As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333-__________
=======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FACTUAL DATA CORP.
(Exact name of registrant as specified in its charter)
Colorado 84-144991
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
5200 Hahns Peak Drive
Loveland, Colorado 80538
(970) 663-5700
-------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Jerald H. Donnan, President
Chairman of the Board and Chief Executive Officer
Factual Data Corp.
5200 Hahns Peak Drive
Loveland, Colorado 80538
(970)663-5700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Samuel E. Wing, Esq.
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
Telephone: (303) 573-1600
Facsimile: (303) 893-6506
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Shares to be Amount to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
- ---------------------- ------------- ------------ ----------- --------------
Common Stock 351,116 $10.56 $3,707,785 $1,031
(1) Estimate based upon the closing sales prices of the Registrant's common
stock on June 8, 1999, as reported by the Nasdaq SmallCap Market, pursuant
to Rule 457(c) promulgated under the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION, DATED JUNE 9, 1999
FACTUAL DATA CORP.
351,116 SHARES OF COMMON STOCK
The 351,116 shares of Factual Data Corp.'s common stock covered by this
prospectus are all being offered for the account of selling shareholders of the
Company. We issued the shares to the selling shareholders in August and
December, 1998 in the acquisition of two businesses described under "Selling
Shareholders."
The selling shareholders may sell the shares from time to time on the
over-the-counter market in regular broker transactions, in transactions directly
with market makers or in privately-negotiated transactions. We will not receive
any proceeds from the sale of these shares.
Our common stock trades on the Nasdaq SmallCap Market under the symbol FDCC.
You should carefully consider the risk factors beginning on page 3 before
purchasing any of the shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______________, 1999
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at HTTP://WWW.SEC.GOV.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference some of the documents we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934. This prospectus is part of a registration statement we filed with the
SEC (Registration No. 333-__________). The documents we incorporate by reference
are:
o Our Annual Report on Form 10-KSB for the year ended December 31, 1998.
o Our Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999.
o Our Current Reports on Form 8-K describing three of our most recent
acquisitions filed April 12, 1999 (2) and May 18, 1999 (1).
o The description of our common stock which is contained in Items 1 and 2 of
our Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act on May 5, 1998.
o All documents we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus and prior to the termination
of the offering of the shares offered hereby.
HOW TO REQUEST INFORMATION
We will provide at no cost to each person, including any beneficial owner, to
whom this prospectus is delivered, on the written or oral request of such
person, a copy of any or all of the documents we incorporate by reference, other
than exhibits to such documents. Requests should be directed to Factual Data
Corp., 5200 Hahns Peak Drive, Loveland, Colorado 80538, (970) 663-5700,
Attention: Investor Relations.
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ABOUT FACTUAL DATA CORP.
Factual Data Corp. is an information services provider to the mortgage and
consumer lending industries, employers, landlords, and other business customers
located throughout the United States. We specialize in preparing mortgage credit
reports ("MCRs") that we format and customize for each mortgage lender's
requirements and then transmit to those lenders via modem, network or facsimile.
We market our services nationally through 49 combined locations, including our
own offices and through our franchisees and licensees. Our franchisees and
licensees are collectively referred to as "System Affiliates." We are
implementing a consolidation plan in the mortgage credit report industry. Our
initial public offering took place in May 1998 and our common stock and warrants
trade on the Nasdaq SmallCap Market under the symbols FDCC and FDCCW.
Credit data provided directly from the three national major credit repositories,
Equifax, Inc., Experian, Inc., and TransUnion Corporation, is often
inconsistent, is not presented in a customized or consolidated format, and may
be relatively difficult to interpret. As such, our services are valuable to the
lending industry since MCR users can obtain credit reports from us which contain
verified credit information upon which such lenders can readily rely and users
can more easily interpret the credit data since we format and customize such
data.
Through the expertise we have developed in mortgage credit reporting, we
recently expanded our services to include employment screening services and
tenant screening services. Our MCR and other products and services are fully
automated, thereby allowing us to deliver our reports very quickly to our
customers' computers.
