SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May 1,
1998, by and among Visual Data Corporation, a Florida corporation, with
headquarters located at 0000 XX 00 Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000 (the
"Company"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized the following new series of its Preferred
Stock, no par value per share (the "Preferred Stock"): the Company's Series A
Convertible Preferred Stock (the "Preferred Shares"), which shall be convertible
into shares of the Company's Common Stock, par value $0.0001 per share (the
"Common Stock") (as converted, the "Conversion Shares"), in accordance with the
terms of the Company's Articles of Amendment to the Articles of Incorporation,
substantially in the form attached hereto as Exhibit A (the "Articles of
Amendment");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 150 of the Preferred Shares (the
"Initial Preferred Shares") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers on the Initial Closing Date (as defined
below);
D. Subject to the terms and conditions set forth in this Agreement, the
Buyers wish to purchase an aggregate of an additional 150 of the Preferred
Shares (the "Additional Preferred Shares") in the respective amounts set forth
opposite each Buyer's name in the Schedule of Buyers on the Additional Closing
Date (as defined below) (the Initial Preferred Shares and the Additional
Preferred Shares collectively are referred to in this Agreement as the
"Preferred Shares"); and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
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NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company
shall issue and sell to each Buyer and each Buyer severally agrees to purchase
from the Company the respective number of Initial Preferred Shares set forth
opposite such Buyer's name on the Schedule of Buyers, (as defined below) (the
"Initial Closing"). Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 1(c), 6(b) and 7(b) below, the Company shall issue and
sell to each Buyer and each Buyer severally agrees to purchase from the Company
the respective number of Additional Preferred Shares set forth opposite such
Buyer's name on the Schedule of Buyers (the "Additional Closing"). The Initial
Closing and the Additional Closing collectively are referred to in this
Agreement as the "Closings." The purchase price (the "Purchase Price") of each
Preferred Share at each of the Closings shall be $5,000.
b. The Initial Closing Date. The date and time of the Initial
Closing (the "Initial Closing Date") shall be 10:00 a.m. Central Time, within
three (3) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Initial Closing set forth in
Sections 6(a) and 7(a) below (or such later date as is mutually agreed to by the
Company and the Buyers). The Initial Closing shall occur on the Initial Closing
Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000-0000 or such other place as the parties shall
agree.
c. The Additional Closing Date. The date and time of the
Additional Closing (the "Additional Closing Date") shall be 10:00 a.m. Central
Time, on the fifth business day following the date of the receipt by each Buyer
of the Additional Share Notice (as defined below) following the date the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective by the SEC subject to satisfaction (or waiver) of the
conditions to the Additional Closing set forth in Sections 6(b) and 7(b) and the
conditions set forth in this paragraph (or such later date as is mutually agreed
to by the Company and the Buyers). The Company shall deliver written notice (the
"Additional Share Notice") to each Buyer of the event described in the preceding
sentence on the first business day (the "Additional Share Notice Date")
following the occurrence of such event. Notwithstanding the foregoing, no Buyer
shall be required to purchase the Additional Preferred Shares unless each of the
following conditions is satisfied: (i) such Buyer shall have received the
Additional Share Notice on or before the first business day after the
Effectiveness Deadline (as defined in the Registration Rights Agreement; (ii)
the Registration Statement shall have been declared effective and shall remain
effective at all times during the period beginning on the Additional Share
Notice Date and ending on and including the Additional Share Closing Date; (iii)
the provisions of Section 4(j) of this Agreement Shall have been satisfied; (iv)
the Closing Bid Price (as defined in the Articles of Amendment) of the Common
Stock is greater than $2.50 on the day immediately preceding the Additional
Share Notice Date; (v) during the period beginning on the date of this Agreement
and ending on and including the Additional Closing Date, there shall not have
occurred (A) a public announcement of a Major Corporate Event (as defined in
Section 2(f) of the Articles of Amendment) which has not been abandoned or
terminated, (B) a Triggering Event (as defined in Section 3(d) of the Articles
of Amendment) or (C) a Material Adverse
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Change (as defined below); (vi) at all times during the period beginning on the
date of this Agreement and ending on and including the Additional Closing Date,
the Common Stock shall have been designated on the Nasdaq SmallCap Market and
shall not have been suspended from trading and the Company shall not have been
notified of any pending or threatened proceeding or other action to delist or
suspend the Common Stock; and (vii) and the Company shall not have previously
delivered an Additional Share Notice. The Additional Closing shall occur on the
Additional Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000 or such other place as the
parties shall agree. The Initial Closing Date and the Additional Closing Date
collectively are referred to in this Agreement as the "Closing Dates." "Material
Adverse Change" means any change, event, result or happening involving, directly
or indirectly, the Company or any of its Subsidiaries (as defined below)
resulting in a material adverse effect on the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
d. Form of Payment. On each of the Closing Dates, (i) each
Buyer shall pay the Purchase Price to the Company for the Preferred Shares to be
issued and sold to such Buyer at the respective Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, and (ii) the Company shall deliver to each Buyer, stock
certificates (in the denominations as such Buyer shall request) (the "Stock
Certificates") representing such number of the Preferred Shares which such Buyer
is then purchasing (as indicated opposite such Buyer's name on the Schedule of
Buyers). Such Stock Certificates shall bear the restrictive legends required
pursuant to Section 2(g).
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is acquiring the
Preferred Shares and (ii) upon conversion of the Preferred Shares, will acquire
the Conversion Shares then issuable (the Preferred Shares and the Conversion
Shares collectively are referred to herein as the "Securities"), for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
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d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
e. No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form to the Company, to
the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with assurance reasonably acceptable to the
Company that such Securities can be sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("Rule
144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to
register such Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Preferred Shares and, until such time as the
sale of the Conversion Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares, except as set forth below, shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
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ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that such
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold.
h. Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable against such Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country specified on the
Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below) or the Articles
of Amendment.
