SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
February 8, 1999 (the "Closing Date"), is entered into by and among Visual Data
Corporation, a Florida corporation, with headquarters located at 0000 X.X. 00xx
Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000 (the "Company"), and the investors listed
on Schedule 1 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 Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, an aggregate of 222,222 shares of the Company's Common Stock,
par value $.0001 per share (the "Common Shares"), in the respective amounts set
forth opposite each Buyer's name on Schedule 1; and
C. 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 A (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.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF COMMON SHARES.
a. Purchase of Common Shares. In connection with the offering
(the "Offering") by the Company of its common stock to certain purchasers,
including without limitation, the Buyers, and subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer and each Buyer severally agrees to purchase from
the Company the respective number of shares of Common Shares set forth opposite
such Buyer's name on Schedule 1 (the "Closing"). The purchase price (the
"Purchase Price") of the Common Shares at the Closing shall be $1,999,998.
b. Form of Payment. On the Closing Date, (i) each Buyer shall
pay the Purchase Price to an escrow account with Gotham Bank of New York, c/o
Xxxxx Xxxxxxx, located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as escrow
agent (the "Escrow Agent"), for the Common Shares to be issued and sold to such
Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company's written wire
instructions, and (ii) the Company shall deliver to the Escrow Agent, on behalf
of each Buyer, stock certificates (in the denominations as such Buyer shall
request) (the "Common Share Certificates") representing such number of the
Common Shares which such Buyer is then purchasing (as indicated opposite such
Buyer's name on Schedule 1) hereunder, duly executed on behalf of the Company
and registered in the name of such Buyer or its designee. Upon the completion of
the conditions contained in Sections 6 and 7 of this Agreement, the Escrow Agent
shall deliver the certificates representing the Common Shares to the Buyers via
overnight courier and the Escrow Agent shall then wire the Purchase Price to the
Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the Common
Shares (the Common Shares may also be 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.
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.
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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: the Common Shares 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 (and its counsel) an opinion of counsel, in a generally acceptable form,
to the effect that such Common Shares 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 (and its counsel) with reasonable
assurance that such Common Shares can be sold, assigned or transferred pursuant
to Rule 144 promulgated under the 1933 Act, as amended, (or a successor rule
thereto) ("Rule 144").
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Commons Shares, until such time as the sale
of the Common Shares has been registered under the 1933 Act as contemplated by
the Registration Rights Agreement, 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 (1) IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE
STATE SECURITIES LAWS, OR (2) IN THE ABSENCE OF AN OPINION OF COUNSEL,
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
THE 1933 ACT OR (3) UNLESS SOLD, TRANSFERRED OR ASSIGNED 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 and the Securities are
being sold pursuant to a Registration Statement, (ii) in connection with a sale
transaction, such holder provides the Company (and its counsel) with an opinion
of counsel, in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the 1933 Act or (iii) such holder provides the Company (and its counsel) with
reasonable assurances that the 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.
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h. Validity; 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 and
state specified in its address on Schedule 1.
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 a controlling position of capital
stock or holds a controlling position of an equity or similar interest) 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 or 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).
b. Authorization; Enforcement; Validity. (i) The Company has
the requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Transfer Agent Instructions
(as defined in Section 5) 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 by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Shares, 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, and
(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
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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.
c. Issuance of Securities. The Common Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable and (ii) free from all taxes,
liens and charges with respect to the issue thereof. Assuming the accuracy of
the representations, warranties and agreements of the Company and the Buyers
contained in this Agreement, the issuance by the Company of the Common Shares is
exempt from registration under the 1933 Act.
d. No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the Company's issuance of the Common Shares) will not (i) result in a violation
of the Company's Certificate of Incorporation, as amended and as in effect on
the date hereof (the "Certificate of Incorporation") or the Company's By-laws,
as amended and as in effect on the date hereof (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
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 (as defined below)) 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 where such
default, termination, amendment, acceleration, cancellation, violation or
conflict would not have a Material Adverse Effect. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, or By-laws or their organizational charter or by-laws,
respectively. Neither the Company or any of its Subsidiaries is in violation or
any term of or in default under any material 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 which would not have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance,
regulation of any governmental entity, 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, any applicable state "Blue Sky" laws or the
Principal Market (as defined below), 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 in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have
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been obtained or effected on or prior to the date hereof. The Company is in
compliance with the listing requirements of the Principal Market (as defined
below).
e. SEC Documents; Financial Statements. As of the Closing, 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"). 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, knowingly 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 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). Neither the Company
nor any of its Subsidiaries or any of their officers, directors, employees or
agents have provided the Buyers with any material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by
the Company with the SEC, there has been no material adverse change in the
business, properties, operations, financial condition, results of operations or
prospects 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 the Company or its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
g. Absence of Litigation. Except as set forth in the SEC
Documents, 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 Company's common stock, the
Common Shares 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
which would have a Material Adverse Effect.
h. [Reserved].
