SHARE PURCHASE AGREEMENT
By and Between
PURCHASERS LISTED ON EXHIBIT A,
as the "Purchasers" herein
and
FACTUAL DATA CORP.
Dated as of March 25, 1999
CONTENTS
Section Page
ARTICLE I THE SHARE PURCHASE ANCILLARY AGREEMENTS................1
Section 1.1 Purchase of Shares...................................1
Section 1.2 Purchase Price.......................................1
Section 1.3 Registration Rights..................................2
Section 1.4 Engagement Letter....................................2
ARTICLE II CLOSING...............................................2
Section 2.1 The Closing..........................................2
Section 2.2 Deliveries by FDC....................................2
Section 2.3 Deliveries by the Purchaser..........................2
Section 2.4 Further Assurances...................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FDC................3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS.........16
ARTICLE V COVENANTS OF FDC......................................17
Section 5.1 Conduct of Business.................................17
Section 5.2 Access and Information..............................18
Section 5.3 Information Following Closing.......................19
Section 5.4 Use of Proceeds.....................................20
Section 5.5 Exclusivity.........................................20
Section 5.6 Consents under Agreements...........................20
Section 5.7 Actions.............................................20
Section 5.8 Additional Disclosure...............................20
Section 5.9 Financial Statements................................20
Section 5.10 Further Assurances.................................20
ARTICLE VI POST CLOSING COVENANTS...............................21
Section 6.1 Post Closing Covenants..............................21
ARTICLE VII CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE......22
Section 7.1 Conditions to Obligations to Close..................22
ARTICLE VIII CONDITIONS TO FDC'S OBLIGATION TO CLOSE............22
Section 8.1 Conditions to Obligations to Close..................22
ARTICLE IX CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE........23
Section 9.1 Conditions to Purchasers' Obligation to Close.......23
ARTICLE X TERMINATION, AMENDMENT AND WAIVER.....................26
Section 10.1 Termination........................................26
Section 10.2 Effect of Termination..............................27
Section 10.3 Amendment..........................................27
Section 10.4 Extension; Waiver..................................27
ARTICLE XI INVESTMENT BANKING FEES..............................27
ARTICLE XII INDEMNIFICATION AND CONTRIBUTION....................28
Section 12.1 Indemnity..........................................28
Section 12.2 Notice of Proceeding...............................29
Section 12.3 Contribution.......................................29
Section 12.4 Other indemnification Provisions...................30
ARTICLE XIII NOTICES.............................................30
ARTICLE XIV CERTIFICATES OF OFFICERS AND DIRECTORS..............30
ARTICLE XV CONFIDENTIALITY......................................31
ARTICLE VI COUNTERPARTS.........................................32
ARTICLE XVII MERGER CLAUSE AND COSTS, FEES AND EXPENSES.........32
ARTICLE XVIII SEVERABILITY......................................32
ARTICLE XIX BENEFIT.............................................32
ARTICLE XX WAIVER...............................................32
ARTICLE XXI HEADINGS............................................33
ARTICLE XXII SURVIVAL...........................................33
ARTICLE XXIII GOVERNING LAW.....................................33
ARTICLE XXIV MISCELLANEOUS......................................33
(a) Press Releases and Public Announcements.................33
(b) Succession and Assignment...............................33
(c) Amendments..............................................33
(d) Expenses................................................34
(e) Specific Performance....................................34
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement"), dated as of March 25, 1999, is
made by and between Purchasers to be listed on Exhibit A (collectively, the
"Purchasers" or individually, a "Purchaser"), and Factual Data Corp., a Colorado
corporation ("FDC"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively the "Majority Shareholders").
RECITALS:
A. On or about February 3, 1999, FDC represented to Purchasers the general terms
on which FDC would sell to Purchasers restricted shares of FDC Common Stock
(the "Shares"), together with certain other rights to be vested in the
Purchasers; and
B. The parties contemplated that they would enter into a definitive agreement
and prepare such other documentation as the parties and their respective
legal counsel determine is appropriate; and
C. The parties intend that this Share Purchase Agreement, together with the
exhibits attached hereto, serve as the definitive agreement between the
parties with respect to the above-mentioned transaction;
THEREFORE, in consideration of the covenants, representations, warranties and
mutual agreements herein set forth, the Purchasers and FDC hereby agree as
follows:
ARTICLE I
THE SHARE PURCHASE ANCILLARY AGREEMENTS
Section 1.1 Purchase of the Shares Subject to and upon the terms and conditions
hereof and the representations, warranties and covenants contained herein,
on the Closing Date (as defined below) FDC shall sell, transfer, assign and
deliver certificate(s) representing shares of Common Stock of FDC, and the
Purchasers shall purchase the Shares from FDC, free and clear of all liens,
claims and encumbrances thereon (the "Purchase Transaction"). The aggregate
number of Shares to be offered to the Purchasers shall be that number of
shares of Common Stock of FDC equal to $15 million divided by the market
price (i.e., the average of the closing prices on the SmallCap Market for
each relevant day, the "Market Price") of FDC's Common Stock for the five
prior trading days ending the day this Agreement is executed (as so
calculated, the "Purchase Price" or, with respect to the per Share price,
the "Purchase Price per Share"), provided that, in no case shall the
Purchase Price per Share exceed $8.50. If, for any reason, Shareholder
approval is required, Shareholder approval shall be obtained for a Purchase
Price per Share equal to the Market Price. The exact number of Shares to be
sold to each Purchaser shall be determined immediately prior to Closing and
shall be set forth on Exhibit A hereto.
Section 1.2 Purchase Price
(a) Upon the terms and subject to the conditions herein set forth, FDC and
the Purchasers agree that on the Closing Date FDC shall sell to the
Purchasers, and the Purchasers shall purchase from FDC, the Shares at
the Purchase Price per Share, for aggregate consideration of $15
million, payable in United States currency by wire transfer in
immediately available funds.
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(b) At the Closing, FDC shall deliver to the Purchasers certificates
representing the Shares against delivery by the Purchasers to FDC of
the Purchase Price. Certificates for the securities comprising the
Shares shall be registered in such name or names and in such
denominations as the Purchasers may request in writing at least two
full business days prior to the Closing Date.
Section 1.3 Registration Rights Contemporaneously with the execution of this
Agreement, the parties shall execute a registration rights agreement (the
"Registration Rights Agreement"), a copy of which is attached hereto as
Exhibit B and incorporated by reference herein, an investors agreement (the
"Investors Agreement"), a copy of which is attached hereto as Exhibit D,
and a voting agreement (the "Voting Agreement"), a copy of which is
attached hereto as Exhibit E.
Section 1.4 Engagement Letter ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. (the "Agent") and FDC have
entered into an Engagement Letter dated January 8, 1999 Agreement (the
"Letter"). Pursuant to the terms of the Letter, the Agent shall receive
compensation comprised of a 7% cash commission and warrants to acquire a
number of shares of Common Stock of FDC equal to 3% of the number of Shares
sold to the Purchasers pursuant to this Agreement. Any compensation payable
to the Agent shall be payable by FDC.
ARTICLE II
CLOSING
Section 2.1 The Closing The closing of the sale of Shares contemplated hereby
(the "Closing") shall take place at a date and time to be specified by the
Purchasers and FDC (the "Closing Date") following satisfaction or waiver of
all conditions precedent to Closing as described in Articles VI, VII and
VIII hereof, which date, pursuant to the parties' best efforts, shall be on
or before March 31, 1999. The Closing shall take place at the offices of
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or
any other place mutually agreeable to the parties, subject to the right of
the parties to close by exchange of executed counterpart documents on the
Closing Date.
Section 2.2 Deliveries by FDC At the Closing, FDC shall deliver to the
Purchasers or cause to be delivered to the Purchasers the following
instruments and documents:
(a) A certificate or certificates representing the Shares registered in
the name of the Purchasers or in such name as may be designated by the
Purchasers. Any sales, stock transfer or other stock payable in
connection with the sale to the Purchasers by FDC of the Shares shall
be paid by the Purchasers;
(b) The opinion of counsel for FDC as provided in Article IX below; and
(c) Such other documents, instruments and certificates of the officers of
FDC as are described in Article IX or as may be reasonably requested
by the Purchasers.
Section 2.3 Deliveries by the Purchasers At the Closing, the Purchasers shall
deliver to FDC or cause to be delivered to FDC the following instruments
and documents:
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(a) The Purchase Price as provided in Sections 1.1 and 1.2(a) hereof;
(b) As applicable to any or all of the Purchasers, evidence of compliance
with United States securities laws for shareholders owning in excess
of 5% or 10%, as the case may be, of a publicly held entity, including
filings of a Form 3 under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and/or a Schedule 13G under
Section 13 of the 1934 Act; provided, however, that none of the
language set forth in this Agreement or the Registration Rights
Agreement shall be deemed to constitute one or more of the Purchasers
to be a "group" for purposes of reporting obligations under the 1934
Act, it being the intention of the parties that the existence of a
"group" shall only be determined by the Purchasers and their counsel
and any joint action taken hereunder shall not in and of itself
constitute the Purchasers to be a "group" as defined under the 1934
Act; and
(c) Such other documents, instruments and certificates of the officers of
the Purchasers as may be reasonably requested by FDC.
Section 2.4 Further Assurances FDC shall execute and deliver on the Closing Date
or thereafter any and all such other instruments, and take or cause to be
taken all such further action as may be necessary or appropriate to vest
fully and confirm to the Purchasers title to and possession of the Shares
to be delivered hereunder by FDC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FDC
As a material inducement to the Purchasers to (i) enter into this Agreement, and
(ii) purchase and acquire the Shares, FDC and its subsidiaries represent and
warrant to the Purchasers, that, except as specifically and expressly set forth
in the disclosure schedules attached hereto (the "Schedules"), the statements
contained in this Article III are true, correct and complete as of the date of
this Agreement and will be true, correct and complete on the Closing Date.
(a) Organization; Power and Authority; Subsidiaries. FDC has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Colorado. Each subsidiary of FDC has
been duly organized and is validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization as the
case may be. Each of FDC and its subsidiaries has full corporate power
and authority to own its properties and conduct its business as
currently being carried on and is duly qualified to do business as a
foreign corporation in good standing under the corporation laws of
each jurisdiction in which the conduct of its business or ownership or
lease of its properties requires such qualification and where the
failure to be so qualified could, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects,
assets, results of operations or properties of FDC and its
subsidiaries taken as a whole. The copies of the Articles of
Incorporation (certified by the Secretary of the State of the state of
incorporation) and the Bylaws of FDC, both as amended to date, which
have been delivered to Purchasers and attached as Schedule 3(a) are
complete and correct, and FDC is not in default under or in violation
of any provision of its Articles of Incorporation or Bylaws. The
minute books (containing the records of meeting of the shareholders,
the Board of Directors and any committees of the Board of Directors),
the stock certificate books and the stock record books of FDC, as made
available to Purchasers, are correct and complete.
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(b) Financial Statements. The consolidated financial statements of FDC,
(together with the notes thereto for those years listed on Schedule
3(b)) and the unaudited consolidated financial statements of FDC for
the interim periods after December 31, 1998, listed on Schedule 3(b)
(all of which are attached as Schedule 3(b)), fairly and accurately
present the consolidated financial condition of FDC and its
consolidated subsidiaries as of the dates indicated and the results of
operations and changes in cash flows for the periods therein specified
in conformity with generally accepted accounting principles
consistently applied through the periods involved ("GAAP") and are
correct and complete.
(c) Transactions. Except as disclosed on Schedule 3(c), subsequent to
December 31, 1998, neither FDC nor any of its subsidiaries has
incurred any Material (for purposes of this Agreement, an event or
condition shall be deemed to be "Material" if such event or condition,
taken together with all other events or conditions that are qualified
by materiality, would, in the aggregate, have an adverse effect that
exceeds $150,000) liabilities or obligations, direct or contingent, or
entered into any Material transactions, or, declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock; and there has not been any change in the capital stock,
or any Material change in the short-term or long-term debt of FDC or
of FDC and its subsidiaries considered on a consolidated basis, or any
Material adverse change, or any development involving a prospective
Material adverse change, in the general affairs, condition (financial
or otherwise), business, key personnel, property, prospects, net worth
or results of operations of FDC and its subsidiaries, taken as a
whole. Since December 31, 1998, FDC and its subsidiaries have operated
their business in the ordinary course, and have taken (or not taken,
as appropriate) each of the actions described in Section 5.1.
(d) Litigation. Except as disclosed on Schedule 3(d), there is not pending
or threatened or contemplated, any action, suit or proceeding to which
FDC or any of its subsidiaries is a party or to which either of their
assets may be subject, before or by any court or governmental agency,
authority or body, or any arbitrator, which might have a Material
adverse effect on its or their financial position, results of
operations, business or prospects.
(e) Authorization, etc.; Conflicts; Consents. Each of this Agreement, the
Letter, the Registration Rights Agreement, and the Investors Agreement
has been duly authorized, executed and delivered by FDC and
constitutes a valid, legal and binding obligation of FDC, enforceable
in accordance with its terms. The execution, delivery and performance
of this Agreement, the Letter, the Registration Rights Agreement, and
the Investors Agreement and the consummation of the transactions
herein or therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, or require consent or notice under or result in the
creation of any lien, charge, encumbrance, security interest, pledge
or adverse claim in respect of any property of FDC or any subsidiary
under, any statute, any agreement or instrument to which FDC or a
subsidiary is a party or by which any of them is bound or to which any
of their respective properties is subject, FDC's charter or bylaws, or
any order, rule, regulation, judgment, ruling or decree of any court,
arbitrator or governmental agency or body having jurisdiction over FDC
or any subsidiary or any of the properties of FDC or any subsidiary;
no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Letter or the
Registration Rights Agreement or for the consummation of the
transactions contemplated hereby or thereby. This Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and unanimously approved by the Board of Directors of FDC.
FDC and its subsidiaries do not need to obtain the approval of any
shareholders for the execution, delivery and performance of this
Agreement, other than the approval of the shareholders who are parties
to this Agreement (and, such shareholders hereby agree to vote in
favor of the transactions contemplated by this Agreement).
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(f) FDC's Capital Stock. The authorized capitalization of FDC consists of
10,000,000 shares of Common Stock and 1,000,000 shares of Preferred
Stock. As of the date hereof, 3,551,345 shares of Common Stock have
been duly authorized and validly issued and are outstanding, fully
paid and nonassessable, and no shares of Preferred Stock are issued or
outstanding. All of the issued and outstanding shares of capital stock
of each of FDC's subsidiaries have been duly and validly authorized
and issued and are fully paid and nonassessable, and FDC owns, of
record and beneficially, free and clear of any liens, all of the
issued and outstanding shares of such stock. Except as set forth in
Schedule 3(f), there are no options, warrants, agreements, contracts
or other rights in existence to purchase or acquire from FDC or any
subsidiary of FDC any shares of the capital stock of the Company or of
any subsidiary of FDC. FDC has an authorized and outstanding
capitalization as set forth in Schedule 3(f). For purposes of this
agreement, "subsidiary" means any corporation (or other entity) with
respect to which a specified person (or a subsidiary thereof) owns a
25% or more of the common stock (or other form of equity) or has the
power to vote or direct the voting of sufficient securities to elect
25% or more of the directors (or other governing body or management).
There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of FDC
or any of its subsidiaries.
(g) Authorization of the Shares. The Shares have been duly authorized by
the Board of Directors of FDC and, when issued and delivered by FDC
against payment therefor, will be validly issued, fully paid and
nonassessable, free and clear of any liens or encumbrances; the
issuance of the Shares is not subject to preemptive or other similar
rights.
(h) Licenses, Permits, Laws, etc. FDC and each of its subsidiaries holds,
and is operating in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates
and order of any governmental or self-regulatory body required for the
conduct of its business and all such franchises, grants,
authorizations, licenses, permits, easements, consents, certifications
and orders are valid and in full force and effect; the failure to hold
or operate in compliance with the foregoing or the lack of a validity,
would not be Material, and FDC and each of its subsidiaries is and has
been in compliance in all respects with all applicable federal, state,
local and foreign laws, regulations, orders and decrees, except to the
extent that the failure to comply, individually or in the aggregate,
would not have a Material adverse effect on its financial position or
results of operations. FDC has not received any notice of any
violation, probable violation or default by FDC or any of its
subsidiaries under any applicable law, regulation, franchise, permit,
license, authorization or order of any governmental department,
commission, board or agency or instrumentality, domestic or foreign,
having jurisdiction over FDC's or any of its subsidiaries' operations
which could adversely affect the business, operations, financial
condition, prospects, properties or assets of FDC or its subsidiaries,
or the ability to consummate the transaction contemplated hereby. FDC
and its subsidiaries have operated their business, and will continue
to operate their business, in compliance with all applicable federal
and state laws and regulations (including but not limited to the Truth
in Lending Act, Fair Credit Reporting Act, Real Estate Settlement
Procedures Act and Fair Debt Collection Practices Act) and in
compliance with all applicable state laws and regulations. FDC has
given notice and obtained approvals of the transactions contemplated
by this Agreement to all government entities that require such notice
or approvals.