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b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and each of the other agreements entered
into by the parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the execution
and delivery of the Transaction Documents and the Articles of Amendment by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the issuance of the Preferred Shares and
the reservation for issuance and the issuance of the Conversion Shares issuable
upon conversion thereof, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) the Transaction Documents have
been duly executed and delivered by the Company, (iv) the Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (v)
prior to each of the Closing Dates, the Articles of Amendment has been filed
with the Secretary of State of the State of Florida and will be in full force
and effect, enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 20,000,000 shares of Common Stock,
of which as of the date hereof, 3,105,435 shares were issued and outstanding,
200,000 shares are issuable and reserved for issuance pursuant to the Company's
stock option plan and 5,040,966 shares are issuable and reserved for issuance
pursuant to securities (other than the Preferred Shares) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000
shares of preferred stock, which as of the date hereof, no shares were issued
and outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement),
(v) there are no outstanding securities of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement,
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and (vii) the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement. The Company has
furnished to the Buyers true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the "Articles of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and (iii) entitled to the rights
and preferences set forth in the Articles of Amendment. A number of shares of
Common Stock equal to 200% of the number of Conversion Shares issuable upon
conversion of the Preferred Shares and outstanding on the applicable Closing
Date (after giving effect to the Preferred Shares issued on such Closing Date
and assuming all such outstanding Preferred Shares were fully convertible on
such date regardless of any limitation on the timing or amount of such
conversions) initially have been duly authorized and reserved for issuance
(subject to adjustment pursuant to the Company's covenant set forth in Section
4(f) below) upon conversion of the Preferred Shares. Upon conversion in
accordance with the Articles of Amendment, the Conversion Shares will be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Based in part upon the representations of
the Buyers set forth in Section 2, the issuance by the Company of the Securities
is exempt from registration under the 1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Articles of
Amendment and the consummation by the Company of the transactions contemplated
hereby and thereby will not (i) result in a violation of the Articles of
Incorporation, any Articles of Amendment, Preferences and Rights of any
outstanding series of Preferred Stock of the Company or the By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or material instrument to which the Company or any of its Subsidiaries
is a party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and the rules and regulations of the principal market or exchange on which the
Common Stock is traded or listed) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Except as disclosed in Schedule 3(e), neither
the Company nor its Subsidiaries is in violation of any term of or in default
under the Articles of Incorporation, any Articles of Amendment, Preferences and
Rights of any outstanding series of Preferred Stock or the By-laws or their
organizational charter or by-laws, respectively, or any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in
the aggregate have a Material Adverse Effect. The business of the Company and
its Subsidiaries is not being conducted in violation of any law, ordinance,
regulation of any governmental entity having authority or jurisdiction over the
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Company, except for possible violations the sanctions for which either
individually or in the aggregate would not have a Material Adverse Effect.
Except as specifically contemplated by this Agreement and as required under the
1933 Act, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by the
Transaction Documents or to perform its obligations under the Articles of
Amendment, in each case in accordance with the terms hereof or thereof. Except
as disclosed in Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of the Nasdaq SmallCap
Market as in effect on the date hereof and on each of the Closing Dates and is
not aware of any facts which would reasonably lead to delisting of the Common
Stock by the Nasdaq SmallCap Market in the foreseeable future.
f. SEC Documents; Financial Statements. Since July 30, 1997,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Buyers or their respective
representatives true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made, not misleading.
g. Absence of Certain Changes. Except as disclosed in Schedule
3(g) or in the SEC Documents filed at least five (5) days prior to the date
hereof and available on XXXXX, since July 30, 1997, there has been no material
adverse change and no material adverse development in the business, properties,
operations, financial condition or results of operations of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
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the Company or its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, except as set forth in Schedule 3(h).
i. Acknowledgment Regarding Buyers' Purchase of Preferred
Shares. The Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
of the Buyers or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
business, properties, operations or financial condition, that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly announced.
k. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. The Company has not, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of The Nasdaq Stock Market, Inc., nor will the
Company or any of its Subsidiaries take any action or steps that would require
registration of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries
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is a party to a collective bargaining agreement, and the Company and its
Subsidiaries believe that relations with their employees are good. No executive
officer (as defined in Rule 501(f) of the 0000 Xxx) has notified the Company
that such officer intends to leave the Company or otherwise terminate such
officer's employment with the Company.
n. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights necessary to conduct its business as now or as proposed to be
conducted have expired or terminated, or are expected to expire or terminate
within two years from the date of this Agreement. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 3(n), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its Subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties.
o. Environmental Laws. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where, in each of the three
foregoing cases, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.
p. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or any of
its Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
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q. Insurance. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of the Company and its Subsidiaries, taken as a whole.
r. Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such items would not
have, individually or in the aggregate, a Material Adverse Effect and neither
the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit.
s. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement
which in the reasonable judgment of the Company's officers has or is expected to
have a Material Adverse Effect.
t. Tax Status. Except as set forth on Schedule 3(u), the
Company and each of its Subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
u. Certain Transactions. Except as set forth on Schedule 3(v)
and in the SEC Documents filed at least ten days prior to the date hereof and
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers or directors of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer or
director or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer or director has a substantial
interest or is an officer, director, trustee or partner.