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i. No Undisclosed Events, Liabilities, Developments or
Circumstances. To the Company's knowledge, no event, liability, development or
circumstance has occurred or exists, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, 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.
j. 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.
k. [Reserved].
l. 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. 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.
m. 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. 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 have expired or terminated,
or are expected to expire or terminate within one year 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.
n. Environmental Laws. Except in such an event which would not
result in a Material Adverse Effect, 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.
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o. 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 the SEC Documents 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 and
any of its Subsidiaries or would not result in a Material Adverse Effect. Any
real property and facilities held under lease by the Company and 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.
p. Insurance. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for.
q. Regulatory Permits. Except in such an event which would not
result in a Material Adverse Effect, 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, 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.
r. Tax Status. Except in such an event which would not result
in a Material Adverse Effect, 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 current unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction.
s. Transactions With Affiliates. Except as set forth in the
SEC Documents filed at least ten days prior to the date hereof, none of the
officers, directors, or controlling shareholders 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, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
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t. Current Public Information. The Company is currently
eligible to register the resale of the Common Shares on a registration statement
on Form S-3 under the 1933 Act.
u. Use of Proceeds. The net proceeds from the sale of the
Common Shares shall be used for working capital.
v. 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, 5,348,484 shares were issued and outstanding,
and (ii) 5,000,000 shares of preferred stock, which as of the date hereof, none
were issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable.
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 and Blue Sky. 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 the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Buyers at the Closing 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 applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
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 Common Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Investors shall have sold all the Common
Shares (the "Registration Period"), the Company shall use its best efforts to
file all reports required to be filed with the SEC pursuant to the 0000 Xxx.
d. Buyers' Sale of Common Shares. From the Closing Date,
through and including the date which is the earlier of 90th calendar day
following the Closing Date or the 15th calendar day after the effectiveness of
the Registration Statement (as defined in the Registration Rights Agreement) if
the Registration Statement is not reviewed by the SEC (the "Release Date"), the
Buyers shall not sell, transfer or dispose the Common Shares. From the date
which is the Release Date through and including the date which is the 45th
calendar day following the Release Date, each Buyer shall have the right to
transfer, sell or dispose, in any manner whatsoever, pursuant to a Registration
Statement (as defined in the Registration Rights Agreement) or pursuant to an
exemption from registration under the 1933 Act, fifty percent
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(50%) of the Common Shares purchased by such Buyer. From the date which is the
46th calendar day following the Release Date, each Buyer shall have the right to
transfer, sell or dispose, in any manner whatsoever, pursuant to a Registration
Statement (as defined in the Registration Rights Agreement) or pursuant to an
exemption from registration under the 1933 Act, one hundred percent (100%) of
the Common Shares then held by such Buyer. Notwithstanding the foregoing, in no
event shall any restriction extend beyond the 121st day following the Closing
Date.
