As filed with the Securities and Exchange Commission on December 26, 1996
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VISUAL DATA CORPORATION
(Name of Small Business Issuer in its Charter)
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FLORIDA 2741 65-0420146
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number Identification No.)
1600 S. DIXIE HIGHWAY, SUITE 3A, BOCA RATON, FLORIDA 33432 (561) 367-8505
(Address and telephone number of principal executive offices and principal place of business)
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RANDY S. SELMAN, PRESIDENT
VISUAL DATA CORPORATION
1600 S. DIXIE HIGHWAY, SUITE 3A
BOCA RATON, FLORIDA 33432
(561) 367-8505
(Name, address and telephone number of agent for service)
Copies to:
CHARLES B. PEARLMAN, ESQ.
GAYLE COLEMAN, ESQ.
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 1900
FORT LAUDERDALE, FLORIDA 33301
(954) 763-1200
Approximate date of proposed sale to the public: As soon as practicable after
the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous bases pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list in the
Securities Act registration number of the earlier effective registration
statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED BE REGISTERED SHARE OR WARRANT PRICE(1) REGISTRATION FEE
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Common Stock
(par value
$.0001 per share) 1,000,000 $6.00 $6,000,000 $1819.00
Common Stock
(par value
$.0001 per share)(2) 150,000 $6.00 $900,000 $273.00
Common Stock
(par value
$.0001 per share(3) 1,843,289 $6.00 $11,059,734 $3,352.00
Representative's
Warrants(4) 100,000 $.001 $100 $1.00
Common Stock
$.0001 par value(4)(5) 100,000 $7.20 $720,000 $219.00
TOTAL.............................................................................. $5,664.00
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1. Estimated solely for purposes of calculating the amount of the
registration fee pursuant to Rule 457 under the Securities Act of 1933,
as amended.
2. Includes 150,000 shares which the Representative of the Underwriters has
the option to purchase from shareholders of the Company to cover the
Underwriter's over-allotments (the "Over-Allotment Option"), if any. See
"Underwriting."
3. Represents shares offered by the Selling Securityholders.
4. Pursuant to Rule 416, this Registration Statement also relates to an
indeterminate number of additional shares as may be issued as a result
of anti-dilution provisions of the Representative's Warrants.
5. Reserved for issuance upon exercise of the Representative's Warrants.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
ii
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VISUAL DATA CORPORATION
-----------------
Cross Reference Sheet for Prospectus Under Form SB-2
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FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
1. Front of Registration Statement Outside Front Cover Page; Cross Reference
and Outside Front Cover of Prospectus Sheet; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front and Outside Back Cover Pages
Indemnification for Securities Act
3. Summary Information and
Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Risk Factors; Underwriting
6. Dilution Dilution
7. Selling Securityholders Selling Securityholders
8. Plan of Distribution Inside Front Cover Page; Underwriting
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers Management
Promoters and Control Persons
11. Security Ownership of Certain
Beneficial Owners and Management Principal Shareholders; Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Indemnification of Officers and Directors
Position on Indemnification for
for Securities Act Liabilities
15. Organization within Last Five Years Business
16. Description of Business Business
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FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
17. Management's Discussion Management's Discussion and Analysis of
and Analysis or Plan of Financial Condition and Results of
Operation Operations; Business
18. Description of Property Business
19. Certain Relationships and Certain Relationships and Related
Related Transactions Transactions
20. Market for Common Equity and Risk Factors; Description of
Related Stockholder Matters Securities
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Not Applicable
Accountants on Accounting and
Financial Disclosure
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EXPLANATORY NOTE
This Registration Statement covers the registration of (i) up to 1,000,000
shares of Common Stock, $.0001 par value ("Common Stock") of Visual Data
Corporation (the "Company"), a Florida corporation, for sale by the Company in
an underwritten public offering, (ii)] up to an aggregate of 150,000 shares of
Common Stock to cover the Underwriter's Over-Allotment Option of Common Stock in
an underwritten public offering to be offered for sale by Randy S. Selman
(75,000 Shares), the Chief Executive Officer, President, acting Chief Financial
Officer and a Director of the Company, and by Alan Saperstein (75,000 Shares),
the Vice President, Secretary, and a Director of the Company, and (iii) an
additional 1,843,289 shares of Common Stock for sale by the holders thereof (the
"Selling Securityholders") for resale from time to time by the Selling
Securityholders, subject to the contractual restrictions that the Selling
Securityholders may not sell the Selling Securityholders' shares of Common Stock
for a specified period after the closing of the underwritten offering.
See"Underwriting."
The complete Prospectus relating to the underwritten offering follows
immediately after this explanatory note. Following the Prospectus for the
underwritten offering are pages of the Prospectus relating solely to the Selling
Securityholders' stock, including an alternative front and back cover pages and
the section entitled "The Offering," "Initial Public Offering," "Selling
Securityholders," and Plan of Distribution," to be used in lieu of sections
entitled "The Offering," "Concurrent Offering," and Underwriting" in the
Prospectus relating to the underwritten offering. Certain sections of the
Prospectus for the underwritten offering will not be used in the Prospectus
relating to the Selling Shareholders' Stock such as "Dilution."
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of such State.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED DECEMBER 24, 1996
VISUAL DATA CORPORATION
1,000,000 SHARES OF COMMON STOCK
Prior to this offering, there has been no public market for the Common Stock and
there can be no assurance that any such market will develop. It is anticipated
that the Common Stock will be quoted on the Nasdaq SmallCap Market ("Nasdaq")
under the symbol "VDAT". For a discussion of the factors considered in
determining the offering price, see "Underwriting."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING AT PAGE 7 AND DILUTION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CONTRARY IS A
CRIMINAL OFFENSE.
===============================================================================
Price to Underwriting Proceeds to
Public Discounts(1) Company(2)
- -------------------------------------------------------------------------------
Per Share $6.00 $0.60 $5.40
- -------------------------------------------------------------------------------
Total(3) $6,000,000 $600,000 $5,400,000
===============================================================================
(1) In addition, the Company has agreed to (i) pay to the Underwriters
a 3% non-accountable expense allowance, (ii) sell to the
Underwriters warrants (the "Underwriters' Warrants") to purchase
an aggregate of 100,000 shares of Common Stock at an exercise price,
subject to anti-dilution adjustments, of $7.20 per Share and (iii)
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses estimated at $500,000 ($527,000 if the
Underwriter's over-allotment option is exercised in full), including the
non-accountable expense allowance in the amount of $180,000 ($207,000 if
the Underwriter's over-allotment option is exercised in full), and the
Company's related offering expenses of $320,000 including legal fees,
accounting fees, blue sky expenses and filing fees, printing and filing
fees and costs or other related offering expenses.
(3) Certain shareholders have granted to the Underwriter a 30-day
option to purchase up to 150,000 additional shares of Common Stock
upon the same terms and conditions as set forth above, solely to
cover over-allotments (the Over-Allotment Option"), if any. The
Company will not receive any of the over-allotment proceeds from
the sale of shares by the selling shareholders. If such option is
exercised in full, total price to the public, underwriting
discounts and commissions, proceeds to the Company and proceeds to
the selling shareholders will be $6,900,000, $690,000, $5,400,000, and
$810,000, respectively. See "Principal Shareholders" and
"Underwriting."
The shares of Common Stock are offered, subject to prior sale, when, as and if
delivered by the Underwriters, and subject to the approval of certain legal
matters by counsel and to certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify the offering and to reject any order in
whole or in part. It is expected that delivery of certificates representing the
shares of Common Stock will be made against payment therefor at the office of
______________, ______________, on or about _____________, 1996.
--------------
The date of this Prospectus is December __, 1996
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The registration statement of which this Prospectus is a part also covers the
registration of an additional 1,843,289 shares of Common Stock under an
Alternate Prospectus (the "Alternate Prospectus"), which are being offered by 90
shareholders of the Company (collectively the "Selling Securityholders"). Of the
1,843,289 shares of Common Stock described above, 85,000 shares of Common Stock
may be sold commencing forty-five (45) days from the effective date of this
Prospectus, and the remaining 1,758,289 shares of Common Stock may be sold
commencing twelve (12) months from the date of this Prospectus. Certificates
evidencing these securities will bear a legend reflecting such restrictions. The
Representative may release the shares held by the Selling Securityholders at any
time after all shares subject to the Over-Allotment Option have been sold or
such option has expired (which period is for 30 days from the effective date of
this Prospectus). The resale of the securities held by the Selling
Securityholders is subject to prospectus delivery and other requirements of the
Securities Act of 1933, as amended (the "Securities Act."). Sales of such
securities or the potential of such sales at any time may have an adverse effect
on the market prices of the securities offered hereby. See "Selling
Securityholders." Additionally, the Selling Securityholders may be deemed to be
underwriters under the Securities Act. See "Selling Securityholders."
2
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND MUST BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF
THE UNDERWRITER'S OVER-ALLOTMENT OPTION AS USED IN THIS PROSPECTUS, UNLESS THE
CONTEXT OTHERWISE REQUIRES, THE "COMPANY" REFERS TO VISUAL DATA CORPORATION AND
HOTELVIEW CORPORATION.
THE COMPANY
Visual Data Corporation is a "content" developer specializing in the production,
marketing and distribution of visual information for the Internet, other on-line
services and, eventually, interactive television (ITV). Through its
international network of independent camera crews and state-of-the-art video
production studio, the Company is developing full-motion visual libraries
containing short, concise vignettes for various consumer oriented topics such as
travel, education, health, fitness, medicine and consumer products.
The Company's first product, the HotelView/Registered trademark/ Library (the
"Library"), operated through the Company's currently wholly owned subsidiary
HotelView Corporation ("HVC"), is a visual library for the hotel and travel
industry that provides an overview of amenities of hotels and resorts, as well
as local attractions and services. On a fee for service basis, the Company
videotapes, edits and produces high quality visual brochures ("vignettes"), two
to three minutes in length, with a voice narrative in full-motion video, which
features include room views, conference facilities, lobby, pool, restaurants,
grounds, and sports facilities. The Library is currently installed in travel
agencies nationwide and is used to market hotel and resort accommodations.
The annual fee for inclusion in the HotelView/Registered trademark/ Library for
one year ranges from $8,000- $12,000, depending on the size and location of the
hotel property. This fee includes the videotaping and production of the
vignette, updates of the vignette and distribution to the Company's travel agent
network. Annual renewals will cost hotels from $8,000-$12,000 to remain in the
Library. While the initial HotelView/Registered trademark/ Library currently
installed in travel agencies contains 70 vignettes, over 100 vignettes have been
videotaped and the Company anticipates that by March 1997, more than 200
vignettes will be included in the HotelView/Registered trademark/ Library.
To facilitate the marketing of the HotelView/Registered trademark/ Library and
the hotels included in the Library, the Company provides the Library to travel
agencies at no charge. Travel agencies enter into an agreement with the Company
that commits the agencies to booking a certain number of hotel rooms per month
with hotels subscribing to the HotelView/Registered trademark/ Library. In
return, the Company provides (1) a laser disc player, and (2) a combination
television/VCR to these travel agencies in order to display and copy a vignette
for a client. In order to increase the distribution of the Library, the Company
intends to make the Library available through the Internet to potential
travelers at no charge. The Company is developing marketing relationships with
travel industry
3
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companies whose goods and services complement those of the Company. The Company
is currently targeting firms providing hotel reservation and marketing services
for the travel industry via the Internet.
The Company's revenues are presently derived from annual and renewal fees paid
by hotels included in the HotelView/Registered trademark/ Library. The Company
anticipates that additional revenues may be generated from foreign language
versions of the vignettes and international distribution of the Library.
Additional revenues may be realized from advertising fees paid to the Company by
destination services and attractions to be included in the Library. Additional
revenues may be realized from other planned video libraries whose users and
suppliers will include nursing homes, cruise ship lines, convention centers,
colleges, consumer product manufacturers and the general public.
The Company was incorporated in May 1993 under the laws of the State of Florida
and commenced operations in October 1993. The address of the Company's principal
executive and administrative offices is 1600 S. Dixie Highway, Suite 3A, Boca
Raton, Florida 33432 and its telephone number is (561) 367-8505. Its fiscal year
end is September 30.
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THE OFFERING
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Common Stock Outstanding
Prior to Offering(1)...................... 4,058,214 shares
Common Stock Offered by
the Company(2). ........................... 1,000,000 shares
Common Stock Outstanding
After the Offering(3)..................... 5,058,214 shares
Net Proceeds to the Company(4)............... $4,900,000
Use of Proceeds ............................. The net proceeds of this offering will be
used for (i) video content acquisition (ii)
marketing and advertising; (iii) editing
equipment and facilities; (iv) personnel;
(v) travel agent hardware and (vi) general
corporate and working capital. See "Use of
Proceeds."
Proposed Nasdaq Symbol ...................... VDAT(5)
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(1) Does not include (i) up to 200,000 shares of Common Stock reserved for
issuance under the Company's 1996 Stock Option Plan, and (ii) additional
options and warrants issued by the Company (with the exception of
244,321 shares underlying warrants, and 439,136 shares underlying
options for the Company's Chief Executive Officer and the Company's
Executive Vice President, which shares are to be registered pursuant to
an Alternate Prospectus of even date by certain Securityholders). See
"Underwriting," "Management- Stock Option Plan," "Description of
Securities", and "Selling Securityholders."
(2) Does not include 150,000 shares which the Representative of the
Underwriters has the option to purchase from shareholders of the Company
(the Company's Chief Executive Officer [75,000 shares] and the
4
<PAGE>
Company's Executive Vice President [75,000 shares]) to cover the
Underwriter's Over-Allotment Option, if any. See "Underwriting."
(3) Does not include 100,000 shares of Common Stock reserved for issuance in
the event of the exercise of the Representative's Warrants. See
"Underwriting."
(4) Represents gross proceeds of $6,000,000 less (i) $600,000 for
Underwriter's commissions, (ii) $180,000 which represents a 3%
non-accountable expense allowance for the Underwriters; and (iii)
$320,000 for offering expenses including legal expenses, accounting
expenses, blue sky filing fees and expenses, printing expenses,
Securities and Exchange filing fees and other offering expenses.
(5) The Company intends to apply for inclusion of its Common Stock on NASDAQ
(SmallCap) however, there can be no assurances that the Common Stock
will qualify for inclusion at any time in the future. Inclusion on
NASDAQ does not imply that an established trading market will develop or
be sustained for the Common Stock.
RISK FACTORS
Investment in the shares of Common Stock offered hereby involves a high degree
of risk and immediate and substantial dilution from the price to the public. See
"Risk Factors" and "Dilution."
5
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SUMMARY FINANCIAL INFORMATION
The following tables set forth certain summary financial data of the Company.
The summary statement of operations data for the year ended September 30, 1995
and 1996 and from Inception (May 17, 1993) to September 30, 1994 and the Summary
Balance Sheet Data as of September 30, 1996, were derived from the audited
financial statements of the Company which were audited by Goldstein Lewin & Co.,
independent certified public accountants. The financial statements for the
periods indicated above, and the report thereon, appear elsewhere in the
Prospectus. The data in such tables should be read together with Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and notes thereto, appearing elsewhere herein.
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FROM MAY 17,
1993 (INCEPTION)
TO SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1994 1995 1996
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STATEMENT OF OPERATIONS DATA:
Operating Revenue $ - 0 - $ - 0 - $ 111,719
Net Loss $ (188,766) $ (500,599) $ (1,891,702)
Net Loss per average common
share outstanding $ (0.11) $ (0.26) $ (0.83)
Weighted average shares
outstanding 1,736,702 1,908,425 2,279,329
SEPTEMBER 30, 1996
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BALANCE SHEET DATA:
Working capital (deficit) $ (118,918)
Total assets $ 679,151
Long-term debt $ 790,207
Stockholders' equity (deficit) $ (460,599)
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6
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RISK FACTORS
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IS
HIGHLY SPECULATIVE IN NATURE. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISKS AND SPECULATIVE FACTORS, AS WELL AS OTHERS DESCRIBED
ELSEWHERE IN THE PROSPECTUS, RELATING TO THE BUSINESS OF THE COMPANY AND THIS
OFFERING.
LIMITED OPERATING HISTORY AND RISK OF INVESTMENT. The Company had limited
operations from its inception on May 17, 1993 through April of 1995 during which
time the Company was developing its marketing and business plan, and commenced
raising capital. Beginning in May of 1995, the Company completed its initial
private financing and began developing and marketing its first video product --
the HotelView/registered trademark/ Library. Additionally, the Company has
received deposits and has signed agreements from hotels and travel agents. The
Company's operations are subject to all the risks inherent in the establishment
of a new business enterprise and it is anticipated that the Company will sustain
operating losses through December 31, 1996. The likelihood of success of the
Company must be considered in light of the problems, expenses, complications,
and delays frequently encountered in connection with the development of new
businesses. As a result, an Investor could lose all or a substantial portion of
their investment.
COMPETITION. The Company is engaged in a competitive segment of the industry
which disseminates information through video technology. The Company may compete
directly or indirectly with many companies who provide specialized information
such as content concerning hotels, attractions and resorts. A number of these
competitors, who include hotel chains, airlines and other travel-related
organizations, are larger, better capitalized, more established and have greater
access to resources necessary to produce a competitive advantage. The Company
believes, but there can be no assurances that, there are no competitors who have
or are developing content that can be distributed or marketed in a similar
manner to the Company. See "Business."
DEPENDENCE ON OFFERING PROCEEDS. The Company is substantially dependent upon the
proceeds of this offering in order to provide financing to further develop its
business plan. Assuming the Shares offered hereby are sold, the Company
anticipates that proceeds of this Offering together with funds generated from
operations and received from the exercise of certain Company warrants will be
sufficient to satisfy its anticipated cash requirements for the 24 month period
following the date of this offering.
POSSIBLE NEED FOR ADDITIONAL FINANCING. While the Company believes that the net
proceeds from the Offering will be sufficient to enable the Company to carry out
its business objectives and continue to operate as a going concern for the 24
month period following the date of this offering, adverse changes in economic
and/or competitive conditions may adversely affect the Company's planned
operations. If cash requirements are greater than anticipated, the Company could
be required to modify its operations or seek additional financing. The Company
has no current arrangements with respect to additional financing and there can
be no assurances that additional financing will be available on terms acceptable
to the Company, if at all, and therefore an Investor may lose his or her
investment in the securities.
7
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CUSTOMER BASE. The Company has begun to establish a formidable base of hotel
clients, hotel associations and management companies, as well as travel agents.
The inability of the Company to continue to develop this customer base or to
attain acceptance of its products from the consumer could have a material effect
on the Company.
RAPID TECHNOLOGY CHANGE. The industries in which the Company competes -- video,
computer and communications as a whole -- have been, and currently are, subject
to rapid technological change and obsolescence. In order for the Company to
compete effectively, it must offer products and services that find customer
acceptance and fulfill customer needs. To the extent that the Company fails to
achieve technological advances and enhancements comparable to and competitive
with those made by others in the same or similar industries, the products of the
Company may become outmoded. There can be no assurance that the Company's
products will not be rendered obsolete by changing technology or that the
Company will be able to respond to advances in technology to remain competitive.
UNCERTAINTY OF MARKET ACCEPTANCE. Although the Company believes that its
products and services offer certain advantages over competitive products and
services and has already attained a degree of market acceptance by hotels and
travel agents, no assurance can be given that the Company's products and
services will attain a market sufficient for the Company to be profitable. The
Company has successfully completed a test market on its first disc (a sampler
disc in 200 travel agencies, which incorporates over 20 hotels and resorts
located in North America). The Company also has shipped a four (4) disc library
containing 70 hotels to all 200 of its travel agencies and has begun to receive
booking reports from many of these agencies. See "Business - Marketing and Sales
Strategy."
COLLECTION OF PERFORMANCE BASED FEES. A number of hotels have the option for the
first year of their agreement with the Company to pay for inclusion in the
Library either (i) totally in cash, or (ii) a portion of the fee in a
performance based arrangement whereby the Company is paid by the hotel as rooms
are booked by HVC travel agencies. The Company has established a certain
requisite cash deposit required to be paid by each hotel which, at a minimum,
covers the cost of the vignette production. Because there is no time limitation
on when or if the balance of the fees will be paid, the Company cannot predict
when these funds will be available, which could have an adverse effect on the
Company's cash flow. This delay in receipt of or inability to collect these
revenues, which the Company currently estimates to be approximately $287,000,
may have an adverse affect on the Company. This performance based arrangement
shall be phased out commencing January 1997.
PRODUCT DEVELOPMENT RISKS. The Company's business is, to a large degree, subject
to the continued updating of existing products and the development of new
products and services which development may generally involve one or more
material risks. See "Business - The Company's Products and Services." With
regard to the Library, the Company relies on independent camera crews for all of
its video tapings. There can be no assurances that these third-party camera
crews will be available to the Company when needed or that the rates charged by
these crews will continue to be competitive.
8
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MODIFICATIONS BY PROVIDERS OF PRODUCTS AND SERVICES. While each of the hotels
and resorts included in the HotelView/registered trademark/ Library have
contractually indemnified the Company against any liability for any changes or
modifications to the hotel or resort subsequent to the date of videotaping as
well as if a hotel guest is dissatisfied with their accommodations, nonetheless
there may be potential liability to the Company or its subsidiaries in the event
that the information represented in the vignettes or libraries is not correct.
DISCRETION IN USE OF PROCEEDS. The Company presently intends to use the net
proceeds from this Offering for the purposes set forth in "Use of Proceeds."
However, management of the Company has broad discretion to adjust the
application and allocation of the net proceeds of this Offering in order to
address changes in circumstances or opportunities. Approximately 30% of the net
proceeds are allocated to general corporate and working capital. As a result of
the foregoing, the success of the Company will be substantially dependent upon
the discretion and judgment of the management of the Company with respect to the
application and allocation of the net proceeds of this Offering.
PEGASUS' OPTION TO PURCHASE UP TO 33.3% OF HOTELVIEW. In November 1996, the
Company and Pegasus Systems, Inc. ("Pegasus") entered into a letter of intent
whereby Pegasus agreed to use its reasonable efforts to market, endorse and
promote the Library to each of its customer-based hotels and to obtain executed
agreements from hotels for inclusion in the Library. See "Business - Strategic
Alliances." The letter of intent also gives Pegasus an option to purchase up to
thirty-three and one-third (33-1/3%) percent of the outstanding capital stock of
HVC based upon obtaining contracts between its member-based hotels and the
Company as follows: once the Company has entered into (i) not less than 1,000
initial contracts with Pegasus member hotels, Pegasus has the option to purchase
up to five percent (5%) of HVC for $500,000; (ii) not less than 1,500 additional
initial contracts with Pegasus member hotels, (for a total of 2,500 initial
contracts), Pegasus has the option to purchase up to an additional ten percent
(10%) of HVC for $1 million; (iii) not less than an additional 2,500 initial
contracts with Pegasus member hotels (for a total of 5,000 initial contracts),
Pegasus has the option to purchase up to an additional 10% of the Company for $1
million; and, (iv) not less than an additional 5,000 initial contracts with
Pegasus member hotels (for a total of 10,000 initial contracts), then Pegasus
has the option to purchase up to an additional 8.3% of the Company for $833,333
(for a total of $3,333,333 for 33-1/3% of the outstanding capital stock of HVC).
To the extent that Pegasus meets these levels, the Company will only own 66-2/3%
of HVC and this reduction of ownership could have an adverse effect on HVC and
its operations. However, in order for Pegasus to exercise its options at each of
the levels described above, and assuming that the average fee for a hotel that
Pegasus obtains on behalf of the Company is $8,000 per hotel, the Company would
have realized gross revenues of (i) $8 million, (ii) an additional $12 million
(for a total of $20 million), (iii) an additional $20 million for a total of $40
million; and (iv) an additional $40 million for a total of $80 million.
MATERIAL DEPENDENCE ON EXECUTIVE OFFICERS; KEY PERSONNEL. The Company is
materially dependent on the efforts and abilities of Randy S. Selman, its
President, Chief Executive Officer, acting Chief Financial Officer and a
Director and Alan M. Saperstein, its Vice President and a
9
<PAGE>
Director. In October 1996, the Company entered into employment agreements with
these individuals for a minimum two-year period. Although the Company currently
carries key-man insurance coverage only for Mr. Saperstein, it does intend to
purchase key-man insurance for Mr. Selman in the future. The loss of the
services of either Messrs. Selman or Saperstein could have a material adverse
effect upon the Company's business and future prospects. See "Management".
ABSENCE OF OUTSIDE DIRECTORS. Presently each of the directors of the Company are
also officers of the Company and, accordingly, there are no outside directors.
Accordingly, the views of persons other than members of management may not be
fully represented at meetings of the Company's Board of Directors. Following the
effective date of this Prospectus, Mr. Ben Swirsky and Mr. Brian Service will
join the Company's Board of Directors. Additionally, Mr. Eric Jacobs, currently
the Vice President and General Manager of HotelView Corporation shall join the
Company's Board of Directors. However, because Mr. Jacobs is an employee of the
Company, he is not deemed to be an outside Director.
DIVIDEND POLICY. The Company has never declared or paid cash dividends on its
Common Stock and the Company does not currently intend to declare or pay cash
dividend on its Common Stock in the foreseeable future.
THE COMPANY'S BUSINESS. The discussion of the Company's business incorporates
management's current best estimate and analysis of the potential market,
opportunities and difficulties that face the Company. There can be no assurances
that the underlying assumptions accurately reflect the Company's opportunities
and potential for success. Competitive and economic forces on marketing,
distribution and pricing of the Company's services make forecasting of sales,
revenues and costs extremely difficult and unpredictable. See "Business."
IMMEDIATE AND SUBSTANTIAL DILUTION. The proposed initial public offering is
substantially higher than the book value per share of the Company's Common
Stock. Investors purchasing shares of Common Stock in this offering will incur
immediate and substantial dilution of approximately $4.49 per Share, or
approximately 75% of the initial public offering price per share, in net
tangible book value of the Company's Common Stock (giving effect to the receipt
by the Company of the estimated net proceeds and assuming an initial public
offering price of $6.00 per share). Additional dilution may result following the
exercise of the Representatives's Warrants or the exercise of options under the
Company's 1996 Stock Plan. See "Dilution."
ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET The Company is authorized to issue 20,000,000 of its Common Stock, $.0001
par value per share. If all of the 1,000,000 shares offered hereby are sold,
there will be a total of 5,058,214 shares of Common Stock issued and outstanding
(which includes an aggregate of 244,321 Shares underlying certain warrants). See
"Description of Securities - Warrants." In addition, the following securities
have been reserved for issuance: (i) 200,000 shares pursuant to the Company's
1996 Stock Option Plan; (ii) options to purchase an aggregate of 13,215 shares
of Common Stock at prices ranging from $.875 to $3.50 for exercise periods
ending from May 30, 1998 to April 15, 1999; and (iii) warrants to purchase an
aggregate of 38,515 shares at prices
10
<PAGE>
ranging from $.875 to $1.75 for periods ranging from three years to five years
from the date of issuance. See "Management-Stock Option Plan" and "Description
of Securities Options." After the exercise and /or issuance of these securities,
the Company will have 5,309,944 shares outstanding and 14,690,056 shares of
authorized but unissued capital stock available for issuance without further
shareholder approval. As a result, any issuance of additional shares of common
stock may cause current shareholders of the Company to suffer significant
dilution which may adversely affect the market.
LACK OF PRIOR MARKET FOR SECURITIES OF THE COMPANY. No prior market has existed
for the securities offered hereby and no assurance can be given that one will
develop subsequent to this offering. The Company has applied for inclusion of
the Common Stock on the NASDAQ SmallCap market, there can be no assurance that
an active trading market will develop (or be sustained, if developed), even if
the securities are accepted for quotation or that purchasers will be able to
resell their Common Stock or otherwise liquidate their investment without
considerable delay, if at all. Recent history relating to the market prices of
newly public companies indicates that, from time to time, there may be
significant volatility in their market price. There can be no assurance that the
market price of the Company's Common Stock will not be volatile as a result of a
number of factors, including the Company's financial results or various matters
affecting the stock market generally.
SHARES ELIGIBLE FOR FUTURE SALE AND REGISTRATION RIGHTS. All of the shares of
Common Stock outstanding are currently "restricted securities" as that term is
defined under the Securities Act and may only be sold pursuant to a registration
statement or in compliance with Rule 144 under the Securities Act or other
exemption from registration. Rule 144 provides, in essence, that a person
holding restricted Common Stock for a period of two years may sell such
securities during any three month period, subject to certain exceptions, in
amounts equal to the greater of (i) one percent (1%) of the Company's
outstanding Common Stock or (ii) the average weekly trading volume of the Common
Stock during the four calendar weeks prior to the filing of the required Form
144. Rule 144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who is not an affiliate of the
Company and who has satisfied a three year holding period. Last year, the
Securities and Exchange Commission (the "Commission") proposed to amend Rule 144
by reducing the two and three year holding periods to one and two years,
respectively. The Company cannot predict whether this proposed amendment will be
adopted.
Upon the sale of the Common Stock offered hereby, the Company will have
5,058,214 shares of its Common Stock issued and outstanding, of which 2,064,925
shares are "restricted securities," 1,150,000 shares are being registered under
the registration statement of which this Prospectus is a part (assuming exercise
of the Underwriter's Over-Allotment Option of 150,000 Shares of which 75,000
Shares each will be sold by Randy S. Selman, the Company's Chief Executive
Officer, President, acting Chief Financial Officer and a Director and by Alan
Saperstein, the Company's Vice President, Secretary and a Director), and
1,843,289 shares are being registered pursuant to an Alternate Prospectus of
even date (of which 38,572 shares are being offered by affiliates of the Company
including Randy S. Selman (1,429 Shares), Alan Saperstein, (1,429
11
<PAGE>
Shares), and Fleet National Bank, Trustee, Frederick A. DeLuca U/A 102 Qualified
Annuity Trust, a principal shareholder of the Company (35,714 Shares)). Of the
shares being registered pursuant to the Alternate Prospectus, 85,000 Shares may
be sold commencing 45 days from the effective date of this Prospectus and the
remaining 1,758,289 Shares may be sold commencing twelve (12) months from the
date of this Prospectus. Additionally, all other shares of Common Stock held by
shareholders of the Company are also subject to a twelve (12) month lock-up
period, unless otherwise required by the NASDAQ SmallCap Market for such longer
period. After expiration of these lock-up agreements, all outstanding shares of
Common Stock will be eligible for sale under Rule 144. The availability for sale
of substantial amounts of Common Stock subsequent to this offering could
adversely affect the prevailing market price of the Common Stock and could
impair the Company's ability to raise additional capital through the sale of its
equity securities. See "Principal Shareholders," "Selling Securityholders," and
"Shares Eligible for Future Sale."
Certificates evidencing these securities will bear a legend reflecting such
restrictions. The Representative may release the securities held by the Selling
Securityholders at any time after all securities subject to the Over-Allotment
Option have been sold or such option has expired. The resale of the securities
held by the Selling Securityholders is subject to prospectus delivery and other
requirements of the Securities Act of 1933, as amended ("Securities Act"). Sales
of such securities or the potential of such sales at any time may have an
adverse effect on the market prices of the securities offered hereby.
Additionally, the Selling Securityholders may be deemed to be underwriters under
the Securities Act. See "Selling Securityholders" and "Underwriting."
Prospective investors should be aware that the possibility of sales may, in the
future, have a depressive effect on the price of the Company's Common Stock in
any market which may develop and, therefore, the ability of any investor to
market his shares may be dependent directly upon the number of shares that are
offered and sold. Affiliates of the Company may sell their shares during a
favorable movement in the market price of the Company's Common Stock which may
have a depressive effect on its price per share. See "Description of
Securities."
POSSIBLE APPLICABILITY OF RULES RELATING TO LOW-PRICED STOCKS; POSSIBLE FAILURE
TO QUALIFY FOR NASDAQ SMALLCAP MARKET LISTING. The Commission has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price (as defined) of less than $5 per share, subject to
certain exceptions. Upon completion of this Offering, the shares of Common
Stock, offered hereby may be deemed to be "penny stocks" and thus will become
subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the Common Stock is listed on the
NASDAQ SmallCap Market. There can be no assurance that the Company will be able
to satisfy the listing criteria of the NASDAQ SmallCap Market or will trade for
$5 or more per security after the Offering. Consequently, the "penny stock"
rules may restrict the ability of broker/dealers to sell the Company's
securities and may affect the ability of purchasers in this Offering to sell the
Company's securities in a secondary market.
12
<PAGE>
Although the Company intends to apply for listing of the Common Stock on the
NASDAQ SmallCap Market, there can be no assurance that the trading of the Common
Stock will develop or, if developed, will be sustained. Furthermore, there can
be no assurance that the Securities purchased by the public hereunder may be
resold at their original offering price or at any other price.
In order to qualify for initial listing on the NASDAQ SmallCap Market, a company
must, among other things, have at least $4,000,000 in total assets, $2 million
net worth, $1 million "public float," and a minimum bid price for its securities
of $3 per share. For continued listing on the NASDAQ SmallCap Market, a company
must maintain $2 million in total assets, a $200,000 market value of the public
float and $1 million in total capital and surplus. In addition, continued
inclusion requires two market-makers and a minimum bid of $1 per share;
provided, however, that if a company falls below such minimum bid price, it will
remain eligible for continued inclusion on the NASDAQ SmallCap Market if the
market value of the public float is at least $1 million and the Company has $2
million in capital and surplus. The failure to meet these maintenance criteria
in the future may result in the discontinuance of the inclusion of the Common
Stock on the NASDAQ SmallCap Market.
The NASDAQ Stock Market, Inc. has recently proposed certain changes to the entry
and maintenance criteria for listing eligibility on The NASDAQ SmallCap Market.
The proposed entry standards would also require a public float of at least 1
million shares, a $1 million market value of public float, a minimum bid price
of $4.00 per share, at least 3 market makers, and at least 300 shareholders. The
proposed maintenance standards (as opposed to entry standards) would require at
least $2 million in net tangible assets or $500,000 in net income in 2 of the
last 3 years, a public float of at least 500,000 shares, a $1 million market
value of public float, a minimum bid price of $1.00 per share, at least 2 market
makers, and at least 300 shareholders. The NASDAQ Stock Market, Inc. is
currently is the process of soliciting comments from investors, issuers, market
participants, and others with respect to the foregoing proposed changes. No
changes have yet been adopted by The Nasdaq Stock Market, Inc.
If the Company is or becomes unable to meet the listing criteria (either
initially or on a maintenance basis) of the NASDAQ SmallCap Market and is never
traded or becomes delisted therefrom, trading, if any, in the Common Stock would
thereafter be conducted in the over-the- counter market in the so-called "pink
sheets" or, if then available, "Electronic Bulletin Board" administered by the
National Association of Securities Dealers, Inc. (the "NASD"). In such an event,
the market price of the Common Stock may be adversely impacted. As a result, an
investor may find it difficult to dispose of, or to obtain accurate quotations
as to the market value of the Common Stock.
REPRESENTATIVE'S WARRANTS. The Company will sell to the Representative and/or
its designees, for nominal consideration, the Representative's Warrants to
purchase up to 100,000 shares of Common Stock. The Representative's Warrants are
exercisable for a period of four years commencing one year after the date of
this Prospectus at an exercise price equal to 120% of the initial public
offering price or $7.20 per share. For the life of the Representative's
Warrants, the
13
<PAGE>
holders are given, at nominal cost, the opportunity to profit from a rise in the
market price of the Common Stock of the Company without assuming the risk of
ownership, which may result in the dilution in the interest of other
shareholders. Commencing one year from the date of this Prospectus, holders of
the Representative's Warrants have certain registration rights. Exercise of
these registration rights could involve substantial expense to the Company at a
time when it could not afford cash expenditures, may adversely affect the terms
upon which the Company may obtain additional funding and may adversely affect
the price of the Common Stock. Additionally, if the holders of the
Representative's Warrants exercise their registration rights to sell shares of
Common Stock, the Representative, prior to and during such distribution, may be
unable to make a market in the Company's Common Stock, and would be required to
comply with other limitations on trading set forth in Rules 10b-6 and 10b-7
promulgated under the Securities Exchange act of 1934 (the "Exchange Act"). Such
rules restrict the solicitation of purchasers of a security when a person is
engaged in the distribution of such security and also limited certain market
making activities in such securities. See "Underwriting."
DETERMINATION OF OFFERING PRICE; VOLATILITY OF COMMON STOCK PRICE. The initial
public offering price of the Common stock has been determined by negotiations
between the Company and the Representative and does not necessarily reflect the
Company's book value, result in operations, net worth or other established
criteria of value. The stock market has from time to time experienced
significant price and volume fluctuations that may be unrelated to the operating
performance of any particular company. The market price of the securities of
many newly-traded public companies have in the past been, and can be expected in
the future to be especially volatile. Factors such as the Company's operating
results, announcements by the Company of new agreements for its products or
services and announcements by the Company or its competitors concerning
technological innovations or new services may have a significant impact on the
market price of the Company's Common Stock. See "Underwriting."
ABSENCE OF PUBLIC MARKET. Prior to this offering, there has been no public
market for the Company's Common Stock, and there can be no assurance that any
trading market therefor will develop, or, if any such market develops, that it
will be sustained. Accordingly, purchasers of the shares of Common Stock offered
hereby may experience difficulty selling or otherwise disposing of their shares
of Common Stock. The market price of the Common Stock following this offering
may be highly volatile. Factors such as announcements by the Company or its
competitors concerning acquisitions or dispositions, new procedures, proposed
governmental regulations, and general market conditions may have a significant
impact on the market price of the Common Stock. See "Underwriting."
If the Representative should exercise its registration rights to effect a
distribution of the Representative's Warrants or the shares of Common Stock
issuable upon the exercise of such Warrants (the "Warrant Shares"), the
Representative, prior to and during such distribution, may be unable to make a
market in the Company's securities for some period depending upon a variety of
factors, including the price of the Company's Common Stock and the size of the
float for such stock. If the Representative ceases making a market in the Common
Stock, the market and market prices for the Common Stock may be materially
adversely affected, and holders
14
<PAGE>
thereof may be unable to sell or otherwise dispose of shares of Common Stock.
The holders of the Representative's Warrants will have certain demand and
"piggyback" registration rights with respect to such Warrants and the Warrant
Shares, commencing one year after the date hereof. See "Shares Eligible for
Future Sale" and "Underwriting - Representative's Warrants."
ANTI-TAKEOVER PROVISIONS. Certain provisions of the Company's Articles of
Incorporation and Bylaws may be deemed to have anti-takeover effects and may
delay, defer or prevent a takeover attempt of the Company, which include when
and by whom special meetings of the Company may be called. In addition, certain
provisions of the Florida Business Corporation Act also may be deemed to have
certain anti-takeover effects which include that control of shares acquired in
excess of certain specified thresholds will not possess any voting rights unless
these voting rights are approved by a majority of a corporation's disinterested
shareholders.
Additionally, the Company's Articles of Incorporation, Bylaws and Florida law
authorize the Company to indemnify its directors, officers, employees and agents
and limit the personal liability of corporate directors for monetary damages,
except in certain instances. See "Description of Securities - Certain Florida
Legislation; Anti-takeover Effects of Certain Provisions of the Company's
Articles of Incorporation and Bylaws."
Furthermore, the Board of Directors has the authority to issue up to 5,000,000
shares of the Company's preferred stock and to fix the dividend, liquidation,
conversion, redemption and other rights, preferences and limitations of such
shares without any further vote or action of the shareholders. Accordingly, the
Board of Directors is empowered, without shareholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or the rights of the holders of
the Company's Common Stock. In the event of issuance, the preferred stock could
be utilized under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company has no
present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future. See "Description of
Securities."
LIMITATION OF DIRECTOR LIABILITY
The Florida Business Corporation Act provides that a director is not personally
liable for monetary damages to the Company or any other person for breach of
fiduciary duty, except under very limited circumstances. Such a provision makes
it more difficult to assert a claim and obtain damages from a director in the
event of his non-intentional breach of fiduciary duty. See
"Management-Limitation of Liability."
15
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,000,000 shares of Common
Stock offered hereby are estimated to be $4,900,000 assuming an initial public
offering price of $6.00 per share, after deducting offering expenses estimated
to be $1,100,000 (including Representative's non-accountable expense allowance
in the amount of $180,000 and underwriting discounts of 10% payable by the
Company are estimated to be approximately $600,000 and the Company's related
offering expenses of $320,000 including legal fees, accounting fees, blue sky
expenses and filing fees, printing and filing fees and costs or other related
offering expenses). The Company will not receive any proceeds from the sale by
certain selling shareholders of Common Stock pursuant to any exercise of the
Underwriter's Over-Allotment Option. The net proceeds of this offering,
excluding the exercise of any warrants, will be unitized in order of priority by
the Company as listed below for the 24 month period following the date of this
offering.
ANTICIPATED USE APPROXIMATE
OF NET PROCEEDS AMOUNT PERCENTAGE
Video Acquisition(1) $980,000 20%
Marketing and Advertising(2) $980,000 20%
Editing Equipment and Facilities(3) $490,000 10%
Personnel(4) $490,000 10%
Travel Agent Equipment(5) $245,000 5%
Internet Hardware and Software(6) $245,000 5%
General Corporate and Working Capital(7) $1,470,000 30%
---------- -----
TOTAL $4,900,000 100%
========== -----
(1) Includes the purchase of existing video content from third parties that
can be incorporated into the HotelView/registered trademark/ Library as
well as other libraries the Company intends to develop. While the
Company has had initial conversations with a number of companies with
such content, the Company has not entered into any definitive agreements
to purchase these libraries.
(2) Includes national consumer advertising, advertising in trade
publications, attendance and participation in trade shows. Although the
Company currently anticipates that a substantial portion of these funds
will be allocated to the marketing and advertising of the
HotelView/registered trademark/ Library, some of these funds may be used
in the future for the marketing and advertising of other libraries, as
they become available.
(3) The Company is currently searching for a location to construct
additional editing facilities in Palm Beach County, Florida. The Company
intends to lease additional equipment for video editing, graphic design
and other production services. The funds allocated will be used
16
<PAGE>
for lease deposits as well as for the purchase of certain equipment and
software. See "Business - Filming and Production."
(4) Includes the hiring of a Chief Financial Officer, a General Manager for
the Company's Internet systems, and approximately 8 additional
employees. It is estimated that these proceeds will be sufficient to pay
the compensation and benefits for at least one year from the date of
hiring such personnel.
(5) Includes approximately 400 additional hardware systems for use by travel
agents in order to display the HotelView/registered trademark/ Library
and copy vignettes for a client. Each of these systems includes (1) a
laser disc player, and (2) a combination television/VCR and a set of
library disks. See "Business - The Company's Products and Services - The
HotelView/registered trademark/ Library."
(6) Includes the purchase of file server hardware (computer), software,
sufficient disk storage for digitized video files, and communications
hardware for linking the file server to the Internet and directly to
marketing partners' file servers.
(7) Includes in-house production and costs for independent camera crews,
overhead expenses, and compensation and benefits for existing employees
for at least one year from the date of this offering.
The amounts set forth in the use of proceeds merely indicate the proposed use of
proceeds, and actual expenditures may vary substantially from these estimates
depending upon the fiscal health of the Company, the success, if any of the
Company's proposed business and operations and the availability of other
financing arrangements, such as lines of credit and loans. The Company is unable
to predict the precise period for which this offering will provide financing,
although management believes that the Company should have sufficient working
capital to meet its cash requirements for the 24 month period following the date
of this offering. Accordingly, the Company may need to seek additional funds
through loans or other financing arrangements during this period of time. No
such arrangements exist or are currently contemplated and there can be no
assurance that they may be obtained in the future should the need arise.
Pending use of the net proceeds of the sale of the shares of Common Stock
offered hereby, the Company intends to invest such funds in short-term,
interest-bearing, investment grade obligations. Any additional proceeds received
upon the exercise of the Representative's Warrants, or the exercise of any
warrants or options held by the Company's shareholders, as well as income from
investments, if any, will be added to working capital.
17
<PAGE>
DILUTION
The net tangible book value of the Company at September 30, 1996 was $(562,976)
or approximately $(.30) per share of Common Stock (assuming that the Company has
1,866,039 shares outstanding as derived from the balance sheet as of that date).
"Net tangible book value" per share represents the amount of total tangible
assets of the Company less total liabilities of the Company, divided by the
number of shares of Common Stock outstanding. Without taking into account any
changes in such net tangible book value after September 30, 1996, and after
giving effect to the sale by the Company of the 1,000,000 Shares of Common Stock
offered hereby at an assumed initial public offering price of $6.00 per Share
(after deducting underwriting discounts and estimated offering expenses), pro
forma net tangible book value of the Company at September 30, 1996 would have
been $4,337,024 or $1.51 per share of Common Stock, representing an immediate
increase in net tangible book value of $1.81 per share to existing shareholders
and an immediate dilution of $4.49 (75%) per share to new investors. "Dilution"
is determined by subtracting net tangible book value per share after the
offering from the offering price to investors. The following table illustrates
this per share dilution:
Initial public offering price per share $6.00
Pro forma net tangible book value per share,
before the offering $(.30)
Increase per share attributable to new investors $1.81
Pro forma net tangible book value per
share after the offering $1.51
Dilution to new investors $4.49 (75%)
- --------------
The above table assumes (i) no exercise of outstanding options or warrants with
the exception of warrants to purchase an aggregate of 244,321 shares of Common
Stock, nor (ii) the possible issuance of 200,000 shares of Common Stock reserved
for issuance pursuant to the Company's Stock Option Plan. As of the date of this
Prospectus, there are outstanding warrants to purchase an aggregate of 38,515
shares of Common Stock exercisable at prices ranging from $.875 to $1.75 and
outstanding options to purchase (A) an aggregate of 13,215 shares of Common
Stock at prices ranging from $.875 to $3.50 issued to shareholders of the
Company and (B) an aggregate of 439,136 Shares at $.0001 per Share for a period
of 5 years commencing January 1, 1997 issued to Randy S. Selman, the Chief
Executive Officer, President, acting Chief Financial Officer and a Director and
to Alan Saperstein, the Company's Vice President, Secretary and a Director. See
"Description of Securities," "Executive Compensation, "Executive Compensation -
1996 Stock Option Plan," and "Underwriting."
The following table sets forth at September 30, 1996, with respect to the
Company's existing shareholders and new investors in this offering, a comparison
of the number of shares of Common Stock acquired from the Company, the
percentage of ownership of such shares, the total consideration paid, the
percentage of total consideration paid and the current shareholders of the
Company.
18
<PAGE>
<TABLE>
<CAPTION>
AVERAGE
TOTAL CASH AVERAGE PRICE PER
SHARES PURCHASED CONSIDERATION PAID PRICE PER SHARE AS
NUMBER PERCENT AMOUNT PERCENT SHARE ADJUSTED(1)
-------- ------- --------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Existing Shareholders......1,866,039 65.1% $1,015,428 14.5% $.54 $.80
New Investors..............1,000,000 34.9% $6,000,000 85.5% $6.00 $6.00
Total......................2,866,039 100% $7,015,478 100.00% $2.91 $2.17
</TABLE>
- --------------
(1) As adjusted for the conversion of Series A and B Preferred Stock and
convertible debt which occurred subsequent to September 30, 1996.
19
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at
September 30, 1996, (ii) capital activity from October 1 through November 30,
1996, and (iii) pro-forma adjusted to give effect to the sale of the 1,000,000
shares of Common Stock offered hereby and the application of the estimated net
proceeds therefrom assuming an offering price of $6.00 per share. See "Use of
Proceeds."
<TABLE>
<CAPTION>
ADJUSTED FOR
CAPITAL ACTIVITY ADJUSTED FOR
OCT. 1, 1996 - SHARES
SEPT.30, 1996 NOV. 30, 1996 (1) SOLD (2)(3)
------------- ----------------- -----------------
<S> <C> <C> <C>
Debt:
Loans payable, shareholders $ 50,000 $ 15,000 - 0 -
Convertible notes payable 680,000 - 0 - - 0 -
Shareholders' Equity
Preferred stock, par value .0001
Series A, 185,716 shares
issued and outstanding 19 - 0 - - 0 -
Series B, 113,750 shares
issued and outstanding 11 - 0 - - 0 -
Common stock, par value .0001
1,866,039 shares issued
and outstanding 187 291 391
Paid in Capital 2,120,211 2,890,577 8,110,477
Accumulated Deficit (2,581,027) (2,581,027) (2,581,027)
-------------- -------------- --------------
Total shareholders' equity $ 269,401 $ 324,841 $ 5,529,841
============== ============= =============
</TABLE>
(1) Gives effect to the conversion of convertible notes and all preferred
stock to common stock, as well as the exercise of 95,501 warrants and
4,286 options and the repayment of $35,000 of the shareholder loans.
(2) Gives effect to the sale of the 1,000,000 shares in the offering and
assumes the repayment of shareholder loans from working capital.
(3) After deducting offering expenses estimated to be $780,000.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock and
the Company does not currently intend to declare or pay cash dividend on the
Common Stock in the foreseeable future. The Company currently intends to retain
earnings for use in its business and therefore does not anticipate paying cash
dividends in the foreseeable future.
20
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables contain selected consolidated financial data as of and for
the dates indicated and should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and the notes thereto appearing elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
VISUAL DATA CORP.
Selected Historical Consolidated Financial Data
FROM MAY 17,
1993 (INCEPTION)
TO SEPTEMBER 30, YEAR ENDED SEPTEMBER 30
1994 1995 1996
------------------ -----------------------------------
<S> <C> <C> <C>
SELECTED STATEMENT OF
OPERATIONS DATA:
Operating revenue $ 0 $ 0 $ 111,719
----------- ----------- -----------
Operating expenses
Selling, General and Administrative
Compensation and Related Costs 0 206,935 985,441
Production 0 17,982 121,239
Occupancy 38,409 62,991 43,875
Professional Fees 77,886 87,662 298,815
Interest 5,797 9,606 27,112
Other 66,674 117,092 527,692
----------- ----------- -----------
Total Operating Expenses 188,766 502,268 2,004,174
----------- ----------- -----------
Loss from Operations (188,766) (502,268) (1,892,455)
Other Income 0 1,709 753
----------- ----------- -----------
Net (Loss) ($ 188,766) ($ 500,559) ($1,891,702)
=========== =========== ===========
Primary Earnings Per Share ($ 0.11) ($ 0.26) ($ 0.83)
=========== =========== ===========
Fully Diluted Earnings Per Share ($ 0.11) ($ 0.26) ($ 0.83)
=========== =========== ===========
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the Notes thereto appearing
elsewhere in this Prospectus.
RESULTS OF OPERATIONS
The Company, which exited the development stage during the fourth quarter of
fiscal 1996, is a content developer specializing in the production, marketing
and distribution of visual information for the Internet, interactive television
(ITV) and other on-line services. Through its international network of
professional camera crews and state of the art video production studios, the
Company is developing a number of full motion visual libraries containing short
concise vignettes on topics of consumer interest such as travel, education,
health, fitness, medicine and consumer products. Users will be able to view the
libraries on laser discs, CD-ROMS, digital video discs (DVDs), VHS cassettes,
through the Internet, and eventually the cable modem network and ITV. The
Company's first product, the HotelView/registered trademark/ Library is a visual
library of hotels and resorts which includes an overview of the amenities of
hotels and resorts as well as local attractions and services.
The Company anticipates the development of both the Internet and ITV into the
largest forms of interactive communications during the next few years. Since
there can be no assurances that these technologies will continue to be
developed, certain of the Company's products may have no global distribution
mechanism. Therefore, the Company plans to continue to establish other
distribution methods (for its other libraries) similar to its travel agent
network, as well as make the information available on other media such as
CD-ROMs, DVD, VHS tapes, as well as new media to be developed in the future.
As of September 30, 1996, the Company had incurred operating losses of
$2,581,027 since inception. Approximately 70 hotel vignettes were produced up to
that point in time. Revenues of $111,719 were recognized based on the redemption
of room credit balances due to bookings made by the HVC travel agent network and
tape sales to the hotels. Deposits of $70,500 collected through September 30,
1996 will be recognized as revenue by the Company in the first quarter of fiscal
1997 as it has fulfilled certain obligations; i.e., to install the videos into
the travel agencies, a process which has been completed as of the date of this
document. In addition, as the travel agent network books rooms, the Company
expects to bill and collect as revenue remaining room credit balances of
approximately $287,000.
The Company intends to continue to produce vignettes on many new hotels as these
hotels enter into hotel services agreements with the Company for inclusion in
the Library. The Company has budgeted additional dollars to be spent on
advertising the Library to both trade (including hotel chains, travel agencies
and travel industry associations) as well as to consumers to expand product
awareness. See "Use of Proceeds."
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The Company intends expanding sales of its library through joint ventures and
alliances with travel service companies having the ability to penetrate the
corporate hotel chain and management company markets. Discussions with several
companies are expected to result in marketing and sales agreements during the
first quarter of fiscal 1997.
The Company also intends to begin to develop other libraries during fiscal 1997
which libraries include CruiseView/trademark/, ConventionView/trademark/, and
AdventureView/trademark/. Additionally, the company is planning to develop a
library of nursing homes and convalescent care centers (CareView/trademark/) as
well as time share properties (TimeShareView/trademark/).
The Company is currently negotiating to acquire certain products from a Canadian
software company that has developed a high speed multi-media database and
various application products. The Company expects to begin marketing these
products during the second quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
From inception (May 17, 1993) through September 30, 1996, the Company's capital
has been provided by the sale of stock, debentures, convertible debt, the
exercise of warrants and shareholder loans amounting to an aggregate of
$2,448,153. These funds have been used for production ($139,221), compensation
($808,132), acquisition of equipment ($152,783) and general operations of the
Company during its development stage. Accordingly, the Company's cash and
equivalents decreased primarily as a result of implementing the Company's sales
and marketing strategy, as well as continued development of the Company's travel
agent network and product development.
Based on the level of success of its HotelView/registered trademark/ Library and
expected introduction of additional libraries that the Company believes can be
used in conjunction with most forms of media now conceived or developed in the
future, the company anticipates the acquisition of additional capital equipment
including editing facilities, travel agent equipment and an Internet file server
with significant capacity and memory to store video files. See "Use of
Proceeds." Additionally, the Company anticipates moving its principal offices to
larger facilities and increasing the number of its employees, as required.
During July and August 1996, through its placement agent, the Company raised
$850,000 through a private placement offering of certain of its securities.
These proceeds were used to finance operations, further market the
HotelView//registered trademark/ Library and repay shareholder loans of $35,000
and debt. It is expected that these funds will provide sufficient working
capital through the effective date of this Prospectus, at which time both the
results of operations, as well as the proceeds from the offering described in
this Prospectus should be sufficient to maintain the business for the 24 month
period following the date of this offering.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Company's operations.
23
<PAGE>
BUSINESS
GENERAL
Visual Data Corporation (the "Company"), a Florida corporation, is a "content"
developer, specializing in the production, marketing and distribution of visual
information for the Internet, other on-line services and, eventually,
Interactive Television (ITV). Demand for full motion multimedia content
continues to grow rapidly. In order to capitalize on this demand, the Company
has established an international network of independent camera crews and
in-house production staff capable of taping, editing and producing full motion
video data at the Company's state of the art video production studio. The
Company is currently using this video data to develop various libraries which
contain short, concise vignettes on consumer oriented topics.