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v. Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the Preferred
Shares will increase in certain circumstances. The Company further acknowledges
that, subject to such limitations as are expressly set forth in the Transaction
Documents, its obligation to issue Conversion Shares upon conversion of the
Preferred Shares in accordance with this Agreement and the Articles of Amendment
is absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.
w. No Other Agreements. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before each of
the Closing Dates, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
the Closing Date. The Company shall make all filings and reports relating the
offer and sale of the Securities required under the applicable securities or
"Blue Sky" laws of the states of the United States following each of the Closing
Dates.
c. Reporting Status. Until the earlier of (i) the date which
is one year after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Investors shall have sold all the
Conversion Shares and (B) none of the Preferred Shares is outstanding (the
"Registration Period"), the Company shall file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would otherwise permit such
termination.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Preferred Shares for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Registration Period: (i) within five (5) days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements or amendments (other than on Form S-8) filed pursuant to
the
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1933 Act; (ii) on the same day as the release thereof, facsimile copies of all
press releases issued by the Company or any of its Subsidiaries and (iii) copies
of any notices and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making available or giving
thereof to the stockholders.
f. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 200% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares.
g. Right of First Refusal. Subject to the exceptions described
below, the Company and its Subsidiaries shall not contract with any party for
any equity financing (including any debt financing with an equity component) or
issue any equity securities, other than pursuant to existing agreements set
forth on Schedule 4(g), of the Company or any Subsidiary or securities
convertible or exchangeable into or for equity securities of the Company or any
Subsidiary (including debt securities with an equity component) in any form
("Future Offerings") during the period beginning on the Closing Date and ending
on and including the date which is the later of 365 days after the Initial
Closing Date and 180 days after the Additional Closing Date, unless it shall
have first delivered to each Buyer or a designee appointed by such Buyer written
notice (the "Future Offering Notice") describing the proposed Future Offering,
including the terms and conditions thereof, and providing each Buyer an option
to purchase up to its Aggregate Percentage (as defined below), as of the date of
delivery of the Future Offering Notice, in the Future Offering (the limitations
referred to in this sentence are collectively referred to as the "Capital
Raising Limitation"). For purposes of this Section 4(g), "Aggregate Percentage"
at any time with respect to any Buyer shall mean the percentage obtained by
dividing (i) the aggregate number of Preferred Shares purchased by such Buyer at
the Closings by (ii) the aggregate number of Preferred Shares purchased by all
Buyers at the Closings. A Buyer can exercise its option to participate in a
Future Offering by delivering written notice thereof to participate to the
Company within ten (10) business days of receipt of a Future Offering Notice,
which notice shall state the quantity of securities being offered in the Future
Offering that such Buyer will purchase, up to its Aggregate Percentage, and that
number of securities it is willing to purchase in excess of its Aggregate
Percentage. In the event that one or more Buyers fail to elect to purchase up to
each such Buyer's Aggregate Percentage then each Buyer which has indicated that
it is willing to purchase a number of securities in excess of its Aggregate
Percentage shall be entitled to purchase its pro rata portion (determined in the
same manner as described in the preceding sentence) of the securities in the
Future Offering which one or more Buyers have not elected to purchase. In the
event the Buyers fail to elect to fully participate in the Future Offering
within the periods described in this Section 4(g), the Company shall not be
obligated to sell any of the securities of the Future Offering to any of the
Buyers and the Company shall have 45 days thereafter to sell the securities of
the Future Offering upon terms and conditions (including the amount thereof), no
more favorable to the purchasers thereof than specified in the Future Offering
Notice. In the event the Company has not sold such securities of the Future
Offering within such 45 day period, the Company shall not thereafter issue or
sell such securities without first offering such securities to the Buyers in the
manner provided in this Section 4(g). The Capital Raising Limitation shall not
apply to (i) a loan from a commercial bank which does not have any equity
feature, (ii) any transaction involving the Company's issuances of securities
(A) as consideration in a merger or
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consolidation, (B) in connection with any strategic partnership or joint venture
(the primary purpose of which is not to raise equity capital), or (C) as
consideration for the acquisition of a business, product or license or other
assets by the Company, (iii) the issuance of Common Stock in a firm commitment,
underwritten public offering, (iv) the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof or (v) the grant of additional options or
warrants, or the issuance of additional securities, under any Company stock
option plan, restricted stock plan or stock purchase plan for the benefit of the
Company's employees or directors. The Buyers shall not be required to
participate or exercise their right of first refusal with respect to a
particular Future Offering in order to exercise their right of first refusal
with respect to later Future Offerings.
h. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation system
(including the Nasdaq SmallCap Market and the Nasdaq National Market), if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents and the Articles of
Amendment. The Company shall maintain the Common Stock's authorization for
quotation on the Nasdaq SmallCap Market, the Nasdaq National Market, The New
York Stock Exchange, Inc. ("NYSE") or The American Stock Exchange, Inc.
("AMEX"). Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Nasdaq National Market, NYSE or AMEX. The Company shall
promptly provide to each Buyer copies of any notices it receives from the Nasdaq
SmallCap Market, the Nasdaq National Market, NYSE or AMEX regarding the
continued eligibility of the Common Stock for listing on such automated
quotation system or securities exchange. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(h).
i. Expenses. Subject to Section 9(l) below, following the
Initial Closing, the Company shall reimburse the Buyers for the Buyers'
reasonable expenses (including attorneys fees and expenses) in connection with
negotiating and preparing the Transaction Documents and consummating the
transactions contemplated thereby up to an aggregate of $20,000 upon
presentation of documentation, if requested by the Company.
