Document:

Prepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document
  

Exhibit 4.4  

    THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE LAW OR AN OPINION OF COUNSEL ACCEPTABLE TO THE BORROWER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH LAWS. THE CONVERSION OF THIS NOTE IS SUBJECT TO THE APPLICABLE REQUIREMENTS OF THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED.

 
 

CONVERTIBLE SUBORDINATED PROMISSORY NOTE    
  

	$5,150,000.00	 	March 30, 2001

    FOR
VALUE RECEIVED, the undersigned, US Search.com Inc., a Delaware corporation ("Borrower"), promises to pay to Pequot Private Equity Fund II, L.P. ("Holder"), the principal
sum of Five Million One Hundred and Fifty Thousand Dollars ($5,150,000.00) with interest from the date hereof, at the rate of (i) seven percent (7%) per annum on the unpaid balance prior to and
on August 28, 2001 and (ii) twelve percent (12%) per annum on the unpaid balance after August 28, 2001, until paid or until default, both principal and interest being payable in
lawful money of the United States of America, at 500 Nyala Farm Road, Westport, Connecticut 06880, or at such place as the Holder may designate in writing. The principal and interest shall be due and
payable as follows: 

	(i)
	The
entire unpaid balance shall be due and payable on April 1, 2002 (the "Due Date"); and

	(ii)
	Interest
shall be due and payable on the Due Date. All computations of interest payable hereunder shall be on the basis of a 360-day
year and actual days elapsed in the period of which such interest is payable. 

    1.  Conversion.  

    (a) In
the event that 

	(i)
	the
Borrower and the Holder shall enter an agreement or agreements (the "Financing Agreements") for the Holder's purchase of Financing Shares (as
defined below) of the Borrower and the exchange by the Holder of issued and outstanding capital stock of the Borrower on the terms and subject to the conditions generally set forth in the Summary of
Terms for Preferred Stock Issuance/Restructuring of Series A-1 Preferred Stock (the "Summary of Terms") dated as of February 19, 2001, as amended on the date hereof, between
the Borrower and the Holder, including without limitation, that the Financing Shares shall be convertible into Common Stock of the Borrower at a price per share equal to the lesser of
(A) $2.00, (B) 105% of the ten day average of the closing bid prices of the Company's Common Stock for the ten trading days prior to but not including the date on which the Financing
Shares are purchased by the Holder and (C) if the Financing Shares are not purchased by the Holder on or prior to April 15, 2001, 105% of the ten day average of the closing bid prices of
the Company's common stock for the ten trading days prior to but not including the date of April 15, 2001 (the agreement or agreements and such terms and conditions being referred to as the
"Financing"); and

	(ii)
	the
Borrower shall have received approval from its stockholders of the Financing or the approval of Nasdaq to the effect that the Borrower may
complete the Financing 

1

 

without
soliciting the approval of all holders of capital stock of the Borrower; provided, however that this subsection (ii) shall not apply if the Borrower's common stock, par value $.001 per
share (the "Common Stock"), is no longer subject to the Rules and Regulations of the Nasdaq Stock Market, including those of the Nasdaq National Market and the Nasdaq SmallCap Market, 

within
ten (10) business days following the satisfaction of the conditions set forth in the foregoing clauses (i) and (ii), all amounts of principal and accrued interest under this Note
shall be converted (within such period, the exact date upon which such conversion will occur being determined by the Holder in its discretion) into shares of the Borrower's then newly authorized,
fully paid and non-assessable shares of Series A-1 Preferred Stock in accordance with the Financing (such shares being the "Financing Shares"), on the terms and with the
rights, preferences and privileges as are set forth in the Financing Agreements. Upon such conversion, in addition to any shares or other instruments
received by the Holder through the Financing, the Holder shall receive the number of Financing Shares calculated by dividing the amount of principal and accrued interest due under this Note by the
price per share of the Financing Shares paid by the Holder in the Financing. The Borrower shall proceed diligently, expeditiously and in good faith to negotiate, execute and deliver the Financing
Agreements. 

    (b) If
a Financing does not occur on or before the Due Date, or if a Financing has not occurred and an Acceleration Event (as defined below) occurs prior to the Due
Date, then on the Due Date or upon the consummation of an Acceleration Event, as the case may be, all amounts of principal and accrued interest due under this Note, including any amounts accruing
pursuant to Section 3.3 hereof, shall, at the option of the Holder: 

	(i)
	become
due and payable in full; or

	(ii)
	be
converted (the "Conversion") into such number of fully paid and non-assessable shares (the "Conversion Shares") of the Borrower's
Series A Convertible Preferred Stock, $0.001 par value per share ("Series A Preferred") having the same terms, preferences and conditions as were in effect on September 7, 2000
(including an initial conversion price of $1.70 per share of Common Stock), as shall be determined by dividing the outstanding amount of principal and accrued interest due under this Note by $100.00
(as adjusted to reflect any stock splits, reverse splits, stock dividends, recapitalizations or similar events having occurred since September 7, 2000). Borrower shall not issue fractional
shares but shall pay the dollar equivalent of any fractional shares on such closing date. 