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(i) Title to Properties. FDC and its subsidiaries have good and
marketable title to all property and assets used by them, located
on their premises, shown on their financial statements, or
described in Schedule 3(i) as being owned by them, in each case
free and clear of all liens except such as are described Schedule
3(i); the property held under leases by FDC and its subsidiaries
is held by them under valid, binding, subsisting and enforceable
leases with only such exceptions with respect to any particular
lease as do not interfere in any respect with the conduct of the
business of FDC or its subsidiaries. FDC is not in default under
any such lease, and no circumstances exist which, if unremedied
would, either with or without notice or the passage of time or
both, result in a default under any such lease. Attached as
Schedule 3(i) is a complete and accurate list of the real
property held under lease by FDC and its subsidiaries. Schedule
3(i) sets forth the lessor, location and termination date for
each such lease. Except for the leasehold interests set forth in
Schedule 3(i), FDC and its subsidiaries do not own any real
property. FDC and each of its subsidiaries owns or possesses all
patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses, inventions, trade secrets and rights
necessary for the conduct of the business of FDC and its
subsidiaries as currently carried on "Intellectual Property"; no
name which FDC or any of its subsidiaries uses and no other
aspect of the business of FDC or any of its subsidiaries will
involve or give rise to any infringement of, or license or
similar fees for, any patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses, inventions, trade secrets or
other similar rights or others to the business or prospects of
FDC and neither FDC nor any of its subsidiaries has received any
notice alleging any such infringement or fee; to the extent that
FDC or each of its subsidiaries has licensed its trademarks,
service marks, tradenames and copyrights (including proprietary
software) for use by third parties, it has done so pursuant to
written licenses that fully protect and maintain FDC's or its
susidiaries' rights in such trademarks, service marks, tradenames
and copyrights. All Key Technical Employees (as defined below) of
FDC and its subsidiaries have executed agreements with FDC or its
subsidiaries pursuant to which Key Technical Employees have
assigned their rights, title and interest in and to any
Intellectual Property including without limitation patents,
copyrights and inventions to FDC or its subsidiaries. As used in
this Agreement, "Key Technical Employees" means all management
level employees, executives, officers, and members of the Board
of Directors who have worked in the development and/or
maintenance of Intellectual Property.
(j) Compliance with Organizational Documents, etc. Neither FDC nor any of
its subsidiaries is in violation of its respective charter or bylaws
(copies of which are attached as Schedule 3(j)); none of FDC nor any
of its subsidiaries is in breach of or otherwise in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note, indenture, loan agreement or any other
contract, lease or other instrument to which it is subject or by which
any of them may be bound, or to which any of the property or assets of
FDC or any of its subsidiaries is subject.
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(k) Tax Returns; Taxes. FDC and its subsidiaries have timely filed all tax
returns that are required to have been filed in any jurisdiction, and
all such tax returns are complete and accurate, and were prepared in
compliance with applicable law. FDC and its subsidiaries have paid all
taxes due, or claimed to be due by any taxing authority, whether or
not shown on a tax return, and FDC and its subsidiaries have paid all
other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and assessments
have become due and payable and before they have become delinquent,
except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which FDC or
a subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. There is no basis for any other tax, assessment,
interest payment or penalty that could have a Material adverse effect.
The charges, accruals and reserves on the books of FDC and its
subsidiaries in respect of Federal, state or other taxes for all
fiscal periods are adequate in all respects. Except as set forth on
Schedule 3(k), neither FDC nor any of its subsidiaries is currently
the beneficiary of any extension of time within which to file any tax
return. No claim has been made by an authority in a jurisdiction where
FDC or any of its subsidiaries do not file tax returns that any of
them are or may be subject to taxation by that jurisdiction. There are
no security interests on any of the assets of FDC or any of its
subsidiaries that arose in connection with any failure or alleged
failure to pay any tax. FDC and its subsidiaries have withheld and
paid all taxes that any of them are required to withhold and pay in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party. No action,
suit, proceeding, audit, investigation, assessment, dispute or claim
concerning any tax liability of FDC or any of its subsidiaries has
been claimed or raised by any taxing authority. FDC and its
subsidiaries have not waived any statute of limitation in respect of
taxes or agreed to any extension of time with respect to a tax
assessment or deficiency. FDC and its subsidiaries (i) have not been a
member of an affiliated group filing a consolidated federal income tax
return other than the affiliated group of which FDC is the parent, and
(ii) have no liability for the taxes of any person (other than FDC and
its subsidiaries) under Treas. ▇▇▇.▇▇. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(l) Accounting Procedures. FDC and its subsidiaries maintain a system of
internal accounting controls to provide that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(m) Agent's Fee. Other than fees payable by FDC to the Agent, neither FDC
nor its subsidiaries has incurred any liability for any finder's or
broker's fee or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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(n) Disclosure. FDC has fairly described, in all Material respects, the
general nature of the business and principal properties of FDC and its
subsidiaries. This Agreement (including the Schedules hereto), the
documents, certificates or other writings delivered to the Purchaser
by or on behalf of FDC in connection with the transactions
contemplated hereby, taken as a whole, do not contain any untrue
statement of a Material fact or omit to state any Material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Except as disclosed in
this Agreement (including the Schedules), since December 31, 1998,
there has been no Material change in the financial condition,
operations, business, properties or prospects of FDC or any
subsidiary. There is no Material fact which adversely affects or may
adversely affect FDC which has not been set forth in writing in this
Agreement or disclosed in the other documents, certificates or written
statements furnished to Purchasers by or on behalf of FDC in
connection herewith.
(o) Compliance with ERISA.
(i) FDC and each trade or business (whether or not incorporated) that
is a member of the group of which FDC is a member or is treated
as a single employer together with FDC under Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") (each such
trade or business being an "ERISA Affiliate"), have operated and
administered each "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time, and the rules
and regulations promulgated thereunder as from time to time in
effect ("ERISA")) (each such Plan being a "Plan") in compliance
with all applicable laws except for such instances of
noncompliance as have not resulted in any liability and could not
reasonably be expected to be Material. Neither FDC nor any ERISA
Affiliate has incurred any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of
ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the
incurrence of any such liability by FDC or any ERISA Affiliate,
or in the imposition of any lien, charge or encumbrance on any of
the rights, properties or assets of FDC or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412
of the Code, other than such liabilities or liens, charge or
encumbrance as would not be individually or in the aggregate
Material.
(ii) Each of FDC and each ERISA Affiliate do not maintain or
contribute to, and have not at any relevant time maintained,
contributed to or had any obligation to contribute to, any
employee benefit plan that is, or at such time was, subject to
the provisions of title I, subtitle B, part 3, of ERISA or Title
IV of ERISA (including, without limitation, any multiemployer
plan within the meaning of ERISAss. 3(37)(A))
(iii)Each Plan that is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA is qualified in form and
operation under Code ss. 401(a), each trust for each such Plan is
exempt from federal income tax under Code ss. 401(a), each trust
for each such Plan is exempt from federal income tax under Code
ss. 501(a) and FDC has applied for or obtained a determination to
such effect from the Internal Revenue Service. No event has
occurred or circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan or
trust. No Plan is a "qualified foreign plan" (as such term is
defined in Code Section 404A(e)), and no Plan is subject to the
laws of any jurisdiction other than the United States of America
or one of its political subdivisions.
- 8 -
(iv) FDC and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are
material.
(v) The expected post-retirement benefit obligation (determined as of
the last date of FDC's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to
continuation coverage mandated by Section 4980B of the Code) of
FDC and its subsidiaries is not material.
(vi) The execution and delivery of this Agreement and the issuance and
sale of the Shares hereunder will not involve any transaction
that is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code.
(vii)No Plan, individually or collectively, provides for any payment
by FDC or any ERISA Affiliate to any employee or independent
contractor that is not deductible under Code Sections 162(a)(1)
and (m) and 404 or that is an "excess parachute payment" pursuant
to Code Section 280G. Each of FDC and each ERISA Affiliate has
the right to modify and terminate benefits (other than vested and
accrued pension benefits) with respect to both retired and active
employees. Each Plan could be terminated as of the Closing
without material liability in excess of any amount reflected as a
liability with respect to such Plan on the financial statements
of FDC that are referred to in Article III(b) hereof.
(p) Use of Proceeds; Margin Regulations. FDC will apply the proceeds of
the sale of the Shares for the purposes described in Section 5.4 and
no other purpose. No part of the proceeds from the sale of the Shares
will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221), or for
the purpose of buying or carrying or trading in any securities under
such circumstances as to involve FDC in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of the Board (12 CFR 220).
(q) No Default on Debt. Neither FDC nor any subsidiary is in default and
no waiver of default is currently in effect, in the payment of any
principal or interest on any debt on which FDC or any subsidiary is
obligated, and no event or condition exists with respect to any debt
of FDC or any subsidiary that would permit (or that with notice of the
lapse of time, or both, would permit) one or more persons to cause
such debt to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.
(r) Environmental Laws.
(i) FDC and each of its subsidiaries have complied and are in
compliance with, and the Real Property and all improvements
thereon are in compliance with, all Environmental Laws.
- 9 -
(ii) Neither FDC nor any of its subsidiaries have any liability under
any Environmental Law, nor is FDC or any of its subsidiaries
responsible for any liability of any other person under
Environmental Law. There are no pending or threatened Claims or
other proceedings based on, and neither FDC nor any of its
subsidiaries, nor any officer, director or stockholder thereof
has directly or indirectly received any notice of any complaint,
order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any
governmental authority or any other person or entity or knows or
suspects any fact(s) which might reasonably form the basis for
any such actions or notices arising out of or attributable to:
(A) the current or past presence, Release, or threatened Release
of Hazardous Materials at or from any part of the Real Property;
(B) the off-site disposal or treatment of Hazardous Materials
originating on or from the Real Property or the businesses or
Assets of FDC or any Subsidiary; or (C) any violation of
Environmental Laws at any part of the Real Property or arising
from FDC's or any of its subsidiaries' activities (or the
activities of FDC's or any of its subsidiaries' predecessors in
title) involving Hazardous Materials.
(iii)Neither FDC nor its subsidiaries owns, operates, or has
installed, and to the knowledge of FDC and its subsidiaries, the
Real Property contains no underground improvements, including but
not limited to treatment or storage tanks, or underground piping
associated with such tanks, used currently or in the past for the
management of Hazardous Materials. Neither FDC nor its
subsidiaries has used, and to the knowledge of FDC and its
subsidiaries no portion of the Real Property is or has been used
as a dump or landfill or consists of or contains filled in land
or wetlands.
(iv) No lien, superlien, or other encumbrance in favor of any person
relating to or in connection with any Claims under any
Environmental Law has been filed or has attached to the Real
Property.
(v) No authorization, notification, recording, filing, consent,
waiting period, remediation, investigation, or approval is
required under any Environmental Law in order to consummate the
transaction contemplated hereby.
- 10 -
(vi) As used in this Agreement: "Claims" means demands, suits, orders,
legal proceedings, claims, actions or causes of action,
assessments, losses, damages (including, without limitation,
diminution in value), liabilities, costs and expenses, including,
without limitation, interest, penalties and attorneys' fees and
disbursement; "Environmental Laws" means any and all Federal,
state, local, and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, common law rulings,
agreements or governmental restrictions relating to pollution or
the protection of human health or the environment or the release
of any materials into the environment, including but not limited
to the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ▇▇.▇▇. 9601 et seq.) and those related
to hazardous substances, wastes, air emissions, or discharges to
waste or public systems; "Hazardous Material" means any and all
hazardous substances, pollutants, contaminants, toxic or
hazardous wastes or any other substances or wastes that might
pose a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, regulated,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, petroleum or petroleum products (including,
without limitation, crude oil or any fraction thereof), urea
formaldehyde foam insulation and polychlorinated biphenyls);
"Real Property" means the real property currently or formerly
owned, operated, leased, or used by FDC or its subsidiaries; and
"Release" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying,
dumping, disposal, or release of materials from any source
(including, without limitation, the Real Property and property
adjacent to the Real Property) into or upon the environment,
including the air, soil, improvements, surface water,
groundwater, the sewer, septic system, storm drain, publicly
owned treatment works, or waste treatment, storage, or disposal
systems;
(s) Year 2000 Compliance. (i) The software and hardware comprising the
systems necessary to operate the business of FDC and its subsidiaries
("Systems") are Year 2000 ready; (ii) are designed to be used prior
to, during, and after the calendar year 2000 A.D.; (iii) will operate
consistently, predictably and accurately, without Material
interruption or manual intervention, and in accordance with all
requirements of the related documentation, including without
limitation all specification and/or functionality and performance
requirements, during each such time period, and the transitions
between them, in relation to dates it encounters or processes; all
date recognition and processing by the Systems will include four digit
year format and will correctly recognize and process the date of
February 29, and any related data, during leap years; and (iv) all
date sorting by the Systems that includes a "year category" shall be
done based on the four digit year format.
(t) Accounts. Except as described on Schedule 3(t), all contracts or
agreements between FDC and/or its subsidiaries and the customers with
which FDC does business are valid and enforceable against FDC and/or
its subsidiaries and are not currently, and will not be at Closing, in
default, invalid or unenforceable in any manner, or and are not
subject to threatened or imminent termination. FDC and/or its
subsidiaries have performed all of their obligations and
responsibilities as described under each such contract or agreement,
none of such contracts or agreements are subject to any counterclaim
or setoff, and all such contracts are in full force and effect and
will continue in full force and effect following the Closing. Except
as described on Schedule 3(t), FDC has no reason to believe that
amounts payable under such contracts or agreements will not be paid
substantially in accordance with the terms of such contracts or
agreements. Neither FDC nor its subsidiaries have received any notices
of default, claims, or any other type of notice with respect to any
such contract or agreement.
- 11 -
(u) License Agreements. Attached as Schedule 3(u) is a complete and
accurate list of any license agreements to which FDC or any of its
subsidiaries is a party as of the date hereof relating to their credit
reporting business (other than customary, off-the-shelf licenses. Also
stated on Schedule 3(u) is the expiration date of each such license
agreement. Except as described on Schedule 3(u), all such license
agreements are valid and enforceable against FDC or its subsidiaries,
as the case may be, and are not currently, and will not be at Closing,
in default, invalid or unenforceable. To the extent the transactions
contemplated by this Agreement requires the consent of any third
party, FDC shall use its commercially reasonable efforts to obtain
such consents. FDC has not received any written notices of default or
claims with respect to any license agreement.
(v) Contracts.
(i) Neither FDC nor any of its subsidiaries is a party to, or bound
by, any contract, distributorship agreement, license agreement,
agency agreement, or any other agreement, indenture, mortgage,
deed of trust, lease, loan agreement or instrument which would be
in default or which would terminate by virtue of this Agreement.
(ii) Schedule 3(v) lists the following contracts and other agreements
to which any of FDC and its subsidiaries is a party:
(A) any agreement (or group of related agreements) the
performance of which involves consideration in excess of
$50,000;
(B) any agreement concerning a partnership or joint venture;
(C) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $50,000 or under which it has
imposed a security interest on any of its assets, tangible
or intangible;
(D) any agreement concerning confidentiality or noncompetition;
(E) any agreement with any of the stockholders of FDC, or any
affiliates of such stockholders;
(F) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of its current or former
directors, officers, and employees;
(G) any collective bargaining agreement;
(H) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing
annual compensation in excess of $50,000 or providing
severance benefits;
(I) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
- 12 -
(J) any agreement under which the consequences of a default or
termination could have an adverse effect on the business,
financial condition, operations, results of operations, or
future prospects of any of FDC and its subsidiaries; or
(K) any agreement involving a license or franchise to operate in
the type of business that FDC engages.