j. Proxy Statement. The Company shall provide each stockholder
entitled to vote at the next meeting of stockholders of the Company, which shall
be not later than 120 days after the Initial Closing Date (the "Stockholder
Meeting Deadline"), a proxy statement, which has been previously reviewed by the
Buyers and a counsel of their choice, soliciting each such stockholder's
affirmative vote at such stockholder meeting for approval of the Company's
issuance of all of the Securities as described in this Agreement, and the
Company shall use its best efforts to solicit its stockholders' approval of such
issuance of the Securities and cause the Board of Directors of the Company to
recommend to the stockholders that they approve such proposal. If the Company
fails to hold a meeting of its stockholders by the Stockholder Meeting Deadline
(unless such failure is the result solely of the actions of the Buyers), then,
as partial relief (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each holder of
Preferred Shares an amount in cash per Preferred Share
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equal to the product of (i) $5,000 multiplied by (ii) .025 multiplied by (iii)
the quotient of (x) the number of days after the Stockholder Meeting Deadline
that a meeting of the Company's stockholders is not held, divided by (y) 30. The
Company shall make the payments referred to in the immediately preceding
sentence within five days of the earlier of (I) the holding of the meeting of
the Company's stockholders, the failure of which resulted in the requirement to
make such payments and (II) the last day of each 30-day period beginning on the
Stockholder Meeting Deadline. In the event the Company fails to make such
payments in a timely manner, such payments shall bear interest at the rate of
2.0% per month (pro rated for partial months) until paid in full.
k. No Violation of Law. The Company and its Subsidiaries shall
conduct their business in accordance with all laws, ordinances, regulations of
any governmental entity having authority or jurisdiction over the Company,
except for possible violations the sanctions for which either individually or in
the aggregate would not have a Material Adverse Effect.
l. Transactions With Affiliates. So long as any Preferred
Shares are outstanding the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, person who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of the
Common Stock, or affiliates or with any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a "Related Party"),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party, or (c) any agreement,
transaction, commitment or arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also an officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "Affiliate" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5% or
more common ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity. "Control" or
"controls" for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.
m. Filing of Form 8-K. On or before the fifth (5th) business
day following each of the Closing Dates, the Company shall file a Form 8-K with
the SEC describing the terms of the transaction contemplated by the Transaction
Documents and consummated at such Closing, in each case in the form required by
the 1934 Act.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its
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respective nominee(s), for the Conversion Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Preferred
Shares (the "Irrevocable Transfer Agent Instructions"). Prior to registration of
the Conversion Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of the Conversion Shares under the 0000 Xxx) will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way each Buyer's obligations and agreements
set forth in Section 2(g) to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If a Buyer provides the
Company with an opinion of counsel, in generally acceptable form, that
registration of a resale by such Buyer of any of such Securities is not required
under the 1933 Act, the Company shall permit the transfer, and, in the case of
the Conversion Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer
and without any restrictive legends. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyers shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. Initial Closing Date. The obligation of the Company
hereunder to issue and sell the Initial Preferred Shares to each Buyer at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction
Documents and delivered the same to the Company.
(ii) The Articles of Amendment shall have been filed with the
Secretary of State of the State of Florida.
(iii) Such Buyer shall have delivered to the Company the
Purchase Price for the Initial Preferred Shares being purchased by such
Buyer at the Initial Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.
(iv) The representations and warranties of such Buyer shall be
true and correct as of the date when made and as of the Initial Closing
Date as though made at that time
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(except for representations and warranties that speak as of a specific
date), and such Buyer shall have performed, satisfied and complied with
the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Buyer at
or prior to the Initial Closing Date.
b. Additional Closing Date. The obligation of the Company
hereunder to issue and sell the Additional Preferred Shares to each Buyer at the
Additional Closing is subject to the satisfaction, at or before the Additional
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Such Buyer shall have delivered to the Company the
Purchase Price for the Additional Preferred Shares being purchased by
such Buyer at the Additional Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the
Company.
(ii) The representations and warranties of such Buyer shall be
true and correct as of the date when made and as of the Additional
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall
have performed, satisfied and complied with the covenants, agreements
and conditions required by the Transaction Documents to be performed,
satisfied or complied with by such Buyer at or prior to the Additional
Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. Initial Closing Date. The obligation of each Buyer
hereunder to purchase the Initial Preferred Shares at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Articles of Amendment shall have been filed with the
Secretary of State of the State of Florida, and a copy thereof
certified by such Secretary of State shall have been delivered to such
Buyer.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq SmallCap Market, trading in the Common Stock shall not have
been suspended by the SEC, The Nasdaq Stock Market, Inc., at any time
beginning on the date hereof and through and including the Initial
Closing Date.
(iv) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied with the covenants,
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agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Initial Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Initial Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer including, without
limitation, an update as of the Initial Closing Date regarding the
representation contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of the
Company's counsel dated as of the Initial Closing Date, in form, scope
and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Stock Certificates (in such denominations as such Buyer shall
request) for the Preferred Shares being purchased by such Buyer at the
Initial Closing.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form
reasonably acceptable to such Buyer (the "Resolutions").
(viii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares, a
number of shares of Common Stock equal to at least 200% of the number
of Conversion Shares issuable upon conversion of the Preferred Shares
outstanding on the Initial Closing Date (after giving effect to the
Preferred Shares to be issued on the Initial Closing Date and assuming
all such Preferred Shares were fully convertible or exercisable on such
date regardless of any limitation on the timing or amount of such
conversions or exercises).
(ix) The Irrevocable Transfer Agent Instructions, in the form
of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Initial Closing.
(xi) The Company shall have delivered to such Buyer a
certified copy of its Articles of Incorporation as certified by the
Secretary of State of the State of Florida within ten days of the
Initial Closing Date.
(xii) The Company shall have delivered to such Buyer a
secretary's certificate, dated as the Initial Closing Date, as to (i)
the resolutions described in Section 7(a)(vii), (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the Initial
Closing.
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(xiii) The Company shall have delivered to such Buyer copies
of proxy agreements, in a form reasonably acceptable to such Buyer,
executed by each executive officer and director of the Company pursuant
to which such persons agree to vote in favor of the matters described
in Section 4(j).
