EXHIBIT 4.1
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
No. [ ] $[ ]
Date: ________ __, 2004
VISUAL DATA CORPORATION
8.0% SENIOR SECURED CONVERTIBLE NOTE DUE
___________ __, 2008
THIS NOTE is one of a series of duly authorized and issued Notes of
Visual Data Corporation, a Florida corporation (the "COMPANY"), designated as
its 8.0% Senior Secured Convertible Notes due ________ __, 2008, in the
aggregate principal amount of $6,500,000 (the "NOTES"), subject to increase
pursuant to the terms of a certain Additional Investment Right of even date
herewith.
FOR VALUE RECEIVED, the Company promises to pay to the order of
[Holder] or its registered assigns (the "HOLDER"), the principal sum of
[__________] $(__________), on _________ __, 2008 (the "MATURITY DATE"), or such
earlier date as the Notes are required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the unconverted and then
outstanding principal amount of this Note in accordance with the provisions
hereof. The principal amount of this Note may be increased as set forth in
Section 2(c) below. Notwithstanding the foregoing, the Company hereby
unconditionally promises to pay to the order of the Holder interest on any
principal or interest payable hereunder that shall not be paid in full when due,
whether at the time of any stated interest payment date or maturity or by
prepayment, acceleration or declaration or otherwise, for the period from and
including the due date of such payment to but excluding the date the same is
paid in full, at a rate of 18% per annum (but in no event in excess of the
maximum rate permitted under applicable law).
Interest payable under this Note shall be computed on the basis of a
year of 360 days and actual days elapsed (including the first day but excluding
the last day) occurring in the period for which interest is payable.
Payments of principal and interest shall be made in lawful money of the
United States of America to the Holder at its address as provided in SECTION 14
or by wire transfer to such account specified from time to time by the Holder
hereof for such purpose as provided in SECTION 14.
The holder of this Note is entitled to the benefits of the Security
Agreement and the Pledge Agreement.
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Note, (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Securities Purchase Agreement, dated as of
June 8, 2004, among the Company and the Purchasers identified therein (the
"PURCHASE AGREEMENT"), and (b) the following terms have the meanings indicated:
"COMPANY PREPAYMENT PRICE" for any Notes which shall be
subject to prepayment pursuant to Section 8(a), shall equal the sum of:
(i) the principal amount of Notes to be prepaid, plus all accrued and
unpaid interest thereon, and (ii) all other amounts, costs, expenses
and liquidated damages due in respect of such Notes.
"CONVERSION DATE" means the date a Conversion Notice is
delivered to the Company together with the Conversion Schedule pursuant
to SECTION 6(A).
"CONVERSION NOTICE" means a written notice in the form
attached hereto as SCHEDULE 1.
"CONVERSION PRICE" means $2.00, subject to adjustment from
time to time pursuant to SECTION 12.
"EQUITY CONDITIONS" means, with respect to a specified
issuance of Common Stock, that each of the following conditions is
satisfied: (i) the number of authorized but unissued and otherwise
unreserved shares of Common Stock is sufficient for such issuance; (ii)
such shares of Common Stock are registered for resale by the Holder and
may be sold by the Holders pursuant to an effective Registration
Statement covering the Underlying Shares or all such shares may be sold
without volume restrictions pursuant to Rule 144(k) under the
Securities Act; (iii) the Common Stock generally is listed or quoted
(and is not suspended from trading) on an Eligible Market and such
shares of Common Stock are approved for listing upon issuance; (iv)
such issuance would be permitted in full without violating SECTION 6(C)
hereof or the rules or regulations of any Trading Market; (v) no
Bankruptcy Event has occurred; (vi) the Company is not in default with
respect to any material obligation hereunder or under any other
Transaction Document; and (vii) no public announcement of a pending or
proposed Change of Control transaction has occurred that has not been
consummated.
"EVENT EQUITY VALUE" means 115% of the average of the Closing
Prices for the five Trading Days preceding the date of delivery of the
notice requiring payment of the Event Equity Value, PROVIDED that if
the Company does not make such required payment (together with any
other payments, expenses and liquidated damages then due and payable
under the Transaction Documents) when due or, in the event the Company
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disputes in good faith the occurrence of the Triggering Event pursuant
to which such notice relates, does not instead deposit such required
payment (together with such other payments, expenses and liquidated
damages then due) in escrow with an independent third-party escrow
agent within five Trading Days of the date such required payment is
due, then the Event Equity Value shall be 115% of the greater of (a)
the average of the Closing Prices for the five Trading Days preceding
the date of delivery of the notice requiring payment of the Event
Equity Value and (b) the average of the Closing Prices for the five
Trading Days preceding the date on which such required payment
(together with such other payments, expenses and liquidated damages) is
paid in full.
"HOLDER PREPAYMENT PRICE" for any Notes required to be prepaid
pursuant to Section 8(b) shall equal the sum of: (i) the principal
amount of Notes to be prepaid, plus all accrued and unpaid interest
thereon and (ii) all other amounts, costs, expenses and liquidated
damages due in respect of such Notes.
"ORIGINAL ISSUE DATE" means the date of the first issuance of
any Notes, regardless of the number of transfers of any particular
Note.
"PRINCIPAL PAYMENT DATE" means any date on which payment of a
principal amount of this Note shall be due and payable by the Company
in accordance with Section 9.