The Company's first product, the HotelView/registered trademark/ Library (the
"Library"), is a visual library of hotels and resorts. The Library is being
marketed through the Company's currently wholly-owned subsidiary, HotelView
Corporation ("HVC"), a Florida corporation incorporated on September 15, 1993.
The HotelView/registered trademark/ Library contains short, concise visual
brochures ("vignettes") depicting the specific characteristics and amenities of
hotels and resorts in full-motion video. The Library is marketed to (i) hotels
and resorts, (ii) travel agencies, and (iii) potential travelers. Through
inclusion in the HotelView/registered trademark/ Library, a hotel reaches
thousands of travel agents and potential guests through a convenient, low cost,
and effective method.
The Company is developing marketing relationships with travel industry companies
whose goods and services complement those of the Company. The Company is
currently targeting firms providing hotel reservation and marketing services for
the travel industry via the Internet.
THE COMPANY'S PRODUCTS AND SERVICES
THE HOTELVIEW/REGISTERED TRADEMARK/ LIBRARY
The Company believes it has established a niche market in the hotel and travel
industry by providing travel agents and potential travelers with full motion
vignettes about hotels and resorts located in North America, the Caribbean and
Europe, which vignettes are consistent in format, style, quality and duration.
While various textual databases exist containing substantial information on
hotels and resorts and their amenities (including brochures with photographs),
these limited forms of media are becoming inadequate as consumers are demanding
more detailed information in multi-media formats. The Company believes concise,
non-promotional videos, with a voice narrative, specifically designed to provide
the viewer with a clear perception of a hotel's or resort's facilities will meet
this demand.
The Company's first phase of its development is the production, marketing and
distribution of its HotelView/registered trademark/ Library. The
HotelView/registered trademark/ Library contains vignettes of hotels and
resortS. Each vignette is approximately two to three minutes in length providing
the viewer with a look at the hotel's amenities. All facilities included in the
HotelView/registered trademark/ Library are videotaped in a uniform
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<PAGE>
manner and follow a format developed by the Company in order to maintain
consistency and quality. Hotel and resort management are not involved in the
development or content of the vignette except to verify accuracy, thereby
permitting the HotelView/registered trademark/ Library to be fair and consistent
in its presentation. Professionally videotaped with a voice narrative, the
vignette shows the features of the hotel, including room views, conference
facilities, lobby, pool, restaurants, grounds, sports facilities, and spas.
Information concerning the relative location of the property to area attractions
and airport facilities is also provided.
Each hotel or resort pays an annual fee of between $8,000 and $12,000 for
inclusion in the Library. Each hotel or resort must renew its agreement with the
Company annually and pay its annual fee ranging from $8,000 to $12,000 in order
to remain in the Library. In the past, hotels have had the option to pay the
Company by choosing one of two payment methods: (i) cash in full, or (ii) after
payment of a cash deposit of $3,000, a performance-based arrangement whereby the
Company is paid the balance due by the hotel or resort as rooms are booked by
the HVC travel agent network.
The Library is supplied free of charge to qualifying travel agencies who
typically have a minimum of six agents, have been in business for at least five
years, and have annual bookings of at least $2 million. Each travel agent is
provided with a base set of disks and then sent updates (which modifications may
include additional hotels or modifications to existing hotels that were
contained in the Library) several times each year. The Company provides its
travel agents in order to display and copy a vignette for a client: (1) a laser
disc player, (2) a combination television/VCR, and (3) the Library on laser
disc. This system is easily assembled and requires minimal training.
The Company has selected laser discs as the storage medium for the
HotelView/registered trademark/ Library since laser discs are extremely high
quality, easy to use, and most importantly, allows instant access to individual
vignettes. Unlike video tapes, laser discs do not require fast forward or
reverse winding in order to access a particular part of the media. The video
equipment, as well as the disc library, is supplied by the Company as part of
the contract with the travel agents.
The equipment used in the HotelView/registered trademark/ Library system is
provided by several leading manufacturers. The Company purchases all the
equipment, including the laser disc player, and a combination television/VCR at
a price of under $600. The Company has entered into a capital lease for certain
of this equipment. The Company has also established pricing with a leading
supplier of laser discs to create the disc masters at a one time per disc cost
of $2,000. The agreement also provides for a $8 per disc copy cost. Therefore,
copies of the initial hotel library will cost the Company approximately $48 per
set. Additional disks will also cost $8 per disk with a one time cost of $2,000
for the disc master.
To use the HotelView/registered trademark/ Library, the viewer simply loads the
laser disc into the player for the region they wish to view. A menu appears that
asks the viewer to select from a list of hotels or maps. The viewer can then
make a selection and view a particular hotel. At any time, the viewer can also
choose to view nearby services or attractions -- such as theme parks and sports
25
<PAGE>
facilities. The Company's concept is for a potential traveler to "Look Before
You Book/trademark/" a reservation so that travelers can make a more
knowledgeable decision when choosing a hotel or resort.
For those travelers who are unable to visit a travel agency,
HotelView/registered trademark/ Library videos are also available through the
mail. A traveler wishing to receive videos on specific hotels can call a
HotelView/registered trademark/ travel agent and request them. The agent can
easily copy the desired videos from the discs onto VHS tape and mail the tape to
the customer. Blank tapes and mailers to the travel agents are supplied by the
Company at no charge.
The HotelView/registered trademark/ Library can be used in conjunction with
other travel agent tools, such as airline reservation system terminals and
various hotel directories that list location, price range, and basic amenities
for thousands of hotels worldwide. Once a traveler has identified a hotel or
group of hotels that meets his requirements, the traveler can use the
HotelView/registered trademark/ Library to actually "see" the property. The
Company believes that by using the HotelView/registered trademark/ Library,
travel agents can reduce costly research time and improve client satisfaction.
Travel agents can use the video library themselves (to learn more about the
hotels and resorts included in the HotelView/registered trademark/ Library) or
provide access to the library to their clients.
The HotelView /registered trademark/ Library is now being marketed to
international hotels and resorts and international travel agencies from the
Company's Munich, Germany sales office. HotelView/registered trademark/
vignettes are being translated into French, German, Spanish and Japanese.
OTHER LIBRARIES
In addition to the HotelView/registered trademark/ Library, the Company plans to
create and maintain additional video libraries for travel related topics as well
as on other topics of general consumer interests. The following are examples of
the libraries already in the planning stages by the Company:
- - CRUISEVIEW/trademark/ - A visual database of top cruise ships and
facilities.
- - ADVENTUREVIEW/trademark/ - A collection of exotic and exciting vacations
on video. Vignettes of unusual activities ranging from rafting trips,
safaris, mountain climbing, diving expeditions and even hiking through
the Amazon.
- - CONVENTIONVIEW/trademark/ - A visual library of convention centers and
meeting facilities.
- - CAMPUSVIEW/trademark/ - A visual database of American colleges and
universities. Concise vignettes include tours of the school's
facilities, special program descriptions, and campus social life.
- - CAREVIEW/trademark/ - A library of nursing homes, adult care centers and
rehabilitation facilities.
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- - HEALTH & FITNESSVIEW/trademark/ - A collection of specific exercise
videos. The viewer can customize a workout by watching and selecting
only the exercise segments they need. Special exercise and workout
products are also reviewed. Other health related libraries include
nursing homes, rehabilitation centers and specialized hospitals.
- - MEDICALVIEW/trademark/ - Medical treatments are presented in-depth, in
easy-to-understand, comforting terms by a physician specializing in that
field.
- - PRODUCT & INFORMATIONVIEW/trademark/ - An ever growing collection of
consumer products presented to consumers to enable review of each item's
features and capabilities before they purchase. Selected manufacturer's
entire lines, in every model and color, will be shown. Full-motion
instructional information will be included on products requiring
assembly.
Because the Company intends to create and distribute visual information, the
Company is not dependent on any specific technology or service that will deliver
this information to the consumer. This battle is being waged between cable
companies, telephone companies, computer software and hardware companies, and
communications equipment manufacturers. The Company anticipates that its
products and services will be fully operational on any potential platform.
PRODUCT DISTRIBUTION
GENERAL
The Company's libraries will be offered to the general public through various
media. HotelView/registered trademark/, and its related libraries
(CruiseView/trademark/, AdventureView/trademark/ and ConventionView/trademark/),
will be available to the general public through a travel agent distribution
channel developed by the Company. This travel agent network will eventually be
converted to an on-line network as soon as high speed data transmission
capability is widely available. Many of the Company's other libraries will only
become effective at that time. MedicalView/trademark/, CampusView/trademark/,
Health and FitnessView/trademark/, and Product and InformationView/trademark/
will be dependEnt on the capability of the on-line systems, the Internet and/or
interactive television. These libraries will not be introduced until that time.
THE INTERNET
During 1997, certain technological advancements (including cable modems, digital
satellite and high speed wireless modems) are expected to be implemented. These
advancements will enable suppliers and users of the Internet to access
multi-media (including full motion video) information efficiently. The Company's
Libraries, including the HotelView/registered trademark/ Library, will be made
available to information suppliers (websites) that provide various services to
consumers via the Internet. The Company also intends to distribute its video
libraries directly to consumers via its own Internet websites.
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<PAGE>
VIDEOTAPING AND PRODUCTION
HOTELVIEW/REGISTERED TRADEMARK/ LIBRARY
The HotelView/registered trademark/ Library is being produced using an
international network of professional camera crews, cultivated over 13 years by
the Company's co-founder, Alan Saperstein. See "Management." The camera crews
are independent contractors, enabling the Company to pay for services only as
required. The Company has developed a network of over 250 camera crews in 40
states as well as in Europe, Japan, and the Far East. These crews have been
trained by the Company to produce vignettes which conform in style, quality and
duration. Crews in areas such as New York, Washington, D.C., Boston, Florida,
Arizona, California, Nevada, Louisiana, Oregon, and the Caribbean have already
taped HotelView/registered trademark/ vignettes.
The Company has a state-of-the-art non-linear video editing system and a digital
sound editing system fully operational in its Boca Raton, Florida facility. The
Company has hired and trained personnel to perform editing and final production
tasks. The editing equipment and software, which costs approximately $170,000,
is being financed upon a capital lease agreements (with payments of
approximately $5,500 per month). The Company expects to expand its video
production capability by adding additional video production facilities, as
demand for the Company's products increases. The Company estimates that a
typical editing suite with an experienced editor and the use of the services of
a scriptwriter and graphics designer can produce approximately 285 vignettes per
year, based upon the format of a HotelView/registered trademark/ vignette.
MARKETING AND SALES STRATEGY
HOTELVIEW/REGISTERED TRADEMARK/ LIBRARY
The Company continues to target and establish relationships with major hotel
chains, travel agencies, travel associations and travel bureaus throughout the
United States, Canada, Europe and the Caribbean. The Company has hired sales
representatives in the Northeast, Southeast and Western areas of the United
States. The Company has already contracted with and completed production of many
well-known hotels such as the Fontainebleau (Miami), the Arizona Biltmore
(Scottsdale), Walt Disney World Dolphin and Swan (Orlando), Ritz Carlton (Laguna
Niguel), the Waldorf-Astoria (New York), and the Mirage (Las Vegas).
While the Company has established relationships with a number of the larger
hotel chains such as Hilton, Best Western, Hyatt, Crowne Plaza and Doubletree,
the Company is also focusing on lesser-known, but high quality hotels and
resorts who may not have the name recognition of the larger chains and thus, are
often overlooked by travelers and travel professionals. The Company intends to
focus on those hotels that have a minimum daily room price of not less than $100
per day with the number of rooms of not less than 100. The Company is also in
the process of establishing relationships with smaller properties such as bed
and breakfasts in the Caribbean and New England, as well as in targeted ski
areas throughout the United States for inclusion in the HotelView/registered
trademark/ Library.
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The Company has already established relationships with agencies that are part of
a number of the major consortiums including American Express/registered
trademark/, VTS/registered trademark/, and Carlson/registered trademark/.
American Express Travel Services has agreed to endorse the HotelView/registered
trademark/ Library to certain of its agencies.
The Company initially created a marketing program that enables a hotel to pay
for a portion of the library subscription fee on a performance basis. After
paying an initial deposit, the balance of the fee is paid as rooms are booked by
HVC travel agents. The program will be phased out in January 1997. Thereafter,
all fees from hotels will be paid in cash.
The Company has begun a national advertising program in both newspapers and
travel magazines introducing the HotelView/registered trademark/ Library to
consumers as well as to hotels and travel agents. The credibility from this
program is expected to enhance the sales efforts and increase the closure rate
of hotels. The Company has created a promotional video that demonstrates the
operation of the HotelView/registered trademark/ system. The video contains
examples of hotel vignettes and shows the benefits of the system to the client,
travel agent and hotel and resort operators. The tape, along with various
brochures, has been sent to the targeted travel agencies representing a
significant portion of the leisure travel business. The Company has installed
over 200 systems with a sampler disc of over 20 hotels to promote the program
and test its operation. Four additional discs with hotels from New York, Boston,
Washington, D.C., California, Arizona, Nevada, Florida and the Caribbean were
distributed in November 1996 and through November 1996, travel agents have
produced close to $200,000 in hotel bookings for hotels participating in the
Library.
Sales of the HotelView/registered trademark/ Library are primarily made to
hotels by the Company's professional direct sales group. Regional sales
representatives are canvassing primary U.S., Caribbean, and European leisure
destinations for the initial library. The direct sales representatives work in
conjunction with a telemarketing department that sets appointments with hotel
management. The Company has developed brochures, marketing collaterals and demo
videos to support the sales efforts.
INTERNET STRATEGY
As higher speed access (such as cable modems and digital satellite technology)
becomes more available, the Company plans to provide to hotels a single video
storage location (file server) that will be connected both to the Internet
directly, and via point-to-point high speed data links to the file servers of
the prominent travel service providers on the Internet. In this arrangement
Internet users visiting a travel site such as the TravelWeb (Pegasus) or
Travelocity (Sabre) can make airline reservations, select a hotel, see the
hotel's video and book the hotel without leaving the travel services web site.
The hotels' annual fee allows each of them to participate both in the Company's
travel agent network as well as to be part of the Company's Library on the
Internet and the Company links them to all participating travel services on the
Internet.
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STRATEGIC ALLIANCES
The Company's business strategy is to enter into strategic alliances with
enterprises that have the ability to reach the targeted markets to whom the
Company's products are aimed. The Company has established a strategic marketing
partnership with the American Hotel and Motel Association ("AH&MA"), the largest
association of hoteliers in the world, with 50 state affiliates and over 10,000
hotel members.
The Company has recently entered into a letter of intent with Pegasus Systems,
Inc., which is owned by hotel chains including Hyatt, Marriott, Hilton, Sonesta,
Westin and Wyndham (and which includes more than 15,000 hotel customers). The
Company has recently entered into negotiations with (i) Reed Travel Group, Inc.,
which publishes the Hotel & Travel Index (HTI), the largest directory of hotels
worldwide, the Official Hotel Guide, and Business Travel Planner, (ii) Wizcom,
Inc., which is owned by Avis rental car and HFS Corp. and which has more than
6,000 hotel customers, and (iii) Sabre Interactive, Inc, which is owned by the
Sabre Group, a wholly-owned subsidiary of AMR Corp., which is the parent company
of American Airlines and which is linked to most hotels who have automated
booking processes. See "Risk Factors - Pegasus' Option To Purchase up to 33.3%
of HotelView Corporation.
It is the intent that each of these companies will use their best efforts to
market, endorse, and promote the HotelView/registered trademark/ Library to each
of their respective customer-base hotels and to obtain executed agreements from
hotels for inclusion in the HotelView/registered trademark/ Library. Each of
these marketing partners will typically receive commissions of 20% on sales made
for initial contracts and 10% for renewals of contracts obtained by them,
respectively.
PENDING ACQUISITIONS
The Company has entered into a non-binding letter of intent with Digital
Criteria Search Technologies, Inc. ("DCST") to acquire certain software products
which the Company anticipates will be developed into additional libraries, which
include three entertainment/talent libraries including (i) QuickCast-Voice (a
library of voice talent), (ii) Model Select (a library of modeling talent), and
(iii) QuickCast Directors (a library of film and video directors). Additionally,
the Company and DCST intend to enter into a marketing and licensing agreement to
market additional software products, Checkmate, a multimedia dating service, and
CareerSelect/trademark/, a multimedia job opportunity library which also
contains information concerning potential employment candidates and which will
be available through the Internet.
COMPETITION
The Company is engaged in a highly-competitive segment of the industry which
disseminates information through video technology. The Company may compete
directly or indirectly with many companies, a number of which are larger, better
capitalized, more established and have greater access to resources necessary to
produce a competitive advantage. However, the Company believes, but there can be
no assurances that, there are no competitors who have or are
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developing products using the same format, style, content and delivery as the
Company's, although similar products may exist in different formats.
INTELLECTUAL PROPERTY
Each of the Company's vignettes is protected to the fullest extent under United
States copyright law, and all foreign jurisdictions with whom the United States
is part of a treaties concerning the protection of copyright (including the
Berne Convention).
The Company has obtained federal trademark protection for its mark HotelView
/registered trademark/ and has filed for federal trademark registration for the
marks CruiseView/trademark/, Campusview/trademark/, MedicalView/trademark/,
ConventionView/trademark/, AdventureView/trademark/, Product and
InformationView/trademark/ and Look Before You Book/trademark/.
EMPLOYEES
The Company and its wholly owned subsidiary, HVC, currently has 15 employees, of
which three are in management, three are in sales, three are in telemarketing,
three are in video production, and three are administrative (including the
Company's controller).
FACILITIES
The Company currently leases approximately 3,525 square feet of office space in
Boca Raton, Florida. The lease commenced on May 1, 1995 and continues for two
years to April 30, 1997, with one two-year renewal option. The Company's monthly
rent is $3,525.
LEGAL PROCEEDINGS
Neither the Company nor its subsidiary, HotelView Corporation, is a party to any
material legal proceedings and, to the best of the Company's information,
knowledge and belief, none is contemplated or has been threatened.
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MANAGEMENT
The following persons are the directors and executive officers of the Company:
NAME AGE POSITION
- ---- --- ---------
Randy S. Selman 40 President, Chief Executive Officer,
acting Chief Financial Officer, Director
Alan M. Saperstein 37 Vice President, Secretary, Director
RANDY S. SELMAN. Since the Company's inception in May 1993, Mr. Selman has
served as the Company's Chief Executive Officer, President, and a Director and
its acting Chief Financial Officer since 1996. From March 1985 through May 1993,
Mr. Selman was Chairman of the Board, President and Chief Executive Officer of
SK Technologies Corporation (SKTC-NASDAQ SmallCap Market), a publicly-traded
software development company. SKTC develops and markets software for
point-of-sale with complete back office functions such as inventory, sales
analysis and communications. Mr. Selman founded SKTC in 1985 and took the
company public in 1989. Mr. Selman's responsibilities included management of
SKTC, public and investor relations, finance, high level sales and general
overall administration.
ALAN M. SAPERSTEIN. Mr. Saperstein has served as the Company's Vice President,
Secretary and a Director since its inception in May 1993. Since 1989, Mr.
Saperstein has been a free-lance producer of video film projects. Mr. Saperstein
has provided consulting services for corporations which have set up their own
sales and training video departments. From 1983 through 1989, Mr. Saperstein was
the Executive Director/Entertainment Division of NFL Films where Mr. Saperstein
was responsible for supervision of all projects, budgets, screenings and
staffing.
There is no family relationship between any of the executive officers and
directors.
Upon the effective date of this Prospectus, two new board members have agreed to
join the Company's Board as its outside directors. Ben Swirsky is the President
and Chief Executive Officer of Slater Steel, Inc., a publicly traded company
listed on the Toronto Stock Exchange (SSI) with investments in the steel, steel
service, forging, pole-line hardware and trucking industries. Mr. Swirsky is
also a member of the Board of Directors of the Four Seasons Hotel Corp., an
international chain of first class hotels located throughout the world. Brian K.
Service is currently an international business consultant with clients in North
and South America, the United Kingdom, Asia, Australia and New Zealand. From
October 1992 to October 1994, Mr. Service was the CEO and Managing Director of
Salmond Smith Biolad, a New Zealand, publicly traded company with 3 divisions,
and from October 1986 to October 1992, he was the CEO and Executive Chairman of
Milk Products Holding (North America) Inc., a wholly owned subsidiary of the New
Zealand Dairy Board in Santa Rosa California, which was the sole marketer of New
Zealand dairy products in North America. In addition, Eric Jacobs, currently the
Vice-president
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and General Manager of HotelView Corporation, has agreed to become the third new
board member. See "Significant Employees.
Additionally, following the effective date of this offering, the Company intends
to undertake an employment search to hire a full-time Chief Financial Officer.
SIGNIFICANT EMPLOYEES
ERIC JACOBS has been Vice President and General Manager of the Company's wholly
owned subsidiary, HotelView Corporation since March 1996. From October 1993
through February 1996, Mr. Jacobs was a member of the City of Miami Beach
Commission and served as the Chairman of (i) the Miami Beach Visitor and
Convention Authority, (ii) the Greater Miami and the Beaches Hotel Association,
and (iii) the Miami Beach Chamber of Commerce. From 1972 through October 1993,
Mr. Jacobs was the owner, President, and General Manager of the Tarleton Hotel,
Miami Beach, Florida.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board. The Company has purchased key-man insurance for Mr.
Saperstein and intends to purchase similar insurance for Mr. Selman in the
future.
BOARD OF DIRECTORS
Election of Directors
Each director is elected at the Company's annual meeting of shareholders and
holds office until the next annual meeting of shareholders, or until their
successors are elected and qualified. At present, the Company's bylaws provide
for not less than one director. Currently, there are two directors in the
Company. The bylaws permit the Board of Directors to fill any vacancy and such
director may serve until the next annual meeting of shareholders or until his
successor is elected and qualified. Officers are elected by the Board of
Directors and their terms of office are, except to the extent governed by
employment contracts, at the discretion of the Board. Other than as indicated
above, there are no family relations among any officers or directors of the
Company. The officers of the Company devote full time to the business of the
Company. See "Certain Transactions".
DIRECTORS' COMPENSATION
Directors receive no cash compensation for serving on the Board of Directors
other than reimbursement of reasonable out-of-pocket expenses incurred in
connection with their attendance at Board of Directors' meetings. Pursuant to
the Plan, directors who are not 10% shareholders or employees will receive a
grant of Common Stock and non-qualified stock options as described under "1996
Stock Option Plan."
33
<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table shows, for the three year period ended September 30,
1995, the cash and other compensation paid by the Company to its President,
acting Chief Financial Officer and Chief Executive Officer and its Vice
President and to each of the executive officers of the Company who had annual
compensation in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
OTHER ALL
NAME AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION PERIOD SALARY BONUS SATION AWARDS SARS(#) SATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randy S. Selman 1996 $83,000 -0- $2,092.84(1) -0- 219,568 -0- -0-
President, Chief 1995 $43,333 -0- $2,174.83(2) -0- -0- -0- -0-
Executive Officer 1994 -0- -0- -0- -0- -0- -0- -0-
acting Chief Financial
Officer, Director
Alan Saperstein 1996 $83,000 -0- $5,927.19(3) -0- 219,568 -0- -0-
Vice President, 1995 $43,333 -0- $5,951.73(4) -0- -0- -0- -0-
Secretary, 1994 -0- -0- -0- -0- -0- -0- -0-
Director
</TABLE>
- --------------
(1) Includes $568.70 for disability insurance and $1,524.14 for
medical insurance.
(2) Includes $616.00 for disability insurance and $1,558.83 for
medical insurance.
(3) Includes $424.08 for disability insurance and $5503.11 for
medical insurance (family plan).
(4) Includes $388.74 for disability insurance policy and $5,562.99
for medical insurance (family plan).
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Agreements") with Randy
S. Selman, the Company's Chief Executive Officer, President, acting Chief
Financial Officer, and a Director, and with Alan Saperstein, the Company's Vice
President, Secretary, and a Director effective October 19, 1996. Each of the
Agreements between the Company and Messrs. Selman and Saperstein are
substantially similar. The term of the Agreements is for two years from the
effective date of the Agreements and is renewable for successive one year terms
unless terminated. The annual salary under each of the Agreements $125,000,
which amount will be increased by 10% each year. Messrs. Selman and Saperstein
are also each eligible to receive an annual bonus equal to 3% of the Company's
earnings before income tax, depreciation and
34
<PAGE>
amortization (EBITDA) on that portion of EBITDA that has increased over the
previous year's EBITDA. Additionally, on January 1 of each year Messrs. Selman
and Saperstein shall receive options to purchase 25,000 shares of Common Stock
at a price equal to the average closing price for the five (5) prior trading
days prior to the Grant Date, for an exercise period of five (5) years from the
Grant Date.
The Agreements also provide, among other things, for participation in any
profit-sharing or retirement plan and in other employee benefits applicable to
employees and executives of the Company. The Agreements further provide for an
automobile allowance and fringe benefits commensurate with the duties and
responsibilities of Messrs. Selman and Saperstein. The Agreements also provide
for benefits in the event of disability. Additionally, Messrs. Selman and
Saperstein may be granted certain bonus incentives by the Company's Board of
Directors. Furthermore, the Company has agreed to indemnify each of them for any
obligations or guaranties which either of them may have undertaken on behalf of
the Company.
Under the terms of the Agreements, the Company's may terminate the employment of
Mr. Selman or Mr. Saperstein either with or without good cause. If the employee
is terminated by the Company without cause, or by Mr. Selman or Mr. Saperstein,
as applicable, the Company would be obligated to pay that executive an amount
equal to three (3) times that executive's current annual compensation (including
base salary and bonus), payable in bi-weekly installments (except in the case of
a termination upon a change in control wherein the executive may elect either a
lump sum payment, discounted to present market value or payment over a three
year period in bi-weekly installments). Additionally, the executive would be
entitled to participate in and accrue medical benefits for a period of two years
after the date of termination without cause (by the Company) or for good cause
(by the executive). To the extent that either Messrs. Selman or Saperstein are
terminated for cause, no severance benefits shall be paid.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of options
to purchase shares of Common Stock during the fiscal year ended September 30,
1996 to each person named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARES) DATE
<S> <C> <C> <C> <C>
Randy S. Selman, President,
Chief Executive Officer,
acting Chief Financial
Officer, Director 219,568 50% $.0001 12/31/01
Alan Saperstein, Vice President
Secretary, Director 219,568 50% $.0001 12/31/01
</TABLE>
35
<PAGE>
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
The Board of Directors have approved, and a majority of the Company's
shareholders intend to adopt and implement the Company's proposed 1996 Stock
Option Plan at a special meeting of shareholders to be held in January 1997 (the
"Plan").
The Plan will work to increase the employees', advisors, consultants' and
non-employee directors' proprietary interest in the Company and to align more
closely their interests with the interests of the Company's stockholders. The
Plan will also maintain the Company's ability to attract and retain the services
of experienced and highly qualified employees and non-employee directors.
Under the Plan, the Company intends to reserve an aggregate of 200,000 shares of
Common Stock for issuance pursuant to options granted under the Plan ("Plan
Options"). The Board of Directors or a Committee of the Board of Directors (the
"Committee") of the Company will administer the Plan including, without
limitation, the selection of the persons who will be granted Plan Options under
the Plan, the type of Plan Options to be granted, the number of shares subject
to each Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of Common Stock owned
by the eligible person and receive a new Plan Option to purchase shares of
Common Stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the Company's Common Stock must be at least 110% of such
fair market value as determined on the date of the grant. The term of each Plan
Option and the manner in which it may be exercised is determined by the Board of
the Directors or the Committee, provided that no Plan Option may be exercisable
more than 10 years after the date of its grant and, in the case of an Incentive
Option granted to an eligible employee owning more than 10% of the Company's
Common Stock, no more than five years after the date of the grant.
The exercise price of Non-Qualified Options shall be determined by the Board of
Directors or the Committee.
The per share purchase price of shares subject to Plan Options granted under the
Plan may be adjusted in the event of certain changes in the Company's
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors, key employees and consultants of the Company and its
subsidiaries (if applicable in the future) will be eligible to receive
Non-Qualified Options under the Plan. Only
36
<PAGE>
officers, directors and employees of the Company who are employed by the Company
or by any subsidiary thereof are eligible to receive Incentive Options.
All Plan Options are nonassignable and nontransferable, except by will or by the
laws of descent and distribution, and during the lifetime of the optionee, may
be exercised only by such optionee. If an optionee's employment is terminated
for any reason, other than his death or disability or termination for cause, or
if an optionee is not an employee of the Company but is a member of the
Company's Board of Directors and his service as a Director is terminated for any
reason, other than death or disability, the Plan Option granted to him shall
lapse to the extent unexercised on the earlier of the expiration date or 30 days
following the date of termination. If the optionee dies during the term of his
employment, the Plan Option granted to him shall lapse to the extent unexercised
on the earlier of the expiration date of the Plan Option or the date one year
following the date of the optionee's death. If the optionee is permanently and
totally disabled within the meaning of Section 22(c)(3) of the Internal Revenue
Code of 1986, the Plan Option granted to him lapses to the extent unexercised on
the earlier of the expiration date of the option or one year following the date
of such disability.
The Board of Directors or the Committee may amend, suspend or terminate the Plan
at any time, except that no amendment shall be made which (i) increases the
total number of shares subject to the Plan or changes the minimum purchase price
therefor (except in either case in the event of adjustments due to changes in
the Company's capitalization), (ii) affects outstanding Plan Options or any
exercise right thereunder, (iii) extends the term of any Plan Option beyond ten
years, or (iv) extends the termination date of the Plan. Unless the Plan shall
theretofore have been suspended or terminated by the Board of Directors, the
Plan shall terminate on approximately 10 years from the date of the Plan's
adoption. Any such termination of the Plan shall not affect the validity of any
Plan Options previously granted thereunder.
The Company intends to schedule a special meeting of its shareholders in the
near future to adopt the 1996 Stock Option Plan. As of the date hereof, no
options have been granted pursuant to the 1996 Stock Option Plan.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the exercise of
options to purchase shares of Common Stock during the fiscal year ended
September 30, 1996 to each person named in the Summary Compensation Table and
the unexercised options held as of the end of the 1996 fiscal year.
37
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FY-END(#) AT FY-END ($)
ON REALIZED EXERCISABLE/ EXERCISABLE
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Randy S. Selman
President, Chief
Executive Officer,
acting Chief Financial
Officer, Director -0- -0- -0- -0-
Alan Saperstein.
Vice President, Secretary,
and Director -0- -0- -0- -0-
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
NUMBER PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
OF SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
<S> <C> <C> <C> <C> <C>
Randy S. Selman
President, Chief
Executive Officer,
acting Chief Financial
Officer, Director -0- -0- -0- -0- -0-
Alan Saperstein.
Vice President, Secretary,
and Director -0- -0- -0- -0- -0-
</TABLE>
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Florida Business Corporation Act (the "Corporation Act") permits the
indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act. Insofar as indemnification
for liabilities arising under the Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
38
<PAGE>
LIMITATION OF LIABILITY
Under Florida law, the Company's directors are protected against personal
liability for monetary damages from breaches of their duty of care. As a result,
the Company's directors will not be liable in an action by the Company or a
shareholder for monetary damages alleging negligence or gross negligence in the
performance of their duties. In such actions, they remain liable for monetary
damages for wilful misconduct, conscious disregard of the best interest of the
Company, and for transactions from which a director derives an improper personal
benefit. Directors also remain liable under another provision of Florida law
which makes directors personally liable for unlawful distributions and expressly
sets forth a negligence standard with respect to such liability. The liability
of the Company's directors under federal or applicable state securities laws is
also unaffected. The Company has applied for directors' liability insurance.
While a Company's directors have protection from awards of monetary damages for
breaches of fiduciary duty, that does not eliminate their fiduciary duty.
Equitable remedies, such as an injunction or rescission based upon a director's
breach of fiduciary duty, are still available.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
THE COMPANY
LOANS AND ADVANCES FROM OFFICER, DIRECTORS, EMPLOYEES AND SHAREHOLDERS TO THE
COMPANY
On February 12, 1996, three shareholders of the Company made loans to
the Company in the aggregate principal amount of $50,000 plus interest at 6% per
annum. Additionally, the shareholders received warrants to purchase an aggregate
of 20,000 shares of Common Stock at $.875 per Share. The final payment of
principal and accrued interest were paid by the Company to these shareholders on
August 13, 1996.
On March 5, 1996, the same three shareholders of the Company discussed
above made additional loans to the Company in the aggregate principal amount of
$50,000 plus interest at 6% per annum. As of the date hereof, the principal
amount of $15,000 and accrued interest (from August 13, 1996) is outstanding.
OFFICE SPACE
The Company's wholly owned subsidiary, HotelView Corporation, currently is the
lessee of the Company's executive offices in Boca Raton, Florida. The Company is
responsible for 50% of the lease obligations for the leased space and HotelView
Corporation is responsible for the remaining 50%.
OFFICERS AND DIRECTORS OF THE COMPANY AND ITS SUBSIDIARIES
The Directors and Executive Officers of the Company also serve in the same
capacity as Directors and Executive Officers of the Company's wholly owned
subsidiary, HotelView Corporation.
39
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned at September 30, 1996 (i) by each person who is
known by the Company to beneficially own more than five percent (5%) of the
outstanding shares of Common Stock, (ii) each director and officer of the
Company, and (iii) all directors and officers as a group. Unless otherwise set
forth, the mailing addresses for the individuals named is 1600 South Dixie
Highway, Suite 3A, Boca Raton, Florida 33432. At December 1, 1996, there were
4,058,214 shares of Common Stock outstanding (giving effect to (i) options to
purchase an aggregate of 439,136 Shares at $.0001 for a period of five years
commencing January 1, 1997 issued to Messrs. Selman (219,568) and Saperstein
(219,568 Shares); and (ii) the exercise of an aggregate of 244,321 warrants to
purchase 244,321 shares of Common Stock which underlying shares of Common Stock
are being registered as part of a Selling Securityholders's Registration
Statement of even date).
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF OUTSTANDING CLASS
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF COMMON STOCK OWNED
OF BENEFICIAL OWNER(1) PRIOR TO OFFERING AFTER OFFERING PRIOR TO OFFERING AFTER OFFERING
<S> <C> <C> <C> <C>
Randy S. Selman
President/CEO/Chief
Financial Officer/
Director(2)(3)(4)(6) 505,359 428,930 12.45% 8.48%
Alan M. Saperstein,
Vice President/
Secretary/
Director(2)(3)(5)(6) 539,476 463,047 13.29% 9.15%
All Officers and Directors
as a group(3) (two persons) 1,044,835 891,977 25.74% 17.63%
Fleet National Bank, N.A. Trustee,
U/A Frederick A. DeLuca 102
Qualified Annuity
Trust(2)(7) 252,292 216,578 6.22% 4.28%
</TABLE>
- --------------
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
securities beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person
within 60 days from the date of the Prospectus upon the exercise of
warrants or options or the conversion of convertible securities.
40
<PAGE>
(2) Gives effect to the outstanding shares of Common Stock but gives no
effect to or the exercise of warrants or options, except as otherwise
indicated. See "Description of Securities."
(3) Gives effect to the exercise of the Underwriter's Over-Allotment Option,
of which Mr. Selman and Mr. Saperstein has agreed with the
Representative to sell up to an aggregate of 150,000 shares of their
Common Stock upon exercise of the Underwriter's Over- Allotment Option.
See "Underwriting." Does include 1,429 shares of Common Shares each
being registered pursuant to a Selling Securityholders' Registration
Statement of even date.
(4) Does not include warrants to purchase 6,250 shares of Common Stock at
$.875 per share from the date of issuance.
(5) Does not include warrants to purchase 3,929 shares of Common Stock at
$.875 from the date of issuance.
(6) Includes options to purchase 219,568 and 219,568 shares of Common Stock
at $.0001 per Share issued to Messrs. Selman and Saperstein,
respectively upon the mandatory conversion of the Series A Convertible
Preferred Stock, pursuant to certain bonus incentives previously granted
to Messrs. Selman and Saperstein.
(7) The address is P.O. 40460, Rochester, New York 44609.
Messrs. Selman and Saperstein were parties to a voting trust agreement and a
shareholders agreement that terminated as of the date hereof.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 20,000,000 shares of Common
Stock, par value $.0001 per share of which 4,058,214 shares were outstanding as
of December 1, 1996 (after giving effect to the conversion of the Company's
Series A Preferred Stock, Series B Preferred Stock, and an aggregate of $850,000
Principal Amount of Notes convertible into an aggregate of 340,000 Shares at
$2.50 per Share, as described hereinafter). The Company is also authorized to
issue 5,000,000 shares of preferred stock, par value $.0001. As of the date of
this Prospectus, the Company has designated two series of Preferred Stock, (i)
650,000 shares have been designated as Series A Convertible Preferred Stock,
none of which are currently issued or outstanding, and (ii) 1,000,000 shares has
been designated as Series B Convertible Preferred Stock, none of which are
currently issued or outstanding.
41
<PAGE>
COMMON STOCK
The Company is authorized to issue 20,000,000 Shares of Common Stock, par value
$.0001, of which 4,058,214 Shares are issued and outstanding as of the date of
this Prospectus, without giving effect to (i) shares of Common Stock reserved
for issuance under the Company's 1996 Stock Option Plan, or (ii) with the
exception of options to purchase an aggregate of 244,321 shares of Common Stock
at prices ranging from $5.00 per shares (100,000 Shares) to $6.60 per Shares
(144,321 Shares), any shares of Common Stock reserved for issuance pursuant to
certain other warrants or options granted by the Company which have not, as yet,
been exercised. The outstanding shares of Common Stock are fully paid and
non-assessable.
The holders of Common Stock are entitled to one vote per share for the election
of directors and with respect to all other matters submitted to a vote of
shareholders. Shares of Common Stock do not have cumulative voting rights, which
means that the holders of more than fifty percent (50%) of such shares voting
for the election of directors can elect one hundred percent (100%) of the
directors if they choose to do so and, in such event, the holders of the
remaining shares so voting will not be able to elect any directors.
Upon any liquidation, dissolution or winding-up of the Company, the assets of
the Company, after the payment of the Company's debts and liabilities and any
liquidation preferences of, and unpaid dividends on, any class of "Preferred
Stock" then outstanding, will be distributed pro-rata to the holders of the
Common Stock. See "Description of Securities Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock." The holders of the Common Stock
do not have preemptive or conversion rights to subscribe for any securities of
the Company and have no right to require the Company to redeem or purchase their
shares. The holders of Common Stock are entitled to share equally in dividends,
if, as and when declared by the Board of Directors of the Company, out of funds
legally available therefor, subject to the priorities accorded any class of
Preferred Stock which may be issued. A consolidation or merger of the Company,
or a sale, transfer or lease of all or substantially all of the assets of the
Company, which does not involve distribution by the Company of cash or other
property to the holders of Common Stock, will not be deemed to be a liquidation,
dissolution or winding up of the Company.
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock, par
value $.0001 per share. The Company has designated two series of Preferred
Stock, (i) 650,000 shares have been designated as Series A Convertible Preferred
Stock, none of which are currently issued or outstanding, and (ii) 1,000,000
shares has been designated as Series B Convertible Preferred Stock, none of
which are currently issued or outstanding.
The Board of Directors of the Company has the authority, without further action
by shareholders, to issue the Preferred Stock in one or more series, and to fix
for any series the dividend rate,
42
<PAGE>
redemption price, liquidation or dissolution preferences, conversion rights,
voting rights and other preferences and privileges.
SERIES A CONVERTIBLE PREFERRED STOCK
The Company has designated 650,000 shares of Series A Convertible Preferred
Stock ("Series A Preferred Stock"), none of which are currently issued and
outstanding, however, just prior to the filing of the Company's registration
statement of which this Prospectus is a part, holders of 185,716 shares of
Series A Preferred Stock converted their shares into an aggregate of 371,432
shares of Common Stock.
Each share of Series A Preferred Stock is convertible into two (2) shares of
Common Stock. The shares have no dividend rights and each one (1) share of
Series A Preferred Stock shall have two (2) votes per share and the Series A
Preferred Stock shall vote with the Common Stock as a single class on all
matters in which the Common Stock is entitled to vote. There are proportional
adjustments stock splits, recapitalization and similar transactions. In the
event of liquidation, dissolution or winding up of the Company, holders of the
Series A Preferred Stock will be entitled to receive, after due payment or
provision for payment of the debts and other liabilities of the Company, a
liquidating distribution of up to $3.50 per share of Series A Preferred Stock
before any distributions may be made to any other series of preferred stock of
the Common Stock of the Company.
A holder of the Series A Preferred Stock has the right to include up to fifty
percent (50%) of shares of Common Stock underlying the Series A Preferred Stock
in this registration statement, provided that (i) the conversion of the Series A
Preferred Stock is effectuated at the discretion of the Investor; and (ii) the
holder of the Series A Preferred Stock has never received any distributions or
dividends in connection with the Series A Preferred Stock and subject to the
sole discretion of the Company's underwriter, if applicable, of a Registration
Statement who may (i) refuse or defer such registration rights or (ii) impose
certain restrictions including a "lock-up restriction" on the Common Stock. To
the extent that such "piggyback rights" are available, any holder of the Series
A Preferred Stock not electing to participate will be deemed to have waived that
holder's "piggyback" registration rights. No distributions or dividends have
been made in connection with the Series A Preferred Stock. All holders of the
Series A Preferred Stock have elected to convert an aggregate of 185,716 shares
of Series A Preferred Stock into 371,432 shares of Common Stock, of which
185,716 shares shall be registered pursuant to this Registration Statement and
an Alternate Prospectus, which shares of Common Stock are subject to a twelve
(12) month lock-up period from the effective date of this Prospectus, unless
otherwise required by the NASDAQ SmallCap Market for such longer period.
43
<PAGE>
SERIES B CONVERTIBLE PREFERRED STOCK
The Company has designated 1,000,000 shares of Series B Convertible Preferred
Stock ("Series B Preferred Stock"), none of which are issued and outstanding,
however, just prior to the filing of the Company's registration statement of
which this Prospectus is a part, holders of 113,750 shares of Series B Preferred
Stock converted their shares into an aggregate of 227,500 shares of Common
Stock.
Each share of Series B Preferred Stock is convertible into two (2) Shares of
Common Stock. The shares have no dividend rights and each one (1) share of
Series B Preferred Stock shall have two (2) votes per share and the Series B
Preferred Stock shall vote with the Common Stock as a single class on all
matters in which the Common Stock is entitled to vote. There are proportional
adjustments stock splits, recapitalization and similar transactions. There is no
mandatory conversion by the holders of the Series B Preferred Stock nor is there
any mandatory redemption by the Company. In the event of liquidation,
dissolution or winding up of the Company, holders of the Series B Preferred
Stock will be entitled to receive, after (i) due payment or provision for
payment of the debts and other liabilities of the Company and (ii) a liquidating
distribution of up to $3.50 per share has been paid to the holders of Series A
Preferred Stock (up to an aggregate of 185,716 shares of Series A Preferred
Stock or approximately $650,000), a liquidating distribution of up to $4.00 per
share of Series B Preferred Stock before any distributions may be made to
holders of any other series of preferred stock or the Common Stock of the
Company.
A holder of the Series B Preferred Stock has the right to include up to fifty
percent (50%) of shares of Common Stock underlying the Series B Preferred Stock
in this registration statement, provided that (i) the conversion of the Series B
Preferred Stock is effectuated at the discretion of the Investor; and (ii) the
holder of the Series B Preferred Stock has never received any distributions or
dividends in connection with the Series A Preferred Stock and subject to the
sole discretion of the Company's underwriter, if applicable, of a Registration
Statement who may (i) refuse or defer such registration rights or (ii) impose
certain restrictions including a "lock-up restriction" on the Common Stock. To
the extent that such "piggyback rights" are available, any holder of the Series
B Preferred Stock not electing to participate will be deemed to have waived that
holder's "piggyback" registration rights. No distributions or dividends have
been made in connection with the Series B Preferred Stock. All holders of the
Series B Preferred Stock have elected to convert an aggregate of 113,750 shares
of Series B Preferred Stock into 227,500 shares of Common Stock, of which
113,750 shares shall be registered pursuant to this Registration Statement and
an Alternate Prospectus, which shares of Common Stock are subject to a twelve
(12) month lock-up period from the effective date of this Prospectus, unless
otherwise required by the NASDAQ SmallCap Market for such longer period.
44
<PAGE>
DEMAND REGISTRATION RIGHTS.
Holders of Series A Preferred Stock and Series B Preferred Stock also have the
right to register all shares of Common Stock underlying any Series A Preferred
Stock or Series B Preferred Stock (which includes shares of Preferred Stock
already converted) held at any time after six (6) months subsequent to the date
that any shares of the Company's Common Stock is publicly traded if fifty (50%)
percent or more of the holders of the shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock and the Series B Convertible
Preferred Stock demand such rights; provided that any holder of Series A
Preferred Stock or Series B Preferred Stock not electing to participate will be
deemed to have waived that holder's demand registration rights.
WARRANTS
As of the date of this Prospectus, there are warrants to purchase an aggregate
of 282,836 shares of Common Stock, 144,321 of which are exercisable at 110%
($6.60 per Share) of the initial offering price of the Company's Common Stock
for a period of two years from the date of issuance, 100,000 of which are
exercisable at $5.00 per share for a period of three years from the date of
issuance, 13,336 shares of which are exercisable at $1.75 through May 20, 1999,
18,571 shares of which are exercisable at $.875 for a period of three years from
the date of issuance, and 6,608 of which are exercisable at $.875 for a period
of five years from the date of issuance which warrants are held by Randy S.
Selman, the Company's President, Chief Executive Officer and Chief Financial
Officer (4,465 warrants) and by Alan Saperstein, the Company's Executive Vice
President and Secretary (2,143 warrants).
STOCK OPTIONS
As of the date of this Offering, there are stock options to purchase an
aggregate of 452,351 shares of Common Stock outstanding, (i) 2,232 of which are
exercisable at $3.50 per share through March 31, 1999, (ii) 4,286 of which are
exercisable at $.875 per share through May 30, 1998, (iii) 6,697 of which are
exercisable at $.875 per Share through March 31, 1999, and (iv) 439,136 are
exercisable at $.0001 per Share commencing January 1, 1997 and continue for a
period of 5 years thereafter, which options are held by Randy S. Selman, the
Company's President, Chief Executive Officer and Chief Financial Officer
(219,568 options) and by Alan Saperstein, the Company's Executive Vice President
and Secretary (219,568 options).
CONVERTIBLE PROMISSORY NOTES
The Company has issued an aggregate of $850,000 Convertible Promissory Notes
(the "Notes"). The Notes are unsecured. Interest accrues at an annual rate of
10% through the date of the Note, provided that if a Note is converted as
described hereafter, all interest (accrued or otherwise) will be forfeited. As
of the date of the filing of the registration statement of which this Prospectus
is a part, all Notes have been converted into an aggregate of 340,000 shares of
Common Stock, as described more fully below.
45
<PAGE>
Each Note may be converted into Common Stock at $2.50 per Share (for a total of
20,000 shares of Common Stock for each $50,000 Note), subject to adjustment,
prior to the filing of the Registration Statement with the SEC. Upon conversion
of the Notes, all accrued interest was forfeited by each of the Noteholders.
Proportioned adjustments shall be made for stock splits, dividends, mergers,
recapitalizations and similar transactions. In the event that an Investor elects
to convert the Investor's Note, then the Investor shall forfeit all other rights
pursuant to the Note.
Subject to the Conversion provisions of the Notes, each Note is due and payable
(including all principal and accrued interest) on January 31, 1997; provided
however that if a Registration Statement is filed by the Company with the
Securities and Exchange Commission to register certain of the Company's Common
Stock on or before January 31, 1997, the Note shall become due and payable the
earlier of (A) two (2) weeks from the effective date of the Registration
Statement or (B) July 31, 1997 (the "Maturity Date"). The provisions concerning
the extension of the Maturity Date described above are automatic and do not
require any actions on the part of the Company or the Noteholders and no party
has the right to change or amend this provision. Furthermore, the provisions of
this section concerning the Maturity Date relate only to those Noteholders who
do not convert their Notes. No mandatory redemption obligation is imposed on the
Company with respect to the Notes nor is there any sinking fund.
All holders of the Notes have elected to convert an aggregate of $850,000 Notes
into 340,000 shares of Common Stock, of which 340,000 shares shall be registered
pursuant to this Registration Statement and an Alternate Prospectus, which
shares of Common Stock are subject to a twelve (12) month lock-up period from
the effective date of this Prospectus, unless otherwise required by the NASDAQ
SmallCap Market for such longer period.
SELLING SECURITYHOLDERS
The registration statement of which this prospectus is a part also covers the
registration of an additional 1,843,289 shares of Common stock under an
Alternate Prospectus by the Selling Security holders. Of these shares, 38,572
Shares are being offered by affiliates of the Company and the balance of these
Shares are being offered by 87 persons not affiliated with the Company. See
Principal Shareholders." While the shares of Common Stock being offered hereby
were subject to either no lock-up restrictions, or 45 day, 90 day, or 180 days
lock-up restrictions pursuant to agreements between these shareholders and the
Company, these agreements further provide these lock-ups period notwithstanding,
the Company's Representative or underwriter of a Registration Statement to be
filed with the Securities and Exchange Commission may, in its sole discretion
(A) refuse or defer such registration rights or (B) impose certain additional
restrictions in addition to current lock-up restrictions imposed by the
respective agreements. Currently, of the 1,843,289 shares of Common Stock
described above 85,000 Shares may be sold commencing 45 days from the date of
this prospectus and the remaining 1,758,289 Shares may be sold commencing twelve
(12) months from the date of this Prospectus, unless otherwise required by the
NASDAQ SmallCap Market for such longer period. The Over-Allotment Option will
expire 30 days from the date of this Prospectus. The resale of the securities of
the Selling Securityholders is subject to prospectus delivery and other sales at
any time may have an adverse
46
<PAGE>
effect on the market prices of the securities or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby. Additionally, the Selling Securityholders may be deemed to be
underwriters under the Act.
Of these 1,843,289 shares of Common Stock being offered by the Selling
Securityholders, (i) an aggregate of 749,466 shares were acquired in three
separate private placements during calendar year 1995 and 1996 to accredited and
otherwise knowledgeable investors; (ii) an aggregate of 81,428 shares were
acquired in private, isolated transactions; (iii) an aggregate of 244,321 shares
of Common Stock underlying certain warrants exercisable at prices ranging from
$5.00 to $6.60 per Shares; (iv) an aggregate of 398,287 shares of Common Stock
were acquired pursuant to financial and other consulting services performed on
behalf of the Company; (v) an aggregate of 270,000 shares are reserved for
issuance upon the closing of a proposed transaction to acquire certain assets
from Digital Criteria Search Technologies, Inc.; (vi) 4,286 shares of Common
Stock issued upon the exercise of options at $.875 per share (for an aggregate
of $3,750.25 received by the Company); and (vii) 95,501 shares of Common Stock
issued upon the exercise of warrants at prices ranging from $.875 to $1.75 per
Share (for an aggregate of $86,690 received by the Company).
The Company will not receive any of the proceeds from the sale of the securities
being offered by the Selling Securityholders. The Company is paying for the
benefit of the Selling Securityholders certain of their expenses in connection
with this offering. These expenses consist of: $3,352 (SEC filing fee
attributable to the Selling Securityholders' securities); and $193,000 (based
upon a pro rata share of blue sky legal expenses and filing fees, legal fees,,
accounting fees and other related offering expenses, without giving effect to
the exercise of the Underwriter's Over-Allotment Option). Certain of the Selling
Securityholders are customers of the Representative and have participated in
prior transactions in which the underwriter was involved as a placement agent or
as an underwriter.
The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers and agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the- counter market,
including, ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for release of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The Selling
Securityholders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Securities Act with respect to
the securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Selling Securityholders may also elect to
sell such securities pursuant to one or more exemptions from registration under
the Securities Act, including but not limited to sales under Rule 144.
47
<PAGE>
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a Prospectus will be distributed
which will set forth the number of Shares being offered and the terms of the
offering, including the name or names of any underwriters for Shares purchased
from the Selling Securityholder and any discounts, commissions or concessions
allowed to be paid to dealers, and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation, Rule 10b-6
and 10b-7, in connection with the transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Securityholders.
CERTAIN FLORIDA LEGISLATION
Florida has enacted legislation that may deter or frustrate takeovers of Florida
corporations. The Florida Control Share Act generally provides that shares
acquired in excess of certain specified thresholds will not possess any voting
rights unless such voting rights are approved by a majority of a corporation's
disinterested shareholders. The Florida Affiliated Transactions Act generally
requires super majority approval by disinterested shareholders of certain
specified transactions between a public corporation and holders of more than 10%
of the outstanding voting shares of the corporation (or their affiliates).
Florida law and the Company's Articles and Bylaws also authorize the Company to
indemnify the Company's directors, officers, employees and agents. In addition,
the Company's Articles and Florida law presently limit the personal liability of
corporate directors for monetary damages, except where the directors (i) breach
their fiduciary duties and (ii) such breach constitutes or includes certain
violations of criminal law, a transaction from which the directors derived an
improper personal benefit, certain unlawful distributions or certain other
reckless, wanton or willful acts or misconduct.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS
Certain provisions of the Articles and Bylaws of the Company summarized in the
following paragraphs and above under "Preferred Stock" will become operative
upon the closing of the offering and may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt,
including attempts that might result in a premium being paid over the market
price for the shares held by shareholders. The following provisions may not be
amended in the Company's Articles or Bylaws without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Common Stock.
48
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS. The Articles and Bylaws provide that special
meetings of shareholders of the Company may be called only by a majority of the
Board of Directors, the Company's Chief Executive Officer or holders of not less
than twenty (20%) percent of the Company's outstanding voting stock.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS.
The Bylaws provide that shareholders seeking to bring business before an annual
meeting of shareholders, or to nominate candidates for election as directors at
an annual or special meeting of shareholders, must provide timely notice thereof
in writing. To be timely, a shareholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not less than 60
days nor more than 90 days prior to the meeting; provided, however, that in the
event that less than 70 days' notice or prior public disclosure of the date of
the meeting is given or made to shareholders, notice by the shareholder, to be
timely, must be received no later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever is first. The Bylaws also specify
certain requirements as to the content and form of a shareholder's notice. These
provisions may preclude shareholders from bringing matters before the
shareholders at an annual or special meeting or from making nominations for
directors at an annual or special meeting.
RESTRICTED SHARES ELIGIBLE FOR FUTURE SALE
All of the Company's currently outstanding shares of Common Stock are
"restricted securities" and, in the future may be sold upon compliance with Rule
144, adopted under the Securities Act of 1933, as amended. In general, Rule 144
provides, in essence, that a person holding "restricted securities" for a period
of two years may sell only an amount every three months equal to the greater of
(a) one percent of the Company's issued and outstanding shares, or (b) the
average weekly volume of sales during the four calendar weeks preceding the
sale. The amount of "restricted securities" which a person who is not an
affiliate of the Company may sell is not so limited, since non-affiliates may
sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. A proposed
rule which may be adopted by the Commission would reduce these two and three
year periods to one and two years, respectively.