(xiv) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
b. Additional Closing Date. The obligation of each Buyer
hereunder to purchase the Additional Preferred Shares at the Additional Closing
is subject to the satisfaction, at or before the Additional Closing Date, of
each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:
(i) The Articles of Amendment shall be in full force and
effect and shall not have been amended since the Initial Closing Date,
and a copy thereof certified by the Secretary of State of the State of
Florida shall have been delivered to such Buyer.
(ii) The Common Stock shall be authorized for quotation on the
Nasdaq SmallCap Market, the Nasdaq National Market, NYSE or AMEX,
trading in the Common Stock shall not have been suspended by the SEC,
The Nasdaq Stock Market, Inc., NYSE or AMEX on the Additional Closing
Date.
(iii) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Additional
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied with the covenants, agreements
and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Additional
Closing Date. Such Buyer shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the Additional
Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Buyer including, without
limitation, an update as of the Additional Closing Date regarding the
representation contained in Section 3(c) above.
(iv) Such Buyer shall have received the opinion of the
Company's counsel dated as of the Additional Closing Date, in form,
scope and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(v) The Company shall have executed and delivered to such
Buyer the Stock Certificates (in such denominations as such Buyer shall
request) for the Preferred Shares being purchased by such Buyer at the
Additional Closing.
(vi) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form
reasonably acceptable to such Buyer (the "Resolutions").
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(vii) As of the Additional Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares, a
number of shares of Common Stock equal to at least 200% of the number
of Conversion Shares issuable upon conversion of the Preferred Shares
outstanding on the Additional Closing Date (after giving effect to the
Preferred Shares to be issued on such Additional Closing Date and
assuming all such outstanding Preferred Shares were fully convertible
or exercisable on such date regardless on any limitation on the timing
or amount of such conversions or exercises).
(viii) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(ix) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Additional Closing.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each Subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Additional Closing.
(xi) The Company shall have delivered to such Buyer a
certified copy of its Articles of Incorporation as certified by the
Secretary of State of the State of Florida within ten days of the
Additional Closing Date.
(xii) The Company shall have delivered to such Buyer a
secretary's certificate, dated as the Initial Closing Date, as to (i)
the resolutions described in Section 7(a)(vii), (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the Additional
Closing.
(xiii) The Company shall have delivered to such Buyer copies
of proxy agreements, in a form reasonably acceptable to such Buyer,
executed by each executive officer and director of the Company pursuant
to which such persons agree to vote in favor of the matters described
in Section 4(j).
(xiv) The conditions to the Additional Closing set forth in
Section 1(c) shall have been satisfied on or before the Additional
Closing Date.
(xv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement
as such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents and the Articles of
-20-
Amendment, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
the Articles of Amendment or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or the Articles
of Amendment or any other certificate, instrument or document contemplated
hereby or thereby, or (c) any cause of action, suit or claim brought or made
against such Indemnitee and arising out of or resulting from the execution,
delivery, performance or enforcement of the Transaction Documents or the
Articles of Amendment or any other certificate, instrument or document
contemplated hereby or thereby, (d) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities or (e) the status of such Buyer or holder of the Securities as
an investor in the Company. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. The corporate laws of the State of Florida
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York without regard to the principles of
conflict of laws. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
-21-
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Preferred Shares then outstanding. No consideration shall
be offered or paid to any person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents or the Articles of
Amendment unless the same consideration also is offered to all of the parties to
the Transaction Documents or holders of Preferred Shares, as the case may be.
f. Notices. Any notices consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically generated and kept on
file by the sending party); or (iii) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same.
The addresses and facsimile numbers for such communications shall be:
-22-
If to the Company:
Visual Data Corporation
0000 XX 00 Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Atlas Xxxxxxxx Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to the Transfer Agent:
Interwest Tranfer Company, Inc.
0000 Xxxx Xxxxxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers.
Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. Except for a merger,
consolidation or other business combination in compliance with Sections 2(g) and
3 of the Articles of Amendment, the Company shall not assign this Agreement or
any rights or obligations hereunder [without the prior written consent of the
holders of two thirds (2/3) of the Preferred Shares then outstanding]. A Buyer
may assign some or all of its rights hereunder to affiliates or associates of
such Buyer, without the consent of the Company, and to others, with the consent
of the Company, which consent shall not be unreasonably withheld; provided,
however, that any such assignment shall not release such Buyer from its
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption. Notwithstanding
anything to
-23-
the contrary contained in the Transaction Documents, Buyer shall be entitled to
pledge the Securities in connection with a bona fide margin account.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification provisions set forth in Section 8, shall survive each
of the Closings. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right
to approve before issuance any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Buyer, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Initial Closing shall
not have occurred with respect to a Buyer on or before three (3) business days
from the date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the
non-breaching Buyers for the expenses described in Section 4(i) above.