An
"Acceleration Event" shall be deemed to have occurred if (i) Borrower, or a subsidiary thereof, shall merge or consolidate with or into another entity such that the shareholders of Borrower
prior to such transaction do not or are not expected to own a majority of the voting stock of the surviving entity, (ii) Borrower shall sell or otherwise dispose of all or substantially all of
its assets, or (iii) Borrower shall liquidate, (iv) any transaction or series of transactions shall occur which results in the holders, as of the date hereof, of a majority in interest
of the capital stock of the Borrower entitled to vote for the election of directors no longer holding such a majority in interest, (v) the occurrence of a Material Adverse Effect (as
hereinafter defined), or (vi) any breach occurs of a representation, warranty or covenant hereunder not remedied by the Borrower within thirty days after notice thereof by the Holder. 

    2.  Borrower Representations.  Subject to and except as disclosed by the Borrower in  Exhibit A hereto, the Borrower hereby represents and
warrants to the Holder as follows: 

    2.1.  Organization and Qualification.  The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has the requisite 

2

 

corporate power and authority to own, lease and operate its assets, properties and business and to carry on its business as it is now being conducted or proposed to be conducted. The Borrower is duly
qualified as a foreign corporation to transact business, and is in good standing, in each jurisdiction where it owns or leases real property or maintains employees or where the nature of its
activities make such qualification necessary, except where the failure to be so qualified would not have a Material Adverse Effect. For purposes of this Note, "Material Adverse Effect" shall mean a
material adverse effect (i) on the business, operations, prospects, properties, earnings, assets, liabilities or condition (financial or other) of the Borrower and any subsidiary of the
Borrower, taken as a whole, or (ii) on the ability of the Borrower or any subsidiary of the Borrower to perform its obligations hereunder or under any of the other agreement or instrument to
which the Borrower and the Holder are a party; provided, however that a delisting from the Nasdaq Stock Market will not be a Material Adverse Effect for
any purposes hereunder. 

    2.2.  Certificate of Incorporation and Bylaws.  The Borrower has delivered to the Holder true, correct
and complete copies of the Borrower's Certificate of Incorporation and bylaws, as amended and in force on the date hereof. 

    2.3.  Capitalization.  The authorized capital stock of the Borrower consists of: (1) 40,000,000
shares of Common Stock, of which 17,908,244 shares are issued and outstanding, and (2) 1,000,000 shares of Preferred Stock, $0.001 par value per share, of which (i) 350,000 shares have
been designated as Series A Preferred, (ii) 100,000 shares are issued and outstanding, (iii) 75,000 shares are reserved for issuance upon the conversion and upon exercise of that
certain Warrant, dated as of September 7, 2000, in the name of the Holder (the "September Warrant") and (iv) 51,000 shares are reserved for issuance upon the conversion of that certain
Convertible Promissory Note, dated February 28, 2001, by the Borrower in favor of the Holder (the "February Note"). All of the issued and outstanding shares of Common Stock and Preferred Stock
have been duly authorized and validly issued and are fully paid and nonassessable. Shares of the authorized Common Stock (as adjusted to reflect stock splits, stock dividends, conversion price
adjustments and similar events) have been reserved as follows: (i) 5,872,098 shares of the authorized Common Stock have been reserved for issuance upon conversion of currently outstanding
Preferred Stock; and (ii) 1,750,000 shares of authorized Common Stock have been reserved for issuance pursuant to the exercise of the Warrant Agreement by and between the Borrower and
Infospace Inc. dated October 1, 2000. As of the date hereof and immediately prior to the issuance of the Note, all issued and outstanding shares of the Borrower's capital stock have been
duly authorized and validly issued, are fully paid and nonassessable and owned of record, and to the Borrower's knowledge, beneficially. Other than as provided in the Summary of Terms and the February
Note and except as aforesaid and as set forth on Exhibit A hereto, there are no options, warrants, conversion privileges, or preemptive or other
rights or agreements presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the capital stock or other securities of the Borrower. Except as aforesaid and as
contemplated herein, and other than that certain Stockholders Agreement, dated as of September 7, 2000, by and among the Borrower, the Holder and The Kushner-Locke Company, the Borrower is not
a party or subject to any agreement or understanding that affects or relates to the voting or giving of written consents with respect to any security, or the voting by a director, of the Borrower.
Except as aforesaid, to the Borrower's knowledge, no stockholder has granted options or other rights to any person (other than the Borrower) to purchase any shares of Common Stock or other equity
securities of the Borrower from such stockholder. Except as aforesaid and as set forth on Exhibit A hereto, the Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise to acquire or retire any shares of its capital stock. Since its initial public offering on June 24, 1999, the Borrower has not
declared or paid any dividend or made any other distribution of cash, stock or other property to its stockholders. All of the issued and outstanding shares of capital stock of 