Upon the sale of the Common Stock offered hereby, the Company will have
5,058,214 shares of its Common Stock issued and outstanding, of which 2,064,925
shares are "restricted securities," 1,150,000 shares are being registered under
the registration statement of which this Prospectus is a part (assuming exercise
of the Underwriter's Over-Allotment Option of 150,000 Shares), and 1,843,289
shares are being registered pursuant to an Alternate Prospectus of even date (of
which an aggregate of 38,572 are being offered by affiliates, including
principal shareholders of the Company). Of the 1,843,289 shares of Common Stock
being sold pursuant to the Alternate Prospectus, 85,000 Shares may be sold
commencing 45 days from the effective date of this Prospectus and the remaining
1,758,289 Shares may be sold commencing twelve (12) months from the date of this
Prospectus. Additionally, all securities held by the Company's shareholders
(whether or not such securities are being registered pursuant to this Prospectus
or to the Alternate
49
<PAGE>
Prospectus), other than the 85,000 shares of Common Stock as described above,
are also subject to the twelve (12) month lock-up period, unless otherwise
required by the NASDAQ SmallCap Market for such longer period. After expiration
of these lock-up agreements, all outstanding shares of Common Stock will be
eligible for sale under Rule 144. The availability for sale of substantial
amounts of Common Stock subsequent to this offering could adversely affect the
prevailing market price of the Common Stock and could impair the Company's
ability to raise additional capital through the sale of its equity securities.
See "Principal Shareholders," "Selling Securityholders," and "Shares Eligible
for Future Sale."
The Representative may release the securities held by the Selling
Securityholders at any time after all securities subject to the Underwriter's
Over-Allotment Option have been sold or such option has expired. The resale of
the securities held by the Selling Securityholders is subject to prospectus
delivery and other requirements of the Securities Act of 1933, as amended
("Securities Act"). Sales of such securities or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby. Additionally, the Initial Selling Securityholders and the
Selling Securityholders may be deemed to be underwriters under the Securities
Act. See "Selling Securityholders" and "Underwriting."
Prospective investors should be aware that the possibility of sales may, in the
future, have a depressive effect on the price of the Company's Common Stock in
any market which may develop and, therefore, the ability of any investor to
market his shares may be dependent directly upon the number of shares that are
offered and sold. Affiliates of the Company may sell their shares during a
favorable movement in the market price of the Company's Common Stock which may
have a depressive effect on its price per share. See "Description of
Securities."
CERTAIN MARKET INFORMATION
The Company has applied for listing of its shares of Common Stock on the Nasdaq
SmallCap market under the symbol "VDAT."
This offering is the initial public offering the Company's securities and,
accordingly, there is currently no public trading market for any such
securities. There can be no assurance that a public trading market will ever
develop or, if one develops, that it will be maintained.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Interwest
Transfer Co., Inc., 1981 East Murray Holladay Road. Suite 100, Salt Lake City,
UT 84117
50
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), acting through
______________, as Representative, have agreed, subject to the terms and
conditions of the Underwriting agreement between the Company and ______________,
as Representative of the Underwriters, to purchase from the Company on a firm
commitment basis the number of shares of Common Stock set forth opposite their
respective names. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters shall be obligated to purchase all of the shares of Common Stock
offered hereby if any of such securities are purchased. The 10% underwriting
discount set forth on the cover page of this Prospectus will be allowed to the
Underwriters at the time of delivery to the Underwriters of the shares of Common
Stock so purchased.
NAME OF UNDERWRITER NUMBER OF SHARES
------------------- ----------------
Total 1,000,000
The Representative has advised the Company that the Underwriters propose to
offer the Shares to the public at $6.00 per Share and the Selling
Securityholders Shares to the public at $6.00 per Share as set forth on the
cover page of this Prospectus and they may allow certain dealers who are NASD
members, and such dealers may reallow concessions not to exceed $____ per Share.
After the initial public offering, the public offering price, concession and
reallowance may be changed by the Representative.
The public offering price of the Shares were arbitrarily determined by
negotiations between the Company and the Representative and do not necessarily
relate to the assets, book value or results of operations of the Company or any
other established criteria of value.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make. The Company has agreed to pay
the Representative a non-accountable expense allowance equal to three percent
(3%) of the gross proceeds of this offering, or $180,000 ($207,000 if the
Underwriter's Over-Allotment Option is exercised in full) of which $____ has
been paid to date.
Messrs. Selman and Saperstein have granted to the Representatives an option
exercisable during the 30-day period after the date of this Prospectus to
purchase from such shareholders, at the public offering price less underwriting
discounts and the expense allowance, up to an additional 150,000 shares of
Common Stock for the sole purpose of covering the Underwriter's Over- Allotment
Option, if any. To the extent the Underwriters exercise such option, each
Underwriter will have a firm commitment, subject to certain conditions, to
purchase a number of the additional shares of Common Stock proportionate to such
Underwriters' initial commitment. The Company will not receive any of the
proceeds from a sale of Common Stock by shareholders pursuant to the exercise of
the Underwriter's Over-Allotment Option.
51
<PAGE>
The Company has agreed that for five years after the effective date of the
Prospectus, if requested, it will appoint a non-voting advisor designated by the
Underwriter, to the Company's Board of Directors who will attending meetings of
the Board and receive the same compensation paid to other non-management
directors of the Company.
Prior to the date of this Prospectus, except as set forth below, all holders of
the Company's Common Stock as of the Effective Date, have agreed in writing not
to sell, assign or transfer any of the shares of the Company's securities (other
than 85,000 shares of Common Stock being registered pursuant to the Alternate
Prospectus, which shall have a lock-up period of 45 days from the effective
date) without the underwriter's prior written consent for a period of twelve
(12) months from the Effective Date, unless otherwise required by the NASDAQ
SmallCap Market for such longer period.
In connection with this offering, the Company has agreed to sell to the
Representative, at nominal consideration, warrants (the "Representative's
Warrants") to purchase from the Company 100,000 shares of Common Stock. The
Representative's Warrants are initially exercisable at an exercise price of 120%
of the initial public offering price per share (which shall be $7.20 per Share)
for a period of four years, commencing one year from the date of this
Prospectus. The Representative's Warrants contain provisions providing for
adjustment of the exercise price and the number and type of securities issuable
upon exercise of the Representative's Warrants upon the occurrence of certain
events. During the one-year period commencing on the date of this Prospectus,
the Representative's Warrants and the securities issuable upon the exercise
thereof will not be transferable, except to the Underwriter's officers, partners
or members of the selling group. The Representative's Warrants grant to the
holders thereof certain registration rights under the Securities Act for the
securities issuable upon the exercise thereof. The Representative's Warrants
will contain anti-dilution and exercise provisions.
During the exercise period of the Representative's Warrants, the Underwriters
(or the then holders of a majority of the Representative's Warrants) shall have
the right to require the Company to prepare and file one Post Effective
Amendment to the Registration Statement or a new Registration Statement, if then
required under the Securities Act, covering all or any portion of the
Representative's Warrants and/or underlying shares of Common Stock. The Company
shall bear all expenses incurred in the preparation and filing of such
Registration Statement or Post- Effective Amendment. Additionally, if at any
time during the seven years after the Effective date, the Company prepares and
files one or more Post-Effective Amendments to the Registration Statement or new
Registration Statements under the Securities Act, with respect to a public
offering of equity or debt securities of the Company, or of any securities of
the Company held by its shareholders, the Company will include the
Representative's Warrants and/or underlying securities held by the Underwriter
and its designees or transferees in such Registration Statement or Post
Effective Amendment.
For a period during which the Representative's Warrants are exercisable, the
holder or holders thereof will have the opportunity to profit from a rise in the
market value of the Common Stock, with a resulting dilution in the interests of
the other shareholders of the Company. The holder
52
<PAGE>
or holders of the Representative's Warrants can be expected to exercise it at a
time when the Company would, in all likelihood, be able to obtain any needed
capital from an offering of its unissued Common Stock on terms more favorable to
the Company than those provided for in the Representative's Warrants. Such fact
may adversely affect the terms on which the Company can obtain additional
financing. To the extent that the Representative realizes any gain from the
resale of the Representative's Warrants or the securities issuable thereunder,
such gain may be deemed additional underwriting compensation under the
Securities Act.
The foregoing is a brief summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement filed as an Exhibit to the Registration Statement of
which this Prospectus forms a part. Following the consummation of this offering,
the underwriter intends to seek others to make a market in the Company's
securities in addition to the underwriter.
Prior to this offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock was determined by
negotiation between the Company and the Representative and should not be
considered indicative of the actual value of the Common Stock. Among the factors
considered in determining this price were the Company's current financial
condition and prospects, the market prices of similar securities of comparable
publicly traded companies and the general condition of the securities markets
and such other factors as were deemed relevant.
LEGAL MATTERS
Legal matters in connection with the Common Stock being offered hereby will be
passed upon for the Company by Atlas, Pearlman, Trop & Borkson, P.A., Fort
Lauderdale, Florida. Partners of the law firm of Atlas, Pearlman, Trop &
Borkson, P.A. own an aggregate of 5,357 shares of Common Stock of the Company,
of which an aggregate of 2,679 shares are being registered pursuant to the
Alternate Prospectus of even date.
EXPERTS
The consolidated balance sheets of the Company as of September 30, 1995 and
1996, and the related consolidated statements of operations, shareholders'
equity and cash flows for the period from inception (May 17, 1993) to September
1994 and the years ended September 30, 1995 and 1996, included in this
Prospectus have been so included in reliance upon the report of Goldstein Lewin
& Co., independent certified public accountants, given on authority of said firm
as experts in auditing and accounting.
53
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission, in Washington, D.C. a Registration
Statement on Form SB-2, pursuant to the Securities Act of 1933, as amended, with
respect to the securities offered by this Prospectus. This Prospectus does not
contain all of the information set forth in said Registration Statement, and the
exhibits thereto. For further information with respect to the Company and the
securities offered hereby, reference is made to such Registration Statement and
exhibits which may be inspected without charge at the Commission's principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; at
its Northeast Regional Office, 7 World Trade Center, Suite 1300,, New York, New
York 10048; and at its Midwest Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and copies of such materials can be obtained
form the public reference facilities at prescribed rates. Additionally, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission and the address of such site is (http://www.sec.gov).
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and such other periodic reports as the Company may
from time to time deem appropriate or as may be required by law. The Company
will furnish its shareholders with annual reports containing audited financial
statements and such other periodic reports as the Company may from time to time
deem appropriate or as may be required by law.
The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference herein (excluding exhibits) by
contacting the Company at Visual Data Corporation, 1600 S. Dixie Highway, Suite
300, Boca Raton, Florida 33432, Attention: President.
54
<PAGE>
<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Report of Certified Public Accountant............................................ F-2
Consolidated Balance Sheets as of September 30, 1995
and 1996....................................................................... F-3-F-4
Consolidated Statements of Operations for the Years
Ended September 30, 1995 and 1996 and for the Period
from Inception (May 17, 1993) to September 30, 1994............................ F-5
Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
September 30, 1995 and 1996 and for the Period from Inception (May 17, 1993)
to September 30, 1994.......................................................... F-6
Consolidated Statements of Cash Flows for the Years
Ended September 30, 1995 and 1996 and for the Period
from Inception (May 17, 1993) to September 30, 1994............................ F-7-F-9
Notes to the Financial Statements................................................ F-10-F-20
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
Visual Data Corporation and Subsidiary
Boca Raton, Florida
We have audited the accompanying consolidated balance sheets of Visual Data
Corporation and Subsidiary as of September 30, 1995 and 1996 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the year ended September 30, 1995 and 1996 and the period from
inception (May 17, 1993) to September 30, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Visual Data
Corporation and Subsidiary as of September 30, 1995 and 1996, and the results of
their operations and their cash flows for the years ended September 30, 1995 and
1996 and the period from inception (May 17, 1993) to September 30, 1994, in
conformity with generally accepted accounting principles.
/s/ GOLDSTEIN LEWIN & CO.
-------------------------
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
December 4, 1996
F-2
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
ASSETS
SEPTEMBER 30,
1995 1996
--------- ---------
CURRENT ASSETS
Cash ....................................... $249,678 $158,377
Stockholder Receivables .................... 11,000 50,000
Accounts Receivable, Net of
Allowance for Doubtful
Accounts of $14,056 ....................... -- 42,168
Prepaid Expenses ........................... 8,837 32,145
--------- ---------
Total Current Assets ............... 269,515 282,690
--------- ---------
PROPERTY AND EQUIPMENT, Net
of Accumulated Depreciation of
$10,525 and $44,138 ........................ 193,885 272,393
OTHER ASSETS
Financing Costs, Net of
Accumulated Amortization of
$51,000 -- 102,000
Security Deposits .......................... 19,059 21,691
Organization Expenses, Net ................. 573 377
--------- ---------
19,632 124,068
--------- ---------
$483,032 $679,151
========= =========
The Accompanying Notes are an Integral
Part of These Financial Statements
F-3
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
SEPTEMBER 30,
1995 1996
----------- -----------
CURRENT LIABILITIES
Current Portion of Liability
Under Capital Leases ..................... $ 35,615 $ 50,293
Accounts Payable and Accrued
Liabilities .............................. 57,370 229,043
Customer Deposits .......................... 7,000 70,500
Current Portion of Deferred Rent
Benefit .................................. 3,038 1,772
Loans Payable-Stockholders ................. -- 50,000
----------- -----------
Total Current Liabilities .......... 103,023 401,608
----------- -----------
LONG-TERM LIABILITIES
Convertible Notes Payable, Net
of Discount ............................... -- 680,000
Liability Under Capital Leases,
Net of Current Portion ................... 80,641 58,142
Deferred Rent Benefit, Net of
Current Portion .......................... 1,772 --
----------- -----------
82,413 738,142
----------- -----------
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Par Value $.0001
Per Share; Authorized 5,000,000
Shares:
Series A Convertible Preferred
Stock, Designated 650,000 Shares;
Issued and Outstanding 185,716
Shares .................................. 19 19
Series B Convertible Preferred
Stock, Designated 1,000,000
Shares; Issued and Outstanding
-0- Shares at September 30, 1995;
113,750 Shares at September 30, 1996 .... -- 11
Common Stock, Par value $.0001 Per
Share; Authorized 20,000,000
Shares; Issued and Outstanding
1,397,289 Shares at September 30,
1995; 1,866,039 Shares at September
30, 1996 .................................. 140 187
Additional Paid-In Capital ................. 986,762 2,120,211
Accumulated Deficit ........................ (689,325) (2,581,027)
----------- -----------
297,596 (460,599)
----------- -----------
$ 483,032 $ 679,151
=========== ===========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-4
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FROM MAY 17,
1993 (INCEPTION)
TO SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1994 1995 1996
---------------- ---------- -----------
REVENUE $ - $ - $ 111,719
----------- ---------- -----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Compensation and Related
Costs - 206,935 985,441
Production - 17,982 121,239
Occupancy 38,409 62,991 43,875
Professional Fees 77,886 87,662 298,815
Interest 5,797 9,606 27,112
Other 66,674 117,092 527,692
----------- ---------- -----------
Total Selling,
General and
Administrative 188,766 502,268 2,004,174
----------- ---------- -----------
Loss Before
Other Income (188,766) (502,268) (1,892,455)
OTHER INCOME
Interest - 1,709 753
----------- ---------- -----------
Net Loss $ (188,766) $ (500,559) $(1,891,702)
=========== ========== ===========
Weighted Average Number
of Shares 1,736,709 1,908,425 2,279,329
=========== ========== ===========
Net Loss Per Common Share
Primary $ (0.11) $ (0.26) $ (0.83)
=========== ========== ===========
Fully Diluted $ (0.11) $ (0.26) $ (0.83)
=========== ========== ===========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
ACCUMULATED
SERIES A SERIES B ADDITIONAL DURING THE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE
------ ------ ------ ------ ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance, May 17, 1993 .... -- $ -- -- $ -- -- $ -- $ -- $ --
Issuance for:
Cash ............................. -- -- -- -- 767,679 77 36,023 --
Services and Incentives .......... -- -- -- -- 36,697 4 1,949 --
Net Loss ........................... -- -- -- -- -- -- -- (188,766)
------- ------ ------ ------ ------- ------ ------- --------
Balance, September 30, 1994 ........ -- -- -- -- 804,376 81 37,972 (188,766)
Issuance for Cash ..................169,287 17 -- -- -- -- 592,483 --
Conversion of Debentures ........... 13,572 2 -- -- -- -- 47,498 --
Conversion of Stockholder Loan ..... 2,857 -- -- -- -- -- 10,000 --
Issuance for:
Cash ............................. -- -- -- -- 248,884 25 13,875 --
Minority Interest in Subsidiary .. -- -- -- -- 19,104 2 58 --
Interest ......................... -- -- -- -- 6,764 -- 6,518 --
Services and Incentives .......... -- -- -- -- 30,911 3 27,043 --
Exercise of Warrants ............... -- -- -- -- 287,250 29 251,315 --
Net Loss ........................... -- -- -- -- -- -- -- (500,559)
------- ------ ------- ------ --------- ------ ---------- -----------
Balance, September 30, 1995 ........185,716 19 -- -- 1,397,289 140 986,762 (689,325)
Issuance for Services and Incentives -- -- -- -- 358,750 36 74,227 --
Issuance for Cash .................. -- -- 113,750 11 -- -- 454,989 --
Issuance for Cash .................. -- -- -- -- 25,000 2 49,998 --
Convertible Notes Discount ......... -- -- -- -- 85,000 9 169,991 --
Compensation Expense on
Stock Option Grants ............... -- -- -- -- -- -- 384,244 --
Net Loss ........................... -- -- -- -- -- -- -- (1,891,702)
------- ------ ------- ------ --------- ------- ----------- -----------
Balance, September 30, 1996 ........185,716 $ 19 113,750 $ 11 1,866,039 $ 187 $ 2,120,211 $(2,581,027)
======== ====== ======= ====== ========= ======= =========== ===========
</TABLE>
The Accompanying Notes are an Integral
Part of these Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FROM MAY 17,
1993 (INCEPTION) YEAR ENDED
TO SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996
---------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss .............................................. $ (188,766) $ (500,559) $(1,891,702)
Adjustments to Reconcile
Net Loss to Net Cash Used
in Operating Activities:
Depreciation ....................................... 1,566 8,959 33,613
Amortization ....................................... 207 195 51,196
Issuance of Shares for:
Interest Expense ................................. -- 6,518 --
Minority Interest ................................ -- 60 --
Stockholder Receivables .......................... -- (11,000) (50,000)
Services and Incentives .......................... 1,953 27,046 458,507
Change in Assets and Liabilities:
(Increase) in:
Accounts Receivable ............................ -- -- (42,168)
Prepaid Expenses ............................... -- (8,837) (23,308)
Increase (Decrease) in:
Accounts Payable and
Accrued Liabilities ........................... 58,891 (1,521) 171,673
Customer Deposits .............................. -- 7,000 63,500
Deferred Rent Benefit .......................... 7,848 (3,038) (3,038)
--------- --------- ----------
Cash Flows Used in
Operating Activities ......................... (118,301) (475,177) (1,231,727)
--------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Property and Equipmen................... (5,436) (65,294) (82,053)
Increase in Deposits .................................. (2,548) (16,511) (2,632)
Organizational Expenses ............................... (975) -- --
--------- --------- ----------
Cash Flows Used In
Investing Activities ......................... (8,959) (81,805) (84,685)
--------- --------- ----------
</TABLE>
The Accompanying Notes are an Integral
Part of these Financial Statements
F-7
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FROM MAY 17,
1993 (INCEPTION) YEAR ENDED
TO SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996
--------------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Capital Leases (1,685) (15,739) (37,889)
Issuance of Debentures 50,000 - -
Repayment of Debentures - (2,500) -
Issuance of Convertible Notes - - 850,000
Financing Costs - - (153,000)
Issuance of Preferred Stock - 592,500 455,000
Issuance of Common Stock 36,100 265,244 61,000
Proceeds from Stockholder Loans 45,000 15,000 100,000
Repayments of Stockholder Loans - (50,000) (50,000)
-------- --------- ----------
Cash Flows Provided by
Financing Activities 129,415 804,505 1,225,111
-------- --------- ----------
Net Increase (Decrease)
in Cash 2,155 247,523 (91,301)
CASH:
Beginning - 2,155 249,678
-------- --------- ----------
Ending $ 2,155 $ 249,678 $ 158,377
======== ========= ==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-8
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FROM MAY 17,
1993 (INCEPTION) YEAR ENDED
TO SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996
---------------- ------- -------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Payments for Interest $ 1,792 $ 7,094 $ 24,635
========== ========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of Common Shares for:
Services and Incentives $ 1,953 $ 27,046 $ 458,507
Subscription Receivable - - 50,000
Minority Interest In Subsidiary - 60 -
Interest on Debentures - 6,518 -
---------- ---------- ----------
$ 1,953 $ 33,624 $ 508,507
========== ========== ==========
Issuance of Preferred Shares for:
Conversion of Debentures $ - $ 47,500 $ -
Conversion of Stockholder Loan - 10,000 -
---------- ---------- ----------
$ - $ 57,500 $ -
========== ========== ==========
Stockholder Receivables on
Exercise of warrants $ - $ 11,000 $ -
========== ========== ==========
Property and Equipment Financed
By Capital Leases $ 9,934 $ 123,746 $ 30,068
========== ========== ==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-9
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Visual Data Corporation ("VDC") and HotelView Corporation ("HVC") were
incorporated on May 17, 1993 and September 15, 1993, respectively.
VDC was a development stage company as all its efforts had been toward
establishing a new business. Planned principal operations have commenced and it
exited the development stage during September, 1996. The Company specializes in
the production and marketing/distribution of video information libraries
intended for use by the general public through the Internet and interactive
television as well as other media primarily in the United States. These
libraries will contain short concise vignettes on various topics such as travel,
medicine, cooking and fitness. HVC has developed a hotel information database
and is marketing a laser disc library to travel agents.
The Companies cash and available credit are not sufficient to support operations
for the next year. Accordingly, management will need to seek additional bank,
lease and/or equity financing. These financial statements have been prepared on
the basis that adequate financing will be obtained.
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of VDC
and HVC collectively known as the "Company". As the Company has just exited the
development stage, the accompanying consolidated financial statements should not
be regarded as typical for normal operating periods. Intercompany accounts and
transactions have been eliminated in consolidation.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Property and equipment under capital
leases is stated at the lower of the present value of the minimum lease payments
at the beginning of the lease term or the fair value at the inception of the
lease. Depreciation is computed using the straight line method over the
estimated useful lives of the related assets. Amortization expense on assets
acquired under capital leases is included with depreciation expense.
F-10
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
PRODUCTION COSTS
The Company expenses costs directly related to the production (copy, art work,
video shoots, travel and related costs) of vignettes which are incurred prior to
the acceptance of the final master by the client, during the period incurred.
Costs associated with the preparation of the related videos and discs are
capitalized and charged to expense upon delivery to the customer.
INCOME TAXES
The Company and its wholly owned subsidiary file a consolidated federal income
tax return.
The deficit accumulated during the development stage is deferred for income tax
purposes, and is to be amortized over a sixty month period beginning October 1,
1996. The Company has recorded a valuation allowance with respect to any future
tax benefits and any net operating losses due to the uncertainty of their
ultimate realization.
EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of common and
common equivalent shares outstanding during the period.
F-11
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all financial
instruments at September 30, 1995 and 1996, does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value, and,
accordingly, the estimates are not necessarily indicative of the amounts that
the Company could realize in a current market exchange.
NOTE 2: PROPERTY AND EQUIPMENT
Property and equipment, including equipment acquired under capital leases,
consists of:
SEPTEMBER 30,
1995 1996
--------- ---------
Furniture and Fixtures $ 16,814 $ 16,814
Equipment 13,280 91,272
Editing Equipment 136,084 168,305
Computer Equipment 24,700 26,608
Leasehold Improvements 13,532 13,532
--------- ---------
204,410 316,531
Less: Accumulated Depreciation
and Amortization (10,525) (44,138)
--------- ---------
$ 193,885 $ 272,393
========= =========
NOTE 3: CONCENTRATION OF CREDIT RISK
The Company at times has cash in banks in excess of FDIC insurance limits and
places its temporary cash investments with high credit quality financial
institutions. The Company performs ongoing credit evaluations of its customers'
financial condition and does not require collateral from them. Reserves for
credit losses are maintained at levels considered adequate by management.
F-12
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4: STOCKHOLDER RECEIVABLES
Stockholder receivables at September 30, 1995 consist of $11,000 from two of
VDC's stockholders for the exercise of warrants. Stockholder receivables at
September 30, 1996 consist of $50,000 from one VDC stockholder for the purchase
of stock. The amounts were received in cash subsequent to September 30, 1995 and
1996, respectively.
NOTE 5: CAPITAL LEASE OBLIGATIONS
The Company leases certain equipment, which are accounted for as capital leases.
The following is a schedule by years of the future minimum lease payments under
the capital leases together with the present value of the net minimum lease
payments.
SEPTEMBER 30,
1995 1996
--------- ---------
Year Ending September 30, 1996 $ 53,878 $ -
1997 55,860 74,192
1998 40,008 54,418
--------- ---------
Total Minimum Lease Payments 149,746 128,610
Less: Amount Representing Interest (33,490) (20,175)
--------- ---------
Present Value of Minimum Lease
Payments 116,256 108,435
Current Portion (35,615) (58,142)
--------- ---------
Long-Term Portion $ 80,641 $ 50,293
========= =========
Equipment held under capital leases have a book value of $163,680 and 193,748 as
of September 30, 1995 and 1996. Accumulated Depreciation related to this
equipment was $7,205 and $27,582 as of September 30, 1995 and 1996,
respectively.
NOTE 6: CONVERTIBLE NOTES
The Company in July and August 1996 issued units ("Units") consisting of
convertible notes ("Notes") aggregating $850,000 and common stock aggregating
85,000 shares. Each Unit consists of a $50,000 note and 5,000 shares of common
stock. The Notes are unsecured and bear interest at 10%. Each Note may be
converted into 20,000 additional shares of common stock at $2.50 per share,
subject to the conversion provisions of the Notes, each Note matures on January
31, 1997 unless a registration statement is filed. If such statement is filed,
the maturity date becomes the earlier of two weeks after the effective date or
July 31, 1997. The convertible notes have been recorded at a discount of
$170,000, reflecting an average per share price of $2.00 for all shares issued
or to be issued upon conversion. All convertible notes were converted into
common stock in October, 1996 (Note 14). Accordingly, such notes have been
classified as long-term debt at September 30, 1996.
F-13
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7: NOTES PAYABLE - SHAREHOLDERS
Certain stockholders made loans to the Company for working capital purposes.
These loans bear interest at one half of 1% per month and are to be repaid from
50% of the monthly proceeds from room credits and hotel service deposits, with a
maturity of six months from the date of the notes. These shareholders also
received 40,000 warrants to purchase common stock at $.875 for a four year
period, expiring March 4, 2000.
As of December 4, 1996, the Company is in default on $15,000 of these Notes and
therefore they are considered demand notes, and the interest rate, at the option
of the holder, can be increased to one and one half percent per month.
NOTE 8: COMMITMENTS
OPERATING LEASES
The Company leases their operating facility in Boca Raton, Florida under a
twenty four month lease which expires in April, 1997. This lease provides for a
monthly base rent of $3,525. In conjunction with the lease, the Company is
paying back rent in the amount of $1,494 per month for twenty four months ending
April, 1997. At September 30, 1995 and 1996, the back rent payable aggregated
$25,881 and $10,118, respectively, and is included in accounts payable.
The total minimum lease commitment, including back rent, at September 30, is as
follows:
During the Year Ended September 30, 1997 35,133
---------
$ 35,133
=========
Rent expense for the years ending September 30, 1995 and 1996 aggregated $41,800
and $42,071, respectively.
EMPLOYMENT CONTRACTS
Employment contracts, expiring October 19, 1996, with the President and Vice
President of the Company, which may be terminated by the Company on not less
then three months prior notice, provide for minimum annual total compensation of
$80,000 each. In the event of death or disability of the Company's principal
officers, the contracts call for payments of all compensation for approximately
6 months. The contracts also include severance agreements which create certain
liabilities in the event of the termination of the covered officers following a
change of control of the Company. The aggregate commitment under the severance
agreements is equal to the balance of compensation for the then remaining term
of the contract.
F-14
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: COMMITMENTS (CONTINUED)
SHAREHOLDERS AGREEMENT
In May 1993, VDC entered into a stock repurchase agreement with its two majority
shareholders under which, upon the death of a shareholder, VDC is obligated to
purchase the shares of its common stock owned by the estate of the deceased
stockholder. The per share repurchase price is defined by the agreement as an
amount mutually agreed upon by the estate and the other shareholder. If an
agreement cannot be reached, then an independent appraisal is to be performed.
The agreement also allows for a dual option stock purchase wherein either
shareholder may give written notice to the other shareholder of the price per
share he is willing to have the corporation pay for the other shareholder's
shares or to accept for his shares if the other shareholder so elects.
Furthermore, this agreement also contains a covenant not to compete for a period
of twelve months following the sale of the shareholder's interest in the
Company. This agreement is to be terminated upon the Company filing its initial
registration with the Securities and Exchange Commission.
NOTE 9: CAPITAL STOCK (NOTE 16)
The Company currently has two classes of authorized capital stock.
PREFERRED STOCK
Series A convertible preferred stock is convertible at the holder's option into
two shares of common stock. Accordingly, at September 30, 1996 371,432 shares of
common stock are reserved for this contingency. Each share of the Series A
preferred stock has two votes per share and votes with the common stock. Holders
of Series A preferred stock are entitled to a liquidation distribution of $3.50
per share before any distributions may be made on any other capital stock of the
Company. The shares have no dividend rights.
Series B convertible preferred stock is convertible at the holder's option into
two shares of common stock. Accordingly, at September 30, 1996 227,500 shares of
common stock are reserved for this contingency. Each share of the Series B
preferred stock has two votes per share and votes with the common stock. Holders
of Series B preferred stock are entitled to a liquidation distribution of $4.00
per share after the Series A shareholders have been paid their liquidation
distribution and before any other distributions may be made on any other capital
stock of the Company. The shares have no dividend rights.
F-15
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 9: CAPITAL STOCK (NOTE 16) (CONTINUED)
COMMON STOCK
Common stock has one vote per share for the election of directors and all other
matters submitted to a vote of stockholders. Shares of common stock do not have
cumulative voting, preemptive, redemption or conversion rights.
From inception through September 30, 1996, the Company issued 1,016,563 shares
of common stock for prices ranging from $.0001 (par value) to $2.00 per share.
Common stock issued for services and incentives totaling 426,358 shares were
determined by the Board of Directors to be valued at prices ranging from par
($.0001 per share) to $9.16. Warrants of 287,250 were exercised at $.875 per
share. In 1995 shares were issued in exchange for repayment of interest at $.96
per share, or 6,764 shares and 19,104 shares were issued to acquire the minority
interest in the subsidiary at the underlying historical cost basis of $60.
Additionally, 85,000 shares were issued in conjunction with convertible notes
(Note 6) which were valued at $2.00 per share.
The Company, at September 30, 1996, has reserved 834,974 shares of common stock
for issuance relating to unexpired options and warrants.
NOTE 10: STOCK OPTIONS
Since inception VDC granted unqualified stock options to purchase 17,501 shares
of common stock of the Company at prices ranging from $.875 to $3.50 per share.
The options expire between May, 1998 and April, 1999. Additionally, options were
granted in September 1996 to two officers to purchase 439,136 shares of common
stock at par ($.0001 per share) expiring December 31, 2001.
NOTE 11: STOCK WARRANTS (NOTE 16)
In conjunction with the issuance of debentures in 1994, the Company issued
warrants redeemable for a total of 17,857 shares of VDC common stock at $.875
per share. The warrants are exercisable any time and expire at varying dates
between November, 1996 and September, 1998.
As part of the Company's private placement offerings for the purchase of common
and preferred shares, VDC issued warrants redeemable for common stock of the
Company. The warrants outstanding at September 30, 1996 are for a total of
360,480 shares of common stock, have an exercise price ranging from $.875 to
$6.00 per share and expire between January, 1997 and June, 2000.
F-16
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: NET LOSS PER COMMON SHARE
Net loss per share has been computed in accordance with Securities and Exchange
Commission Staff Accounting Bulletin (SAB) No. 83. The SAB requires that common
shares issued by the Company in the twelve months immediately preceding a
proposed public offering plus the number of common equivalent shares which
became issuable during the same period pursuant to the grant of warrants and
stock options (using the treasury stock method) at prices substantially less
than the initial public offering price be included in the calculation of common
stock and common stock equivalent shares as if they were outstanding for all
periods presented.
Primary loss per common share is calculated by dividing the net loss by the
average shares of common stock of the Company and Common Stock equivalents
outstanding during the period. Common Stock equivalents represent the dilutive
effect of the assumed exercise of certain outstanding stock options. The
calculation of fully diluted loss per share of Common Stock assumes the dilutive
effect of the Company's convertible 10% notes converted into Common Stock at the
later of the beginning of the year or issue date. During a loss period, the
assumed exercise of outstanding in-the-money stock options and conversion of
Convertible Notes have an antidilutive effect. As a result, these shares are not
included in the weighted average shares outstanding used in the calculation of
primary and fully diluted net loss per common share.
NOTE 13: CONTINGENT SERVICE FEES
In the normal course of business, the Company enters into contracts with hotels
that provide for the payment of service fees directly related to the amount
received by the Hotel from bookings made by the HVC travel agents network for
room revenue. At September 30, 1996, the Company has a total service fee balance
of $287,020 related to these contracts for future room usage which is to be paid
should room revenue be received by the Hotels.
The Company is unable to predict the timing or probability of collection of
these service fees.
NOTE 14: NEW ACCOUNTING STANDARD
In October, 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. SFAS No. 123 establishes a fair value
F-17
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14: NEW ACCOUNTING STANDARD (CONTINUED)
based method of accounting for stock-based compensation plans. It encourages
entities to adopt that method in place of the intrinsic value method currently
in place under the provisions of Opinion No. 25 of the Accounting Principles
Board (APB). Under the fair value method of accounting, all arrangements under
which employees receive shares of stock or other equity instruments or under
which employers incur liabilities to employees in amounts based on the price of
its stock result in the measurement of compensation cost at the grant date of
the award which is recognized over the service period, usually the vesting
period. Under the intrinsic value method, compensation cost is measured by the
excess of the quoted market price of the stock, if any, over the amount the
employee must pay to acquire the stock.
For example, granting immediately exercisable stock options to an employee at an
exercise price equal to the quoted market price of the stock results in the
recognition of compensation expense at the date of grant under the fair value
method of SFAS No. 123; under the intrinsic value method of APB No. 25, no
compensation expense is recognized. However, SFAS No. 123 allows the Company to
elect to continue its current method of accounting under APB No. 25 for employee
stock-based compensation arrangements. The Company expects to continue its
current method of accounting under APB No. 25 for employee stock-based
compensation arrangements. If the Company continues its current method of
accounting, pro forma disclosures of net income and earnings per share must be
disclosed, as if the Company had adopted the recognition provisions of SFAS No.
123.
Although the Company is permitted to continue accounting for employee
stock-based compensation arrangements under APB No. 25, SFAS No. 123 requires
the Company to utilize the fair value method of accounting for transactions
involving stock options or other equity instruments issued to nonemployees as
consideration for goods or services. Presently, those transactions are accounted
for by the Company under the intrinsic value principles of APB No. 25. The use
of intrinsic value versus fair value did not have a material effect on any
period presented.
The accounting and disclosure requirements of SFAS No. 123 are effective for the
Company in its fiscal year beginning October 1, 1996. The Company has not yet
determined the impact of SFAS No. 123.
F-18
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15: OTHER MATTERS
The accompanying financial statements for 1995 have been restated to correct an
error in recording common stock issued for services. The effect of the
restatement was to increase the net loss for 1995 by $27,046 ($.01 per share)
and the cumulative loss by $28,999.
The financial statements have been adjusted to reflect the effect of a one to
2.5 reverse split in December, 1993, a one to 1.6 reverse split in October, 1994
and a one to 3.5 reverse split in May, 1996 by reclassifying amounts to paid-in
capital from common stock.
NOTE 16: SUBSEQUENT EVENTS
a. STOCK OPTION PLAN
In October, 1996, the Board of Directors approved the 1996 Stock Option
Plan (the "Plan") subject to the approval of the share- holders, with
200,000 shares of common stock reserved for the grant of qualified
incentive options or non-qualified options to employees and directors of
the Company. Option prices must provide for an exercise price of not
less than 100% of the fair market value of the common stock on the date
the options are granted unless the eligible employee owns more than 10%
of the Company's common stock for which the exercise price must be at
least 110% of such fair market value. No options have been granted under
this plan.
b. PEGASUS AGREEMENT
In November, 1996, the Company entered into a letter of intent with
Pegasus, Inc. (Pegasus) (an unrelated party) whereby Pegasus has the
option to purchase up to 33 1/3% of the stock of HVC in exchange for
Pegasus marketing, endorsing and promoting the HVC library and meeting
certain sales levels. The sales levels and related options range from
1,000 hotels for a 5% option to 10,000 hotels for a 33 1/3% option.
c. CONVERSION OF SECURITIES
Subsequent to September 30, 1996, all of the Company's Series A
preferred stock and Series B preferred stock were converted into 598,932
shares of common stock. Options for 4,286 shares were exercised for
$3,750. Warrants for 95,501 shares were exercised for $86,690.
Additionally, the noteholders elected to convert the convertible notes
into 340,000 shares of common stock.
F-19
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: SUBSEQUENT EVENTS (CONTINUED)
d. EMPLOYMENT CONTRACTS
Effective October 1996, the Company entered into two year, renewable
employment contracts with the President and Vice President. The
contracts provide for annual compensation of $125,000 each subject to an
annual increase of 10%. The contracts also provide for an annual bonus
equal to 3% of the Company's increase in earnings as defined therein and
other fringe benefits. The contracts also include severance agreements
which create certain liabilities in the event of termination without
cause aggregating three times the executives annual compensation plus
certain fringes.
NOTE 17: EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
PUBLIC OFFERING OF COMMON STOCK
The Company is in the process of filing a registration statement on Form SB-2
with the Securities and Exchange Commission relating to an initial public
offering of 1,000,000 shares of common stock. The net proceeds of the offering
is to be used to replenish working capital, acquire equipment, expand
facilities, marketing and advertising.
In addition to the issuance and sale of 1,000,000 shares of common stock,
pursuant to an over allotment option which is to be granted to the underwriters,
up to 150,000 additional shares may be purchased from the current shareholders
of the Company and sold by the underwriters.
In connection with the offering, the Company granted to the underwriters, for
nominal consideration, warrants to purchase from the Company up to 100,000
shares of common stock. They are initially exercisable at a price of 120% of the
initial public offering price per share of common stock for a period of five
years commencing one year from the effective date of the registration statement
and are restricted from sale, transfer and assignment for a specified period.
VISUAL DATA CORPORATION AND SUBSIDIARY
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
------------------
BALANCE CHARGED
AT TO CHARGED BALANCE
BEGINNING COSTS TO AT
OF AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------- --------- -------- -------- ---------- --------
YEAR ENDED SEPTEMBER 30, 1996
Allowance for
Doubtful Accounts
Receivable $ - $ 14,056 $ - $ - $ 14,056
========= ======== ======= ======== ========
F-20
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any Representative. Neither the
delivery of this Prospectus nor any sale made hereunder shall, in any
circumstances, create an implication that there has been no change in the
affairs of the Company or that information contained herein is correct as of any
date subsequent to the date hereof. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.........
Risk Factors...............
Use of Proceeds............
Dilution...................
Dividend Policy............
Capitalization.............
Selected Financial Data....
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations...............
Business...................
Management.................
Certain Transactions.......
Principal Shareholders.....
Description of Securities..
Selling Securityholders....
Underwriting...............
Legal Matters..............
Experts....................
Additional Information
Index to Financial
Statements...............
Until _________, 1996 (25 days after the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligations of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
--------------------
VISUAL DATA
CORPORATION
1,000,000 Shares of
Common Stock
--------------------
PROSPECTUS
-----------------------
--------------
DECEMBER __,1996
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of such State.
[ALTERNATE PAGE]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 24, 1996
1,843,289 SHARES OF COMMON STOCK
VISUAL DATA CORPORATION
This Prospectus relates to 1,843,289 shares (the "Shares") of Common Stock (the
"Common Stock"), $.0001 par value per share, of Visual Data Corporation, a
Florida corporation (the "Company") held by 90 shareholders (the "Selling
Securityholders"). Of these 1,843,289 shares of Common Stock being offered by
the Selling Securityholders, (i) an aggregate of 749,466 shares were acquired in
three separate private placements during calendar year 1995 and 1996 to
accredited and otherwise knowledgeable investors; (ii) an aggregate of 81,428
shares were acquired in private, isolated transactions; (iii) an aggregate of
244,321 shares of Common Stock certain warrants exercisable at prices ranging
from $5.00 to $6.60 per Shares; (iv) an aggregate of 398,287 shares of Common
Stock were acquired pursuant to financial and other consulting services
performed on behalf of the Company; (v) an aggregate of 270,000 shares are
reserved for issuance upon the closing of a proposed transaction to acquire
certain assets from Digital Criteria Search Technologies, Inc.; (vi) the
exercise of options to purchase 4,286 shares of Common Stock at $.875 per share
(for an aggregate of $3,750.25 received by the Company); and (vii) the exercise
of warrants to purchase 95,501 shares of Common Stock at prices ranging from
$.875 to $1.75 per Share (for an aggregate of $86,690 received by the Company).
Of the Common Stock offered hereby, 85,000 Shares may not be transferred for
forty-five (45) days from the date hereof, and 1,758,289 Shares may not be
transferred for twelve (12) months from the date hereof unless otherwise
required by the NASDAQ SmallCap Market for such longer period, subject to
earlier release at the sole discretion of _______________, which is acting as
the Representative (the "Representative") of several underwriters (the
"Underwriters") in connection with a public offering of the Company's
securities. The certificates evidencing such securities include a legend with
such restrictions. See "Selling Securityholders" and "Plan of Distribution."
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS" AND "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December __, 1996
<PAGE>
[ALTERNATE PAGE]
The Common Stock offered by the Selling Securityholders pursuant to this
Prospectus may be sold from time to time by the Selling Securityholders or by
their transferees. No underwriting arrangements have been entered into by the
Selling Securityholders. The distribution of the securities by the Selling
Securityholders may be effected in one or more transactions that may take place
on the over-the-counter market including ordinary broker's transactions,
privately- negotiated transactions or through sales to one or more dealers for
resale of such shares as principals at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with sales
of such securities. Transfers of the securities may also be made pursuant to
applicable exemptions under the Securities Act of 1933, as amended (the
"Securities Act"), including but not limited to sales under Rule 144 under the
Securities Act.
The Selling Securityholders and intermediaries through whom such securities may
be sold may be deemed "underwriters" within the meaning of Section 2(11) the
Securities Act with respect to the securities offered, and any profits realized
or commissions received may be deemed underwriting compensation. The Company has
agreed to indemnify the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act.
The resale of the securities held by the Selling Securityholders is subject to
prospectus delivery and other requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Sale of such securities or the potential of such
sales at any time may have an adverse effect on the market prices of the Common
Stock offered hereby, Additionally, the Selling Securityholders may be deemed to
be underwriters under the Securities Act.
On the date of this Prospectus, a registration statement under the Securities
Act with respect to an underwritten public offering by the Company of 1,000,000
shares of Common Stock was declared effective by the Securities and Exchange
Commission (the "Commission"). See "Concurrent Offering." Subject to the terms
and conditions of the Underwriting Agreement, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part, the
Underwriter has agreed, on a "firm commitment" basis, to purchase 1,000,000
shares of the Company, if any are purchased. The Underwriter has advised the
Company that it proposed to offer the Shares to the public at $6.00 per share
and that they may allow certain dealers who are NASD members, and such dealers
may reallow, concession and reallowance may be changed by the Underwriter. The
Company will receive approximately $4,900,000 in net proceeds from such
offering, after (i) payment of underwriting discounts and commissions of 10%
($600,000), (ii) additional compensation to be received by the Representative in
the form of a non- accountable expense allowance equal to 3% of the gross
proceeds totalling $180,000, and (iii) offering expenses of the Company,
estimated at $320,000. The net proceeds of $4,900,000 do not include any value
attributable to warrants (the "Representative's Warrants") entitling the
Representative to purchase up to 100,000 shares of Common Stock at a price per
share equal to
2
<PAGE>
[ALTERNATE PAGE]
120% of the initial public offering price, exercisable for a period of five
years commencing 12 months after the date of this Prospectus. The Company will
not receive any of the proceeds from the sale of the Securities by the Selling
Securityholders. All costs incurred in the registration of the Securities of the
Selling Securityholders are being borne by the Company. See "Selling
Securityholders."
The Company intends to furnish its security holders with annual reports
containing audited financial statements and the audit report of the independent
certified public accountants and such interim reports as it deems appropriate or
as may be required by law. The Company's fiscal year ends September 30.
THE OFFERING
Securities Offered by Company (1)........... 1,000,000 Shares
Securities Offered by
Selling Securityholders..................... 1,843,289 Shares
Common Stock Outstanding
Prior to Offering(2)........................ 4,058,214 Shares
Common Stock Outstanding
After the Offering(3)....................... 5,058,214 Shares
Use of Proceeds (4)......................... The net proceeds of this
offering will be used for (i)
marketing and advertising; (ii)
video acquisition; (iii)
construction of editing
facilities; (iv) travel agent
equipment and (v) working
capital. See "Use of Proceeds."
Proposed Nasdaq Symbol ..................... VDAT
(1) Assumes the issuance of 1,000,000 shares of Common Stock. See
"Description of Securities." Does not include 150,000 shares of Common
Stock which the Representative of the Underwriters has the option to
purchase from shareholders of the Company to cover the Underwriter's
Over-allotment Option, if any. See "Underwriting."
(2) Includes shares of Common Stock underlying warrants to purchase an
aggregate of 244,321 at prices ranging from $5.00 per Share to $6.60 per
Share which shares of Common Stock are being registered hereby. Also
includes options to purchase an aggregate of 439,136 shares of Common
Stock at $.0001 per Share for a period of five
3
<PAGE>
[ALTERNATE PAGE]
(5) years commencing January 1, 1997 issued to Randy S. Selman, the
Company's President, Chief Executive Officer, Chief Financial Officer
and a Director (219,568 Shares) and to Alan Saperstein, the Company's
Vice President, Secretary and a Director (219,568 Shares).
(3) Except as described in footnote (2) above, does not include (i) the
exercise of any other warrants or options, (ii) the shares of Common
Stock reserved for the Company's 1996 Stock Option Plan, or (iii) the
exercise of any Underwriter's Options.
(4) The Company's intended use of net proceeds from the sale of Common Stock
in the Concurrent Public Offering.
CONCURRENT PUBLIC OFFERING
On the date of this Prospectus, a registration statement under the Securities
Act with respect to the Initial Public Offering of 1,000,000 shares of Common
Stock was declared effective by the Securities and Exchange Commission
("Commission"), Washington, D.C. 20549, and the Company commenced the sale of
the Shares offered thereby (without giving effect to the Over- Allotment Option
granted to the Underwriters of the offering). Sales of Securities under this
Prospectus by the Selling Securityholders or even the potential of such sales
may have an adverse effect on the market price of the Company's securities.
4
<PAGE>
[ALTERNATE PAGE]
SELLING SECURITYHOLDERS
The registration statement of which this Prospectus is a part also covers the
registration of an additional 1,000,000 shares of Common Stock. The shares of
Common Stock are being offered as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED OF COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITYHOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING OFFERING
- ---------------------- ------------------- ---------------- ------------------- -----------
<S> <C> <C> <C> <C>
Lisa Aboud(1)(2) .................................... 1,369 744 625 *
Aeron Marine
Shipping Company(3) .............................. 50,001 14,286 35,715 *
Afton Corporation(4) ................................ 100,000 100,000 -0- -0-
Atlas, Pearlman, Trop
& Borkson, P.A.(5) ................................ 5,357 2,679 2,678 *
Martin Amhrein(1) ................................... 30,000 15,000 15,000 *
Raynor Baldwin(2)(3) ................................ 8,616 3,215 5,401 *
Neil Berman (2) ..................................... 9,285 3,571 5,714 *
Herman Blank(2) ..................................... 32,715 18,429 14,286 *
Shirley Blank(3) .................................... 40,000 7,143 32,857 *
Darell Boyd(2) ...................................... 9,285 3,571 5,714 *
Abraham & Cheryl
Chamely(1)(2) ..................................... 2,738 1,488 1,250 *
Greg Catinella(5) ................................... 3,571 3,571 -0- -0-
Peter Conzatti(1) ................................... 30,000 15,000 15,000 *
Rona Coty(2)(3) ..................................... 28,571 10,000 18,571 *
DBC Corporation(3) .................................. 57,143 14,286 42,857 *
Frances DaSilva(1)(2) ............................... 2,738 1,488 1,250 *
Harvey Delott(6) .................................... 25,000 25,000 -0- -0-
Fleet Trust Company, N.A ............................
Trustee, U/A Frederick
A. Deluca 102 Qualified
Annuity Trust(3) ................................. 252,292 35,714 216,578 4.28%
Digital Criteria Search
Technologies, Inc.(7) ............................. 270,000 270,000 -0- -0-
Alex Dohner(1) ...................................... 3,750 1,875 1,875 *
Carl Domino(3) ...................................... 25,714 7,143 18,571 *
Meir Eliakim(6) ..................................... 50,000 50,000 -0- -0-
FPI, Inc.(8) ........................................ 194,321 169,321 25,000 *
Cheri Ferguson(3) ................................... 10,000 2,857 7,143 *
Hans Frank(1) ....................................... 7,500 3,750 3,750 *
David Glassman(3) ................................... 10,000 2,857 7,143 *
____________
* Less Than 1%
5
<PAGE>
[ALTERNATE PAGE]
NUMBER OF SHARES OF NUMBER OF SHARES NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED OF COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITYHOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING OFFERING
- ---------------------- ------------------- ---------------- ------------------- -----------
Harvey and Harolyn
Glicker(2)(3) .................................... 9,285 6,428 2,857 *
Jerome R. Grigoli(5)(9)(10) ........................ 15,000 15,000 -0- -0-
HST Partners(11) ................................... 75,000 75,000 -0-
Dominic Hadeed(5) .................................. 20,000 20,000 -0- -0-
Joseph & Rosemary
Hadeed(2)(12) .................................... 7,739 6,489 1,250 *
Monica Hadeed(1)(2) ................................ 1,369 744 625 *
Robert Hadeed(1)(2) ................................ 1,369 744 625 *
Stephen & Elizabeth
Hadeed, JTBE(1)(2) ............................... 2,738 1,488 1,250 *
Patricia A. Herman(5) .............................. 5,000 5,000 -0- *
Lisa Holmes(9) ..................................... 25,000 12,500 12,500 *
Intervest, Inc.(5) ................................. 10,000 10,000 -0- *
Eric Jacobs(1)(15) ................................. 7,024 5,774 1,250 *
Richard Jacobs(1)(2) ............................... 5,476 2,976 2,500 *
Neil H. Jones(6) ................................... 25,000 25,000 -0- -0-
Susan G. Joyalle &
Andre Weinlich, JTROS(3) ........................... 2,499 714 1,785 *
Marjorie Kalikow Trust
f/b/o Nathan Kalikow(3) ............................ 25,000 7,143 17,857
Kensington Capital Corp.(5) ........................ 12,500 12,500 -0- -0-
Olaf Koester(1) .................................... 15,000 7,500 7,500 *
Marian Korff(1) .................................... 15,000 7,500 7,500 *
Stefani J. Lennon(6) ............................... 25,000 25,000 -0- -0-
Christian Lepple(1) ................................ 5,000 2,500 2,500 *
William Low(6) ..................................... 12,500 12,500 -0- -0-
Mackenzie Shea Inc.(5) ............................. 37,500 37,500 -0- -0-
Colin Magg(1) ...................................... 7,500 3,750 3,750 -0-
James Massetti(3) .................................. 5,401 1,429 3,972 *
Metro Consulting, Inc.(5)(10) ...................... 22,500 22,500 -0- -0-
Victor Moftakhar(1) ................................ 7,500 3,750 3,750 *
Arthur Nasso(2) .................................... 60,497 1,786 58,711
Robert E. Newman(6) ................................ 25,000 25,000 -0- -0-
Frederick J. Oswald(6) ............................. 12,500 12,500 -0- -0-
Sid Paterson(3) .................................... 25,714 7,143 18,571 *
Potenza Investments, Inc.(10)(13) .................. 25,000 25,000 -0- -0-
Providence Holding Co.(5) .......................... 10,000 10,000 -0- -0-
__________________
* Less Than 1%
6
<PAGE>
[ALTERNATE PAGE]
NUMBER OF SHARES OF NUMBER OF SHARES NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED OF COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITYHOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING OFFERING
- ---------------------- ------------------- ---------------- ------------------- -----------
Khalid Ramadan(1)(2) ............................... 1,369 744 625 *
Roger Rankin(2)(3) ................................. 107,144 41,429 65,715 1.66%
Cornelie Raiser(1) ................................. 3,750 1,875 1,875 *
David Ratcliff(2) .................................. 1,085 893 192
Burt Rhodes(5) ..................................... 14,287 14,287 -0- -0-
Gary Rhodes(9) ..................................... 5,714 5,714 -0- -0-
Robert Rogoff(1)(2) ................................ 16,429 8,929 7,500 -0-
Hart Rotenberg(6) .................................. 25,000 25,000 -0- -0-
Joseph Rotenberg(6) ................................ 25,000 25,000 -0- -0-
Alan Saperstein(14) ................................ 539,476 76,429 463,047 9.15%
Allan L. Schrager(6) ............................... 12,500 12,500 -0- -0-
Tony Schweiger(3) .................................. 25,000 7,143 17,857 *
Randy S. Selman(14) ................................ 505,359 76,429 428,930 8.48%
Socrates Skiadas(6) ................................ 25,000 25,000 -0- -0-
Sterling Factors, Inc.(6) .......................... 75,000 75,000 -0- -0-
Orrin & Jeffrie Stern, JTBE(3) ..................... 21,428 2,857 18,571 *
Statistical Analytics Corp(5) ...................... 97,500 97,500 -0- -0-
Stratus Management
Group, Inc.(5) ................................... 5,250 5,250 -0- -0-
William Talmadge(2)(3) ............................. 4,345 1,607 2,738 *
Town and Country Ltd.(5) ........................... 102,500 102,500 -0- -0-
Univest Management EPSP(3) ......................... 40,393 7,143 33,250 *
John Varacchi(9)(10) ............................... 12,500 12,500 -0- -0-
Voltava IV Inc.(6) ................................. 12,500 12,500 -0- -0-
David Wajnberg(9) .................................. 5,000 5,000 -0- -0-
Elizabeth Wajnberg(9) .............................. 5,714 5,714 -0- -0-
Phil Waldbaum(3) ................................... 10,000 2,857 7,143 *
Bernd Wolpert(1) ................................... 15,000 7,500 7,500 *
Yosef Yud(6) ....................................... 75,000 75,000 -0- *
Ruth Zelinka(3) .................................... 25,715 7,143 18,572 *
Robert Zelinka(2) .................................. 61,679 27,429 34,250 (16)
Delaware Charter &
Guaranty as Trustee for
Robert Zelinka IRA(3)(16) ......................... 99,999 28,571 71,428 2.19%(16)
---------- --------- ---------
3,798,213 1,993,289 1,804,924
</TABLE>
_________
* Less than 1%
(1) Represents conversion of Series B Preferred Stock (each share of Series
B Preferred Stock is convertible into two shares of Common Stock). These
shares were issued pursuant to the Company's November 15, 1995 offering
(the "November 1995 Offering") of certain securities pursuant to
Regulation D of the Securities Act. Of the shares of Series B Preferred
Stock that were converted into Common Stock, 50% are being registered
hereby.