m. Placement Agent. Each of the Company and the Buyers, on
their own behalf, acknowledges that it has not engaged a placement agent in
connection with the sale of the Preferred Shares. The Company shall be
responsible for the payment of any placement agent's fees or broker's
commissions relating to or arising out of the purchase of the Securities by the
Buyers. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
-24-
n. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
o. Remedies. Each Buyer and each holder of Preferred Shares,
Conversion Shares shall have all rights and remedies set forth in this
Agreement, the Articles of Incorporation and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
p. Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to the Articles of
Amendment or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
q. Number of Conversion Shares. Notwithstanding any other
provision herein or in the Articles of Amendment, the Company shall not be
obligated to issue any shares of Common Stock upon conversion of the Preferred
Shares if the issuance of such shares of Common Stock would exceed that number
of shares of Common Stock which the Company may issue upon Conversion of the
Preferred Shares (the "Exchange Cap") without breaching the Company's
obligations under the rules or regulations of the Nasdaq Stock Market, Inc.,
except that such limitation shall not apply in the event that the Company (a)
obtains the approval of its stockholders as required by applicable rules and
regulations of The Nasdaq Stock Market for issuances of Common Stock in excess
of such amount or (b) obtains a written opinion from outside counsel to the
Company that such approval is not required, which opinion shall be reasonably
satisfactory to the holders of a majority of the Preferred Shares then
outstanding. Until such approval or written opinion is obtained, no Buyer
pursuant to this Agreement or the Articles of Amendment shall be issued, upon
conversion of the Preferred Shares, shares of Common Stock in an amount greater
than the product of (i) the Exchange Cap amount multiplied by (ii) a fraction,
the numerator of which is the number of Preferred Shares issued to such Buyer
pursuant to this Agreement and the denominator of which is the aggregate amount
of all the Preferred Shares issued to the Buyers pursuant to this Agreement (the
"Cap Allocation Amount"). In the event that any Buyer shall sell or otherwise
transfer any of such Buyer's Preferred Shares, the transferee shall be allocated
a pro rata portion of such Buyer's Cap Allocation Amount. In the event that any
holder of Preferred Shares shall convert all of such holder's Preferred Shares
into a number of shares of Common Stock which, in the aggregate, is less than
such holder's Cap Allocation Amount, then the difference between such holder's
Cap
-25-
Allocation Amount and the number of shares of Common Stock actually issued to
such holder shall be allocated to the respective Cap Allocation Amounts of the
remaining holders of Preferred Shares on a pro rata basis in proportion to the
number of Preferred Shares then held by each such holder.
* * * * * *
-26-
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
VISUAL DATA CORPORATION THEMIS PARTNERS L.P.
By: Promethean Investment Group L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. X'Xxxxx, Xx.
----------------------- -------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. X'Xxxxx, Xx.
Its: President Its: President
5-1-98
HERACLES FUND
By: Promethean Investment Group L.L.C.
Its: Investment Advisor
By: /s/ Xxxxx X. X'Xxxxx, Xx.
-------------------------------
Name: Xxxxx X. X'Xxxxx, Xx.
Its: President
-27-
SCHEDULE OF BUYERS
Number of
Investor Address Preferred Shares Investor's Representatives' Address
Investor Name and Facsimile Number Initial/Additional and Facsimile Number
------------- -------------------- ------------------ ------------------------------------
Themis Partners L.P. c/o Promethean Investment Group, L.L.C. 50/50 Promethean Investment Group, L.L.C.
00 Xxxx 00xx Xxxxxx, Xxxxx 0000 00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 10019 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. X'Xxxxx, Xx. Attn: Xxxxx X. X'Xxxxx, Xx.
Facsimile: 000-000-0000 Xxxxx Xxxxxx
Facsimile: 000-000-0000
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
Heracles Fund Bank of Bermuda (Cayman) Limited 100/100 Promethean Investment Group, L.L.C.
X.X. Xxx 000 40 West 57th Street, Suite 1520
3rd Floor British Xxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xx. Xxx'x Drive Attn: Xxxxx X. X'Xxxxx, Xx.
Georgetown, Grand Cayman Xxxxx Xxxxxx
Cayman Island, BWI Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxxx
Facsimile: 000-000-0000 Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
SCHEDULE 3(a)
Subsidiaries
------------
The following companies are wholly owned subsidiaries of the Company:
HotelView Corporation
CareView Corporation
ResortView Corporation
Video New Wire Corporation
AttractionView Corporation (in process)
SCHEDULE 3(c)
Capitalization
--------------
Vested Unvested Total
------ -------- -----
Common Stock:
Issued and outstanding 3,105,435 3,105,435
Reserved for issuance:
* DCT Acquisition 105,000
* Other agreements 55,000 160,000
Warrants:
Publically traded 1,150,000 1,150,000
*Underwriter/investment banker 255,000 75,000 330,000
Others 208,246 208,246
*Reserved for issuance 100,000 100,000
Options:
*Employee Stock Option Plan 200,000 200,000
Directors 250,000 250,000
Management 874,460 2,020,000 2,894,460
Others 8,260 8,260
--------- --------- ---------
3,265,435 2,495,966 2,645,000 8,406,401
========= ========= ========= =========
*Registration rights
SCHEDULE 3(e)
Conflicts
---------
Filing with Nasdaq to list the Conversion Shares.
SCHEDULE 3(g)
Material Changes
----------------
None.
SCHEDULE 3(h)
Litigation
----------
None.
SCHEDULE 3(n)
Intellectual Property
---------------------
None.
SCHEDULE 3(p)
Liens
-----
18 month first mortgage in the principal amount of $1,000,000, bearing interest
at the rate of 8.75% per annum, with 15 year amortization. At maturity, on March
31, 1999, the amount due under the mortgage, which is held by an unaffiliated
financial institution, will be approximately $963,000.
SCHEDULE 3(t)
Tax Status
----------
The Company?s consolidated Forms 1120 and F-1120 for the year ended September
30, 1997 are on extension until June 15, 1998 and June 30, 1998, respectively.
SCHEDULE 3(u)
Certain Transactions
--------------------
None.
SCHEDULE 4(d)
Use of Proceeds
---------------
The Company intends to use the proceeds of this offering for the purchase of
equipment and general working capital.
SCHEDULE 4(g)
Agreements Regarding Issuance of Securities
-------------------------------------------
Investment Banking Agreement with BlueStone Capital Partners.
EXHIBIT A
Form of Articles of Amendment
Attached hereto.
EXHIBIT B
Form of Registration Rights Agreement
Attached hereto.
