Warrant Exercise Fee Agreement - Schneider Securities Inc., Factual Data Corp. and American Securities Transfer & Trust Inc.
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated as of the ______ day of _____________, 1998, by and
among Schneider Securities, Inc. ("Schneider"), Factual Data Corp. (the
"Company") and American Securities Transfer & Trust, Inc. (the "Warrant
Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of 1,000,000 shares of
Common Stock and 1,000,000 Warrants (or up to a maximum of 1,150,000 shares of
Common Stock and/or 1,150,000 Warrants including the over-allotment option),
the Company proposes to issue, in accordance with an agreement dated as of
, 1998, by and between the Company and the Warrant Agent (the "Warrant
Agreement"), Warrants to purchase shares of Common Stock; and
WHEREAS, the parties hereto wish to provide Schneider, a member of the
National Association of Securities Dealers, Inc. ("NASD"), with certain rights
on an exclusive basis in connection with the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. DESCRIPTION OF THE WARRANTS. The Company's Warrants
may be exercised on or after , 1998 and expire at 5:00 p.m. Colorado time
on , 2001 (the "Expiration Date"), subject to redemption rights
commencing on or after , 1999. In accordance with the provisions
of the Warrant Agreement, the holder of each Warrant shall have the right to
purchase from the Company, and the Company shall issue and sell to such holders
of Warrants, one fully paid and non-assessable share of the Company's Common
Stock for every Warrant exercised at an exercise price of $ per
share (the "Exercise Price"), subject to adjustment as provided in the Warrant
Agreement.
SECTION 2. NOTIFICATION OF EXERCISE. Within ten (10) days of
the last day of each month commencing one year from the date of the Company's
Prospectus, the Warrant Agent or the Company will notify Schneider of each
Warrant certificate which has been properly completed and delivered for
exercise by holders of Warrants during each such month, the determination of
the proper completion to be in the sole and absolute reasonable discretion of
the Company and the Warrant Agent. The Company or the Warrant Agent will
provide Schneider with such information, in connection with the exercise of
each Warrant, as Schneider shall reasonably request.
SECTION 3. PAYMENT TO SCHNEIDER. The Company hereby agrees to
pay to Schneider an amount equal to five (5%) percent of the exercise price
(i.e. $ per share based on the initial Exercise Price of the Warrants
which is $ per share) for each Warrant exercised (the
"Exercise Fee") a portion of which may be allowed by Schneider to the dealer
who solicited the exercise (which may also be Schneider) provided that:
(a) such Warrant is exercised on or after
, 1999, which is one year from the effective date of the Company's
Registration Statement;
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(b) at the time of exercise, the market price of the
Company's Common Stock is higher than the applicable Exercise Price of
the Warrant being exercised;
(c) the holders of Warrants being exercised have
specifically indicated in writing, either in the Form of Election
contained on the specimen Warrant Certificate or by written documents
signed and dated by the holders that the exercise of such Warrants was
solicited by Schneider or another member of the NASD; and
(d) Schneider and/or the member of the NASD which
solicited the exercise of Warrants delivers a certificate to the
Company within five (5) business days of receipt of information
relating to such exercised Warrants from the Company or the Warrant
Agent in the form attached hereto as Exhibit A, stating that:
(1) The Warrants exercised were not held in a
discretionary account;
(2) The member which solicited the exercise of
Warrants did not (unless granted an exemption by the
Securities and Exchange Commission ("the Commission") from the
provisions thereof), within the applicable number of business
days under Regulation M immediately preceding the date of
exercise of the Warrant bid for or purchase the Common Stock
of the Company or any securities of the Company immediately
convertible into or exchangeable for the Common Stock
(including the Warrants) or otherwise engage in any activity
that would be prohibited by Regulation M under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to a
broker-dealer engaged in a distribution of the Company's
securities; and
(3) In connection with the solicitation, it
disclosed the compensation it would receive upon exercise of
the Warrant.
SECTION 4. PAYMENT OF THE EXERCISE FEE. The Company hereby
agrees to pay over to Schneider within two (2) business days after receipt by
the Company of the certificate described in Section 3(d) above, the Exercise
Fee out of the proceeds it received from the applicable Exercise Price paid for
the Warrants to which the certificate relates.
SECTION 5. INSPECTION OF RECORDS. Schneider may at any time
during business hours, at its expense, examine the records of the Company and
the Warrant Agent which relate to the exercise of the Warrants.