FDC has delivered to Purchaser a correct and complete copy of
each written agreement listed in Schedule 3(v) and a written
summary setting forth the terms and conditions of each oral
agreement referred to in Schedule 3(v). With respect to each
such agreement: (1) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (2) the agreement
will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (3) no
party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration,
under the agreement; and (4) no party has repudiated any
provision of the agreement.
(w) Absence of Undisclosed or Contingent Liabilities. Except as described
in Schedule 3(d), FDC has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due,
whether known or unknown, and regardless of when asserted) in excess
of $25,000 in any single instance or $150,000 in the aggregate.
(x) Condition of Assets. The fixed assets necessary for the conduct of
FDC's and its subsidiaries' businesses are in good condition and
repair, ordinary wear and tear excepted, and are usable in the
ordinary course of business. There are no defects in such fixed assets
or other conditions relating thereto which could adversely affect the
operation or value of such fixed assets. FDC and its subsidiaries own,
or lease under valid leases, all equipment and other tangible assets
necessary for the conduct of their business.
(y) Employees. To the best of FDC's knowledge, no significant employee
(including Key Technical Employees and Key Employees, as those terms
are defined herein) of FDC or any of its subsidiaries, or any group of
their employees, has any plan or intention to terminate his, her or
its employment following the Closing. FDC and its subsidiaries have
complied with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other
taxes. FDC and its subsidiaries have no labor relations problem
pending, and their labor relations are satisfactory. There are no
workmen's compensation, sexual harassment, discrimination or claims
pending against FDC or any of its subsidiaries, and there are no facts
that would give rise to such claims. No employee of FDC or any of its
subsidiaries is subject to any secrecy or non-competition agreement or
any other agreement or restriction of any kind that would impede in
any way the ability of such employee to carry out fully all activities
of such employee in furtherance of the business of FDC or its
subsidiaries. No employee or former employee of FDC or any of its
subsidiaries has any claim with respect to any intellectual property
rights of FDC or any of its subsidiaries. None of FDC or any of its
subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining
disputes. None of FDC or any of its subsidiaries has committed any
unfair labor practice. There are no organizational efforts presently
being made or threatened by or on behalf of any labor union with
respect to employees of any of FDC or any of its subsidiaries.
- 13 -
(z) Gifts. Neither FDC, its subsidiaries, nor any of their officers,
directors or shareholders has made or agreed to make gifts of money,
other property or similar benefits (other than incidental gifts of
articles of nominal value) to any actual or potential customer,
supplier, governmental employee, political party, candidate for
office, governmental agency or instrumentality or any other person in
a position to assist or hinder FDC in connection with any actual or
proposed business transaction.
(aa) Subsidiaries. Schedule 3(aa) sets forth for each subsidiary of FDC (i)
its name and jurisdiction of incorporation, (ii) the number of shares
of authorized capital stock of each class of its capital stock, (iii)
the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of
shares held by each such holder, and (iv) the number of shares of its
capital stock held in treasury. All of the issued and outstanding
shares of capital stock of each subsidiary of FDC have been duly
authorized and are validly issued, fully paid, and nonassessable. One
of FDC and its subsidiaries holds of record and owns beneficially all
of the outstanding shares of each subsidiary of FDC, free and clear of
any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), taxes, security interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require
any of FDC and its subsidiaries to sell, transfer, or otherwise
dispose of any capital stock of any of its subsidiaries or that could
require any subsidiary of FDC to issue, sell, or otherwise cause to
become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation,
or similar rights with respect to any subsidiary of FDC. There are no
voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any subsidiary of FDC.
None of FDC and its subsidiaries controls directly or indirectly or
has any direct or indirect equity participation in any corporation,
partnership, trust, or other business association which is not a
subsidiary of FDC.
(bb) Notes and Accounts Receivable. All notes and accounts receivable of
FDC and its subsidiaries are reflected properly on their books and
records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with
their terms at their recorded amounts.
(cc) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of FDC and its subsidiaries.
(dd) Insurance. Schedule 3(dd) sets forth the following information with
respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which any of FDC and its subsidiaries
has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past seven years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage
- 14 -
(iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect;
(B) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby; (C) neither any of FDC and its subsidiaries nor any other
party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and
no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Each of FDC
and its subsidiaries has been covered during the past seven years
by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned
period. Schedule 3(dd) describes any self-insurance arrangements
affecting any of FDC and its subsidiaries.
(ee) Product Warranty. No product sold or delivered by any of FDC and its
subsidiaries is subject to any guaranty, warranty, or other indemnity.
(ff) Certain Business Relationships With FDC and Its Subsidiaries. None of
the stockholders of FDC or its subsidiaries, or their officers,
directors or employees, has been involved in any business arrangement
or relationship with any of FDC and its subsidiaries within the past
12 months, and no such person owns any asset, tangible or intangible,
which is used in the business of any of FDC and its subsidiaries.
(gg) Small Business Investment Company Act Matters. FDC, together with its
"affiliates" (as that term is defined in Title 13, Code of Federal
Regulations, ss. 121.103), is a "small business concern" within the
meaning of Section 103(5) of the Small Business Act of 1958 and the
regulations thereunder. Each of FDC and its Subsidiaries does not
presently engage in, and neither FDC nor any of its Subsidiaries shall
hereafter engage in, any activities, nor shall FDC or any Subsidiary
use directly or indirectly the proceeds from the sale of the shares
hereunder for any purpose for which a Small Business Investment
Company is prohibited from providing funds by the Small Business
Investment Act of 1958 and the regulations thereunder, including Title
13, Code of Federal Regulations,ss. 107.720.
- 15 -
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to FDC to enter into this Agreement and the Registration Rights
Agreement, each Purchaser severally, and not jointly, represents and warrants to
FDC that:
(a) Each Purchaser that is a corporation or other business entity is duly
organized, validly existing and in good standing under the laws of the
applicable jurisdictions of incorporation, and such corporations as
business entities are qualified to transaction business as foreign
corporations in all other jurisdictions in which the character of
Purchasers' businesses requires the Purchasers to be so qualified;
such corporations or business entities have all of the power necessary
to engage in the businesses in which they are presently engaged; and
each such corporation or business entity is an accredited investor as
described in Rule 501(a) adopted under the ▇▇▇▇ ▇▇▇.
(b) Each Purchaser warrants and represents that the Purchaser is and was
not organized or reorganized for the specific purpose of acquiring the
Shares and that the individual executing this Agreement has the power
and authority to execute and deliver this Agreement on behalf of such
partnership, joint venture, corporation or trust. Furthermore, in the
event a Purchaser is one of the foregoing entities, such Purchaser
represents that all of the equity owners are accredited investors as
defined in (a) above or, if not, such Purchaser otherwise qualifies as
an accredited investor with total assets in excess of $5 million.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated, will conflict
with or result in the breach of, or accelerate the performance
required by, any terms of any agreement, or result in the creation of
any lien, charge or encumbrance upon any of the properties or assets
of the Purchasers under the terms of any such agreement.
(d) The Purchasers have all requisite power and authority to execute,
deliver and perform this Agreement and the Registration Rights
Agreement, and have all requisite power and authority to purchase and
own the Shares. All necessary corporate proceedings of the Purchasers
have been duly taken to authorize the execution, delivery and
performance by the Purchasers of this Agreement and the Registration
Rights Agreement. This Agreement has been duly authorized, executed
and delivered by the Purchasers, and is enforceable as to the
Purchasers in accordance with its terms. No consent, authorization,
approval, order, license, certificate or permit of or from, or
declaration or filing with, any United States federal, state, local or
other governmental authority or any court or other tribunal is
required by the Purchasers for the execution, delivery or performance
by the Purchasers of either this Agreement or the Registration Rights
Agreement other than (i) filings described in Section 2.3(b), (ii)
filings that may be required with bank regulatory agencies, and (iii)
filings that may need to be made with the small business
administration. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement or understanding to which the
Purchasers are a party, or to which any of their properties or assets
are subject, is required for the execution, delivery or performance of
either this Agreement or the Registration Rights Agreement.
- 16 -
(e) The Purchasers are acquiring the Shares, upon payment for and delivery
thereof, not with a view to the distribution or public resale thereof
within the meaning of the 1933 Act. The Purchasers further agree that
FDC may cause to be set forth on the certificates for the Shares, to
be delivered to the Purchasers hereunder, a legend in substantially
the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THAT ACT OR IF, IN THE OPINION OF COUNSEL TO THE SELLER AN
EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.
ARTICLE V
COVENANTS OF FDC
Section 5.1 Conduct of Business From the date hereof until the Closing, or as
otherwise consented to by the Purchasers in writing each of FDC and its
subsidiaries :
(a) Carry on its business only in the ordinary course, in accordance with
all laws, regulations and rules in the same manner in which it
previously has been conducted but not including pursuing and
implementing its consolidation strategy (which will require the prior
written consent of Purchaser);
(b) Maintain its real and personal property in as good condition and
repair as of the date hereof, except for ordinary wear and tear;
(c) Perform in all Material respects all of its Material obligations under
all contracts to which FDC is a party;
(d) Use reasonable efforts to preserve intact its present business
organization and to keep available the services of its present
officers and employees;
(e) Not amend its charter or Bylaws or otherwise alter its corporate
existence or powers;
(f) Not take any action or engage in any transaction which would cause any
of the representations made by FDC herein to be untrue as of the
Closing Date or would cause FDC to be in breach of the terms and
conditions of this Agreement;
(g) Maintain its books, accounts and records in its usual, regular and
ordinary manner;
(h) Comply with all filing and reporting requirements of the 1934 Act;
(i) Maintain a listing of the Common Stock with The Nasdaq Stock Market,
Inc.;
(j) Not issue any shares of its capital stock, except upon the exercise of
any currently outstanding option, warrant, convertible security or
similar right which is listed on Schedule 5.1(j);
- 17 -
(k) Not increase, decrease, or exchange any of its outstanding Common
Stock for a different number or class of securities through
reorganization, reclassification, share dividend, share split or
similar change in the capitalization of FDC;
(l) not enter into or become subject to any agreement, transaction, or
commitment which (i) would have a Material effect on its business, or
(ii) restrict or in any way impair its ability to comply with the
terms of this Agreement;
(m) not create, incur, assume, guarantee or otherwise become liable with
respect to any indebtedness, and not sell, pledge, encumber or
otherwise subject its assets to any security interest, claim or
indebtedness not in existence prior to the execution of this
Agreement;
(n) not declare or pay any dividend, make any distribution on shares of
its capital stock or redeem, repurchase or otherwise acquire any
shares of its capital stock;
(o) promptly notify Purchasers in writing after becoming actually aware of
the occurrence or threatened occurrence of any event which would cause
or constitute a breach of any warranty, representation, covenant or
agreement contained herein, and use all commercially reasonable
efforts to prevent or promptly remedy such breach or threatened
breach; and promptly notify Purchasers in writing if it shall discover
that any representation or warranty made in Article III of this
Agreement was when made, or has subsequently become, untrue;
(p) not, directly or indirectly, (i) enter into or modify (whether in
writing or orally) any employment, collective bargaining, severance or
similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination paid to, any employees, officers
or directors or consultants, or (ii) grant or promise any bonuses,
salary increases, severance or termination pay, or benefits for any
officers, employees, or directors;
(q) not adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or
other employee benefit plan, trust, fund or arrangement for the
benefit or welfare of any employee, director, or officer;
(r) not cancel or terminate its current insurance policies or cause any of
the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the canceled,
terminated or lapsed policies for substantially similar premiums are
in full force and effect;
(s) use its commercially reasonable efforts to preserve intact its
business organization and goodwill, keep available the services of its
officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others
having business relationships with it up to the Closing;
(t) confer on a weekly basis with representatives of Purchasers to report
operational matters and the general status of ongoing operations;
(u) not take any action which would render, or which reasonably would be
expected to render, any representation or warranty made by it in the
Agreement untrue at the Closing;
- 18 -
(v) notify Purchasers of any emergency or other change in the normal
course of its business or in the operation of its properties and of
any governmental or third party complaints, investigations or hearings
(or communications indicating that the same may be contemplated) if,
in each case, such emergency, change, complaint, investigation or
hearing would, individually or in the aggregate, have an adverse
effect on its business, operations or financial condition or to its
ability to consummate the transactions contemplated by this Agreement;
(w) not sell any of its assets, tangible or intangible;
(x) not enter into any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) either
involving more than $15,000 or outside the ordinary course of
business;
(y) not make any capital expenditure (or series of related capital
expenditures) either involving more than $100,000;
(z) not make any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other person (or series of related
capital investments, loans, and acquisitions) either involving more
than $15,000 or outside the ordinary course of business;
(aa) not delay or postpone the payment of accounts payable and other
liabilities outside the ordinary course of business;
(bb) not cancel, compromise, waive, or release any right or claim (or
series of related rights and claims) either involving more than
$15,000 or outside the ordinary course of business;
(cc) not grant any license or sublicense of any rights under or with
respect to any Intellectual Property;
(dd) not make any loan to, or enter into any other transaction with, any of
its directors, officers, or employees;
(ee) not make or pledge to make any charitable or other capital
contribution
(ff) maintain reasonable business insurance; commit no waste of assets; not
dispose or otherwise change the nature of any asset such that cash or
accounts receivable are increased; not create or suffer to exist any
lien, charge or encumbrance on any asset or incur any indebtedness for
borrowed money; and maintain and preserve their business organizations
intact and maintain their relationships with suppliers, employees,
customers and others;
(gg) refrain from making capital expenditures or commitments for additions
to property, plant or equipment or enter into transactions which could
reasonably be expected to alter or affect their operations (unless
approved in writing in advance by Purchasers); and
(hh) not commit to any of the foregoing.
Section 5.2 Access and Information FDC shall give to the Purchasers and their
representatives full access at all reasonable times prior to the Closing to
the properties, books and records of FDC and to furnish such information
and documents in its possession relating to FDC as the Purchasers may
reasonably request.
- 18 -
Section 5.3 Information Following Closing Beginning with execution of this
Agreement and continuing beyond Closing for so long as Purchasers own more
than five percent of the common stock of FDC, FDC shall furnish Purchasers,
without charge, the following documents:
(a) As soon as practicable after they have been filed with the Commission,
one copy of each annual and interim financial and other report or
communication filed with the Commission;
(b) Such additional publicly filed documents and publicly available
information with respect to FDC and its affairs as the Purchasers may
from time to time reasonably request;
(c) as soon as available, and in any event within 90 days after the end of
each fiscal year of FDC, duplicate copies of the audited financial
statements of FDC and its subsidiaries reported on by a firm of
independent certified public accountants of national recognition, and
stating in comparative form the figures as of the end of and for the
previous fiscal year, accompanied by a report thereon containing an
opinion by such independent certified public accountants that the
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied, except as may be
noted otherwise;
(d) as soon as available, and in any event within 30 days after the end of
each month commencing with the end of the month of January 1999, a
copy of the consolidated interim financial statements of FDC and its
subsidiaries, consisting at a minimum of: (i) the balance sheet as of
the end of the month, and (ii) a statement of income for the month and
for the partial or full fiscal year ended as of the end of the month,
all in reasonable detail and, in the case of a month which is the end
of FDC's fiscal quarter, setting forth in comparative form
corresponding budgeted figures for such partial or full fiscal year
prepared in accordance with generally accepted accounting principles
consistently applied, except as may be noted otherwise;
(e) by December 1 of each year copies of the FDC budget for operations for
the next fiscal year;
(f) as soon as available, and in any event within 45 days after the end of
a fiscal year, a report of the financial information of FDC on an
actual versus as budgeted basis;
(g) within 30 days of filing, copies of all returns and documents filed by
FDC and its subsidiaries with any federal governmental authority,
including, without limitation, the U.S. Internal Revenue Service, the
U.S. Environmental Protection Agency, the U.S. Occupational Safety &
Health Administration, the Small Business Administration and the
Securities and Exchange Commission;
(h) within 30 days of receipt thereof, a copy of the complaint, motion for
judgment or other such pleadings served on or by FDC and its
subsidiaries or any of their respective officers or directors, as the
case may be, relating to any litigation to which any of FDC and its
subsidiaries, or any of their respective officers or directors is made
a party after the date of this Agreement by mailing to the Purchasers;
and
(i) within ten days of receipt thereof, notice of any default declared
with respect to any lease, contract or loan of any of FDC and its
subsidiaries or any judgment entered against any of FDC and its
subsidiaries if such default or judgment involves an amount exceeding
$10,000.
