colorado 80538
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Factual Data Corp. acknowledges receipt of
the notice of the annual meeting of shareholders, to be held Friday, October 22,
1999, at 9:00 a.m., at the Training Room, 5200 Hahns Peak Drive, Loveland,
Colorado and hereby appoints J.H. Donnan and Todd A. Neiberger, or either of
them, each with the power of substitution, as attorneys and proxies to vote all
the shares of the undersigned at the annual meeting and at all adjournments
thereof, hereby ratifying and confirming all that the attorneys and proxies may
do or cause to be done by virtue hereof. The above-named attorneys and proxies
are instructed to vote all of the undersigned's shares as follows:
1. Election of Two Directors.
[ ] FOR [ ] AGAINST
Robert J. Terry Abdul H. Rajput
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER NOMINEE,
MARK THE BOX NEXT TO THAT NOMINEE'S NAME.)
2. Approval of 1999 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of 1999 Employee Formula Award Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment of Ehrhardt Keefe Steiner & Hottman
PC as independent auditors for 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Transaction of such other business as may properly come before the
meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED ABOVE IN
PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
DATED:___________________ 1999
SIGNATURE
SIGNATURE IF HELD JOINTLY
Please sign your name exactly as it appears
below. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY. NOTE:
SECURITIES DEALERS PLEASE STATE THE NUMBER OF SHARES VOTED BY THIS
PROXY:_____________________________