e. Right of First Refusal. Subject to the exceptions described
below, the Company and its Subsidiaries shall not negotiate or contract with any
party for any equity financing (including any debt financing with an equity
component) or issue any equity securities 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 date hereof
and ending on, and including, the date which is the later of (i) ninety (90)
days after the Closing Date or (ii) the date on which the Registration Statement
is declared effective, 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 its Aggregate Percentage
(as defined below) of the securities to be issued in such Future Offering, as of
the date of delivery of the Future Offering Notice, in the Future Offering (the
limitations referred to in this sentence is referred to as the "Capital Raising
Limitations"). For purposes of this Section 4(e), "Aggregate Percentage" at any
time with respect to any Buyer shall mean the percentage obtained by dividing
(i) the aggregate number of the Common Shares initially issued to such Buyer by
(ii) the aggregate number of the Company's restricted common stock sold to
certain purchasers by the Company in connection with the Offering and the
Offering as defined therein) under the other Securities Purchase Agreement of
even date herewith. A Buyer can exercise its option to participate in a Future
Offering by delivering written notice thereof to participate to the Company
within five (5) business days after 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 (such amount equaling such Buyer's
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 investors
participating in this Offering, and the investors in that other Securities
Purchase Agreement of even date hereof, fail to elect to purchase such
investor's Aggregate Percentage (each such investor, a "Rejecting Investor"),
then the remaining investor(s) willing to purchase a number of securities in
such Future Offering must either (A) additionally purchase the Rejecting
Investor's Aggregate Percentage of such Future Offering or (B) forfeit such
investor's right of first refusal with respect to such Future Offering (and such
forfeit shall not affect the Buyers' ability or rights to exercise their right
of first refusal with respect to later Future Offerings). In the event the
Buyers fail to participate in the Future Offering within the periods described
in this Section 4(e), the Company shall have 60 days thereafter to sell the
securities of the Future Offering, upon terms and conditions, 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 60 day period, the Company shall not
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thereafter issue or sell such securities without first offering such securities
to the Buyers in the manner provided in this Section 4(e). The Capital Raising
Limitations 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 consolidation, or (B) as
consideration for the acquisition of a business, product, 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, (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, (vi) the issuance of common stock to the
Placement Agent (as defined in Section 11(m) below) in connection with the
Placements Agent's role as placement agent in the Offering or the Offering under
the other Securities Purchase Agreement of even date herewith or (vii) the
Company's issuance of securities with any strategic partner as a result of which
the Company receives in excess of $8,000,000.00 in cash or cash equivalents. 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.
f. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as that term is defined in the Registration
Rights Agreement) upon each national securities exchange and automated quotation
system, if any, upon which shares of the Company's 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. The Company shall maintain the Common Stock's authorization for
quotation on the Nasdaq Small-Cap Market, The NASDAQ National Market, The New
York Stock Exchange, Inc. or The American Stock Exchange, Inc., as applicable
(the "Principal Market"). Neither the Company nor any of its Subsidiaries shall
take any action which would be, in their good faith business judgment,
reasonably expected to result in the delisting or suspension of Company common
stock on the Principal Market. The Company shall promptly, and in no event later
than the following business day, provide to each Buyer copies of any notices it
receives from the Principal Market regarding the continued eligibility of
Company 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(f).
g. [Reserved.]
h. Business Combination; Transfer Agent. Unless and until the
Common Shares have been registered pursuant to an effective Registration
Statement (as defined in the Registration Rights Agreement) or the Buyers have
provided their prior written consent, the Company shall not (i) enter into any
merger, sale of all or substantially all of the Company's assets or other
business combination or other corporate reorganization in which the Company is
not the surviving entity after such transaction(s) or (ii) select, appoint or
enter into any
11
arrangement or agreement with a party other than Interwest Transfer Company,
Inc. (the "Transfer Agent") to serve as transfer agent for the Company.
i. Limitation on Filing Registration Statements. The Company
shall not file a registration statement (other than the Registration Statement
(as defined in the Registration Rights Agreement) or a registration statement on
Form S-8) covering the sale or resale of shares of Company common stock with the
SEC during the period beginning on the date hereof and ending on the date which
is 30 days after the Registration Statement has been declared effective by the
SEC.
j. [Reserved].
k. Corporate Existence and Taxes. Until all of the Common
Shares have been registered pursuant to an effective Registration Statement, the
Company shall maintain its corporate existence in good standing (provided,
however, that the foregoing covenant shall not prevent the Company from entering
into any merger or corporate reorganization as long as the surviving entity in
such transaction, if not the Company, has common stock listed for trading on the
Principal Market and shall pay all its taxes when due except for taxes which the
Company disputes).
l. Lock-Up Waivers. From the date hereof through the date
which is 45 days after the Registration Statement is declared effective the
Company shall not release or waive any lock-up, restriction or limitation on any
person or entity on their right to sell or dispose of securities of the Company
outstanding on the date hereof without notifying the Buyer at least three (3)
business days prior to such release or waiver and the Company grants Buyer a
release from the transfer restrictions imposed under 4(d) herein.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to the
Transfer Agent substantially in the form of Exhibit B hereto (the "Transfer
Agent Instructions"). Prior to registration of the Common 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 Transfer Agent Instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof 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 (and its counsel) with an opinion of counsel, in a generally acceptable
form, to the effect that a public sale, assignment or transfer of the Securities
may be made without registration under the 1933 Act or the Buyer provides the
Company (and its counsel) with reasonable assurances that the Securities can be
sold pursuant to Rule 144 without any restriction as to the number of securities
12
acquired as of a particular date that can then be immediately sold, the Company
shall permit the transfer, and, 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 legend. 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 order and/or 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.