- 19 -
Section 5.4 Use of Proceeds FDC will use the proceeds from the sale of the
Shares hereunder (a) to consummate future acquisitions by the Company, and
(b) as corporate working capital in the ordinary course of business.
ADDITIONAL PRE-CLOSING COVENANTS
Section 5.5 Exclusivity Prior to the Closing, none of FDC, its subsidiaries, or
any of their officers or directors, or those FDC shareholders who are party
to this Agreement, shall cause FDC to, directly or indirectly, through any
officer, director, agent or otherwise, solicit, initiate or encourage
submission of any proposal or offer from any person or entity (including
any of its or their officers or employees) relating to any liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or the
purchase of all or any portion of the assets of, or any equity interest in,
FDC or any similar transaction or business combination involving FDC, or
participate in any negotiations regarding, or furnish to any other person,
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other person or entity to do or seek any of the foregoing. FDC shall
within one business day notify Purchasers of any such proposal or offer, or
any inquiry from or contact with any person with respect thereto, and shall
promptly provide Purchasers with such information regarding such proposal,
offer, inquiry or contact as Purchasers may request.
Section 5.6 Consents under Agreements FDC agrees that, prior to the Closing, it
and its subsidiaries will secure the approval under all agreements (if any)
as to which consent to the transactions contemplated hereunder is required.
Section 5.7 Actions Prior to the Closing, none of FDC, its shareholders who are
parties to this Agreement, and its subsidiaries will take or permit to be
taken any action that would be in breach of the terms or provisions of this
Agreement or that would cause any of their representations and warranties
contained herein to be or become untrue.
Section 5.8. Additional Disclosure Prior to the Closing, FDC will promptly
advise Purchasers of each event that occurs after execution of this
Agreement, if such event would have had to be disclosed on any schedule to
this Agreement had it occurred prior to the execution of this Agreement, or
if such event otherwise would lead to a breach or inaccuracy of any
representation, warranty, or covenant of FDC or its subsidiaries.
Section 5.9. Financial Statements Prior to the Closing, FDC will deliver monthly
financial statements to Purchasers within 10 days of the end of each month
after the date hereof.
Section 5.10 Further Assurances Prior to Closing, each of the parties will use
its reasonable best efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in this Agreement).
- 20 -
ARTICLE VI
POST CLOSING COVENANTS
Section 6.1 Post Closing Covenants
(a) Noncompete/Non-Solicit.
(i) During the five year period commencing with the date hereof (the
"Non-Compete Period"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Key Employees") agree that
they shall not (and shall not direct or assist others to contact
or solicit, offer employment to, hire, or otherwise attempt to
hire any person employed by the Company. The Key Employees shall
not encourage, induce or assist others in inducing any employee
of the Company to terminate his or her employment with the
Company or in any way interfere with the Company's respective
relationships with their employees.
(ii) During the Non-Compete Period, the Key Employees agree that they
shall not contact or solicit, or direct or assist others to
contact or solicit any customers, suppliers or other business
associates of the Company existing prior to Closing, shall not
engage in the diversion of good-will regarding the activities
conducted by the Company prior to Closing; and shall not
otherwise interfere in any way with the relationships between the
Company and their customers, suppliers or business associates,
existing prior to Closing.
(iii)During the Non-Compete period, the Key Employees shall not
directly or indirectly compete with the Company in any manner in
any state where the Company is engaged or presently proposes to
engage in business; provided that such restriction on competition
will be limited to those businesses of the Company in which the
Company was engaged prior to the date of this Agreement; provided
further that, notwithstanding the foregoing, any Key Employee may
make passive investments of not more than 5% of the outstanding
shares of, or 5% of any other equity interest in, any company or
entity listed or traded on a national securities exchange or in
an over-the-counter securities market. Without limiting the
generality of this paragraph, each Key Employee agrees that the
restrictions on competition contained herein shall also prohibit
serving as a consultant to any entity if such consulting services
would help such entity compete against the Company. Additionally,
except as expressly set forth in this Agreement, no Key Employee
shall have any interest (as owner, principal, general or limited
partner, agent, employee, officer, director, or stockholder) in
any entity which competes with the Company. The Key Employees
agree that this covenant not to compete is made in connection
with the Purchasers' acquisition of the Company's common stock.
(b) Further Assurances. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other party reasonably may request, all at the sole
cost and expense of the requesting party (unless the requesting party
is entitled to indemnification therefor under this Agreement).
- 21 -
(c) Key Man Life Insurance. FDC shall acquire key man life insurance
policies on those persons, in such amounts, and with designated
beneficiaries as determined from time to time and at any time by the
Special Committee (as defined in the Investors Agreement).
(d) Intellectual Property. Within 30 days of Closing, FDC shall cause all
FDC employees, all employees of FDC subsidiaries, and all independent
contractors who have worked in the development and/or maintenance of
Intellectual Property (as defined in Section 3(i)) to execute
agreements with FDC or its subsidiaries to assign their rights, title
and interest in and to any Intellectual Property including, without
limitation, patents, copyrights and inventions to FDC or its
subsidiaries.
ARTICLE VII
CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE
Section 7.1 Conditions to Obligations to Close
In addition to those specific conditions set forth in Articles VIII and IX
below, the obligations of the Purchasers and FDC to consummate the transactions
described herein shall be subject to the following:
(a) No government regulatory body or agency shall have instituted court
action or legal proceedings seeking preliminary or permanent
injunctive relief prohibiting purchase of the Shares.
(b) The performance of all conditions precedent to Closing set forth in
Articles VIII and IX below.
(c) From the date of this Agreement to the Closing Date, there shall have
been no Material adverse change (i) in the business or properties of
FDC, or (ii) in the financial condition of FDC, and the property,
business and operations of FDC shall have not been Materially and
adversely affected due to any fire, accident or other casualty or by
any act of God, whether or not insured.
ARTICLE VIII
CONDITIONS TO FDC'S OBLIGATION TO CLOSE
Section 8.1 Conditions to FDC's Obligations to Close
FDC's obligation to complete the transaction is provided for herein shall be
subject to the performance by the Purchasers of all their agreements to be
performed hereunder on or before the Closing, and to the further conditions
that:
(a) The representations and warranties of the Purchasers contained in
Article IV hereof are true and correct in all Material respects as of
the Closing with the same effect as if made on and as of such date and
the officers or managing directors of the Purchasers shall so certify
thereto.
- 22 -
(b) The Purchasers shall have performed and complied with all the terms
and conditions required by this Agreement to be performed or complied
with by them prior to the Closing.
ARTICLE IX
CONDITIONS TO PURCHASERS' OBLIGATION TO CLOSE
Section 9.1 Conditions to Purchasers' Obligation to Close
The Purchasers' obligation to complete the transactions provided for herein
shall be subject to the performance by FDC of all agreements to be performed
hereunder on or before the Closing, and to the further conditions that:
(a) Representations and Warranties. The representations and warranties of
FDC contained in Article III and the covenants of FDC contained in
Article V hereof are true and correct and have been performed or
satisfied in all respects as of the Closing with the same effect as if
made or performed on and as of such date and FDC shall so certify to
the Purchasers.
(b) No Adverse Changes. There shall have been no event or change occurring
between the execution of this Agreement and the Closing which in the
aggregate may be deemed to have an adverse effect on the business,
operations, financial condition or properties of FDC or its
subsidiaries. There shall have been no adverse changes in the
operating results or financial condition of FDC since December 31,
1998, except as described in Schedule 9(b) and FDC shall so certify in
writing to the Purchasers.
(c) Opinion. The Purchasers shall have received from counsel to FDC, an
opinion dated the Closing, to the following effect:
(i) FDC is a corporation duly organized, validly existing and in good
standing under the laws of Colorado.
(ii) FDC has all corporate power and authority necessary to engage in
the business in which it is presently engaged and to execute,
deliver and perform its obligations under this Agreement. There
are no options, puts, calls, or other rights outstanding to
purchase or sell FDC's securities, other than as contemplated in
this Agreement or as disclosed in the Schedules.
(iii)FDC's authorized capitalization consists of 10,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. At the
Closing Date and prior to the issuance of the Shares, there will
be 3,551,346 shares of Common Stock issued and outstanding, and
no shares of Preferred Stock issued and outstanding. All of such
outstanding shares of capital stock have been duly authorized and
are validly issued and are fully paid and nonassessable, subject
to certain escrow provisions.
- 23 -
(iv) Execution and delivery of this Agreement and the Registration
Rights Agreement, and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all
necessary action, corporate or otherwise, by FDC. This Agreement
and the Registration Rights Agreement are legal, valid and
binding obligations of FDC, enforceable against FDC in accordance
with their terms except as enforcement may be limited by general
equitable principles or bankruptcy, insolvency or similar laws
affecting creditors' rights generally. FDC has all requisite
power and authority to execute, deliver and perform this
Agreement and the Registration Rights Agreement. All necessary
corporate proceedings of FDC have been taken to authorize the
execution, delivery and performance by FDC of this Agreement and
the Registration Rights Agreement.
(v) There are no preemptive rights to acquire FDC's Common Stock or
Preferred Stock.
(vi) The Shares, when issued in accordance with the terms and
conditions of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and will be free and clear
of any adverse claim, security interest, lien, pledge, option,
encumbrance or restriction; provided, however, that the Shares
will be "restricted securities" as such term is defined under the
1933 Act (unless registered for sale as described in the
Registration Rights Agreement) and the certificates representing
the Shares will contain a legend to reflect such status; and
provided further that any Purchaser, if deemed an "affiliate"
under the 1933 Act, may be subject to certain restrictions as
provided in the 1933 Act, the 1934 Act or the rules and
regulations thereunder.
(vii)To the best knowledge of such counsel, FDC is not in violation or
default of any provision of its Articles of Incorporation, Bylaws
or of any provision of any instrument or contract to which it is
a party or by which it is bound or, of any provision of any
federal, state or local judgment, writ, decree, order, law,
statute, rule or government regulation, applicable to it. To the
best knowledge of such counsel, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in any such
violation or be in conflict with or constitute, with or without
the passage of time and giving of notice, either a violation or
default under any such provision or an event which results in the
creation of any lien, charge of encumbrance upon any asset of
FDC. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with
any federal, state, local or other governmental authority or any
court or other tribunal is required by FDC for the execution,
delivery or performance by FDC of this Agreement or the
Registration Rights Agreement. To the best knowledge of such
counsel, except for obligations under its listing agreement with
The Nasdaq Stock Market, Inc., no consent of any party to any
contract, agreement, instrument, lease, license, arrangement or
understanding to which FDC is a party, or to which any of its
properties or assets are subject, is required for the execution,
delivery or performance of this Agreement or the Registration
Rights Agreement.
(viii) The Shares shall have been approved for additional listing by
The Nasdaq Stock Market, Inc.
- 24 -
(ix) Except as disclosed in this Agreement or the Schedules, such
counsel is not aware of any pending or threatened action, suit,
proceeding or investigation before any court or any public,
regulatory, or governmental agency, authority or body, involving
FDC or any of its existing officers or directors and such counsel
do not know of any legal matter or government proceedings
regarding FDC.
In rendering such an opinions counsel for FDC may rely (i) as to
matters of fact, to the extent they deem proper, on certificates
of responsible officers of FDC; and (ii) to the extent they deem
proper, upon written statements or certificates of officers of
departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of FDC,
provided that copies of any such statements or certificates shall
be delivered to counsel for the Purchasers.
(d) Performance of Conditions. FDC shall have performed and complied with
all the terms and conditions required by this Agreement and the
Registration Rights Agreement to be performed or complied with by it
on or before the Closing.
(e) Action. All action necessary to authorize the execution, delivery and
performance of this Agreement by FDC and the consummation of the
transactions contemplated hereby shall have been duly and validly
taken by FDC. FDC shall have furnished Purchasers with copies of all
consents or resolutions adopted or executed by FDC in connection with
such actions.
(f) No Action or Proceeding. As of the Closing, no action, suit or
proceeding shall be pending or threatened before any court or
administrative body, and there shall have been no threats, to (i)
prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (iii) affect
adversely the right of Purchasers to own the Shares and to exercise
their ownership rights with respect to the Shares, or (iv) affect
adversely the right of any of FDC and its subsidiaries to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect).
(g) Consents & Approvals. FDC shall have obtained and given each consent
and notice required in connection with the transactions contemplated
herein (as specified in Schedule 3(e).
(h) Governmental Filings. All governmental filings, authorizations and
approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained by FDC and
its subsidiaries.
(i) Discovery of Facts or Circumstances. Purchasers shall not have
discovered any fact or circumstance existing as of the date of this
Agreement which has not been disclosed to Purchasers as of the date of
this Agreement regarding the business, assets, liabilities,
properties, condition (financial or otherwise), results of operations
or prospects of FDC which is, individually or in the aggregate with
other such facts and circumstances, adverse to FDC, its financial
position, results of operations or the value of its assets.
- 25 -
(j) Damage. There shall have been no damage, destruction or loss of or to
any property or properties owned or used by FDC, or to its assets,
whether or not covered by insurance which, in the aggregate, has or
would be reasonably likely to have, an adverse effect on FDC.
(k) Confidentiality Agreement. FDC shall have entered into a
confidentiality agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in form and substance
as set forth in Exhibit C, and the same shall be in full force and
effect;
(l) Investors Agreement. FDC shall have entered into the Investors
Agreement with the Purchasers in form and substance as set forth in
Exhibit D, and the same shall be in full force and effect;
(m) Voting Agreement. Certain shareholders of FDC (as identified in
Exhibit E) shall have entered the Voting Agreement with the Purchasers
in form and substance as set forth in Exhibit E, and the same shall be
in full force and effect;
(o) Acquisitions. There shall have been no adverse changes from that
contemplated on March 12, 1999, with respect to the valuation of, or
the terms of the transactions with, FDC's proposed acquisition
targets, United Data Services, Inc., Imfax, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ d/b/a Quality Credit Reporting of Texas, Mortgage
Credit Services, Inc. (Oklahoma), and Credit ▇▇▇▇, Inc.
(p) Officer's Certificate. The President of FDC and its subsidiaries shall
have delivered to Purchasers a certificate to the effect that each of
the conditions specified above in Sections VIII(a), (b), (d), (e),
(f), (g), (h), and (j) is satisfied in all respects.
(q) President's Certificate. A certificate of the President of FDC,
certifying that FDC is not in violation or default without knowledge
qualifier.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement and each agreement contemplated hereby
may be terminated at any time prior to the Closing:
(a) Mutual Consent. By the mutual written consent of the Purchasers and
FDC.
(b) Breach. By FDC if there has been a breach of any representation,
warranty or agreement on the part of the Purchasers set forth in this
Agreement, or by the Purchasers if there has been a breach of any
representation, warranty, covenant or agreement on the part of FDC set
forth in this Agreement.
- 26 -
(c) No Consummation. By either FDC or the Purchasers if the Purchase
Transaction shall not have been consummated on or before April 21,
1999, by reason of the failure of any condition precedent under
Article VIV (with respect to Purchasers) or Article VIII (with respect
to FDC), unless the failure of such condition precedent results
primarily from the party seeking to terminate being in breach of any
representation, warranty, or covenant contained in this Agreement;
provided, however, that if the consummation of the Purchase
Transaction requires Shareholder approval or consent, then such date
shall automatically be extended to sixty days from the date on which
determination is made that such Shareholder approval or consent is
required, and provided further that such date may be extended at any
time upon mutual agreement of the Parties.
(d) Litigation. By either FDC or the Purchasers if any litigation or
proceeding has been instituted with a view of restraining or
prohibiting consummation of the transaction contemplated by this
Agreement.
Section 10.2 Effect of Termination. In the event of termination of this
Agreement or any agreement contemplated hereby, or to be executed
simultaneously herewith, this Agreement or any such other agreements shall
forthwith become void and there shall be no liability or obligation
hereunder or thereunder on the part of any party hereto, except for
liability of any party for breaches of this agreement and liability under
Section 24(d).
Section 10.3 Amendment. This Agreement may be amended by the parties hereto at
any time before or after approval hereof. This Agreement or any agreement
contemplated hereby may not be amended except by an instrument in writing
signed on behalf of each of the parties thereto.
Section 10.4 Extension; Waiver. At any time prior to the Closing the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c)
waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument signed on behalf of such
party.
ARTICLE XI
INVESTMENT BANKING FEES
FDC and the Purchasers each represent that, except as described in the
referenced Letter, neither has employed any broker or agent or entered into any
agreement for the payment of any fees or compensation to any other person, firm
or corporation in connection with this transaction.