3

 

the Borrower listed on Exhibit A have been offered, issued and sold by the Borrower in compliance with applicable Federal and state securities
laws. 

    2.4.  Issuance of Note and Financing Shares.  The issuance and delivery of the Note, and the issuance and
delivery of the equity securities issuable upon the completion of the Financing described in Section 1(a) hereto (the "Financing Shares") or upon the Conversion described in Section 1(b)
hereto, and the issuance and delivery of the equity securities issuable upon conversion of the Financing Shares or the Conversion Shares, as the case may be (the "Subsequent Shares"), have been, or
will be prior to issuance, duly authorized by all necessary corporate action on the part of the Borrower. The Conversion Shares have been duly reserved for issuance. Any shares of Common Stock that
are not issued and outstanding as of the date hereof, are not reserved for issuance and are not so described as being reserved in Section 2.3 hereof have been duly reserved for issuance as
Subsequent Shares. Each of the Financing Shares, the Conversion Shares and the Subsequent Shares, when and the extent issued will be duly and validly issued, fully paid and nonassessable. 

    2.5.  Authority for Agreement.  The execution, delivery and performance by the Borrower of this Note, and
the consummation by the Borrower of the transactions contemplated hereby, have been or will be duly authorized by all necessary corporate action. This Note has been duly executed and delivered by the
Borrower and constitutes a valid and binding obligation of the Borrower enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, and the
relief of debtors, rules and laws governing specific performance, injunctive relief, and other equitable remedies and principles of public policy. The execution of and performance of the transactions
contemplated by this Note and compliance with its provisions by the Borrower will not violate any provision of law and will not conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or require a consent or waiver under, its Certificate of Incorporation or Bylaws (each as amended to date) or any indenture, lease, agreement or other
instrument to which the Borrower is a party or by which it or any of its properties is bound, or any decree, judgment, order, statute, rule or regulation applicable to the Borrower. 

    2.6.  Compliance with Other Instruments.  The Borrower is not in violation of any provisions of its
Certificate of Incorporation or its Bylaws as amended and in effect on and as of the date hereof, or of any provisions of any material instrument or contract to which it is a party or any judgment,
decree, or order by which it is bound or, to its knowledge, any statute, rule, or regulation applicable to the Borrower. The execution, delivery, and performance of this Note, and the issuance of the
Note, the Financing Shares, the Conversion Shares and the Subsequent Shares pursuant to the terms of the Note, will not result in any such violation or be in conflict with or constitute a default
under any such provisions or result in the creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the properties or assets of the Borrower. 

    2.7.  Litigation.  Except as set forth on  Exhibit A hereto, there is no action, proceeding, or investigation pending or, to the best
knowledge of the Borrower currently threatened against
the Borrower before any court or administrative agency (or any basis therefor known to the Borrower). There is no action, proceeding, or investigation by the Borrower currently pending or that the
Borrower intends to initiate. 

    2.8.  Permits; Compliance with Applicable Law.  The Borrower has all material franchises, permits,
licenses, authorizations, approvals and any similar authorizations from any foreign, Federal, state or local court, governmental authority, regulatory authority, self-regulatory agency or
organization ("Permits") necessary for the conduct of its business as now being conducted by it and believes it can obtain, without undue burden or expense, any similar authority for the conduct of
its business as planned by the Borrower to be conducted. The Borrower is not in violation in 

4

 

any material respect of, or default in any material respect under, any such Permits. All such Permits are in full force and effect, and to the Borrower's knowledge, no violations have been recorded in
respect of any such permits; no proceeding is pending or, to the knowledge of the Borrower, threatened to revoke or limit any such Permit; and no such Permit will be suspended, cancelled or adversely
modified as a result of the execution and delivery of this Note and the consummation of the transactions contemplated hereby. Since the Borrower's inception, the conduct of the business of the
Borrower has been in conformity with all applicable federal, state and other governmental and regulatory requirements, except where nonconformity or noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect. No investigation or review by any governmental entity with respect to the Borrower is pending, or to the knowledge of the Borrower, threatened. 