SECTION 6. TERMINATION. Schneider shall be entitled to
terminate this Agreement prior to the exercise of all Warrants at any time upon
five (5) business days' prior notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, Schneider shall be entitled to
receive an Exercise Fee for the exercise of any Warrant for which it has
already delivered to the Company prior to any such termination the certificate
required by Section 3(d) of this Agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF SCHNEIDER. At the
date of execution hereof and at the time of solicitation of exercise of
Warrants, Schneider represents that it is, and will, (i) be registered as a
broker-dealer under the Exchange Act, (ii) be a member in good standing of the
NASD, and (iii) maintain its registration, qualification and membership in full
force and effect and
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in good standing throughout the term of this Agreement. Schneider acknowledges
and agrees that it will not solicit the exercise of Warrants, or offer or sell
the underlying Common Stock, in any state or jurisdiction except those in which
the Common Stock underlying the Warrants has been qualified or qualification is
not required. Further, Schneider agrees to comply with the laws of the states
in which it may solicit exercise of the Warrants or in which the Common Stock
underlying the Warrants may be offered or sold by it, with the applicable rules
and regulations of the NASD, and will comply with federal laws including, but
not limited to, the Securities Act of 1933, as amended (the "Act"), the
Exchange Act and the rules and regulations of the Commission thereunder.
SECTION 8. INDEMNIFICATION.
a. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless any and all statutory or
designated underwriters (the "Underwriters"), the representative of
the Underwriters, if any (the "Representative"), and each of their
officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Representative or any one of the
Underwriters within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes
of this Section 8, 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) as and when incurred arising out of, based upon,
or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any preliminary
prospectus, the registration statement, or any post-effective
amendment thereto, or the prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, relating to the
offer or sale of Common Stock underlying the Warrants or the
solicitation of exercise of the Warrants (such preliminary prospectus,
registration statement, post-effective amendment or prospectus
hereinafter collectively, the "Offering Documents") or (B) in any
application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock and Warrants under the "blue sky" or
securities laws thereof or filed with the Commission or any securities
exchange; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this
Agreement. The foregoing agreement to indemnify shall be in addition
to any liability the Company may otherwise have, including liabilities
arising under this Agreement; however, the Company shall have no
liability under this Section 8 if such statement or omission was made
in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to the
Underwriters by or on behalf of the Underwriters expressly for
inclusion in any of the Offering Documents, or in any application, as
the case may be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other
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than pursuant to this Section 8(a)) and the Company 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 the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel
satisfactory to such indemnified party or parties to have charge of
the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any
of which events such fees and expenses shall be borne by the Company.
Anything in this paragraph to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or
action effected without its written consent. The Company agrees
promptly to notify the Underwriters and the Representative of the
commencement of any litigation or proceedings against the Company or
against any of its officers or directors in connection with the sale
of the Common Stock underlying the Warrants, any Offering Documents,
or any application.
b. The Underwriters agree to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company
who shall have signed the Registration Statement, each other person,
if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to the Underwriters in
Section 8(a), but only with respect to statements or omissions, if
any, made in any of the Offering Documents, or in any application, in
reliance upon and in conformity with written information furnished to
the Company as stated in this Section 8(b) with respect to the
Underwriters by or on behalf of the Underwriters expressly for
inclusion in any of the Offering Documents, or in any application, as
the case may be; provided, however, that the obligation of the
Underwriters to provide indemnity under the provisions of this Section
8(b) shall be limited to the amount which represents the product of
the number of shares of Common Stock issued on exercise of Warrants
and the Warrant Exercise Price. For all purposes of this Agreement,
the amounts of the Exercise Fee set forth in the Offering Documents,
the information under "Plan of Distribution" and the identification of
counsel to the Representative under "Legal Matters" constitute the
only information furnished in writing by or on behalf of the
Underwriters expressly for inclusion in any of the Offering Documents,
or in any application, as the case may be. If any action shall be
brought against the Company or any other person so indemnified based
on any of the Offering Documents, or any application, and in respect
of which indemnity may be sought against the Underwriters pursuant to
this Section 8(b), the Underwriters shall have the rights and duties
given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(a).
c. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in this Section 8 is for any reason held to be
unavailable to the Underwriters or the Company, then the Company shall
contribute to the damages paid by the several Underwriters, and the
several Underwriters shall contribute to the damages paid by the
Company; provided, however, that no person guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall
be considered the relative benefits received by each party from the
sale of the Common Stock underlying the Warrants (taking into account
the portion of the proceeds of the offering realized by each), the
parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity
to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The
Company and the Underwriters agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity
for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total Exercise Price of the Warrants,
exercise of which was solicited by such Underwriter under this
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required
to pay in respect of the same or any substantially similar claim. The
Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Offering
Documents, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected
without its written consent. This Section 8(c) is intended to
supersede any right to contribution under the Act, the Exchange Act,
or otherwise.