"TRIGGERING EVENT" means any of the following events: (a) the
Common Stock is not listed or quoted, or is suspended from trading, in
each case, on an Eligible Market for a period of 20 or more Trading
Days (which need not be consecutive Trading Days); (b) the Company
fails for any reason to deliver a certificate evidencing any Securities
to a Purchaser within five Trading Days after delivery of such
certificate is required pursuant to any Transaction Document or the
exercise or conversion rights of the Holders pursuant to any
Transaction Document are otherwise suspended for any reason; (c) the
Company fails to have available a sufficient number of authorized but
unissued and otherwise unreserved shares of Common Stock available to
issue Underlying Shares upon any exercise of the Note; (d) the Company
effects or publicly announces its intention to effect any exchange,
recapitalization or other transaction that effectively requires or
rewards physical delivery of certificates evidencing the Common Stock;
(e) the effectiveness of the Registration Statement lapses for any
reason or the Holder shall not be permitted to resell any Underlying
Shares under the Registration Statement, in either case, for 20 or more
consecutive days in any 12 month period or for more than twice any 12
month period; (f) the Company fails to make any cash payment required
under the Transaction Documents and such failure is not cured within
five days after notice of such default is first given to the Company by
a Purchaser; or (g) the Company defaults in the timely performance of
any other obligation under the Transaction Documents and such default
continues uncured for a period of 20 days after the date on which
notice of such default is first given to the Company by a Purchaser (it
being understood that no prior notice need be given in the case of a
default that cannot reasonably be cured within 20 days).
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2. PRINCIPAL AND INTEREST.
(a) The Company shall pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this Note at the
rate of 8.0% per annum, payable quarterly in arrears on each June 30, September
30, December 31 and March 31, except if such date is not a Trading Day, in which
case such interest shall be payable on the next succeeding Trading Day (each, an
"INTEREST PAYMENT DATE"). The first Interest Payment Date shall be September 30,
2004.
(b) Subject to the conditions and limitations set forth below,
the Company may pay interest or principal on this Note in (i) cash or (ii)
shares of Common Stock. The Company must deliver written notice to the Holder
indicating the manner in which it intends to pay interest and principal at least
15 Trading Days prior to each Interest Payment Date or the Principal Payment
Date, respectively, but the Company may indicate in any such notice that the
election contained therein shall continue for subsequent Interest Payment Dates
or Principal Payment Dates until revised. Failure to timely provide such written
notice shall be deemed an election by the Company to pay the amount of any
interest or principal in cash.
(c) Notwithstanding the foregoing, the Company may not pay
interest or principal by issuing shares of Common Stock unless all of the Equity
Conditions have been satisfied; provided, however, that prior to the Effective
Date, the Company shall be permitted to pay the interest due on September 30,
2004 in shares of unregistered Common Stock to the extent such shares will be
included in the Registration Statement. If the Company is required to pay
interest in cash on any Interest Payment Date but fails to do so, the Holder may
(but shall not be required to) treat such interest as if it had been added to
the principal amount of this Note as of such Interest Payment Date or accept any
number of shares of Common Stock in lieu of such interest payment.
(d) In the event that the Company elects to pay interest on
any Interest Payment Date or Principal Payment Date in shares of Common Stock,
the number of shares of Common Stock to be issued to each Holder as such
interest or principal shall be (i) with respect to interest, determined by
dividing the aggregate amount of interest then payable to such Holder by the
Market Price (as defined below) as of the applicable Interest Payment Date, and
rounding up to the nearest whole share, (ii) with respect to principal,
determined as set forth in Section 9(c) hereof, and (iii) paid to such Holder in
accordance with Section 2(e) below. The term "MARKET PRICE" shall mean 85% of
the arithmetic average of the VWAP for the 20 Trading Days prior to the
applicable Interest Payment Date or Principal Payment Date, as the case may be
(not including such date).
(e) In the event that any interest or principal are paid in
Common Stock, the Company shall on such Interest Payment Date or Principal
Payment Date (i) issue and deliver to such Holder a certificate, registered in
the name of the Holder or its designee, for the number of shares of Common Stock
to which the Holder shall be entitled or (ii) at all times after the Holder has
notified the Company that this clause (ii) shall apply, credit the number of
shares of Common Stock to which the Holder shall be entitled to the Holder's or
its designee's balance account with The Depository Trust Company through its
Deposit Withdrawal Agent Commission System.
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3. RANKING AND COVENANTS.
(a) Except as set forth in SCHEDULE 3.1(DD) or as otherwise permitted
in Section 4.10(a) of the Purchase Agreement (the "EXISTING INDEBTEDNESS"), no
indebtedness of the Company is senior to this Note in right of payment, whether
with respect to interest, damages or upon liquidation or dissolution or
otherwise. Other than the Existing Indebtedness and any renewal, refinancing or
replacement thereof that does not exceed the aggregate amount of the Existing
Indebtedness and the borrowing availability under the related credit or loan
agreements on the date hereof, the Company will not, and will not permit any
Subsidiary to, directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom, that is senior in any respect to the Company's
obligations under the Notes, other than indebtedness secured by purchase money
security interests (which will be senior only as to the underlying assets
covered thereby) and indebtedness under capital lease obligations (which will be
senior only as to the assets covered thereby).
(b) Except as set forth on Schedule 3(b), so long as any Notes are
outstanding, neither the Company nor any Subsidiary shall, directly or
indirectly, (i) redeem, purchase or otherwise acquire any capital stock or set
aside any monies for such a redemption, purchase or other acquisition or (ii)
issue variable priced equity securities or variable priced equity linked
securities.