We were incorporated in Colorado in 1985. Our executive offices are located at
5200 Hahns Peak Drive, Loveland, Colorado 80538. Our telephone number is (970)
663-5700. We maintain a site on the World Wide Web at
HTTP://WWW.FACTUALDATA.COM. However, the information on our web site is not part
of this prospectus.
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RISK FACTORS
To inform investors of our future plans and objectives, this prospectus (and
other reports and statements issued by us and our officers from time to time)
contain certain statements concerning our future performance, intentions,
objectives, plans and expectations that are or may be deemed to be
"forward-looking statements." Our ability to do this has been fostered by the
Private Securities Litigation Reform Act of 1995, which provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information so long as those statements are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the statement. We believe it is in the
best interest of investors that we take advantage of the "safe harbor"
provisions of the Reform Act.
The forward-looking statements included herein and in our other reports are
based on expectations that involve a number of risks and uncertainties that
might adversely affect our operating results in the future in a material way.
Such risks and uncertainties include but are not limited to the following:
A decrease in demand for mortgage credit reports will likely decrease our
earnings.
Our primary service is our mortgage credit report ("MCR"). The use of this
service is driven largely by consumer demand for credit for new home mortgages
and refinancings and, to a lesser extent, lenders' efforts to develop new, and
monitor existing, credit relationships. Consumer demand for mortgage credit
tends to vary due to interest rate fluctuations and general economic conditions.
We have found that MCR demand tends to increase during periods of economic
expansion or when interest rates are declining. Our expenses consist largely of
labor, repository and communication charges, and our ability to quickly control
these costs is critical if the demand for MCRs slackens. Also, our lack of
significant diversification in other services hinders our ability to withstand
the negative impact of a downturn in demand for MCRs.
Our consolidation plan includes operational and financial risks which may
negatively affect our earnings.
In mid-1998, we implemented a consolidation plan to acquire certain
of our System Affiliates and competitors engaged in providing MCR
services that either complement or will expand our business. This
plan involves a number of risks including:
o ability to retain acquired customers
o diversion of management time
o use of our financial resources in reviewing acquisition candidates
o operational assimilation of the acquired companies
o amortization charges of acquired intangible assets
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There are over 40 System Affiliates that have exclusive territory rights which
expire at various times through the year 2005. We cannot compete or license
others in those areas. We will be required to purchase a System Affiliate, or
wait until the expiration of the applicable agreement with the System Affiliate,
before expanding into, or acquiring a competitor in, the same territory. The
success of our consolidation plan, both long-term and short-term, remains
unknown.
We may be unable to manage our recent and continued growth, which could
negatively affect our earnings.
Since mid-1998, we have made over 20 acquisitions and our employees have grown
from about 37 to over 250. Our ability to manage these acquisitions, our new
employees and the increased business activity while continuing to make
additional acquisitions is critical to our success. Also critical is our ability
to
o attract and keep mid-level employees and managers
o implement internal cost controls, operating policies and procedures
o implement our sales and marketing techniques
We may not be successful in implementing our business strategy due to the
significant competition we face.
The MCR industry is highly fragmented. We believe there are approximately 1,400
competitors in the United States providing MCR services. We face both direct and
indirect competition for our services. There are large numbers of companies
engaged in the sale of one or more of the services we offer. A significant
number of these competitors are small companies operating on a local or regional
basis, while some are large companies operating on a national scale. Several
large companies have far greater financial resources than we do, including CBC
Companies, Inc., Equifax Credit Information Services, Inc., The First American
Financial Corp. and Trans Union Corporation. We face intense competition in MCR
services from these entities, and as to our other services, from companies
engaged in employment and tenant application verification activities.
Significant governmental regulation, privacy issues and other legal
considerations increase our operating costs.