    2.9.  Financial Statements.  

	(a)
	The
Borrower has delivered to the Holder the audited financial statements of the Borrower for the fiscal year ended December 31, 1999 and the unaudited, internally prepared
financial statements of the Borrower for the fiscal period ended December 31, 2000 (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally
accepted accounting principles in the United States consistently followed (except in the case of the unaudited, internally prepared financial statements with respect to the absence of notes and
outstanding year-end adjustments, which adjustments are not expected to be material) throughout the periods involved and fairly present in all material respects the financial condition,
results of operations and changes in shareholders' equity of the Borrower as of the respective dates thereof and for the respective periods then ended.

	(b)
	Since
September 7, 2000, (i) the Borrower has operated its business only in the ordinary course, (ii) there has not been, individually or in the aggregate, any
change that would have a Material Adverse Effect, nor to the knowledge of the Borrower is any such change threatened and (iii) the Borrower has not increased the compensation of any of its
officers or the rate of pay of any of its employees, except as part of regular compensation increases in the ordinary course of business. 

    2.10.  Absence of Undisclosed Liabilities.  The Borrower does not have, and the Borrower does not know
of, any liabilities or obligations (fixed or contingent, including without limitation any tax liabilities due or to become due) of the Borrower which, either individually or in the aggregate, are
material and not disclosed in the Financial Statements. 

    2.11.  Material Adverse Changes.  Since September 7, 2000, (a) there has been no material
change in the business or financial prospects of the Borrower except as disclosed in the Borrower's Board of Directors Meetings that, individually or in the aggregate, is materially adverse to the
Borrower, and (b) none of the material assumptions (financial or otherwise), operations, management or prospects of the Borrower nor any of its material properties or assets have been
materially adversely affected by any occurrence or development (whether or not insured against). Immediately after giving effect to the issuance of the Note and the consummation of the other
transactions contemplated hereby, the Borrower will not be insolvent. 

    2.12.  Consents.  No consent, approval, or authorization of, or designation, declaration, notification,
or filing with any governmental authority, regulatory authority or self-regulatory agency or organization on the part of the Borrower is required in connection with the valid execution,
delivery and issuance of this Note, or the consummation of any other transaction contemplated hereby (other than such notifications or filings required under applicable federal or state securities
laws, if any). 

5

 

    2.13.  Brokers or Finders.  Neither the Borrower nor the Holder has incurred, or will incur, directly or
indirectly, as a result of any action taken by the Borrower, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Note. 

    2.14.  Borrower Status.  The Borrower is not (i) a "public utility holding company" or a "holding
company" as defined in the Public Utility Holding Borrower Act of 1935, as amended, (ii) a "public utility" as defined in the Federal Power Act, as amended, or (iii) an "investment
company" as defined in the Investment Company Act of 1940, as amended. 

    2.15.  Offering Exemption.  Assuming the truth and accuracy as of the date hereof of the representations
and warranties made by the Holder in the Purchase Agreement, dated as of September 7, 2000, between the Borrower and the Holder (the "September Agreement") (except that any reference to
"Securities" in such representations and warranties shall be deemed to be a reference to this Note), the offer and sale of the Note as contemplated hereby is exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), and under applicable state securities and "blue sky" laws, as currently in effect. 

    2.16.  Disclosure.  Neither this Note nor any certificate, instrument or written statement furnished or
made to the Holders by or on behalf of the Borrower in connection with this Note contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein in light of the circumstances under which they were made not misleading. 

    3.  Borrower Covenants.  The Borrower covenants and agrees with the Holder as follows: 

    3.1.  Required Authorization.  Borrower has completed and submitted an application (the "Application") to
Nasdaq seeking an approval from Nasdaq to the effect that, notwithstanding the Marketplace Rules currently in effect for the Nasdaq Stock Market, the Borrower may complete the Financing without
soliciting the approval of all holders of capital stock of the Borrower. Following the Borrower's receipt of any correspondence or other communication from any party with respect to the Application,
including any response from Nasdaq, or with respect to the transactions contemplated hereunder or under the Summary of Terms, the Borrower shall promptly notify the Holder of such correspondence or
communication and provide the Holder with a copy or, in the case of any oral communication, a transcript thereof. The Holder and the Borrower agree to execute and deliver such documents, certificates
or instruments and to take any other reasonable actions as may be desirable or necessary in connection with the Application. 

