**Exhibit 10.3**

 

**US SEARCH.COM INC.**

 

**THIRD AMENDMENT**

 

**TO**

 

**AGREEMENT AND PLAN OF MERGER DATED AS OF DECEMBER 28, 2001**

 

**THIS THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER DATED AS OF DECEMBER 28, 2001** (this“Amendment”) is entered into as of April 30, 2003, by and among US Search.com Inc., a Delaware corporation (the “Company”), Professional Resource Screening, Inc., a Delaware corporation (“PRSI”), and IrwinR. Pearlstein, an individual, David Pearlstein, an individual, and Cheryl Pearlstein-Enos, an individual (the “Shareholders”). 

 

R E C I T A L S

 

WHEREAS, Professional Resource Screening, Inc., a California corporation, merged with and into US SEARCH Screening Services, Inc., aDelaware corporation, which is therefore the successor in interest to Professional Resource Screening, Inc., a California corporation; 

 

WHEREAS, US SEARCH Screening Services, Inc., a Delaware corporation, changed its name to Professional Resource Screening, Inc.;

 

WHEREAS, the parties to this Amendment areparties to that certain Agreement and Plan of Merger, dated as of December 28, 2001 (the “Agreement”); 

 

WHEREAS, on December 26, 2002, Company sent the Shareholders a Balance Sheet Adjustment Demand as that term is defined in the Agreement;

 

WHEREAS, on or about January 3, 2003, Company,PRSI and Shareholders entered into a “First Amendment to Agreement and Plan of Merger dated as of December 28, 2001” (the “First Amendment”), and on or about January 21, 2003, such parties entered into a “SecondAmendment to Agreement and Plan of Merger dated as of December 28, 2001” (the “Second Amendment”), in each case to modify the language in Section 3.3 of the Agreement; and 

 

WHEREAS, the parties hereto desire to amend the Agreement, asamended by the First Amendment and the Second Amendment, as provided below in order to implement their agreement with respect to, among other things, the terms and conditions for the Company’s withdrawal of its Balance Sheet Adjustment Demand.

 

A M E N D ME N T

 

NOW, THEREFORE, BE IT RESOLVED, thatin consideration of the foregoing and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Agreement is hereby amended as set forth below. 

 

1.    References in the Agreement to “this Agreement” shall be deemed to bereferences to the Agreement as amended hereby. 

 

2.    Capitalized terms that are not specifically defined in this Amendment shall have the same definition as in the Agreement. 

 

3.    Sections 3.3(b), 3.3(c), 3.5(a), 3.5(b), 3.5(c) and 3.5(d) (collectively, the“Deleted Sections”) of the Agreement are hereby deleted from the Agreement in their entirety. For clarification, as a result of the deletion of the Deleted Sections from the Agreement: 

 

a.  The Company (for itself and its affiliates,successors and assigns) hereby waives, and releases and forever discharges each of the Shareholders and their respective affiliates, successors and assigns (collectively, the “Shareholder Releasees”) from, any and all claims,demands, proceedings, causes of action, obligations, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, that the Company now has, has ever had, or may hereafter have against any of the Shareholder Releasees onaccount of or arising out of the Deleted Sections; 

 

b.  The Shareholders (for themselves and their affiliates, successors and assigns) hereby waive, and release and forever discharge the Company and its affiliates, successors and assigns (the “CompanyReleasees”) from, any and all claims, demands, proceedings, causes of action, obligations, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, that the Company now has, has ever had, or may hereafter haveagainst any of the Company Releasees on account of or arising out of the Deleted Sections; and 

 

c.  With respect to the releases set forth in paragraphs a. and b. above, each of the releasing parties further expressly agrees to waive and relinquish any and all rights and benefits underSection 1542 of the Civil Code of California as to the matters specified above. Each of such releasing parties acknowledges that such party is familiar with and understands said Section, which provides as follows: 

 

**A general release does not extend to claims which thecreditor does not know or suspect to exist in his favor at the time of executing the release, which, if known to him, must have materially affected his settlement with the debtor.**

 

4.  At the end of section 10.2 of the Agreement the following paragraph shall be added:

 

“Shareholders’ indemnificationobligations to all Shareholders’ Indemnified Parties under Section 10.2 and Section 10.3 shall be extinguished for any and all 

 

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Damages incurred inconnection with, arising out of, resulting from or incident to the items totaling $2,711,705.00 that are itemized in Exhibit A to this Amendment No. 3. All other Shareholders’ indemnification obligations shall remain in full force and effectuntil the Termination Date.” 