- 27 -
ARTICLE XII
INDEMNIFICATION AND CONTRIBUTION
Section 12.1 Indemnity. Subject to the conditions set forth below, FDC agrees to
indemnify and hold harmless the Purchasers, their members, managers,
officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls the Purchasers within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all
loss, liability, claim, damage and expense whatsoever (which shall include,
for all purposes of this Article XII, but not be limited to, attorneys'
fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any
claim or litigation), arising out of, resulting from, based upon, or in
connection with any breach of any Material representation, warranty,
covenant, or agreement of FDC contained in this Agreement. Notwithstanding
anything to the contrary, FDC shall indemnify the Purchasers for their
proportionate share (based on the percentage of the total outstanding
Common Stock owned by the Purchasers) any Material taxes, tax costs,
assessments, penalties or interest incurred by FDC in conjunction with or
as a result of any acquisitions or other transactions entered into prior to
the date of this Agreement by FDC or its subsidiaries. The foregoing
agreement to indemnify shall be in addition to any liability FDC may
otherwise have, including liabilities arising under this Agreement. Any
amount paid to Purchasers under this Section 12 shall be grossed up by
multiplying the amount of any such claim by an amount equal to (i) one,
plus (ii) (A) the number of shares owned by Purchasers, divided by (B) the
number of shares that are owned by persons other than Purchasers. The
Purchasers agree to indemnify and hold harmless FDC, its officers,
directors, partners, employees, agents, and counsel and each person, if
any, who controls FDC within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of
this Article XII, but not be limited to, attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever
and any and all amounts paid in settlement of any claim or litigation),
arising out of, resulting from, based upon, or in connection with any
breach of any Material representation, warranty, covenant, or agreement of
Purchasers contained in this Agreement.
Except as otherwise agreed by the parties in Article XI hereof, (i) FDC
shall indemnify the Purchasers for any broker's or finder's fees which may
become payable as a result of any promise or contract which may have been
made by FDC to or with any such broker or finder and (ii) the Purchasers
shall indemnify FDC for any broker's or finder's fees which may become
payable as a result of any promise or contract which may have been made by
the Purchasers to or with any such broker or finder.
- 28 -
Section 12.2 Notice of Proceeding. If any action is brought against FDC, the
Purchasers or any of their members, managers, officers, directors,
employees, agents or counsel, or any controlling persons (an "Indemnified
Party" or collectively "Indemnified Parties"), in respect of which
indemnity may be sought against the other party (the "Indemnifying Party")
pursuant to the foregoing paragraph, such Indemnified Party or Parties
shall promptly notify the Indemnifying Party in writing of the institution
of such action (but the failure so to notify shall not relieve the
Indemnifying Party from any liability it may have) and the Indemnifying
Party shall promptly assume the defense of such action including the
employment of counsel satisfactory to such Indemnified Party or Parties and
payment of expenses. Such Indemnified Party or Parties shall have the right
to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
or Parties, unless (1) the employment of such counsel shall have been
authorized in writing by the Indemnifying Party in connection with the
defense of such action or (2) the Indemnifying Party shall not have
promptly employed counsel satisfactory to the Indemnified Party or Parties
to have charge of the defense of such action or (3) such Indemnified Party
or Parties shall have reasonably concluded that there may be one or more
legal defenses available to it or them or other indemnified parties which
are different from or additional to those available to the Indemnifying
Party or (4) the Indemnifying Party does not provide the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party of that the
Indemnifying Party will have the financial resources to defend against the
claim and fulfill its indemnification obligations hereunder, such evidence
to be provided within 5 business days after the Indemnified Party requests
such evidence, (5) the claim involves only money damages and does not seek
an injunction or other equitable relief, and (6) the Indemnifying Party
conducts the defense of the claim actively and diligently, in any of which
events such fees and expenses shall be borne by the Indemnifying Party and
the Indemnifying Party shall not have the right to direct the defense of
such action on behalf of the Indemnified Party or Parties.
Section 12.3 Contribution. To provide for just and equitable contribution if (i)
an Indemnified Party makes a claim for indemnification pursuant to the
language set forth in Sections 12.1 and 12.2 above, but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
Indemnified Parties seek contribution under the 1933 Act, the 1934 Act, or
otherwise, then the parties shall contribute to any and all losses,
liabilities, claims, damages and expenses whatsoever to which any of them
may be subject, in accordance with the relative fault of the parties in
connection with the facts which result in such losses, liabilities, claims,
damages and expenses. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission, shall be
determined by, among other things, whether such statement, alleged
statement, omission or alleged omission relates to information supplied by
FDC or the Purchasers, the parties' relative intent, access to information
and the opportunity to correct such statement, alleged statement, omission
or alleged omission. The parties agree that it would be unjust and
inequitable if the respective obligations of each of the parties for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages and expenses or by any other
method of allocation that does not reflect the equitable considerations
referred to herein. No persons guilty of a fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
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Section 12.4 Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any party may have for breach of
representation, warranty, or covenant.
ARTICLE XIII
NOTICES
Any notice given under this Agreement shall be deemed to have been given
sufficiently if in writing and sent by registered or certified mail, return
receipt requested and postage prepaid, by receipt confirmed facsimile
transmission, or by tested telex, telegram or cable addressed as follows:
If to FDC: Factual Data Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and, if to the Purchasers, at such address as appears on Exhibit A hereto, or to
any other address or addresses which may hereafter be designated by any party by
notice given in such manner. All notices shall be deemed to have been given as
of the date of receipt.
ARTICLE XIV
CERTIFICATES OF OFFICERS AND DIRECTORS
The Purchasers and FDC shall provide to each other certificates at the Closing
verifying the representations and warranties made by each party hereto. Any
certificate or other document executed by any officer of FDC or the Purchasers
and delivered to the other party or their counsel shall be deemed a
representation and warranty by such officer on behalf of FDC or the Purchasers
as to the statements made therein.
- 30 -
ARTICLE XV
CONFIDENTIALITY
In connection with this Agreement, the Purchasers acknowledge that they have
received from FDC certain proprietary information, trade secrets, financial
statements and supporting information, together with statistics, analyses,
compilations, studies and other documents or records prepared by any person
including the Purchasers, their agents, advisors, affiliates or representatives
(collectively "Representatives") which contain or otherwise reflect or are
generated from such information (collectively the "Confidential Material"). The
Purchasers agree to take commercially reasonable measures to ensure that the
Confidential Material has not and will not be used other than in connection with
the purchase of the Shares. The Purchasers have and will make all commercially
reasonable efforts to safeguard the Confidential Material from disclosure to
anyone other than as permitted hereby. Without the prior written consent of FDC,
the Purchasers will not, except as required by law, and will direct their
representatives not to, disclose to any person the fact that the Confidential
Material has been made available to the Purchasers or that the Purchasers have
inspected any portion of the Confidential Material. The term "person" as used
herein shall be broadly interpreted to include without limitation, any
corporation, company, partnership and individual or group.
In the event that any Purchasers or any of their Representatives are requested
or required (by oral question or request for information or documents in legal
proceedings, interrogatories, subpoena, civil investigative demand or similar
process) to disclose any information supplied to such Purchaser in the course of
its dealings with FDC or its Representatives, it is agreed that any such
Purchaser will provide FDC with prompt notice of any request or requirement so
that either the Purchaser or FDC or both of them may seek an appropriate
protective order and/or, by mutual written agreement, waive the Purchaser's
compliance with the provisions of this Agreement. It is further agreed that if,
in the absence of a protective order or receipt of a waiver, any of the
Purchasers or any of their Representatives is nonetheless, in the reasonable
written opinion of their counsel, compelled to disclose information concerning
FDC to any court or else stand liable for contempt or suffer other censure, the
Purchasers or such Representative may make disclosure of such information to
such court. In any event, the Purchasers will not oppose action by, and will
cooperate (to the extent commercially reasonable) with, FDC to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded to such information.
The term "Confidential Material" does not include information (i) which was
known to the Purchasers or that the Purchasers had in their possession prior to
the disclosure of confidential information by FDC hereunder, (ii) which becomes
generally available to the public other than as a result of a disclosure by the
Purchasers or their Representatives, (iii) which becomes available to the
Purchasers on a non-confidential basis from a source other than FDC or its
Representatives, provided that such source is not bound by a confidentiality
agreement with FDC or its Representatives or otherwise prohibited from
transmitting the information to the Purchasers by a contractual, legal or
fiduciary obligation, or (iv) which otherwise becomes known to the Purchasers in
a manner which does not violate the proprietary rights of FDC.
Any of the Confidential Material shall be the property of FDC and, if the
transactions, upon request of FDC, all such Confidential Material shall be
returned to FDC or furnished to FDC without the Purchasers retaining any copy
thereof. The obligation of Purchasers under this Article XV will terminate two
years after the Closing.
- 31 -
It is further understood and agreed that money damages would not be a sufficient
remedy for any breach of this Article XV by the Purchasers or their
Representatives. FDC shall be entitled to seek injunctive and any other such
relief as maybe necessary to enforce the terms of this Article XV in the event
of a breach by the Purchasers or their Representatives. Injunctive relief shall
not be deemed to be an exclusive remedy for the Purchasers' breach of this
Article XV, but shall be in addition to all of the remedies available at law or
equity to FDC.
ARTICLE XVI
COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which when
executed and delivered shall be an original, but all of such counterparts shall
constitute one and the same instrument.
ARTICLE XVII
MERGER CLAUSE AND COSTS, FEES AND EXPENSES
This Agreement supersedes all prior agreements and understandings between the
parties, and may not be changed or terminated orally, and no attempted change,
termination or waiver of any of the provisions hereof shall be binding unless in
writing and signed by the parties hereto. Each party shall pay its own expenses
incident to the preparation, execution and delivery of this Agreement and the
consummation of the transactions described herein including, without limitation,
all fees of counsel, accountants and other professional fees and expenses.
ARTICLE XVIII
SEVERABILITY
In the event that any provision of this Agreement is determined to be partially
or wholly invalid, illegal or unenforceable, then such provision shall be deemed
to be modified or restricted to the extent necessary to make such provision
valid, binding and enforceable or, if such a provision cannot be modified or
restricted in a manner so as to make such provision valid, binding and
enforceable, then such provision shall be deemed to be excised from this
Agreement and the validity, binding effect and unenforceability of the remaining
provisions of this Agreement shall not be affected or impaired in any manner.
ARTICLE XIX
BENEFIT
The terms and conditions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of the parties hereto, and the
persons and entities referred to in Article XI who are entitled to
indemnification or contribution and their respective successors, legal
representatives and assigns and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement, the Registration Rights Agreement, or the Letter or
any provision herein or therein contained.
ARTICLE XX
WAIVER
The failure of any party to insist upon the strict performance of any of
the provisions of this Agreement shall not be considered as a waiver of any
subsequent default of the same or similar nature. Time is of the essence in
this Agreement.
- 32 -
ARTICLE XXI
HEADINGS
The headings for the sections of this Agreement are inserted for convenience in
reference only and shall not constitute a part hereof.
ARTICLE XXII
SURVIVAL
The respective agreements, representations, warranties, covenants and other
statements of the Purchasers and FDC set forth in this Agreement shall survive
and remain in full force and effect for a period of fifteen months from the
Closing; provided that the representations in Sections 3(a), 3(e), and 3(g)
shall survive indefinitely and the representations in Sections 3(k) (Tax), 3(o)
(ERISA) and 3(r) (Environmental) shall survive until the expiration of all
statues of limitation, in each case regardless of any investigation or
inspection made on behalf of the Purchasers or FDC; notwithstanding the
foregoing, if the party seeking indemnification makes a written claim for
indemnification within such survival period, then the indemnifying party agrees
to indemnify the party seeking indemnification from and against the entirety of
any adverse consequences party seeking indemnification may suffer through and
after the date of the claim for indemnification (including any adverse
consequences the party seeking indemnification may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach).
ARTICLE XXIII
GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of the
State of Illinois, without giving effect to conflict of laws.
ARTICLE XXIV
MISCELLANEOUS
(a) Press Releases and Public Announcements No party shall issue any press
release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of FDC and the
Purchasers; provided, however, that any party may make any public
disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing party will advise and consult
with the other parties prior to making the disclosure).
(b) Succession and Assignment This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this
Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of the Purchasers and
FDC; provided, however, that Purchasers may (i) assign any or all of
their rights and interests hereunder to one or more of their
affiliates and (ii) designate one or more of their affiliates to
perform their obligations hereunder.
(c) Amendments No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by FDC and the
Purchasers.
- 33 -
(d) Expenses Each of the parties will bear its own costs and expenses
(including, without limitation, attorneys', accountants' and agents'
fees and disbursements) incurred in connection with this Agreement and
the transactions contemplated hereby; provided, however, FDC agrees to
reimburse Purchasers for all reasonable out-of-pocket expenses
(including, without limitation, attorneys', accountants' and agents'
fees and disbursements) incurred by Purchasers in connection with this
proposed investment and in its facilitation of the acquisition
financing line, if either:
(j) Purchasers elect not to complete the purchase of securities from FDC
due to (A) the disclosure of materially adverse information about FDC
or its subsidiaries not known to Purchasers as of March 12, 1999
(which is the date of the letter of intent, which letter of intent was
countersigned by FDC on March 13, 1999) (the "Letter of Intent"), (B)
a Material adverse change in FDC's or its subsidiaries' condition
(financial or otherwise) from that reflected in its most recent
financial statements, as had been provided to Purchasers prior to
March 12, 1999, (C) FDC's failure to comply with the provisions of the
Letter of Intent, the Term Sheet attached to the Letter of Intent, or
this Agreement, or (D) FDC's inability to obtain shareholder approval
of the transaction (to the extent required) within 60 days from which
a determination is made that such shareholder approval is required, or
(iii)FDC elects not to complete the issuance of securities to
Purchasers for any reason other than Purchasers' failure to
comply in with the provisions of the Letter of Intent, the Term
Sheet that is attached to the Letter of Intent, or this
Agreement.
(e) Specific Performance Each of the parties acknowledges and agrees that
the other parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of
the parties agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the
Parties and the matter , in addition to any other remedy to which they
may be entitled, at law or in equity
- 34 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
▇▇▇▇▇ LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
▇▇▇▇▇▇▇▇ FINANCIAL PARTNERS, L.P.
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI INVESTORS, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
FACTUAL DATA CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBITS
No. Description
A Schedule of Purchasers
B Registration Rights Agreement
C Investors Agreement
EXHIBIT A
INFORMATION RELATING TO PURCHASERS
Number of Shares
Name and Address of Purchaser To be Purchased
▇▇▇▇▇ LLC 1,112,828
c/o Continental Illinois Venture Corporation
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BCI Growth V, L.P. 545,286
c/o BCI Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BCI Investors, LLC 11,128
c/o BCI Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Financial Partners, L.P. 185,471
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
--------------------------------
MARCH 25, 1999
--------------------------------
CONFIDENTIAL
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of March 25, 1999 among FACTUAL DATA
CORP., a Colorado corporation (the "Company"), and Purchasers to be listed on
Exhibit A (collectively, the "Purchasers" or individually, a "Purchaser") under
that certain Share Purchase Agreement between the Company and the Purchasers
dated as of March 25, 1999 (the "Share Purchase Agreement").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Shares, as defined
under the Share Purchase Agreement, between the Company and Purchasers
(collectively, the "Shares"), and (ii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution, merger, consolidation, recapitalization,
reclassification or similar transaction with respect to, or in
exchange for or in replacement of, the Shares, in each case held by
any Holder (as defined in clause (c) below);
(c) The term "Holder" or "Holders" means Purchasers and any of their
successors or assigns which hold Registrable Securities; and
(d) The term "Closing Date" is used herein as defined in Article II of the
Share Purchase Agreement.
Section 2. Registration Rights.
(a) Within 90 days after the Closing Date, the Company shall file with the
Securities and Exchange Commission ("SEC") a registration statement
sufficient to permit the public offering and sale of the Registrable
Securities, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement
to become effective as promptly as practicable. The Company shall be
obligated to file such post effective amendments or supplements as may
be necessary to enable the Holders to deliver prospectuses which
comply with the Securities Act for a period of two years from such
effective date. The Registration Expenses (defined below) of this
registration statement shall be borne by the Company. In addition to
the registration provided for hereinabove, the Holders of the
Registrable Securities who, in the aggregate, own a majority of the
total number of Shares issued or issuable upon exercise of the
Registrable Securities may request that the Company prepare and file a
registration statement to permit the public offering and sale of the
Registrable Securities on one additional occasion. The Registration
Expenses of such additional registration statement shall be borne by
the holders of Registrable Securities included in such registration.