    3.2.  Increase to Authorized Capital.  The Borrower will amend its Certificate of Incorporation to
increase the authorized number of shares of Common Stock to a number sufficient to allow fully each of the conversions contemplated in Sections 1(a) and 1(b) hereof. The Borrower will make no other
amendment to its capitalization not expressly contemplated herein. 

    3.3.  Issuance of Warrant.  Upon the conversion of this Note into Financing Shares (the "Financing
Date"), the Company shall issue to the Purchaser a warrant to purchase to purchase Five Thousand (5,000) additional Financing Shares at a price of $100 per share (the "Warrant"). Other than as set
forth in the preceding sentence and other than the date of issuance and the expiration date, the form of the Warrant setting forth the terms with respect thereto will be substantially in the form of
the September Warrant. 

    3.4.  Opinion of Counsel.  Without duplication of any requirements which may be imposed by the definitive
documentation relating to the closing of the transactions contemplated by the Summary of Terms, on the Financing date the Borrower will provide the Holder with legal opinions reasonably satisfactory
in form and substance to the Holder, covering all equity securities of the Borrower to be issued to the Holder on such date. 

6

 

    3.5.  Use of Proceeds.  The Borrower shall use all proceeds from the issuance of this Note for continued
product development, growth of its sales organization, working capital, acquisition of technology assets as appropriate and other general corporate purposes. Without limitation of the foregoing, on
the date hereof the Borrower shall repay by wire transfer in immediately available funds $120,000 of unpaid and/or unreimbursed legal fees of the Holder relating to this transaction and transactions
in connection with, and contemplated by, the September Agreement. Such funds shall be in addition to the $150,000 of convertible debt included as principal of this Note in partial payment by the
Borrower of the aggregate amount of unpaid and/or unreimbursed legal fees of the Holder in connection with this transaction and the September Agreement. 

    4.  Default.  In the event (i) of default when due of any payment of principal or interest hereof
and such default is not cured within five (5) business days; or (ii) Borrower becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they
become due; Borrower applies for a trustee, receiver or other custodian for it or a substantial part of its property; a trustee, receiver or other custodian is appointed for Borrower or for a
substantial part of its property; or any bankruptcy, reorganization, debt arrangement, or other case of proceeding, is commenced in respect of Borrower, or (iii) of a material breach by
Borrower of the representations, warranties, covenants or agreements made herein which, after notice from the Holder, is not cured within fifteen (15) business days; then, upon the occurrence
of any such event, the Holder may, without notice, declare the unpaid principal and interest on this Note, and all other obligations of Borrower to the Holder, at once due and payable, whereupon such
principal, interest and other obligations shall become at once due and payable. Failure to exercise this option shall not constitute a waiver of the right to exercise the same at any other time. The
principal of this Note and any part thereof, and accrued interest, if any, shall bear interest at the rate of eight percent (8%) per annum after default until paid. 

    5.  Waiver of Certain Rights.  All parties to this Note, including maker and any sureties, endorsers, or
guarantors hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums
due under this Note notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of
time for the payment of principal and interest; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be without notice or consent of any of
them. 

    6.  Enforcement.  Upon default the Holder may employ an attorney to enforce the Holder's rights and
remedies and the maker, principal, surety, guarantor and endorsers of this Note hereby agree to pay to the Holder reasonable attorneys' fees plus all other reasonable expenses incurred by the Holder
in exercising any of the Holder's rights and remedies upon default. The rights and remedies of the Holder as provided in this Note shall be cumulative and may be pursued singly, successively, or
together against any other funds, property or security held by the Holder for payment or security, in the sole discretion of the holder. The failure to exercise any such right or remedy shall not be a
waiver or release of such rights or remedies or the right to exercise any of them at another time. 

    7.  No Shareholder Rights.  Nothing contained in this Note shall be construed as conferring upon the
Holder or any other person the right to vote or to consent or to receive notice as a shareholder of the Borrower. 

    8.  Miscellaneous.  The following general provisions apply: 

    (a) This
Note, and the obligations and rights of Borrower hereunder, shall be binding upon and inure to the benefit of Borrower, the Holder, and their respective heirs,
personal representatives, successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Note without the prior written consent of the Holder. 

7

 

    (b) Recourse under this Note shall be to the general unsecured assets of Borrower only and in no event to the officers, directors or shareholders of Borrower. 

    (c) Changes
in or amendments or additions to this Note may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be
omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon written consent of Borrower and the Holder. 

    (d) All
payments shall be made in such coin and currency of the United States of America as at the time of payment shall be legal tender therein for the payment of
public and private debts. 