(c) The Company covenants that it will at all times reserve and keep
available out of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Underlying Shares as
required hereunder, the number of Underlying Shares which are then issuable and
deliverable upon the conversion of (and otherwise in respect of) this entire
Note (taking into account the adjustments set forth in SECTION 12 and
disregarding any limitations set forth in SECTION 6(B)), free from preemptive
rights or any other contingent purchase rights of Persons other than the Holder.
The Company covenants that all Underlying Shares so issuable and deliverable
shall, upon issuance in accordance with the terms hereof, be duly and validly
authorized and issued and fully paid and nonassessable.
(d) The Company covenants that it will not redeem, repurchase or
otherwise acquire all or any portion of the Series A-10 Preferred Stock or any
other preferred stock, common stock or other equity equivalent of the Company,
on or prior to the earlier of (i) the Maturity Date hereof or (ii) the date on
which all of the Notes shall have been converted into Common Stock, without the
prior written consent of the holders of 51% of the aggregate principal value of
the then outstanding Notes (the "MAJORITY HOLDERS").
4. REGISTRATION OF NOTES. The Company shall register the Notes upon
records to be maintained by the Company for that purpose (the "NOTE REGISTER")
in the name of each record holder thereof from time to time. The Company may
deem and treat the registered Holder of this Note as the absolute owner hereof
for the purpose of any conversion hereof or any payment of interest or principal
hereon, and for all other purposes, absent actual notice to the contrary.
5. REGISTRATION OF TRANSFERS AND EXCHANGES. The Company shall register
the transfer of any portion of this Note in the Note Register upon surrender of
this Note to the Company at its address for notice set forth herein. Upon any
such registration or transfer, a new Note, in substantially the form of this
Note (any such new Note, a "NEW NOTE"), evidencing the portion of this Note so
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transferred shall be issued to the transferee and a New Note evidencing the
remaining portion of this Note not so transferred, if any, shall be issued to
the transferring Holder. The acceptance of the New Note by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Note. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge or other fee
will be imposed in connection with any such registration of transfer or
exchange.
6. CONVERSION.
(a) AT THE OPTION OF THE HOLDER. All or any portion of this Note shall
be convertible into shares of Common Stock (subject to the limitations set forth
in SECTION 6(C)), at the option of the Holder, at any time and from time to time
from and after the Original Issue Date. The number of Underlying Shares issuable
upon any conversion hereunder shall equal the outstanding principal amount of
this Note to be converted, plus the amount of any accrued but unpaid interest on
this Note through the Conversion Date, divided by the Conversion Price on the
Conversion Date. The Holder shall effect conversions under this SECTION 6(A) by
delivering to the Company a Conversion Notice together with a schedule in the
form of SCHEDULE 2 attached hereto (the "CONVERSION Schedule"). If the Holder is
converting less than all of the principal amount of this Note, or if a
conversion hereunder may not be effected in full due to the application of
SECTION 6(C), the Company shall honor such conversion to the extent permissible
hereunder and shall promptly deliver to the Holder a Conversion Schedule
indicating the principal amount (and accrued interest) which has not been
converted.
(b) AUTOMATIC CONVERSION.
At any time following the Original Issue Date, the
Company shall have the right to cause an amount (the "CONVERTED
AMOUNT") of this Note then outstanding equal to the lesser of (A) the
principal amount outstanding under this Note and (B) 20% of the product
of (x) the total volume of Common Stock traded on the company's Trading
Market for the 30 day period preceding the Automatic Conversion Date
(as defined below), (y) the arithmetic average of the VWAP for such 30
day period and (z) the quotient of (I) the outstanding principal amount
of this Note on the Automatic Conversion Date and (II) the outstanding
principal amount of all of the Notes issued pursuant to the Transaction
Documents on the Automatic Conversion Date (such amount being the
Holder's "PRO RATA AMOUNT"), to be automatically converted into fully
paid non-assessable shares of Common Stock (such conversion, an
"AUTOMATIC CONVERSION") at the Conversion Price (subject to the
limitations set forth in Sections 6(c)), by delivery of a 10 day
advance written notice (the "AUTOMATIC CONVERSION NOTICE") to the
Holder.
Notwithstanding anything to the contrary, the Company
may not cause an Automatic Conversion unless each of the following
conditions are satisfied: (A) as of the Automatic Conversion Date (as
defined below), no Triggering Event has occurred (after giving effect
to any addition to principal under the Notes); (B) each of the Equity
Conditions are satisfied with respect to all of the Common Stock
issuable on the Automatic Conversion Date; and (C) the Closing Price of
the Common Stock on each of the 20 out of any 30 consecutive days
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preceding the Automatic Conversion Notice is greater than $3.25 per
share (as adjusted for stock splits, stock combinations or other
similar recapitalization or event).
Upon an Automatic Conversion in accordance with the
procedures specified in this Section 6(b), and effective as of the
close of business on the Automatic Conversion Date, the Converted
Amount shall be converted into fully paid and non-assessable shares of
Common Stock automatically without the need for any further action by
the Holder. Upon the occurrence of such Automatic Conversion of the
Converted Amount, there shall be (A) issued and delivered to the Holder
a certificate or certificates for the number of shares of Common Stock
into which this the Converted Amount was convertible on the Automatic
Conversion Date or (B) at all times after the Holder has notified the
Company that this clause (ii) shall apply, credited the number of
shares of Common Stock to which the Holder shall be entitled to the
Holder's or its designee's balance account with The Depository Trust
Company through its Deposit Withdrawal Agent Commission System. For
purposes of this Section 6(b), the "AUTOMATIC CONVERSION DATE" shall
mean the 10th day following the date on which the Automatic Conversion
Notice is either: (x) delivered to the Holder by personal delivery, or
(y) delivered to the Holder by facsimile transmission to the facsimile
telephone number of such Holder appearing on the signature page to the
Purchase Agreement (with confirmation of receipt), or (z) deposited
with a recognized express courier for express delivery, fees prepaid,
addressed to such registered holder at the address of such holder
appearing on the signature page to the Purchase Agreement.