Holders of the Registrable Securities who, in the aggregate, own a
majority of the total number of Shares issued or issuable upon
exercise of the Registrable Securities may also request that the
Company prepare and file a registration statement on Form S-2 or S-3,
if available, to permit the public offering and sale of Registrable
Securities (each, a "Short Form Registration"). The Holders may
request a maximum of three (3) Short Form Registrations. The
Registration Expenses of any such Short Form Registration shall be
borne by the Company.
(b)
Any such registration of Registrable Securities requested pursuant to
this Section 2 shall be referred to as a Demand Registration. No
Demand Registration shall be deemed to have been effected if (i) such
registration statement, after it has become effective, is the subject
of any stop order, injunction or other order or requirement of the SEC
or other governmental agency or court for any reason not primarily
attributable to the selling Holders of Registrable Securities, (ii)
the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such
registration statement are not satisfied, other than by reason of a
failure on the part of the selling Holders of Registrable Securities;
or (iii) the holders of Registrable Securities are not able to
register and sell at least ninety percent (90%) of the Registrable
Securities requested to be included in such registration.
(c) If at any time or from time to time during the time period applicable
to Demand Registrations any of the Holders of the Registrable
Securities covered by a registration statement desire to sell
Registrable Securities in a public offering, the investment banker or
investment bankers that will manage the offering will be selected by
the Holders of at least a majority of the Registrable Securities
included in such offering; provided that the selection of any such
investment banker or investment bankers is subject to consent by the
Company, which consent shall not be unreasonably withheld.
(d) Whenever the Company shall effect a registration pursuant to this
Section 2 in connection with a public offering of Registrable
Securities, securities other than Registrable Securities shall be
reduced to the extent determined necessary by the managing underwriter
of such offering if such managing underwriter shall have advised the
selling Holders in writing (with a copy to the Company) that, in their
opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold within a price range
acceptable to the selling Holders of a majority of the Registrable
Securities requested to be included in such registration. If no such
notice or letter is provided, the Company may include Common Stock for
its own account or for the account of other shareholders of the
Company, if and to the extent consented to by the Holders of at least
a majority of the Registrable Securities included in such offering.
(e) In the event of a Demand Registration, the Company, if requested by
the Holders of at least a majority of the Registrable Securities to be
included in such Demand Registration, (i) shall agree not to, and
shall cause its executive officers and directors not to, effect any
public sale or distribution of its Common Stock or similar securities
or securities convertible into, or exchangeable or exercisable for,
Common Stock during the 90-day period following the effective date of
a registration statement relating to a public offering of Registrable
Securities if the managing underwriter or underwriters determine such
public sale or distribution would have a material adverse effect on
such offering and (ii) shall (x) cause each securityholder of the
Company's privately placed equity securities issued in connection with
a financing transaction involving at least 5% of the Company's then
outstanding equity securities at any time after the date hereof and
(y) use its reasonable best efforts to cause each other securityholder
of the Company owning at least 10% of the Company's then outstanding
equity securities (other than a securityholder permitted to file a
Schedule 13G under the Exchange Act) to agree, not to effect a public
sale or distribution of the Common Stock during the 90-day period
following the effective date of a registration statement relating to a
public offering of the Registrable Securities if the managing
underwriter or underwriters determine such public sale or distribution
would have a material adverse effect on such offering.
(f)
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and
filing fees, fees and expenses of compliance with securities or blue
sky laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for
the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons
retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on,
the NASD automated quotation system.
(g) In connection with each Demand Registration and each Piggyback
Registration (defined below), the Company shall reimburse the holders
of Registrable Securities included in such registration for the
reasonable fees and disbursements of one counsel chosen by the holders
of a majority of the Registrable Securities included in such
registration and for the reasonable fees and disbursements of each
additional counsel retained by any holder of Registrable Securities
for the purpose of rendering a legal opinion on behalf of such holder
in connection with any underwritten Demand Registration or Piggyback
Registration.
(h) To the extent Registration Expenses are not required to be paid by the
Company, each holder of securities included in any registration
hereunder shall pay its proportionate share of all Registration
Expenses based upon the ratio of the aggregate selling price of each
holder's securities included therein to the aggregate selling price of
all securities to be so registered.
Section 3. Piggyback Registration
(a) Participation. Subject to Section 3(b) below, if at any time from and
after the date hereof, the Company proposes to file or files a
registration statement under the Securities Act with respect to any
offering of securities of the same type as the Registrable Securities
for its own account (other than a registration statement on Form S-8
or Form S-4 or any successor form thereto), or for the account of any
securityholder of securities of the same type as the Registrable
Securities, then, as promptly as practicable, the Company shall give
written notice of such proposed filing to each Holder of Registrable
Securities and such notice shall offer the Holders of Registrable
Securities the opportunity to include in such registration such number
of Registrable Securities as each such Holder may request (a
"Piggyback Registration"), provided that, any Holder of Registrable
Securities may only participate in a Piggyback Registration to the
extent (based on the number of shares included) that the Holder of a
majority of the Registrable Securities elects to participate. The
Company shall include in such registration statement all Registrable
Securities requested within 20 days after the receipt of any such
notice (which request shall specify the Registrable Securities
intended to be disposed of by such Holder) to be included in the
registration for such offering pursuant to a Piggyback Registration.
Each Holder electing to participate in such Piggyback Registration
shall do so pursuant to the terms of such proposed registration and
shall execute such usual and customary custody agreements, powers of
attorney, underwriting agreements or other documents as are reasonably
requested or required by the Company and any underwriter of such
offering; provided, however, that such Holders shall not be required
to represent and warrant to, or to indemnify, any party with respect
to any matters other than as to the Holder's ownership of the
Registrable Securities and with respect to any other information
provided by Holder and required to be included in the registration
statement pursuant to SEC rules and regulations. Each Holder of
Registrable Securities shall be permitted to withdraw all or part of
such Holder's Registrable Securities from a Piggyback Registration at
any time prior to the effective date thereof. The Registration
Expenses of the holders of Registrable Securities shall be paid by the
Company in all Piggyback Registrations.
(b) Underwriter's Cutback. The Company shall use its best efforts to cause
the managing underwriter or underwriters of a proposed public offering
to permit the Registrable Securities requested to be included in the
registration for such offering under Section 3(a) above (the
"Piggyback Securities") to be included on the same terms and
conditions as any similar securities included therein. Notwithstanding
the foregoing, if the managing underwriter or underwriters
participating in such offering advises each of the Holders in writing
(with a copy to the Company) that the total amount of securities
requested to be included in such Piggyback Registration exceeds the
amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of the offering
(including the price per share of the securities to be sold), then,
after including all shares proposed to be sold by the Company in a
Company-initiated registration, the amount of securities to be offered
for the account of the Holders shall be reduced pro rata with all
other holders participating in such offering on the basis of the
number of shares to be registered by all stockholders participating in
such offering; provided, however, that the managing underwriter or
underwriters may not limit the Registrable Securities or other
securities to be included in such Registration to less than 25% of the
securities included therein.
Section 4. Registration Procedure. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall,
as expeditiously as is reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations otherwise
necessary to keep the registration statement effective for a period of
not less than twelve months (or such shorter period which will
terminate when all Registrable Securities covered by such registration
statement have been sold or withdrawn); and cause the prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act and the
Exchange Act of 1934 with respect to the disposition of all securities
covered by such registration statement during the applicable period in
accordance with the intended methods of disposition by the selling
Holders thereof set forth in such registration statement or supplement
to the prospectus.
(b) Furnish to the Holders of the Registrable Securities covered by such
registration statement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them.
(c) Use its best efforts to register and qualify the securities covered by
such registration statement under such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company has no
obligation to qualify Registrable Securities where such qualification
would cause any unreasonable delay or expenditure by the Company, but
the Company may be required to file a consent to service substantially
in the form of the Uniform Consent to Service of Process Form U-2.
(d) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter
into and perform its obligations under such an agreement.
(e) Notifyeach Holder of Registrable Securities covered by such
registration statement, (i) at any time when a prospectus relating
thereto covered by such registration statement is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose; and (iii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(f) Furnish to each Holder of Registrable Securities on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such
securities are being sold through underwriters, or, if such securities
are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes
effective (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten
public offering addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a
letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if
any, and to the Holders requesting registration of Registrable
Securities.
(g) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of any registration statement covering
Registrable Securities.
(h) Cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two
business days prior to any sale of Registrable Securities to the
underwriters.
(i) Use its best efforts to cause the Registrable Securities covered by
the applicable registration statement to be registered with or
approved by such other foreign governmental agencies or authorities,
and the NASD or any other applicable exchange or regulatory authority,
as may be necessary to enable the seller or selling Holders thereof or
the underwriters, if any, to consummate the disposition of such
Registrable Securities.
(j) Cause all Registrable Securities covered by the registration statement
to be listed on each securities exchange on which similar securities
issued by the Company are then listed if requested by the Holders of
at least 50% of such Registrable Securities or the managing
underwriters, if any.
(k) Cooperate and assist in any filings required to be made with the NASD
in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations
of the NASD).
(l) Make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with
such registration statement.
(m) Permit any holder of Registrable Securities, which holder, in the
Company's sole and exclusive judgment, might be deemed to be an
underwriter or a controlling Person of the Company, to participate in
the preparation of such registration or comparable statement and to
require the insertion therein of material furnished to the Company in
writing, which in the reasonable judgment of such holder and its
counsel should be included.
Section 5. Furnish Information. The selling Holders shall promptly furnish to
the Company in writing such reasonable information regarding themselves,
the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
Section 6. Indemnification and Contribution. In the event any Registrable
Securities are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder, and
each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Securities Exchange Act of
1934 (the "Exchange Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the
Company will reimburse each such Holder, officer or director,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
Section 6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not
be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon an untrue statement or
omission made in such registration statement, preliminary prospectus
or final prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder,
underwriter or controlling person; provided, further, however, that if
any losses, claims, damages or liabilities arise out of or are based
upon any untrue statement of a material fact, or omission to state a
material fact required to be stated therein or necessary to make the
statements there not misleading in any preliminary prospectus, and
made in reliance upon and in conformity with written information
furnished by such Holder expressly for use therein, which did not
appear in the final prospectus, the Company shall not have any such
liability with respect thereto to such Holder, any person who controls
such Holder within the meaning of the Securities Act, or any director
of such Holder, if such Holder delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or
liabilities and failed to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or supplemented, to
such person at or prior to the written confirmation of the sale to
such person, provided that such Holder had an obligation to deliver a
copy of the final prospectus to such person; and
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities in such
registration statement or any of its directors or officer or any
person who controls such Holder or underwriter, against any losses,
claims, damages or liabilities (joint or several) to which the Company
or any such director, officers, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any untrue statement or of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, if the untrue statement or omission in respect of which
such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and
each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling
person, underwriter or controlling person, or other Holder, officer,
director, or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action, if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably
withheld); provided, further that the maximum liability of any selling
Holder under this Section 6(b) in regard to any registration statement
shall in no event exceed the amount of the net proceeds received by
such selling Holder from the sale of securities under such
registration statement; provided, further, however, that if any
losses, claims, damages or liabilities arise out of or are based upon
an untrue statement, or omission to state a material fact require to
be stated therein or necessary to make the statements therein not
misleading in any preliminary prospectus which did not appear in the
final prospectus, such seller shall not have any such liability with
respect thereto to the Company, any person who controls the Company
within the meaning of the Securities Act, any officer of the Company
who signed the registration statement or any director of the Company,
if the Company delivered a copy of the preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed
to deliver a copy of the final prospectus, as amended or supplemented
if it has been amended or supplemented, to such person at or prior to
the written confirmation of the sale to such person, provided that the
Company had an obligation to deliver a copy of the final prospectus to
such person.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is
to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel mutually satisfactory to the
parties. An indemnified party shall have the right to retain its own
counsel, however, the fees and expenses of such counsel shall be at
the expense of the indemnified party, unless (i) the employment of
such counsel has been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party has failed to assume
the defense and employ counsel, or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party, it being understood,
however, that the indemnifying party shall not, in connection with any
one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for all
indemnified parties). The failure to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 6 is unavailable
or insufficient (other than for reason of exceptions provided in this
Section 6) to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of
indemnifying such indemnified party contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or actions in such proportion as is appropriate
to reflect the relative fault of the Company, on the one hand, and
selling Holders, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities
or actions as well as any other relevant equitable considerations,
including the failure to give any required notice. The relative fault
shall be determined by reference to, among other things, whether the
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company, on the
one hand, or by such selling Holders on the other, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto
acknowledge and agree that it would not be just and equitable if
contribution pursuant to this subparagraph (d) were determined by pro
rata allocation (even if all of the selling Holders were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred
to above in this subparagraph (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities or actions in respect thereof referred to above in this
subparagraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this subparagraph (d), the amount
the selling Holders shall be required to contribute shall not exceed
the amount, if any, by which the total price at which the securities
sold by each of them were offered to the public exceeds the amount of
any damages which they would have otherwise been required to pay by
reason of such untrue statement or omission, or other violation of
law. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of fraudulent
misrepresentation.
Section 7. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the original parties hereto and each person who
becomes a party hereto, and their respective successors and assigns.
(b) Notices. Except as otherwise provided herein, any notice, consent or
request to be given in connection with any term or provision of this
Agreement shall be deemed to have been given sufficiently if sent by
hand, registered or certified mail, postage prepaid, facsimile
transmission or courier (next day delivery), to the Company or to
Purchasers at their addresses as designated in, or from time to time
pursuant to, Article XII of the Share Purchase Agreement.
(c) Integration. This Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereby and no
party shall be bound by, nor shall any party be deemed to have made,
any covenants, representations, warranties, undertakings or agreements
except those contained in such entire Agreement. The section and
paragraph headings contained in this Agreement are for the reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.
(e) Amendment. Except as otherwise provided herein, the provisions of this
Agreement may be amended or waived only upon the prior written consent
of the Company and the holders of a majority of all Registrable
Securities; provided, however, that no amendment or waiver which
materially and adversely effects the rights of a Purchaser or its
affiliates hereunder without also correspondingly materially and
adversely effecting the rights of the other holders of Registrable
Securities may be made without the consent of such Purchaser.
(f) Governing Law. This Agreement and the rights and remedies of the
parties hereto shall be governed by and construed in accordance with
the laws of the State of Colorado.
(g) Specific Performance. Each of the parties hereto, in addition to being
entitled to exercise all rights provided herein, in the Share Purchase
Agreement and granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
Each of the parties hereto agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
(h) Rule 144. The Company covenants that it will file the reports required
to be filed by it under the Exchange Act of 1934 and the rules and
regulations adopted by the SEC thereunder, all to the extent required
from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as
such rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such
Holder a written statement as to whether it has complied with such
information and requirements.
(i) No Inconsistent Agreements. The Company shall not hereafter enter into
any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(j) New Parties. During the term of this Agreement, the Company may, with
the consent of the Company's Board of Directors and CIVC, allow other
persons to become parties to this Agreement by executing a joinder
agreement, and the Schedule of Holders attached hereto as Exhibit A
shall be revised and updated accordingly.
(k) Other Registration Rights. Except as provided in this Agreement, the
Company shall not grant to any Persons the right to request the
Company to register any equity securities of the Company, or any
securities convertible or exchangeable into or exercisable for such
securities, without the prior written consent of the holders of a
majority of the Registrable Securities.
(l) Adjustments Affecting Registrable Securities. The Company shall not
take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would
adversely affect the marketability of such Registrable Securities in
any such registration.
IN WITNESS WHEREOF, this Agreement has been executed effective as of the
date first above written.
▇▇▇▇▇ LLC
By:
Name:
Title:
▇▇▇▇▇▇▇▇ FINANCIAL PARTNERS, L.P.
By:
Name:
Title:
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By:
Name:
Title:
BCI INVESTORS, LLC
By:
Name:
Title:
FACTUAL DATA CORP.
By:
Name:
Title:
EXHIBIT C
INVESTORS AGREEMENT
INVESTORS AGREEMENT
OF
FACTUAL DATA CORP.