Our business involves collecting consumer and business credit data and other
information and distributing this information to lenders and businesses making
credit and other decisions. Concerns about individual privacy and the
collection, distribution and use of information about individuals have led to
substantial governmental regulation of the credit reporting industry. The
industry is regulated under the federal Fair Credit Reporting Act and by
legislation in many states. The industry has recently been subject to increased
legislative attention. There can be no assurance that pending or additional
federal or state consumer-oriented legislation will not significantly limit
demand for, or increase the costs of, our services. Under general legal concepts
and, in some instances, under specific federal and state statutes, we could be
held liable to customers or to the subjects of credit reports prepared by us for
inaccurate information or misuse of information. No assurance can be given that
we can successfully defend any claims made against us, that insurance will cover
these claims or that uninsured losses from these claims might arise, thereby
negatively impacting our operations and financial condition.
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We are dependent upon the services of our President and Chief Executive Officer.
We are highly dependent on the services of our President and Chief Executive
Officer, Jerald H. Donnan, who is subject to an employment agreement which
expires on July 1, 2000. To the extent that Mr. Donnan's services become
unavailable, we may not be able to promote existing personnel or employ
qualified persons on favorable terms. We own a $1 million Key Man term life
insurance policy on the life of Mr. Donnan.
Our reseller agreements can be cancelled on short notice and they expose us to
claims or liabilities from the use of inaccurate information.
We do not maintain our own consumer credit database. Instead, we obtain consumer
credit data from large, national credit repositories such as Experian, Inc.,
TransUnion Corporation and Equifax, Inc. under reseller agreements with these
entities. Generally, the reseller agreements are terminable without cause by
either party within a short period of time upon written notice. Also, the
agreements can be terminated if we were to use the information in violation of
the Fair Credit Reporting Act or other applicable laws, or in violation of the
reseller agreement. The reseller agreements typically do not provide any
warranties as to the accuracy or correctness of the information contained in the
databases maintained by credit repositories, and further provide that we will
hold the repositories harmless and indemnify them from claims or liabilities
arising from the use of inaccurate information contained in the databases.
Our success partly depends upon our ability to protect our technology from
misappropriation or infringement.
We rely on a combination of trademark, servicemark, copyright, trade secret and
contract protection to establish and protect our proprietary rights in our
services and technology. Because there is little in the design, development or
delivery of our services that is protectable under law, competitors can
replicate our services. We generally enter into confidentiality agreements with
customers and limit access to and distribution of our proprietary information.
These steps may not be adequate to deter misappropriation or infringement of our
proprietary technologies and costly litigation may ensue. Although we believe
that our intellectual property and technologies do not infringe any proprietary
rights of others, third parties may assert claims of infringement in the future.
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We may not be able to meet the automated level of performance required by some
of our larger customers.
The Federal National Mortgage Association and The Federal Home Loan Mortgage
Corporation provide a secondary market for residential mortgages. Both entities
require that any mortgage purchased be supported by a credit report on the
mortgagee and be prepared by an entity, such as us, independent from the lender.
We are aware that these and other entities are increasingly using "automated"
credit reporting techniques that require credit report providers to render
almost instantaneous responses, often within 60 seconds or less. We may not be
able to continue to provide the level of performance required by these or other
large institutional lenders. Additionally, we may not be able to match the level
of technological service provided, or developed in the future, by competitors.
A loss of operations in our data center could negatively impact our earnings.
Our operations depend on our ability to protect our data center against damage
from fire, power loss, telecommunications failure, natural disasters or similar
events. We moved into a new facility in Loveland, Colorado in April 1998, that
is outfitted with backup power and duplicate telecommunication facilities;
nonetheless, in the event we experience a natural disaster, hardware or software
malfunction or other interruption of our data center operations, our business
could be hurt. Extended interruptions in our services could be particularly
detrimental, and our insurance may not be adequate to compensate us for
resulting losses that may occur.
If our computer systems, or the computer systems of our suppliers and customers
are not year 2000 compliant, our financial condition and business may be
adversely affected.