EXHIBIT C
Form of Company Counsel Opinion
May 8, 1998
Themis Partners, L.P. Heracles Fund
c/o Promethean Investment Group, L.L.C. Bank of Bermuda (Cayman) Limited
00 Xxxx 00xx Xxxxxx Post Office Box 513
Suite 1520 Georgetown Grand Cayman
New York, New York 10019 Cayman Island, BWI
Re: Visual Data Corporation
Ladies and Gentlemen:
We have acted as counsel to Visual Data Corporation, a Florida
corporation (the "Company") in connection with the Securities Purchase
Agreement, dated as of May 1, 1998 (the "Agreement"), between the parties listed
on the Schedule of Buyers to the Agreement and the Company and the transactions
contemplated therein. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned to such terms in the
Agreement.
This opinion has been prepared and is to be construed in accordance
with the Report on Standards for Florida Opinions dated April 8, 1991, issued by
the Business Law Section of the Florida Bar (the "Report"). The Report is
incorporated by reference into this Opinion.
As counsel in the capacity indicated above, we have examined:
a. The Agreement and the Transaction Documents (as defined);
b. The original or certified, conformed or photostatic copies of
the Certificate of Incorporation and Bylaws of the Company and
its subsidiaries;
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 2
c. The original or certified, conformed or photostatic copies of
minutes of the Company;
d. The records of proceedings and actions of the Company and its
members in the form certified to us by officers of the Company as being
true, correct and complete copies of the foregoing; and
e. Certificates of public officials and such other documents, records
and legal matters as we have deemed necessary or relevant for the
purposes of the opinion hereinafter expressed.
In addition, we have assumed, with your approval but without
investigation, that the Agreement and Transaction Documents are valid and
binding on, and enforceable against all parties thereto other than the Company.
Insofar as this opinion relates to factual matters, we have relied upon
(a) the representations and warranties set forth in the Agreement, (b)
representations of officers of the Company, and (c) certificates of public
officials; however, we have not made any independent review or investigation of
the information contained in such material.
Based upon our examination of the foregoing, and in reliance thereon
and subject to the assumptions, qualifications, exceptions and limitations set
forth herein, we are of the opinion that:
1. The Company and each of its subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has the requisite corporate power and
authority to conduct its business, and to own, lease and operate its properties,
as described in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997. The Company and each of its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in each
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary and in which the failure to
be so qualified or be in good standing
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 3
would have a material adverse effect on the business, operations, financial
conditions or results of operations of the Company and its subsidiaries taken as
a whole (a "Material Adverse Effect").
2. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Agreement, the Articles
of Amendment, the Registration Rights Agreement and the Irrevocable Transfer
Agent Instructions (collectively, the "Transactions Documents"), including
issuance of the Preferred Shares and the Conversion Shares in accordance with
the terms thereof. The filing of the Articles of Amendment and the execution and
delivery of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated therein have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its shareholders is required therefor (except
to the extent that shareholder approval may be required pursuant to the rules of
the Nasdaq SmallCap Market for the issuance of a number of Conversion Shares
greater than 19.99% of the number of shares of Common Stock outstanding
immediately prior to the Initial Closing Date). The Transaction Documents have
been duly executed and delivered by the Company and the Articles of Amendment
have been duly executed and filed by the Company with the Secretary of State of
the State of Florida in accordance with the Florida Business Corporation Act
(the "Florida Corporate Law") and has been accepted for filing with the
Secretary of State. The Transaction Documents constitute the valid and binding
agreements of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
3. The issuance and sale of the Preferred Shares has been duly
authorized, and assuming the Company's receipt of payment of the purchase price
therefor in accordance with the terms of the Agreement, the Preferred Shares are
validly issued, fully paid and non-assessable and free of all taxes, liens,
charges and preemptive rights with respect to the issue thereof. The Conversion
Shares are duly authorized and reserved for issuance
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 4
upon conversion of the Preferred Shares in accordance with the Agreement and the
Articles of Amendment, and when issued in accordance with the Agreement and the
Articles of Amendment, the Conversion Shares will be validly issued, fully paid
and non-assessable and free of all taxes, liens, charges and preemptive rights
with respect to the issue thereof.
4. As of the date hereof, the authorized capital stock of the Company
consists of (i) 20,000,000 shares of Common Stock, par value $.0001 per share
and (ii) 5,000,000 shares of Preferred Stock and no designations are
outstanding. None of such Common Stock or such Preferred Stock is subject to
preemptive rights.
5. Subject to the accuracy of the Buyers' and Company's representations
(as to factual matters) in the Agreement, the Preferred Shares and the
Conversion Shares may be issued to you pursuant to the Transaction Documents
without registration under the 1933 Act or the securities laws of any state,
assuming the Buyers are only located in the State of New York.
6. No authorization, approval, consent, filing or other order of any
Federal or state governmental body, regulatory agency, self-regulatory
organization or stock exchange or market, or the shareholders of the Company
(except (i) to the extent that shareholder approval may be required pursuant to
the rules of the Nasdaq SmallCap Market for the issuance of a number of
Conversion Shares greater than 19.99% of the number of shares of Common Stock
outstanding immediately prior to the Initial Closing Date, (ii) the filing of a
notice of sale of securities on Form D pursuant to Regulation D under the 1933
Act, (iii) filings under "blue sky" state securities laws which may be required
in accordance with applicable laws and (iv) the listing application with the
NASDAQ Stock Market for the Conversion Shares), or any court, or, to our
Knowledge, any third party, is required to be obtained by the Company to enter
into and perform its obligations under the Transaction Documents or for the
issuance and sale of the Preferred Shares and the Conversion Shares as
contemplated by the Transaction Documents.
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 5
7. The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated thereby and the compliance by the Company with the terms thereof
does not (a) violate, conflict with or constitute a default (or an event which,
with the giving of notice or lapse of time or both, constitutes or would
constitute a default) under (i) the Articles of Incorporation or the By-laws, or
(ii) any agreement, note, lease, mortgage, deed or other instrument to which the
Company is a party or by which the Company is bound and which the Company has
filed as an exhibit to its reports filed with the SEC under the 1934 Act or
which, to our Knowledge, the Company otherwise is required or will be required
to file as an exhibit to its reports under the 1934 Act; or (b) result in any
violation of any statute, law, rule or regulation known to us to be applicable
to the Company or, to the best of our Knowledge, any order, writ, injunction or
decree, if such violation would have a Material Adverse Effect.