(c) CERTAIN CONVERSION RESTRICTIONS.
RELATING TO THE NUMBER OF SHARES.
(A) Subject to Section 6(c)(i)(B), the number of shares of Common Stock
that may be acquired by a Holder upon any conversion of Notes (or
otherwise in respect hereof) shall be limited to the extent necessary
to insure that, following such conversion (or other issuance), the
total number of shares of Common Stock then beneficially owned by such
Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with such Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999%
(the "MAXIMUM PERCENTAGE") of the total number of issued and
outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such conversion). For such
purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of a Conversion Notice hereunder
will constitute a representation by the applicable Holder that it has
evaluated the limitations set forth in this SECTION 6(C)(I)(A) and has
determined that issuance of the full number of Underlying Shares
issuable in respect of such Conversion Notice does not violate the
restrictions contained in this SECTION 6(C)(I)(A). If at any time the
limits in this Section 6(c) make this Note inconvertible in whole or in
part, the Company shall not by reason thereof be relieved of its
obligation to issue shares of Common Stock at any time or from time to
time thereafter but prior to the Maturity Date upon conversion of this
Note as and when shares of Common Stock may be issued in compliance
with such restrictions.
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(B) Notwithstanding the provisions of Section 6(c)(i)(A), by written
notice to the Company, the Holder shall have the right (x) at any time
and from time to time to reduce its Maximum Percentage immediately upon
notice to the Company in the event and only to the extent that Section
16 of the Exchange Act or the rules promulgated thereunder (or any
successor statute or rules) is changed to reduce the beneficial
ownership percentage threshold thereunder to a percentage less than
9.999%.
7. MECHANICS OF CONVERSION.
(a) Upon conversion of this Note, the Company shall promptly (but in no
event later than three Trading Days after the Conversion Date) issue or cause to
be issued and cause to be delivered to or upon the written order of the Holder
and in such name or names as the Holder may designate a certificate for the
Underlying Shares issuable upon such conversion, free of restrictive legends
unless a registration statement covering the resale of the Underlying Shares and
naming the Holder as a selling stockholder thereunder is not then effective and
such Underlying Shares are not then freely transferable without volume
restrictions pursuant to Rule 144 under the Securities Act. The Holder, or any
Person so designated by the Holder to receive Underlying Shares, shall be deemed
to have become holder of record of such Underlying Shares as of the Conversion
Date. The Company shall, upon request of the Holder, use its best efforts to
deliver Underlying Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions.
(b) The Holder shall not be required to deliver the original Note in
order to effect a conversion hereunder. Execution and delivery of the Conversion
Notice shall have the same effect as cancellation of the original Note and
issuance of a New Note representing the remaining outstanding principal amount.
Upon surrender of this Note following one or more partial conversions, the
Company shall promptly deliver to the Holder a New Note representing the
remaining outstanding principal amount.
(c) The Company's obligations to issue and deliver Underlying Shares
upon conversion of this Note in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any set-off, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other Person of any obligation
to the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of such Underlying Shares.
(d) If by the third Trading Day after a Conversion Date the Company
fails to deliver to the Holder such Underlying Shares in such amounts and in the
manner required pursuant to SECTION 7(A), then the Holder will have the right to
rescind such conversion.
(e) If by the third Trading Day after a Conversion Date the Company
fails to deliver to the Holder such Underlying Shares in such amounts and in the
manner required pursuant to SECTION 7(A), and if after such third Trading Day
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the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Holder of the
Underlying Shares which the Holder anticipated receiving upon such conversion (a
"BUY-IN"), then the Company shall either (i) pay cash to such Purchaser in an
amount equal to such Purchaser's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the "BUY-IN
PRICE"), at which point the Company's obligation to deliver such certificate
(and to issue such Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to such Purchaser a certificate or certificates
representing such Common Stock and pay cash to such Purchaser in an amount equal
to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Common Stock, times (B) the Closing Price on the date of the event
giving rise to the Company's obligation to deliver such certificate. In the
event the Holder elects to effectuate a Buy-In and the Company complies with the
provisions of this SECTION 7(E), the failure of the Company to deliver to the
Holder the Underlying Shares required to be issued on the Conversion Date
pursuant to SECTION 7(A) shall not result in a Triggering Event.
8. PREPAYMENT.
(a) AT THE OPTION OF THE COMPANY.
(i) At any time following the Original Issue Date, upon
delivery of a written notice to the Holder (a "COMPANY PREPAYMENT
NOTICE" and the date such notice is delivered by the Company, the
"COMPANY NOTICE DATE"), the Company shall be entitled to prepay all or
any portion of the outstanding principal amount of this Note plus any
accrued and unpaid interest thereon for an amount in cash equal to the
Company Prepayment Price. Notwithstanding anything to the contrary, the
Company shall only be entitled to deliver a Company Prepayment Notice
pursuant to the terms hereof if the Equity Conditions are satisfied
with respect to all shares of Common Stock issuable pursuant to the
Transaction Documents on the Company Notice Date. If any of the Equity
Conditions shall cease to be in effect during the period between the
Company Notice Date and the date the Company Prepayment Price is paid
in full, then the Holder subject to such prepayment may elect, by
written notice to the Company given at any time after any of the Equity
Conditions shall cease to be in effect, to invalidate AB INITIO such
optional prepayment, notwithstanding anything herein contained to the
contrary. The Holder may, within 5 Trading Days of its receipt of the
Company Prepayment Notice, convert any portion of the outstanding
principal amount of this Note and any accrued and unpaid interest
thereon subject to a Company Prepayment Notice. Once delivered, the
Company shall not be entitled to rescind a Company Prepayment Notice.