We face a serious business issue because many computer programs use only two
digits to identify a year in a date field. We have reviewed our products and key
financial operational systems, and where required, have developed plans to
ensure that our products and computer systems continue to function properly. If
we fail to develop the necessary plans for our computer systems to continue to
function properly, our business, financial condition and results of operations
may be seriously affected. The Year 2000 date issue could also negatively impact
our financial condition and business if our suppliers, customers and other
businesses fail to address this issue successfully.
Impediments to takeover attempts and removal of directors may depress the price
of our common stock.
Our Articles of Incorporation and Bylaws contain provisions that may discourage
or make it more difficult for a third party to acquire us. These provisions
include:
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o the ability of our Board of Directors to issue authorized but unissued
common and preferred stock without action by our shareholders, although
issuances are subject to approval by the majority of our independent
directors;
o the election of directors for three-year terms, with approximately
one-third of the Board of Directors standing for election each year;
o limitations on alteration of the staggered board provisions and the ability
of shareholders to remove directors; and
o the affirmative vote of the holders of at least two-thirds of our capital
stock entitled to vote to approve a merger, dissolution or sale of all or
substantially all of our assets.
We intend not to declare dividends.
We have not declared nor paid, and we intend not to declare or pay, any cash or
other dividends in the foreseeable future. Earnings, if any, will be retained to
finance our operations and growth.
The market price of our common stock may be adversely affected due to
outstanding options and warrants that may have exercise prices less than the
market price of our stock.
We have reserved 1,380,000 shares of common stock for issuance on exercise of
warrants issued in our initial public offering and 200,000 shares of common
stock for issuance on exercise of options under our 1997 Stock Incentive Plan.
The representative of the underwriters in our initial public offering holds
options to purchase 120,000 shares of common stock and warrants to purchase
120,000 shares of common stock. Our agent in our March and April 1999 private
placements earned warrants to purchase 55,641 shares of common stock. Option
prices range from $5.50 to $9.15 per share. During the terms of the warrants and
the options, the holders have the opportunity to profit from a rise in the
market price of our common stock, and their exercise may dilute the ownership
interest of existing shareholders. Additionally, immediate resale of the
underlying shares may have a depressive effect on the market in our common
stock.
Registration rights held by others could adversely affect the market price of
our common stock.
In addition to the above, we granted registration rights in connection with two
private placements completed in early 1999. Shares registerable in these
transactions have been registered, or may be registered, in other registration
statements. The holders ability to sell these approximately 1,912,451 shares
constitute market overhang and could depress the market price of our common
stock.
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USE OF PROCEEDS
The selling shareholders will receive all of the net proceeds from the sale of
the shares; accordingly, we will not receive any proceeds from sales of the
shares.
SELLING SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of
our common stock by each selling shareholder. All information contained in the
table below is based upon beneficial ownership as of June 1, 1999.
Shares Beneficially Owned Shares
Prior to the Offering Shares Beneficially
Name and Address --------------------- Offered Owned
of Selling Shareholder Number Percent Hereby the Offering
- ---------------------------- --------- ---------- --------- -------------
Landmark Financial Services,
Inc.
2901 North Dallas Parkway
Suite 220
Plano, Texas 75093 53,782 * 53,782 -
David R. Tamuty
15311 Vantage Parkway
Suite 320
Houston, Texas 77032 107,041 1.96 107,041 -
Larry W. Knigge
15311 Vantage Parkway
Suite 320
Houston, Texas 77032 68,387 1.25 68,387 -
A. Wayne Wright
15311 Vantage Parkway
Suite 320
Houston, Texas 77032 98,120 1.80 98,120 -
Barbara Hahn
15311 Vantage Parkway
Suite 320
Houston, Texas 77032 11,893 * 11,893 -
Lanette McCoy
15311 Vantage Parkway
Suite 320
Houston, Texas 77032 11,893 * 11,893 -
- ------------------
*less than 1% of our outstanding shares.