(2) Includes the exercise of warrants in October and November 1996, at
prices ranging from $.875 to $1.75 per Share.
7
<PAGE>
[ALTERNATE PAGE]
(3) Represents conversion of Series A Preferred Stock (each share of Series
A Preferred Stock is convertible into two shares of Common Stock). These
shares were issued pursuant to the Company's February 15, 1995 offering
(the "February 1995 Offering") of certain securities pursuant to
Regulation D of the Securities Act. Of the shares of Series A Preferred
Stock that were converted into Common Stock, 50% are being registered
hereby.
(4) Represents shares underlying warrants exercisable for a period of three
(3) years from the date of issuance at $5.00 per share.
(5) Issued in consideration for advisory, business and other consulting
services performed on behalf of the Company.
(6) Includes shares issued pursuant to the May 1996 Offering of up to 17
units, each unit consisting of a $50,000 convertible promissory note
(the "Note") convertible at $2.50 per Share (for an aggregate of
$850,000 Notes convertible into an aggregate of 340,000 Shares) and
5,000 shares of Common Stock (for an aggregate of 85,000 Shares).
Pursuant to the May 1996 Offering memorandum, 20% of the Shares are
subject to a lock-up period of 45 days, and assuming conversion of the
Notes, 50% of the Shares underlying the Notes (for an aggregate of
170,000 shares) are subject to a 90 day and the remaining 50% of the
Shares underlying the Notes (170,000 shares) are subject to a 180 day
lock-up period. The May 1996 Offering memorandum also states that these
lock-ups period notwithstanding, the Company's Representative of a
Registration Statement of which this Prospectus is a part may, in its
sole discretion may (A) refuse or defer such registration rights or (B)
impose certain additional restrictions in addition to the current
lock-up restrictions described in this Note 1.
(7) Reserved for issuance pursuant to the proposed acquisition of Digital
Criteria Search Technologies, Inc. wherein shares of a wholly owned
subsidiary of the Company to be formed are exchangeable for shares of
Common Stock of the Company. See "Business - Digital Criteria Search
Technologies, Inc."
(8) Represents (i) Shares underlying warrants exercisable for a period of
two years at $6.60 per Share from the effective date of this Prospectus,
and (ii) 25,000 Shares, which represents 50% of the Shares issued to the
investor pursuant to the conversion of Series B Preferred Stock as
described in Note 5.
(9) Issued in connection with sale of securities from shareholders of the
Company.
(10) Notwithstanding that the shares held by each of these persons were
subject to 90 day lock-up period,the Company's Representative of a
Registration Statement of which this Prospectus is a part may, in its
sole discretion (A) refuse or defer such registration rights of these
Shares or (B) impose certain additional restrictions in addition to the
current lock-up restrictions described in this note 9.
(11) Includes (i) Shares issued pursuant to the May 1996 Offering, (ii)
Shares issued upon conversion of the Notes pursuant to the May 1996
Offering; and (iii) 50,000 Shares issued pursuant to an isolated
transaction with shareholders of the Company.
(12) Includes (i) 5,000 Shares issued in connection with consulting, business
and advisory services and (ii) 2,500 Shares issued in connection with
the conversion of Series B Preferred Stock.
(13) Issued in connection with isolated transactions with the Company.
8
<PAGE>
[ALTERNATE PAGE]
(14) Issued in connection with the conversion of the Series A Preferred Stock
pursuant to the Company's February 1995 Offering. Also includes (i)
options granted to Messrs Selman and Saperstein each to purchase 219,568
shares (an aggregate of 439,136 shares) of Common Stock at $.0001 per
Share for a period commencing January 1, 1997 and continuing for a
period of five (5) years thereafter, which options were issued in
connection with an employment and other bonus arrangement with the
Company and (ii) 75,000 shares of Common Stock to be sold by each of
Messrs. Selman and Saperstein (for an aggregate of 150,000 Shares) to
the extent that the Underwriters exercise their Over-Allotment Option as
described in the concurrent offering.
(15) Includes the exercise of warrants at $1.75 per Share and options to
purchase shares of Common Stock at $.875 per share.
(16) Represents shares held by Robert Zelinka and Delaware Charter &
Guaranty, as Trustee for Robert Zelinka IRA.
Of these shares, 38,572 Shares are being offered by three affiliates of the
Company, including Randy S. Selman, the Company's Chief Executive Officer,
President, Chief Financial Officer, and a Director, Alan Saperstein, the
Company's Vice President, Secretary, and a Director, and Fleet Trust
Company,Trustee, Frederick A. Deluca U/A 102 Qualified Annuity Trust, and the
balance of these Shares are being offered by 87 persons not affiliated with the
Company, While the Shares being offered hereby were subject to either no lock-up
restrictions, or 45 day, 90 day, or 180 days lock-up restrictions pursuant to
agreements between these shareholders and the Company, these agreements further
provide these lock-ups period notwithstanding, the Company's Representative or
underwriter of a Registration Statement to be filed with the Securities and
Exchange Commission may, in its sole discretion (A) refuse or defer such
registration rights or (B) impose certain additional restrictions in addition to
current lock-up restrictions imposed by the respective agreements. Currently, of
the 1,843,289 shares of Common Stock described above, 85,000 Shares may be sold
commencing forty-five (45) days from the date of this Prospectus and the
remaining 1,758,289 Shares may be sold commencing twelve (12) months from the
date of this offering, unless otherwise required by the NASDAQ SmallCap Market
for such longer period. The resale of the securities of the Selling
Securityholders is subject to prospectus delivery and other requirements of the
Securities Act of 1933, as amended. Sales of such securities or the potential of
such sales at any time may have an adverse effect on the market prices of the
securities offered hereby.
The Company is paying for the benefit of the Selling Securityholders certain of
their expenses in connection with this offering. These expenses consist of
$3,352 (SEC filing fee attributable to such Selling Securityholders'
securities); and $193,000 (based upon a pro rata share of blue sky legal
expenses and filing fees, legal fees, accounting fees and other related offering
expenses, without giving effect to the exercise of the Underwriter's
Over-Allotment Option). Certain of the Selling Securityholders are customers of
the Underwriter and have participated in prior transactions in which the
Underwriter was involved as a placement agent or as an underwriter.
9
<PAGE>
[ALTERNATE PAGE]
The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers and agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The Selling
Securityholders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Selling Securityholders may also elect to
sell such securities pursuant to one or more exemptions from registration under
the Act, including but not limited to sales under Rule 144.
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a Prospectus will be distributed
which will set forth the numbers of shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for shares purchased from the
Selling Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and the
regulations thereto, any person engaged in a distribution of the securities of
the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation, Rule 10b-6
and 10b-7, in connection with the transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Securityholders.
PLAN OF DISTRIBUTION
The sale of Common Stock by the Selling Securityholders offered hereby may be
effected from time to time in transactions (which may include block transactions
by or for the account of the Selling Securityholders). Alternatively, the
Selling Securityholders may from time to time offer such Securities through
underwriters, dealers or agents. The distribution of the Securities by the
Selling Securityholders may be effected in one or more transactions that may
take place on the over-the-counter market, including ordinary broker's
transactions, privately-negotiated transactions
10
<PAGE>
[ALTERNATE PAGE]
or through sales to one or more broker-dealers for resale of such shares as
principals, including the Underwriter, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with such
sales of Securities. The Selling Securityholders and intermediaries through whom
such Securities are sold may be deemed "underwriters" within the meaning of the
Securities Act with respect to the Securities offered, and any profits realized
or commission received may be deemed underwriting compensation. The Selling
Securityholders may also transfer the Securities pursuant to applicable
exemptions from registration under the Securities Act including Rule 144 under
such Act.
Each of the Selling Shareholders have agreed not to sell, transfer, or otherwise
publicly dispose of any shares of Common Stock (including Common Stock
underlying any warrants or options held by any of them for a period of twelve
months, with the exception of an aggregate of 85,000 shares of Common Stock,
which may not be sold, transferred or otherwise publicly disposed of for a
period of 45 days. At the time a particular offer of the Securities is made by
or on behalf of a Selling Securityholder, to the extent required, a Prospectus
will be distributed which will set forth the number of shares of Common Stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for the shares of Common Stock purchased from the Selling
Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the Securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such Securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation, Rule 10b-6
and 10b-7, in connection with transactions in such Securities, which provisions
may limit the timing of purchases and sales of such Securities by the Selling
Securityholders.
11
<PAGE>
[ALTERNATE PAGE]
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any Underwriter. Neither the
delivery of this Prospectus nor any sale made hereunder shall, in any
circumstances, create an implication that there has been no change in the
affairs of the Company or that information contained herein is correct as of any
date subsequent to the date hereof. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Page
----
Available Information......
Prospectus Summary.........
Risk Factors...............
Use of Proceeds............
Dilution...................
Dividend Policy............
Capitalization.............
Selected Financial Data....
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations...............
Business...................
Management.................
Certain Transactions.......
Principal Shareholders.....
Description of Securities..
Selling Securityholders....
Underwriting...............
Legal Matters..............
Experts....................
Index to Financial
Statements...............
Until _________, 1996 (25 days after the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligations of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
______________________
VISUAL DATA
CORPORATION
1,843,289 Shares of
Common Stock
_______________________
PROSPECTUS
_______________________
______________
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "Corporation Act") permits the
indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act. Insofar as indemnification
for liabilities arising under the Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as express in the act and is therefore unenforceable.
The Articles of Incorporation and Bylaws of the Company require the Company to
indemnify its Directors and officers to the fullest extent permitted by the
Business Corporation Act of the State of Florida.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the expenses to be
incurred by it in connection with the issuance and distribution of the
securities covered by this Registration Statement.
Securities and Exchange Commission/Registration fee and other documents
Nasdaq filing fee............................................................
Transfer Agent and registrar Fees............................................
Printing and engraving expenses..............................................
Legal Fees and Expenses......................................................
Accounting Fees and Expenses.................................................
Blue Sky Fees and Expenses...................................................
Representatives' Non-Accountable Expense Allowance...........................
Miscellaneous................................................................
Total*...............................................................
*Estimated
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
THE NUMBERS AND AMOUNTS DESCRIBED BELOW GIVE EFFECT TO A 1:2.5 REVERSE STOCK
SPLIT IN DECEMBER 1993, A 1:1.6 REVERSE STOCK SPLIT EFFECTIVE IN DECEMBER 1994
AND A 1:3.5 REVERSE STOCK SPLIT EFFECTIVE IN MAY 1996.
Pursuant to a private offering commencing in October 1993 (the "October 1993
Offering") of securities of HotelView Corporation, a wholly owned subsidiary,
the Company offered and sold an aggregate of ten (10) units, each unit
consisting of (i) a $5,000 principal amount ten percent (10%) convertible
subordinated debenture (the "Debentures") and (ii) common stock warrants to
purchase 5,000 shares of Common Stock through September 30, 1994 at $.25 per
share, to accredited or otherwise knowledgeable investors who were provided with
and had access to information concerning the Company. Accordingly, the
securities were exempt from registration pursuant to Rule 505 of Regulation D
and Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"). Investors in the October 1993 Offering included Randy S. Selman, the
Company's Chief Executive Officer, President, acting Chief Financial Officer and
a Director ($5,000) and Alan Saperstein, the Company's Vice President, Secretary
and a Director ($5,000). In connection with the October 1993 Offering, HVC
received gross proceeds of $50,000 (representing the sale of 10 units for an
aggregate of $50,000 Debentures and warrants to purchase an aggregate of 50,000
shares of Common Stock). The investors in the October 1993 Offering received an
aggregate of warrants to purchase 17,859 shares of Common Stock of HVC at $.875
for a period of five years which were exchanged for similar warrants of the
Company.
Subsequently, the HotelView Debentureholders were offered the opportunity to
elect to convert the principal due under such the Debentures into shares of
Series A Preferred Stock offered pursuant to the Company's February 1995
Offering described below. Holders representing an aggregate of $47,500
Debentures (including a $5,000 Debenture held by Randy S. Selman and a $5,000
Debenture held by Alan Saperstein), elected to convert their Debentures and the
holder of the remaining $2,500 Debenture received cash. An aggregate of 3,000
shares of Common Stock representing interest at 10% per annum for a period of
approximately 13-1/2 months were issued to Debentureholders of $37,500 (Messrs.
Selman and Saperstein waived any interest on the Debentures held by each of
them). Each of the persons to whom these shares were issued had a pre-existing
relationship to the Company, had access to and were provided with relevant
information concerning the Company and thus, were exempt from registration
pursuant to Section 4(2) of the Securities Act.
Between September 1994 and January 1995, the Company issued warrants to purchase
an aggregate of 5,714 shares of Common Stock at $.875 per share for a period of
five years from the date of issuance to two accredited persons in consideration
for certain loans made to the Company, each of whom had a pre-existing
relationship with the Company and had access to relevant information concerning
the Company. Thus, these securities were exempt from registration pursuant to
Section 4(2) of the Securities Act.
II-2
<PAGE>
Between January and June 1994, the Company issued an aggregate of 12,857 Shares
and warrants to purchase 7,143 shares of Common Stock at $.875 per Share for a
period of five years from the date of issuance to an accredited investor who had
a pre-existing relationship with the Company in an isolated transaction. The
Company also sold 892 shares of Common Stock and warrants to purchase 1,786
shares of Common Stock at $.875 per Share for a period of five years from the
date of issuance to Arthur Nasso, the former Chief Operating Officer of the
Company. Additionally, the Company issued options to purchase an aggregate of
8,929 shares of Common Stock at $3.50 per share to two accredited investors,
each of whom had a pre-existing relationship with the Company. Each of these
persons were provided with and had access to relevant information concerning the
Company. Accordingly, the issuance of the securities described above were exempt
from registration pursuant to Section 4(2) of the Securities Act.
From January 1994 to March 1995, the Company issued 22,321 shares of Common
Stock, in connection with advisory, business and consulting fees performed on
behalf of the Company. Each of the persons receiving such securities were
accredited or otherwise knowledgeable investors, had a pre-existing relationship
with the Company, and were provided with and had access to relevant information
concerning the Company. Accordingly, the securities were exempt from
registration pursuant to Section 4(2) of the Securities Act.
From August 1994 to October 1994, the Company issued an aggregate of 11,428
shares of Common Stock, and warrants to purchase 7,142 shares of Common Stock at
$.875 expiring three years from the date of issuance to two accredited or
otherwise knowledgeable persons in connection with isolated transactions, which
persons had pre-existing relationships with the Company and received and had
access to relevant information concerning the Company. The Company received
gross proceeds of $20,000 from the sale of these securities. Accordingly, these
securities were exempt from registration pursuant to Section 4(2) of the
Securities Act.
Pursuant to a private offering commencing in February 1995 (the "February 1995
Offering") of 185,716 units at $3.50 per unit, the Company offered and sold to
accredited and otherwise knowledgeable investors an aggregate of 185,716 units,
each unit consisting of one share of Series A Convertible Preferred Stock
(convertible into two shares of Common Stock) and a warrant to purchase 1.5
shares of Common Stock at $.875 per Share. Additionally, an aggregate of 155,150
Shares were issued to two accredited investors in consideration for the
quantities purchased by each of them. The investors were provided with and had
access to relevant information concerning the Company. Accordingly, the
securities were exempt from the registration requirements pursuant to Rule 505
of Regulation D and Section 4(2) of the Securities Act. Investors in this
offering included Fleet Trust Company N.A., Trustee, U/A Frederick A. Deluca 102
Qualified Annuity Trust, a principal shareholder of the Company ($125,000). In
connection with the February 1995 Offering, the Company received gross proceeds
of $650,000, of which (i) $592,500 was received in cash, (ii) $10,000 was in
consideration for the forgiveness of a loan made to the Company, and (iii)
$47,500 was in consideration for the conversion of the Debentures into units.
II-3
<PAGE>
On March 31, 1995, the Company issued an aggregate of 3,572 shares of Common
Stock in consideration to certain investors in the February Offering as interest
on funds that were held in escrow by the Company for up to a year, based upon
accrued interest of $6,251 (based upon $1.75 per Share). Additionally, the
Company issued 2,857 shares of Common Stock in consideration for legal services.
Each of the persons to whom these securities were issued were accredited or
otherwise knowledgeable persons, had access to and were provided with relevant
information concerning the Company, and had a pre-existing relationship with the
Company. Accordingly, these securities were exempt from registration pursuant to
Section 4(2) of the Securities Act.
In March 1995, the Company issued 19,571 shares of Common Stock in consideration
for certain business, advisory and other consulting services performed on behalf
of the Company. In May 1996, the Company issued warrants to purchase 13,715
shares of Common Stock at $.875 for a period of four years from the date of
issuance to the same consultant in consideration for certain additional
business, advisory and other consulting services performed on behalf of the
Company. The consultant is an accredited investor, has a pre-existing
relationship with the Company, and had access to relevant information concerning
the Company. The issuance of these shares of Common Stock were exempt from
registration pursuant to Section 4(2) of the Securities Act.
In May 1995 and April 1996, the Company issued options to purchase an aggregate
of 8,572 shares of Common Stock at an exercise price of $.875 per Share for a
period of three years from the date of issuance to two persons, each of whom
were accredited or otherwise knowledgeable persons, had access to and were
provided with relevant information concerning the Company, and with whom had
pre-existing relationships with the Company. Accordingly, these securities were
exempt from registration pursuant to Section 4(2) of the Securities Act.
In September 1995, holders of an aggregate of 287,250 warrants to purchase
287,250 shares of Common Stock at $.875 per Share issued pursuant to the
February 1995 Offering exercised their warrants. The Company received gross
proceeds of $251,344. The issuance of these securities was exempt from
registration pursuant to 4(2) of the Securities Act.
Pursuant to a private offering commencing in November 1995 (the "November 1995
Offering") of 25 units, each unit consisting of 7,500 shares of Series B
Convertible Preferred Stock (each share of Series B Preferred Stock is
convertible into two shares of Common Stock) and warrants to purchase 1,429
shares of Common Stock at $1.75 per share for a period of three years from the
date of issuance. The securities were issued to accredited or otherwise
knowledgeable persons, each of who were provided with and had access to relevant
information concerning the Company. Accordingly, the securities were exempt from
registration pursuant to Rule 505 of Regulation D and Section 4(2) of the
Securities Act. The Company received gross proceeds of $455,000. One of the
investors in the November 1995 Offering also received warrants to purchase an
aggregate of 144,321 shares of Common Stock at $6.60 (representing 110% of the
offering price of the Common Stock of this initial public offering) for a period
through two years from the effective date of this Prospectus.
II-4
<PAGE>
In December 1995, the Company issued 10,716 shares of Common Stock in
consideration for business and advisory services. Each person receiving such
securities was accredited or otherwise knowledgeable investors, had a
pre-existing relationship with the Company, and was provided with and had access
to relevant information concerning the Company. Accordingly, the securities were
exempt from registration pursuant to Section 4(2) of the Securities Act.
In February and March 1996, certain shareholders who are accredited investors of
the Company loaned the Company an aggregate of $100,000. As an incentive for
these loans, these shareholders received warrants to purchase an aggregate of
40,000 shares of Common Stock at $.875 per share for period of four years from
the date of issuance. Each of these shareholders had a pre-existing
relationships with the Company, were provided with and had access to relevant
information concerning the Company and accordingly, the securities were exempt
from registration pursuant to Section 4(2) of the Securities Act.
Pursuant to a private offering commencing in May 1996 (the "May 1996 Offering")
of a maximum of 17 units at $50,000 per unit, each unit consisting of a $50,000
Convertible Promissory Note and 5,000 shares of Common Stock. Each $50,000 Note
is convertible into 20,000 shares of Common Stock at $2.50 per Share. Each
investor was an accredited or otherwise knowledgeable person who had access to
and was provided with relevant information concerning the Company. These
securities were issued pursuant to Rule 505 of Regulation D and Rule 4(2) of the
Securities Act. The Company received gross proceeds of $850,000, of which
$739,500 was received in cash and $110,500 was paid to registered broker-dealers
as commissions for the sale of these securities (including $25,500 for a
non-accountable expense allowance).
Between June and September 1996, the Company issued an aggregate of 346,750
shares of Common Stock in consideration for advisory, business, financial, legal
and other consulting services.
In September 1996, the Company sold 25,000 shares of Common Stock to an
accredited investor who had access to and was provided with relevant information
concerning the Company. In connection with this transactions, the Company
received gross proceeds of $50,000. Accordingly, the Shares were exempt from
registration pursuant to Section 4(2) of the Securities Act.
In September 1996, the Company issued warrants to purchase an aggregate of
100,000 shares of Common Stock at an exercise price of $5.00 for an exercise
period expiring three years from the effective date of this offering in
connection with advisory, business and other consulting services to an
accredited investor who was provided with and had access to relevant information
concerning the Company. Accordingly, the Shares were exempt from registration
pursuant to Section 4(2) of the Securities Act.
During October and November 1996, warrants to purchase an aggregate of 95,501
shares of Common Stock at prices ranging from $.875 to $1.50 per share for an
aggregate of $86,690 were exercised. Options to purchase an aggregate of 4,286
shares at $8.75 per share for an aggregate
II-5
<PAGE>
of $3,750.25 were also exercised during this period. The shareholders exercising
those warrants and options had access to and were provided with relevant
information concerning the Company. Accordingly, the securities were exempt from
registration pursuant to Section 4(2) of the Securities Act.
ITEM 27. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1 Form of Underwriting Agreement*
3(i)(a) Articles of Incorporation of Visual Data Corporation dated
May 17, 1993(1)
3(i)(b) Articles of Amendment of Visual Data Corporation dated July
26, 1993(1)
3(i)(c) Articles of Amendment of Visual Data Corporation dated
January 17, 1994(1)
3(i)(d) Articles of Amendment of Visual Data Corporation dated
October 11, 1994(1)
3(i)(e) Articles of Amendment of Visual Data Corporation dated
March 21, 1995 in connection with the Certificate of
Determination of Series A Convertible Preferred Stock(1)
3(i)(f) Articles of Amendment of Visual Data Corporation dated
October 31, 1995 in connection with the Certificate of
Determination of Series B Convertible Preferred Stock(1)
3(i)(g) Articles of Amendment of Visual Data Corporation dated May
23, 1996(1)
3(ii)(a) Articles of Incorporation of HotelView Corporation dated
September 15, 1993(1)
3(ii)(b) Articles of Amendment dated September 30, 1993(1)
3(iii) Bylaws of Visual Data Corporation(1)
3(iv) Bylaws of HotelView Corporation(1)
4(a) Form of Representative's Warrant Agreement*
4(b) Form of Common Stock Certificate*
4(c) Form of Series A Convertible Preferred Stock*
4(d) Form of Series B Convertible Preferred Stock*
5 Opinion of Atlas, Pearlman, Trop & Borkson*
10(b) Lease between HotelView Corporation and Life Insurance
Company of Georgia(1)
10(c) Employment Agreement, dated October 21, 1996 between the
Company and Randy S. Selman(1)
10(d) Employment Agreement, dated October 21, 1996 between the
Company and Alan Saperstein(1)
10(e) Form of Stock Option Plan(1)
10(f) Form of Travel Agency Agreement(1)
10(g) Form of Hotel Services Agreement(1)
10(h) Form of Hotel Services Agreement - Addendum I(1)
10(i) Form of Hotel Services Agreement - Addendum II(1)
10(j) Form of Attraction/Service Agreement(1)
II-6
<PAGE>
10(k) Form of HotelView Public Relations Agreement(1)
10(l) Form of HotelView Video Licensing Agreement(1)
10(m) Consulting Agreement between the Company and Stratus
Management Group, Inc.(1)
21 Subsidiaries of the Company(1)
23.1 Consent of Atlas, Pearlman, Trop & Borkson, P.A. (included
in Exhibit 5)*
23.2 Consent of Goldstein Lewin & Co. Certified Public
Accountants(1)
27 Financial Data Schedule (1)
- -------------
(1) Filed herewith
* To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(a) it will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) include any prospectus required by section 10(a)(3
of the Securities Act;
(ii) reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) include any additional or changed material
information on the plan of distribution;
(iv) for determining liability under the Securities Act,
It will treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time shall
be deemed to be the initial bona fide offering.
(v) it will file a post-effective amendment to remove
from registration any of the securities that remain unsold at the end of the
Offering.
(vi) it will provide to the Representatives at the
Closing of this Offering certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to each
purchaser.
(b) Insofar as indemnification for liability arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
II-7
<PAGE>
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide Offering thereof.
II-8
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing the Registration Statement on Form SB-2 and
authorizes this Registration Statement to be signed on its behalf by the
undersigned, in the City of Boca Raton, State of Florida, on this 26th day of
December, 1996.
VISUAL DATA CORPORATION
By: /S/ RANDY S. SELMAN
------------------------------
Randy S. Selman, President
and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement was signed by the following persons in
the capacities and on the dates stated.
SIGNATURES TITLE DATE
/S/ RANDY S. SELMAN President and Chief DECEMBER 26, 1996
- ----------------------------- Executive Officer and
Randy S. Selman Director (Principal
Executive Officer)
/S/ ALAN SAPERSTEIN Vice President, DECEMBER 26, 1996
- ----------------------------- and Director
Alan Saperstein
II-9
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles of
Incorporation of VISUAL DATA CORPORATION, a Florida corporation, filed on
May 17, 1993, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number H93000004239. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Seventeenth day of May, 1993
Authentication code: 993A00114658-051793-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
VISUAL DATA CORPORATION
The undersigned of full age, for the purpose of forming a corporation under the
provisions of Chapter 607 of Florida Statutes, and laws amendatory thereof and
supplemental thereto, hereby adopts the following Articles of Incorporation.
ARTICLE I - NAME
The name of this corporation is Visual Data Corporation. The principal address
of the corporation is 1650 South Dixie Highway, Boca Raton, Florida 33432.
ARTICLE II - PURPOSE
The purpose of this Corporation is to engage in any business or activity
permitted under the laws of the United States and the State of Florida.
ARTICLE III - DURATION
The period of existence of this corporation is perpetual.
ARTICLE IV - CAPITAL STOCK
The maximum number of shares which this Corporation is authorized to issue is
One Million (1,000,000) shares of Common Stock having a par value of $.0001
each.
ARTICLE V - INITIAL REGISTERED OFFICE AND AGENT
The initial registered office of this Corporation shall be located at 1650 South
Dixie Highway, Boca Raton, FL 33432. The initial agent of this corporation at
such office shall be Randy S. Selman who upon accepting this designation agrees
to comply with the provisions of Section 48.091, Florida Statutes, as amended
from time to time, with respect to keeping an office open for service of
process.
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
700 S.E. THIRD AVENUE, SUITE 300
FORT LAUDERDALE, FL 33316
(305) 463-3173
<PAGE>
ARTICLE VI - INITIAL BOARD OF DIRECTORS
The initial Board of Directors shall consist of three (3) members. The number of
directors may be increased or decreased from time to time as provided in the
Bylaws, but in no case shall the number of directors be less than two (2). The
names and addresses of the directors constituting the initial Board of Directors
are:
NAME ADDRESS
Randy S. Selman 1650 South Dixie Highway
Boca Raton, FL 33432
Alan Saperstein 1650 South Dixie Highway
Boca Raton, FL 33432
ARTICLE VII - INCORPORATOR
The name and address of the person signing these Articles of Incorporation is:
Randy S. Selman 1650 South Dixie Highway
Boca Raton, FL 33432
ARTICLE VIII - AUTHORITY
Authority to make and alter Bylaws, to accept and reject subscriptions for
shares, to make allotment of shares and to grant rights, options and warrants
with respect to shares is vested in the Board of Directors to the full extent
provided by law.
/s/ RANDY S. SELMAN
-------------------------
Randy S. Selman
STATE OF FLORIDA )
) SS
COUNTY OF PALM BEACH )
The following Articles of Incorporation of Visual Data Corporation were
acknowledged before me this 7th day of May, 1993 by Randy S. Selman as
incorporator.
/s/ JOANNE M. TEPPER
-------------------------
Notary Public
My Commission Expires:
[stamped]
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION EXP. DEC. 20, 1994
BONDED THRU GENERAL INS.
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles
of Amendment, filed on August 6, 1993, to Articles of Incorporation of VISUAL
DATA CORPORATION, a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX
audit number H93000006412. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Sixth day of August, 1993
Authentication code: 793A00127098-080693-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
VISUAL DATA CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of Visual Data Corporation, a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida, do hereby certify:
First: That pursuant to Written Consent of all of the shareholders and
directors of said Corporation dated July 26, 1993, the shareholders and
directors approved the amendment to the Corporation's Certificate of
Incorporation as follows:
Article IV of the Corporation's Articles of Incorporation shall be
deleted and the following substituted therefor:
ARTICLE IV
CAPITAL STOCK
The Corporation shall be authorized to issue Twenty Million (20,000,000)
shares of common stock with a par value of $.0001 per share.
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation, has executed these Articles of Amendment as of the 26th day of
July, 1993.
/s/ RANDY S. SELMAN
------------------------------------
RANDY S. SELMAN, President
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
700 S.E. THIRD AVENUE, SUITE 300
FORT LAUDERDALE, FL 33316
(305) 463-3173
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles
of Amendment, filed on Janusry 20, 1994, to Articles of Incorporation of
VISUAL DATA CORPORATION, a Florida corporation, as shown by the records of this
office.
I further certify the document was electronically received under FAX
audit number H94000000677. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Seventeenth day of May, 1993
Authentication code: 994A00002637-012194-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
VISUAL DATA CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of Visual Data Corporation (the
"Corporation"), a corporation organized and existing under and by virtue of the
Business Corporation Act of the State of Florida, do hereby certify:
First: That pursuant to Written Consent of a majority of the
shareholders and directors of said Corporation, the shareholders and directors
approved the amendment to the Corporation's Certificate of Incorporation as
follows:
Article IV of the Corporation's Articles of Incorporation shall be
deleted in its entirety and substituted by the following:
ARTICLE IV
CAPITAL STOCK
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be Twenty-five Million
(25,000,000) shares which are to be divided into two classes as follows:
20,000,000 shares of common stock with a par value of $.0001 per share
and 5,000,000 shares of Series A Convertible Preferred Stock at a par value of
$.0001.
Series of the preferred stock may be created and issued from time to
time, with such designations, preferences, conversion rights, cumulative,
relative, participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
700 S.E. THIRD AVENUE, 3RD FLOOR
FORT LAUDERDALE, FLORIDA 33316
(305) 463-3173
<PAGE>
of such series of preferred stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
The foregoing was adopted by all of the directors of the Corporation
pursuant to a meeting of the Board of Directors and by a majority of the
shareholders of the common stock of the Corporation held on the 17th day of
January, 1994, pursuant to Chapter 607 of the Florida Business Corporation Act
and the Corporation's by-laws. These shares present and voted at such meeting
represented a majority of the total issued and outstanding capital stock of the
Corporation entitled to vote. Therefore, the number cast for the amendment to
the Corporation's Articles of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation, has executed these Articles of Amendment as of the 17th day of
January, 1994.
/s/ RANDY S. SELMAN
--------------------------
RANDY S. SELMAN, President
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles
of Amendment, filed on October 17, 1994, to Articles of Incorporation of VISUAL
DATA CORPORATION, a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX
audit number H94000009879. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Seventeenth day of October, 1994
Authentication code: 594A00045807-101794-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
FOR
VISUAL DATA CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of Visual Data Corporation (the
"Corporation"), a corporation organization and existing under and by virtue of
the Business Corporation Act of the State of Florida, does hereby certify:
Pursuant to Written Consent of a majority of the shareholders and
directors of said Corporation, the Shareholders and Directors approved the
amendment to the Corporation's Certificate of Incorporation as follows:
The following shall be added to Article IV of the Corporation's Articles
of Incorporation :
ARTICLE IV
CAPITAL
All issued and outstanding shares of Common Stock of the Corporation
held by each holder of record on October 11, 1994, shall be automatically
combined at a rate of one-for one point six (1 for 1.6).
The foregoing was adopted by all of the directors of the Corporation
pursuant to a meeting of the Board of Directors and by a majority of the
shareholders of the Common Stock of the Corporation held on the 11th day of
October, 1994 pursuant to Chapter 607 of the Florida Business Corporation Act
and the Corporation's By-laws. These shares present and voted at such meeting
represented a majority of the total issued and outstanding capital stock of the
Corporation entitled to vote. Therefore the number cast for the amendment to the
Corporation Articles of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation has executed these Articles of Amendment as of the 11, day of
October, 1994.
/s/ RANDY S. SELMAN
----------------------------
Randy S. Selman, President
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 19000
FORT LAUDERDALE, FL 33301
PHONE NO.: (305) 763-1200
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles
of Amendment, filed on March 22, 1995, to Articles of Incorporation of VISUAL
DATA CORPORATION, a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX
audit number H95000003248. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Twenty-second day of March, 1995
Authentication code: 695A00012934-032295-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ SANDRA B. MORTHAM
--------------------------
Sandra B. Mortham
Secretary of State
<PAGE>
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF
PREFERRED SHARES DESIGNATED
"SERIES A CONVERTIBLE PREFERRED STOCK"
OF
VISUAL DATA CORPORATION
A FLORIDA CORPORATION
The undersigned, Randy S. Selman, President and Alan Saperstein,
Secretary, hereby certify that:
(i) They are the duly elected and acting President and Secretary,
respectively, of VISUAL DATA CORPORATION, a Florida corporation (the "Company").
(ii) Pursuant to authority given by the Company's Articles of
Incorporation, the Board of Directors has duly adopted the following recitals
and resolutions this 21st day of March 1995.
WHEREAS, the Articles of Incorporation of the Company provide for a
class of shares known as Series A Convertible Preferred Stock, $.0001 par value
per share, issuable from time to time; and
WHEREAS, the Board of Directors of this Company is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued preferred stock, to fix the number of
shares constituting any such class, and to determine the designations thereof,
or any of them; and
WHEREAS, this Company has not heretofore issued shares of preferred
stock of any series or class, and the Board of Directors of the Company desires,
pursuant to its authority as aforesaid, to determine and fix the rights,
preferences, privileges and restrictions relating to separate classes of said
preferred stock to be respectively designated "Series A Convertible Preferred
Stock" totalling 650,000 shares (the "Series A Preferred Stock").
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 1900
FORT LAUDERDALE, FL 33301
PHONE NO.: (305) 763-1200
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designation of the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, the Series A
Preferred Stock as follows:
1. DESIGNATION AND NUMBER OF SHARES. The Series A Preferred Stock shall
be designated "Series A Convertible Preferred Stock" of a par value of $.0001
each, and the number of shares constituting the Series A Preferred Stock shall
be 650,000 shares.
2. DIVIDEND RIGHTS. None.
3. CONVERSION.
(a) Subject to Paragraph 3(b), the Series A Preferred Stock is
convertible into two (2) shares of Common Stock at the option of the holder at
any time.
(b) Mandatory conversion of the Series A Preferred Stock shall
occur to holders of the Series A Preferred Stock upon the happening of any of
the following events:
(i) on the effective date the common stock ("Common Stock") of
the Company is trading in a public market;
(ii) any or all of the assets of the Company or any of its
subsidiaries are sold to the extent that the sale generates
distributions of not less than $650,000 to the holders of the Series A
Preferred Stock, whether in cash, cash equivalents or securities;
(iii) the Company or any of its subsidiaries merges or
consolidates with a third party, which third party is the surviving
party and the merger or consolidation generates cash, cash equivalents
or securities to the holders of the Series A Preferred Stock of not less
than $650,000; or
2
<PAGE>
(iv) the Company calls for a conversion of the Series A Preferred
Stock whereby the Company pays the holders of the Series A Preferred
Stock the amount of $1.00 per share, and (c) the holders of the Series A
Preferred Stock may convert the Series A Preferred Stock at any time.
4. REGISTRATION OF COMMON STOCK. If within two (2) years of the closing
date of an offering dated February 1, 1995 by the Company (the "Offering")
pursuant to Rule 505 of the Securities Act of 1933, as amended, of 650,000
"Units," each "Unit" consisting of one (1) share of Preferred Stock and a
Warrant to purchase 1.5 shares of common stock (the "Common Stock") of the
Company, par value $.0001 Mandatory Conversion of the Preferred Stock has not
occurred, the Company shall file a registration statement of its Common Stock
with the Securities and Exchange Commission. The holders of the Preferred Stock
at the date of the filing of the registration statement shall have certain
Piggyback and Demand Registration Rights. "See Piggyback Registration Rights"
and "Demand Registration Rights."
5. PIGGYBACK REGISTRATION RIGHTS.
The Investors are entitled to (1) piggyback registration for up to fifty
percent (50%) of any common stock resulting from the conversion of the Preferred
Stock by the Investor ("Investor Conversion") any time prior to the filing of a
registration statement filed by the Company in connection with an initial public
offering, provided that (i) the conversion of the Preferred Stock is effectuated
at the discretion of the Investor and not the result of actions undertaken by
the Company ("Mandatory Conversion"); and (ii) the Investor has never received
any distributions or dividends in connection with the Preferred Stock. The
Company shall, in each case, give written notice of the proposed filing to the
holders of the Preferred Stock at least
3
<PAGE>
45 days prior to the anticipated filing date, and such notice shall offer such
holders the opportunity to register such number of shares. To the extent that
the holders of the Preferred Stock intend to convert any or all of the Preferred
Stock into Common Stock, such conversion must occur at least 30 days prior to
the proposed filing which shares shall be included in the registration
statement. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering delivers a written notice to the Company that the
total number of securities which such holders, the Company or other persons or
entities entitled to include in such offering cannot be reasonably sold in such
offering, then the securities to be offered for the account of the holders of
these shares will be reduced pro rata to the extent necessary to reduce the
total number of securities to be included in such Offering to the number
recommended by such managing underwriter. The Company will bear all expenses of
such registration, except that the holder shall bear the costs and expenses of
the underwriter's commissions, brokerage fees, transfer taxes and the fees and
expenses of any counsel, accountant or other representatives attributable to the
shares (determined on a pro rata basis) held by such holders. Neither Piggyback
registration rights nor Demand registration rights are applicable to any
warrants or common stock underlying the Warrants offered pursuant to this
Offering.
6. DEMAND REGISTRATION RIGHTS
The Investors are entitled to (1) demand registration for all shares of
Common stock underlying any Preferred Stock held at any time after six (6)
months subsequent to the date that any shares of the Company's Common Stock is
publicly traded if at least fifty (50%) percent or more of the holders of the
shares of Common Stock issuable upon conversion of the Preferred Stock demand
such rights. The Company shall, in each case, give written notice of the
proposed
4
<PAGE>
filing to the holders of the Preferred Stock at least 45 days prior to the
anticipated filing date, and such notice shall offer such holders the
opportunity to register the shares of Common Stock underlying the Preferred
Stock. To the extent that the holders of the Preferred Stock intend to convert
any or all of the Preferred Stock into Common Stock, such conversion must occur
at least 30 days prior to the proposed filing. The Company will bear all
expenses of such registration, except that the holder shall bear the costs and
expenses of the underwriter's commissions, brokerage fees, transfer taxes and
the fees and expenses of any counsel, accountant or other representatives
attributable to the shares (determined on a pro rata basis) held by such
holders. Neither Piggyback Registration Rights nor the Demand Registration
Rights are applicable to any warrants or common stock underlying the Warrants
offered pursuant to this Offering.
7. VOTING RIGHTS. Except as may be provided by law, the holders of
Series A Preferred Stock will be entitled to have two (2) votes per share and
the Preferred Stock shall vote the Common Stock as a single class on all matters
in which the Common Stock is entitled to vote. Unless the vote or consent of the
holders of a greater number of shares is required by law, the consent of the
holders of at least two-thirds of this Series A Preferred Stock at the time
outstanding shall be necessary to change, alter or revoke the rights and
preferences conferred upon the Series A Preferred Stock by the Articles of
Incorporation or this Resolution, as amended from time to time, or for issuance
of further shares of this series or another class of preferred stock which shall
be senior to the Series A Preferred Stock.
8. ANTI-DILUTION PROVISIONS. Proportional adjustments shall be made for
stock splits, recapitalizations and similar transactions.
5
<PAGE>
9. DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP. In the
event of any voluntary or involuntary liquidation, dissolution or other winding
up of the affairs of the Company, the holders of the Series A Preferred Stock
shall be entitled to be paid after payment or provision for payment of the debts
and other liabilities of the Company, a liquidating distribution of $1.00 per
share of Series A Preferred Stock before any distributions may be made to any
other series or calls of preferred stock or the Common Stock of the Company. If,
upon any such liquidation, dissolution or other winding up of the affairs of the
Company, the net assets of the Company distributable among the holders of all
outstanding shares of the Series A Preferred Stock shall be insufficient to
permit the payment in full to such holders of the preferential amounts to which
they are entitled, then the entire net assets of the Company shall be
distributed among the holders of the Series A Preferred Stock ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled. Neither the consolidation or merger of the Company into or with
another corporation or corporations, nor the sale of all or substantially all of
the assets of the Company to another corporation or corporations shall be deemed
a liquidation, dissolution or winding up of the affairs of the Company within
the meaning of this paragraph.
10. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
law, the shares of Series A Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this Resolution (as such Resolution may be amended
from time to time) and in the Company's Articles of Incorporation. The shares of
Series A Preferred Stock shall have no preemptive or subscription rights.
6
<PAGE>
11. SEVERABILITY OF PROVISIONS. If any right, preference or limitation
of the Series A Preferred Stock set forth in this resolution (as such resolution
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth in this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
12. STATUS OF REACQUIRED SHARES. Shares of Series A Preferred Stock
which have been issued and reacquired in any manner shall (upon compliance with
any applicable provisions of the laws of the State of Florida) have the status
of authorized and unissued shares of Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
FURTHER RESOLVED, that the President or any Vice President, and the
Secretary, the Chief Financial Officer, the Treasurer or any Assistant Secretary
or Assistant Treasurer of this Company are each authorized to execute, verify
and file a certificate of determination of preferences in accordance with
Florida law.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Determination as of March 21, 1995.
VISUAL DATA CORPORATION
By: /s/ RANDY S. SELMAN
--------------------------------
Randy S. Selman, President
/s/ ALAN SAPERSTEIN
--------------------------------
Alan Saperstein, Secretary
7
<PAGE>
STATE OF FLORIDA )
: SS
COUNTY OF )
The foregoing instrument was acknowledged before me this _________ day
of _______________, 1995 by Randy S. Selman, President, who is personally known
to me or who has produced _____________________ as identification and who
did/did not take an oath.
Notary Public:
sign_________________________________
print________________________________
State of Florida at Large (Seal)
My Commission Expires:
STATE OF FLORIDA )
: SS
COUNTY OF )
The foregoing instrument was acknowledged before me this ________ day of
________________, 1995 by Alan Saperstein, Secretary, who is personally known to
me or who has produced _____________________ as identification and who did/did
not take an oath.
Notary Public:
sign_________________________________
print________________________________
State of Florida at Large (Seal)
My Commission Expires:
96/3617.900/21561.1
3
[SEAL]
FLORIDA DEPARTMENT OF STATE
SANDRA B. MORTHAM
SECRETARY OF STATE
[LETTERHEAD]
November 16, 1995
VISUAL DATA CORPORATION
1650 S DIXIE HWY
#3A
BOCA RATON, FL 33432US
RE: Document Number P93000035279
The Articles of Amendment to the article of Incorporation for VISUAL DATA
CORPORATION, a Florida corporation, were filed on November 16, 1995.
The certification requested is enclosed. To be offcial, the certificaton for a
certified copy must by atached to the original document that was electronically
submitted and filed under FAX audit number H95000012912.
Should you have any question regarding this matter, please telephone (904)
487-6050, the Amendment Filing Section.
Linda Stitt
Corporate Specialist
Division of Corporations Letter Numver: 095A00050895
<PAGE>
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles
of Amendment, filed on November 16, 1995, to Articles of Incorporation of
VISUAL DATA CORPORATION, a Florida corporation, as shown by the records of this
office.
I further certify the document was electronically received under FAX
audit number H95000012912. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Sixteenth day of November, 1995
Authentication code: 095A00050895-111695-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ SANDRA B. MORTHAM
CR2EO22 (1-95) --------------------------
Sandra Mortham
Secretary of State
<PAGE>
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF
PREFERRED SHARES DESIGNATED
"SERIES B CONVERTIBLE PREFERRED STOCK"
OF
VISUAL DATA CORPORATION
A FLORIDA CORPORATION
The undersigned, Randy S. Selman, President and Alan Saperstein,
Secretary, hereby certify that:
(i) They are the duly elected and acting President and Secretary,
respectively, of VISUAL DATA CORPORATION, a Florida corporation (the "Company").
(ii) Pursuant to authority given by the Company's Articles of
Incorporation, the Board of Directors has duly adopted the following recitals
and resolutions this 31st day of October, 1995.
WHEREAS, the Articles of Incorporation of the Company provide for a
class of shares known as Series B Convertible Preferred Stock, $.0001 par value
per share, issuable from time to time; and
WHEREAS, the Board of Directors of this Company is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued preferred stock, to fix the number of
shares constituting any such class, and to determine the designations thereof,
or any of them; and
WHEREAS, this Company has heretofore issued 650,000 shares of Series A
Convertible Preferred Stock, and the Board of Directors of the Company now
desires, pursuant to its authority as aforesaid, to determine and fix the
rights, preferences, privileges and restrictions relating to separate classes of
said preferred stock to be respectively designated "Series B Convertible
Preferred Stock" totalling 1,000,000 shares (the "Series B Preferred Stock").
GAYLE COLEMAN, ESQ., FL BAR # 857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 1900
FORT LAUDERDALE, FLORIDA 33301
PHONE NO.: (305) 763-1200
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designation of the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, the Series B
Preferred Stock as follows:
1. DESIGNATION AND NUMBER OF SHARES. The Series B Preferred Stock shall
be designated "Series B Convertible Preferred Stock" of a par value of $.0001
each, and the number of shares constituting the Series B Preferred Stock shall
be 1,000,000 shares.
2. DIVIDEND RIGHTS. None.
3. CONVERSION. The Series B Preferred Stock is convertible into two
(2) shares of Common Stock at the option of the holder at any time.
4. REGISTRATION OF COMMON STOCK. The holders of the Series B
Preferred Stock at the date of the filing of the registration statement shall
have certain Piggyback and Demand Registration Rights for certain of the common
stock underlying the Series B Preferred Stock. "See Piggyback Registration
Rights" and "Demand Registration Rights."
(a) PIGGYBACK REGISTRATION RIGHTS.
The Investors are entitled to (1) piggyback registration
for up to fifty percent (50%) of any common stock resulting from the
conversion of the Preferred Stock by the Investor ("Investor
Conversion") any time prior to the filing of a registration statement
filed by the Company in connection with an initial public offering,
provided that (i) the conversion of the Preferred Stock is effectuated
at the discretion of the Investor and not the result of actions
undertaken by the Company ("Mandatory Conversion"); and (ii) the
Investor has never received any distributions or dividends in connection
with the Preferred Stock. The Company shall, in each case, give written
notice of the proposed filing to the holders of the Preferred Stock at
least 45 days prior
2
<PAGE>
to the anticipated filing date, and such notice shall offer such holders
the opportunity to register such number of shares. To the extent that
the holders of the Preferred Stock intend to convert any or all of the
Preferred Stock into Common Stock, such conversion must occur at least
30 days prior to the proposed filing which shares shall be included in
the registration statement. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering delivers a written
notice to the Company that the total number of securities which such
holders, the Company or other persons or entities entitled to include in
such offering cannot be reasonably sold in such offering, then the
securities to be offered for the account of the holders of these shares
will be reduced pro rata to the extent necessary to reduce the total
number of securities to be included in such Offering to the number
recommended by such managing underwriter. The Company will bear all
expenses of such registration, except that the holder shall bear the
costs and expenses of the underwriter's commissions, brokerage fees,
transfer taxes and the fees and expenses of any counsel, accountant or
other representatives attributable to the shares (determined on a pro
rata basis) held by such holders.
(b) DEMAND REGISTRATION RIGHTS
The Investors are entitled to (1) demand registration for
all shares of Common stock underlying any Preferred Stock held at any
time after six (6) months subsequent to the date that any shares of the
Company's Common Stock is publicly traded if at least fifty (50%)
percent or more of the holders of the shares of Common Stock issuable
upon conversion of the Preferred Stock demand such rights. The Company
shall, in each case, give written notice of the proposed filing to the
holders of the Preferred Stock at least 45 days prior to the anticipated
filing date, and such notice
3
<PAGE>
shall offer such holders the opportunity to register the shares of
Common Stock underlying the Preferred Stock. To the extent that the
holders of the Preferred Stock intend to convert any or all of the
Preferred Stock into Common Stock, such conversion must occur at least
30 days prior to the proposed filing. The Company will bear all expenses
of such registration, except that the holder shall bear the costs and
expenses of the underwriter's commissions, brokerage fees, transfer
taxes and the fees and expenses of any counsel, accountant or other
representatives attributable to the shares (determined on a pro rata
basis) held by such holders.
5. VOTING RIGHTS. Except as may be provided by law, the holders of
Series B Preferred Stock will be entitled to have two (2) votes per share and
the Preferred Stock shall vote the Common Stock as a single class on all matters
in which the Common Stock is entitled to vote. Unless the vote or consent of the
holders of a greater number of shares is required by law, the consent of the
holders of at least two-thirds of this Series B Preferred Stock at the time
outstanding shall be necessary to change, alter or revoke the rights and
preferences conferred upon the Series B Preferred Stock by the Articles of
Incorporation or this Resolution, as amended from time to time, or for issuance
of further shares of this series or another class of preferred stock which shall
be senior to the Series B Preferred Stock.
6. ANTI-DILUTION PROVISIONS. Proportional adjustments shall be made for
stock splits, recapitalizations and similar transactions.
7. DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP. In the
event of liquidation, dissolution or winding up of the Company, holders of the
Preferred Stock will be entitled to receive, after (i) due payment or provision
for payment of the debts and other liabilities of the Company and (ii) a
liquidating distribution of up to $1.00 per share has been
4
<PAGE>
paid to the holders of Series A Convertible Preferred Stock (up to an aggregate
of 650,00 shares of Series A Convertible Preferred Stock or $650,000), a
liquidating distribution of up to $1.50 per share of Preferred Stock before any
distributions may be made to any other series or calls of preferred stock or the
Common Stock of the Company.
8. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
law, the shares of Series B Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this Resolution (as such Resolution may be amended
from time to time) and in the Company's Articles of Incorporation. The shares of
Series B Preferred Stock shall have no preemptive or subscription rights.
9. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Series B Preferred Stock set forth in this resolution (as such resolution
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth in this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
10. STATUS OF REACQUIRED SHARES. Shares of Series B Preferred Stock
which have been issued and reacquired in any manner shall (upon compliance with
any applicable provisions of the laws of the State of Florida) have the status
of authorized and unissued shares of Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
FURTHER RESOLVED, that the President or any Vice President, and the
Secretary, the Chief Financial Officer, the Treasurer or any Assistant Secretary
or Assistant Treasurer of this
5
<PAGE>
Company are each authorized to execute, verify and file a certificate of
determination of preferences in accordance with Florida law.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Determination as of October 31, 1995.
VISUAL DATA CORPORATION
By: /s/ RANDY S. SELMAN
-------------------------------
Randy S. Selman, President
/s/ ALAN SAPERSTEIN
-------------------------------
Alan Saperstein, Secretary
STATE OF FLORIDA )
: SS
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 31st day
of October, 1995 by Randy S. Selman, President, who is personally known
to me _____________________ and who did not take an oath.
Notary Public:
sign /s/ JOANNE M. TEPPER
------------------------------
print Joanne M. Tepper
------------------------------
State of Florida at Large (Seal)
My Commission Expires:
JOANNE M. TEPPER
Commission #CC 420611
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION EXP. DEC. 20, 1998
BONDED THRU
ATLANTIC BONDING CO INC
6
<PAGE>
STATE OF FLORIDA )
: SS
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 31st day of
October, 1995 by Alan Saperstein, Secretary, who is personally known to me
_____________________ and who did not take an oath.
Notary Public:
sign /s/ JOANNE M. TEPPER
------------------------------
print Joanne M. Tepper
------------------------------
State of Florida at Large (Seal)
My Commission Expires:
JOANNE M. TEPPER
Commission #CC 420611
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION EXP. DEC. 20, 1998
BONDED THRU
ATLANTIC BONDING CO INC
7
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles of
Amendment, filed on May 24, 1996, to Articles of Incorporation for VISUAL DATA
CORPORATION, a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number H96000007354. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Twenty-fourth day of May, 1996
Authentication code: 796A00056097-052496-P93000035279-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ SANDRA B. MORTHAM
CR2EO22 (1-95) --------------------------
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
FOR
VISUAL DATA CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of Visual Data Corporation (the
"Corporation"), a corporation organization and existing under and by virtue of
the Business Corporation Act of the State of Florida, does hereby certify:
Pursuant to the Written Consent of a majority of the Shareholders and
Directors of said Corporation, the Shareholders and Directors approved the
amendment to the Corporation's Articles of Incorporation as follows:
The following shall be added to Article IV of the Corporation's
Articles of Incorporation:
ARTICLE IV
CAPITAL STOCK
All issued and outstanding shares of Common Stock of the Corporation
held by each holder of record on May 15, 1996, shall be automatically combined
at a rate of one for three and one-half (1:3.5). No fractional share or scrip
representing a fractional share will be issued upon the Reverse Stock Split.
Fractional shares of .5 of Common Stock will be rounded up to the next highest
share, and fractional interest of less than .5 of Common Stock will be reduced
down to the next nearest share. Any stockholder whose aggregate stockholding is
reduced to a fraction of one (1) share will receive one (1) share of New Common
Stock.
The foregoing was adopted by all of the directors of the Corporation
pursuant to a meeting of the Board of Directors and by a majority of the
shareholders of the Common Stock of the Corporation held on the 15th day of May,
1996 pursuant to Chapter 607 of the Florida Business Corporation Act and the
Corporation's By-laws. These shares present and voted at such meeting
represented a majority of the total issued and outstanding capital stock of the
Corporation entitled to vote. Therefore the number cast for the amendment to the
Corporation Articles of Incorporation was sufficient for approval.
