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 toss.240.14a-11(c) orss.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>
FACTUAL DATA CORP.
5200 Hahns Peak Drive
Loveland, Colorado 80538
(970) 663-5700
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 28, 2000
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To the Shareholders of Factual Data Corp.:
Date: July 28, 2000
Time: 8:30 a.m.
Place: Conference Center
5200 Hahns Peak Drive
Loveland, Colorado
Matters to be voted on:
1. Election of three directors to serve three year terms;
2. A proposal to increase the number of shares reserved for issuance in
future years under our 1999 Employee Formula Award Stock Option Plan
from 100,000 to 400,000;
3. Ratification of Ehrhardt Keefe Steiner & Hottman PC as our
independent auditors for 2000; and
4. 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
June 30, 2000
<PAGE>
CONTENTS
Page
General Information About Voting 1
Security Ownership of Certain Beneficial Owners and Management 3
Proposal No. 1 Election of Three Directors 5
Proposal No. 2 Increase Reserved Shares under the Formula Award Plan 12
Proposal No. 3 Appointment of Independent Auditors 14
Other Matters 14
Shareholder Proposals 15
<PAGE>
FACTUAL DATA CORP.
5200 Hahns Peak Drive
Loveland, Colorado 80538
PROXY STATEMENT
July 28, 2000 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 2000
annual meeting. This Proxy Statement and the enclosed proxy card were
sent to shareholders on or about June 30, 2000.
The following matters will be acted on at our annual meeting:
1. Election of three directors to serve three year terms;
2. A proposal to increase the number of shares reserved for issuance in
future years under the 1999 Employee Formula Award Stock Option Plan
from 100,000 to 400,000;
3. Ratification of the appointment of Ehrhardt Keefe Steiner & Hottman
PC as our independent auditors for 2000; and
4. 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 June 28, 2000. A total of 5,381,501 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.
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 three 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.
<PAGE>
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 non-routine proposal.
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. In
the election of three directors, the nominees receiving the highest number of
votes cast in their favor will be elected to the board. The proposals to
increase the number of shares underlying 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.
<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 June 28, 2000 by:
- each person who is known by us to own beneficially more than 5% of
our common stock
- each of our executive officers and directors
- 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(2) 634,202 11.8%
Marcia R. Donnan(2) 634,251 11.8
Russell E. Donnan(2) 272,143 5.1
James N. Donnan(2) 272,620 5.1
Todd A. Neiberger(2)(3) 6,579 .1
Robert J. Terry(4) 35,500 .7
Abdul H. Rajput(4) 10,000 .2
Daniel G. Helle(5) 1,112,829 20.7
J. Barton Goodwin(6) 556,414 10.3
All officers and directors as a group (nine persons) 3,534,547 65.8
Other beneficial owners
CIVC Fund L.P.(5)(7) 1,112,829 20.7
BCI Growth V, L.P. 545,286 10.1
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(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.
<PAGE>
(2) Includes options to purchase common stock granted in January, 2000 under
our 1999 Employee Formula Award Stock Option Plan as follows:
J.H. Donnan--4,202; Marcia R. Donnan--4,251; Russell E. Donnan--2,143;
James N. Donnan--2,629; and Todd A. Neiberger--1,579.
(3) Includes options to purchase 5,000 shares of common stock at $6.50 per
share which are presently exercisable.
(4) Represents options to purchase shares of common stock at $5.50 per share
which are presently exercisable.
(5) Mr. Helle is a managing director of CIVC Fund L.P., hence is deemed to be a
beneficial owner of its shares.
(6) 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.
(7) The number of shares shown include 16,074 owned by certain employees of
CIVC's affiliates over which the affiliates have voting power.
<PAGE>
PROPOSAL NO. 1
ELECTION OF THREE DIRECTORS
Election to our Board of Directors is staggered so that:
- three directors were elected for terms expiring at this annual
meeting
- two directors were elected for terms expiring at our 2001 annual
meeting
- two directors were elected for terms expiring at our 2002 annual
meeting
The terms of Messrs. James N. Donnan, Todd A. Neiberger and J. Barton
Goodwin expire at this annual meeting and we propose that they be elected to
three year terms expiring at our annual meeting in 2003.
Your Board of Directors recommends a vote FOR the election of Messrs.
Donnan, Neiberger and Goodwin. 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 these
directors/nominees, and our other directors and executive officers.