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We issued the shares in two separate transactions as part of our ongoing
acquisition program in September and December, 1998. We issued 53,782 shares of
common stock to Landmark Financial Services, Inc. in connection with the
acquisition of what is now our Dallas, Texas office. The natural persons listed
above acquired up to 297,334 shares in our acquisition of Mortgage Credit
Services, Inc. Shares in that transaction were issued but escrowed and will be
released as sales under this registration statement are made, up to a maximum
aggregate sales proceeds of $1,784,000. Any shares remaining in escrow after
$1,784,000 sales proceeds have been realized by the natural persons will be
returned to us and cancelled.
As part of our acquisitions, we agreed to register all of the shares included in
this prospectus in order to permit the selling shareholders to sell the shares
from time to time in the public market or in privately-negotiated transactions.
We have agreed to prepare and file any amendments and supplements as may be
necessary to keep the registration of the shares effective until the earlier of
(i) two years following the date of this prospectus; or (ii) the date on which
all of the shares have been sold. We have also agreed to pay for all expenses of
this offering other than underwriting discounts and commissions and brokerage
commissions and fees.
This table assumes that all shares owned by the selling shareholders are being
sold. The selling shareholders may offer and sell less than the number of shares
indicated. The selling shareholders are not making any representation that any
shares will or will not be offered for sale.
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PLAN OF DISTRIBUTION
The selling shareholders, together with their donees or transferees, or by their
other successors in interest, may sell the shares in one or more transactions on
The Nasdaq Stock Market, in special offerings, exchange distributions, secondary
distributions, negotiated transactions, in settlement of short sales or a
combination or such methods. They may sell at market prices prevailing at the
time of sale, at prices related to the market price or at negotiated prices.
The selling shareholders may make such transactions by selling their shares to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from the selling
shareholders for whom they may act as agent (which compensation may be in excess
of customary commissions). Broker-dealers purchasing shares from the selling
shareholders for their own account may resell such securities pursuant to this
prospectus.
The selling shareholders or any broker-dealers or other persons acting on their
behalf may be deemed to be underwriters and any commissions received or profit
realized by them on the resale of the shares may be deemed to be underwriting
discounts and commissions under the Securities Act. As of the date of this
prospectus, we are not aware of any agreement, arrangement or understanding
between any broker or dealer with the selling shareholders with respect to the
offer or sale of the shares.
At the time that any particular offering of shares is made, to the extent
required by the Securities Act, a prospectus supplement will be distributed
setting forth the terms of the offering, including the aggregate number of
shares being offered, the names of any underwriters, dealers or agents, and
discounts, commissions and other items constituting compensation from the
selling shareholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.
We have advised the selling shareholders that during such time as they may be
engaged in a distribution of the shares, they are required to comply with
Regulation M under the Securities Exchange Act. With certain exceptions,
Regulation M prohibits any selling shareholder, any affiliated purchasers and
any other persons who participate in such a distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase, any
security which is the subject of the distribution until the entire distribution
is complete.
We have agreed with the selling shareholders to indemnify each other (and each
other's controlling persons) against certain liabilities, including liabilities
under the Securities Act.
It is possible that a significant number of shares could be sold at the same
time. Such sales, or the perception that such sales could occur, may negatively
affect prevailing market prices for our common stock.
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LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for us by Jones &
Keller, P.C., Denver, Colorado. Two members of that firm own an aggregate of
7,000 shares of our common stock.
EXPERTS
Ehrhardt Keefe Steiner & Hottman PC, independent certified public accountants,
have audited our consolidated financial statements included in our Annual Report
on Form 10-KSB for the year ended December 31, 1998, as set forth in their
report, which is incorporated in this prospectus by reference. Our consolidated
financial statements are incorporated by reference in reliance on their report,
given on their authority as experts in accounting and auditing. With respect to
the unaudited interim consolidated financial information for the three months
ended March 31, 1998 and 1999 included in Form 10-QSB, the independent certified
public accountants have not audited or reviewed such consolidated financial
information and have not expressed an opinion or any other form of assurance
with respect to such consolidated financial information.