    (e) All
notices, requests, consents and demands shall be made in writing and shall be mailed postage prepaid, or delivered by hand, to Borrower or to the Holder at
their respective addresses set forth below or to such other address as may be furnished in writing to the other party hereto and shall be effective upon receipt: 

    If
to Borrower, at US SEARCH.com Inc., 5401 Beethoven Street, Los Angeles, California 90066, Attention: General Counsel. 

    If
to Holder, at Pequot Capital Management, Inc., 500 Nyala Farm Road, Westport, Connecticut 06880, Attention: Carol Holley and Amber Tencic. 

    (f)  This
Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York. 

    IN
TESTIMONY WHEREOF, Borrower has caused this instrument to be executed in its corporate name by its Chief Executive Officer, by order of its Board of Directors first duly given, the
day and year first above written. 

	US SEARCH.COM INC.
	

By:	
 	

 
	

 	
 	

	

Name:	
 	

 
	

 	
 	

8

QuickLinks

CONVERTIBLE SUBORDINATED PROMISSORY NOTE<PAGE>

                                                                   Exhibit 10.1

                     AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

        THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (the "AMENDMENT") is made
and entered into as of February 22, 2001 (the "Effective Date") by and among
PROMOTIONAL MARKETING, L.L.C., an Illinois limited liability company
("EMPLOYER", "COMPANY" or "UPSHOT"), JOHN R. KELLEY, JR. ("EXECUTIVE") and HA-LO
INDUSTRIES, INC., an Illinois corporation ("HA-LO" or "ACQUIROR").

        WHEREAS, Employer and Executive have previously entered into an
Employment Agreement, dated as of June 30, 1998 (as amended, the "EMPLOYMENT
AGREEMENT"); and

        WHEREAS, the Employment Agreement has heretofore been amended pursuant
to Amendment No. 1 to Employment Agreement by and between the parties hereto
dated as of July 31, 2000 ("Amendment No. 1");

        WHEREAS, as of the date hereof, Executive is the Chief Executive Officer
of HA-LO and a Manager of UPSHOT; and

        WHEREAS, the parties wish to further amend certain provisions of the
Employment Agreement:

        NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows, all effective as of the Effective Date:

        1. Each of the above recitals are incorporated in the Amendment and are
binding upon the parties hereof. Capitalized terms used herein shall have the
meaning set forth in Employment Agreement (as heretofore amended) unless
otherwise defined herein.

        2. Effective on the Effective Date, the Executive resigns as the Chief
Executive Officer of HA-LO and agrees to tender his resignation from each board
of director or each position as an officer of any subsidiary, direct or
indirect, of HA-LO (other than UPSHOT, UPSHOT (New York), Inc., or Upshot
Integrated, Inc.) or upon the request of his successor as HA-LO's Chief
Executive Officer (the "CEO").

        3. Section 3 of the Employment Agreement shall be restated in its
entirety as follows:

               "3. EMPLOYMENT SERVICES. During the term of his employment
        pursuant to this Agreement, Executive shall render his services to the
        Company. In the performance of his duties hereunder, Executive shall
        report to the CEO. Executive shall devote his full time and best
        efforts, energy and skill in the rendition of his services as the Chief
        Executive Officer and President of UPSHOT, shall perform such duties
        commensurate with such position and shall also devote his energy and
        skill to the promotion of the interests of the Company (which shall
        include all subsidiaries and affiliates of the Company and the
        Acquiror), specifically including the disposition of the Company.
        Executive further agrees that during the Term he will not engage in any
        other business

<PAGE>

        activity or have business pursuits or interests except activities or
        interests which the CEO determines do not conflict or interfere with the
        performance of the Executive's duties and obligations hereunder. On or
        before March 31, 2001, the Executive shall have completed and shall have
        delivered to the CEO, monthly budgets for UPSHOT for the calendar year
        2001 reasonably acceptable to the CEO. UPSHOT's performance shall be
        discussed and reported to the CEO as reasonably requested by the CEO but
        no less frequently than monthly. The CEO shall direct the Executive and
        UPSHOT to take appropriate action in the event that actual performance
        of UPSHOT with respect to EBITDA (as herein defined), revenue or expense
        results do not reflect budgeted amounts."

        4. The Employment Agreement shall be amended by (i) denoting the initial
paragraph of Section 3 as paragraph "(a)" and (ii) by the addition of the
following Section 3(b):

                      "(b) So long as the Executive is employed hereunder, the
               Board shall place the Executive's name in nomination as a member
               of the Board of Directors at each of the 2001 and 2002 annual
               meetings of the Stockholders of HA-LO and the Board shall
               recommend to the HA-LO stockholders to vote for Executive's
               election as a member of the Board of Directors. In the event of
               the Sale of UPSHOT (as herein defined) or in the event the
               Executive is no longer employed by UPSHOT, the Executive would
               immediately upon request of the CEO, tender his resignation to
               the CEO as a member of the Board of Directors of HA-LO."