GAYLE COLEMAN, ESQ., FL BAR # 857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 1900
FORT LAUDERDALE, FLORIDA 33301
PHONE NO.: (954) 763-1200
<PAGE>
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation has executed these Articles of Amendment as of the 23RD day of MAY,
1996.
/s/ RANDY S. SELMAN
------------------------
Randy S. Selman, President
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles of
Incorporation of HOTELVIEW CORPORATION, a Florida corporation, filed on
September 15, 1993, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number H93000007417. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000035279.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Fifteenth day of September, 1993
Authentication code: 193A00131614-091593-P93000064158-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
VISUAL DATA CORPORATION
The undersigned of full age, for the purpose of forming a corporation under the
provisions of Chapter 607 of Florida Statutes, and laws amendatory thereof and
supplemental thereto, hereby adopts the following Articles of Incorporation.
ARTICLE I - NAME
The name of this corporation is Visual Data Corporation. The principal address
of the corporation is 1650 South Dixie Highway, Boca Raton, Florida 33432.
ARTICLE II - PURPOSE
The purpose of this Corporation is to engage in any business or activity
permitted under the laws of the United States and the State of Florida.
ARTICLE III - DURATION
The period of existence of this corporation is perpetual.
ARTICLE IV - CAPITAL STOCK
The maximum number of shares which this Corporation is authorized to issue is
One Million (1,000,000) shares of Common Stock having a par value of $.001 each.
ARTICLE V - INITIAL REGISTERED OFFICE AND AGENT
The initial registered office of this Corporation shall be located at 1650 South
Dixie Highway, Boca Raton, FL 33432. The initial agent of this corporation at
such office shall be Randy S. Selman who upon accepting this designation agrees
to comply with the provisions of Section 48.091, Florida Statutes, as amended
from time to time, with respect to keeping an office open for service of
process.
GAYLE E. COLEMAN, ESQ. - FL BAR #857327
Atlas, Pearlman & Trop, P.A.
70 S.E. Third Avenue
Suite 300
Fort Lauderdale, FL 33316
(305) 463-3173
<PAGE>
ARTICLE VI - INITIAL BOARD OF DIRECTORS
The initial Board of Directors shall consist of three (3) members. The number of
directors may be increased or decreased from time to time as provided in the
Bylaws, but in no case shall the number of directors be less than two (2). The
names and addresses of the directors constituting the initial Board of Directors
are:
NAME ADDRESS
Randy S. Selman 1650 South Dixie Highway
Boca Raton, FL 33432
Alan Saperstein 1650 South Dixie Highway
Boca Raton, FL 33432
ARTICLE VII - INCORPORATOR
The name and address of the person signing these Articles of Incorporation is:
Randy S. Selman 1650 South Dixie Highway
Boca Raton, FL 33432
ARTICLE VIII - AUTHORITY
Authority to make and alter Bylaws, to accept and reject subscriptions for
shares, to make allotment of shares and to grant rights, options and warrants
with respect to shares is vested in the Board of Directors to the full extent
provided by law.
/s/ RANDY S. SELMAN
-------------------------
Randy S. Selman
STATE OF FLORIDA )
) SS
COUNTY OF PALM BEACH )
The following Articles of Incorporation of Visual Data Corporation were
acknowledged before me this 7th day of May, 1993 by Randy S. Selman as
incorporator.
/s/ JOANNE M. TEPPER
-------------------------
Notary Public
My Commission Expires:
[stamped]
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION EXP. DEC. 20, 1994
BONDED THRU GENERAL INS.
STATE OF FLORIDA
[LETTERHEAD]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles of
Amendment, filed on October 5, 1993, to Articles of Incorporation for HOTELVIEW
CORPORATION, a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number H93000008020. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P93000064158.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Sixth day of October, 1993
Authentication code: 793A00134016-100693-P93000064158-1/1
[left hand corner]
GREAT SEAL OF THE
STATE OF FLORIDA
IN GOD WE TRUST
/s/ JIM SMITH
--------------------------
Jim Smith
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
HOTELVIEW CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of Hotelview Corporation (the
"Corporation"), a corporation organized and existing under and by virtue of the
Business Corporation Act of the State of Florida, do hereby certify:
First: That pursuant to Written Consent of a majority of the
shareholders and directors of said Corporation, the shareholders and directors
approved the amendment to the Corporation's Certificate of Incorporation as
follows:
Article IV of the Corporation's Articles of Incorporation shall be
deleted and the following substituted therefor:
ARTICLE IV
CAPITAL STOCK
The Corporation shall be authorized to issue Twenty Million (20,000,000)
shares of common stock with a par value of $.0001 per share.
The foregoing was adopted by all of the directors of the Corporation
pursuant to meeting of the Board of Directors held on September 29, 1993, and by
a majority of the shareholders of the common stock of the Corporation present at
the Meeting of the Shareholders pursuant to Section 607.0702 of the Florida
Business Corporation Act, which shares present and voted at such meeting
represented a majority of the total issued and outstanding capital stock of the
Corporation entitled to vote. Therefore, the number cast for the amendment to
the Corporation's Articles of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation, has executed these Articles of Amendment as of the 30th day of
September, 1993.
/s/ RANDY S. SELMAN
------------------------------
RANDY S. SELMAN, President
GAYLE E. COLEMAN, ESQ. FL BAR #857327
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
700 SOUTHEAST THIRD AVENUE, 3RD FLOOR
FORT LAUDERDALE, FLORIDA 33316
(305) 463-3174
BY-LAWS
OF
VISUAL DATA CORPORATION
a Florida corporation
<PAGE>
INDEX
PAGE
----
ARTICLE I
OFFICES
Section 1.01 PRINCIPAL OFFICE.................................. 1
Section 1.02 REGISTERED OFFICE................................. 1
Section 1.03 OTHER OFFICES..................................... 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01 ANNUAL MEETING.................................... 1
Section 2.02 SPECIAL MEETINGS.................................. 2
Section 2.03 SHAREHOLDERS' LIST FOR MEETING.................... 2
Section 2.04 RECORD DATE....................................... 3
Section 2.05 NOTICE OF MEETINGS AND ADJOURNMENT................ 3
Section 2.06 WAIVER OF NOTICE.................................. 4
ARTICLE III
SHAREHOLDER VOTING
Section 3.01 VOTING GROUP DEFINED.............................. 5
Section 3.02 QUORUM AND VOTING REQUIREMENTS FOR
VOTING GROUPS................................. 5
Section 3.03 ACTION BY SINGLE AND MULTIPLE VOTING
GROUPS........................................ 6
<PAGE>
Section 3.04 SHAREHOLDER QUORUM AND VOTING; GREATER
OR LESSER VOTING REQUIREMENTS................. 6
Section 3.05 VOTING FOR DIRECTORS; CUMULATIVE VOTING........... 7
Section 3.06 VOTING ENTITLEMENT OF SHARES...................... 7
Section 3.07 PROXIES........................................... 9
Section 3.08 SHARES HELD BY NOMINEES........................... 10
Section 3.09 CORPORATION'S ACCEPTANCE OF VOTES................. 10
Section 3.10 ACTION BY SHAREHOLDERS WITHOUT MEETING............ 11
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
Section 4.01 QUALIFICATIONS OF DIRECTORS....................... 12
Section 4.02 NUMBER OF DIRECTORS............................... 12
Section 4.03 TERMS OF DIRECTORS GENERALLY...................... 12
Section 4.04 STAGGERED TERMS FOR DIRECTORS..................... 13
Section 4.05 VACANCY ON BOARD.................................. 13
Section 4.06 COMPENSATION OF DIRECTORS......................... 13
Section 4.07 MEETINGS.......................................... 13
Section 4.08 ACTION BY DIRECTORS WITHOUT A MEETING............. 14
Section 4.09 NOTICE OF MEETINGS................................ 14
Section 4.10 WAIVER OF NOTICE.................................. 14
Section 4.11 QUORUM AND VOTING................................. 14
Section 4.12 COMMITTEES........................................ 15
Section 4.13 LOANS TO OFFICERS, DIRECTORS AND
EMPLOYEES; GUARANTY OF OBLIGATIONS........... 16
Section 4.14 REQUIRED OFFICERS................................. 16
ii
<PAGE>
Section 4.15 DUTIES OF OFFICERS................................ 16
Section 4.16 RESIGNATION AND REMOVAL OF OFFICERS............... 16
Section 4.17 CONTRACT RIGHTS OF OFFICERS....................... 17
Section 4.18 GENERAL STANDARDS FOR DIRECTORS................... 17
Section 4.19 DIRECTOR CONFLICTS OF INTEREST.................... 18
Section 4.20 RESIGNATION OF DIRECTORS.......................... 19
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 5.01 DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS.................................... 19
ARTICLE VI
OFFICE AND AGENT
Section 6.01 REGISTERED OFFICE AND REGISTERED AGENT............ 24
Section 6.02 CHANGE OF REGISTERED OFFICE OR REGISTERED
AGENT; RESIGNATION OF REGISTERED AGENT....... 24
ARTICLE VII
SHARES, OPTION, DIVIDENDS AND DISTRIBUTIONS
Section 7.01 AUTHORIZED SHARES................................. 25
Section 7.02 TERMS OF CLASS OR SERIES DETERMINED
BY BOARD OF DIRECTORS......................... 26
Section 7.03 ISSUED AND OUTSTANDING SHARES..................... 26
Section 7.04 ISSUANCE OF SHARES................................ 27
Section 7.05 FORM AND CONTENT OF CERTIFICATES.................. 27
iii
<PAGE>
Section 7.06 SHARES WITHOUT CERTIFICATES....................... 28
Section 7.07 RESTRICTION ON TRANSFER OF SHARES
AND OTHER SECURITIES.......................... 28
Section 7.08 SHAREHOLDER'S PRE-EMPTIVE RIGHTS.................. 29
Section 7.09 CORPORATION'S ACQUISITION OF ITS
OWN SHARES.................................... 29
Section 7.10 SHARE OPTIONS..................................... 29
Section 7.11 TERMS AND CONDITIONS OF STOCK RIGHTS
AND OPTIONS................................... 30
Section 7.12 SHARE DIVIDENDS................................... 30
Section 7.13 DISTRIBUTIONS TO SHAREHOLDERS..................... 31
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
Section 8.01 AUTHORITY TO AMEND THE ARTICLES OF
INCORPORATION................................. 32
Section 8.02 AMENDMENT BY BOARD OF DIRECTORS................... 32
Section 8.03 AMENDMENT OF BYLAWS BY BOARD OF
DIRECTORS..................................... 33
Section 8.04 BYLAW INCREASING QUORUM OR VOTING
REQUIREMENTS FOR DIRECTORS.................... 33
ARTICLE IX
RECORDS AND REPORT
Section 9.01 CORPORATE RECORDS................................. 34
Section 9.02 FINANCIAL STATEMENTS FOR SHAREHOLDERS............. 35
Section 9.03 OTHER REPORTS TO SHAREHOLDERS..................... 36
Section 9.04 ANNUAL REPORT FOR DEPARTMENT OF STATE............. 36
iv
<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.01 DEFINITION OF THE "ACT"........................... 37
Section 10.02 APPLICATION OF FLORIDA LAW........................ 37
Section 10.03 FISCAL YEAR....................................... 37
Section 10.04 CONFLICTS WITH ARTICLES OF
INCORPORATION................................ 37
v
<PAGE>
ARTICLE I
OFFICES
SECTION 1.01. PRINCIPAL OFFICE.
The principal office of the corporation in the State of Florida shall be
established at such places as the board of directors from time to time
determine.
SECTION 1.02. REGISTERED OFFICE.
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
SECTION 1.03. OTHER OFFICES.
The corporation may have additional offices at such other places, either
within or without the State of Florida, as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. ANNUAL MEETING.
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
<PAGE>
SECTION 2.02. SPECIAL MEETING.
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% of all votes entitled to
be cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
(2) Special shareholders' meetings may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
SECTION 2.03. SHAREHOLDERS' LIST FOR MEETING.
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or
2
<PAGE>
attorney is entitled to inspect the list at any time during the meeting or any
adjournment.
SECTION 2.04. RECORD DATE.
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant to
the Act, and, unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to take action without a meeting is the
date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
SECTION 2.05. NOTICE OF MEETINGS AND ADJOURNMENT.
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no
3
<PAGE>
fewer than 10 or more than 60 days before the meeting date. Unless the Act
requires otherwise, the corporation is required to give notice only to
shareholders entitled to vote at the meeting. Notice shall be given in the
manner provided in Section 607.0141 of the Act, by or at the direction of the
president, the secretary, of the officer or persons calling the meeting. If the
notice is mailed at least 30 days before the date of the meeting, it may be done
by a class of United States mail other than first class. Notwithstanding Section
607.0141, if mailed, such notice shall be deemed to be delivered when deposited
in the United Statement mail addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
SECTION 2.06. WAIVER OF NOTICE.
(1) A shareholder may waive any notice required by the Act, the articles
of incorporation, or bylaws before or after the date and time stated in the
notice. The waiver must be in writing, be signed by the shareholder entitled to
the notice, and be delivered
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to the corporation for inclusion in the minutes or filing with the corporate
records. Neither the business to be transacted at nor the purpose of any regular
or special meeting of the shareholders need be specified in any written waiver
of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
ARTICLE III
SHAREHOLDER VOTING
SECTION 3.01. VOTING GROUP DEFINED.
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
SECTION 3.02. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS.
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
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SECTION 3.03. ACTION BY SINGLE AND MULTIPLE VOTING GROUPS.
(1) If the articles of incorporation or the Act provides for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
SECTION 3.04. SHAREHOLDER QUORUM AND VOTING; GREATER OR LESSER VOTING
REQUIREMENTS.
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by
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the Act, but in no event shall a quorum consist of less than one-third of the
shares entitled to vote.
SECTION 3.05. VOTING FOR DIRECTORS; CUMULATIVE VOTING.
(1) Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
(2) Each shareholder who is entitled to vote at an election of directors
has the right to vote the number of shares owned by him for as many persons as
there are directors to be elected and for whose election he has a right to vote.
Shareholders do not have a right to cumulate their votes for directors unless
the articles of incorporation so provide.
SECTION 3.06. VOTING ENTITLEMENT OF SHARES.
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote any
shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
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(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds all;
(b) If more than one vote, in person or by proxy, the act of the
majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote is
evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
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SECTION 3.07. PROXIES.
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest. Appointments coupled with an interest include the
appointment of: (a) a pledgee; (b) a person who purchased or agreed to purchase
the shares; (c) a creditor of the corporation who extended credit to the
corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes revocable
when the interest with which it is coupled is extinguished and, in a case
provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three years
after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the
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certificate representing the shares or on the information statement for shares
without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
SECTION 3.08. SHARES HELD BY NOMINEES.
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
SECTION 3.09. CORPORATION'S ACCEPTANCE OF VOTES.
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee,
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beneficial owner, or attorney in fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority to
sign for the shareholder has been presented with respect to the vote, consent,
waiver, or proxy appointment; or (e) two or more persons are the shareholder as
covenants or fiduciaries and the name signed purports to be the name of at least
one of the co-owners and the person signing appears to be acting on behalf of
all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
SECTION 3.10. ACTION BY SHAREHOLDERS WITHOUT MEETING.
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must by evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty (60) days of the date of the earliest dated consent is
delivered in the manner required by this section, written consent signed by the
number of holders required to take action is delivered to the corporation by
delivery as set forth in this section.
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(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
SECTION 4.01. QUALIFICATIONS OF DIRECTORS.
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
SECTION 4.02. NUMBER OF DIRECTORS.
(1) The board of directors shall consist of not less than one (1) nor
more than nine (9) individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
SECTION 4.03. TERMS OF DIRECTORS GENERALLY.
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
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SECTION 4.04. STAGGERED TERMS FOR DIRECTORS.
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
SECTION 4.05. VACANCY ON BOARD.
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
SECTION 4.06. COMPENSATION OF DIRECTORS.
The board of directors may fix the compensation of directors.
SECTION 4.07. MEETINGS.
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the board of directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all
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directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
SECTION 4.08. ACTION BY DIRECTORS WITHOUT A MEETING.
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting vote
and may be described as such in any document.
SECTION 4.09. NOTICE OF MEETINGS.
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
SECTION 4.10. WAIVER OF NOTICE.
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
SECTION 4.11. QUORUM AND VOTING.
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote of
a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the board
of directors or a committee of the board of directors
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when corporate action is taken is deemed to have assented to the action taken
unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
SECTION 4.12. COMMITTEES.
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a voting group except that the board of directors may
authorize a committee (or a senior executive officer of the corporation) to do
so within limits specifically prescribed by the board of directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any
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member of the board of directors not a member of the committee in question with
his responsibility to act in good faith, in a manner he reasonably believes to
be in the best interests of the corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
SECTION 4.13. LOANS TO OFFICERS, DIRECTORS, AND EMPLOYEES; GUARANTY OF
OBLIIGATIONS.
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
SECTION 4.14. REQUIRED OFFICERS.
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
SECTION 4.15. DUTIES OF OFFICERS.
Each officer has the authority and shall perform the duties set forth in
a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
SECTION 4.16. RESIGNATION AND REMOVAL OF OFFICERS.
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation
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accepts the future effective date, the board of directors may fill the pending
vacancy before the effective date if the board of directors provides that the
successor does not take office until the effective date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
SECTION 4.17. CONTRACT RIGHTS OF OFFICERS.
The appointment of an officer does not itself create contract rights.
SECTION 4.18. GENERAL STANDARDS FOR DIRECTORS.
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation
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or its subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
SECTION 4.19. DIRECTOR CONFLICTS OF INTEREST.
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose WITHOUT
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in
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a vote on the transaction under this subsection constitutes a quorum for the
purpose of taking action under this section.
SECTION 4.20. RESIGNATION OF DIRECTORS.
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
SECTION 5.01. DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not
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exceeding, in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Such indemnification shall be authorized if such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made under this subsection in respect of any claim, issue, or matter as to which
such person shall have been adjudged to be liable unless, and only to the extent
that, the court in which such proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(4) Any indemnification under subsections (1) or (2), unless pursuant to
a determination by a court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (1) or (2). Such
determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in which
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(1) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(2) If a quorum of the directors cannot be obtained for
paragraph (a) and the committee cannot be designed under paragraph (b), selected
by majority vote of the full board of directors (in which directors who are
parties may participate); or
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(d) By the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant to
this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
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(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
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(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to any
employee benefit plan), and expenses actually and reasonably incurred with
respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation" includes
any service as a director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
(12) The corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
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ARTICLE VI
OFFICE AND AGENT
SECTION 6.01. REGISTERED OFFICE AND REGISTERED AGENT.
(1) The corporation shall have and continuously maintain in the
State of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(1) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(2) Another corporation or not-for-profit corporation
as defined in Chapter 617 of the Act, authorized to transact business or conduct
its affairs in the State of Florida, having a business office identical with the
registered office; or
(3) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
SECTION 6.02. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT; RESIGNATION OF
REGISTERED AGENT.
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the street
address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name of
the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
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(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted by
its board of directors or by an officer of the corporation so authorized by the
board of directors.
ARTICLE VII
SHARES, OPTIONS, DIVIDENDS AND DISTRIBUTIONS
SECTION 7.01. AUTHORIZED SHARES.
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class or
classes as those with voting rights) that together are entitled to receive the
net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the article of
incorporation;
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with respect
to distributions, including dividends and distributions upon the dissolution of
the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as
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common shares. Shares which are not entitled to preference in the distribution
of dividends or assets shall be common shares and shall not be designated as
preferred shares.
SECTION 7.02. TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS.
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of that
class, or
(b) One or more series within a class before the issuance of any
shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
SECTION 7.03. ISSUED AND OUTSTANDING SHARES.
(1) A corporation may issue the number of shares of each class or series
authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
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SECTION 7.04. ISSUANCE OF SHARES.
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract for
future services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are performed, the
note is paid, or the benefits received. If the services are not performed, the
shares escrowed or restricted and the distributions credited may be canceled in
whole or part.
SECTION 7.05. FORM AND CONTENT OF CERTIFICATES.
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the corporation
is organized under the laws of the State of Florida;
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(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
SECTION 7.06. SHARES WITHOUT CERTIFICATES.
(1) The board of directors of the corporation may authorize the issue of
some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
SECTION 7.07. RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES.
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the
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holders of such shares are parties to the restriction agreement or voted in
favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
SECTION 7.08. SHAREHOLDER'S PRE-EMPTIVE RIGHTS.
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
SECTION 7.09. CORPORATION'S ACQUISITION OF ITS OWN SHARES.
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
SECTION 7.10. SHARE OPTIONS.
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
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restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
SECTION 7.11. TERMS AND CONDITIONS OF STOCK RIGHTS AND OPTIONS.
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
SECTION 7.12. SHARE DIVIDENDS.
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class or
series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to be
issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
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SECTION 7.13. DISTRIBUTIONS TO SHAREHOLDERS.
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum of
its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or other
acquisition of the corporation's shares, as of the earlier of:
(1) The date money or other property is transferred or
debt incurred by the corporation, or
(2) The date the shareholder ceases to be a shareholder
with respect to the acquired shares;
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(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the
payment occurs within one hundred twenty (120) days after the date of
authorization, or
(ii) The date the payment is made if it occurs more
than one hundred twenty (120) days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
SECTION 8.01. AUTHORITY TO AMEND THE ARTICLES OF INCORPORATION.
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
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SECTION 8.02. AMENDMENT BY BOARD OF DIRECTORS.
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated
at a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word "corporation,"
"incorporated," or "company," or the abbreviation "corp.," Inc.," or Co.," for a
similar word or abbreviation in the name, or by adding, deleting, or changing a
geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
SECTION 8.03. AMENDMENT OF BYLAWS BY BOARD OF DIRECTORS.
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
SECTION 8.04. BYLAW INCREASING QUORUM OR VOTING REQUIREMENTS FOR DIRECTORS.
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
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(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
RECORDS AND REPORTS
SECTION 9.01. CORPORATE RECORDS.
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
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(c) Resolutions adopted by the board of directors creating one or
more classes or series of shares and finding their relative rights, preferences,
and limitations, if shares issued pursuant to those resolutions are outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or all
shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department of
State of the State of Florida.
SECTION 9.02. FINANCIAL STATEMENTS FOR SHAREHOLDERS.
(1) Unless modified by resolution of the shareholders within 120 days of
the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within
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the prescribed period. Thereafter, on written request from a shareholder who was
not mailed the statements, the corporation shall mail him the latest annual
financial statements.
SECTION 9.03. OTHER REPORTS TO SHAREHOLDERS.
(1) If the corporation indemnifies or advances expenses to any director,
officer, employee or agent otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
SECTION 9.04. ANNUAL REPORT FOR DEPARTMENT OF STATE.
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State of
Florida on or before July 1 of each calendar year that such report was deposited
in the United States mail in a sealed envelope, properly addressed with postage
prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
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(5) Any corporation failing to file an annual report which complies with
the requirements of this section shall not be permitted to maintain or defend
any action in any court of this state until such report is filed and all fees
and taxes due under the Act are paid and shall be subject to dissolution or
cancellation of its certificate of authority to do business as provided in the
Act.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. DEFINITION OF THE "ACT".
All references contained herein to the "Act" or to sections of the "Act"
shall be deemed to be in reference to the Florida Business Corporation Act.
SECTION 10.02. APPLICATION OF FLORIDA LAW.
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
SECTION 10.03. FISCAL YEAR.
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
SECTION 10.04. CONFLICTS WITH ARTICLES OF INCORPORATION.
In the event that any provision contained in these bylaws conflicts with
any provision of the corporation's articles of incorporation, as amended from
time to time, the provisions of the articles of incorporation shall prevail and
be given full force and effect, to the full extent permissible under the Act.
37
BY-LAWS
OF
HOTELVIEW CORPORATION
a Florida corporation
<PAGE>
INDEX
PAGE
----
ARTICLE I
OFFICES
Section 1.01 PRINCIPAL OFFICE................................ 1
Section 1.02 REGISTERED OFFICE............................... 1
Section 1.03 OTHER OFFICES................................... 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01 ANNUAL MEETING.................................. 1
Section 2.02 SPECIAL MEETINGS................................ 2
Section 2.03 SHAREHOLDERS' LIST FOR MEETING.................. 2
Section 2.04 RECORD DATE..................................... 3
Section 2.05 NOTICE OF MEETINGS AND ADJOURNMENT.............. 3
Section 2.06 WAIVER OF NOTICE................................ 4
ARTICLE III
SHAREHOLDER VOTING
Section 3.01 VOTING GROUP DEFINED............................ 5
Section 3.02 QUORUM AND VOTING REQUIREMENTS FOR
VOTING GROUPS............................... 5
Section 3.03 ACTION BY SINGLE AND MULTIPLE VOTING
GROUPS...................................... 6
<PAGE>
Section 3.04 SHAREHOLDER QUORUM AND VOTING; GREATER
OR LESSER VOTING REQUIREMENTS............... 6
Section 3.05 VOTING FOR DIRECTORS; CUMULATIVE VOTING......... 7
Section 3.06 VOTING ENTITLEMENT OF SHARES.................... 7
Section 3.07 PROXIES......................................... 9
Section 3.08 SHARES HELD BY NOMINEES......................... 10
Section 3.09 CORPORATION'S ACCEPTANCE OF VOTES............... 10
Section 3.10 ACTION BY SHAREHOLDERS WITHOUT MEETING.......... 11
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
Section 4.01 QUALIFICATIONS OF DIRECTORS..................... 12
Section 4.02 NUMBER OF DIRECTORS............................. 12
Section 4.03 TERMS OF DIRECTORS GENERALLY.................... 12
Section 4.04 STAGGERED TERMS FOR DIRECTORS................... 13
Section 4.05 VACANCY ON BOARD................................ 13
Section 4.06 COMPENSATION OF DIRECTORS....................... 13
Section 4.07 MEETINGS........................................ 13
Section 4.08 ACTION BY DIRECTORS WITHOUT A MEETING........... 14
Section 4.09 NOTICE OF MEETINGS.............................. 14
Section 4.10 WAIVER OF NOTICE................................ 14
Section 4.11 QUORUM AND VOTING............................... 14
Section 4.12 COMMITTEES...................................... 15
Section 4.13 LOANS TO OFFICERS, DIRECTORS AND
EMPLOYEES; GUARANTY OF OBLIGATIONS......... 16
Section 4.14 REQUIRED OFFICERS............................... 16
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Section 4.15 DUTIES OF OFFICERS.............................. 16
Section 4.16 RESIGNATION AND REMOVAL OF OFFICERS............. 16
Section 4.17 CONTRACT RIGHTS OF OFFICERS..................... 17
Section 4.18 GENERAL STANDARDS FOR DIRECTORS................. 17
Section 4.19 DIRECTOR CONFLICTS OF INTEREST.................. 18
Section 4.20 RESIGNATION OF DIRECTORS........................ 19
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 5.01 DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS.................................. 19
ARTICLE VI
OFFICE AND AGENT
Section 6.01 REGISTERED OFFICE AND REGISTERED AGENT.......... 24
Section 6.02 CHANGE OF REGISTERED OFFICE OR REGISTERED
AGENT; RESIGNATION OF REGISTERED AGENT..... 24
ARTICLE VII
SHARES, OPTION, DIVIDENDS AND DISTRIBUTIONS
Section 7.01 AUTHORIZED SHARES............................... 25
Section 7.02 TERMS OF CLASS OR SERIES DETERMINED
BY BOARD OF DIRECTORS....................... 26
Section 7.03 ISSUED AND OUTSTANDING SHARES................... 26
Section 7.04 ISSUANCE OF SHARES.............................. 27
Section 7.05 FORM AND CONTENT OF CERTIFICATES................ 27
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Section 7.06 SHARES WITHOUT CERTIFICATES..................... 28
Section 7.07 RESTRICTION ON TRANSFER OF SHARES
AND OTHER SECURITIES........................ 28
Section 7.08 SHAREHOLDER'S PRE-EMPTIVE RIGHTS................ 29
Section 7.09 CORPORATION'S ACQUISITION OF ITS
OWN SHARES.................................. 29
Section 7.10 SHARE OPTIONS................................... 29
Section 7.11 TERMS AND CONDITIONS OF STOCK RIGHTS
AND OPTIONS................................. 30
Section 7.12 SHARE DIVIDENDS................................. 30
Section 7.13 DISTRIBUTIONS TO SHAREHOLDERS................... 31
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
Section 8.01 AUTHORITY TO AMEND THE ARTICLES OF
INCORPORATION............................... 32
Section 8.02 AMENDMENT BY BOARD OF DIRECTORS................. 32
Section 8.03 AMENDMENT OF BYLAWS BY BOARD OF
DIRECTORS................................... 33
Section 8.04 BYLAW INCREASING QUORUM OR VOTING
REQUIREMENTS FOR DIRECTORS.................. 33
ARTICLE IX
RECORDS AND REPORT
Section 9.01 CORPORATE RECORDS............................... 34
Section 9.02 FINANCIAL STATEMENTS FOR SHAREHOLDERS........... 35
Section 9.03 OTHER REPORTS TO SHAREHOLDERS................... 36
Section 9.04 ANNUAL REPORT FOR DEPARTMENT OF STATE........... 36
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ARTICLE X
MISCELLANEOUS
Section 10.01 DEFINITION OF THE "ACT"......................... 37
Section 10.02 APPLICATION OF FLORIDA LAW...................... 37
Section 10.03 FISCAL YEAR..................................... 37
Section 10.04 CONFLICTS WITH ARTICLES OF
INCORPORATION.............................. 37
v
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ARTICLE I
OFFICES
SECTION 1.01. PRINCIPAL OFFICE.
The principal office of the corporation in the State of Florida shall be
established at such places as the board of directors from time to time
determine.
SECTION 1.02. REGISTERED OFFICE.
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
SECTION 1.03. OTHER OFFICES.
The corporation may have additional offices at such other places, either
within or without the State of Florida, as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. ANNUAL MEETING.
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
<PAGE>
SECTION 2.02. SPECIAL MEETING.
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% of all votes entitled to
be cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
(2) Special shareholders' meetings may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
SECTION 2.03. SHAREHOLDERS' LIST FOR MEETING.
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or
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attorney is entitled to inspect the list at any time during the meeting or any
adjournment.
SECTION 2.04. RECORD DATE.
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant to
the Act, and, unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to take action without a meeting is the
date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
SECTION 2.05. NOTICE OF MEETINGS AND ADJOURNMENT.
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no
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fewer than 10 or more than 60 days before the meeting date. Unless the Act
requires otherwise, the corporation is required to give notice only to
shareholders entitled to vote at the meeting. Notice shall be given in the
manner provided in Section 607.0141 of the Act, by or at the direction of the
president, the secretary, of the officer or persons calling the meeting. If the
notice is mailed at least 30 days before the date of the meeting, it may be done
by a class of United States mail other than first class. Notwithstanding Section
607.0141, if mailed, such notice shall be deemed to be delivered when deposited
in the United Statement mail addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
SECTION 2.06. WAIVER OF NOTICE.
(1) A shareholder may waive any notice required by the Act, the articles
of incorporation, or bylaws before or after the date and time stated in the
notice. The waiver must be in writing, be signed by the shareholder entitled to
the notice, and be delivered
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to the corporation for inclusion in the minutes or filing with the corporate
records. Neither the business to be transacted at nor the purpose of any regular
or special meeting of the shareholders need be specified in any written waiver
of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
ARTICLE III
SHAREHOLDER VOTING
SECTION 3.01. VOTING GROUP DEFINED.
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
SECTION 3.02. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS.
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter.
Unless the articles of incorporation or the Act provides otherwise, a majority
of the votes entitled to be cast on the matter by the voting group constitutes a
quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
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SECTION 3.03. ACTION BY SINGLE AND MULTIPLE VOTING GROUPS.
(1) If the articles of incorporation or the Act provides for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
SECTION 3.04. SHAREHOLDER QUORUM AND VOTING; GREATER OR LESSER VOTING
REQUIREMENTS.
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by
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the Act, but in no event shall a quorum consist of less than one-third of the
shares entitled to vote.
SECTION 3.05. VOTING FOR DIRECTORS; CUMULATIVE VOTING.
(1) Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
(2) Each shareholder who is entitled to vote at an election of directors
has the right to vote the number of shares owned by him for as many persons as
there are directors to be elected and for whose election he has a right to vote.
Shareholders do not have a right to cumulate their votes for directors unless
the articles of incorporation so provide.
SECTION 3.06. VOTING ENTITLEMENT OF SHARES.
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote any
shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
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(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds all;
(b) If more than one vote, in person or by proxy, the act of the
majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote is
evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
8
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SECTION 3.07. PROXIES.
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest. Appointments coupled with an interest include the
appointment of: (a) a pledgee; (b) a person who purchased or agreed to purchase
the shares; (c) a creditor of the corporation who extended credit to the
corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes revocable
when the interest with which it is coupled is extinguished and, in a case
provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three years
after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the
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certificate representing the shares or on the information statement for shares
without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
SECTION 3.08. SHARES HELD BY NOMINEES.
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
SECTION 3.09. CORPORATION'S ACCEPTANCE OF VOTES.
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee,
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beneficial owner, or attorney in fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority to
sign for the shareholder has been presented with respect to the vote, consent,
waiver, or proxy appointment; or (e) two or more persons are the shareholder as
covenants or fiduciaries and the name signed purports to be the name of at least
one of the co-owners and the person signing appears to be acting on behalf of
all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
SECTION 3.10. ACTION BY SHAREHOLDERS WITHOUT MEETING.
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must by evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty (60) days of the date of the earliest dated consent is
delivered in the manner required by this section, written consent signed by the
number of holders required to take action is delivered to the corporation by
delivery as set forth in this section.
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(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
SECTION 4.01. QUALIFICATIONS OF DIRECTORS.
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
SECTION 4.02. NUMBER OF DIRECTORS.
(1) The board of directors shall consist of not less than one (1) nor
more than nine (9) individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
SECTION 4.03. TERMS OF DIRECTORS GENERALLY.
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
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SECTION 4.04. STAGGERED TERMS FOR DIRECTORS.
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
SECTION 4.05. VACANCY ON BOARD.
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
SECTION 4.06. COMPENSATION OF DIRECTORS.
The board of directors may fix the compensation of directors.
SECTION 4.07. MEETINGS.
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the board of directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all
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directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
SECTION 4.08. ACTION BY DIRECTORS WITHOUT A MEETING.
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting vote
and may be described as such in any document.
SECTION 4.09. NOTICE OF MEETINGS.
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
SECTION 4.10. WAIVER OF NOTICE.
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
SECTION 4.11. QUORUM AND VOTING.
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote of
a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the board
of directors or a committee of the board of directors
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when corporate action is taken is deemed to have assented to the action taken
unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
SECTION 4.12. COMMITTEES.
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a voting group except that the board of directors may
authorize a committee (or a senior executive officer of the corporation) to do
so within limits specifically prescribed by the board of directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any
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member of the board of directors not a member of the committee in question with
his responsibility to act in good faith, in a manner he reasonably believes to
be in the best interests of the corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
SECTION 4.13. LOANS TO OFFICERS, DIRECTORS, AND EMPLOYEES; GUARANTY OF
OBLIGATIONS.
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
SECTION 4.14. REQUIRED OFFICERS.
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
SECTION 4.15. DUTIES OF OFFICERS.
Each officer has the authority and shall perform the duties set forth in
a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
SECTION 4.16. RESIGNATION AND REMOVAL OF OFFICERS.
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation
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accepts the future effective date, the board of directors may fill the pending
vacancy before the effective date if the board of directors provides that the
successor does not take office until the effective date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
SECTION 4.17. CONTRACT RIGHTS OF OFFICERS.
The appointment of an officer does not itself create contract rights.
SECTION 4.18. GENERAL STANDARDS FOR DIRECTORS.
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation
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or its subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
SECTION 4.19. DIRECTOR CONFLICTS OF INTEREST.
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose WITHOUT
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in
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a vote on the transaction under this subsection constitutes a quorum for the
purpose of taking action under this section.
SECTION 4.20. RESIGNATION OF DIRECTORS.
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
SECTION 5.01. DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not
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exceeding, in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Such indemnification shall be authorized if such person acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no indemnification shall be
made under this subsection in respect of any claim, issue, or matter as to which
such person shall have been adjudged to be liable unless, and only to the extent
that, the court in which such proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(4) Any indemnification under subsections (1) or (2), unless pursuant to
a determination by a court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (1) or (2). Such
determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(1) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(2) If a quorum of the directors cannot be obtained for
paragraph (a) and the committee cannot be designed under paragraph (b), selected
by majority vote of the full board of directors (in which directors who are
parties may participate); or
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(d) By the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant to
this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
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(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
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(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including
those for appeal;
(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to any
employee benefit plan), and expenses actually and reasonably incurred with
respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation" includes
any service as a director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
(12) The corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
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ARTICLE VI
OFFICE AND AGENT
SECTION 6.01. REGISTERED OFFICE AND REGISTERED AGENT.
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(1) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(2) Another corporation or not-for-profit corporation
as defined in Chapter 617 of the Act, authorized to transact business or conduct
its affairs in the State of Florida, having a business office identical with the
registered office; or
(3) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
SECTION 6.02. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT; RESIGNATION OF
REGISTERED AGENT.
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
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(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted by
its board of directors or by an officer of the corporation so authorized by the
board of directors.
ARTICLE VII
SHARES, OPTIONS, DIVIDENDS AND DISTRIBUTIONS
SECTION 7.01. AUTHORIZED SHARES.
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as
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common shares. Shares which are not entitled to preference in the distribution
of dividends or assets shall be common shares and shall not be designated as
preferred shares.
SECTION 7.02. TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS.
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of any
shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
SECTION 7.03. ISSUED AND OUTSTANDING SHARES.
(1) A corporation may issue the number of shares of each class or series
authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
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SECTION 7.04. ISSUANCE OF SHARES.
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract for
future services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are performed, the
note is paid, or the benefits received. If the services are not performed, the
shares escrowed or restricted and the distributions credited may be canceled in
whole or part.
SECTION 7.05. FORM AND CONTENT OF CERTIFICATES.
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
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(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
SECTION 7.06. SHARES WITHOUT CERTIFICATES.
(1) The board of directors of the corporation may authorize the issue of
some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
SECTION 7.07. RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES.
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the
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holders of such shares are parties to the restriction agreement or voted in
favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
SECTION 7.08. SHAREHOLDER'S PRE-EMPTIVE RIGHTS.
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
SECTION 7.09. CORPORATION'S ACQUISITION OF ITS OWN SHARES.
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
SECTION 7.10. SHARE OPTIONS.
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
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restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
SECTION 7.11. TERMS AND CONDITIONS OF STOCK RIGHTS AND OPTIONS.
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
SECTION 7.12. SHARE DIVIDENDS.
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
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SECTION 7.13. DISTRIBUTIONS TO SHAREHOLDERS.
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum of
its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or other
acquisition of the corporation's shares, as of the earlier of:
(1) The date money or other property is transferred or
debt incurred by the corporation, or
(2) The date the shareholder ceases to be a shareholder
with respect to the acquired shares;
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(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(1) The date the distribution is authorized if the
payment occurs within one hundred twenty (120) days after the date of
authorization, or
(ii) The date the payment is made if it occurs more than
one hundred twenty (120) days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
SECTION 8.01. AUTHORITY TO AMEND THE ARTICLES OF INCORPORATION.
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
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SECTION 8.02. AMENDMENT BY BOARD OF DIRECTORS.
The corporation's board of directors may adopt one or more amendments to
the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated
at a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word "corporation,"
"incorporated," or "company," or the abbreviation "corp.," Inc.," or Co.," for a
similar word or abbreviation in the name, or by adding, deleting, or changing a
geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
SECTION 8.03. AMENDMENT OF BYLAWS BY BOARD OF DIRECTORS.
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
SECTION 8.04. BYLAW INCREASING QUORUM OR VOTING REQUIREMENTS FOR DIRECTORS.
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
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(b) If originally adopted by the board of directors, either
by the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
RECORDS AND REPORTS
SECTION 9.01. CORPORATE RECORDS.
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
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(c) Resolutions adopted by the board of directors creating one or
more classes or series of shares and finding their relative rights, preferences,
and limitations, if shares issued pursuant to those resolutions are outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or all
shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department of
State of the State of Florida.
SECTION 9.02. FINANCIAL STATEMENTS FOR SHAREHOLDERS.
(1) Unless modified by resolution of the shareholders within 120 days of
the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within
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the prescribed period. Thereafter, on written request from a shareholder who was
not mailed the statements, the corporation shall mail him the latest annual
financial statements.
SECTION 9.03. OTHER REPORTS TO SHAREHOLDERS.
(1) If the corporation indemnifies or advances expenses to any director,
officer, employee or agent otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
SECTION 9.04. ANNUAL REPORT FOR DEPARTMENT OF STATE.
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State of
Florida on or before July 1 of each calendar year that such report was deposited
in the United States mail in a sealed envelope, properly addressed with postage
prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
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(5) Any corporation failing to file an annual report which complies with
the requirements of this section shall not be permitted to maintain or defend
any action in any court of this state until such report is filed and all fees
and taxes due under the Act are paid and shall be subject to dissolution or
cancellation of its certificate of authority to do business as provided in the
Act.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. DEFINITION OF THE "ACT".
All references contained herein to the "Act" or to sections of the "Act"
shall be deemed to be in reference to the Florida Business Corporation Act.
SECTION 10.02. APPLICATION OF FLORIDA LAW.
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
SECTION 10.03. FISCAL YEAR.
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
SECTION 10.04. CONFLICTS WITH ARTICLES OF INCORPORATION.
In the event that any provision contained in these bylaws conflicts with
any provision of the corporation's articles of incorporation, as amended from
time to time, the provisions of the articles of incorporation shall prevail and
be given full force and effect, to the full extent permissible under the Act.
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EXHIBIT 10(b)
OFFICE LEASE
THIS LEASE, made by and between Life Insurance Company of Georgia
("Landlord") and HotelView Corporation, ("Tenant") as of May 1, 1995.
1. BASIC LEASE PROVISIONS.
This Paragraph is an integral part of the Lease and all defined
terms under the Lease as contained herein shall be governed hereby:
(a) LANDLORD'S MAILING ADDRESS: Life Insurance Company of Georgia
c/o The Investment Centre, Inc.
P. O. Box 105242
Atlanta, Georgia 30348
(b) TENANT'S MAILING ADDRESS: HotelView Corporation
1600 S. Dixie Highway
Suite 3AB
Boca Raton, Florida 33432
(c) PREMISES: Suites 3AB and 3CD in the building
known as Royal Palm Towers III, located at
1600 South Dixie Highway, Boca Raton,
Florida 33432 (The "Building")
(d) RENTABLE AREA: 3,525 square feet
(e) TENANT'S PRO RATA SHARE: N/A
(f) GROSS RENT: As more fully described in Addendum B in
dollars per square foot per annum,
together with any and all applicable sales
or rent tax thereon, on the first day of
each month in advance without demand
and without deduction, counterclaim, or
set off, at the offices of Landlord. (See
Paragraph 4).
(g) RENTAL ADJUSTMENTS: See Paragraph 6.
(h) SECURITY DEPOSIT: $3,535.00 (See Paragraph 7.)
(i) TERM: Twenty four months from the
Commencement date.
<PAGE>
(j) COMMENCEMENT DATE (OF TERM): May 1, 1995
(k) TERMINATION DATE (OF TERM): April 30, 1997
(l) PERMITTED USE: Office (See Paragraph 9.)
(m) RENEWAL OPTION: One, for two years (See Paragraph 33.)
2. PREMISES.
Landlord, in consideration of the covenants and agreements to be
performed by Tenant and on the terms and conditions hereinafter stated, hereby
leases to Tenant and Tenant hereby leases the Premises from Landlord.
3. LEASE TERM.
The initial term of this lease (the "Term") is Twenty-four (24)
months. The Term shall commence on the Commencement Date and shall terminate on
the Termination Date. The Term shall be subject to earlier termination as
hereinafter provided.
4. GROSS RENT.
Tenant agrees to pay to Landlord as rent for the Premises,
without prior notice or demand, and without deduction, counterclaim or set off,
the Gross Rent subject, however, to adjustment as hereinafter provided, on or
before the first day of the first full calendar month of the Term and a like sum
on or before the first day of each and every successive calendar month
thereafter during the Term, except that the first month's Gross Rent shall be
paid upon the execution hereof. Gross Rent for any period during the Term which
is for less than one (1) month shall be prorated portion of the monthly
installment herein, based upon a thirty (30) day month. Gross Rent shall be paid
to Landlord, at its office as set forth in Paragraph 1(a), in lawful money of
the United States of America, which shall be legal tender at the time of payment
or to such other person or at such other place as Landlord may, from time to
time, designate in writing. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly Gross Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Gross Rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as Gross Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Gross Rent or pursue any other remedy provided in this
Lease.
5. INTENTIONALLY OMITTED.
6. GROSS RENT ADJUSTMENT.
Notwithstanding anything to the contrary herein contained, it is
agreed by the Landlord and the Tenant that the Gross Rent provided to be paid by
the Tenant to the Landlord under the initial term of this Lease or any renewals
or extensions thereof shall be increased upon
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renewal of this lease and each term thereafter by an amount equal to the lesser
of (a) five (5%) percent of the rent for the year immediately preceding the
renewal or extension or (b) the increase in the cost of living, if any, since
the Commencement Date of the Lease determined in the manner hereinafter set
forth. The cost of living increase in Gross Rent shall be determined by dividing
the Gross Rent (being the rental for the first year of the term of the Lease) by
the index number for the last date for which computation has been made in the
column for "ALL ITEMS" in the table entitled "Consumer's Price Index - U.S. City
Average for all Urban consumers, All Items (1982-84=100)" published monthly in
the "Monthly Labor Review" of the Bureau of Labor Statistics of the United
States Department of Labor (the "Index") for the month which is the third month
immediately prior to the first month of the term of this Lease, and subsequently
multiplying that product by the index number for the month immediately preceding
the commence of the lease year for which the computation is being made. In the
event that the Bureau of Labor Statistics shall change the Index (now
1982-84=100), the new index shall be substituted for the Index in making the
above computation. In no event shall the Gross Rent be diminished by any change
in the Index. In the event that at any time during the term of this Lease, the
U.S. Bureau of Labor Statistics shall discontinue the issuance of the Index or a
substitute therefor, then it is agreed that in such event,t he parties shall
accept comparable statistics on the purchasing power of the consumer dollar, as
published by a responsible financial periodicals of recognized authority chosen
by the Landlord.
7. SECURITY DEPOSIT.
Landlord acknowledges receipt of the Security Deposit which shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of Gross Rent, Landlord may (but shall not be required to) use, apply or
retain all or any part of this security deposit for the payment of any Gross
Rent or any other sum in default, or for the payment of any amount which
Landlord may spend or become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other los or damage which Landlord may suffer
by reason of Tenant's default. If any portion of said deposit is so used or
applied, Tenant shall within five (5) days after demand therefore, deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to its
original amount and Tenant's failure to do so shall be a breach of this Lease.
Landlord shall not be required to keep this Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on such deposit. If
Tenant shall fully and faithfully perform any provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned
to Tenant (or, at Landlords' option, to the last assignee of Tenant's interest
hereunder) at the expiration of the Lease term. In the event of termination of
Landlords' interest in this Lease, Landlord shall transfer the Security Deposit
to Landlord's successor in interest and shall thereupon be released from all
liability for the return of the Security Deposit, and Tenant shall look solely
to the new landlord for the return of the Security Deposit, and this provision
shall apply toe very transfer or assignment made of the Security Deposit to the
new landlord. The Security Deposit shall not be assigned or encumbered by Tenant
and any attempted assignment or encumbrance by Tenant shall be void.
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8. LEASEHOLD IMPROVEMENTS.
Any and all leasehold improvements are to be completed at the
Tenant's sole cost and expense. The Tenant accepts the demised premises in their
condition as of January 18, 1993 and agrees to return them to this condition
upon termination of, or any extension of, this lease.
9. USE.
Tenant shall use the Premises only for the Permitted Use (as set
forth in Paragraph (1) hereof) and shall not use or permit the Premises to be
used for any other purpose without prior written consent of Landlord. Tenant
shall not do or permit anything to be done in or about the Premises nor bring or
keep anything therein which will in any way increase the existing insurance
rating of the Building or affect any fire or other insurance upon the Building
or any of its contents, or cause cancellation of any insurance policy covering
said Building or any part thereof or any of its contents. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them or use or allow the Premises to be used for any
improper, immoral, unlawful or objectional purpose, nor shall Tenant cause,
maintainor permit any nuisance in, on or about the Premises. Tenant shall not
commit or suffer to be committed any waste in or upon the Premises.
10. COMPLIANCE WITH LAW.
Tenant shall not use the Premises or permit anything to be done
in or about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule or regulation now in force or which may hereafter
be enacted or promulgated.
11. ALTERATIONS AND ADDITIONS.
Tenant shall not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof without the
written consent of Landlord, which consent shall not be unreasonably withheld,
first had an obtained in each and every instance and any alterations, additions
or improvements to or of said Premises, including, but not limited to, wall
covering, paneling and built-in cabinet work, but excepting movable furniture
and trade fixtures, shall on the expiration of the term become a part of the
realty and belong to the Landlord and shall be surrendered. Landlord's decision
to refuse such consent shall be conclusive.
12. REPAIRS.
(a) Tenant shall, at Tenant's sole cost and expense, keep the
Premises and every part thereof in good condition and repair, damage thereto
from causes beyond the reasonable control of Tenant and ordinary wear and tear
excepted. Tenant shall upon the expiration or sooner termination of this Lease
hereof surrender the Premises to the Landlord in good condition, ordinary wear
and tear and damage from causes beyond the reasonable control of Tenant
excepted. Landlord shall have no obligation to alter, remodel, improve, repair,
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decorate or paint the Premises or any part thereof and the parties hereto affirm
that Landlord has made no representations to Tenant respecting the condition of
the Premises or the building and Tenant's occupancy of the Premises shall be
conclusive evidence that the Premises are satisfactory to Tenant.
(b) Notwithstanding the provisions of Subparagraph (a)
hereinabove, Landlord shall repair and maintain the structural portions of the
Building, including the basic plumbing, air conditioning, heating, roof and
electrical systems, installed or furnished by Landlord, unless such maintenance
and repairs are caused in part or in whole by the act, neglect, fault or
omission of the Tenant, it agents, servants, employees or invitees, in which
case Tenant shall directly and individually, pay to Landlord the reasonable cost
of such maintenance and repairs. landlord shall not be liable for any failure to
make any such repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant. Except as may be
hereinafter provided, there shall be no abatement of Gross Rent and no liability
of Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or to any
portion of the Building or the Premises or in or to fixtures, appurtenances and
equipment therein. Tenant waives the right to make repairs at Landlord's expense
under any law, statute or ordinance now or hereafter in effect, except in the
case of emergencies.
13. MECHANICS' LIENS OR CLAIMS.
Nothing contained in this Lease shall be construed as a consent
on the part of the Landlord to subject the estate or the Landlord to liability
under the Mechanics' Lien Law of the State of Florida, it being expressly
understood that the Landlord's estate shall not be subject to such liability.
Tenant shall strictly comply with the Mechanic's Lien Law of the State of
Florida as set forth in Florida Statutes Section 713. In the event that a
mechanic's claim of lien is filed against the property in connection with any
work performed by or on behalf of the Tenant, the Tenant shall satisfy such
claim, or shall transfer same to security, within ten (10) days from the date of
filing. In the event that the Tenant fails to satisfy or transfer such claim
within said ten (10) day period, the Landlord may do so and thereafter charge
the Tenant, as additional rent, all costs incurred by the Landlord in
satisfaction or transfer of such claim, including attorneys' fees. Further, the
Tenant agrees to indemnify, defend and save the Landlord harmless from and
against any damage or loss incurred by the Landlord as a result of any such
mechanics' claim of lien. If so requested by the Landlord, the Tenant shall
execute a short form or memorandum of this Lease, which may, in the Landlord's
discretion be recorded in the Public Records for the purpose of protecting the
Landlord's estate from mechanics' claims of lien, as provided in Florida
Statutes Section 713.10. The security deposit paid by the Tenant may be used by
the landlord for the satisfaction or transfer of any mechanics' claim or lien,
as provided in this Paragraph. This Paragraph shall survive the termination of
the Lease. Tenant agrees that by execution of this Lease it agrees that Landlord
may file in the Public Records of Palm Beach County, Florida, a Notice of
Limitation of Landlord's liability in form and content similar to Exhibit "A"
attached hereto.
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14. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not (i) assign, transfer, mortgage, pledge or
otherwise encumber or dispose of this Lease or any interest under it; (ii)
sublet the Premises or any part thereof except as agreed to in Addendum B, or
(iii) permit the Premises or any part thereof to be occupied by other persons.
This prohibition against assigning or subletting shall be construed to include a
prohibition against any assignment or subletting by operation of law.
(b) If the Landlord shall consent to any assignment or
subletting, or any assignment or subletting is permitted hereunder, neither
Tenant nor any assignee shall be relieved of any liability hereunder and in the
event of default by assignee in the performance of any of the terms hereof, no
notice of such default or demand of any kind need be served on Tenant or
assignee to hold him or them liable to Landlord. Landlord may consent to
subsequent assignments and subletting without notifying Tenant or any assignee
and without obtaining his or their consent thereto. If this Lease is assigned,
or if the Premises or any part thereof is sublet or occupied by anybody other
than the Tenant, the Landlord may collect rent from the assignee, subtenant or
occupant and apply the net amount collected to the Gross Rent herein reserved,
but no such collection shall be deemed a waiver of any breach of this covenant,
or the acceptance of the assignee, subtenant or occupant as tenant or a release
of the Tenant from the further observance and performance by the Tenant of the
covenants herein contained. Tenant shall deliver to Landlord a duplicate
original of any assignment or subletting of the Premises. Landlord's prior
written consent to any assignment or subletting of this Lease shall not relieve
Tenant of the necessity of obtaining such consent to any other or further
assignment or subletting. With respect to this paragraph, Landlord's consent
shall not be unreasonably withheld.
15. INDEMNIFICATION AND NON-LIABILITY OF LANDLORD.
(a) Tenant hereby agrees to defend, pay, indemnify and save free
and harmless Landlord from and against any and all claims, demands, fines,
suits, actions, proceedings, orders, decrees and judgments of any kind or nature
by or in favor of anyone whosoever and from and against any and all costs and
expenses, including attorneys' fees, resulting from or in connection with loss
of life, bodily or personal injury or property damage arising, directly or
indirectly, out of or from or on account of any occurrence in, occasioned wholly
or in part through the use and occupancy of the Premises or by any act or
omission of Tenant or any subtenant, concessionaire or licensee of Tenant, or
their respective employees, agents, contractors or invitees in, upon, at or from
the Premises or its appurtenances or the Building.