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We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person makes such a statement you should not rely on
it. This prospectus is not an offer to sell, nor is it seeking an offer to buy,
the shares in any state in which the offer or sale is not permitted. The
information in this prospectus is complete and accurate as of its date, but the
information may change after that date.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION.................1
INCORPORATION OF DOCUMENTS BY REFERENCE.............1
HOW TO REQUEST INFORMATION..........................1
ABOUT FACTUAL DATA CORP.............................2
RISK FACTORS........................................3
USE OF PROCEEDS.....................................8
SELLING SHAREHOLDERS................................8
PLAN OF DISTRIBUTION...............................10
LEGAL MATTERS......................................11
EXPERTS............................................11
FACTUAL DATA CORP.
351,116 Shares
of Common Stock
PROSPECTUS
June ___, 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various costs and expenses to be paid by the
Registrant with respect to the sale and distribution of the securities being
registered. All of the amounts shown are estimates except for the Securities and
Exchange Commission registration fee.
SEC Registration Fee $ 1,028
Printing and Edgar Expenses 1,500
Legal Fees and Expenses 4,000
Accounting Fees and Expenses 2,000
Miscellaneous 1,472
--------
Total $ 10,000
========
Item 15. Indemnification of Directors and Officers.
The Registrant's Bylaws requires the Registrant to indemnify, to the fullest
extent authorized by applicable law, any person who is or is threatened to be
made a party to any civil, criminal, administrative, investigative, or other
action or proceeding instituted or threatened by reason of the fact that he is
or was a director of officer of the Registrant or is or was serving at the
request of the Registrant as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise.
The Registrant's Articles of Incorporation provides that, to the fullest extent
permitted by Colorado law, directors and officers of the Registrant shall not be
liable to the Registrant or any of its shareholders for damages caused by a
breach of fiduciary duty by its directors or officers.
Sections 7-109-102 and 103 of the Colorado Business Corporation Act ("CBCA")
authorize the indemnification of directors and officers against liability
incurred by reason of being a director or officer and against expenses
(including attorney's fees) judgments, fines and amounts paid in settlement and
reasonably incurred in connection with any action seeking to establish such
liability, in the case of third-party claims, if the officer or director acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and in the case of actions by or in the
right of the corporation, if the officer or director acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interest of
the corporation and if such officer or director shall not have been adjudged
liable to the corporation, unless a court otherwise determines. Indemnification
is also authorized with respect to any criminal action or proceeding where the
officer or director also had no reasonable cause to believe his conduct was
unlawful.
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All executive officers and directors of the Company have entered into
indemnification agreements with the Company which provide for certain defense
costs and reimbursements.
The above discussion of the Registrant's Articles of Incorporation, Bylaws the
CBCA and the indemnification agreements is only a summary and is qualified in
its entirety by the full text of each of the foregoing.
Under Section 6 of two Registration Rights Agreements under which the securities
the subject hereof were sold and are being registered, the selling shareholders
have agreed to indemnify the Registrant and its directors and certain officers
against certain liabilities arising under the Securities Act of 1933 and the
Securities Exchange Act of 1934.
The Registrant maintains directors' and officers' liability insurance.
Item 16. Exhibits
Exhibit
Number
5 Opinion of Jones & Keller, P.C.
23.1 Consent of Ehrhardt Keefe Steiner & Hottman PC
23.2 Consent of Jones & Keller, P.C. (included in Exhibit 5).
24 Power of Attorney (see page II-4).
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering price may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
II-2
<PAGE>
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended,
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Registrant's Annual
Report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Loveland, State of Colorado, on the 8th day of June,
1999.
FACTUAL DATA CORP.
By: /s/ Jerald H. Donnan
Jerald H. Donnan, President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Jerald H.