Name Age Position
---- --- --------
J.H. Donnan 54 Chairman of the Board, Chief Executive Officer
and President
Todd A. Neiberger 35 Chief Financial Officer and a Director/Nominee
Russell E. Donnan 35 Vice President
James N. Donnan 28 Vice President and a Director/Nominee
Robert J. Terry 59 Director
Abdul H. Rajput 53 Director
Daniel G. Helle 38 Director
J. Barton Goodwin 53 Director/Nominee
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 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, prior to co-founding Factual Data Corp. in 1985. 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.
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 internal 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, he formerly served as a director,
president and chief operating officer of Mail-Well, Inc., a publicly traded
envelope manufacturer and printing company. Prior to his Mail-Well experience,
he was associated with Georgia-Pacific and its predecessor companies in various
management positions, including Executive Vice President of its envelope
division and as regional vice president for Butler Paper. Mr. Terry is a
graduate of DePaul University, Bachelor of Science degree in business, and
University of Michigan's Advanced Executive Program.
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 a director and 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 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 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. 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.
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 1999 at which all members were present. We also
acted on several resolutions by written consent after telephonic conferences.
Board Meetings and Committees
The Board of Directors had five meetings during 1999. Each director attended all
of the meetings of the Board and of each committee that he belongs to. Our Board
of Directors has two committees. The following describes the function and
membership of each committee and the number of times it met with respect to
fiscal 1999:
AUDIT COMMITTEE-- ONE MEETING
We have adopted an Audit Committee Charter which is attached to this Proxy
Statement as Appendix A. The Charter requires our Audit Committee to undertake
a variety of activities designed to assist our Board of Directors in fulfilling
its oversight role regarding our auditors' independence, our financial reporting
process, our systems of internal control and compliance with applicable laws,
rules and regulations. The Charter also makes it clear that the independent
auditors are ultimately accountable to the Board of Directors and the Audit
Committee, not management. Please take a few minutes to read our Charter. If you
have any comments or suggestions, we would welcome them.
The members of our Audit Committee for 1999 were Messrs. Helle, Rajput, Terry
and J.H. Donnan. For the year 2000 the Audit Committee will be comprised of
Messrs. Helle, Rajput and Terry.
COMPENSATION COMMITTEE -- ONE MEETING
The function of our Compensation Committee is review and approval of
compensation and benefit programs for key executives and administration of our
stock options plans. The Compensation Committee endeavors to ensure that the
compensation program for our executive officers is effective in attracting and
retaining key executives responsible for our success and is tailored to promote
our long-term interests and that of our stockholders. Our executive officer
compensation program in the fiscal year 1999 was principally comprised of base
salary and long-term incentive compensation in the form of incentive stock
options or non-qualified stock options.
The members of our Compensation Committee for 1999 were Messrs. J.H. Donnan,
Helle, Rajput and Terry. For the year 2000 the Compensation Committee membership
will remain the same.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on a review of the record, we believe that all reports required to be
filed by our officers, directors and principal shareholders under Section 16(a)
of the Securities Exchange Act of 1934 have been duly filed except that Mr.
Helle and his affiliates failed to timely file Section 16(a) statements in
connection with our private placement of March 1999.
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 1999, 1998 and 1997. No other
person serving as an executive officer during the reported years received
compensation in excess of $100,000 during any of those years.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
----------------------- ------------------------ -------
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and Fiscal Salary Bonus sation Award(s) SARs Payouts sation*
Principal Year ($) ($) ($) ($) ($) ($)
Position
--------- ------ ------- ----- ------ -------- ----------- -------- -------
J.H.
Donnan 1999 107,554 -- -- -- -- -- 2,624
President,
Chief 1998 105,100 9,300 -- -- -- -- 3,061
Executive
Officer 1997 82,445 -- -- -- -- -- 10,265
Marcia R.
Donnan 1999 111,156 -- -- -- -- -- 3,997
Executive
Vice 1998 105,100 9,300 -- -- -- -- 4,107
President 1997 93,773 -- -- -- -- -- 6,093
---------
*Consists of certain health and accident insurance benefits and automobile
expense reimbursements.
Employment Agreements
J.H. and Marcia Donnan's employment agreements with us expire on
July 1, 2000. The Compensation Committee is reviewing and will recommend to the
full Board that three year employment agreements be entered into with each of
Messrs. J.H. Donnan, Russell E. Donnan and James N. Donnan. Ms. Donnan expects
to retire in 2000. It is expected these new employment agreements will be in
place within 60 days.