(ii) The Company Prepayment Price shall be due on the 5th
Trading Day immediately following the Company Notice Date. Any such
prepayment shall be free of any claim of subordination. If any portion
of the Company Prepayment Price shall not be timely paid by the
Company, interest shall accrue thereon at the rate of 18% per annum (or
the maximum rate permitted by applicable law, whichever is less) until
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the Company Prepayment Price plus all such interest is paid in full,
which payment shall constitute liquidated damages and not a penalty. In
addition, if any portion of the Company Prepayment Price remains unpaid
after such date, the Holder subject to such prepayment may elect by
written notice to the Company to invalidate AB INITIO such Company
Prepayment Notice with respect to the unpaid amount, notwithstanding
anything herein contained to the contrary and no interest shall be owed
to the Holder in respect thereof. If the Holder makes such an election,
the principal amount of this Note, together with the accrued and unpaid
interest thereon shall be reinstated with respect to such unpaid amount
and the Company shall no longer have any prepayment rights under this
Section 8.
(iii) Notwithstanding anything to the contrary herein, the
Company may not elect a prepayment pursuant to Section 8(a)(i) unless
the Company makes such prepayment election to all of the Holders on a
pro rata basis, based on such Holders then outstanding principal amount
of Notes.
(iv) At any time the Company shall prepay any amount due under
this Note, the Company shall issue to the Holder warrants substantially
in the same form as the Warrants, except the number of shares of Common
Stock issuable upon the exercise of such warrants shall equal 50% of
the quotient of (1) the portion of the outstanding principal amount of
this Note prepaid by the Company in accordance with this Section 8(a)
and (2) the Conversion Price on the date the prepayment shall take
place.
(b) AT THE OPTION OF THE HOLDER.
(i) At any time following the one year anniversary of the
Original Issue Date, each Holder shall have the right, exercisable at
the sole option of such Holder, and by delivery of a written notice (a
"HOLDER PREPAYMENT NOTICE" and the date such notice is delivered by
such Holder, the "HOLDER NOTICE DATE") to the Company, to require the
Company to prepay all or a portion of the Holder Prepayment Amount (as
defined below) for an amount in cash, equal to the Holder Prepayment
Price which shall be due and payable on the 15th Trading Day following
the delivery of the Holder Prepayment Notice by the Holder.
Notwithstanding anything herein to the contrary, a Holder shall only be
entitled to deliver a Holder Prepayment Notice pursuant to the terms
hereof if: (x) on the one year anniversary of the Original Issue Date,
such Holder or the Company have not converted more than an aggregate of
$500,000 of the original principal amount of Notes issued to such
Holder on the Original Issue Date, or (y) on the date occurring
eighteen months following the Original Issue Date, such Holder or the
Company have not paid or converted more than an aggregate of $1,000,000
of the original principal amount of Notes issued to such Holder on the
Original Issue Date. For the purposes of this Section 8, "HOLDER
PREPAYMENT AMOUNT" shall mean (x) from the 12 month anniversary of the
Original Issue Date to the 18 month anniversary, $500,000 less the
principal amount of any Notes converted or paid during such period, and
(y) on or after 18 month anniversary of the Original Issue Date,
$1,000,000 less the principal amount of any Notes converted or paid.
(ii) Any obligation to pay any Holder Prepayment Price shall
be free of any claim of subordination. If any portion of the Holder
Prepayment Price shall not be timely paid by the Company, interest
shall accrue thereon at the rate of 18% per annum (or the maximum rate
10
permitted by applicable law, whichever is less) until the Holder
Prepayment Price plus all such interest is paid in full, which payment
shall constitute liquidated damages and not a penalty. In addition, if
any portion of the Holder Prepayment Price remains unpaid after such
date, the Holder subject to such prepayment may elect by written notice
to the Company to invalidate AB INITIO such Holder Prepayment Notice
with respect to the unpaid amount, notwithstanding anything herein
contained to the contrary. If the Holder makes such an election, this
Note shall be reinstated with respect to such unpaid amount. For
purposes of this Section 8, the principal amount of Notes shall remain
outstanding until such date as the Holder shall have received payment
in cash therefor or Underlying Shares upon a conversion (or attempted
conversion) thereof that meets the requirements hereof. The Holder may
convert any portion of the outstanding principal amount of the Notes
subject to a prepayment hereunder prior to the date that the Holder
Prepayment Price is due and paid in full.
(iii) Notwithstanding anything to contrary herein, no warrants
shall be issued to the Holders pursuant to a prepayment in connection
with a Holder Prepayment Notice.
9. PRINCIPAL REPAYMENT.
(a) On and after the 21st month following the Original Issue Date, the
principal face amount of any Notes then outstanding shall be paid in 9 equal
quarterly installments on the last day of such quarter (each a "Principal
Payment"), except if such date is not a Trading Day, in which case such
Principal Payment shall be payable on the next succeeding Trading Day, each a
"Principal Payment Date", with the first Principal Payment Date to occur on
[_______ ___], 2006.