        5. Reference is made to Section 4 of Amendment No. 1. The parties agree
that (i) the options granted pursuant to subsections (c) and (d) of such Section
are hereby terminated and (ii) the options granted pursuant to subsections (e)
and (f) of such Section shall be amended by substituting the following for the
proviso that appears at the end of each subsection:

               "PROVIDED, HOWEVER, that Executive remains the Chief Executive
               Officer of UPSHOT on such date, retained such position at any
               time within ninety days prior to the date of such measurement, or
               HA-LO or UPSHOT has terminated Executive's employment other than
               For Cause or Disability prior to the date of such measurement."

        6. The Employment Agreement shall be amended by the addition of the
following Section 4(d):

                      "(d) SUCCESS BONUS. In the event of the Sale of UPSHOT
               during the Term while the Executive is employed hereunder, the
               Executive would receive a bonus equal to the greater of (a)
               $1,466,250 (three times the success bonus received by Carol
               Griseto) or (b) a portion of the 'Aggregate Consideration' (as
               defined below) determined as follows: 50% of the Aggregate
               Consideration in excess of $80 million up to and including $100
               million will be paid to the Executive and the UPSHOT Management
               Team (as herein defined) and 20% of the Aggregate

                                      2

<PAGE>

               Consideration in excess of $100 million shall be paid to the
               Executive and the UPSHOT Management Team.

                      (i) 'Aggregate Consideration' shall mean the total amount
               of consideration that HA-LO and/or its shareholders, affiliates,
               direct or indirect subsidiaries (including the Company), and
               creditors receive from an acquiror including but not limited to
               cash, stock, assumption of borrowed debt, earn-out or other
               contingent consideration;

                      (ii) Except as otherwise provided herein, the portion of
               the Aggregate Consideration payable to the Executive on the one
               hand, and to the UPSHOT Management Team, on the other hand will
               be allocated 50% to the Executive and 50% to the UPSHOT
               Management Team. For purposes hereof, the UPSHOT Management Team
               shall mean such employees of UPSHOT as shall be selected together
               by the Executive and the CEO, allocations to be made amongst the
               members of UPSHOT Management Team jointly by the CEO and the
               Executive.

                      (iii) Except as set forth in the following sentence, the
               portion of the Aggregate Consideration payable to the Executive
               and the UPSHOT Management Team will be paid in the same form, in
               the same manner and at the same time as which the Aggregate
               Consideration as is paid to HA-LO and/or its shareholders.
               Notwithstanding the foregoing, any portion of the Aggregate
               Consideration that is attributable to a buyer's assumption of the
               borrowed debt of HA-LO or UPSHOT shall be paid to the Executive
               and the UPSHOT Management Team in cash at closing of such a
               transaction.

                      (iv) For purposes hereof, the term 'Sale of UPSHOT' shall
               mean the sale of substantially all of the assets or the sale or
               transfer by HA-LO of more than 50% of its equity interest in
               UPSHOT (whether by sale of stock, merger or consolidation) or the
               change of control (as herein defined) of HA-LO, in all cases to a
               third party, the primary owner of which is not affiliated with
               HA-LO.

                      (v) For purposes hereof, the term 'change of control in
               HA-LO' shall mean a sale of all or substantially all of the
               assets or capital stock of HA-LO to a third party, the primary
               owner of which is not affiliated with HA-LO. In the event of a
               change of control of HA-LO prior to a sale of UPSHOT, HA-LO and
               the Executive will agree upon an appraiser or other appropriate
               methodology to allocate a portion of the overall purchase price
               of HA-LO to UPSHOT to determine if a bonus is payable pursuant to
               Section 4(d) hereof.