8. The Company is not an "investment company" or any entity controlled
by an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended.
These opinions are limited to the matters expressly stated herein and
are rendered solely for your benefit and may not be quoted or relied upon for
any other purpose or by any other person.
The opinions expressed herein are subject to the following assumptions,
limitations, qualifications and exceptions:
(a) We have relied upon the factual representations of the
Company in the Agreement and Transaction Agreements with regard to those matters
of fact expressly represented in the Agreement and Transaction Agreements and we
have not undertaken any independent investigation to determine the existence or
absence of those facts, and no inference as to our Knowledge of the existence or
absence of those facts should be drawn from our representation of the Company.
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 6
(b) We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity with
originals of all documents submitted to us as copies, the authenticity of
certificates of public officials and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement and Transaction Agreements).
(c) Whenever a statement herein is qualified by the phrases
"to our Knowledge" or similar phrases, it is intended to indicate that during
the course of our representation of the Company in the transactions contemplated
by the Agreement and Transaction Agreements, and having made inquiry of certain
officers of the Company as to such matters, no information that would give us
current actual knowledge of the inaccuracy of such statement has come to the
attention of those attorneys presently in this firm who have rendered legal
services in connection with the representation described in the introductory
paragraph of this opinion letter. However, we have not undertaken any
independent investigation or review to determine the accuracy of any such
statements and any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation or review.
No inference as to our Knowledge of any matters bearing on the accuracy of any
such statement should be drawn from the fact of our representation of the
Company.
(d) Our examination of law relevant to the matters covered by
this opinion is limited to the laws of Florida and the Federal laws of the
United States, and we express no opinion as to the affect on the matters covered
by this opinion of the laws of any other jurisdiction. We have made no inquiry
into the laws and regulations of any other jurisdiction or jurisdictions or as
to laws relating to choice of law or conflicts of law principles.
(e) Our opinions are as of the date hereof and the opinions
set forth herein speak only to the events which occur pursuant to the precise
terms of the Agreement and Transaction Agreements. We assume no obligation to
advise you of changes which thereafter may be brought to our attention. Our
opinions are based on statutory and judicial decisions in effect at the date
hereof, and we do not opine with
Themis Partners, L.P.
Heracles Fund
May 8, 1998
Page 7
respect to any law, regulation, rule or governmental policy which may be enacted
or adopted after the date hereof, nor assume any responsibility to advise you of
future changes in our opinion.
(f) Our opinion concerning the enforceability of the Agreement
and the Transaction Agreements means that, subject to the last sentence of item
two, some remedy is available if the Company is in material default thereunder.
This opinion does not mean that any particular remedy is available upon a
material default, or every provision of the Agreement and the Transaction
Agreements will be upheld or enforced in any or each circumstance by a court of
competent jurisdiction.
(j) We express no opinion as to the choice of law provisions
in the Agreement and the Transaction Agreements.
Very truly yours,
ATLAS, XXXXXXXX, TROP & BORKSON, P.A.
JDM/dcb
EXHIBIT D
Form of Irrevocable Transfer Agent Instructions
Interwest Transfer Company, Inc.
Suite 100
1981 East Xxxxxx Xxxxxxxx Xxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxx
Ladies & Gentlemen:
Reference is made to that certain Securities Purchase Agreement to be entered
into by and among Visual Data Corporation, a Florida corporation (the
"Company"), and the buyers named therein (collectively, the "Holders") pursuant
to which the Company is issuing to the Holders shares of its Series A
Convertible Preferred Stock, par value $0.0001 per share (the "Preferred
Shares"), which shall be convertible into shares of the Company's Common Stock,
par value $0.0001 per share (the "Common Stock"). This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue shares of Common Stock upon
conversion of the Preferred Shares (the "Conversion Shares") to or upon the
order of a Holder from time to time upon (i) surrender to you of a properly
completed and duly executed Conversion Notice, in the form attached hereto as
Exhibit 1, which has been acknowledged by the Company as indicated by the
signatures of a duly authorized officer of the Company thereon, and (ii)
certificate representing Preferred Shares being converted (or an indemnification
undertaking with respect to such share certificates in the case of their loss,
theft or destruction). As long as you have previously received (x) written
confirmation from counsel to the Company that a registration statement covering
resales of the Conversion Shares has been declared effective by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), and (y) a copy of such registration statement, and (z) a
letter confirming sale and prospectus delivery, then the certificates
representing the Conversion Shares shall not bear any legend restricting
transfer of the Conversion Shares thereby and should not be subject to any
stop-transfer restriction. Provided, however, that if you have not previously
received (i) written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares has been
declared effective by the SEC under the 1933 Act, and (ii) a copy of such
registration statement, then the certificates for the Conversion Shares shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED TO SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT."
and, provided further, that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
in the event a registration statement covering the Conversion Shares is subject
to amendment for events then current.
A form of written confirmation from counsel to the Company that a registration
statement covering resales of the Conversion Shares has been declared effective
by the SEC under the 1933 Act is attached hereto as Exhibit II.
Please be advised that the Holders are relying upon this letter as an inducement
to enter into the Securities Purchase Agreement and, accordingly, each Holder is
a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions. Should you have any questions
concerning this matter, please contact me at 000-000-0000.
Sincerely,
Xxxx Xxxxxxxxxx
Executive Vice President
ACKNOWLEDGED AND AGREED:
Interwest Transfer Company, Inc.
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ____________________________