 

5.    At the end of Section 10.2(f)(i), the following sentence shall be added: 

 

“Any and all Damages incurred in connection with the items listed in Exhibit A to this Amendment No. 3 shall not be consideredDamages for purposes of calculating whether Damages exceed the Threshold.” 

 

6.    The Company agrees that, promptly after the date of this Amendment, it shall reimburse Irwin R. Pearlstein for the $5,000 legal retainer he paid in defense of PRSIin case number C 02 –01816 pending before the Superior Court of California, County of Contra Costa. 

 

7.    The parties agree to execute and deliver that certain “First Amendment to Escrow Agreement dated as ofDecember 28, 2001” (the “Escrow Amendment”) that is attached hereto as Exhibit B simultaneously with the execution and delivery of this Amendment. The Company covenants (a) to cause Comerica Bank-California to execute anddeliver the Escrow Amendment, (b) to cause the Escrowed Property (as defined in the Escrow Agreement) to be distributed to the Shareholders as provided for in the Escrow Agreement, and (c) that it will not, prior to the occurrence of the eventsdescribed in (a) and (b), make any Indemnity Claim Notice, or other claim or demand of entitlement to receive any such Escrowed Property. 

 

Except as amended hereby the provisions of the Agreement shall remain unchanged and in full force and effect. This Amendment shall begoverned by, and construed in accordance with, the laws of the State of California. 

 

[Signature Page Follows] 

 

 

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IN WITNESSWHEREOF, the undersigned have executed this Amendment as of the date first set forth above. 

 

US SEARCH.COM, INC.

By:
 
/s/    BRENT N.COHEN      

Name:
 
Brent N. Cohen

Title:
 
Chief Executive Officer

 

PROFESSIONAL RESOURCE SCREENING, INC.

By:
 
/s/    IRWIN R.PEARLSTEIN      

Name:
 
Irwin R. Pearlstein

Title:
 
President

 

SHAREHOLDERS

/s/    IRWIN R.PEARLSTEIN

Name: Irwin R.Pearlstein

/s/    DAVID PEARLSTEIN

Name: David Pearlstein

/s/    CHERYLPEARLSTEIN-ENOS

Name:Cheryl Pearlstein-Enos

 

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**EXHIBIT A**

 

1.    LITIGATION MATTERS

 

Wood, Warren & Co. v. Professional ResourceScreening, Inc., Superior Court of California for the County of Contra Costa, Case No. C 02-01816 

 

Lucent Technologies, Inc. v. Professional Resource Screening, Inc., In the Circuit Court of DuPage County, Illinois, Case No. 2003L000094

 

2.    Sales Tax Liabilityfor Texas, New Mexico, Ohio, Hawaii, South Carolina, Connecticut, South Dakota and District of Columbia for tax years 1997 through 2001 

 

3.    Software License Liability for the software listed in Appendix A 

 

4.    Unrecorded Liabilities orImpairments totaling $899,399.00 that were set forth on the Closing Audited Balance Sheet that did not appear on the August 31 Unaudited Balance Sheet 

 

5.    Unrecorded Liabilities or Impairments relating to the following accounts receivable in the amounts indicated

 
   
**Expenses**
  
**Credits**
    
**Accounts Receivable**
          
Accounts receivable writeoff
          
Pueblo
  
4,937
       
Brandsmart
  
14,467
       
Rentway
  
9,659
       
Surewest
  
290
       
Estimated additional reserves
  
21,354
                  
Bad debt reserves at 12/01
     
(24,000

)
      
50,707
  
(24,000

)
  
26,707
 
 

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6.    Unrecorded Liabilities or Impairments relating to the following accounts payable in the amounts indicated 

 

**Accounts Payable**
  
**Expenses**
  
**Credits**
    
Travel & Entertainment
  
8,299
       
Health & WC Insurance
  
16,441
       
WC Insurance
  
3,114
       
Gas & Electric
  
151
       
Cellular
  
37
       
Telephone—LD
     
(17,467

)
   