(b) Tenant and all those claiming by, through or under Tenant
shall store their property in and shall occupy and use the Premises and any
improvements therein and appurtenances thereto and all other portions of the
Building solely at their own risk and Tenant and all those claiming by, through
or under Tenant hereby release Landlord, to the full extent permitted by law,
from all claims of every kind, including loss of life, personal or bodily
injury, damage to merchandise, equipment, fixtures or other property or damage
to business or for business interruption arising, directly or indirectly, out of
or from or on account of such occupancy and use or resulting from any present or
future condition or state of repair thereof.
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(c) Landlord shall not be responsible or liable at any time to
Tenant, or to those claiming by, through or under Tenant, for any loss of life,
bodily or personal injury, or damage to property or business, or for business
interruption, that may be occasioned by or through the acts, omissions or
negligence of any other persons, or any other tenants or occupants of any
portion of the Building.
(d) Tenant shall give prompt notice to Landlord in case of fire
or other casualty or accidents in the Premises or in the Building of which the
Premises forms a part or of any defects therein or in any of its fixtures,
machinery or equipment.
(e) In case Landlord, without fault on its part, shall be made a
party to any litigation commenced by or against Tenant for any acts occurring on
Tenant's Premises, then Tenant shall indemnify and hold Landlord harmless
therefrom and shall pay Landlord all costs and expenses, including reasonable
attorneys' fees, which Landlord may sustain by reason of any act or failure to
act on the part of the Tenant.
(f) Anything contained in this lease to the contrary
notwithstanding, Tenant shall look solely to the estate and property of the
Landlord in the land and buildings comprising the Building of which the Premises
forms a part for the collection of any judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or breach
by Landlord with respect to any of the terms and provisions of this Lease to be
observed and/or performed by Landlord, subject, however, to the prior rights of
any ground or underlying lessors or the holder of any mortgage covering the
Building, and no other assets of the Landlord shall be subject to levy,
execution or other judicial process for the satisfaction o f Tenant's claim. In
the event Landlord conveys or transfers its interest in the Building or in this
Lease or makes a lease of the entire Building, except as collateral security for
a loan, upon such conveyance or transfer or lease, Landlord (and in the case of
any subsequent conveyances or transfers or leases the then grantor or lessor
transferor) shall be entirely released and relieved from all liability with
respect to the performance of any covenants and obligations on the part of the
Landlord to be performed hereunder from and after the date of such conveyance or
transfer of lease, provided that any amounts then due and payable to Tenant by
Landlord (or by the then grantor, lessor or transferor) or any other obligation
then to be performed by Landlord (or by the then grantor, lessor transferor) for
Tenant under any provisions of this Lease, shall either be paid or performed by
Landlord (or by the then grantor, lessor or transferor) or such payment or
performance shall be assumed by the grantee, lessee or transferee; it being
intended hereby that the covenants and obligations on the part of the Landlord
to be performed hereunder, subject as aforesaid, shall be binding on Landlord,
its successors and assigns only during and in respect of their respective
periods of ownership of an interest in the Building or in this Lease. This
provision shall not be deemed, construed or interpreted to be or constitute an
agreement, express or implied, between Landlord and Tenant that the Landlord's
interest hereunder and in the Building or any part thereof shall be subject to
impressment of an equitable lien.
16. LIABILITY INSURANCE.
Tenant shall, at Tenant's expense, obtain and keep in force
during the term of this Lease a policy of comprehensive public liability
insurance insuring Landlord and Tenant against
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any liability for damages to persons and Property arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas appurtenant thereto
in amounts of not less than Five Hundred Thousand ($500,000.00) Dollars in the
event of injury to one person, and One Million ($1,000,000.00) Dollars in the
event of injury to a number of persons in the same accident, and One Hundred
Thousand ($100,000.00) Dollars in the event of property damage. The limit of
said insurance shall not, however, limit the liability of the Tenant hereunder.
Tenant may carry said insurance under a blanket policy, providing, however, said
insurance by Tenant shall have a Landlord's protective liability endorsement
attached thereto. If Tenant shall fail to procure and maintain said insurance,
Landlord may, but shall not be required to, procure and maintain same, but at
the expense of Tenant. Insurance required hereunder, shall be in companies rated
A+ AAA or better in "Best's Insurance Guide" and licensed to do business under
the insurance laws in the State of Florida. Tenant shall deliver to Landlord
prior to occupancy of the Premises copies of policies of liability insurance
required herein or certificates evidencing the existence and amounts of such
insurance with loss payable clauses satisfactory to Landlord. No policy shall be
cancelable or subject to reduction of coverage except after thirty (30) days'
prior written notice to Landlord. As long as their respective insurers so
permit, Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage and
other property insurance policies existing for the benefit of the respective
parties. Each party shall obtain any special endorsement, if required by their
insurer, to evidence compliance with the aforementioned waiver.
17. SERVICES AND UTILITIES.
During the Term, Landlord will provide the following services:
(a) Heat and air conditioning in common areas.
(b) Automatically operated elevator service, electrical current
for normal office use, cold water for normal drinking and lavatory purposes at
all times and on all days throughout the year.
(c) Monthly exterminating.
Landlord shall also cause to be maintained and lighted the common
stairs, common entries and toilet rooms in the Building of which the Premises
are a part. Landlord shall not be liable for, and Tenant shall not be entitled
to, any reduction of rental by reason of Landlord's failure to furnish any of
the foregoing when such failure is caused by accident, breakage, repairs,
strikes, lockouts or other labor disturbances or labor disputes of any
character, or by any other cause, similar or dissimilar, beyond the control of
Landlord. landlord shall not be liable under any circumstances for a loss of or
injury to property, however occurring, through or in connection with or
incidental to failure to furnish any of the foregoing. Wherever heat generating
machines or equipment are used in the Premises which affect the temperature
otherwise maintained by the air conditioning system, Landlord reserves the right
to install supplementary air conditioning units in the Premises and the cost
thereof, including the cost of installation, and the cost of operation and
maintenance thereof shall be paid by Tenant to landlord upon demand by Landlord.
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18. LANDLORD'S RIGHT OF ENTRY.
Landlord reserves and shall at any and all times have the right
to enter the Premises, inspect the same, supply janitorial service and any other
service to be provided by Landlord to Tenant hereunder, to submit said Premises
to prospective purchasers or tenants, to post notices of non-responsibility, and
to alter, improve or repair the Premises and any portion of the Building of
which the Premises are a part that Landlord may deem necessary or desirable,
without abatement of Gross Rent and may for that purpose erect scaffolding and
other necessary structures where reasonably required by the character of the
work to be performed, providing that the entrance to the Premises shall not be
blocked thereby, and further providing that the business of the Tenant shall not
be interfered with unreasonably. Tenant hereby waives any claim for damages or
for any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults, safes and files, and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open said doors in an emergency, in order to obtain entry to the Premises
without liability to Tenant except for any failure to exercise due care for
Tenant's property. Any entry to the Premises obtained by Landlord by any of said
means, or otherwise shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or any
eviction of Tenant from the Premises or any portion thereof.
19. DESTRUCTION/DAMAGE
If the Premises are made unrentable in whole or in part by fire
or other casualty, until repairs shall be made or the Lease terminated as
hereinafter provided, the Gross Rent shall be apportioned on a pro rata basis
according to the part of the Premises which is usable by the Tenant if, but only
if, such fire or other casualty is not caused by the fault or negligence of the
Tenant, its contractors, invitees, agents, or employees. If such damage shall be
so extensive that the Premises cannot be restored by the Landlord within a
period of six (6) months, either party shall have the right to cancel this Lease
by notice to be other given at any time within thirty (30) days after the date
of such damage; except that if such fire or casualty resulted from the Tenant's
fault or negligence the Tenant shall have no right to cancel. If a portion of
the Building other than the Premises shall be so damaged that in the opinion of
the Landlord the Building should be restored in such a way as to alter the
Premises materially, either the Landlord or the Tenant may cancel this lease by
notice to the other given at any time within thirty (30) days after the date of
such damage. In the event of giving effective notice pursuant to this Paragraph,
this Lease and the term and the estate hereby granted shall expire on the date
fifteen (15) days after the giving of such notice as fully and completely as if
such date were the date hereinbefore set for the expiration of the term of this
Lease. Notwithstanding anything to the contrary contained in this Paragraph,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when the damage resulting from any casualty covered under
this Paragraph occurs during the last twelve (12) months of the term of this
Lease or any extension thereof or in excess of any insurance proceeds received
by Landlord. Landlord agrees to maintain during the term of this Lease one
hundred (100%) percent replacement cost insurance. Landlord shall not be
required to repair any injury or damage by fire or other cause, or to make any
repairs or
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replacements of, including but not limited to, any panels, decoration, office
fixtures, railings, floor covering, partitions, or any other property installed
in the Premises by Tenant. The Tenant shall not be entitled to any compensation
or damages from Landlord for loss of the use of the whole or any part of the
Premises or because of damage to Tenant's personal property or any inconvenience
or annoyance occasioned by such damage, repair, reconstruction or restoration.
20. DEFAULT.
The occurrence of any one or more the following events shall
constitute a default and breach of this Lease by Tenant: (a) the failure by
Tenant to make any payment of rent or any other payment required to be made by
Tenant hereunder, as and when due; (b) the vacating or abandonment of the
Premises by Tenant; (c) the assignment of the Lease or the subletting of all or
part of the Premises, either voluntarily or by operation or law without the
written consent of Landlord; (d) the failure by Tenant to observe or perform any
of the covenants, conditions or provisions of this Lease to be observed or
performed by the Tenant, other than described in Paragraphs (a), (b) or (c)
above, where such failure shall continue for a period of ten (10) days after
written notice thereof by Landlord to Tenant, provided, however, that if the
nature of Tenant's default is such that more than ten (10) days are reasonably
required for its cure then Tenant shall not be deemed to be in default if Tenant
commences such cure within a ten (10) day period and thereafter diligently
prosecutes such cure to completion, or (e) the making by Tenant of any general
assignment or general arrangement for the benefit of creditors; or (f) the
filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or
a petition of reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a Petition filed against Tenant, the same is dismissed
within sixty (60) days, the appointment of a trustee or a receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within thirty (30) days, or the attachment, execution or other judicial seizure
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged in thirty (30)
days.
21. LANDLORD'S REMEDIES FOR TENANT'S BREACH.
In case of any aforementioned default, Landlord shall have the
option to pursue any one or more of the following remedies: (i) Landlord shall
have the right, at its election, to cancel and terminate this Lease and
dispossess Tenant; or (ii) Landlord shall have the right without terminating or
canceling this Lease to declare all amounts and Gross Rents due under this Lease
for the remainder of the existing term (or any applicable extension or renewal
thereof) to be immediately due and payable, and thereupon all Gross Rents and
other charges due hereunder to the end of the initial term or any renewal term,
if applicable, shall be accelerated; or (iii) Landlord may elect to enter and
repossess the Premises and relet the Premises for Tenant's account, holding
Tenant liable in damages for all expenses incurred in any such reletting and for
any difference between the amount of rent received from such reletting and the
Gross Rent due and payable under the terms of this Lease. Landlord, in putting
the Premises in good order or preparing the same for re-rental may, at
Landlord's option, make such alterations, repairs, and/or replacements in and to
the Premises as Landlord, in its sole judgment, may then consider advisable or
necessary, without releasing Tenant from liability hereunder as aforesaid.
Landlord
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will in no event be liable in any way whatsoever for failure to re-let the
Premises, or, if the Premises are re-let, for failure to collect the rent and
under such re-letting, and in no event will Tenant be entitled to receive the
excess, if any, of such net rents collected over the sums payable by Tenant to
Landlord hereunder. Tenant hereby expressly waives any and all rights or
redemption granted by or under any present or future laws.
All of the rights and remedies set forth in this Lease in favor
of Landlord to redress any default of Tenant shall be deemed to be, and are
hereby declared to be, non-exclusive and Landlord hereby reserves unto itself
all such rights and remedies as may be recited in this Lease, together with all
other rights and remedies permitted under the laws of the State of Florida. The
exercise of any one remedy shall not preclude the exercise of any other remedy,
nor shall the failure to exercise any remedy, on any occasion or occasions, be
deemed a waiver by Landlord of its right to exercise any such remedy on any
other such occasion or occasions.
22. EMINENT DOMAIN.
If all or any portion of the Premises or the Building should be
taken by any condemnation or eminent domain proceedings, or same should be sold
in lieu of condemnation, at Landlord's election this Lease will terminate on the
effective date of the taking. Landlord will be entitled to all awards for such
taking, and Tenant shall not be entitled and expressly waives its right to all
or any portion of the award. If this Lease is not terminated in accordance with
the foregoing provisions of this paragraph, the Gross Rent will be ratably
reduced according to the area of the Premises which is taken.
23. PARKING.
The parking spaces are provided by Landlord as a convenience to
tenants and the guests or customers of tenants and shall be used at the sole and
exclusive risk of the Tenant and guests or customers of said Tenant. The
Landlord does not accept any responsibility for injury to any persons whosoever,
damage or loss of any automobiles, while in the parking facility, unless
Landlord was negligent. Landlord shall have the right to designate specified
areas for employee parking, which may be more distant from the building than
guest or visitor parking.
24. SUBORDINATION.
(a) This Lease is subject and subordinate to each and every trust
indenture and mortgage (collectively the "Mortgages") which may now or hereafter
affect the Building and to all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements thereof or thereto, substitutions
therefor, and advances made thereunder. This clause shall be self-operative and
no further instrument of subordination shall be required to make the interest of
any trustee or mortgagee of a Mortgage superior to the interest of Tenant
hereunder. In confirmation of such subordination, however, Tenant shall execute
promptly any certificate that Landlord may request and Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any
such certificate or certificates for and on behalf of Tenant. However, should
any mortgagee under any such Mortgage request that this Lease be made superior,
rather than subordinate, to any such Mortgage, then Tenant within ten (10) days
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following Landlord's written request therefor, agrees to execute and deliver,
without charge, any and all documents (in a form acceptable to landlord and such
mortgagees) effectuating such priority. Tenant covenants and agrees that, except
as expressly provided herein, Tenant shall not do anything that would constitute
a default under any Mortgage, or omit to do anything that Tenant is obligated to
do under the terms of this Lease so as to cause Landlord to be in default under
any of the foregoing.
(b) Tenant agrees, at the election and upon demand of any owner
of the Building, or of any mortgagee in possession of the Building, to attorn,
from time to time, to any such owner or mortgagee, upon the then executory terms
and conditions of this Lease, for the remainder of the term originally demised
in this Lease, provided that such owner or mortgagee, as the case may be, or
receiver caused to be appointed by any of the foregoing, shall then be entitled
to possession of the Building. The provisions of this Subparagraph (b) shall
inure to the benefit of any such owner or mortgagee, shall be self-operative
upon any such demand, and no further instrument shall be required to give effect
to said provisions. Tenant, however, upon demand of any such owner, lessor or
mortgagee, agrees to execute, from time to time, instruments in confirmation of
the foregoing provision of this Subparagraph (b), satisfactory to any such owner
or mortgagee, acknowledging such attornment and setting forth the terms and
conditions of its tenancy. Nothing contained in this Subparagraph (b) shall be
construed to impair any right otherwise exercisable by any such owner or
mortgagee.
(c) Landlord agrees as an expressed condition precedent to
Tenant's subordination to this Lease to any Mortgage as provided in subparagraph
(a) above, Landlord will obtain and deliver to Tenant from any Mortgagee now or
hereafter holding a Mortgage affecting the Premises, a non-disturbance agreement
for the benefit of Tenant, substantially to the effect that as long as Tenant is
not in default under the Gross Rent or additional rent or any of the other
covenants or conditions of this Lease after notice (if required) and for longer
than the respective grace or cure period provided in this Lease, its rights as
Tenant hereunder shall not be terminated and possession of Tenant shall not be
disturbed by any Mortgagee or by any proceeding on the debt which any Mortgagee
secures.
25. ESTOPPEL CERTIFICATES.
From time to time, within seven (7) days next following
Landlord's request Tenant shall deliver to Landlord, or such other party as
Landlord may direct, a certificate stating that the Lease is in full force and
effect and Landlord is not in default (or stating specifically any exceptions
thereto) and any other matters requested by Landlord.
26. HOLDING OVER.
If the Tenant retains possession of the Premises or any part
thereof after the termination of the term or any extension thereof, by lapse of
time or otherwise, the Tenant shall pay the Landlord rent at double the Gross
Rent immediately preceding said holdover, computed on a per month basis, for the
time the Tenant thus remains in possession. The provisions of this Paragraph do
not waive the Landlord's right of re-entry or any other right hereunder. Any
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retention of the Premises after the termination of this Lease or any extension
thereof shall be considered as a month-to-month holdover unless otherwise agreed
to in writing by both parties.
27. BROKERS.
Landlord and Tenant acknowledge that there is no broker involved
in this transaction.
28. WAIVER.
The waiver by Landlord of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or condition
on any subsequent breach of the same or any other term, covenant or condition
herein contained. The subsequent acceptance of Gross Rent or other sum due
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of the Tenant to pay the particular Gross Rent or other sum due so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of the acceptance of such Gross Rent or other sum due.
29. QUIET POSSESSION.
Upon Tenant paying the Gross Rent reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all provisions
of this Lease, without hindrance or interruption by Landlord or any other person
or person lawfully or equitably claiming by, through or under the Landlord.
30. SALE OF PREMISES BY LANDLORD.
In the event of any sale of the Building, Landlord shall be and
is hereby entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease arising out of
any act, occurrence or omission occurring after the consummation of such sale;
and the purchaser, at such sale or any subsequent sale of the Premises shall be
deemed, without any further agreement between the parties or their successors in
interest or between the parties and any such purchaser, to have assumed and
agreed to carry out any and all of the covenants and obligations of the Landlord
under this Lease.
31. PERSONAL PROPERTY TAXES.
Tenant shall be liable for all taxes levied against personal
property and trade fixtures placed by Tenant in the Premises. If any such taxes
are levied against Landlord or Landlord's property is increased by inclusion of
personal property and trade fixtures placed by Tenant in the Premises and
Landlord elects to pay the taxes based on such increase, Tenant shall pay to
Landlord, upon demand, that part of such taxes for which Tenant is primarily
liable hereunder.
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32. SUMS CONSIDERED RENTAL.
For all purposes with respect to the remedies available to
Landlord under this Lease and the laws of Florida, the term "rent" or "rental"
shall include, without limitation, all Tax Payments and Operating Expenses, and
all other payments to be made by Tenant under this Lease including any
expenditures made by Landlord for which Tenant is liable under this Lease, and
such sums shall be delinquent if not received by Landlord on the date on which
same are due, on demand, or with the next installment of Gross Rent, whichever
shall first occur.
33. OPTION TO RENEW.
Provided this Lease is in good standing and Tenant is not in
default hereunder, Landlord hereby gives and grants to Tenant the right,
privilege and option of extending this Lease for one (1) term of two (2) years;
the extended term commencing from the date of the expiration of the initial
Term. In order to exercise the option herein granted, Tenant must give written
notice of Tenant's intention to exercise the option to extend no less than six
(6) months prior to the expiration of the initial Term. Failure to give such
notice shall make the option to extend null and void. All of the terms,
covenants and conditions of the Lease will apply during the extended term,
including the payment of additional rent, as otherwise provided herein. The
Gross Rent during the option period shall be the Gross Rent from the last year
of this lease adjusted in Paragraph six (6) of this Lease.
34. RULES AND REGULATIONS.
Tenant agrees to abide by all reasonable Rules and Regulations
promulgated by Landlord for the Premises and Building, as reasonably amended and
supplemented from time to time, including, but not limited to, those set forth
in Exhibit "B" attached hereto. Landlord will have no duty to enforce any Rules
and Regulations (or terms or conditions in any other lease) as against any other
tenant and Landlord will not be liable to Tenant for violation of the same, or
any other act or omission, by any other tenant. Notwithstanding the foregoing,
the Landlord will enforce the Rules and Regulations, if at all, uniformly with
respect to all tenants.
35. SIGNS.
Tenant shall not place or suffer to be placed or maintained upon
any exterior door or window of the Premises, or in any other place within the
Building, any sign, awning, canopy or advertising matter or other thing of any
kind, and will not place or maintain any decoration, lettering or advertising
matter on the glass of any window or door of the Premises except as approved by
Landlord, which approval may be withheld by Landlord in its sole discretion. No
exterior sign visible from the exterior of the Building shall be permitted.
36. GENERAL PROVISIONS.
(a) NOTICES. Any notice, request, consent, approval, or demand
which mayor is required or permitted to be given by either party to the other
hereunder shall be in writing, and shall be deemed given when personally
delivered or 72 hours after being deposited in the United
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States Mail, certified, return receipt requested, with postage prepaid, or 24
hours after being given to a nationally recognized overnight courier for
delivery, or when transmitted by telegraph or telex, charges prepaid, addressed
to the other party at the address stated herein. However, either party, from
time to time, may designate in writing such other person or place to which any
communication shall thereafter be mailed. Any communication made hereunder shall
be deemed made when mailed as herein provided.
(b) MARGINAL HEADINGS. The marginal headings, numbers, index, and
Article titles to the Paragraphs of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any part hereof.
(c) TIME. Time is of the essence of this Lease and each and all
of its provisions in which performance is a factor.
(d) SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
(e) RECORDING. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the other party.
(f) PRIOR AGREEMENTS, MODIFICATIONS. This Lease contains all of
the agreements of the parties hereto with respect to any matter covered or
mentioned in this Lease, and no prior agreements or understanding pertaining to
any such matters shall be effective for any purpose. No provision of this Lease
may be amended, or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest.
(g) INABILITY TO PERFORM. This Lease and the obligations of the
Tenant hereunder shall not be affected or impaired because the Landlord is
unable to fulfill any of its obligations hereunder or is delayed in doing so, if
such inability or delay is caused by reason of strike, labor troubles, acts of
God, or any other cause beyond the reasonable control of the Landlord.
(h) ATTORNEYS' FEES. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof, or to protect its interest in
any matter arising under this Agreement, or to recover damages for the breach of
this Agreement, the party prevailing in any final judgment shall be entitled to
the payment by the other party of all reasonable costs, charges and expenses,
including attorneys' fees at trial and at all appellate levels, if any, expended
or incurred in connection therewith by the prevailing party.
(i) SEPARABILITY. Any provision of this Lease which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof and the balance and remainder of this Lease shall remain
in full force and effect.
(j) CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
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(k) CHOICE OF LAW. This Lease shall be construed, enforced and
governed by the laws of the State of Florida.
(l) GENDER AND NUMBER. The words "Landlord" and "Tenant" wherever
used herein shall be construed to mean Landlords and Tenants in all cases where
there is more than one Landlord or Tenant, and the necessary grammatical changes
required to make the provisions hereof apply either to corporations or
individuals, men or women, shall in all cases be assumed as though in each case
fully expressed.
(m) COUNTERPARTS. This Lease may be executed in multiple copies,
each of which shall be deemed an original, and all of such copies shall together
constitute one and the same instrument.
(n) ACCEPTANCE OF FUNDS BY LANDLORD. No receipt of money by the
Landlord from the Tenant after the termination of this Lease or after the
service of any notice or after the commence of any suit, or after final judgment
for possession of the Premises shall reinstate, continue or extend the term of
this Lease or affect any such notice, demand or suit.
(o) SIGNS AND BUILDING DIRECTORY. Tenant shall not permit the
painting or display of signs or other advertising material of any kind on or
near the exterior of the Premises without the prior written approval of
Landlord.
(p) WAIVER OF JURY TRIAL. Landlord and Tenant hereby waive the
right to trail by jury for all matters arising out of or in connection with this
Lease.
(q) LANDLORD'S CONSENT. In each instance in which consent of
Landlord is required under this Lease, Landlord's consent shall not be
unreasonably withheld or delayed. Landlord shall be deemed to have given its
consent if Landlord has not responded to Tenant within ten (10) working days
from the date upon which the Landlord has received written notice from Tenant
requesting such consent as may be required by this Lease.
(r) RADON GAS. Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who were exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
(s) EFFECTIVENESS OF LEASE. The submission of this Lease for
examination does not constitute a reservation of or option for the Leased
Premises and this Lease becomes effective as a lease only upon execution and
delivery thereof by Landlord to Tenant, and the receipt of the full security
deposit, and if paid by check, subject to clearance.
IN WITNESS WHEREOF, the parties have executed this Lease on the dates
specified immediately below to their respective signatures.
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WITNESSES: LANDLORD: Life Insurance Company
of Georgia
______________________________ By:_________________________________
______________________________ Dated: August 23,1995
TENANT: HotelView Corporation
______________________________ By: RANDY S. SELMAN
---------------------------------
Randy Selman, President
______________________________ Dated: July 21, 1995
Tenant's Home Address
822 NE 73rd Street
Boca Raton, FL 33487
17
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ADDENDUM A
SITE PLAN & LEGAL DESCRIPTION
LEGAL DESCRIPTION OF PROPERTY
A portion of the NW 1/4 of the NE 1/4 of Section 31, township 47 South,
Range 43 East lying east of the East right-of-way line of Dixie Highway in Boca
Raton, Palm Beach County, Florida and being more fully described as follows:
commence at the Southeast corner of said NW 1/4 of the NE 1/14 thence N
01 degrees 27' 30" E, along the easterly boundary of the said NW 1/4 of
the NE 1/4 of the NE 1/4, 415,00 feet to the POINT OF BEGINNING; thence
N 01 degrees 27' 30" E, 282.01 feet to a point on the North line of
Section 31; thence run due West, along said north line, 136.05 feet to a
point, of the existing easterly right-of-way line of Dixie Highway;
thence S 08 degrees 29' 40" W, along said easterly line, 280.66 feet to
a point; thence S 88 degrees 32' 30" E, 170.38 feet to a POINT OF
BEGINNING. Containing 42,907.60 square feet and subject to easements and
rights-of-way of record.
TOGETHER WITH
Block 68-A, Plat "A" SPANISH RIVER LAND COMPANY, according to the plat thereof,
recorded in Plat Book 16, Pages 27 thru 30, of the public records of Palm Beach
County, Florida, said lands lying and being in the City of Boca Raton, Palm
Beach County, Florida.
LESS: The Easterly two (2) feet of Bloc 68-A, PLAT "A" SPANISH RIVER LAND
COMPANY, according to the plat thereof, recorded in Plat Book 16, Pages 27 thru
30, of the public records of Palm Beach County, Florida, said lands lying and
being in the City of Boca Raton, Palm Beach County, Florida
4
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ADDENDUM B
This Addendum B shall be attached to and form a part of that certain Office
Lease dated as of May 1, 1995 by and between Life Insurance Company of Georgia
and HotelView Corporation.
1. USE & OCCUPANCY: Tenant acknowledges that it currently is in occupancy
of the demised premises pursuant to a prior lease with Landlord, and
accordingly, hereby accepts the demised premises in their current "as
is" condition.
2. LEASEHOLD IMPROVEMENTS: Landlord, at its expense, shall make the
following alternations as described herein completed: NONE
3. RENT PAYMENTS: Tenant will, until notified otherwise, send all rent
and other payments due hereunder to Landlord at the following address:
Life of Georgia
c/o Grant Property Management
1700 South Dixie Hwy.
Suite 2AB
Boca Raton, Florida 33432
4. GROSS RENT: Gross Rent (annually) for the initial term of this lease
shall be $62,765.76 per year ($5,230.48 per month) which amount is
comprised of (a) a sum calculated by adding (i) the amount obtained by
multiplying an annual rate of $12.00 per square foot times tenant's
rentable area of 3,525 square feet ($3,525 per month), plus (ii)
applicable sales and rental taxes (subsections (i) and (ii)
collectively, "Current Rent") and (b) a sum of $17,927.76 annually
(inclusive of sales tax) ($1,493.98 per month, inclusive of sales tax)
which shall be applied to past due rent owed and actually incurred
pursuant to a preceding lease between Landlord and Tenant dated executed
January 31, 1994, but effective January 18, 1994 ("Back Rent").
The Back Rent shall be an obligation owed to Landlord personally and, at
Landlord's election, shall not run with title to the property. In the
event Landlord sells the property of which the demised premises are a
part, Tenant shall pay Current Rent as directed by the successor owner
and Back Rent as directed by Landlord, notwithstanding the sale of the
property. At Landlord's election, Landlord may direct Tenant to continue
paying the Back Rent portion of Gross Rent directly to the successor
owner, in which instance, successor owner shall cooperate with Landlord
and forward the Back Rent portion of each monthly rent payment to
Landlord.
5. GUARANTEE OF RENT: As consideration for Landlord agreeing to enter into
this lease and accept payment of Back Rent as set forth above, the
undersigned Visual Data Corporation ("Guarantor"), the parent
corporation of Tenant (Hotel View Corporation), hereby unconditionally
and irrevocably guarantees the full and complete payment and performance
by Tenant of all Tenant obligations under this lease. In the event this
lease
5
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is terminated by Tenant (with or without Landlord's consent thereto, and
whether a breach hereunder or not) or Tenant defaults in the payment or
performance of its obligations hereunder, Guarantor shall immediately
pay to Landlord all Back Rent due and to become due under the remaining
initial term of the lease, together with all other sums due and owing
(or accelerated at Landlord's election as permitted by Section 21 of the
lease).
6. ONLY LEASE: This lease supersedes all preceding leases for the demised
premises with HotelView Corporation. Upon the complete execution of this
lease, all prior leases between Landlord and Tenant shall be null and
void.
Guarantor:
Witness: Visual Data Corporation
_______________________ By:/S/RANDY S. SELMAN
---------------------------------
Title: PRESIDENT
_______________________ Date: 7/21/95
-------------------------------
ACKNOWLEDGMENT OF GUARANTOR
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 21st day of July, 1995,
by RANDY S. SELMAN as President of Visual Data Corporation, a Florida
corporation, on behalf of the corporation.
------------------------------
Notary Public, State of Florida
My commission expires:
Initialed by Landlord and Tenant in acknowledgment of terms and conditions of
Addendum B:
Tenant: /S/ Landlord: /S/
------- -------
Date: 7/31/95 Date: 8/23/95
------- -------
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<PAGE>
EXHIBIT "A"
NOTICE OF NO LIABILITY UNDER SECTION 713.10
OF THE FLORIDA STATUTES
THIS MEMORANDUM OF LEASE is made this __________ day of _________ 1994,
by and between HotelView Corporation, a Florida corporation ("Tenant") and Life
Insurance Company of Georgia ("Landlord").
W I T N E S S E T H:
WHEREAS, Tenant and Landlord entered into that certain Lease dated
_________, 1995 (the "Lease"), with respect to the lease of 3,525 sq. ft., in
the office building commonly known as Royal Palm Towers III, located in Palm
Beach County, Florida, as more particularly described on ADDENDUM "A" attached
hereto and made a part hereof, and
WHEREAS, Landlord and Tenant desire to provide notice of the Lease and
to summarize certain provisions thereof.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant hereby acknowledge the following:
1. The Lease, among its provisions, contains the following:
Nothing contained in the Lease shall be construed as a consent on
the part of the Landlord to subject the estate of the Landlord to
liability under the Mechanic's Lien Law of the State of Florida,
it being expressly understood that the Landlord's estate shall
not be the subject to such liability. Tenant shall strictly
comply with the Mechanic's Lien law of the State of Florida as
set forth in FLORIDA STATUTES, Section 713.
2. Nothing herein shall be construed as amending or altering the terms
of the Lease. In the event of a conflict with the terms of the Lease and this
Memorandum, the terms of the Lease shall control.
IN WITNESS WHEREOF, Landlord and Tenant have executed this memorandum of
lease as of the day and date first above written.
Name of Company
WITNESSES:
-----------------------------------
a Florida corporation
______________________________ By: ____________________________
<PAGE>
STATE OF )
) SS:
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
_________ 19 ___, by ________________________________________ as
_________________________ of _______________________________, a ______________,
on behalf of the___________________.
-----------------------------------
Notary Public, State of
My commission expires:
STATE OF )
) SS:
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
_________ 19 ___, by ________________________________________ as
_________________________ of _______________________________, a ______________,
on behalf of the _____________________.
-----------------------------------
Notary Public, State of
My commission expires:
2
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EXHIBIT B
ROYAL PALM TOWERS CONDOMINIUM ASSOCIATION
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways,
corridors or halls shall not be obstructed or encumbered or used for any purpose
other than ingress and egress to and from the demised premises.
2. No awnings or other projections be attached to the outside of the Building
without the Condominium Association's prior written consent. No curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with, any window or door of the demised premises, without the prior written
consent of the Condominium Association. Such awnings, projections, curtains,
blinds, shades, screens or other fixtures are permitted they must be of a
quality, type, design and color, and attached in the manner approved by the
Condominium Association.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed on any part of the outside or inside of the
demised premises or Building without the Condominium Association's prior written
consent. In the event of the violation of the foregoing, the Condominium
Association may remove same without any liability, and may charge the expense
incurred by such removal to the Unit Owner violating this rule. Interior signs
on doors and directory tablet shall be inscribed, painted or affixed for each
Unit Owner by the Condominium Association at the Unit Owner's expense and shall
be of a color and style acceptable to the Condominium Assoc.
4. The skylights, windows and doors that reflect or admit light and air into the
halls, passageways or other public places in the Building shall not be covered
or obstructed by any Unit Owner.
5. No show cases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, nor placed in the halls, corridors or
vestibules without the prior written consent of the Condominium Association.
6. The toilets and urinals and other plumbing fixtures shall not be used for any
purpose other than those for which they were constructed, and no sweepings,
rubbish, rags, or other substances shall be thrown into them. All damages
resulting from any misuse of the fixtures shall be borne by the Unit Owner who,
or whose servants, employees, agents, visitors or licensees, shall have caused
the same. Waste and excessive or unusual use of water shall not be allowed.
7. No Unit Owner shall mark, paint, drill into, or in any way deface any part of
the demised premises or the Building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of the Condominium Association, and as the Condominium Association may
direct. The expenses of any breakage, stoppage or damage resulting from a
violation of the Rule shall be borne by the Unit Owner who has caused such
breakage, stoppage or damage.
8. No bicycles, vehicles or animals of any kind shall be brought into or kept in
or about the premises. No Unit Owner shall cause or permit any unusual or
objectionable odors to be produced upon or permeates from the demised premises.
<PAGE>
9. No space in the building shall be used for manufacturing for the storage or
merchandise or for the sale of merchandise, goods or property of any kind at
auction.
10. No Unit Owner shall make, or permit to be made, any unseemingly or
disturbing noises or disturb or interfere with occupants of this neighboring
buildings or premises or those having business with them. No Unit Owner shall
throw anything out of the doors, windows or skylights or down the passageways.
11. No Unit Owner, nor any of the Unit Owner's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the demised premises
any inflammable, combustible or explosive fluid, chemical or substance.
12. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows, nor shall any changes be made in existing locks or the
mechanism thereof. Each Unit Owner must give all keys of stores, offices,
mailboxes and toilet rooms, either furnished to, or otherwise procured by such
Unit Owner to Condominium Association office, and in the event of the loss of
any keys so furnished, the Unit Owner shall pay to the Condominium Association
the cost thereof.
13. All freight must be moved into, within and out of the Building according to
such regulations as may be posted for the Building; but the Condominium
Association will not be responsible for loss of or damage to such freight from
any cause.
14. When electric wiring of any kind is introduced, it must be connected as
directed by the Condominium Association and no boring or cutting for wires will
be allowed except with the Condominium Association's consent. The location of
telephones, telegraph instruments, electric appliances, call boxes etc., shall
be prescribed by the Condominium Association. No apparatus of any kind shall be
connected with the electric wiring without the written consent of the
Condominium Association. The Unit Owners agree not to use or connect with the
electric wires any more lights that are provided for in each room or any
electric lamp of higher candlepower than provided, or any fan, motor or other
apparatus without the Condominium Association's written consent. The Unit Owners
agree not to connect with the water pipes any apparatus using water without the
written consent of the Condominium Association.
15. The Condominium Association shall have the right to prohibit any advertising
by any Unit Owner which, in the Condominium Association's opinion, tends to
impair the reputation of the Building or its desirability as a Building for
offices, and upon written notice from the Condominium Association, the Unit
Owner shall refrain from or discontinue such advertising.
16. The premises shall not be used for lodging or sleeping or for any immoral
or illegal purposes.
17. Canvassing, soliciting and peddling in the Building or surrounding areas is
prohibited and each Unit Owner shall cooperate to prevent the same.
18. The Condominium Association Board may waive or modify any one or more of
these rules for the benefit of any particular Unit Owner of said Building; but
no such waiver of any such rules shall be construed as a waiver or modification
of such rule in favor of any other Unit Owner of said Building, nor prevent the
Condominium Association from thereafter enforcing any such rule against any or
all of the Unit Owners of said Building.
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19. The Condominium Association reserves the right to make any such other and
further rules and regulations as in its judgment may from time to time be
necessary for the safety and cleanliness of, and for the preservation of good
order in the Building and Parking Lot area. If a segment of the Parking Lot is
designated for use by Unit Owner and its employees, the Unit Owner will
cooperate with the Condominium Association in having its employees only park
therein.
20. Each tenant moving out of or into a Building must stop moving by 8:30 A.M.
or not begin before 5:30 P.M. Monday through Friday. Any hours are permissible
on weekends. Any deviation must be approved by the Condominium Association
Office 48 hours prior to any move.
21. No signs, advertisement, notice or other lettering shall be permitted on the
premises which includes windows of individual suites. Only one sign is permitted
for rental or sale of suites which will be erected and maintained by the
Condominium Association and inquiries resulting from same will be directed to
Unit Owners or Real Estate Companies that are tenants of this complex.
22. No owner or tenant, nor any of the Unit Owner's employees or tenant's
employees shall leave a car parked in Visitor's parking space for more than 72
hours. The first offense would be a warning notification in writing from the
Condo Association, if not moved then a $25.00 per day fine would be levied. The
final step of having the car towed away at the owner's expense - Lien to be
filed against the suite for fines and towing expense after a reasonable amount
of time has elapsed.
3
EXHIBIT 10(c)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of the 21st day of October, 1996, (the "Effective Date"),
between Visual Data Corporation, a Florida corporation, whose principal place of
business is 1600 S. Dixie Highway, Suite 3A, Boca Raton, Florida 33432 (the
"Company") and Randy S. Selman, an individual whose address is 120 Yacht Club
Way, #206, Hypoluxo, Florida 33462 (the "Executive").
RECITALS
A. The Company is a Florida corporation and is principally engaged in
the business of acquisition, marketing, development, distributing, and product
production of video information, including without limitation hotel, resort and
attraction specific, travel related information (the "Business").
B. The Company presently employs the Executive and desires to continue
to employ the Executive and the Executive desires to continue in the employ of
the Company.
C. The Company has established a valuable reputation and goodwill in the
Business.
D. The Executive, by virtue of the Executive's employment with the
Company has become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's business,
including the Company's client base.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. RECITALS. The above recitals are true, correct, and are herein
incorporated by reference.
2. EMPLOYMENT. The Company hereby employs the Executive, and the
Executive hereby accepts employment, upon the terms and conditions hereinafter
set forth.
3. AUTHORITY AND POWER DURING EMPLOYMENT PERIOD.
a. DUTIES AND RESPONSIBILITIES. During the term of this
Agreement, the Executive shall serve as Chief Executive Officer, President and
Chairman of the Company and shall have general executive operating supervision
over the property, business and affairs of the Company, its subsidiaries and
divisions, subject to the guidelines and direction of the Board of Directors of
the Company. It is further the intention of the parties that at all times during
the "Term," as hereinafter defined, of the Agreement, the Executive shall serve
as a member of the Board of Directors of the Company, in accordance with the
Bylaws of the Company.
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b. TIME DEVOTED. Throughout the term of the Agreement, the
Executive shall devote substantially all of the Executive's business time and
attention to the business and affairs of the Company consistent with the
Executive's senior executive position with the Company, except for reasonable
vacations and except for illness or incapacity, but nothing in the Agreement
shall preclude the Executive from engaging in personal business including as a
member of the board of directors of related companies, charitable and community
affairs, provided that such activities do not interfere with the regular
performance of the Executive's duties and responsibilities under this Agreement.
In the event Executive shall, at any time, not be on the Board of Directors of
the Company and serving as Chairman of such Board, it shall be presumed (if
Executive so elects) that the Executive has been terminated other than for cause
and Executive shall have all of the rights specified in Section 6(h) of this
Agreement just as if the Executive had been terminated "Without Cause."
4. TERM. The Term of employment hereunder will commence on the date as
set forth above and terminate two (2) years from the Effective Date, and such
term shall automatically be extended for successive one (1) year terms
thereafter unless (1) the parties mutually agree in writing to alter or amend
the terms of the Agreement; or (2) one or both of the parties exercises their
right, pursuant to Section 6 herein, to terminate this employment relationship.
For purposes of this Agreement, the Term (the "Term") shall include the initial
term and all renewals thereof.
5. COMPENSATION AND BENEFITS.
a. SALARY. The Executive shall be paid a base salary (the "Base
Salary"), payable bi-weekly, at an annual rate of no less than One Hundred
Twenty-Five Thousand Dollars ($125,000.00) for the first year, with annual
incremental increases of ten (10%) percent per year and which annual incremental
increases shall be paid retroactively to January 1, 1997 for the first year of
this Agreement and on the anniversary of the Effective Date for each year
thereafter.
b. PERFORMANCE BASED BONUS. As additional compensation, the
Executive shall be entitled to receive a bonus ("Bonus") for each fiscal year
during the Term of the Executive's employment by the Company in an amount equal
to three percent (3%) of Earnings of the Company Before Income Tax, Depreciation
and Amortization (EBITDA) in excess of the EBITDA for the previous fiscal year.
The base year for the Bonus shall commence fiscal 1996. The Bonus shall be
payable within thirty (30) days of the determination of the amount of the Bonus.
c. STOCK OPTIONS. On January 1 of each year (the Grant Date"),
the Executive shall receive options to purchase 25,000 shares of Common Stock at
an exercise price equal to the average of the closing price for the five (5)
prior trading days prior to the Grant Date, for an exercise period of five (5)
years from the Grant Date.
d. EXECUTIVE BENEFITS. The Executive shall be entitled to
participate in all benefit programs of the Company currently existing or
hereafter made available to executives and/or other salaried employees,
including, but not limited to, pension and other retirement plans,
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group life insurance, hospitalization, surgical and major medical coverage, sick
leave, disability and salary continuation, vacation and holidays, cellular
telephone and all related costs and expenses, long-term disability, and other
fringe benefits.
e. VACATION. During each fiscal year of the Company, the
Executive shall be entitled to reasonable vacation time and to utilize such
vacation as the Executive shall determine; provided however, that the Executive
shall evidence reasonable judgment with regard to appropriate vacation
scheduling. Notwithstanding the foregoing, employee shall be entitled to four
(4) weeks vacation per year, with unused vacation accruing to the following
year.
f. BUSINESS EXPENSE REIMBURSEMENT. During the Term of employment,
the Executive shall be entitled to receive proper reimbursement for all
reasonable, out-of-pocket expenses incurred by the Executive (in accordance with
the policies and procedures established by the Company for its senior executive
officers) in performing services hereunder, provided the Executive properly
accounts therefor.
g. AUTOMOBILE EXPENSES. The Company shall provide the Executive
with an automobile allowance not to exceed $500.00 per month. The Company shall
pay all insurance premiums for the automobile that is the subject of the
automobile allowance.
h. MEMBERSHIPS, DUES AND CHARITABLE CONTRIBUTIONS. The Company
shall provide to the Executive, in the Executive's sole discretion (I) a
membership in a social, charitable or religious organization or club, which
membership shall be either in the name of the Executive or in the name of the
Company, as determined by the Executive; or (ii) an equivalent dollar amount of
charitable donations or contributions shall be made, which amounts and which
charities shall be determined in the sole discretion of the Executive; provided
that such Membership, Dues and Charitable Contributions shall not exceed Five
Thousand Dollars ($5,000) per year.
i. PLACE OF EMPLOYMENT - MOVING ALLOWANCE. This Agreement is
entered into on the basis that the principal place of business of the Company,
and the location from which Executive is to be based for the performance of his
services hereunder, is Boca Raton, Florida. In the event that the Company shall
change the location of Company's principal office, or otherwise require
Executive to be based and/or to operate from, another location which is more
than fifty (50) miles further from Executive's then-current residence than
Company's current headquarters office at 1600 S. Dixie Highway, Suite 3A, Boca
Raton, Florida, Company shall reimburse Executive for all moving and relocation
expenses paid or incurred in connection with Executive's relocation to a new
residence closer to Company's new principal office.
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6. CONSEQUENCES OF TERMINATION OF EMPLOYMENT.
a. DEATH. In the event of the death of the Executive during the
Term, salary shall be paid to the Executive's designated beneficiary, or, in the
absence of such designation, to the estate or other legal representative of the
Executive for a period of one (1) year from and after the date of death. The
Company shall also be obligated to pay to the Executive's estate or heirs, as
the case may be, such amount of Bonus based upon (I) the formula set forth in
Section 5(b) of this Agreement, and (ii) the greater of (a) the Bonus earned or
accrued for such fiscal year annualized for a 12-month period, or (b) the Bonus
for the prior year multiplied times two. Other death benefits will be determined
in accordance with the terms of the Company's benefit programs and plans.
b. DISABILITY.
(1) In the event of the Executive's disability, as
hereinafter defined, the Executive shall be entitled to compensation in
accordance with the Company's disability compensation practice for
senior executives, including any separate arrangement or policy covering
the Executive, but in all events the Executive shall continue to receive
the Executive's salary for a period, at the annual rate in effect
immediately prior to the commencement of disability, of not less than
180 days from the date on which the disability has been deemed to occur
as hereinafter provided below. Any amounts provided for in this Section
6(b) shall not be offset by other long-term disability benefits provided
to the Executive by the Company.
(2) "Disability," for the purposes of this Agreement,
shall be deemed to have occurred in the event (A) the Executive is
unable by reason of sickness or accident, to perform the Executive's
duties under this Agreement for an aggregate of 180 days in any
twelve-month period or (B) the Executive has a guardian of the person or
estate appointed by a court of competent jurisdiction. Termination due
to disability shall be deemed to have occurred upon the first day of the
month following the determination of disability as defined in the
preceding sentence.
Anything herein to the contrary notwithstanding, if,
following a termination of employment hereunder due to disability as
provided in the preceding paragraph, the Executive becomes reemployed,
whether as an Executive or a consultant to the Company, any salary,
annual incentive payments or other benefits earned by the Executive from
such reemployment shall offset any salary continuation due to the
Executive hereunder commencing with the date of re-employment.
c. TERMINATION BY THE COMPANY FOR CAUSE.
(1) Nothing herein shall prevent the Company from
terminating Employment for "Cause," as hereinafter defined. The
Executive shall continue to receive salary only for the period ending
twenty (20) days after the date of such termination plus
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any accrued Bonus through such date of termination. Any rights and
benefits the Executive may have in respect of any other compensation
shall be determined in accordance with the terms of such other
compensation arrangements or such plans or programs.
(2) "Cause" shall mean and include those actions or events
specified below in subsections (A) through (E) to the extent the same
occur, or the events constituting the same take place, subsequent to the
date of execution of this Agreement: (A) Committing or participating in
an injurious act of fraud, gross neglect or embezzlement against the
Company; (B) committing or participating in any other injurious act or
omission wantonly, willfully, recklessly or in a manner which was
grossly negligent against the Company, monetarily or otherwise; (C)
engaging in a criminal enterprise involving moral turpitude; (D)
conviction of an act or acts constituting a felony under the laws of the
United States or any state thereof; or (E) any assignment of this
Agreement by the Executive in violation of Section 14 of this Agreement.
No actions, events or circumstances occurring or taking place at any
time prior to the date of this Agreement shall in any event constitute
or provide any basis for any termination of this Agreement for Cause;
(3) Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for
Cause unless and until there shall have been delivered to the Executive
a notice of termination stating that the Executive committed one of the
types of conduct set forth in this Section 6(c) contained in this
Agreement and specifying the particulars thereof and the Executive shall
be given a thirty (30) day period to cure such conduct, if possible.
d. TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE.
(1) The foregoing notwithstanding, the Company may
terminate the Executive's employment for whatever reason it deems
appropriate; provided, however, that in the event such termination is
not based on Cause, as provided in Section 6(c) above, the Company may
terminate this Agreement upon giving three (3) months' prior written
notice. During such three (3) month period, the Executive shall continue
to perform the Executive's duties pursuant to this Agreement, and the
Company shall continue to compensate the Executive in accordance with
this Agreement. The Executive will receive, at the Executive's option,
either (A) a lump sum equal to the "Compensation and Benefits," as
hereinafter defined, for the remaining balance of the Term of this
Agreement, at the then current rate, reduced to present value, as set
forth in Section 280G of the Internal Revenue Code or (B) for the
remaining balance of the Term of this Agreement from and after the date
of any such termination, the Company shall on the last day of each
calendar month pay to the Executive such "Compensation and Benefits,"
which shall be an amount equal to (Y) One Hundred percent (100%) of the
Executive's compensation and benefits set forth in Section 5, which
shall specifically include the Base Salary and Executive Benefits (the
"Compensation and Benefits"), on the date of any such
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termination, divided by (Z) twelve (12); provided, however, that if (A)
there is a decrease in the Executive's Compensation and Benefits of more
than five (5%) percent prior to termination for any reason other than
for "Cause", and (B) the Executive is terminated without cause, the
Compensation and Benefits shall be as existed immediately prior to such
a decrease. The Executive will be entitled to continued Compensation and
Benefits coverage and credits as provided in Section 5 or to
reimbursement for the cost of providing the Executive with comparable
benefit coverage during the term in which the Executive is receiving
payments from the Company after termination pursuant to Section 6(d).
Such benefit coverage will be offset by comparable coverage provided to
the Executive in connection with subsequent employment.
(2) In the event that the Executive's employment with the
Company is terminated pursuant to this Section 6(d), Section 6(f),
Section 6(g), Section 7(a) of this Agreement and all references thereto
shall be inapplicable as to the Executive and the Company.
e. VOLUNTARY TERMINATION. In the event the Executive terminates
the Executive's employment on the Executive's own volition (except as provided
in Section 6(f) and/or Section 6(g)) prior to the expiration of the Term of this
Agreement, including any renewals thereof, such termination shall constitute a
voluntary termination and in such event the Executive shall be limited to the
same rights and benefits as provided in connection with a termination for Cause
as provided in Section 6(c).
f. CONSTRUCTIVE TERMINATION OF EMPLOYMENT. If the Executive so
elects, a termination by the Company without Cause under Section 6(d) shall be
deemed to have occurred upon the occurrence of one or more of the following
events without the EXPRESS written consent of the Executive:
(1). a significant change in the nature or scope of the
authorities, powers, functions, duties or responsibilities attached to
Executive's position as described in Section 3; or
(2) Change in the Executive's principal office to a
location outside the Palm Beach-Broward County, Florida area; or
(3) any reduction in the Executive's salary or any change
in the method of calculating Executive's Bonus Compensation hereunder;
or
(4) a material breach of the Agreement by the Company; or
(5) a material reduction of the Executive's benefits under
any employee benefit plan, program or arrangement (for Executive
individually or as part of a group) of the Company as then in effect or
as in effect on the effective date of the Agreement,
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which reduction shall not be effectuated for similarly situated
employees of the Company; or
(6) failure by a successor company to assume the
obligations under the Agreement.
Anything herein to the contrary notwithstanding, the Executive shall give
written notice to the Board of Directors of the Company that the Executive
believes an event has occurred which would result in a Constructive Termination
of the Executive's employment under this Section 6(f), which written notice
shall specify the particular act or acts, on the basis of which the Executive
intends to so terminate the Executive's employment, and the Company shall then
be given the opportunity, within fifteen (15) days of its receipt of such notice
to cure said event, provided, however, there shall be no time period permitted
to cure a second or subsequent occurrence under this Section 6(f) (whether such
second occurrence be of the same or a different event specified in subsections
(1) through (7) above).
g. TERMINATION FOLLOWING A CHANGE OF CONTROL.
(1) In the event that a "Change in Control" or an
"Attempted Change in Control" as hereinafter defined, of the Company
shall occur at any time during the Term hereof, the Executive shall have
the right to terminate the Executive's employment under this Agreement
upon thirty (30) days written notice given at any time within one year
after the occurrence of such event, and such termination of the
Executive's employment with the Company pursuant to this Section
6(g)(1), and, in any such event, such termination shall be deemed to be
a Termination by the Company Other than for Cause and the Executive
shall be entitled to such Compensation and Benefits as set forth in
Subsection 6(h) of this Agreement.
(2). For purposes of this Agreement, a "Change in Control"
of the Company shall mean a change in control (A) as set forth in
Section 280G of the Internal Revenue Code or (B) of a nature that would
be required to be reported in response to Item 1 of the current report
on Form 8K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a change in control shall be
deemed to have occurred at such time as:
(A) any "person", other than the Executive, (as
such term is used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's outstanding securities
then having the right to vote at elections of directors; or,
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(B) the individuals who at the commencement date of
the Agreement constitute the Board of Directors cease for any
reason to constitute a majority thereof unless the election, or
nomination for election, of each new director was approved by a
vote of at least two thirds of the directors then in office who
were directors at the commencement of the Agreement; or
(C) there is a failure to elect three or more (or
such number of directors as would constitute a majority of the
Board of Directors) candidates nominated by management of the
Company to the Board of Directors; or
(D) the business of the Company for which the
Executive's services are principally performed is disposed of by
the Company pursuant to a partial or complete liquidation of the
Company, a sale of assets (including stock of a subsidiary of the
Company) or otherwise.
Anything herein to the contrary notwithstanding, this Section 6(g)(2) will not
apply where the Executive gives the Executive's explicit written waiver stating
that for the purposes of this Section 6(g)(2) a Change in Control shall not be
deemed to have occurred. The Executive's participation in any negotiations or
other matters in relation to a Change in Control shall in no way constitute such
a waiver which can only be given by an explicit written waiver as provided in
the preceding sentence.
An "Attempted Change in Control" shall be deemed to have occurred
if any substantial attempt, accompanied by significant work efforts and
expenditures of money, is made to accomplish a Change in Control, as described
in subparagraphs (A), (B), (C) or (D) above whether or not such attempt is made
with the approval of a majority of the then current members of the Board of
Directors.
(3) In the event that, within twelve (12) months of any
Change in Control of the Company or any Attempted Change in Control of
the Company, the Company terminates the employment of the Executive
under this Agreement, for any reason other than for Cause as defined in
Section 6(c), or the Executive's employment is constructively terminated
as defined in Section 6(f), then, in any such event, such termination
shall be deemed to be a Termination by the Company Other than for Cause
and the Executive shall be entitled to such Compensation and Benefits as
set forth in Subsection 6(h) of this Agreement.
h. COMPENSATION AND BENEFITS UPON TERMINATION OF EXECUTIVE
EMPLOYMENT. In the event of any termination of Executive's employment Without
Cause under Section 6(d), or any termination of Executive's employment pursuant
to Section 6(f) or Section 6(g), on the effective date of any such termination,
the Executive shall be entitled to receive the following:
(1) All life, disability and health insurance benefits to
which he was entitled to continue to receive thirty (30) days prior to
the Effective Date of the
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Settlement Agreement, for a period of two (2) years following the
effective date of such termination; provided that in the Executive's
sole discretion, the Executive may receive the cash equivalent of all or
any part of such life, disability and/or health insurance benefits from
the Company in lieu of receiving such benefits; plus
(2) Base Compensation equal to three (3) times the
Executive's annual Base Salary, based upon the greater of the
Executive's Base Salary (I) immediately prior to the effective date of
termination or (ii) or as of ninety (90) days prior to the effective
date of termination. All Base Compensation shall be payable to the
Executive by-weekly; provided that in the event that the Executive is
entitled to receive the Base Compensation as a result of a Change in
Control, at the Executive's option, the Executive may receive either (i)
a lump sum equal to the Base Compensation due to the Executive pursuant
to Section 6(g) reduced to present value, as set forth in Section 280G
of the Internal Revenue Code or (ii) bi-weekly; plus
(3) Any accrued Bonus multiplied times two as computed to the
effective date of such termination, computed on the basis of actual
figures through such effective date of termination and based upon the
formula set forth in Section 5(b) above.