(b) The Company shall have the option to make any Principal Payments in
cash or in Common Stock; PROVIDED, HOWEVER, that the Company may only make such
payments in Common Stock if (i) the arithmetic average of the VWAP for the
quarter ending on the applicable Principal Payment Date is greater than $2.36
per share (as adjusted for stock splits, stock combinations or other similar
recapitalization or event), (ii) the Equity Conditions are satisfied with
respect to all shares of Common Stock issuable by the Company on the Principal
Payment Date, and (iii) to the extent such payment may be made in accordance
with subsection (c) below.
(c) In the event the Company elects to pay all or part of any Principal
Payment in Common Stock, such Principal Payment shall be satisfied first through
the issuance of Common Stock in an amount equal to the quotient of (i) the
lesser of (A) the product of (1) 20% of the total volume of Common Stock traded
on the Company's Trading Market in such quarter and (2) the arithmetic average
of the VWAP for such quarter (such amount, the "MAXIMUM PRINCIPAL PAYMENT") and
(B) the Principal Payment amount and (ii) the Conversion Price on such date. To
the extent that such calculation results in an insufficient amount to satisfy
the then due Principal Payment, at the option of the Holder, the balance may be
paid in cash or otherwise in Common Stock issued at the Conversion Price on such
Principal Payment Date. Further, in the event such amount shall exceed the
11
Principal Payment then due, at the option of a majority of the Holders of the
Notes, an additional amount of Common Stock up to an amount equal to the
quotient of (x) the Maximum Principal Payment on such date minus the Principal
Payment then due and (y) the Conversion Price may be converted and applied to
the 9th and final Principal Payment (or other Principal Payments in an order
starting with last Principal Payment that has not yet been satisfied in
accordance with this Section 9(c) (i.e. the Principal Payment due on the 8th
Principal Payment Date) once the last Principal Payment shall have been paid in
full). Any other conversions that occur after the 21st month following the
Original Issue Date shall apply to the 9th and final Principal Payment or prior
Principal Payments as set forth in the preceding sentence.
10. EVENTS OF DEFAULT.
(a) "EVENT OF DEFAULT" means any one of the following events (whatever
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body):
(i) any default in the payment (free of any claim of
subordination) of principal, interest or liquidated damages in respect
of any Notes, as and when the same becomes due and payable (whether on
a date specified for the payment of interest or the date on which the
obligations under the Note mature or by acceleration, redemption,
prepayment or otherwise);
(ii) the Company or any Subsidiary defaults in any of its
obligations under any other note or any mortgage, credit agreement or
other facility, indenture agreement, factoring agreement or other
instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement of the Company or
any Subsidiary in an amount exceeding $1,000,000, whether such
indebtedness now exists or is hereafter created, and such default
results in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise become due and payable;
(iii) the occurrence of a Triggering Event; or
(iv) the occurrence of a Bankruptcy Event.
(b) At any time or times following the occurrence of an Event of
Default, the Holder shall have the option to elect, by notice to the Company (an
"EVENT NOTICE"), to require the Company to repurchase all or any portion of (i)
the outstanding principal amount of this Note, at a repurchase price equal to
the greater of (A) 115% of such outstanding principal amount, plus all accrued
but unpaid interest thereon through the date of payment, or (B) the Event Equity
Value of the Underlying Shares issuable upon conversion of such principal amount
12
and all such accrued but unpaid interest thereon, provided this remedy shall not
be available upon an Event of Default set forth in Section 10(a)(ii) hereof, and
(ii) any Underlying Shares issued to such Holder upon conversion of Notes and
then owned by the Holder, at a price per share equal to the Event Equity Value
of such issuable and issued Underlying Shares. The aggregate amount payable
pursuant to the preceding sentence is referred to as the "EVENT PRICE." The
Company shall pay the Event Price to the Holder no later than the third Trading
Day following the date of delivery of the Event Notice, and upon receipt thereof
the Holder shall deliver this Note and certificates evidencing any Underlying
Shares so repurchased to the Company (to the extent such certificates have been
delivered to the Holder).
(c) Upon the occurrence of any Bankruptcy Event, all amounts pursuant
to SECTION 10(B) shall immediately become due and payable in full in cash,
without any further action by the Holder.
(d) In connection with any Event of Default, the Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately enforce any and all of its
rights and remedies hereunder and all other remedies available to it under
applicable law. Any such declaration may be rescinded and annulled by the Holder
at any time prior to payment hereunder. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereto.
11. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
Underlying Shares upon conversion of (or otherwise in respect of) this Note
shall be made without charge to the Holder for any issue or transfer tax,
withholding tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the registration of any certificates for Underlying Shares or Notes in a name
other than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Note or
receiving Underlying Shares in respect hereof.
12. CERTAIN ADJUSTMENTS. The Conversion Price is subject to adjustment
from time to time as set forth in this SECTION 12.
(a) STOCK DIVIDENDS AND SPLITS. If the Company, at any time while this
Note is outstanding, (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of
Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, or (iii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
SECTION 12(A) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this SECTION 12(A) shall
become effective immediately after the effective date of such subdivision or
combination.