The obligation of the Company hereunder to issue and sell the
Common Shares to each Buyer at the Closing is subject to the satisfaction, at or
before the 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:
a. Such Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Escrow Agent for
the transactions contemplated by this Agreement;
b. Such Buyer shall have delivered to the Escrow Agent the
Purchase Price for the Common Shares being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company or the Escrow Agent;
c. The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and as of the
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 in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date;
d. Such Buyer shall have delivered to the Escrow Agent such
other documents relating to the transactions contemplated by this Agreement as
the Escrow Agent or its counsel may reasonably request;
e. The Company and the Escrow Agent shall have entered into an
escrow agreement; and
13
f. The Company and the Placement Agent shall have entered into
a Placement Agent's Agreement.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Common
Shares at the Closing is subject to the satisfaction, at or before the 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 by providing the Company with prior written notice thereof:
a. The Company shall have executed each of the
Transaction Documents and delivered the same to the Escrow Agent;
b. The Company's common stock shall be authorized for
quotation on the Principal Market and trading in Company common stock shall not
have been suspended by the SEC or the Principal Market;
c. The representations and warranties of the Company shall be
true and correct, in all material respects, as of the date when made and as of
the 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, in all material respects, 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 Closing Date;
d. The Company shall have delivered to the Escrow Agent the
opinion of the Company's counsel dated as of the Closing Date, in form, scope
and substance reasonably satisfactory to such Buyer and in substantially the
form of Exhibit C attached hereto;
e. The Company shall have executed and delivered to the Escrow
Agent the certificates representing Common Shares (in such denominations as such
Buyer shall request) for the Common Shares being purchased by such Buyer at the
Closing;
f. The Transfer Agent Instructions, in the form of Exhibit B
attached hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent and a copy of the executed Transfer Agent Instructions
shall have been delivered to the Escrow Agent;
g. The Company shall have made all filings, other than those
contemplated by the Registration Rights Agreement, under all applicable federal
and state securities laws necessary to consummate the issuance of the Securities
pursuant to this Agreement in compliance with such laws;
14
h. The Company shall have delivered to the Escrow Agent such
other documents relating to the transactions contemplated by this Agreement as
the Escrow Agent or its counsel may reasonably request;
i. The Company and the Escrow Agent shall have entered into an
escrow agreement; and,
j. Subject to Section 11(l) below, at the Closing, the Company
shall reimburse the Buyers for the Buyers' attorneys' fees and expenses (in an
amount not to exceed $15,000.00) incurred by the Buyers concerning the due
diligence review of the contemplated transactions and the Company, and the
negotiation and preparation of the Transaction Documents and the consummation of
the transactions contemplated thereby.
8. INDEMNIFICATION.
a. Indemnification by Company. 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, the Company shall defend, protect, indemnify
and hold harmless each Buyer and all of their stockholders, partners, officers,
directors, employees 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 "Buyer
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 and including reasonable attorneys' fees and disbursements
(the "Buyer Indemnified Liabilities"), incurred by any Buyer Indemnitee as a
result of, or arising out of, or relating to (a) any material misrepresentation
or breach of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any material breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Buyer
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, or (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. 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 Buyer Indemnified Liabilities which is permissible
under applicable law.
b. Indemnification by Buyers. In consideration of the
Company's execution and delivery of the Transaction Documents and the Company's
performance of the transactions contemplated thereunder, each Buyer shall
severally and not jointly defend, protect, indemnify and hold harmless the
Company, its officers and directors (collectively, the "Company Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs,
15
penalties, fees, liabilities and damages, and expenses in connection therewith
and including reasonable attorneys' fees and disbursements (the "Company
Indemnified Liabilities"), incurred by any Company Indemnitee as a result of, or
arising out of, or relating to (a) any material representation or breach of any
representation or warranty made by such Buyer in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(b) any material breach of any covenant, agreement or obligation of such Buyer
contained in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby; provided, however, that any Buyer shall
not be jointly liable for the indemnification obligations of any other Buyer or
investor and the Buyer subject to an indemnification obligation shall be liable
under this Section 8(b) for only that amount of Company Indemnified Liabilities
as does not exceed the net proceeds to such Buyer as a result of the sale of
Common Shares held by such Buyer. To the extent that the foregoing undertaking
by a Buyer may be unenforceable for any reason, such Buyer shall make the
maximum contribution to the payment and satisfaction of each of the Company
Indemnified Liabilities which is permissible under applicable law; provided,
however, that any Buyer shall not be jointly liable for the indemnification
obligations of any other Buyer or investor and the Buyer subject to an
indemnification obligation shall be liable under this Section 8(b) for only that
amount of Company Indemnified Liabilities as does not exceed the net proceeds to
such Buyer as a result of the sale of Common Shares held by such Buyer.