The provisions of this Section 6(h) notwithstanding, the Compensation and
Benefits to be received by the Executive pursuant to this Section 6(h) shall not
exceed the amount set forth in Section 162(m) of the Internal Revenue Code, or
its successor provision.
7. COVENANT NOT TO COMPETE AND NON-DISCLOSURE OF INFORMATION.
a. COVENANT NOT TO COMPETE. The Executive acknowledges and
recognizes the highly competitive nature of the Company's business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients (as hereinafter defined) constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Accordingly, in consideration of the execution of this Agreement, in the event
the Executive's employment is terminated by reason of disability pursuant to
Section 6(b) or for Cause pursuant to Section 6(c), then the Executive agrees to
the following:
I. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the
Executive will not, individually or in conjunction with others, directly
or indirectly, engage in any Competitive Business Activities (as
hereinafter defined), whether as an officer, director, proprietor,
employer, partner, independent contractor, investor (other than as a
holder solely as an investment of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant, advisor or
agent.
ii. That during the Restricted Period and within the
Restricted Area, the Executive will not, directly or indirectly, compete
with the Company by soliciting, inducing or influencing any of the
Company's Clients which have a business relationship
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with the Company at the time during the Restricted Period to discontinue
or reduce the extent of such relationship with the Company.
b. NON-DISCLOSURE OF INFORMATION. In the event Executive's
employment has been terminated pursuant to either Section 6(b) or Section 6(c)
hereof, Executive agrees that, during the Restricted Period, Executive will not
use or disclose any Proprietary Information of the Company for the Executive's
own purposes or for the benefit of any entity engaged in Competitive Business
Activities. As used herein, the term "Proprietary Information" shall mean trade
secrets or confidential proprietary information of the Company which are
material to the conduct of the business of the Company. No information can be
considered Proprietary Information unless the same is a unique process or method
material to the conduct of Company's Business, or is a customer list or similar
list of persons engaged in business activities with Company, or if the same is
otherwise in the public domain or is required to be disclosed by order of any
court or by reason of any statute, law, rule, regulation, ordinance or other
governmental requirement. Executive further agrees that in the event his
employment is terminated pursuant to Sections 6(b) or 6(C) above, all Documents
in his possession at the time of his termination shall be returned to the
Company at the Company's principal place of business.
c. DOCUMENTS. "Documents" shall mean all original written,
recorded, or graphic matters whatsoever, and any and all copies thereof,
including, but not limited to: papers; books; records; tangible things;
correspondence; communications; telex messages; memoranda; work-papers; reports;
affidavits; statements; summaries; analyses; evaluations; client records and
information; agreements; agendas; advertisements; instructions; charges;
manuals; brochures; publications; directories; industry lists; schedules; price
lists; client lists; statistical records; training manuals; computer printouts;
books of account, records and invoices reflecting business operations; all
things similar to any of the foregoing however denominated. In all cases where
originals are not available, the term "Documents" shall also mean identical
copies of original documents or non-identical copies thereof.
d. COMPANY'S CLIENTS. The "Company's Clients" shall be deemed to
be any partnerships, corporations, professional associations or other business
organizations for whom the Company has performed Business Activities.
e. RESTRICTIVE PERIOD. The "Restrictive Period" shall be deemed
to be twelve (12) months following termination of this Agreement pursuant to
Sections 6(b) or 6(C) of this Agreement.
f. RESTRICTED AREA. The "Restricted Area" shall, if this
Agreement has been terminated pursuant to Section 6(b) or 6(c), be the area
commonly included as part of the "Standard Metropolitan Statistical Area" of
Boca Raton, Florida.
g. COMPETITIVE BUSINESS ACTIVITIES. The term "Competitive
Business Activities" as used herein shall be deemed to mean the Business.
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h. COVENANTS AS ESSENTIAL ELEMENTS OF THIS AGREEMENT. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7(a) and (b) are essential elements of this Agreement, and
that but for the agreement by the Executive to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Executive shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Executive.
I. SURVIVAL AFTER TERMINATION OF AGREEMENT. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7(a) and (b) shall survive the termination of this Agreement and the Executive's
employment with the Company.
j. REMEDIES.
I. The Executive acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions
of Section 7(a) or (b) herein would be inadequate and a breach thereof
will cause irreparable harm to the Company. In recognition of this fact,
in the event of a breach by the Executive of any of the provisions of
Section 7(a) or (b), the Executive agrees that, in addition to any
remedy at law available to the Company, including, but not limited to
monetary damages, all rights of the Executive to payment or otherwise
under this Agreement and all amounts then or thereafter due to the
Executive from the Company under this Agreement may be terminated and
the Company, without posting any bond, shall be entitled to obtain, and
the Executive agrees not to oppose the Company's request for equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which
may then be available to the Company.
ii. The Executive acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent
injunction merely prohibiting the use of Proprietary Information would
not be an adequate remedy upon breach or threatened breach of Section
7(a) or (b) and consequently agrees, upon proof of any such breach, to
the granting of injunctive relief prohibiting any form of competition
with the Company. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available to it
for such breach or threatened breach.
8. INDEMNIFICATION.
a. The Executive shall continue to be covered by the Articles of
Incorporation and/or the Bylaws of the Company with respect to matters occurring
on or prior to the date of termination of the Executive's employment with the
Company, subject to all the provisions of Florida and Federal law and the
Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles
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of Incorporation and/or Bylaws of the Company shall be paid by the Company on a
current basis in accordance with such provision, the Company's Articles of
Incorporation and Florida law. To the extent that any such payments by the
Company pursuant to the Company's Articles of Incorporation and/or Bylaws may be
subject to repayment by the Executive pursuant to the provisions of the
Company's Articles of Incorporation or Bylaws, or pursuant to Florida or Federal
law, such repayment shall be due and payable by the Executive to the Company
within twelve (12) months after the termination of all proceedings, if any,
which relate to such repayment and to the Company's affairs for the period prior
to the date of termination of the Executive's employment with the Company and as
to which Executive has been covered by such applicable provisions.
b. The Company specifically acknowledges and agrees that the Executive
has personally guaranteed certain obligations on behalf of the Company and
further that the Executive is personally liable for certain obligations of the
Company. The Company shall indemnify and hold the Executive harmless from any
and all obligations that the Executive may incur, including, without limitation,
costs and attorneys fees in connection with such guaranties or personal
liabilities. Any costs or expenses that may be incurred by the Executive in
connection with such liabilities or guaranties shall be reimbursed to the
Executive, upon receipt by the Company of documented evidence of such
liabilities, within three (3) business days of the receipt of such documented
evidence.
9. WITHHOLDING. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
10. NOTICES. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the first paragraph of this Agreement, or at such other place as it may
designate.
11. WAIVER. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
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12. COMPLETENESS AND MODIFICATION. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties or, in the case of a waiver, by the party to be charged.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
14. BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
15. GOVERNING LAW. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with the laws of the State of Florida. Anything in this Agreement to
the contrary notwithstanding, the Executive shall conduct the Executive's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Executive is located.
16. FURTHER ASSURANCES. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
17. HEADINGS. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
18. SURVIVAL. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
19. SEVERABILITY. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
20. ENFORCEMENT. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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21. VENUE. Company and Executive acknowledge and agree that the U.S.
District for the Southern District of Florida, or if such court lacks
jurisdiction, the 15th Judicial Circuit (or its successor) in and for Palm Beach
County, Florida, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under
or in connection with this Agreement and the parties further agree that, in the
event of litigation arising out of or in connection with this Agreement in these
courts, they will not contest or challenge the jurisdiction or venue of these
courts.
22. CONSTRUCTION. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
THE EXECUTIVE ACKNOWLEDGES THAT THE EXECUTIVE HAS READ ALL OF THE TERMS OF THIS
AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
set forth in the first paragraph of this Agreement.
Witness: The Company:
VISUAL DATA CORPORATION
/s/ JOANN TIPPER BY: /s/ ALAN SAPERSTEIN
- ----------------------------- ------------------------
Alan Saperstein, Executive Vice President
Witness: The Executive
/s/ PAULINE SCHNEIDER /s/ RANDY S. SELMAN
- ----------------------------- ------------------------
RANDY S. SELMAN
14
EXHIBIT 10(d)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of the 21st day of October, 1996, (the "Effective Date"),
between Visual Data Corporation, a Florida corporation, whose principal place of
business is 1600 S. Dixie Highway, Suite 3A, Boca Raton, Florida 33432 (the
"Company") and Alan Saperstein, an individual whose address is 21136 Birds Nest
Terrace, Boca Raton, Florida 33433 (the "Executive").
RECITALS
A. The Company is a Florida corporation and is principally engaged in
the business of acquisition, marketing, development, distributing, and product
production of video information, including without limitation hotel, resort and
attraction specific, travel related information (the "Business").
B. The Company presently employs the Executive and desires to continue
to employ the Executive and the Executive desires to continue in the employ of
the Company.
C. The Company has established a valuable reputation and goodwill in the
Business.
D. The Executive, by virtue of the Executive's employment with the
Company has become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's business,
including the Company's client base.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. RECITALS. The above recitals are true, correct, and are herein
incorporated by reference.
2. EMPLOYMENT. The Company hereby employs the Executive, and the
Executive hereby accepts employment, upon the terms and conditions hereinafter
set forth.
3. AUTHORITY AND POWER DURING EMPLOYMENT PERIOD.
a. DUTIES AND RESPONSIBILITIES. During the term of this
Agreement, the Executive shall serve as Executive Vice President and Secretary
of the Company and shall have general executive operating supervision over the
property, business and affairs of the Company, its subsidiaries and divisions,
subject to the guidelines and direction of the Board of Directors of the
Company. It is further the intention of the parties that at all times during the
"Term," as hereinafter defined, of the Agreement, the Executive shall serve as a
member of the Board of Directors of the Company, in accordance with the Bylaws
of the Company.
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b. TIME DEVOTED. Throughout the term of the Agreement, the
Executive shall devote substantially all of the Executive's business time and
attention to the business and affairs of the Company consistent with the
Executive's senior executive position with the Company, except for reasonable
vacations and except for illness or incapacity, but nothing in the Agreement
shall preclude the Executive from engaging in personal business including as a
member of the board of directors of related companies, charitable and community
affairs, provided that such activities do not interfere with the regular
performance of the Executive's duties and responsibilities under this Agreement.
In the event Executive shall, at any time, not be on the Board of Directors of
the Company and serving as Chairman of such Board, it shall be presumed (if
Executive so elects) that the Executive has been terminated other than for cause
and Executive shall have all of the rights specified in Section 6(h) of this
Agreement just as if the Executive had been terminated "Without Cause."
4. TERM. The Term of employment hereunder will commence on the date as
set forth above and terminate two (2) years from the Effective Date, and such
term shall automatically be extended for successive one (1) year terms
thereafter unless (1) the parties mutually agree in writing to alter or amend
the terms of the Agreement; or (2) one or both of the parties exercises their
right, pursuant to Section 6 herein, to terminate this employment relationship.
For purposes of this Agreement, the Term (the "Term") shall include the initial
term and all renewals thereof.
5. COMPENSATION AND BENEFITS.
a. SALARY. The Executive shall be paid a base salary (the "Base
Salary"), payable bi-weekly, at an annual rate of no less than One Hundred
Twenty-Five Thousand Dollars ($125,000.00) for the first year, with annual
incremental increases of ten (10%) percent per year and which annual incremental
increases shall be paid retroactively to January 1, 1997 for the first year of
this Agreement and on the anniversary of the Effective Date for each year
thereafter.
b. PERFORMANCE BASED BONUS. As additional compensation, the
Executive shall be entitled to receive a bonus ("Bonus") for each fiscal year
during the Term of the Executive's employment by the Company in an amount equal
to three percent (3%) of Earnings of the Company Before Income Tax, Depreciation
and Amortization (EBITDA) in excess of the EBITDA for the previous fiscal year.
The base year for the Bonus shall commence fiscal 1996. The Bonus shall be
payable within thirty (30) days of the determination of the amount of the Bonus.
c. STOCK OPTIONS. On January 1 of each year (the Grant Date"),
the Executive shall receive options to purchase 25,000 shares of Common Stock at
an exercise price equal to the average of the closing price for the five (5)
prior trading days prior to the Grant Date, for an exercise period of five (5)
years from the Grant Date.
d. EXECUTIVE BENEFITS. The Executive shall be entitled to
participate in all benefit programs of the Company currently existing or
hereafter made available to executives and/or other salaried employees,
including, but not limited to, pension and other retirement plans,
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group life insurance, hospitalization, surgical and major medical coverage, sick
leave, disability and salary continuation, vacation and holidays, cellular
telephone and all related costs and expenses, long-term disability, and other
fringe benefits.
e. VACATION. During each fiscal year of the Company, the
Executive shall be entitled to reasonable vacation time and to utilize such
vacation as the Executive shall determine; provided however, that the Executive
shall evidence reasonable judgment with regard to appropriate vacation
scheduling. Notwithstanding the foregoing, employee shall be entitled to four
(4) weeks vacation per year, with unused vacation accruing to the following
year.
f. BUSINESS EXPENSE REIMBURSEMENT. During the Term of employment,
the Executive shall be entitled to receive proper reimbursement for all
reasonable, out-of-pocket expenses incurred by the Executive (in accordance with
the policies and procedures established by the Company for its senior executive
officers) in performing services hereunder, provided the Executive properly
accounts therefor.
g. AUTOMOBILE EXPENSES. The Company shall provide the Executive
with an automobile allowance not to exceed $500.00 per month. The Company shall
pay all insurance premiums for the automobile that is the subject of the
automobile allowance.
h. MEMBERSHIPS, DUES AND CHARITABLE CONTRIBUTIONS. The Company
shall provide to the Executive, in the Executive's sole discretion (I) a
membership in a social, charitable or religious organization or club, which
membership shall be either in the name of the Executive or in the name of the
Company, as determined by the Executive; or (ii) an equivalent dollar amount of
charitable donations or contributions shall be made, which amounts and which
charities shall be determined in the sole discretion of the Executive; provided
that such Membership, Dues and Charitable Contributions shall not exceed Five
Thousand Dollars ($5,000) per year.
i. PLACE OF EMPLOYMENT - MOVING ALLOWANCE. This Agreement is
entered into on the basis that the principal place of business of the Company,
and the location from which Executive is to be based for the performance of his
services hereunder, is Boca Raton, Florida. In the event that the Company shall
change the location of Company's principal office, or otherwise require
Executive to be based and/or to operate from, another location which is more
than fifty (50) miles further from Executive's then-current residence than
Company's current headquarters office at 1600 S. Dixie Highway, Suite 3A, Boca
Raton, Florida, Company shall reimburse Executive for all moving and relocation
expenses paid or incurred in connection with Executive's relocation to a new
residence closer to Company's new principal office.
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6. CONSEQUENCES OF TERMINATION OF EMPLOYMENT.
a. DEATH. In the event of the death of the Executive during the
Term, salary shall be paid to the Executive's designated beneficiary, or, in the
absence of such designation, to the estate or other legal representative of the
Executive for a period of one (1) year from and after the date of death. The
Company shall also be obligated to pay to the Executive's estate or heirs, as
the case may be, such amount of Bonus based upon (I) the formula set forth in
Section 5(b) of this Agreement, and (ii) the greater of (a) the Bonus earned or
accrued for such fiscal year annualized for a 12-month period, or (b) the Bonus
for the prior year multiplied times two. Other death benefits will be determined
in accordance with the terms of the Company's benefit programs and plans.
b. DISABILITY.
(1) In the event of the Executive's disability, as
hereinafter defined, the Executive shall be entitled to compensation in
accordance with the Company's disability compensation practice for
senior executives, including any separate arrangement or policy covering
the Executive, but in all events the Executive shall continue to receive
the Executive's salary for a period, at the annual rate in effect
immediately prior to the commencement of disability, of not less than
180 days from the date on which the disability has been deemed to occur
as hereinafter provided below. Any amounts provided for in this Section
6(b) shall not be offset by other long-term disability benefits provided
to the Executive by the Company.
(2) "Disability," for the purposes of this Agreement,
shall be deemed to have occurred in the event (A) the Executive is
unable by reason of sickness or accident, to perform the Executive's
duties under this Agreement for an aggregate of 180 days in any
twelve-month period or (B) the Executive has a guardian of the person or
estate appointed by a court of competent jurisdiction. Termination due
to disability shall be deemed to have occurred upon the first day of the
month following the determination of disability as defined in the
preceding sentence.
Anything herein to the contrary notwithstanding, if,
following a termination of employment hereunder due to disability as
provided in the preceding paragraph, the Executive becomes reemployed,
whether as an Executive or a consultant to the Company, any salary,
annual incentive payments or other benefits earned by the Executive from
such reemployment shall offset any salary continuation due to the
Executive hereunder commencing with the date of re-employment.
c. TERMINATION BY THE COMPANY FOR CAUSE.
(1) Nothing herein shall prevent the Company from
terminating Employment for "Cause," as hereinafter defined. The
Executive shall continue to receive salary only for the period ending
twenty (20) days after the date of such termination plus
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any accrued Bonus through such date of termination. Any rights and
benefits the Executive may have in respect of any other compensation
shall be determined in accordance with the terms of such other
compensation arrangements or such plans or programs.
(2) "Cause" shall mean and include those actions or events
specified below in subsections (A) through (E) to the extent the same
occur, or the events constituting the same take place, subsequent to the
date of execution of this Agreement: (A) Committing or participating in
an injurious act of fraud, gross neglect or embezzlement against the
Company; (B) committing or participating in any other injurious act or
omission wantonly, willfully, recklessly or in a manner which was
grossly negligent against the Company, monetarily or otherwise; (C)
engaging in a criminal enterprise involving moral turpitude; (D)
conviction of an act or acts constituting a felony under the laws of the
United States or any state thereof; or (E) any assignment of this
Agreement by the Executive in violation of Section 14 of this Agreement.
No actions, events or circumstances occurring or taking place at any
time prior to the date of this Agreement shall in any event constitute
or provide any basis for any termination of this Agreement for Cause;
(3) Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for
Cause unless and until there shall have been delivered to the Executive
a notice of termination stating that the Executive committed one of the
types of conduct set forth in this Section 6(c) contained in this
Agreement and specifying the particulars thereof and the Executive shall
be given a thirty (30) day period to cure such conduct, if possible.
d. TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE.
(1) The foregoing notwithstanding, the Company may
terminate the Executive's employment for whatever reason it deems
appropriate; provided, however, that in the event such termination is
not based on Cause, as provided in Section 6(c) above, the Company may
terminate this Agreement upon giving three (3) months' prior written
notice. During such three (3) month period, the Executive shall continue
to perform the Executive's duties pursuant to this Agreement, and the
Company shall continue to compensate the Executive in accordance with
this Agreement. The Executive will receive, at the Executive's option,
either (A) a lump sum equal to the "Compensation and Benefits," as
hereinafter defined, for the remaining balance of the Term of this
Agreement, at the then current rate, reduced to present value, as set
forth in Section 280G of the Internal Revenue Code or (B) for the
remaining balance of the Term of this Agreement from and after the date
of any such termination, the Company shall on the last day of each
calendar month pay to the Executive such "Compensation and Benefits,"
which shall be an amount equal to (Y) One Hundred percent (100%) of the
Executive's compensation and benefits set forth in Section 5, which
shall specifically include the Base Salary and Executive Benefits (the
"Compensation and Benefits"), on the date of any such
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termination, divided by (Z) twelve (12); provided, however, that if (A)
there is a decrease in the Executive's Compensation and Benefits of more
than five (5%) percent prior to termination for any reason other than
for "Cause", and (B) the Executive is terminated without cause, the
Compensation and Benefits shall be as existed immediately prior to such
a decrease. The Executive will be entitled to continued Compensation and
Benefits coverage and credits as provided in Section 5 or to
reimbursement for the cost of providing the Executive with comparable
benefit coverage during the term in which the Executive is receiving
payments from the Company after termination pursuant to Section 6(d).
Such benefit coverage will be offset by comparable coverage provided to
the Executive in connection with subsequent employment.
(2) In the event that the Executive's employment with the
Company is terminated pursuant to this Section 6(d), Section 6(f),
Section 6(g), Section 7(a) of this Agreement and all references thereto
shall be inapplicable as to the Executive and the Company.
e. VOLUNTARY TERMINATION. In the event the Executive terminates
the Executive's employment on the Executive's own volition (except as provided
in Section 6(f) and/or Section 6(g)) prior to the expiration of the Term of this
Agreement, including any renewals thereof, such termination shall constitute a
voluntary termination and in such event the Executive shall be limited to the
same rights and benefits as provided in connection with a termination for Cause
as provided in Section 6(c).
f. CONSTRUCTIVE TERMINATION OF EMPLOYMENT. If the Executive so
elects, a termination by the Company without Cause under Section 6(d) shall be
deemed to have occurred upon the occurrence of one or more of the following
events without the EXPRESS written consent of the Executive:
(1). a significant change in the nature or scope of the
authorities, powers, functions, duties or responsibilities attached to
Executive's position as described in Section 3; or
(2) Change in the Executive's principal office to a
location outside the Palm Beach-Broward County, Florida area; or
(3) any reduction in the Executive's salary or any change
in the method of calculating Executive's Bonus Compensation hereunder;
or
(4) a material breach of the Agreement by the Company; or
(5) a material reduction of the Executive's benefits under
any employee benefit plan, program or arrangement (for Executive
individually or as part of a group) of the Company as then in effect or
as in effect on the effective date of the Agreement,
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which reduction shall not be effectuated for similarly situated
employees of the Company; or
(6) failure by a successor company to assume the
obligations under the Agreement.
Anything herein to the contrary notwithstanding, the Executive shall give
written notice to the Board of Directors of the Company that the Executive
believes an event has occurred which would result in a Constructive Termination
of the Executive's employment under this Section 6(f), which written notice
shall specify the particular act or acts, on the basis of which the Executive
intends to so terminate the Executive's employment, and the Company shall then
be given the opportunity, within fifteen (15) days of its receipt of such notice
to cure said event, provided, however, there shall be no time period permitted
to cure a second or subsequent occurrence under this Section 6(f) (whether such
second occurrence be of the same or a different event specified in subsections
(1) through (7) above).
g. TERMINATION FOLLOWING A CHANGE OF CONTROL.
(1) In the event that a "Change in Control" or an
"Attempted Change in Control" as hereinafter defined, of the Company
shall occur at any time during the Term hereof, the Executive shall have
the right to terminate the Executive's employment under this Agreement
upon thirty (30) days written notice given at any time within one year
after the occurrence of such event, and such termination of the
Executive's employment with the Company pursuant to this Section
6(g)(1), and, in any such event, such termination shall be deemed to be
a Termination by the Company Other than for Cause and the Executive
shall be entitled to such Compensation and Benefits as set forth in
Subsection 6(h) of this Agreement.
(2). For purposes of this Agreement, a "Change in Control"
of the Company shall mean a change in control (A) as set forth in
Section 280G of the Internal Revenue Code or (B) of a nature that would
be required to be reported in response to Item 1 of the current report
on Form 8K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a change in control shall be
deemed to have occurred at such time as:
(A) any "person", other than the Executive, (as
such term is used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's outstanding securities
then having the right to vote at elections of directors; or,
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(B) the individuals who at the commencement date of
the Agreement constitute the Board of Directors cease for any
reason to constitute a majority thereof unless the election, or
nomination for election, of each new director was approved by a
vote of at least two thirds of the directors then in office who
were directors at the commencement of the Agreement; or
(C) there is a failure to elect three or more (or
such number of directors as would constitute a majority of the
Board of Directors) candidates nominated by management of the
Company to the Board of Directors; or
(D) the business of the Company for which the
Executive's services are principally performed is disposed of by
the Company pursuant to a partial or complete liquidation of the
Company, a sale of assets (including stock of a subsidiary of the
Company) or otherwise.
Anything herein to the contrary notwithstanding, this Section 6(g)(2) will not
apply where the Executive gives the Executive's explicit written waiver stating
that for the purposes of this Section 6(g)(2) a Change in Control shall not be
deemed to have occurred. The Executive's participation in any negotiations or
other matters in relation to a Change in Control shall in no way constitute such
a waiver which can only be given by an explicit written waiver as provided in
the preceding sentence.
An "Attempted Change in Control" shall be deemed to have occurred
if any substantial attempt, accompanied by significant work efforts and
expenditures of money, is made to accomplish a Change in Control, as described
in subparagraphs (A), (B), (C) or (D) above whether or not such attempt is made
with the approval of a majority of the then current members of the Board of
Directors.
(3) In the event that, within twelve (12) months of any
Change in Control of the Company or any Attempted Change in Control of
the Company, the Company terminates the employment of the Executive
under this Agreement, for any reason other than for Cause as defined in
Section 6(c), or the Executive's employment is constructively terminated
as defined in Section 6(f), then, in any such event, such termination
shall be deemed to be a Termination by the Company Other than for Cause
and the Executive shall be entitled to such Compensation and Benefits as
set forth in Subsection 6(h) of this Agreement.
h. COMPENSATION AND BENEFITS UPON TERMINATION OF EXECUTIVE
EMPLOYMENT. In the event of any termination of Executive's employment Without
Cause under Section 6(d), or any termination of Executive's employment pursuant
to Section 6(f) or Section 6(g), on the effective date of any such termination,
the Executive shall be entitled to receive the following:
(1) All life, disability and health insurance benefits to
which he was entitled to continue to receive thirty (30) days prior to
the Effective Date of the
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Settlement Agreement, for a period of two (2) years following the
effective date of such termination; provided that in the Executive's
sole discretion, the Executive may receive the cash equivalent of all or
any part of such life, disability and/or health insurance benefits from
the Company in lieu of receiving such benefits; plus
(2) Base Compensation equal to three (3) times the
Executive's annual Base Salary, based upon the greater of the
Executive's Base Salary (I) immediately prior to the effective date of
termination or (ii) or as of ninety (90) days prior to the effective
date of termination. All Base Compensation shall be payable to the
Executive by-weekly; provided that in the event that the Executive is
entitled to receive the Base Compensation as a result of a Change in
Control, at the Executive's option, the Executive may receive either (i)
a lump sum equal to the Base Compensation due to the Executive pursuant
to Section 6(g) reduced to present value, as set forth in Section 280G
of the Internal Revenue Code or (ii) bi-weekly; plus
(3) Any accrued Bonus multiplied times two as computed to the
effective date of such termination, computed on the basis of actual
figures through such effective date of termination and based upon the
formula set forth in Section 5(b) above.
The provisions of this Section 6(h) notwithstanding, the Compensation and
Benefits to be received by the Executive pursuant to this Section 6(h) shall not
exceed the amount set forth in Section 162(m) of the Internal Revenue Code, or
its successor provision.
7. COVENANT NOT TO COMPETE AND NON-DISCLOSURE OF INFORMATION.
a. COVENANT NOT TO COMPETE. The Executive acknowledges and
recognizes the highly competitive nature of the Company's business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients (as hereinafter defined) constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Accordingly, in consideration of the execution of this Agreement, in the event
the Executive's employment is terminated by reason of disability pursuant to
Section 6(b) or for Cause pursuant to Section 6(c), then the Executive agrees to
the following:
I. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the
Executive will not, individually or in conjunction with others, directly
or indirectly, engage in any Competitive Business Activities (as
hereinafter defined), whether as an officer, director, proprietor,
employer, partner, independent contractor, investor (other than as a
holder solely as an investment of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant, advisor or
agent.
II. That during the Restricted Period and within the
Restricted Area, the Executive will not, directly or indirectly, compete
with the Company by soliciting, inducing or influencing any of the
Company's Clients which have a business relationship
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with the Company at the time during the Restricted Period to discontinue
or reduce the extent of such relationship with the Company.
b. NON-DISCLOSURE OF INFORMATION. In the event Executive's
employment has been terminated pursuant to either Section 6(b) or Section 6(c)
hereof, Executive agrees that, during the Restricted Period, Executive will not
use or disclose any Proprietary Information of the Company for the Executive's
own purposes or for the benefit of any entity engaged in Competitive Business
Activities. As used herein, the term "Proprietary Information" shall mean trade
secrets or confidential proprietary information of the Company which are
material to the conduct of the business of the Company. No information can be
considered Proprietary Information unless the same is a unique process or method
material to the conduct of Company's Business, or is a customer list or similar
list of persons engaged in business activities with Company, or if the same is
otherwise in the public domain or is required to be disclosed by order of any
court or by reason of any statute, law, rule, regulation, ordinance or other
governmental requirement. Executive further agrees that in the event his
employment is terminated pursuant to Sections 6(b) or 6(C) above, all Documents
in his possession at the time of his termination shall be returned to the
Company at the Company's principal place of business.
c. DOCUMENTS. "Documents" shall mean all original written,
recorded, or graphic matters whatsoever, and any and all copies thereof,
including, but not limited to: papers; books; records; tangible things;
correspondence; communications; telex messages; memoranda; work-papers; reports;
affidavits; statements; summaries; analyses; evaluations; client records and
information; agreements; agendas; advertisements; instructions; charges;
manuals; brochures; publications; directories; industry lists; schedules; price
lists; client lists; statistical records; training manuals; computer printouts;
books of account, records and invoices reflecting business operations; all
things similar to any of the foregoing however denominated. In all cases where
originals are not available, the term "Documents" shall also mean identical
copies of original documents or non-identical copies thereof.
d. COMPANY'S CLIENTS. The "Company's Clients" shall be deemed to
be any partnerships, corporations, professional associations or other
business organizations for whom the Company has performed Business
Activities.
e. RESTRICTIVE PERIOD. The "Restrictive Period" shall be deemed
to be twelve (12) months following termination of this Agreement
pursuant to Sections 6(b) or 6(C) of this Agreement.
f. RESTRICTED AREA. The "Restricted Area" shall, if this
Agreement has been terminated pursuant to Section 6(b) or 6(c), be the
area commonly included as part of the "Standard Metropolitan Statistical
Area" of Boca Raton, Florida.
g. COMPETITIVE BUSINESS ACTIVITIES. The term "Competitive
Business Activities" as used herein shall be deemed to mean the
Business.
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h. COVENANTS AS ESSENTIAL ELEMENTS OF THIS AGREEMENT. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7(a) and (b) are essential elements of this Agreement, and
that but for the agreement by the Executive to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Executive shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Executive.
i. SURVIVAL AFTER TERMINATION OF AGREEMENT. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7(a) and (b) shall survive the termination of this Agreement and the Executive's
employment with the Company.
j. REMEDIES.
I. The Executive acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions
of Section 7(a) or (b) herein would be inadequate and a breach thereof
will cause irreparable harm to the Company. In recognition of this fact,
in the event of a breach by the Executive of any of the provisions of
Section 7(a) or (b), the Executive agrees that, in addition to any
remedy at law available to the Company, including, but not limited to
monetary damages, all rights of the Executive to payment or otherwise
under this Agreement and all amounts then or thereafter due to the
Executive from the Company under this Agreement may be terminated and
the Company, without posting any bond, shall be entitled to obtain, and
the Executive agrees not to oppose the Company's request for equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which
may then be available to the Company.
II. The Executive acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent
injunction merely prohibiting the use of Proprietary Information would
not be an adequate remedy upon breach or threatened breach of Section
7(a) or (b) and consequently agrees, upon proof of any such breach, to
the granting of injunctive relief prohibiting any form of competition
with the Company. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available to it
for such breach or threatened breach.
8. INDEMNIFICATION.
a. The Executive shall continue to be covered by the Articles of
Incorporation and/or the Bylaws of the Company with respect to matters occurring
on or prior to the date of termination of the Executive's employment with the
Company, subject to all the provisions of Florida and Federal law and the
Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles
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of Incorporation and/or Bylaws of the Company shall be paid by the Company on a
current basis in accordance with such provision, the Company's Articles of
Incorporation and Florida law. To the extent that any such payments by the
Company pursuant to the Company's Articles of Incorporation and/or Bylaws may be
subject to repayment by the Executive pursuant to the provisions of the
Company's Articles of Incorporation or Bylaws, or pursuant to Florida or Federal
law, such repayment shall be due and payable by the Executive to the Company
within twelve (12) months after the termination of all proceedings, if any,
which relate to such repayment and to the Company's affairs for the period prior
to the date of termination of the Executive's employment with the Company and as
to which Executive has been covered by such applicable provisions.
b. The Company specifically acknowledges and agrees that the Executive
has personally guaranteed certain obligations on behalf of the Company and
further that the Executive is personally liable for certain obligations of the
Company. The Company shall indemnify and hold the Executive harmless from any
and all obligations that the Executive may incur, including, without limitation,
costs and attorneys fees in connection with such guaranties or personal
liabilities. Any costs or expenses that may be incurred by the Executive in
connection with such liabilities or guaranties shall be reimbursed to the
Executive, upon receipt by the Company of documented evidence of such
liabilities, within three (3) business days of the receipt of such documented
evidence.
9. WITHHOLDING. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
10. NOTICES. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the first paragraph of this Agreement, or at such other place as it may
designate.
11. WAIVER. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
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12. COMPLETENESS AND MODIFICATION. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties or, in the case of a waiver, by the party to be charged.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
14. BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
15. GOVERNING LAW. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with the laws of the State of Florida. Anything in this Agreement to
the contrary notwithstanding, the Executive shall conduct the Executive's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Executive is located.
16. FURTHER ASSURANCES. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
17. HEADINGS. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
18. SURVIVAL. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
19. SEVERABILITY. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
20. ENFORCEMENT. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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21. VENUE. Company and Executive acknowledge and agree that the U.S.
District for the Southern District of Florida, or if such court lacks
jurisdiction, the 15th Judicial Circuit (or its successor) in and for Palm Beach
County, Florida, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under
or in connection with this Agreement and the parties further agree that, in the
event of litigation arising out of or in connection with this Agreement in these
courts, they will not contest or challenge the jurisdiction or venue of these
courts.
22. CONSTRUCTION. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
THE EXECUTIVE ACKNOWLEDGES THAT THE EXECUTIVE HAS READ ALL OF THE TERMS OF THIS
AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
set forth in the first paragraph of this Agreement.
Witness: The Company:
VISUAL DATA CORPORATION
/S/ JOANNE TIPPER BY: /S/ RANDY S. SELMAN
- ----------------------------- ------------------------
Randy S. Selman, President
Witness: The Executive
/S/ PAULINE SCHNEIDER /S/ ALAN SAPERSTEIN
- ----------------------------- ------------------------
ALAN SAPERSTEIN
14
EXHIBIT 10(e)
VISUAL DATA CORPORATION
1996 STOCK OPTION PLAN
1. GRANT OF OPTIONS; GENERALLY. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the VISUAL
DATA CORPORATION 1996 STOCK OPTION PLAN (the "Plan"), the Board of Directors
(the "Board") or, the Compensation Committee (the "Stock Option Committee") of
Visual Data Corporation (the "Corporation") is hereby authorized to issue from
time to time on the Corporation's behalf to any one or more Eligible Persons, as
hereinafter defined, options to acquire shares of the Corporation's $.001 par
value common stock (the "Stock").
2. TYPE OF OPTIONS. The Board or the Stock Option Committee is
authorized to issue options which meet the requirements of Section ss.422 of the
Internal Revenue Code of 1986, as amended (the "Code"), which options are
hereinafter referred to collectively as ISOs, or singularly as an ISO. The Board
or the Stock Option Committee is also, in its discretion, authorized to issue
options which are not ISOs, which options are hereinafter referred to
collectively as NSOs, or singularly as an NSO. The Board or the Stock Option
Committee is also authorized to issue "Reload Options" in accordance with
Paragraph 8 herein, which options are hereinafter referred to collectively as
Reload Options, or singularly as a Reload Option. Except where the context
indicates to the contrary, the term "Option" or "Options" means ISOs, NSOs and
Reload Options.
3. AMOUNT OF STOCK. The aggregate number of shares of Stock which may
be purchased pursuant to the exercise of Options shall be 200,000 shares. Of
this amount, the Board or the Stock Option Committee shall have the power and
authority to designate whether any Options so issued shall be ISOs or NSOs,
subject to the restrictions on ISOs contained elsewhere herein. If an Option
ceases to be exercisable, in whole or in part, the shares of Stock underlying
such Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the Corporation as payment for shares of Stock
purchased by the exercise of an Option granted under this Plan, such shares of
Stock shall also be available under this Plan. If there is any change in the
number of shares of Stock on account of the declaration of stock dividends,
recapitalization resulting in stock split-ups, or combinations or exchanges of
shares of Stock, or otherwise, the number of shares of Stock available for
purchase upon the exercise of Options, the shares of Stock subject to any Option
and the exercise price of any outstanding Option shall be appropriately adjusted
by the Board or the Stock Option Committee. The Board or the Stock Option
Committee shall give notice of any adjustments to each Eligible Person granted
an Option under this Plan, and such adjustments shall be effective and binding
on all Eligible Persons. If because of one or more recapitalizations,
reorganizations or other corporate events, the holders of outstanding Stock
receive something other than shares of Stock then, upon exercise of an Option,
the Eligible Person will receive what the holder would have owned if the holder
had exercised the Option immediately before the first such corporate event and
not disposed of anything the holder received as a result of the corporate event.
<PAGE>
4. ELIGIBLE PERSONS.
(a) With respect to ISOs, an Eligible Person means any individual
who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or by any subsidiary of the Corporation or (iii) any
consultant of the Corporation or by any subsidiary of the Corporation.
5. GRANT OF OPTIONS. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in a writing
signed on behalf of the Corporation or by a majority of the members of the Stock
Option Committee. The writing shall identify whether the Option being granted is
an ISO or an NSO and shall set forth the terms which govern the Option. The
terms shall be determined by the Board or the Stock Option Committee, and may
include, among other terms, the number of shares of Stock that may be acquired
pursuant to the exercise of the Options, when the Options may be exercised, the
period for which the Option is granted and including the expiration date, the
effect on the Options if the Eligible Person terminates employment and whether
the Eligible Person may deliver shares of Stock to pay for the shares of Stock
to be purchased by the exercise of the Option. However, no term shall be set
forth in the writing which is inconsistent with any of the terms of this Plan.
The terms of an Option granted to an Eligible Person may differ from the terms
of an Option granted to another Eligible Person, and may differ from the terms
of an earlier Option granted to the same Eligible Person.
6. OPTION PRICE. The option price per share shall be determined by the
Board or the Stock Option Committee at the time any Option is granted, and shall
be not less than (i) in the case of an ISO, the fair market value, (ii) in the
case of an ISO granted to a ten percent or greater stockholder, 110% of the fair
market value, or (iii) in the case of an NSO, not less than 75% of the fair
market value (but in no event less than the par value) of one share of Stock on
the date the Option is granted, as determined by the Board or the Stock Option
Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of Stock
on such exchange or over-the-counter market on which such shares shall be traded
on that date, or if such exchange or over-the- counter market is closed or if no
shares shall have traded on such date, on the last preceding date on which such
shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee.
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7. PURCHASE OF SHARES. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise. The purchase price
of the Stock shall be in United States dollars, payable in cash or by check, or
in property or Corporation stock, if so permitted by the Board or the Stock
Option Committee in accordance with the discretion granted in Paragraph 5
hereof, having a value equal to such purchase price. The Corporation shall not
be required to issue or deliver any certificates for shares of Stock purchased
upon the exercise of an Option prior to (i) if requested by the Corporation, the
filing with the Corporation by the Eligible Person of a representation in
writing that it is the Eligible Person's then present intention to acquire the
Stock being purchased for investment and not for resale, and/or (ii) the
completion of any registration or other qualification of such shares under any
government regulatory body, which the Corporation shall determine to be
necessary or advisable.
8. GRANT OF RELOAD OPTIONS. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 and 21 herein. A
Reload Option provision provides that if the Eligible Person pays the exercise
price of shares of Stock to be purchased by the exercise of an ISO, NSO or
another Reload Option (the "Original Option") by delivering to the Corporation
shares of Stock already owned by the Eligible Person (the "Tendered Shares"),
the Eligible Person shall receive a Reload Option which shall be a new Option to
purchase shares of Stock equal in number to the tendered shares. The terms of
any Reload Option shall be determined by the Board or the Stock Option Committee
consistent with the provisions of this Plan.
9. STOCK OPTION COMMITTEE. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of Directors. The Board may from
time to time remove members from or add members to the Stock Option Committee.
The Stock Option Committee shall be constituted so as to permit the Plan to
comply in all respects with the provisions set forth in Paragraph 20 herein. The
members of the Stock Option Committee may elect one of its members as its
chairman. The Stock Option Committee shall hold its meetings at such times and
places as its chairman shall determine. A majority of the Stock Option
Committee's members present in person shall constitute a quorum for the
transaction of business. All determinations of the Stock Option Committee will
be made by the majority vote of the members constituting the quorum. The members
may participate in a meeting of the Stock Option Committee by conference
telephone or similar communications equipment by means of which all members
participating in the meeting can hear each other. Participation in a meeting in
that manner will constitute presence in person at the meeting. Any decision or
determination reduced to writing and signed by all members of the Stock Option
Committee will be effective as if it had been made by a majority vote of all
members of the Stock Option Committee at a meeting which is duly called and
held.
10. ADMINISTRATION OF PLAN. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Stock Option Committee is granted the full right and authority to interpret and
construe the provisions of this Plan, promulgate,
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amend and rescind rules and procedures relating to the implementation of the
Plan and to make all other determinations necessary or advisable for the
administration of the Plan, consistent, however, with the intent of the
Corporation that Options granted or awarded pursuant to the Plan comply with the
provisions of Paragraph 20 and 21 herein. All determinations made by the Board
or the Stock Option Committee shall be final, binding and conclusive on all
persons including the Eligible Person, the Corporation and its stockholders,
employees, officers and directors and consultants. No member of the Board or the
Stock Option Committee will be liable for any act or omission in connection with
the administration of this Plan unless it is attributable to that member's
willful misconduct.
11. PROVISIONS APPLICABLE TO ISOS. The following provisions shall apply
to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from
_____________, 1996, the date that this Plan was originally adopted by the
Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of ten (10)
years from the date the ISO is granted.
(c) The option price may not be less than the fair market value
of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to whom it
is granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time of
the grant stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the employer corporation or of its
parent or subsidiary corporation (as those terms are defined in the Code), then
the option price shall be at least 110% of the fair market value of the Stock,
and the ISO shall not be exercisable after the expiration of five (5) years from
the date the ISO is granted.
(f) The aggregate fair market value (determined at the time the
ISO is granted) of the Stock with respect to which the ISO is first exercisable
by the Eligible Person during any calendar year (under this Plan and any other
incentive stock option plan of the Corporation) shall not exceed $100,000.
(g) Even if the shares of Stock which are issued upon exercise of
an ISO are sold within one year following the exercise of such ISO so that the
sale constitutes a disqualifying disposition for ISO treatment under the Code,
no provision of this Plan shall be construed as prohibiting such a sale.
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(h) This Plan was adopted by the Corporation on __________, 1996,
by virtue of its approval by the Corporation's Board of Directors. Approval by
the stockholders of the Corporation is to occur prior to ____________, 1996.
12. DETERMINATION OF FAIR MARKET VALUE. In granting ISOs under this
Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. RESTRICTIONS ON ISSUANCE OF STOCK. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by will
or under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.
14. EXERCISE IN THE EVENT OF DEATH OF TERMINATION OR EMPLOYMENT.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of his
employment with the Corporation or a Subsidiary because of his disability, or
retirement or otherwise, his Options may be exercised, to the extent that the
optionee shall have been entitled to do so on the date of his death or such
termination of employment, by the person or persons to whom the optionee's right
under the Option pass by will or applicable law, or if no such person has such
right, by his executors or administrators, at any time, or from time to time. In
the event of termination of employment because of his death while an employee or
because of disability, his Options may be exercised not later than the
expiration date specified in Paragraph 5 or one year after the optionee's death,
whichever date is earlier, or in the event of termination of employment because
of retirement or otherwise, not later than the expiration date specified in
Paragraph 5 hereof or one year after the optionee's death, whichever date is
earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such optionee has not
died within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the termination
of his employment, at any time, or from time to time, but not later than the
expiration date specified in Paragraph 5 hereof or one year after termination of
employment, whichever date is earlier.
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(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans or with the consent of the Board or the Stock Option Committee
or involuntarily other than by termination for cause, and such optionee has not
died within the following three months, he may exercise his Option to the extent
he shall have been entitled to do so at the date of the termination of his
employment, at any time and from to time, but not later than the expiration date
specified in Paragraph 5 hereof or thirty (30) days after termination of
employment, whichever date is earlier. For purposes of this Paragraph 14,
termination for cause shall mean termination of employment by reason of the
optionee's commission of a felony, fraud or willful misconduct which has
resulted, or is likely to result, in substantial and material damage to the
Corporation or a Subsidiary, all as the Board or the Stock Option Committee in
its sole discretion may determine.
(d) If an optionee's employment shall terminate for any reason
other than death, disability, retirement or otherwise, all right to exercise his
Option shall terminate at the date of such termination of employment.
15. CORPORATE EVENTS. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall extend
the term set for purchasing the shares of Stock set forth in the Option.
16. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person's employer, or will interfere with or restrict
in any way the right of the Eligible Person's employer to discharge such
Eligible Person at any time for any reason whatsoever, with or without cause.
17. NONTRANSFERABILITY. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
18. NO RIGHTS AS STOCKHOLDER. No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
19. AMENDMENT AND DISCONTINUANCE OF PLAN. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may
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prejudice the rights of any Eligible Person who has prior thereto been granted
Options under this Plan. Further, no amendment to this Plan which has the effect
of (a) increasing the aggregate number of shares of Stock subject to this Plan
(except for adjustments pursuant to Paragraph 3 herein), or (b) changing the
definition of Eligible Person under this Plan, may be effective unless and until
approval of the stockholders of the Corporation is obtained in the same manner
as approval of this Plan is required. The Corporation's Board of Directors is
authorized to seek the approval of the Corporation's stockholders for any other
changes it proposes to make to this Plan which require such approval, however,
the Board of Directors may modify the Plan, as necessary, to effectuate the
intent of the Plan as a result of any changes in the tax, accounting or
securities laws treatment of Eligible Persons and the Plan, subject to the
provisions set forth in this Paragraph 19, and Paragraphs 20 and 21.
20. COMPLIANCE WITH RULE 16B-3. This Plan is intended to comply in all
respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to participants who are subject to Section 16 of
the Exchange Act, and any provision(s) herein that is/are contrary to Rule 16b-3
shall be deemed null and void to the extent appropriate by either the Stock
Option Committee or the Corporation's Board of Directors.
21. COMPLIANCE WITH CODE. The aspects of this Plan on ISOs is intended
to comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed to
incorporate by reference such modification. Any stock option agreement relating
to any Option granted pursuant to this Plan outstanding and unexercised at the
time any modifying statute or regulation becomes effective shall also be deemed
to incorporate by reference such modification and no notice of such modification
need be given to optionee.
If any provision of the aspects of this Plan on ISOs is
determined to disqualify the shares purchasable pursuant to the Options granted
under this Plan from the special tax treatment provided by Code Section 422,
such provision shall be deemed null and void and to incorporate by reference the
modification required to qualify the shares for said tax treatment.
22. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver Stock under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required
to issue or deliver any certificates for shares of Stock prior to (a) the
listing of such shares on any stock exchange or over-the-counter market on which
the Stock may then be listed and (b) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
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23. DISPOSITION OF SHARES. In the event any share of Stock acquired by
an exercise of an Option granted under the Plan shall be transferable other than
by will or by the laws of descent and distribution within two years of the date
such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Stock Option Committee.
24. NAME. The Plan shall be known as the "Visual Data 1996 Stock Option
Plan."
25. NOTICES. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office, 1600 S. Dixie Highway, Suite 3D,
Boca Raton, Florida 33432 and when addressed to the Committee shall be sent to
it 1600 S. Dixie Highway, Suite 3D, Boca Raton, Florida 33432 at subject to the
right of either party to designate at any time hereafter in writing some other
address, facsimile number or person to whose attention such notice shall be
sent.
26. HEADINGS. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
27. EFFECTIVE DATE. This Plan, the Visual Data Corporation1996 Stock
Option Plan, was adopted by the Board of Directors of the Corporation on
____________________. The effective date of the Plan shall be the same date.
Dated as of _________, 1996.
VISUAL DATA CORPORATION
By:_________________________
Its: President
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[NSO GRANT FORM]
VISUAL DATA CORPORATION
1600 S. Dixie Highway, Suite 3D
Fort Lauderdale, Florida 33308
Date: __________
- ----------
- ----------
- ----------
Dear __________:
The Board of Directors of Visual Data Corporation(the "Corporation") is
pleased to award you an Option pursuant to the provisions of the 1996 Stock
Option Plan (the "Plan"). This letter will describe the Option granted to you.
Attached to this letter is a copy of the Plan. The terms of the Plan also set
forth provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgement to us that you have read and under-stand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. TYPE OF OPTION. You are granted an NSO. Please see in particular
Section 11 of the Plan.
2. RIGHTS AND PRIVILEGES. Subject to the conditions hereinafter set
forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
3. TIME OF EXERCISE. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. METHOD OF EXERCISE. The Options shall be exercised by written notice
to the Chairman of the Board of Directors at the Corporation's principal place
of business. The notice shall set forth the number of shares of Stock to be
acquired and shall contain a check payable to
1
<PAGE>
the Corporation in full payment for the Stock or that number of already owned
shares of Stock equal in value to the total Exercise Price of the Option. We
shall make delivery of the shares of Stock subject to the conditions described
in Section 13 of the Plan.
5. TERMINATION OF OPTION. To the extent not exercised, the Option shall
terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the date of
grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. SECURITIES LAWS.
The Option and the shares of Stock underlying the Option have not
been registered under the Securities Act of 1933, as amended (the "Act"). The
Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear an
appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. BINDING EFFECT. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. DATE OF GRANT. The Option shall be treated as having been granted to
you on the date of this letter even though you may sign it at a later date.
Very truly yours,
2
<PAGE>
By:_______________________________
President
AGREED AND ACCEPTED:
- -------------------------
- ----------
3
<PAGE>
Date: ________________
VISUAL DATA CORPORATION
1600 S. Dixie Highway, Suite 3D
Fort Lauderdale, Florida 33308
- ---------------
- ---------------
- ---------------
Dear _______________:
The Board of Directors of Visual Data Corporation(the "Corporation") is
pleased to award you an Option pursuant to the provisions of the 1996 Stock
Option Plan (the "Plan"). This letter will describe the Option granted to you.
Attached to this letter is a copy of the Plan. The terms of the Plan also set
forth provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgement to us that you have read and under-stand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. TYPE OF OPTION. You are granted an ISO. Please see in particular
Section 11 of the Plan.
2. RIGHTS AND PRIVILEGES. Subject to the conditions hereinafter set
forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
<PAGE>
3. TIME OF EXERCISE. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. METHOD OF EXERCISE. The Options shall be exercised by written notice
to the Chairman of the Board of Directors at the Corporation's principal place
of business. The notice shall set forth the number of shares of Stock to be
acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
5. TERMINATION OF OPTION. To the extent not exercised, the Option shall
terminate upon the first to occur of the following dates:
(a) _____________, 199___, being __________ years from the date
of grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of thirty (30) days following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. SECURITIES LAWS.
The Option and the shares of Stock underlying the Option have not
been registered under the Securities Act of 1933, as amended (the "Act"). The
Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear an
appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
2
<PAGE>
7. BINDING EFFECT. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. DATE OF GRANT. The Option shall be treated as having been granted to
you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By:_______________________________
President
AGREED AND ACCEPTED:
- -------------------------
- ----------
3
<PAGE>
[NSO GRANT FORM
WITH RELOAD OPTIONS]
VISUAL DATA CORPORATION
1600 S. Dixie Highway, Suite 3D
Boca Raton, Florida 33432
Date: __________
- -----------------
- -----------------
- -----------------
Dear __________:
The Board of Directors of Visual Data Corporation (the "Corporation") is
pleased to award you an Option pursuant to the provisions of the 1996 Stock
Option Plan (the "Plan"). This letter will describe the Option granted to you.
Attached to this letter is a copy of the Plan. The terms of the Plan also set
forth provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgement to us that you have read and understand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. TYPE OF OPTION. You are granted an NSO. Please see in particular
Section 11 of the Plan.
2. RIGHTS AND PRIVILEGES.
(a) Subject to the conditions hereinafter set forth, we grant you
the right to purchase __________ shares of Stock at $__________ per share, the
current fair market value of a share of Stock. The right to purchase the shares
of Stock accrues in __________ installments over the time periods described
below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
(b) In addition to the Option granted hereby (the "Underlying
Option"), the Corporation will grant you a reload option (the "Reload Option")
as hereinafter provided. A Reload Option is hereby granted to you if you acquire
shares of Stock pursuant to the exercise of the Underlying Option and pay for
such shares of Stock with shares of Common Stock already
1
<PAGE>
owned by you (the "Tendered Shares"). The Reload Option grants you the right to
purchase shares of Stock equal in number to the number of Tendered Shares. The
date on which the Tendered Shares are tendered to the Corporation in full or
partial payment of the purchase price for the shares of Stock acquired pursuant
to the exercise of the Underlying Option is the Reload Grant Date. The exercise
price of the Reload Option is the fair market value of the Tendered Shares on
the Reload Grant Date. The fair market value of the Tendered Shares shall be the
low bid price per share of the Corporation's Common Stock on the Reload Grant
Date. The Reload Option shall vest equally over a period of __________ (___)
years, commencing on the first anniversary of the Reload Grant Date, and on each
anniversary of the Reload Grant Date thereafter; however, no Reload Option shall
vest in any calendar year if it would allow you to purchase for the first time
in that calendar year shares of Stock with a fair market value in excess of
$100,000, taking into account ISOs previously granted to you. The Reload Option
shall expire on the earlier of (i) __________ (___) years from the Reload Grant
Date, or (ii) in accordance with Paragraph 5(b), or (iii) in accordance with
Paragraph 5(c) as set forth herein. If vesting of the Reload Option is deferred,
then the Reload Option shall vest in the next calendar year, subject, however,
to the deferral of vesting previously provided. Except as provided herein the
Reload Option is subject to all of the other terms and provisions of this
Agreement governing Options.