(b) PRO RATA DISTRIBUTIONS. If the Company, at any time while this Note
is outstanding, distributes to all holders of Common Stock (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock
13
described in SECTION 12(C)), (iii) rights or warrants to subscribe for or
purchase any security, or (iv) cash or any other asset (in each case,
"DISTRIBUTED PROPERTY"), then, at the request of the Holder delivered before the
90th day after the record date fixed for determination of stockholders entitled
to receive such distribution, the Company will deliver to the Holder, within
five Trading Days after such request (or, if later, on the effective date of
such distribution), the Distributed Property that the Holder would have been
entitled to receive in respect of the Underlying Shares for which this Note
could have been converted immediately prior to such record date. If such
Distributed Property is not delivered to the Holder pursuant to the preceding
sentence, upon any conversion of this Note that occurs after such record date,
the Holder shall be entitled to receive, in addition to the Underlying Shares
otherwise issuable upon such conversion, the Distributed Property that the
Holder would have been entitled to receive in respect of such number of
Underlying Shares had the Holder been the record holder of such Underlying
Shares immediately prior to such record date.
(c) FUNDAMENTAL CHANGES. If, at any time while this Note is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person in which it is not the surviving entity, (ii) the
Company effects any sale of all or substantially all of its assets in one or
more transactions, (iii) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock described in SECTION 12(A)) (in any such case, a "FUNDAMENTAL CHANGE"),
then upon any subsequent conversion of this Note, the Holder shall have the
right to receive, for each Underlying Share that would have been issuable upon
such conversion absent such Fundamental Change, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Change if it had been, immediately prior to such
Fundamental Change, the holder of one share of Common Stock (the "ALTERNATE
CONSIDERATION"). If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Change, then the
Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Note following such Fundamental Change. In
the event of a Fundamental Change, the Company or the successor or purchasing
Person, as the case may be, shall execute with the Holder a written agreement
providing that:
(x) this Note shall thereafter entitle the Holder to purchase
the Alternate Consideration,
(y) in the case of any such successor or purchasing Person,
upon such consolidation, merger, statutory exchange, combination, sale
or conveyance such successor or purchasing Person shall be jointly and
severally liable with the Company for the performance of all of the
Company's obligations under this Warrant and the Purchase Agreement,
and
14
(z) if registration or qualification is required under the
Exchange Act or applicable state law for the public resale by the
Holder of shares of stock and other securities so issuable upon
exercise of this Warrant, such registration or qualification shall be
completed prior to such reclassification, change, consolidation,
merger, statutory exchange, combination or sale.
If, in the case of any Fundamental Change, the Alternate Consideration includes
shares of stock, other securities, other property or assets of a Person other
than the Company or any such successor or purchasing Person, as the case may be,
in such Fundamental Change, then such written agreement shall also be executed
by such other Person and shall contain such additional provisions to protect the
interests of the Holder as the Board of Directors of the Company shall
reasonably consider necessary by reason of the foregoing. At the Holder's
request, any successor to the Company or surviving Person in such Fundamental
Change shall issue to the Holder a new Note consistent with the foregoing
provisions and evidencing the Holder's right to convert such Note into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental Change
is effected shall include terms requiring any such successor or surviving Person
to comply with the provisions of this SECTION 12(c) and insuring that this Note
(or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Change. If any Fundamental
Change constitutes or results in a Change of Control, then at the request of the
Holder delivered before the 90th day after such Fundamental Change, the Company
(or any such successor or surviving entity) will purchase this Note from the
Holder for a purchase price, payable in cash within five Trading Days after such
request (or, if later, on the effective date of the Fundamental Transaction),
equal to the Black Scholes value of the remaining unexercised portion of this
Note on the date of such request.
(d) SUBSEQUENT EQUITY SALES.
(i) If, at any time while this Note is outstanding, the
Company or any Subsidiary issues additional shares of Common Stock or
rights, warrants, options or other securities or debt convertible,
exercisable or exchangeable for shares of Common Stock or otherwise
entitling any Person to acquire shares of Common Stock (collectively,
"COMMON STOCK EQUIVALENTS") at a price (exclusive of commissions
payable by the Company in connection therewith) per share of Common
Stock (the "EFFECTIVE PRICE") less than the Conversion Price (as
adjusted hereunder to such date), then the Conversion Price shall be
reduced to equal the Effective Price. For purposes of this paragraph,
in connection with any issuance of any Common Stock Equivalents, (A)
the maximum number of shares of Common Stock potentially issuable at
any time upon conversion, exercise or exchange of such Common Stock
Equivalents (the "DEEMED NUMBER") shall be deemed to be outstanding
upon issuance of such Common Stock Equivalents, (B) the Effective Price
applicable to such Common Stock shall equal the minimum dollar value of
consideration payable to the Company to purchase such Common Stock
Equivalents and to convert, exercise or exchange them into Common Stock
(net of any discounts, fees, commissions and other expenses), divided
by the Deemed Number, and (C) no further adjustment shall be made to
the Conversion Price upon the actual issuance of Common Stock upon
conversion, exercise or exchange of such Common Stock Equivalents.
15
(ii) If, at any time while this Note is outstanding, the
Company or any Subsidiary issues Common Stock Equivalents with an
Effective Price or a number of underlying shares that floats or resets
or otherwise varies or is subject to adjustment based (directly or
indirectly) on market prices of the Common Stock (a "FLOATING PRICE
SECURITY"), then for purposes of applying the preceding paragraph in
connection with any subsequent conversion, the Effective Price will be
determined separately on each Conversion Date and will be deemed to
equal the lowest Effective Price at which any holder of such Floating
Price Security is entitled to acquire Common Stock on such Conversion
Date (regardless of whether any such holder actually acquires any
shares on such date).