--------------------------------
MARCH 25, 1999
--------------------------------
CONFIDENTIAL
CONTENTS
Page
1. Restrictions on Transfer of Common Stock.......................1
(a) Transfer of Common Stock....................................1
(b) Right to Purchase Upon Bankruptcy...........................2
(c) Repurchase Upon Divorce.....................................2
(d) Repurchase Upon Death or Disability.........................2
(e) Termination of Restrictions.................................2
2. Transfers in Accordance with this Agreement....................2
3. Legend.........................................................2
4. Transfer.......................................................3
5. Tag Along Rights...............................................3
6. Approval of Material Company Transactions and Actions..........4
7. Small Business Matters.........................................4
8. Board of Directors.............................................6
(a) Representation..............................................6
(b) Liability Insurance.........................................6
(c) Reimbursement of Expenses...................................6
9. Information Rights.............................................6
(a) Access and Information......................................6
(b) Information Following Effective Date........................6
10. Definitions...................................................7
11. Miscellaneous................................................11
(a) No Third Party Beneficiaries...............................11
(b) Entire Agreement...........................................11
(c) Succession and Assignment..................................11
(d) Counterparts...............................................11
(e) Headings...................................................11
(f) Notices....................................................11
(g) Governing Law..............................................12
(h) Amendments and Waivers.....................................12
(i) Disclaimer of Rights.......................................12
(j) Severability...............................................12
(k) Construction...............................................12
(l) Specific Performance.......................................12
INVESTORS AGREEMENT
THIS INVESTORS AGREEMENT (this "Agreement") is made March 25, 1999 ("Effective
Date") by and among Factual Data Corp., a Colorado corporation (the "Company"),
▇▇▇▇▇ LLC, a Delaware limited liability company ("▇▇▇▇▇"), the "Minority
Investors" to be listed on Exhibit A, and those certain individuals listed on
the signature pages hereto (the "Individual Investors"). The Company, ▇▇▇▇▇, the
Minority Investors and the Individual Investors are individually referred to
herein as an "Investor" and collectively as the "Investors." Capitalized terms
used herein are defined in Section 11 hereof.
RECITALS
A. Pursuant to that certain purchase agreement dated March 25, 1999 between
▇▇▇▇▇ and the Company (the "Purchase Agreement"), ▇▇▇▇▇ owns [___%] of the
Company's common stock, par value $____ per share, (the "Common Stock").
B. The Individual Investors own, in the aggregate, [___%] of the Common
Stock.
C. The parties hereto desire to enter into this Agreement for the purposes of
(i) assuring continuity in the ownership of the Company, (ii) limiting the
manner and terms by which Common Stock held by the Investors may be
transferred, and (iii) establishing the composition of the Company's Board
of Directors (the "Board").
AGREEMENT
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Restrictions on Transfer of Common Stock
(a) Transfer of Common Stock Notwithstanding anything to the contrary in
this Agreement, neither the Individual Investors nor the Minority
Investors shall sell, transfer, assign, pledge or otherwise dispose of
("Transfer") any Common Stock without the prior written consent of
▇▇▇▇▇, provided that, subject to the terms of this Agreement
(including but not limited to Section 5(b)): (i) on any date after six
months from the Effective Date until five years after the Effective
Date, each ▇▇▇▇▇▇ Investor (as defined in Section 10) may Transfer in
any three month period an amount of Common Stock not to exceed the
average weekly reported trading volume of the Common Stock for the
four calendar weeks preceding such Transfer without the consent of
▇▇▇▇▇ provided that, in no case shall the aggregate number of shares
of Common Stock transferred by any ▇▇▇▇▇▇ Investor exceed 20% of the
number of shares of Common Stock held by such ▇▇▇▇▇▇ Investor as of
the Effective Date; (ii) for three years following the Effective Date,
each Minority Investor may Transfer up to 20% of the shares of Common
Stock owned by such Minority Investor as of the Effective Date without
the consent of ▇▇▇▇▇, and (iii) following such three year period, each
Minority Investor may transfer (without the consent of ▇▇▇▇▇), in any
three month period, an amount of Common Stock not to exceed the
average weekly reported trading volume of the Common Stock for the
four calendar weeks preceding such Transfer. ▇▇▇▇▇ and its Affiliates
may Transfer (a "Permitted Transfer") their Common Stock: (i) subject
to the terms of this Agreement, or (ii) to any Person that is an
Affiliate or otherwise associated with ▇▇▇▇▇, or (iii) to any Person
▇▇▇▇▇ may select, provided, however, that not more than 20% of ▇▇▇▇▇'▇
and its Affiliates' Common Stock may be transferred pursuant to the
provisions of this clause (iii), and provided further that ▇▇▇▇▇ shall
obtain a proxy prior to making any Permitted Transfer.
- 1 -
(b) Right to Purchase Upon Bankruptcy Upon the Bankruptcy of any Investor,
such Investor (or its Trustee, as defined below) shall, within five
(5) days, give notice of the Bankruptcy to the Company and the other
Investors (for purposes of this Section 1(b), the "Other Investors")
pursuant to the notice provisions of this Agreement. Within 30 days of
receipt of such notice, the Company shall have the right (but not the
obligation), in its sole and absolute discretion, to notify the
Trustee that it intends to redeem for all cash or for the Purchase
Note, any or all of the Common Stock owned by the bankrupt Investor
from the trustee or bankruptcy estate of such Investor (the
"Trustee"). If the Company gives such a notice of intent to redeem, it
shall consummate the redemption within thirty (30) days after
providing the notice of intent to redeem. If any Common Stock held by
such Trustee is not purchased by the Company, then during the sixty
(60) day period after receipt of the notice of the bankruptcy, the
Other Investors shall have the right (but not the obligation), in
their sole and absolute discretion, to purchase for all cash on a pro
rata basis any of the Common Stock owned by the bankrupt Investor from
the Trustee. The price for the Common Stock shall equal the Fair
Market Value of the Common Stock.
(c) Repurchase Upon Divorce The Company shall have the right (but not the
obligation), for ninety (90) days from the date the Company learns of
the subject divorce, in its sole and absolute discretion, to redeem
for all cash or for the Purchase Note any or all of the Common Stock
from any ex-spouse acquiring Common Stock from any Investor pursuant
to a divorce, for the Fair Market Value of the Common Stock. If any
Common Stock owned by the acquiring spouse are not purchased by the
Company, then the Other Investors shall have the right for the next
thirty (30) days (but not the obligation), in their sole and absolute
discretion, to purchase for all cash on a pro rata basis any of the
Common Stock from any person acquiring Common Stock from any Investor
pursuant to a divorce for the Fair Market Value. Any Investor who
transfers their Common Stock pursuant to a divorce shall, within ten
(10) days of the entry of any decree or order of divorce or any
settlement in which such Investor's Common Stock is transferred, give
notice of such transfer pursuant to the notice provisions of this
Agreement.
(d) Repurchase Upon Death or Disability In the event of the death or
Disability of an Investor other than ▇▇▇▇▇ or its Affiliates, such
Investor's Common Stock may be held by members of such Investor's
Family Group (and such Common Stock will continue to be subject to
this Agreement).
(e) Termination of Restrictions The restrictions set forth in this Section
1 will continue with respect to the Common Stock until ▇▇▇▇▇ and its
Affiliates own, in the aggregate, less than 5% of the Company's total
outstanding Common Stock as of the Effective Date, giving effect to
those transactions contemplated in the Purchase Agreement (the
"Primary Shares").
2. Transfers in Accordance with this Agreement Each Investor agrees that the
Common Stock held by such Investor will not be transferred in violation of
this Agreement, the Securities Act, or any other applicable law.
3. Legend. Each certificate evidencing Common Stock held by ▇▇▇▇▇, the
Individual Investors and the Minority Investors and each certificate
issued in exchange for or upon the transfer of any such Common Stock (if
such Common Stock remains subject to the terms of this Agreement after
such transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
- 2 -
"The securities represented by this certificate were originally issued on
_________________. The transfer of such securities is subject to THE SECURITIES
ACT OF 1933, THE APPLICABLE STATE SECURITIES LAWS, AND certain restrictions set
forth in an Investors Agreement DATED MARCH 25, 1999 BY AND among the issuer of
this security (the "Company") and certain of the Company's security holders. A
copy of the Investors Agreement will be furnished without charge by the Company
to the holder hereof upon written request."
4. Transfer. Prior to ▇▇▇▇▇, any Minority Investor or any Individual Investor
transferring any Common Stock (other than in a Public Sale) to any person
or entity, the transferring Investor will cause the prospective transferee
to execute and deliver to the Company an agreement to be bound by the
terms of this Agreement, in the form attached hereto as Exhibit B.
5. Tag Along Rights.
(a) At least thirty (30) business days prior to any Transfer of Common
Stock by ▇▇▇▇▇ (other than a Permitted Transfer), the Minority
Investors or the Individual Investors, the transferring party (the
"Transferor") shall deliver a written notice (the "Sale Notice") to
the Company, ▇▇▇▇▇, the Minority Investors and the Individual
Investors (for this Section 5, the "Other Investors"), specifying in
---------- reasonable detail the identity of the prospective
transferee(s), the number of shares to be transferred and the terms,
the conditions of the Transfer, and the price and form of
consideration. The Sale Notice shall also include copies of all of the
agreements and other documents that will be used in connection with
such Transfer. The Other Investors may elect to participate in the
contemplated Transfer, at the same price per share and on the same
terms, by delivering written notice to the Transferor within ten (10)
business days after delivery of the Sale Notice. Subject to Section
5(c), if any Other Investors have elected to participate in such
Transfer, the Transferor and such Other Investors shall be entitled to
sell in the contemplated Transfer, at the same price and on the same
terms, a number of shares of Common Stock equal to the product of (i)
the fraction determined by dividing the percentage of Common Stock
owned by such Person by the aggregate percentage of Common Stock owned
by the Transferor and the Other Investors participating in such sale
and (ii) the number of shares of Common Stock to be sold in the
contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 shares by
▇▇▇▇▇, and if ▇▇▇▇▇ at such time owns 30% of all Common Stock and if
one Other Investor elects to participate and owns 20% of all Common
Stock, ▇▇▇▇▇ would be entitled to sell 60 shares ((30%/50%) x 100
shares of Common Stock) and the Other Investor would be entitled to
sell 40 shares ((20%/50%) x 100 shares of Common Stock).
Each Investor transferring Common Stock pursuant to this Section shall
pay its pro rata share (based on the number of shares to be sold) of
the expenses incurred by the Investors in connection with such
transfer (if and to the extent not paid or payable by another person
or entity) and shall be obligated to join on a pro rata basis (based
on the number of shares of Common Stock to be sold) in any
indemnification or other obligations that the Transferor agrees to
provide in connection with such Transfer.
- 3 -
(b) Notwithstanding the foregoing, (i) neither the Individual Investors
nor the Minority Investors shall have the right under Section 5(a) to
participate in a Transfer by ▇▇▇▇▇ until the aggregate number of
shares of Common Stock owned by ▇▇▇▇▇ (after giving effect to the
transfer contemplated by Section 5(a)) equals less than 80% of the
total number of shares of Common Stock owned by ▇▇▇▇▇ as of the
Effective Date; (ii) neither ▇▇▇▇▇ nor the Minority Investors shall
have the right under Section 5(a) to participate in a Transfer by the
Individual Investor until either (A) the aggregate number of shares of
Common Stock owned by the Individual Investors (after giving effect to
the transfer contemplated by Section 5(a)) equals less than 80% of the
total number of shares of Common Stock owned by the Individual
Investors as of the Effective Date, or (B) any Transfer by the
Individual Investors, in conjunction with any other events,
transactions, Transfers or occurrences, results in a Loss of Control;
and (iii) neither ▇▇▇▇▇ nor the Individual Investors shall have the
right under Section 5(a) to participate in a Transfer by the Minority
Investors until the number of shares of Common Stock owned by the
Minority Investor making such Transfer (after giving effect to the
transfer contemplated by Section 5(a)) equals less than 80% of the
total number of shares of Common Stock owned by such Minority Investor
as of the Effective Date.
(c) If any Transfer by ▇▇▇▇▇ results in ▇▇▇▇▇ having transferred shares of
Common Stock which, in the aggregate, constitute more than 20% of the
Common Stock owned by ▇▇▇▇▇ as of the Effective Date (a "Triggering
Event"), then the Individual Investors shall be permitted to
participate in any such Transfer on the following terms: (i) for any
such Transfer made in the first year following such Triggering Event,
the Individual Investors shall be permitted to contribute 25% of those
shares of Common Stock being transferred; (ii) for any such Transfer
made in the second year following such Triggering Event, the
Individual Investors shall be permitted to contribute 35% of those
shares of Common Stock being transferred; and (iii) for any such
Transfer made in the third year following the Triggering Event or
thereafter, the Individual Investors shall be allowed to participate
on a pro rata basis with ▇▇▇▇▇.
6. Approval of Material Company Transactions and Actions The Company will not
liquidate, dissolve or enter into any merger, consolidation, joint venture,
recapitalization, partnership or other combination, or sell, lease or
dispose of or permit any Subsidiary to sell, lease or otherwise dispose of,
more than 50% of the consolidated assets of the Company and its
Subsidiaries (computed on the basis of book value, determined in accordance
with generally accepted accounting principles consistently applied, or fair
value, determined by the Company's board of directors in its reasonable
good faith judgment) in any transaction or series of related transactions
(other than sales goods in the ordinary course of business) without prior
approval of the Special Committee of the Board of Directors (as defined in
Section 10).
7. Small Business Matters.
(a) The Company shall enter into a Plan of Divestiture (as defined in the
SBIC Regulations) with each SBIC Holder as and when required by the
SBIC Regulations.
(b) Within seventy-five (75) days after the Closing and each subsequent
Financing hereunder by an SBIC Holder, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's
president or chief financial officer describing in reasonable detail
the use of the proceeds of the Financing hereunder by the Company and
its Subsidiaries. In addition to any other rights granted hereunder,
the Company shall grant each SBIC Holder and the United States Small
Business Administration (the "SBA") access to the Company's records
for the purpose of verifying the use of proceeds.
- 4 -
(c) The Company acknowledges that Continental Illinois Venture Corporation
is a federally licensed SBIC under the SBIC Act. The Company, together
with its "affiliates" (as that term is defined in 13 CFRss.121.103),
is a "small business concern" within the meaning of the SBIC
Regulations, including 13 CFRss.121.301. The information regarding the
Company and its affiliates set forth in SBA Form 480, Form 652 and
Parts A and B of Form 1031 are accurate and complete. Neither the
Company nor any Subsidiary presently engages in, or shall hereafter
engage in, any activities, nor shall the Company or any Subsidiary use
the proceeds of the Financing for any purpose, for which an SBIC is
prohibited from providing funds by SBIC Regulations (including 13
CFRss.107.720).
(d) Upon the occurrence of any Regulatory Violation or in the event that
the SBIC Holder determines in its reasonable good faith judgment that
a Regulatory Violation has occurred, in addition to any other rights
and remedies to which it may be entitled (whether under this Agreement
or any other agreement), the SBIC Holder shall have the right, to the
extent required under SBIC regulations, to demand the immediate
repurchase of all of the outstanding Company Interests owned by the
SBIC Holder at a price equal to the greater of the Fair Market Value
of such Company Interests or the purchase price paid for such Company
Interests hereunder by delivering written notice of such demand to the
Company. The Company shall deliver a cashier's or certified check or
by wire transfer of immediately available funds to the SBIC Holder
within thirty (30) days after the Company's receipt of the demand
notice, and, upon such payment, such SBIC Holder shall deliver the
certificates evidencing the Company Interests being repurchased duly
endorsed for transfer or accompanying duly executed forms of
assignment.
(e) Promptly after the end of each fiscal year, the Company shall deliver
to the SBIC Holder a written assessment of the economic impact of the
SBIC Holder's investment in the Company, specifying the full-time
equivalent jobs created or retained in connection with the investment,
the impact of such SBIC Holder's Financing on the revenues and profits
of the Company and its Subsidiaries and on taxes paid by the Company
and its employees.