Legal
  
2,565
       
Delivery
  
107
       
Consultants
  
3,120
       
Leases
  
5,953
       
Office
  
3,345
       
Trade Show
  
2,657
       
Printing
  
1,171
       
Payroll Service & Misc
  
991
       
Telephone—LD
     
(7,032

)
   
Fulfillment
  
6,888
       
Shawn Yard
  
6,610
       
Teri Wilson Salary Increase
  
7,000
       
Michelle Hansen Salary Increase
  
7,000
       
Poulsen Investment (CAM)
  
1,662
       
Court Records
  
24,048
              
Totals
  
101,159
  
(24,499

)
  
76,660
       
 

7.    Unrecorded Liabilities or Impairments relating to the following accruals in the amounts indicated 

 

401K accruals
   
December 31, 2001
  
12,000

Close out 401k
  
8,000

AMF
   
Warrant
  
74,099
   
Totals
  
94,099
   
 

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**EXHIBIT B**

 

**ESCROW AMENDMENT**

 

**US SEARCH.COM INC.**

 

**FIRST AMENDMENT**

 

**TO**

 

**ESCROW AGREEMENT DATED AS OF DECEMBER 28, 2001**

 

**THIS FIRST AMENDMENT TO ESCROW AGREEMENTDATED AS OF DECEMBER 28, 2001** (this “Amendment”) is entered into as of April             , 2003, by and among US Search.com Inc., a Delaware corporation (the“Company”), Comerica Bank-California, a California banking corporation (the “Escrow Agent”), and Irwin R. Pearlstein, an individual, David Pearlstein, an individual, and Cheryl Pearlstein-Enos, an individual (the“Shareholders”). 

 

R E C I T AL S

 

WHEREAS, Professional ResourceScreening, Inc., a California corporation, merged with and into US SEARCH Screening Services, Inc., a Delaware corporation, which is therefore the successor in interest to Professional Resource Screening, Inc., a California corporation;

 

WHEREAS, US SEARCH Screening Services, Inc., aDelaware corporation, changed its name to Professional Resource Screening, Inc.; 

 

WHEREAS, the parties to this Amendment are parties to that certain Agreement and Plan of Merger, dated as of December 28, 2001 (the “Agreement”); 

 

WHEREAS, in connection with the Agreement, the parties to thisAmendment entered into an Escrow Agreement, dated as of December 28, 2001 (the “Escrow Agreement”); 

 

WHEREAS, as required by the “Third Amendment to Agreement and Plan of Merger dated as of December 28, 2001” between theCompany and the Shareholders, the parties hereto desire to amend the Agreement as provided below. 

 

A M E N D M E N T

 

NOW, THEREFORE, BE IT RESOLVED, that in consideration of the foregoing and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Agreement is hereby amended as set forth below.

 

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1. Referencesin the Escrow Agreement to “this Agreement” shall be deemed to be references to the Agreement as amended hereby. 

 

2. Capitalized terms that are not specifically defined in this Amendment shall have the same definition as in the Agreement and the EscrowAgreement. 

 

3. In the first sentence of Section3.1 of the Escrow Agreement the words “December 28, 2003” are hereby omitted and replaced with the words “April             , 2003”. 

 

4. The second sentence of Section 3.1 of the Escrow Agreementand Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.8 and 3.9 of the Agreement are hereby deleted from the Agreement in their entirety. 

 

5. The first sentence of Section 3.7 of the Escrow Agreement is amended and restated to read in its entirety as follows: “On theTermination Date, the Escrow Agent shall deliver to the Shareholders all of the Escrowed Property.” 

 

Except as amended hereby the provisions of the Escrow Agreement shall remain unchanged and in full force and effect. This Amendment shallbe governed by, and construed in accordance with, the laws of the State of California. 

 

[Signature Page Follows] 

 

 

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IN WITNESSWHEREOF, the undersigned have executed this Amendment as of the date first set forth above. 

 

US SEARCH.COM, INC. 

 

By:                                                                                               

Name: Brent N. Cohen 

Title: Chief Executive Officer 

 

COMERICA BANK-CALIFORNIA 

By:                                                                                                

Name:                                                                        

Title:                                                                            

 

SHAREHOLDERS 

 

                                                                                                       

Name: Irwin R. Pearlstein 

 

                                                                                                       

Name: David Pearlstein 

 

                                                                                                       

Name: Cheryl Pearlstein-Enos 

 

 

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