9. ANTI-DILUTION ADJUSTMENTS.
a. Issuance of Common Stock or Rights to Purchase Company
Common Stock Below Offering Price. Prior to the registration of the Common
Shares pursuant to an effective Registration Statement (as described in the
Registration Rights Agreement), if the Company shall, at any time or from time
to time, issue Company common stock or instruments convertible or exercisable
into Company common stock (other than Company common stock issued or issuable
pursuant to an employee stock option incentive plan or Company common stock
issued or issuable in connection with a merger or other business combination or
reorganization of the Company or Company common stock issuable in a firm
commitment, underwritten public offering or Company common stock issuable upon
the exercise or conversion of the Company's options, warrants or other
convertible securities currently outstanding as of the date hereof or Company
common stock issuable upon the consummation of a transaction with or an
investment by the entity disclosed by the Company to the Buyers in writing prior
to or at the Closing) at a price per common stock share, a conversion price per
common stock share or an exercise price per common stock share less than $9.00
per common stock share (such lesser price shall be deemed the "Differential
Price"), then the Company shall issue additional shares of Company common stock
to the Buyers equal to the Share Differential Amount. The Share Differential
Amount shall equal the sum of (i) the amount determined by dividing the
Differential Price into the Buyers' aggregate Purchase Price, less (ii) the
number of Common Shares purchased by the Buyer at the Closing. Any such
additional shares of common stock after issuance shall be deemed to be Common
Shares for purposes of this Agreement and shall have the registration rights set
forth in the Registration Rights Agreement.
16
10. [Reserved].
11. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. 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 giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.
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 Buyers, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
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 or electronically
generated and kept on file by the sending party); or (iii) one business day
after deposit with a
17
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:
If to the Company:
Visual Data Corporation
0000 X.X. 00xx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Telephone: 954/000-0000
Facsimile: 954/917-6660
Attention: Xxxxx X. Xxxxxx
With a copy to:
Atlas, Xxxxxxxx, Trop & Borkson
000 X. Xxx Xxxx Xxxx., 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 Transfer Company, Inc.
0000 X. Xxxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: 801/000-0000
Facsimile: 801-277-3147
Attention: Xxxxxxx Xxxx
If to a Buyer, to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's representatives as set forth on Schedule 1, or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change.
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 Common Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Buyers. A Buyer may assign some or all of its rights
hereunder without the consent of the Company, 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.
18
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
11(l), the agreements and covenants set forth in Sections 4, 5 and 11, the
indemnification provisions set forth in Section 8 and the anti-dilution
adjustments and provisions set forth in Section 9 shall survive the Closing.
Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
j. [Reserved].
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 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 11(l), the Company shall remain obligated to reimburse the
nonbreaching Buyers for the expenses described in Section 4(g) above.
m. Placement Agent. The Company acknowledges that it has
engaged Xxxxxxx & Company Securities, Inc. as placement agent (the "Placement
Agent") in connection with the sale of the Common Shares, which placement agent
may have formally or informally engaged other agents on its behalf. 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 transactions contemplated hereby.
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.
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 the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the
19
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.
[Intentionally Left Blank]
20
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 OLIVE INVESTORS, LLC
By: WEC Asset Management LLC
Manager
By:--------------------------
Name: ----------------------- By: /s/ Xxxxx Xxxx
Title: ---------------------- -----------------------------
Name: Xxxxx Xxxx
Title: Managing Director
21
SCHEDULE 1: LIST OF INVESTORS
Number of
Investor Address Common Investor's Legal Representatives'
Investor's Name and Facsimile Number Shares Address and Facsimile Number
--------------------------------- -------------------------------------- ------------- ------------------------------------
Olive Investors LLC c/o WEC Asset Management LLC 222,222 Xxxxx Xxxxxxx Xxxxxxx &
One World Trade Center Xxxxx LLP
Suite 4563 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Transfer Agent Instructions
Exhibit C Form of Company Counsel Opinion