(f) In the event that the SBIC Holder determines that it has a Regulatory
Problem, the SBIC Holder shall have the right to transfer its Common
Stock without regard to any restriction on transfer set forth in this
Agreement, and the Company shall take all such actions as are
reasonably requested by the SBIC Holder in order to (i) effectuate and
facilitate any transfer by the SBIC Holder of any Common Stock then
held by the SBIC Holder to any Person designated by the SBIC Holder,
(ii) permit the SBIC Holder (or any of its Affiliates) to exchange all
or any portion of any voting Common Stock then held by it on a
share-for-share basis for shares of nonvoting Common Stock, which
nonvoting Common Stock shall be identical in all respects to the
voting Common Stock exchanged for it, except that it shall be
nonvoting and shall be convertible into voting Common Stock on such
terms as are requested by the SBIC Holder in light of regulatory
considerations then prevailing, (iii) continue and preserve the
respective allocations of the voting Common Stock with respect to the
Company arising out of the SBIC's aggregate ownership of voting
securities before the transfers and amendments referred to above
(including entering into such additional agreements as are requested
by the SBIC Holder to permit any Persons designated by the SBIC Holder
to exercise any voting power which is relinquished by the SBIC
Holder), and (iv) amend this Agreement, and related agreements and
instruments to effectuate and reflect the foregoing. The parties to
this Agreement agree to vote their securities in favor of such
amendments and actions.
- 5 -
8. Board of Directors.
(a) Representation. From and after the Effective Date and until the
provisions of this Agreement cease to be effective, each Investor
shall vote all his Common Stock and shall take all other necessary or
desirable actions within his control (whether in his capacity as an
equity owner, director, member of a board committee or officer of the
Company or otherwise, and including without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of written consents in lieu of meetings), and the Company
shall take all necessary or desirable actions within its control
(including without limitation, calling special Board and shareholder
meetings), so that:
(i) at least one Person nominated by ▇▇▇▇▇ to serve on the Board (a
"▇▇▇▇▇ Director") is elected to the Board and appointed to serve
on the Board's compensation and audit committees and Special
Committee and that at least one ▇▇▇▇▇ Director remains on the
Board so long as ▇▇▇▇▇ is a holder of at least 5% of the Primary
Shares.
(ii) the composition of the board of directors of each of the
Company's subsidiaries shall be the same as that of the Company's
Board.
(b) Liability Insurance. The Company will provide director and officer
liability insurance coverage, in an amount satisfactory to ▇▇▇▇▇, to
the ▇▇▇▇▇ Director and any officer of the Company who is also an
employee of ▇▇▇▇▇.
(c) Reimbursement of Expenses. The Company will reimburse reasonable fees
and expenses incurred by the ▇▇▇▇▇ Director in the course of
fulfilling such director's duties to the Company, including costs
associated with attending meetings of the Board.
9. Information Rights
(a) Access and Information The Company will provide ▇▇▇▇▇ and their
representatives full access at all reasonable times prior to the
Effective Date to the properties, books and records of the Company and
to furnish such information and documents in its possession relating
to the Company as ▇▇▇▇▇ may reasonably request.
(b) Information Following Effective Date Beginning with execution of this
Agreement and continuing beyond the Effective Date for so long as
▇▇▇▇▇ owns at least 5% of the Primary Shares, the Company shall
furnish Haley, without charge, the following documents:
(i) As soon as available, and in any event, before or simultaneous
with their filing with the Commission, one copy of each annual
and interim financial and other report or communication filed
with the Commission;
(ii) Such additional publicly filed documents and publicly available
information with respect to the Company and its affairs as ▇▇▇▇▇
may from time to time reasonably request;
- 6 -
(iii)as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the Company, duplicate
copies of the audited financial statements of the Company and its
Subsidiaries reported on by a firm of independent certified
public accountants of national recognition, and stating in
comparative form the figures as of the end of and for the
previous fiscal year, accompanied by a report thereon containing
an opinion which contains no exceptions or qualifications (except
for qualifications regarding specified contingent liabilities) by
such independent certified public accountants that the financial
statements have been prepared in accordance with generally
accepted accounting principles consistently applied, except as
may be noted otherwise;
(iv) as soon as available, and in any event within thirty (30) days
after the end of each month commencing with the end of the month
of January 1999, a copy of the consolidated interim financial
statements of the Company and its Subsidiaries, consisting at a
minimum of: (A) the balance sheet as of the end of the month, and
(B) a statement of income for the month and for the partial or
full fiscal year ended as of the end of the month, all in
reasonable detail and, in the case of a month which is the end of
the Company's fiscal quarter, setting forth in comparative form
corresponding budgeted figures for such partial or full fiscal
year prepared in accordance with generally accepted accounting
principles consistently applied, except as may be noted
otherwise;
(v) within thirty (30) days of filing, copies of all returns and
documents filed by the Company or its Subsidiaries with any
federal governmental authority, including, without limitation,
the U.S. Internal Revenue Service, the U.S. Environmental
Protection Agency, the U.S. Occupational Safety & Health
Administration, the Small Business Administration and the
Securities and Exchange Commission;
(vi) within thirty (30) days of receipt thereof, a copy of any
complaint, motion for judgment or other such pleadings served on
or by the Company or its Subsidiaries or any of their respective
officers or directors, as the case may be, relating to any
litigation to which any of the Company and its Subsidiaries, or
any of their respective officers or directors is made a party
after the date of this Agreement by mailing to ▇▇▇▇▇; and
(vii)within ten (10) days of receipt thereof, notice of any default
declared with respect to any lease, contract or loan of any of
the Company or its Subsidiaries or any judgment entered against
any of the Company or its Subsidiaries if such default or
judgment involves an amount exceeding $10,000.
10. Definitions.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person in question.
- 7 -
"Average Closing Price" means, as of any date, (i) if the Common Stock is listed
or admitted for trading on a national securities exchange, the average of the
composite prices therefor as reported in the Wall Street Journal on the
principal national securities exchange on which such Common Stock is traded, on
the last five (5) trading days before such date, (ii) if the Common Stock is not
listed or admitted for trading on a national securities exchange, but is quoted
through the NASDAQ National Market System, the average of the closing prices
therefor on the last five (5) trading days before such date, or (iii) if the
Common Stock is not listed on either a national securities exchange or quoted
through the NASDAQ National Market System, but is publicly traded, the average
of the bid and asked prices therefor on the last twenty (20) trading days before
such date.
"Bankruptcy" means anytime (i) a Person makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as the
become due, (ii) an order, judgment or decree is entered adjudicating a Person
bankrupt or insolvent, (iii) any order for relief with respect to a Person is
entered under the Federal Bankruptcy Code, (iv) a Person petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or liquidator
of a Person, or of any substantial part of the assets of a Person, or commences
any proceeding (other than a proceeding for the voluntary liquidation and
dissolution of any Subsidiary) relating to a Person under any bankruptcy
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction or (v) any such petition or application is
filed, or any such proceeding is commenced, against a Person and either (A) a
Person by any act indicates its approval thereof, consent thereto or
acquiescence therein or (B) such petition, application or proceeding is not
dismissed within 45 days.
"Commission" means the Securities and Exchange Commission.
"Company Interests" means (i) any interests in the Company or any of its
Subsidiaries whether in the form of Common Stock, preferred stock, options,
warrants, unit appreciation rights, voting rights or other equity securities,
and (ii) any instruments convertible into any of the aforementioned interests.
"Disability" means physical or mental incapacity resulting in an Investor being
unable to perform his duties in a manner satisfactory to the Board for any
consecutive three (3) month period, or for any six (6) non-consecutive months in
any consecutive twelve (12) month period. Any question as to the existence of
the Disability of an Investor as to which the Investor and the Company cannot
agree shall be determined in writing by the Board upon consultation with a
qualified independent physician.
"▇▇▇▇▇▇ Investor" means each of (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (together,
▇▇▇▇▇▇ and ▇▇▇▇▇▇ representing one ▇▇▇▇▇▇ Investor).
"Fair Market Value" shall have the following meaning:
(i) debt securities shall be valued at par, plus accrued and unpaid
interest and any applicable prepayment premium;
(ii) if, on the date of determination, any portion of the Common Stock
shall be publicly traded, the Fair Market Value of the publicly
traded Common Stock shall be the Average Closing Price on such
date;
(iii)if, on the date of determination, none of the Common Stock shall
be publicly traded or if the Common Stock consists of some which
are publicly traded and some which are not, then the Fair Market
Value of the non-traded Common Stock shall be determined using
the following procedure:
- 8 -
First, the Company shall deliver in writing to the owner of the Common Stock a
proposed price for the Common Stock as of the date of termination under this
Agreement, such price to be determined by the Company's Board (excluding the
owner of such Common Stock if he or she is a member of the Board), and supply a
reasonably detailed explanation of the basis for such proposal. Upon the written
request of the owner of the Common Stock, the Company shall provide the owner of
the Common Stock, his attorneys, agents and representatives, reasonable access
to the information used by the Company in calculating its proposed price for the
Common Stock.
Second, if the owner of the Common Stock does not in good faith agree with the
proposed price, within thirty (30) days of receipt thereof he shall deliver
written notice of such disagreement to the Company, which notice shall set forth
his proposed price for the Common Stock. During such 30-day period, upon the
written request of the owner of the Common Stock, the Company shall provide the
owner of the Common Stock, his attorneys, agents and representatives, reasonable
access to such information as they may reasonably require in order to determine
their proposed price for the Common Stock.
Third, the Company may either accept the price of the owner of the Common Stock
or, within thirty (30) days of receipt thereof, deliver written notice of its
disagreement therewith to the owner of the Common Stock.
Fourth, if the Company delivers written notice of disagreement within the time
period provided above, the owner of the Common Stock, at the owner's sole
expense, shall appoint a qualified independent appraiser. The appraiser
appointed pursuant to this subsection Fourth, shall render his or her
conclusions of the valuation of any Common Stock which are equity securities at
the Initial Fair Market Value of such Common Stock.
Fifth, the Initial Fair Market Value of such equity securities plus the par
value (and any accrued and unpaid interest and any applicable prepayment
premium) of any such Common Stock which are debt securities shall be the Fair
Market Value for purposes of this subsection Fifth. If such Fair Market Value is
between the prices proposed by the Company and the owner of the Common Stock,
then such Fair Market Value shall establish conclusively the price of the Common
Stock for the purpose of this Agreement. Otherwise, the proposed price closest
to such fair market value of the appraiser shall govern.
"Family Group" means an Investor's parents, siblings, spouse and descendants
(whether natural or adopted), any trust or retirement account for the benefit of
the Investor and/or the Investor's spouse and descendants, and any charitable
entity, established by Investor.
"Financing" means the purchase of Company Interests by the SBIC
Holder hereunder.
"Initial Fair Market Value" means the value of any of Company Interests which
are equity securities determined by an appraiser appointed as provided in this
Agreement utilizing the following principles, and adjusted as provided below.
Such appraiser shall render his or her conclusion of the fair market value of
the issuer of each such Company Interest on a willing buyer-willing seller
basis, both being reasonably and commercially motivated to buy or sell, but
neither being under any compulsion to buy or sell, each having reasonable
knowledge of the relevant facts, and taking into account assets which may not
appear on the issuer's balance sheet (including but not limited to going concern
value and goodwill). The appraiser shall then derive the "Initial Fair Market
Value" of any such Company Interest by multiplying (a) the fair market value of
the issuer of such Company Interest, by (b) the percentage of the equity
securities of such issuer represented by the Investor's equity in such issuer.
The Initial Fair Market Value shall be the aggregate of the individual Initial
Fair Market Values of all Company Interests which are to be transferred.
- 9 -
"Loss of Control" means any event, transaction, Transfer or occurrence which
individually, or in conjunction with other events, transactions, Transfers or
occurrences, results in a reduction of control of the Individual Investors over
the affairs of the Company. Such reductions shall include, but not be limited to
(i) a reduction in the percentage of voting stock held, in the aggregate, by the
Individual Investors, below 30% of the total voting stock outstanding, (ii) a
loss of Board control by the Individual Investors, (iii) the creation of
covenants which could have the effect of significantly reducing the voting,
operational, or Board control of the Individual Investors, or (iv) any
combination of the foregoing events that could result in a significant reduction
of the power of the Individual Investors to exercise control, or a controlling
influence, over the Company.
"Person" means an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
"Purchase Note" shall mean a seven (7) year subordinated promissory note issued
by the Company or one of its Affiliates to the holder of the Common Stock
(provided that if any note is issued by an Affiliate, such note will be
guaranteed by the Company). The principal amount of the note shall accrue
interest at the prime rate on an annual basis, and the note shall be due and
payable, in its entirety, on a date seven (7) years after its date of issuance.
If any senior lenders object to the above terms, the Company agrees to
reformulate the terms of the promissory note to make it reasonably acceptable to
such lenders.
"Regulatory Problem" means any set of facts or circumstances wherein it has been
asserted by any governmental regulatory agency (or the SBIC Holder believes that
there is a substantial risk of such assertion) that the SBIC Holder is not
entitled to hold, or exercise any significant right with respect to any Company
Interests.
"Regulatory Violation" means a change in the principal business activity of the
Company and its Subsidiaries to an ineligible business activity (within the
meaning of the SBIC Regulations).
"SBA" means the United States Small Business Administration, and any other
successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Company licensed by an SBA under the
SBIC Act.
"SBIC Act" means the Small Business Investment Act of 1958, as
amended.
"SBIC Holder" means ▇▇▇▇▇ and any Person whose Company Interests are aggregated
with ▇▇▇▇▇'▇ Company Interests under SBIC Regulations.
"SBIC Regulations" means the SBIC Act and the regulations issued by the SBA
thereunder, codified at Title 13 of the Code of Federal Regulations, Parts 107
and 121.
"Special Committee" means a committee of the Company's Board of Directors
consisting of the ▇▇▇▇▇ Director and two other members of the Board who are (i)
"outside" directors and (ii) appointed to serve on the Special Committee by the
▇▇▇▇▇ Directors. All action taken by the Special Committee shall be taken
pursuant to a unanimous vote of its Members.
"Subsidiary" means any entity with respect to which a specified Person (or a
subsidiary thereof) owns a majority of the equity or has the power to vote or
direct the voting of sufficient securities to control the management of such
entity.
- 10 -
11. Miscellaneous.
(a) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns. Any entity or person to
whom the Investors transfer Common Stock pursuant to this Agreement
shall have all of the Investors' rights and obligations under this
Agreement.
(b) Entire Agreement. This Agreement constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements,
or representations by or among the parties, written or oral, to the
extent they conflict in any way with the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No Investor may assign either this
Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of ▇▇▇▇▇; provided,
however, pursuant to Section 4, a permitted transferee of Common Stock
shall receive all of the rights and obligations of the transferring
party.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if personally delivered, sent by facsimile (with hard copy to
follow) or express overnight courier service, or if mailed by
registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to the Individual Investors: Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇
c/o Factual Data Corp. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
5200 Hahns Peak Drive ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Loveland, CO 80525 ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇: Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Continental Illinois Venture Corp. ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and Copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Continental Illinois Venture Corp. ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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Any Investor may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Investor may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Illinois.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
approved by ▇▇▇▇▇. No waiver by any Investor of any default,
misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence. No course of dealing
between or among any persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of
this Agreement.
(i) Disclaimer Of Rights. No provision in this Agreement shall be
construed to confer upon any individual the right to remain in the
employ or service of the Company or any Affiliate, or to interfere in
any way with any contractual or other right or authority of the
Company or any Affiliate either to increase or decrease the
compensation or other payments to any individual at any time, or to
terminate any employment between any individual and the Company or an
Affiliate.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(k) Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any Investor by virtue of
the authorship of any of the provisions of this Agreement.
(l) Specific Performance. Each of the parties acknowledges and agrees that
the other parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of
the parties agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which they
may be entitled, at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written.
▇▇▇▇▇ LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
▇▇▇▇▇▇▇▇ FINANCIAL PARTNERS, L.P.
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By: _____________________________
Name: _____________________________
Title: _____________________________
BCI INVESTORS, LLC
By: _____________________________
Name: _____________________________
Title: _____________________________
FACTUAL DATA CORP.
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _____________________________
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT A
--------------------
MINORITY INVESTORS
Name and Address Number of Shares
▇▇▇▇▇ LLC 1,112,828
c/o Continental Illinois Venture Corporation
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BCI Growth V, L.P. 545,286
c/o BCI Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BCI Investors, LLC 11,128
c/o BCI Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Financial Partners, L.P. 185,471
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT B
--------------------
ADDITIONAL INVESTORS
The undersigned hereby consent to and agree to be bound by the terms, covenants
and provisions of the Investors Agreement dated March 25, 1999 (the "Agreement")
applicable to Investors of the Company, and take the Common Stock and/or Company
Interests (as defined in the Agreement) subject to all of the rights,
obligations, and restrictions described in the Agreement. Except as otherwise
provided in the Agreement, the term "Investor" shall be deemed to include the
undersigned.
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Address:
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