                      (vi) In the event a Sale of UPSHOT has not occurred on or
               before December 31, 2002 (and the Executive is employed
               hereunder), the Executive would be entitled to receive a bonus as
               follows: if UPSHOT's

                                      3

<PAGE>

               EBITDA exceeds $6,000,000 for the calendar year ended 2001, the
               Executive and the UPSHOT Management Group, collectively, would
               receive 20% of such excess amount; if UPSHOT's EBITDA exceeds
               $8,000,000 for the calendar year ended 2002, the Executive and
               the Upshot Management Group, collectively would receive 20% of
               such excess amount. The parties acknowledge that in the event
               that a Sale of UPSHOT has not occurred prior to December 31,
               2002, the UPSHOT Management Group (exclusive of the Executive)
               shall be entitled to receive ten percent (10%) of (i) the amount
               by which EBITDA exceeds $5,000,000 but is less than $6,000,000
               for calendar year 2001 and (ii) the amount by which EBITDA
               exceeds $6,000,000 but is less than $8,000,000 for calendar year
               2002. HA-LO or UPSHOT shall pay the amounts due under this
               subsection (vi) in cash and as soon as the financial results are
               available. For purposes of this subsection (vi), allocation of
               the foregoing amounts shall be made in accordance with subsection
               (ii) above. For purposes of this Employment Agreement, EBITDA
               shall mean the earnings before interest, taxes, depreciation, and
               amortization of UPSHOT as determined by HA-LO in accordance with
               generally accepted accounting principles, consistently applied,
               exclusive of any charges and/or allocations to earnings other
               than associated with the actual operations of UPSHOT (such as
               parent management fees, parent charges, any required pushdown
               accounting charges and other non-operating (non-UPSHOT) charges).
               All expenses attributable to the 25th and 26th floors of 303 East
               Wacker, Chicago, Illinois shall be borne by HA-LO and shall not
               be reflected as expenses of UPSHOT; the parties acknowledge that
               the 26th floor of such building has heretofore been subleased and
               it is contemplated that the 25th floor shall be subleased after
               June 1, 2001 (or such earlier date, in the good faith
               determination of the CEO that such space will not be needed by
               UPSHOT).

                      (vii) For purposes of this Section 4(d), the term
               'UPSHOT' shall include Promotional Marketing LLC, Upshot (New
               York), Inc. and Upshot Integrated, Inc.

                      (viii) Subject to the next two sentences, neither HA-LO
               nor UPSHOT will have any obligation to pay the Executive any
               bonus or other payment described in this Section 4(d) in the
               event of the termination of the Executive's employment for any
               reason whatsoever, whether pursuant to the terms of this
               Employment Agreement or otherwise, it being the express
               understanding of the parties hereto that the Executive's receipt
               and entitlement to the amounts set forth in this Section 4(d) are
               contingent upon his employment with UPSHOT. If HA-LO and/or
               UPSHOT enters into a Letter of Intent or a definitive agreement
               with respect to a particular Sale of UPSHOT, then HA-LO and
               UPSHOT shall have an obligation to pay the Executive a bonus or
               other payment described in this Section 4(d), when due, with
               respect to such Sale, of UPSHOT unless HA-LO and/or UPSHOT
               terminates the Executives employment pursuant to the terms of

                                      4

<PAGE>

               the Employment Agreement. If on September 1, 2002, the Executive
               is employed hereunder, then HA-LO and UPSHOT shall have an
               obligation to pay the Executive a bonus or other obligation with
               respect to Section 4(d)(vi), when due, unless HA-LO and/or UPSHOT
               terminates Executive's employment pursuant to the terms of the
               Employment Agreement.

       7.      Section 5(b) of the Agreement shall be amended by the addition of
the following sentence at the conclusion of such subsection:

               "Notwithstanding the foregoing, the Executive shall be entitled
               to reimbursement for the cost of the use of one automobile in
               accordance with past practices. The Executive will assume
               responsibility for the obligations of the Range Rover - Rhino
               lease including the monthly payments. HA - LO will assume
               responsibility for the obligations of the Mercedes Benz CL 600
               lease and the Audi (which Mr. Marchesi currently drives) lease
               including the monthly payments."

        8.     Clause (a) of Section 11 of the Employment Agreement shall be
deleted in its entirety and the following shall be inserted in its place and
stead:

                      "(a) which is in the promotional marketing, event
              marketing,  direct marketing or environmental branding business"

        9.    HA-LO shall promptly reimburse the Executive for his reasonable
and necessary legal expenses in the negotiation and drafting of this Amendment
in amount not to exceed $10,000.00.

        10.    This Amendment may be signed in single or separate counterparts,
each of which shall constitute an original with the same effect as if each of
the parties had signed the same document. All counterparts shall be construed
together and shall constitute one and the same instrument.

        IN WITNESS WHEREOF, the parties hereto have executed the Amendment as of
the date and year first above written.

:PROMOTIONAL MARKETING, L.L.C.
                                                   ____________________________
                                                          John R. Kelley, Jr.
By:________________________________
Its:________________________________

HA-LO INDUSTRIES, INC.

By:_______________________________
Its:_______________________________

                                      5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}]]