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:
- the persons to whom awards are granted
- the type of award granted
- the number of shares granted
- the vesting schedule
- employment requirements or performance goals relating to restricted
stock awards
- the type of consideration to be paid upon exercise of options
- 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 June 16, 2000, options to purchase 36,500 shares of common stock
had been granted to several of our employees and two non-executive directors at
an average exercise price of $6.53 per share.
Our 1999 Employee Stock Purchase Plan
Our 1999 Employee Stock Purchase Plan was adopted in October 1999. Most
of our full-time employees, including our officers, who work for us or one of
our designated subsidiaries are 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 Code.
The purpose of the Purchase Plan is to provide our employees with an
opportunity to purchase our common stock through accumulated payroll deductions.
We believe that the Purchase Plan helps create in our employees a direct
interest to increase shareholder value and provide them with additional
compensation. The Purchase Plan is administered by our 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 quarterly 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 have registered 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. Most
full-time employees that complete one year of employment are eligible to
participate in the Purchase Plan.
The initial quarterly offering period began in January 2000. Therefore,
as of December 31, 1999, no shares had been issued under this plan.
Our 1999 Employee Formula Award Stock Option Plan
We also have a 1999 Employee Formula Award Stock Option Plan. We are
requesting an increase in the number of shares available for issuance under the
plan in this Proxy Statement. Please see Proposal No. 2 for details concerning
this plan and the proposal to increase the shares.
Certain Relationships and Related Transactions
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.
<PAGE>
PROPOSAL NO. 2
TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE IN FUTURE
YEARS UNDER OUR 1999 EMPLOYEE FORMULA AWARD STOCK OPTION PLAN
We are requesting that you approve an increase of 300,000 shares to the number
of shares reserved for issuance in future years under our 1999 Employee Formula
Award Stock Option Plan, which was adopted in October 1999. When the plan was
initially adopted, there were only 100,000 shares of our common stock reserved
for issuance under the plan. In January 2000, we granted options covering
97,128 at an exercise price of $7.125 per share.
All of our full-time employees, including our officers, who have worked for us
or one of our designated subsidiaries for at least one year are eligible to
participate in the plan. The plan is administered by the Board of Directors,
and the plan grants the administrator broad powers, including the ability to
amend the plan.
The purpose of the plan is to provide our employees with an opportunity to
acquire our common stock pursuant to options granted under the plan. The
options are automatically issued under the 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 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.
An eligible employee is a person who:
- has been employed with us or with another company we acquire for at
least one year; and .
- is a full-time employee at the time of grant.
Subject to the discretion of the administrator on each anniversary date
of the plan 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 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 any 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 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 plan or modify the formula at any time.
If we merge or reorganize with another company, all outstanding options
under the 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 have grown significantly over the past few years, and as of June 1,
2000, we had 219 full-time employees. In January 2000, we performed our initial
annual option grants to our employees pursuant to the formula provisions of the
plan. These grants totaled 97,128 option shares which leaves the plan with less
than 3,000 shares to cover future option grants. We believe that the number of
shares reserved for issuance under the plan should be increased by 300,000
shares. Our Board of Directors believes that our Formula Award Plan, which
provides option grants to most full-time employees, aligns the interests of our
employees with our stockholders, assists us with recruiting and retaining
qualified personnel, and provides our employees with another form of
compensation.
Your Board of Directors recommends a vote FOR the approval of the
proposal to increase the number of shares reserved under the 1999 Employee
Formula Award Stock Option Plan by an additional 300,000.
<PAGE>
PROPOSAL NO. 3
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 1999. During all four 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 2000.
We recommend a vote FOR the approval of the appointment of Ehrhardt
Keefe Steiner & Hottman PC as our independent auditors for the year 2000.
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.
<PAGE>
SHAREHOLDER PROPOSALS
To be considered for inclusion in our proxy statement for the 2001
annual meeting, proposals of shareholders must be received by us no later
than February 16, 2001. 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
June 30, 2000
<PAGE>
APPENDIX A
FACTUAL DATA CORP.
Audit Committee Charter
(as adopted on May 23, 2000)
The Audit Committee shall consist of three experienced and independent
members as defined by NASDAQ. The following sets forth the activities required
of our Audit Committee.
Continuous Activities
---------------------
- Provide an open avenue of communication and active dialogue between
the independent auditors and the Board of Directors.
- Meet four times per year or more frequently as circumstances require.
The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.
- Instruct the independent auditors that the Board of Directors, as the
stockholders' representative, is the auditors' client.
- Inform the independent auditors that they are ultimately accountable
to the Board of Directors and the Audit Committee.
- Assure the independence of the independent auditors and confirm in
writing; require the independent auditors to provide written
disclosure as to any relationships with the Company.