Donnan and Todd A. Neiberger, or either of them, as attorneys-in-fact, each with
the power of substitution for him in any and all capacities, to sign any
amendment to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person hereby ratifying and confirming all
that said attorneys-in-fact or any of them, or their or his or her substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
By:/s/ Jerald H. Donnan Chairman of the Board June 8, 1999
Jerald H. Donnan of Directors, President
and Chief Executive
Officer (Principal
Executive Officer)
By:/s/ Todd A. Neiberger Chief Financial Officer June 8, 1999
Todd A. Neiberger and a Director
(Principal Financial
and Accounting Officer)
By:/s/ James N. Donnan Vice President and a June 8, 1999
James N. Donnan Director
By:/s/ Robert J. Terry Director June 8, 1999
Robert J. Terry
By:/s/ Abdul H. Rajput Director June 8, 1999
Abdul H. Rajput
By:/s/ Daniel G. Helle Director June 8, 1999
Daniel G. Helle
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
5 Opinion of Jones & Keller, P.C.
23.1 Consent of Ehrhardt Keefe Steiner & Hottman PC
23.2 Consent of Jones & Keller, P.C. (included in Exhibit 5).
24 Power of Attorney (see page II-4).
Exhibit 5
JONES & KELLER, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
Telephone: (303) 573-1600
Telecopier: (303) 893-6506
June 8, 1999
Factual Data Corp.
Hahns Peak Drive
Loveland, CO 80538
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Factual Data Corp., a Colorado corporation (the
"Company"), in connection with the filing with the Securities and Exchange
Commission (the "Commission"), of a Registration Statement on Form S-3 (the
"Registration Statement") covering 351,116 shares (the "Shares") of common stock
of the Company, (the "Common Stock"). The Shares being registered are being sold
by the Selling Shareholders.
This Opinion Letter is governed by, and shall be interpreted in accordance with,
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter is subject to
and should be read in conjunction therewith. Additionally, our Opinion is based
upon and subject to the qualifications, limitations and exceptions set forth in
this letter.
In rendering our Opinion, we have examined such agreements, documents,
instruments and records as we deemed necessary or appropriate under the
circumstances for us to express our Opinion, including, without limitation, the
Articles of Incorporation and Bylaws, as restated or amended, of the Company;
and the resolutions adopted by the Board of Directors of the Company
authorizing, approving and ratifying the Share Purchase Agreements, the
Registration Rights Agreements and the preparation and filing of the
Registration Statement. In making all of our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the original documents of all documents
submitted to us as copies, and the due execution and the delivery of all
documents by any persons or entitled other than the Company and the Selling
Shareholders where due execution and delivery by such persons or entities is a
prerequisite to the effectiveness of such documents.
<PAGE>
As to various factual matters that are material to our Opinion, we have relied
upon the factual statements set forth in an officer's certificate of the Company
and certificates of, and other information obtained from, public officials. We
have not independently verified or investigated, nor do we assume any
responsibility for, the factual accuracy or completeness of such factual
statements.
Based upon and subject to the foregoing, we are of the Opinion that:
(1) the Company (a) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado and (b) has
requisite corporate power and authority to carry on its business as
described in the Registration Statement.
(2) the 351,116 Shares to be registered are validly issued, fully paid
and nonassessable.
We hereby consent to the filing of the Opinion as an exhibit to the Registration
Statement and to the reference to this firm under the heading "Legal Matters" in
the Prospectus forming a part of the Registration Statement.
Our Opinion is furnished for the benefit of the Company solely with regard to
the Registration Statement, may be relied upon by the Company only in connection
with the Registration Statement and may not otherwise be relied upon, used,
quoted or referenced to by or filed with any other person or entity without our
prior written permission.
Very truly yours,
/s/ Jones & Keller, P.C.
JONES & KELLER, P.C.
Exhibit 23.2
CONSENT OF EHRHARDT KEEFE STEINER AND HOTTMAN PC
We consent to the incorporation by reference in this Registration Statement of
Factual Data Corp. on Form S-3 (File 333- ) of our report dated February 10,
1999, appearing in the Annual Report on Form 10-KSB of Factual Data Corp. for
the year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
Ehrhardt Keefe Steiner and Hottman PC
Denver, Colorado
June 8, 1999