SECTION 9. NOTICES. Any notice or other communication required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed sufficiently given if sent by first class certified mail,
return receipt requested, postage prepaid, addressed as follows:
if to the Company: Jerald H. Donnan, Chief Executive Officer
Factual Data Corp.
3665 JFK Parkway, Building 1
Fort Collins, Colorado 80525
With a copy to: Samuel E. Wing, Esq.
Jones & Keller, P.C.
1625 Broadway Street
Suite 1600
Denver, Colorado 80202
If to Schneider: Keith Koch, Director of Corporate Finance
Schneider Securities, Inc.
1120 Lincoln Street, Suite 900
Denver, Colorado 80203
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With a copy to: Robert W. Walter, Esq.
Berliner Zisser Walter & Gallegos, P.C.
1700 Lincoln Street, Suite 4700
Denver, Colorado 80203
and if to the Warrant Administrative Services
Agent: American Securities Transfer & Trust, Inc.
938 Quail Street, Suite 101
Lakewood, Colorado 80215
or such other address as such party shall have given notice to other parties
hereto in accordance with this Section. All such notices or other
communications shall be deemed given three (3) business days after mailing, as
aforesaid.
SECTION 10. SUPPLEMENTS AND AMENDMENTS. The Company, the Warrant
Agent and Schneider may from time-to-time supplement or amend this Agreement by
a written instrument signed by the party to be charged, without the approval of
any holders of Warrants in order to cure any ambiguity or to correct or
supplement any provisions contained herein or to make any other provisions in
regard to matters or questions arising hereunder which the Company, the Warrant
Agent and Schneider may deem necessary or desirable and which do not adversely
affect the interest of the holders of Warrants.
SECTION 11. ASSIGNMENT. This Agreement may not be assigned by
any party without the express written approval of all other parties, except
that Schneider may assign this Agreement to its successors, if any.
SECTION 12. GOVERNING LAW. This Agreement will be deemed made
under the laws of the State of Colorado with respect to matters of contract law
and for all purposes shall be governed by and construed in accordance with the
internal laws of said State, without regard to the conflicts of laws provisions
thereof.
SECTION 13. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give any person or corporation other than the
Company, the Warrant Agent and Schneider any legal or equitable right, remedy
or claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of, and be binding upon, the Company, the Warrant Agent and
Schneider and their respective successors and permitted assigns.
SECTION 14. DESCRIPTIVE HEADINGS. The descriptive headings of
the sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
SECTION 15. SUPERSEDING AGREEMENT. This Agreement supersedes any
and all prior agreements between the parties with respect to the subject matter
hereof.
SECTION 16. EXCLUSIVE AGREEMENT. It is understood that this
Agreement is on an exclusive basis to solicit the exercise of the Warrants and
that the Company shall not engage other broker-dealers to solicit the exercise
of Warrants without the consent of Schneider.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FACTUAL DATA CORP.
By:
----------------------------------------
Jerald H. Donnan,
Chief Executive Officer
SCHNEIDER SECURITIES, INC.
By:
----------------------------------------
Thomas Schneider, President
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By:
----------------------------------------
Gregory Tubbs, Senior Vice President
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EXHIBIT A
CERTIFICATE
The undersigned, being the _______________ of ______________________
(the "NASD Member") pursuant to Section 3(d) of the Warrant Exercise Fee
Agreement relating to the exercise of Warrants dated , 1998 among
Factual Data Corp. (the "Company"), Schneider Securities, Inc. and American
Securities Transfer & Trust, Inc. (the "Warrant Agent") hereby certifies that:
1. The Company or the Warrant Agent has notified the NASD Member
that ____________ Warrants (as defined in the Agreement) have been exercised
during _______________, 19__.
2. The exercise of _________ of such Warrants was solicited by
Schneider.
3. Such Warrants were not held in a discretionary account.
4. The NASD Member did not, within _____ business days
immediately preceding _______________, 19___, bid for or purchase the Common
Stock of the Company or any securities of the Company immediately convertible
into or exchangeable for the Common Stock (including Warrants) or otherwise
engage in any activity that would be prohibited by Regulation M under the
Securities Exchange Act of 1934, as amended, to one engaged in a distribution
of the Company's securities.
5. In connection with the solicitation of the exercise of the
Warrants, the NASD Member disclosed to holders of the Warrants the compensation
it will receive.
DATED: _______________, 19___
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(Firm Name)
By:
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Title:
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