(iii) Notwithstanding the foregoing, no adjustment will be
made under this paragraph (d) in respect of (A) the issuance of Common
Stock upon exercise or conversion of any Common Stock Equivalents
described in SCHEDULE 3.1(G) to the Purchase Agreement (provided that
such exercise or conversion occurs in accordance with the terms
thereof, without amendment or modification, and that the applicable
exercise or conversion price or ratio is described in such schedule);
(B) to officers, directors or employees of, or advisers, consultants or
independent contractors acting in a similar capacity to, the Company
pursuant to restricted stock issuances, stock grants, stock options or
similar employee stock incentives, in each case approved by the Board
of Directors of the Company; (C) the issuance of securities in
connection with a bona fide joint venture or development agreement or
strategic partnership or similar agreement approved by the Company's
board of directors, the primary purpose of which is not to raise equity
capital; or (D) in connection with a transaction involving a merger or
acquisition of an entity, business or assets (not principally for the
purpose of obtaining cash).
(e) CALCULATIONS. All calculations under this SECTION 12 shall be made
to the nearest cent or the nearest 1/100th of a share, as applicable. The number
of shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
(f) NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment
pursuant to this SECTION 12, the Company at its expense will promptly compute
such adjustment in accordance with the terms hereof and prepare and deliver to
the Holder a certificate describing in reasonable detail such adjustment and the
transactions giving rise thereto, including all facts upon which such adjustment
is based.
(g) NOTICE OF CORPORATE EVENTS. If the Company (i) declares a dividend
or any other distribution of cash, securities or other property in respect of
its Common Stock, including without limitation any granting of rights or
warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Change or (iii) authorizes
the voluntary dissolution, liquidation or winding up of the affairs of the
Company, then the Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 20 Trading Days
prior to the applicable record or effective date on which a Person would need to
16
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to convert this
Note prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.
13. NO FRACTIONAL SHARES. The Company shall not issue or cause to be
issued fractional Underlying Shares on conversion of this Note. If any fraction
of an Underlying Share would, except for the provisions of this SECTION 13, be
issuable upon conversion of this Note, the number of Underlying Shares to be
issued will be rounded up to the nearest whole share.
14. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile (facsimile confirmed) at
the facsimile number specified in this Section prior to 5:30 p.m. (New York City
time) on a Trading Day, (ii) the Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Agreement later than 5:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:
If to the Company: Visual Data Corporation
0000 XX 00 Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn:
Fax No.:
With a copy to: With a copy to:
Xxxxxx & Xxxx, P.A.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx
Fax No.:
If to the Purchasers: To the address set forth under such
Purchaser's name on the signature pages
attached hereto.
17
15. MISCELLANEOUS.
(a) This Note shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Company shall not be permitted to assign this Note.
(b) Subject to SECTION 15(A), nothing in this Note shall be construed
to give to any person or corporation other than the Company and the Holder any
legal or equitable right, remedy or cause under this Note.
(c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN 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 (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), 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
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 VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR 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. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(d) The headings herein are for convenience only, do not constitute a
part of this Note and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Note shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Note shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Note.
(f) In the event of any stock split, subdivision, dividend or
distribution payable in shares of Common Stock (or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each reference in
this Note to a price shall be amended to appropriately account for such event.
(g) No provision of this Note may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and
Majority Holders, or, in the case of a waiver, by the Holder; provided that no
18
amendment shall, without the consent of the Holder (i) extend the scheduled
final maturity of this Note, or reduce the rate or extend the time of payment of
principal or of interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) hereon or reduce the principal
amount hereof or reduce or change the form or relative amounts of the components
of the Company Prepayment Price, the Holder Prepayment Price or the Event Price,
(ii) increase the Conversion Price, (iii) amend, modify or waive any provision
of this Section 15(g), including, without limitation, the definition of Majority
Holders or (v) change the method of calculating the Market Price in a manner
adverse to the Holder. No waiver of any default with respect to any provision,
condition or requirement of this Note shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
19
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed by a duly authorized officer as of the date first above indicated.
VISUAL DATA CORPORATION
By
---------------------------------
Name:
Title:
20
SCHEDULE 1
FORM OF CONVERSION NOTICE
(To be executed by the registered Holder
in order to convert Note)
The undersigned hereby elects to convert the specified principal amount of 8.0%
Senior Secured Convertible Notes (the "NOTES") into shares of common stock, no
par value (the "COMMON STOCK"), of Visual Data Corporation, a Florida
corporation, according to the conditions hereof, as of the date written below.
--------------------------------------------
Date to Effect Conversion
--------------------------------------------
Principal amount of Notes owned prior to
conversion
--------------------------------------------
Principal amount of Notes to be converted
(including accrued but unpaid interest
thereon)
--------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------
Applicable Conversion Price
--------------------------------------------
Principal amount of Notes owned subsequent to
Conversion
--------------------------------------------
Name of Holder
--------------------------------------------
By
Name:
Title:
SCHEDULE 2
CONVERSION SCHEDULE
This Conversion Schedule reflects conversions of the 8.0% Senior Secured
Convertible Notes issued by Visual Data Corporation.
--------------------- -------------------- -------------------------------------
Aggregate Principal Amount
Date of Conversion Amount of Conversion Remaining Subsequent to Conversion
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
--------------------- -------------------- -------------------------------------
---------------------
(1) W/r/t AIR -in the form of Note, this will be 288% of Monthly Installment.
(2) Need to add rep into SPA re: indebtedness - carve out per sheet