- Review with the independent auditors efforts to assure completeness
of audit coverage, elimination of redundant efforts, and the
effective use of audit resources.
- Inquire of management and the independent auditors about significant
risks or exposures and assess the steps management has taken to
minimize such risks to the Company.
- Consider and review with the independent auditors:
1) The adequacy of the Company's internal controls including
computerized information system controls and security.
2) Related findings and recommendations of the independent auditors
together with management's responses.
<PAGE>
- Consider and review with management and the independent auditors:
1) Significant findings after quarterly reviews and other times
during the year, including the status of previous audit
recommendations.
2) Any difficulties encountered in the course of audit work including
any restrictions on the scope of activities or access to required
information.
- Meet periodically with the independent auditors and management in
separate executive sessions to discuss any matters that the Committee
or these groups believe should be discussed privately with the Audit
Committee.
- Report in writing periodically to the Board of Directors on
significant results of the foregoing activities.
Continuous Activities Regarding Reporting Specific Policies
-----------------------------------------------------------
- Advise financial management and the independent auditors that they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
- Provide that financial management and the independent auditors discuss
with the Audit Committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be adopted by
the Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
- Inquire as to the auditors' independent qualitative judgments about
the appropriateness, not just the acceptability, of the accounting
principles and the clarity of the financial disclosure practices used
or proposed to be adopted by the Company.
- Inquire as to the auditors' views about whether management's choices
of accounting principles are conservative, moderate or extreme from
the perspective of income, asset, and liability recognition, and
whether those principles are common practices or are minority
practices.
- Determine, as regards to new transactions or events, the auditors'
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by management.
- Assure that the auditors' reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure
practices.
- Inquire as to the auditors' views about how the Company's choices of
accounting principles and disclosure practices may affect
shareholders' and analysts' views and attitudes about the Company.
"When Necessary" Activities
---------------------------
- Monitor if the Company's activities have expanded to the point where
an internal audit function should be implemented.
- Review and concur in the appointment, replacement, reassignment, or
dismissal of a Director of Internal Audit.
- Review and approve requests for any management consulting engagements
to be performed by the Company's independent auditors and be advised
of any other study undertaken at the request of management that is
beyond the scope of the audit engagement letter.
- Review periodically with general counsel, legal and regulatory matters
that may have a material impact on the Company's financial statements,
registration statements and other reporting requirements related to
filings with the Securities and Exchange Commission.
- Conduct or authorize investigations into any matters within the
Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel and other professionals to
assist in the conduct of any investigation.
Scheduled Activities
--------------------
- Recommend the selection of the independent auditors for approval by
the Board of Directors and election by shareholders, approve the
compensation of the independent auditors, and review, recommend and
approve the discharge of the independent auditors if appropriate.
- Consider, in consultation with the independent auditors, the audit
scope and plan of the independent auditors.
- Review with management and the independent auditors the results of
annual audits including:
1) The independent auditors' audit of the Company's annual financial
statements, accompanying footnotes and their report thereon.
2) The independent auditors' audit of businesses acquired by the
Company.
3) Any significant changes required in the independent auditors'
audit plans.
4) Other matters related to the conduct of the audits, which are to
be communicated to the Audit Committee under generally accepted
auditing standards.
- Review the results of the annual audit procedures of directors and
officers' expense accounts and management perquisites with the
independent auditors.
- Review annually with the independent auditors the results of
monitoring compliance with the Company's code of conduct.
- Describe in the Company's annual proxy statement the Committee's
composition and responsibilities, and how they were discharged.
- Arrange for the independent auditors to be available to the full Board
of Directors at least annually to help provide a basis for the Board
to recommend to shareholders the appointment of the auditors.
- Assure that the auditors' reasoning is described in accepting or
questioning significant estimates made by management.
- Review and update the Audit Committee's Charter annually.
- Recommend to the Board of Directors that the financial statements be
included in the Company's annual report on form 10-KSB, if
appropriate.
<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, July 28, 2000,
at 8:30 a.m., at the Conference Center, 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 three Directors to serve three year terms.
FOR AGAINST ABSTAIN
--- ------- -------
James N. Donnan
Todd A. Neiberger
J. Barton Goodwin
2. Approval to increase the number of shares reserved for issuance in
future years under the 1999 Employee Formula Award Stock Option Plan
from 100,000 shares to 400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the appointment of Ehrhardt Keefe Steiner & Hottman
PC as independent auditors for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 AND 3.
DATED:___________________ 2000 ____________________________________
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:_____________________________