3. TIME OF EXERCISE. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. METHOD OF EXERCISE. The Options shall be exercised by written notice
to the Chairman of the Board of Directors at the Corporation's principal place
of business. The notice shall set forth the number of shares of Stock to be
acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
5. TERMINATION OF OPTION. To the extent not exercised, the Option shall
terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the date of
grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
2
<PAGE>
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. SECURITIES LAWS.
The Option and the shares of Stock underlying the Option have not
been registered under the Securities Act of 1933, as amended (the "Act"). The
Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear an
appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. BINDING EFFECT. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. DATE OF GRANT. The Option shall be treated as having been granted to
you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By:_______________________________
President
AGREED AND ACCEPTED:
- -------------------------
- -------------
3
EXHIBIT 10(f)
HOTELVIEW CORPORATION
A Subsidiary of Visual Data Corporation
1600 SOUTH DIXIE HIGHWAY, SUITE 3A, BOCA RATON, FL 33432
TEL: (407)367-8505 O FAX: (407)367-7606
TRAVEL AGENCY AGREEMENT
THIS AGREEMENT commences on the "Effective Date" and sets forth the terms and
conditions between HOTELVIEW CORPORATION (the "Company") and Travel Agency (as
defined below):
================================================================================
Travel Agency Name (the "Travel Agency")
- --------------------------------------------------------------------------------
Contact Name Title
- --------------------------------------------------------------------------------
Address (the "Location") County
- --------------------------------------------------------------------------------
City State Zipcode Country
- --------------------------------------------------------------------------------
Phone( ) Ext. Fax( ) ARC#
================================================================================
TERMS AND CONDITIONS
1. SERVICE OF THE COMPANY. The Company shall provide the following to the
Travel Agency:
a. One (1) non-exclusive, personal, non-assignable License for the
HotelView Library ("Library"), as set forth more fully in the Licensing
Agreement, a copy of which is provided with the Library, which license shall
include the right to make copies on video tape only of any of the Vignette(s)
for use solely by a Travel Agency's clients, which copies shall bear the
following copyright notice: (C) 1995,1996 HotelView Corporation
b. One (1) ("Hardware Package") comprised of a Compact Disc
Interactive Player -- and Color TV/VCR unit, if required -- which at all times
shall remain the property of the Company.
c. One (1) complete HotelView Library ("Library") contained on
compact discs.
d. Periodic Library updates provided on additional compact discs.
e. Marketing brochures, blank tapes, mailers, supporting documents
and professional folders.
f. Incentive payments due the Travel Agency, from the Company, will
be paid within 30 days of the completion of the calendar quarter ("Quarterly
Period").
2. RESPONSIBILITIES OF THE TRAVEL AGENCY.
a. For each License granted to the Travel Agency, the Travel Agency
shall book an average of at least $400.00 per month of:
i. Rooms in Hotels contained in the Library, which shall be
booked through any reservation system; and/or
<PAGE>
ii. tours, utilizing the Company's forms to be sent to the
Company for credit, based on a Quarterly Period. The Company
shall evaluate the Travel Agency for each Quarterly Period to
determine the average monthly booking of the hotel rooms by the
Travel Agency. To the extent that the Travel Agency does not book
hotel rooms totaling $1,200 in any given Quarterly Period, the
Company, in its sole discretion can remove the Hardware Package
and the Library from the Travel Agency and terminate this
Agreement and License.
b. The Travel Agency agrees to disclose and release all information to
the Company on a monthly basis, in connection with the reservations of hotel
rooms, in order that the Company may properly credit the Travel Agency's
account, which information shall be kept confidential.
c. Travel Agency agrees to maintain adequate insurance on the Hardware
Package and show the Company as a Loss Payee on the insurance policy as well as
provide proof of such insurance to the Company on request.
3. TERM. The Term of this Agreement is for one (1) year as of the Effective
Date and shall automatically be renewed for one (1) year periods, unless
terminated by either party upon 30 days prior written notice.
4. ACKNOWLEDGMENTS BY TRAVEL AGENCY. The Travel Agency acknowledges that
during the term of this Contract:
a. The Company is the owner of all rights, title and interest in and
to the Hardware Package, License and Library;
b. The Travel Agency shall not sell or otherwise encumber the
Hardware Package, License and Library;
c. The Travel Agency shall keep the Hardware Package in good working
order and visible to the Travel Agency's clients, and to make copies of the
videos when required on Company supplied blank VHS tapes;
d. Upon conclusion or termination of the Agreement, Travel Agency agrees
to return the Hardware Package, the Library and all other property of the
Company to the Company's address below at Company's expense.
5. ASSIGNMENT. This Agreement and the rights granted hereunder may not be
assigned in whole or in part by the Travel Agency without the prior written
consent of the Company. The Company may assign this Agreement and the rights
granted hereunder to any third party.
2
<PAGE>
THE PARTIES ACKNOWLEDGE THAT EACH HAS READ ALL OF THE TERMS OF THIS AGREEMENT
AND AGREES TO ABIDE BY ITS TERMS AND CONDITIONS.
For the Accepted by HOTELVIEW CORPORATION:
Travel Agent:___________________ 1600 South Dixie Highway, Suite 3A
(Name of Travel Agency) Boca Raton, FL 33432
By:___________________________ By:_________________________________
Name:________________________ Name:_______________________________
Title: _________________________ Title:______________________________
Date:_________________________ Date("Effective Date"):_____________
HOTELVIEW USE ONLY:
================================================================================
Contract No.: CDI Series No.: VCR/TV Serial No.: Library Serial No.:
================================================================================
3
EXHIBIT 10(g)
HOTELVIEW CORPORATION Contract # ________
A SUBSIDIARY OF VISUAL DTA CORPORATION
1600 SOUTH DIXIE HIGHWAY, SUITE 3A, BOCA RATON, FL 33432
TEL: (561)367-8505 FAX: (561)367-7606
HOTEL SERVICES AGREEMENT
THIS AGREEMENT commences on the "Effective Date" and sets forth the terms and
conditions between HOTELVIEW CORPORATION (the "Company") and Hotel (as
defined below):
================================================================================
Hotel Name (the "Hotel")
- --------------------------------------------------------------------------------
Contact Name Title
- --------------------------------------------------------------------------------
Address (the "Location")
- --------------------------------------------------------------------------------
City State Zipcode
- --------------------------------------------------------------------------------
Country County
- --------------------------------------------------------------------------------
Phone ( ) Fax ( )
- --------------------------------------------------------------------------------
Service Fee (the "Service Fee") Term (the "Term")
- --------------------------------------------------------------------------------
$ Year(s)
================================================================================
THE PARTIES ACKNOWLEDGE THAT EACH HAS READ ALL OF THE TERMS ON BOTH SIDES OF
THIS AGREEMENT AND AGREES TO ABIDE BY ITS TERMS AND CONDITIONS.
Accepted by HOTELVIEW CORPORATION
For the HOTEL: _________________________ 1600 South Dixie Highway, Suite 3A
(Name of Hotel) Boca Raton, FL 33432
By: ___________________________________ By:_______________________________
Name: _________________________________ Name: ----------------------------
Title: __________________________________ Title: ---------------------------
Date: __________________________________ Date: ----------------------------
================================================================================
HOTELVIEW USE ONLY:
- --------------------------------------------------------------------------------
Contract No.: Crew No.: File Date: / / Index Code: D- C-
- --------------------------------------------------------------------------------
[ ] Domestic [ ] International [ ] Small/B&B [ ] Standard [ ] Resort
[ ] Super Resort
================================================================================
<PAGE>
TERMS AND CONDITIONS
1. ENGAGEMENT BY HOTEL : SERVICES OF THE COMPANY.
The Hotel hereby engages the Company and Company agrees to provide the
following services to the Hotel:
a. Videotaping of the Location and producing a video brochure
("Vignette") to be included in the HotelView/Registered
trademark/ Laser Disc Library ("Library") for the term set forth
above.
b. A copy of the final version of the Vignette shall be provided by
the Company to the Hotel prior to inclusion of the Vignette in
the Library.
c. Distribution of the Vignette through inclusion in the Library to
travel agencies and on-line service providers (Internet or
Interactive TV).
2. RESPONSIBILITIES OF THE HOTEL.
a. The Hotel shall make its Location and all amenities at the
Location available to the Company as reasonably required by the
Company so that the Company or its agents may videotape the
Vignette, according to the standards set forth by the Company. In
connection therewith, the Hotel shall make available such
reasonable number of rooms (not to exceed two rooms for two
nights unless weather or other factors outside the control of the
Company and Hotel require a longer duration) and meals at its
Location as may be required, at no charge, during the videotaping
of the Location by the Company or its agents; provided however
that all incidental expenses incurred by the Company or its
agents shall be the responsibility of the Company or its agents.
b. Upon receipt of the final version of the Vignette from the
Company for inclusion in the Library, the Hotel shall have seven
(7) days to notify the Company, in writing, of any inaccuracies
in the facts and content contained in the Vignette, but not as to
the style.
c. The Hotel shall promptly notify the Company of any material
changes to any information contained in the Vignette during any
period in which the Vignette is in the Library. The Company shall
videotape at the location as necessary to accurately incorporate
said material changes. The costs and expenses incurred by the
Company and paid for by the Hotel, in connection with this
subsection 2 will be mutually agreed upon in advance by the
Company and the Hotel.
3. PAYMENT TERMS.
a. In consideration for the completion of the Company's services
pursuant to the terms of this Agreement, Hotel shall pay the
Service Fee defined in this Agreement.
b. All payments due to the Company from the Hotel shall be due
thirty (30) days from date of invoice by the Company.
c. All amounts due not paid by the Hotel within forty-five (45) days
of the date of Invoice shall be past due, at which time the
Company shall be entitled to take all reasonable collection
actions, including the use of a collection agency or an attorney,
with Hotel fully liable and solely responsible for all reasonable
costs and expenses associated therewith, including attorneys fees
and costs. If Hotel fails to render payment within sixty (60)
days of the Invoice, the Hotel shall be deemed
2
<PAGE>
to be in default and Company shall have the right to terminate
this Agreement pursuant to Section 5 herein.
4. COPYRIGHT AND LICENSE.
a. The Hotel acknowledges that the Vignette is an original work,
fixed in a tangible form, and the Company owns the Vignette and
all other unedited footage and reserves all right, title and
interest in and to the copyright, the common law copyright, the
right to apply for copyright registration, and any extensions or
renewals, common law and statutory copyright in all publication,
reproduction, broadcast or other derivative rights of the
Vignette including, but not limited to, merchandising rights, use
of title rights, publication rights, and foreign edition rights.
Except as specifically set forth in this Agreement, there is no
grant of license to the Hotel by the Company in connection with
the Vignette or the Library.
b. The Company agrees that the Hotel's name and any derivation of
such name, when used alone or in connection with another word or
words, and the Hotel's trademarks, trade names, symbols, logos
and designs, shall, in all events remain the exclusive property
of the Hotel and nothing contained herein shall confer upon the
Company the right to use such names, trademarks, trade names,
symbols, logos or designs, other than in strict accordance with
the terms of this Agreement.
c. The Hotel shall have the right to copy and distribute the
Vignette to any potential guests. Any other use of the Vignette
by the Hotel requires prior written consent by the Company.
5. TERMINATION.
a. This Agreement may be terminated immediately by the Company, in
its sole discretion, upon the occurrence of any of the following
events:
i. Any legal or equitable proceeding against the Hotel which
results in a final judgment or decree, if the sale of all
or substantially all of Hotel's assets are contemplated or
threatened as a result of such judgment or decree;
ii. The Hotel is in default of any outstanding amounts due to
the Company by the Hotel;
iii. The Hotel is in breach of any provision of this Agreement,
or has committed any act of negligence in performing its
obligations hereunder, which breach shall not have been
cured within ten (10) days after notice thereof.
b. The Company may, in its sole discretion, terminate this Agreement
subsequent to videotaping the Vignette of the Hotel, but prior to
the Vignette's inclusion in the Library for any reason. In the
event of such termination, neither party shall have any
responsibilities to the other party for any costs or expenses by
either party in connection with this Agreement; provided however,
that the videotape shall remain the property of the Company but
shall not be used by the Company in any manner.
c. The termination of this Agreement for any reason shall be without
prejudice to any rights of either party against the other which
may have accrued before the date of such termination.
3
<PAGE>
d. After termination of this Agreement, Hotel shall have no further
authorization or consent from Company to use the vignette in any
manner other than distribution of remaining copies of the
Vignette to any potential guests. If Hotel violates this
paragraph, Hotel shall reimburse Company for all costs and
expenses associated with enforcement herewith, including
attorneys fees.
6. REPRESENTATIONS AND WARRANTIES.
a. REPRESENTATIONS AND WARRANTIES BY HOTEL. The Hotel represents and
warrants that all information provided to the Company which shall
be contained in the Vignette or any marketing or promotional
materials in connection with the services of the Hotel is true,
accurate and correct as of the date of the production of the
Vignette. The Hotel further warrants that it shall promptly
notify the Company of any material changes to any information
contained in the Vignette, as specified in Section 4(e)
heretofore.
B. NO REPRESENTATIONS AND WARRANTIES BY COMPANY. NOTWITHSTANDING
ANY OTHER PROVISION HEREOF, COMPANY MAKES NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESSED OR IMPLIED, BY OPERATION OF LAW,
OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO: ANY REPRESENTATIONS
OR WARRANTIES OF: (1) MER- CHANTABILITY; (II) FITNESS FOR A
PARTICULAR PURPOSE; (III) QUALIFY, OPERATION OR PERFORMANCE; (IV)
SUITABILITY FOR CUSTOMERS; (V) COMPLIANCE WITH ANY ONE OR MORE
LAWS, RULES, REGULATIONS, POLICIES, REQUIREMENTS OR THE LIKE, OF
FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL, ADMINISTRATIVE OR
JUDICIAL AUTHORITIES, OR OTHER THIRD PARTIES; OR (VI)
NON-INFRINGEMENT OR NONVIOLATION OF THE RIGHTS OF ANY THIRD
PARTIES, INCLUDING, BUT NOT LIMITED TO, ANY COPYRIGHTS, TRADEMARK
RIGHTS, RIGHTS OF PUBLICITY OR PRIVACY, TRADE SECRET RIGHTS OR
OTHER PROPRIETARY RIGHTS.
7. INDEMNIFICATION/HOLD HARMLESS.
a. INDEMNIFICATION BY AND LIABILITIES OF COMPANY. Except as to acts
of gross negligence (willful misconduct) on the part of the
Company in the performance of its obligations hereunder, Company
shall have no obligation to indemnify or hold Hotel harmless from
and against, and shall not be responsible or liable for, any
claims, liabilities, damages, losses, costs, attorneys' fees,
etc., including, but not limited to, any indirect, special,
incidental, consequential or punitive losses or damages of any
kind, including lost profits (whether or not Company has been
advised of the possibility of such loss or damage) with respect
to my action, inaction or activities by Hotel, Company and/or one
or more third parties concerning, either directly or indirectly,
the subject matter of this Agreement.
b. INDEMNIFICATION BY AND LIABILITIES OF HOTEL.
i. Hotel hereby indemnifies and holds the Company harmless
from any and all claims for loss or damage to property or for
personal injuries or death, or for loss from delay arising out of
the acts, omissions or negligence of the Hotel or any of its
agents or independent contractors.
ii. The Hotel agrees to indemnify and hold Company harmless
from any and all claims, losses, actions, demands,
damages, costs, penalties, fines and
4
<PAGE>
expenses, including attorneys' fees, resulting from,
relating to or arising out of the following:
A. any services rendered, or acts or omissions related to
services performed by the Hotel and/or the Hotel's
employees or agents for any guests or clients who may
reserve any rooms or amenities;
B. in connection with the Vignette or advertising or
marketing materials provided to the Company by the Hotel
or any other alleged or other action by Hotel and also
from any claims, suits, loss, liability expense (including
costs of suit and attorneys' fees) and damages arising out
of alleged or actual errors in connection with the
information contained in the Vignette or information
provided by the Hotel to the Company. Hotel hereby assumes
full and complete responsibility and liability for the
content of such information and any demand, claim or
liability associated therewith;
C. inaccuracies or breaches of representations or
warranties made herein;
D. Breaches of any one or more of the other covenants or
obligations of Hotel; or
E. Liabilities or other obligations of Hotel.
iii. The Hotel shall have the sole and exclusive responsibility
for all sources of information it provides to Company for
billing and collections purposes and Company shall have no
obligation to verify, check or otherwise inspect the
source, accuracy or reliability of information furnished
by the Hotel. The Company agrees to indemnify and hold
Company harmless against any and all liability, loss,
damages, costs and expenses which Company may incur,
including, but not limited to, reasonable attorneys' fees
and costs, and which Company may be required to pay,
directly or indirectly, by reason of the content of the
Hotel's claims for reimbursement and billing information
or because of any error or omission or misrepresentation
in such information which directly or indirectly results
in any liability, loss and/or damage to Company.
iv. Company's liability with respect to this Agreement is
limited to its charges paid by the Hotel in connection
with this Agreement due to any error by Company; no
special or consequential damages may be recovered by the
Hotel. It is further expressly understood and agreed that
Company shall not be liable to any third person for any
damages or injuries which said third person may incur,
directly or indirectly, as a result of any errors or
omissions of the Hotel or in connection with any bookings.
8. RELATIONSHIP OF THE PARTIES. The relationship of the Company to the
Hotel shall be strictly as independent parties and nothing in this
Agreement shall be construed to place the parties in the relationship of
partners, joint venturers or agents.
9. MISCELLANEOUS PROVISIONS.
a. NOTICES. All notices and requests in connection with this
Agreement shall be given or made upon the respective party in
writing and shall be deemed to be given on the date such notice
or request shall be deposited in the U.S. Mail,
5
<PAGE>
postage prepaid, certified, return receipt requested and
addressed as set forth below on the signature page.
b. ASSIGNMENT. This Agreement and the rights granted hereunder may
not be assigned in whole or in part by the Hotel without the
prior written consent of the Company. The Company may assign this
Agreement and the rights granted hereunder to any third party.
c. FURTHER ASSURANCES. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary
to carry out the intent and purposes of this Agreement.
d. WAIVER. The Company's failure to exercise in any respect any
right provided for herein shall not be deemed a waiver of any
right hereunder.
e. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
f. CHOICE OF LAW. This Agreement shall be governed by, construed,
interpreted and the rights of the parties determined in
accordance with the laws of Florida, without references to the
principles of conflicts of law. Venue for any litigation
concerning this Agreement shall be the Southern District of
Florida and Palm Beach County, Florida.
g. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the heirs, successors, and assigns.
h. ENTIRE AGREEMENT. Each party acknowledges that it has read this
Agreement and any attached Addenda, understands it, and agrees to
be bound by its terms and further agrees that it is the complete
and exclusive statement of the Agreement between the parties,
which supersedes and merges all prior proposals, understandings
and all other agreements, oral and written between the parties
relating to the subject matter of this Agreement. This Agreement
may not be modified or altered in any form except by a written
instrument duly executed by both parties.
THE PARTIES ACKNOWLEDGE THAT EACH HAS READ ALL OF THE TERMS OF THIS AGREEMENT
AND AGREES TO BY ITS TERMS AND CONDITIONS.
6
EXHIBIT 10(h)
HOTELVIEW CORPORATION Contract #________
A Subsidiary of Visual Data Corporation
HOTEL SERVICES AGREEMENT
ADDENDUM I - PERFORMANCE PAYMENT PLAN
The Hotel and Company agree that the balance of the annual Service Fee will be
paid by the Hotel as the Company and its member Travel Agencies provide room
revenues for the Hotel. The Hotel and Company further agree to the following
terms and conditions in addition to those contained in the Hotel Services
Agreement:
1. DEFINITIONS.
Unless otherwise expressly provided herein or in the Agreement or the
context otherwise requires, the following terms used in this Addendum
have the following meanings:
a. "GUEST DEPARTURE DATE" means the day at which a customer
completes their stay at the Hotel.
b. "ISSUE DATE" means the date the Vignette is included in the
Library, which shall not exceed ninety (90) days from the
Effective Date.
c. "RESERVATION SYSTEM" means the automatic electronic reservation
booking system used by Travel Agencies to reserve airline, hotel,
rental car and other travel related services, and by Hotels to
receive said reservations.
d. "SERVICE FEE BALANCE" means balance of payment owed to the
Company from the Hotel as consideration for the services provided
by the Company to the Hotel, which shall be paid from the net
amount received from the Travel Agents for the Hotel's rooms,
less all applicable taxes and commissions paid to the Travel
Agents by the Hotel or its affiliates.
2. ADDITIONAL RESPONSIBILITIES OF THE COMPANY.
a. In addition to the responsibilities set forth in this Agreement,
the Company agrees to accept payments based on performance in
lieu of cash for services rendered under this Agreement.
b. Furthermore, the Company is responsible for providing monthly
statements to the Hotel evidencing bookings made by its member
Travel Agencies.
3. ADDITIONAL RESPONSIBILITIES OF THE HOTEL.
a. In addition to the responsibilities otherwise set forth in this
Agreement, the Hotel shall make all room types available.
b. As the Hotel receives revenues produced by the travel agents,
Hotel Agrees to pay the Company all amounts received, except as
otherwise stated in Addendum II, less the Travel Agent commission
and applicable taxes, until the total amount of the Service Fee
is paid in full. Thereafter, the Hotel is not liable to pay any
other fees to the Company, in connection with the HotelView
Library, for the term of this Agreement.
<PAGE>
c. The Hotel shall take such necessary actions to release to the
Company all booking information relevant for the Company to
properly collect from the Hotel amounts due pursuant to the terms
of this Agreement and Addendum. This includes authorizing the
Reservation System or any other third party tracking/collection
system to release the Company all relevant booking information.
4. CONSIDERATION.
a. In consideration for the Company's services, pursuant to the
terms of this Addendum, Hotel agrees the Service Fee balance is
as follows:
================================
Service Fee Balance
================================
$
================================
5. PAYMENT TERMS.
a. All payments due to the Company from the Hotel shall be due
thirty (30) days from Guest Departure Date.
b. All amounts due not paid by the Hotel within forty-five (45) days
of the date of Guest Departure Date shall be past due, at which
time the Company shall be entitled to take all reasonable
collection actions, including the use of a collection agency or
an attorney, with Hotel fully liable and solely responsible for
all costs and expenses associated therewith, including attorneys
fees and costs. If Hotel fails to render payment within sixty
(60) days of the Guest Departure Date, the Hotel shall be deemed
to be in default and Company shall have the right to terminate
the Hotel Services Agreement and this Addendum pursuant to
Section 5 of the Agreement.
THE PARTIES AGREE TO THE TERMS AND CONDITIONS SET FORTH HEREIN AND IN THE HOTEL
SERVICE AGREEMENT.
Accepted by HOTELVIEW CORPORATION:
For the HOTEL:_________________ 1600 South Dixie Highway, Suite 3A
(Name of Hotel) Boca Raton, FL 33432
By:___________________________ By:_________________________________
Name:_________________________ Name:_______________________________
Title: _______________________ Title:______________________________
Date:_________________________ Date:_______________________________
2
EXHIBIT 10(i)
HOTELVIEW CORPORATION Contract #__________
A Subsidiary of Visual Data Corporation
HOTEL SERVICES AGREEMENT
ADDENDUM II - SPECIAL TERMS AND CONDITIONS, OTHER SERVICES
The Hotel and Company agree to the following special terms and conditions in
addition to those contained in the Hotel Services Agreement:
Select either number 1 or number 2 below:
1. Enclosed with this Agreement is the standard deposit of $__________
leaving a balance of:
Cash $______________ or Service Fee Balance $_______________.
2. Tape Replication
The Hotel agrees to purchase and the Company agrees to furnish copies of
the vignette as follows:
_______ Copies at $________ per vignette for a total cost of $_________
leaving a balance of:
Cash $______________ or Service Fee Balance $_______________.
THE HOTEL AGREES TO PAY SHIPPING COSTS FROM THE REPLICATION
FACILITY TO THE HOTEL OR OTHER DESIGNATED LOCATION FOR THE
TAPE COPIES.
3. Special Clauses and Conditions:
================================================================
================================================================
================================================================
================================================================
================================================================
================================================================
<PAGE>
THE PARTIES AGREE TO THE TERMS AND CONDITIONS SET FORTH HEREIN AND IN THE HOTEL
SERVICES AGREEMENT.
Accepted by HOTELVIEW CORPORATION:
For the HOTEL:_________________ 1600 South Dixie Highway, Suite 3A
(Name of Hotel) Boca Raton, FL 33432
By:___________________________ By:_________________________________
Name:_________________________ Name:_______________________________
Title: _______________________ Title:______________________________
Date:_________________________ Date:_______________________________
2
EXHIBIT 10(j)
HOTELVIEW CORPORATION Contract #__________
A Subsidiary of Visual Data Corporation
1600 SOUTH DIXIE HIGHWAY, SUITE 3A, BOCA RATON, FL 33432
TEL: (407)367-8505 FAX: (407)367-7606
ATTRACTION/SERVICE AGREEMENT
THIS AGREEMENT commences on the "Effective Date" and sets forth the terms and
conditions between HOTELVIEW CORPORATION (the "Company") and
Service/Attraction (as defined below):
================================================================================
Service/Attraction Name (the "Service/Attraction")
- --------------------------------------------------------------------------------
Contact Name Title
- --------------------------------------------------------------------------------
Address (the "Location")
- --------------------------------------------------------------------------------
City
- --------------------------------------------------------------------------------
State Zipcode
- --------------------------------------------------------------------------------
Phone( ) Fax( )
================================================================================
================================================================================
Service Fee (the "Service Fee") Term (the "Term")
- --------------------------------------------------------------------------------
$ Year(s)
================================================================================
TERMS AND CONDITIONS
1. The Service/Attraction owns all rights, title and interest in and to the
copyrighted material (the "Material") supplied to the Company for the purposes
of inclusion in the HotelView Library (the "Library").
2. The Company is a "content" developer specializing in the production and
marketing/distribution of a visual library (the "Library") of hotels, services
and attractions under the name HotelView/registered mark/.
3. The Service/Attraction wishes to grant the Company a license for the Material
so that the Material shall be included in the Library and the Company accepts
such license for the Material, pursuant to the terms and conditions contained in
this Agreement.
4. Subject to the terms and conditions set forth in this Agreement, the
Service/Attraction hereby grants an irrevocable license (the "License") to the
Company to use the Material in the Library during the Term (as defined below).
The grant of the License includes, without limitation, the absolute right to
incorporate the Material in any fixed tangible medium in which the Library may
be contained, including without limitation, video tape, video disc, laser disc,
or otherwise. The Library is also intended to be distributed via the Internet
and Interactive Television.
<PAGE>
5. The Company shall include the Material in the Library for the Term of this
Agreement which shall be from the Effective Date and continue for a period of
one (1) year thereafter. Within thirty (30) days prior to the termination of
this Agreement, the parties agree to enter into good faith negotiations to renew
the Agreement, based upon terms and conditions to be mutually agreed upon. The
provisions of this Section 5 notwithstanding, the Company shall have the right
to continue to use the Material on all fixed-media versions of the Library in
existence through the date of termination, after termination of this Agreement,
until such time as the next update of the Library is produced, marketed and
distributed.
6. MISCELLANEOUS PROVISIONS. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida applicable to agreements made
and to be performed entirely within such State, without giving effect to any
conflicts of law principles. The parties further agree that in the event of such
action, suit or proceeding, the prevailing party shall be entitled to recover
reasonable attorneys' fees and costs. The invalidity or unenforceability of any
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity of and
reinforcement of any other provision or any part thereof. This Agreement may be
executed in any number of counterparts, each of which when so executed, shall
constitute an original copy hereof, but all of which together shall constitute
one and the same document.
7. ASSIGNMENT. This Agreement and the rights granted hereunder may not be
assigned in whole or in part by the Service/Attraction without the prior written
consent of the Company. The Company may assign this Agreement and the rights
granted hereunder to any third party.
THE PARTIES ACKNOWLEDGE THAT EACH HAS READ ALL OF THE TERMS OF THIS AGREEMENT
AND AGREES TO ABIDE BY ITS TERMS AND CONDITIONS.
Accepted by HOTELVIEW CORPORATION:
For Service/Attraction __________________ 1600 South Dixie Highway, Suite 3A
(Name of Service/Attraction) Boca Raton, FL 33432
By: ________________________________ By: _________________________
Name: _____________________________ Name: _______________________
Title: _______________________________ Title: ______________________
Date: _______________________________ Date: _______________________
HOTELVIEW USE ONLY:
- --------------------------------------------------------------------------------
Contract No.: Disc No.: Volume No.: File No.:
- --------------------------------------------------------------------------------
2
EXHIBIT 10(k)
HOTELVIEW
PUBLIC RELATIONS AGREEMENT
KEATING COMMUNICATIONS, INC.
350 Fifth Avenue
New York, New York 10118
<PAGE>
CONSULTING AGREEMENT
- -------------------------------------------------------------------------------
This Agreement ("Agreement") between Keating, Communications, Inc. ("Firm"), 350
Fifth Avenue, New York, New York 10118 and
HotelView Corporation
1600 South Dixie Highway
Boca Raton, Florida 33432
("Client") specifies the services for which the Client engages Firm and the
terms and conditions of the engagement.
Client and Firm understand and agree that:
1. Client engages and retains Firm as Client's consultant for public relations
services for HotelView and/or other services as outlined in Addendum "A" to this
Agreement (the "Project").
2. Client has the right, at its cost, to make changes to Addendum A. Firm will
issue, and Client will sign, a Project Change Notice ("PCN") in respect of any
such change; the PCN will note any addition (for which Client will pay) or
reduction in cost to Client resulting from the change. Firm may invoice Client
immediately for any additional cost, and Client will pay the invoice upon
receipt.
3. To promote quality workmanship and on-time performance by Firm, Client will
provide Firm on a timely basis with the information and materials necessary for
Firm to perform the services specified in this Agreement and generally to carry
out the Project. The Basic Fee (as defined in paragraph 4 below) is premised on
all the Firm's work being performed during a normal week and normal business
hours, e.g. Monday through Friday (except legal holidays), from 9:00 a.m. to
5:00 p.m. Delays may cause production over-time, additional labor and talent
costs, third party cancellation charges, and other additional costs and
expenses; all costs and expenses arising out of delays caused by Client will be
borne by Client and Client will pay them upon invoice. All additional fees
require prior approval by Client.
4. (a) Client agrees to pay Firm the basic fee (the "Basic Fee") of $3,500 per
month for Firm's services under this Agreement for the period commencing August
1, 1996 and ending December 31, 1996. Firm agrees to invoice Client on the first
day of the month for that month's services, and Client agrees to pay such
invoice by the 30th of that month.
(b) All out-of-pocket expenses pre-approved by Client and other costs are
in addition to the Basic Fee and are to be paid by Client upon presentation
of invoice and upon such further terms as provided in Addendum A, as stipulated
hereto.
<PAGE>
(c) Client agrees to pay Firm a monthly finance charge of 1-1/2% of any
Basic Fee not paid when due, and of any invoice for any other amount which is
not paid within 30 days of date of invoice.
5. (a) Upon termination of this Agreement, Client shall pay Firm for all
amounts due Firm at that time including but not limited to any amounts due as
provided in paragraph 4(a) above and all other costs for work done and
liabilities incurred (including any obligations incurred with third parties)
relating to the Project through the effective date of termination.
(b) The provisions of paragraphs 8 and 9 shall survive any cancellation
or termination of this Agreement, whether for cause, without cause or pursuant
to a cancellation or termination right provided in this Agreement.
6. Notwithstanding paragraph 4(a) above, if one or more Acts of God or other
causes beyond the parties' control renders the performance of services or
provisions of material or other performance by either party impossible or delays
it for six (6) months in the aggregate, either party, upon prompt written notice
to title other specifying the event(s) or cause(s), will be excused from such
nonperformance or delay, and either party then has the right to terminate this
Agreement on further written notice to the other.
7. Firm and its personnel working on the Project pursuant to this Agreement are
independent contractors and not employees of Client. Firm carries all insurance
necessary to comply with the workmen's compensation and employer's liability
laws of the state(s) in which Firm's work is to be performed for Client.
8. Client will fully protect and indemnify Firm from any claim of infringement
or violation of any copyright, patent, trademark or other right of any kind of
any person, or any claim of libel or slander, relating to any materials supplied
by Client, its employees, agents, members or guests, or any materials as to
which Client is responsible for securing any necessary or desirable permissions
and releases.
9. During the entire duration of the agreement and two years after its
termination, for any cause whatsoever, the Client and the Firm undertake not to
hire as salaried employee, nor use directly or indirectly, the other contracting
party's employees, sub-agents, former employees and former sub-agents.
10. All prior understandings and negotiations between Firm and Client, both
written and oral, are merged in this Agreement, which is the entire agreement
between them. No representation, inducement or promise has been made or relied
upon by either party, unless expressly set forth in this Agreement. This
Agreement may be altered or changed only in writing signed by both parties.
3
<PAGE>
11. Either party may not assign this Agreement without other party's prior
written consent.
12. The validity, interpretation and performance of this Agreement shall be
controlled by and construed under the laws of the State of New York.
13. The following addenda and schedules are attached to and form an integral
part of this Agreement:
Addendum A
AGREED to and accepted as of this day of July
Client: HotelView Corporation
By:
Name:
Title:
Firm: Keating Communications, Inc.
By:
Name: Richard J. Keating
Title: President & CEO
4
<PAGE>
ADDENDUM A
- -------------------------------------------------------------------------------
HOTELVIEW
Services and product(s) to be performed and delivered by Firm.
This schedule and the requirements listed below are an integral part of the
preceding agreement between Firm and Client.
Description of the Project
DEVELOP AWARENESS FOR HOTELVIEW THROUGH PRINT AND ELECTRONIC MEDIA.
PUBLIC RELATIONS SERVICES
- - Media audit
- - Liaison with the press, press kit development and press releases
- - Media interviews - including television, print and electronic
- - Public relations counseling
- - Placement and exposure of feature articles in national and industry media
- - Assist in special events, trade shows and seminars
5
<PAGE>
ADDENDUM A - CONTINUED
- -------------------------------------------------------------------------------
HOTELVIEW
Costs excluded from Basic Fee:
The Basic Fee does not include certain costs and expenses all of which require
prior approval by client, verbal or written, which are to be invoiced to a
Client at cost and paid by Client upon invoice, including but not limited to:
- - all printing and duplicating
- - fees for outside services selected and monitored by Firm,
- - photography and photographic duplication
- - all travel and entertainment
- - any other direct expense associated with the project
6
EXHIBIT 10(l)
HOTELVIEW VIDEO LIBRARY
LICENSING AGREEMENT
BY USE OF THIS PRODUCT, YOU AGREE TO THE FOLLOWING TERMS AND CONDITIONS
1. DEFINITIONS.
a. "AGREEMENT" means the agreement between Company and Travel
Agency.
a. "BUSINESS" means producing, developing, marketing and
distributing "Libraries" depicting the specific characteristics and
amenities of hotels and resorts.
b. "BUSINESS MATERIALS" means any and all written or otherwise
recorded matter, such as business forms, relating to the conduct of
business concerning the Licensed Products.
c. "COMPANY" means HotelView Corporation.
e. "LIBRARY" means hotel specific travel-related video information
containing the Vignettes.
f. "LICENSED PRODUCTS" or "PRODUCTS" means the "Vignettes" and the
"Libraries."
g. "LICENSED PROPERTY" means any and all of the following assets in
which the Company owns or controls the licensable rights, and which the
Company conceived, created, developed or obtained, alone or with
the assistance of others:
i. Any and all "Vignettes"; "Libraries"; "Marketing and
Business Materials"; and "Marks."
ii. Any and all "Proprietary Rights" relating to the "Licensed
Property".
e. "LOCATION" means the Travel Agency's Location, as defined in the
Agreement.
h. "MARKETING AND BUSINESS INFORMATION" means any and all
knowledge, data, know-how and written or otherwise recorded matter
relating to the promotion or conduct of business concerning the "Licensed
Products".
i. "MARKETING MATERIALS" means any and all written or otherwise
recorded matter relating to the promotion of the "Licensed Products."
j. "MARKS" means any and all trademarks, service marks, trade names
and other designations and indicia which could be used in connection with
the "Licensed Products."
k. "PROPRIETARY RIGHTS" means any and all rights and privileges
provided under the trademark, copyright, trade secret and other laws of
the United States, the individual states thereof, and jurisdictions
foreign thereto, and the goodwill associated therewith.
l. "VIGNETTES" means a short, concise video brochure depicting the
specific characteristics and amenities of high quality hotels and resorts
in a video disc format.
2. AGREEMENT FOR LICENSED PRODUCTS AND LICENSE GRANTS.
a. The Company agrees to provide the Licensed Products for the Travel
Agency and Travel Agency agrees to accept such Licensed Products and agrees to
compensate Company for those products, as set forth more fully on the Agreement.
b. The Company agrees to grant to Travel Agency, the limited
non-exclusive, personal, non-assignable right and license to use the Licensed
Property under the Proprietary Rights, with no right to grant sublicenses
without the prior written consent of Company, and the Travel Agency hereby
undertakes to use the Licensed Property at the Location, in the manner and for
the term as set forth herein.
c. The Company agrees to grant to Travel Agency, the non-exclusive right
to make copies on video tape only of any of the Vignettes for use solely by
their clients, which copies shall bear the following copyright notice:
(C)[Date] HotelView Corporation
The Travel Agency, in its sole discretion, may charge its
clients for the Vignettes and the Company shall not receive any remuneration
from the Travel Agency for this service.
<PAGE>
3. QUALITY CONTROL.
a. Travel Agency shall only use Licensed Property in the manner provided
by this Agreement; provided however that the Travel Agency may use other forms
of the Licensed Property if:
i. Travel Agency submits to the Company a sample of such
other form; and
ii. Company provides the Travel Agency with prior written
approval of such other form.
b. Approval by Company shall not constitute waiver of the Company's
rights or Travel Agency's duties under any provision of this Agreement.
c. At any time the Licensed Products or any related promotional
materials do not meet Company's approval or the standards of quality Company may
establish from time to time, Company shall have the right to require Travel
Agency to discontinue marketing, and promoting and use of the Licensed Products
and related promotional materials and use of the Licensed Property in
conjunction therewith, unless modifications satisfactory to Company are made
within thirty (30) days from notice by Company and acknowledged by the Company
in writing.
d. Travel Agency agrees that the essence of this Agreement is founded on
the goodwill associated with the Licensed Property and the value of such
goodwill in the minds of the consuming public. Travel Agency also agrees that
the Company is the sole creator of the Licensed Property. Therefore, Travel
Agency shall not use the Licensed Property or any reproduction thereof in any
advertising, instructional, informational or promotional material or in
connection with the Licensed Products in such a manner which may detract from or
impair the integrity, character, and dignity of the Licensed Property or reflect
unfavorably upon Company. Travel Agency further agrees that it shall not use the
Licensed Property in connection with sweepstakes, alcoholic beverages,
lotteries, games of chance, or any type of similar promotion reflecting
unfavorably upon Company until and unless the Company grants its prior written
approval thereto.
4. LABELING.
a. Travel Agency agrees that it will cause to appear in connection with,
any of the Licensed Products on or within all advertising, instructional,
informational, promotional or display material bearing the Licensed Property all
required legal notices as required pursuant to all federal and international
copyright and trademark laws and as required by the Company.
b. Travel Agency agrees that its use of such Licensed Property shall
inure to the benefit of Company and that Travel Agency shall not at any time
acquire any rights in such Licensed Property by virtue of any use it may make of
such Licensed Property.
5. MARKETING OF TRAVEL AGENCY BY COMPANY.
Company shall have the right, but shall not be under any
obligation, to use the Licensed Property and/or the name of Travel Agency so as
to give the Licensed Property, Travel Agency, Company and/or Company's programs
full and favorable prominence and publicity.
6. PROPERTY RIGHTS.
a. Company shall be the owner of the entire right, title and interest
in and to the Licensed Property.
b. Travel Agency does hereby agree that all rights created by or arising
from Travel Agency's use of the Licensed Property shall be and remain the sole
and exclusive property of Company.
c. Company shall be the owner of the entire right, title and interest in
and to any and all Proprietary Rights relating to Marketing Materials, Business
Materials, Marketing and Business Information and Marks originated, conceived,
created or developed by Company alone or with the assistance of others,
including, but not limited to, Travel Agency.
d. Company shall be the owner of the entire right, title and interest in
and to any and all Proprietary Rights relating to any derivative works of the
Licensed Property originated, conceived, created or developed by Travel Agency
alone or with the assistance of others.
e. Travel Agency agrees to cooperate fully and in good faith with
Company for the purpose of securing and preserving Company's (or any grantor of
Company's) rights in and to the Licensed Property. In the event there has been
no previous registration of the Licensed Property and/or any material relating
thereto, Travel Agency shall, at Company's request and expense, register such as
a copyright, trademark and/or service mark in the appropriate class, in the name
of Company or, if Company so requests, in Travel Agency's own name. However, it
is agreed that nothing contained in this Agreement shall be construed as an
assignment or grant to the Travel Agency of any right, title or interest in or
to the Licensed Property, it being understood that all rights relating thereto
are reserved by Company, except for the license hereunder to Travel Agency of
the right to use and utilize the Licensed Property only as specifically and
expressly provided in this Agreement.
f. To preserve Company's identification with the Licensed Property
and to avoid confusion of the public, Travel Agency agrees not to associate
other characters and/or personalities with the Licensed Property hereunder in
connection with the Licensed Products or the advertising or display thereof on
which the Licensed Property is used, except that Travel Agency shall have the
right to advertise or display the Products in connection with any other services
provided by Travel Agency.
<PAGE>
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
a. NON-DISCLOSURE. The Travel Agency acknowledges that Company's trade
secrets, private or secret processes, methods and ideas, as they exist from time
to time, customer lists, training and marketing videotapes, and information
concerning Company's Licensed Property and Licensed Products (the "Confidential
Information") are valuable, special and unique assets of Company. In light of
the highly competitive nature of the industry in which the Company's business is
conducted, the Travel Agency agrees that all Confidential Information,
heretofore or in the future obtained by the Travel Agency as a result of the
Travel Agency's association with Company, shall be considered confidential. In
recognition of this fact, the Travel Agency agrees that the Travel Agency will
never use or disclose any such Confidential Information for the Travel Agency's
own purposes or for the benefit of any person or other entity or organization
(except Company) under any circumstances unless such Confidential Information
has been publicly disclosed generally or unless upon written advice of legal
counsel reasonably satisfactory to Company, the Travel Agency is legally
required to disclose such Confidential Information. Documents prepared by the
Travel Agency or that come into the Travel Agency's possession during the Travel
Agency's association with Company are and remain the property of Company, and
when this Agreement terminates, such Documents shall be returned to Company.
b. COVENANTS AS ESSENTIAL ELEMENTS OF THIS AGREEMENT. It is understood
by and between the parties hereto that the foregoing covenants, as described in
this Section 7, are an essential element of this Agreement, and that but for the
agreement by the Travel Agency to comply with such covenant, Company would not
have agreed to enter into this Agreement. Such covenant by the Travel Agency
shall be construed to be an agreement independent of any other provisions of
this Agreement. The existence of any other claim or cause of action, whether
predicated on any other provision in this Agreement, or otherwise, as a result
of the relationship between the parties shall not constitute a defense to the
enforcement of such covenant against the Travel Agency.
c. SURVIVAL AFTER TERMINATION OF AGREEMENT. Notwithstanding anything
to the contrary contained in this Agreement, the covenants in this Section 7
shall survive the termination of this Agreement.
d. REMEDIES. The Travel Agency acknowledges and agrees that Company's
remedy at law for a breach or threatened breach of any of the provisions of
Section 7 herein would be inadequate and the breach shall be per se deemed as
causing irreparable harm to Company. In recognition of this fact, in the event
of a breach by the Travel Agency of any of the provisions of this Section 7, the
Travel Agency agrees that, in addition to any remedy at law available to
Company, including, but not limited to monetary damages, all rights of the
Travel Agency to payment or otherwise under this Agreement and all amounts then
or thereafter due the Travel Agency from Company under this Agreement may be
terminated and Company, without posting any bond, shall be entitled to obtain,
and the Travel Agency agrees not to oppose Company's request for equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available to Company.
e. ATTORNEYS' FEES. The Travel Agency agrees that in the event that
Company is required to engage an attorney to enforce the terms of the covenant
in Section 7(a) of this Agreement, the Travel Agency shall pay all costs and
expenses, including a reasonable attorneys' fee for Company's attorneys, whether
or not a lawsuit is filed, and in the event an action is filed, Company shall be
entitled to payment of such attorneys' fees, expenses and costs at all trial and
appellate levels.
BY USE OF THIS PRODUCT, YOU AGREE TO THE ABOVE TERMS AND CONDITIONS
EXHIBIT 10(m)
CONSULTING AGREEMENT
This Agreement made and entered into as of the 15th day of June, 1996, by
and between Visual Data Corporation, a Florida corporation having its principal
offices at 1600 South Dixie Highway, Suite 3A, Boca Raton, Florida 33432
("VDC"), and Stratus Management Group, Inc., a Delaware corporation having its
principal offices at 1601 Colonial Parkway, Suite 100, Inverness, Illinois 60067
("SMGI").
TERM
1. This Agreement shall be in effect for the period of one (1) year from
1996, unless terminated by either party as set forth in paragraph 9.
SERVICES
2. (a) SMGI shall provide VDC with consulting services related to VDC's
hotel video content business as VDC may request from time to time. These
services shall include assistance in developing marketing plans, in planning and
developing products and services, in analyzing partnerships and acquisition
opportunities, in positioning its products and services to potential customers,
in structuring business relationships with other entities, and such other tasks
as may be mutually agreed.
(b) SMGI shall provide three days of consulting to VDC in each calendar
month. SMGI shall use reasonable efforts to be available to VDC on such dates
and in such locations as VDC may specify, subject to SMGI's prior commitments.
(c) By mutual agreement, SMGI may provide additional consulting days in
any month as requested by VDC.
<PAGE>
PAYMENT
3. (a) In consideration for the services provided for in paragraphs 2(a)
and 2(b) of this Agreement, VDC will pay SMGI a fee of $7,000 (seven thousand
dollars) per month (the "Retainer Fee") commencing June 15, 1996 and continuing
each month for the term of this Agreement. At VDC's option, VDC may, for any
month, instead pay SMGI a fee of $3,000 in cash plus 1,500 shares of its common
stock.
(b) In consideration for the services provided for in paragraph 2(c) of
this Agreement, VDC will pay SMGI its standard daily rate for the individual
whose services are provided, with fractional days billed on a pro rata basis. By
mutual agreement, VDC may pay these fees in a combination of $2 plus one share
of its common stock per $5 of the cash amount
(c) SMGI shall be reimbursed for all reasonable out-of-pocket expenses
incurred in the execution of its duties on VDC's behalf under this Agreement,
provided that SMGI shall have provided advance notice to VDC and/or received
advance approval from VDC, if such notice or approval is required under the
Expense Guidelines (as defined below). These reimbursable out-of-pocket expenses
are defined to include, but are not limited to, the cost for coach class air
transportation, hotel accommodations, ground transportation, meals, telephone,
postage, courier, information services, appropriate gratuities, and client
entertainment. In the event that SMGI shall incur expenses in furtherance of
both its duties to VDC and to other SMGI customers, SMGI shall prorate such
expenses appropriately. VDC shall have the right to establish and modify
reasonable guidelines (the "Expense Guidelines") defining types and/or amount
2
<PAGE>
of specific reimbursable expenses requiring advance notification by SMGI to VDC
and/or advance approval by VDC. Initial guidelines shall include the obligation
of SMGI to obtain VDC's advance verbal or written approval for (a) any
out-of-town travel expense, (b) any local client-related travel or entertainment
expense, and (c) any other individual expense exceeding $50. VDC may modify the
Expense Guidelines upon written notice to SMGI.
(d) SMGI shall invoice VDC monthly for all amounts due SMGI. Such
invoices shall be due and payable thirty (30) days after receipt by VDC. The
provisions of this subparagraph (d) shall survive termination of this Agreement.
(e) REGISTRATION. VDC agrees to register the VDC Common Stock issued to
SMGI pursuant to this Agreement with as minimal holding period as is practicable
and permitted after the effective date of an initial registration statement to
be filed with the Securities and Exchange Commission for VDC Common Stock, at
VDC's cost and expense.
THIRD PARTIES
4. In connection with the performance of its obligations hereunder, SMGI
shall not make, or offer to make, any payments to, or confer or offer to confer,
any benefit upon any officer, director, employee, agent or fiduciary of any
third party (including, without limitation, any government, or agency or
instrumentality thereof with the intent to influence the conduct of such
officer, director, employee, agent or fiduciary in relation to the business or
affairs of such third party, in connection with this Agreement.
3
<PAGE>
CONFIDENTIALITY
5. Each of VDC and SMGI has provided and may further provide, either
directly or through affiliates or representatives (collectively, the "Providing
Party"), to the other, its affiliates or representatives (collectively, the
"Receiving Party") information (including, but not limited to, any data or
information that is competitively sensitive material and not generally known to
the public, such as product planning information, marketing strategies, customer
relationships, customer profiles, sales estimates, business and strategic plans,
the Prospect List, and other trade secrets), in whatever form provided,
concerning the Providing Party's business, that of its affiliates, or that of
parties identified in connection with the services described in Section 2 of
this Agreement (all such information, including without limitation, notes,
analyses and other documents and data derived therefrom or based thereon which
are prepared by or on behalf of the Receiving Party, collectively, the
"Evaluation Materials", but excluding information which (i) becomes generally
available to the public other than as a result of a disclosure by the Receiving
Party, or (ii) becomes available to the Receiving Party on a nonconfidential
basis from a source that is not known by it to be bound by a confidentiality
agreement with or other obligation of secrecy to the Providing Party). The
Receiving Party agrees to use reasonable means, not less than used to protect
its own similar such information, to safeguard the Evaluation Materials. The
Receiving Party agrees that the Evaluation Materials received by it will be used
solely for the purposes related to business issues within the scope of services
provided by SMGI to VDC under this Agreement (the "Business Purposes"), and will
be kept confidential in perpetuity and not disclosed to any
4
<PAGE>
other person or entity; provided, however, that the Receiving Party may disclose
Evaluation Materials to its affiliates and to such of its and its affiliates'
officers, directors, employees and legal and accounting representatives on a
"need to know" basis for the Business Purposes only, and so long as the
Evaluation Materials are maintained in strict confidence by each such person. In
any event, each of the undersigned shall be responsible for any breach of this
undertaking by any person who obtained Evaluation Materials from it, its
affiliates, or their respective representatives. The Receiving Party may
disclose Evaluation Materials pursuant to a proceeding before a court of
competent jurisdiction or other authorized governmental agency, or otherwise
pursuant to law or regulation upon advice of counsel; provided that the
Receiving Party has first notified the Providing Party of any such disclosure
request in a manner to permit it to seek an appropriate protective order and
provided further that the Receiving Party uses reasonable efforts to seek
confidential treatment of all such Evaluation Materials by such court or agency.
The Receiving Party acknowledges and agrees that the Providing Party makes no
representation or warranty as to the accuracy or completeness of the Evaluation
Materials, except as expressly stated with respect to any such Evaluation
Materials. Upon the Providing Party's request in its sole discretion, the
Receiving Party (i) shall promptly deliver to the Providing Party all Evaluation
Materials in tangible form provided to the Receiving Party and will not retain
any copies, extracts, or other reproductions, in whole or in party thereof, and
(ii) shall promptly destroy all other Evaluation Materials prepared by or on
behalf of the Receiving Party. The Providing Party and the Receiving Party agree
to maintain the confidentiality of the existence and
5
<PAGE>
the content of the Assignment and to business transactions related to the
Assignment. The Providing Party and the Receiving Party acknowledge and agree
that the Providing Party (i) would be irreparably harmed by the breach of this
Agreement and that money damages would not constitute an adequate remedy
therefor and (ii) shall be entitled, in addition to any other available relief,
to injunctive relief or other orders prohibiting any breach hereof and requiring
strict compliance herewith and the Receiving Party consents to the entry
thereof.
RELATIONSHIP OF SMGI TO VDC
6. SMGI shall perform all services hereunder as independent contractors,
and nothing contained herein shall be deemed to create any association,
partnership, joint venture, or relationship of principal and agent, or master
and servant between the parties hereto or any affiliates or subsidiaries
thereof, or to provide either party with the right, power, or authority, whether
express or implied, to create any such duty or obligation on behalf of the other
party. SMGI agrees that it will not hold itself out as affiliates, agents, or
employees of or partners, joint venturers, co-principals, or co-employers with
VDC, or any of VDC's affiliates by reason of this Agreement, and that SMGI will
not knowingly permit any of its employees, agents, representatives, and/or
subcontractors of its employees, agents, representatives, and/or subcontractors
to hold themselves out as, or claim to be, officers or employees of VDC, or any
of its affiliates by reason of this Agreement. SMGI shall have no authority to
contract for or bind VDC or any VDC subsidiary or affiliate in any manner.
6
<PAGE>
INDEMNIFICATION
7. Each party hereto (the "Indemnitor") shall indemnify and hold harmless
the other party, its partners, officers, employees, and agents (the
"Indemnitees'), from and against any and all claims, damages, losses, expenses,
liabilities, or judgments of any kind whatsoever (including reasonable
attorneys' fees) which may be asserted against, charged to or recovered from the
Indemnitees by reason of the Indemnitor's negligence or failure to perform its
obligations under this Agreement. Each party agrees to give the other prompt
notice of any claim made or suit instituted for which indemnification may be
sought pursuant to this paragraph, and the Indemnitor shall have the right to
participate in the defense and settlement of any such claim or suit to the
extent of its own interest.
OWNERSHIP OF MATERIALS AND WORK PRODUCT
8. (a) SMGI agrees that any work prepared by SMGI under this Agreement,
including without limitation pre-existing work of authorship which has been
modified by SMGI in the course of performance under this Agreement, shall be
considered "work made for hire" unless otherwise specified in writing. SMGI
further agrees that VDC shall have ownership of the rights, including
copyrights, to materials, written documents and ideas embodied in such "work
made for hire" with the exception of pre-existing work of authorship and
materials, written documents, and ideas. In the event such works are not legally
construed to be "works-made-for-hire," SMGI hereby assigns to VDC all such
rights, title and interest in such "works made for hire" and agrees to execute
any further documents to evidence such assignment.
7
<PAGE>
(b) SMGI agrees that all materials, written documents, and ideas which
SMGI has developed and/or has conveyable rights to, and which SMGI has
transmitted to VDC in the performance of its obligations under this Agreement,
shall be irrevocably and perpetually licensed to VDC for its use, provided that
confidentiality provisions of this Agreement are adhered to with respect to said
materials, documents, and ideas, and provided that preexisting copyrighted
materials shall not be reproduced or distributed by VDC without SMGI's advance
written permission.
TERMINATION OF AGREEMENT
9. (a) Either party may terminate this Agreement without cause upon written
notice to the other. In such case, VDC will not be obligated to continue to pay
the Retainer Fee, but will be obligated to pay fees incurred prior to
termination, including qualified reimbursable expenses for which SMGI is not
invoiced until after termination. The Retainer Fee compensation shall be
adjusted on a pro rata basis in accordance with the date of termination.
(b) Upon the termination of this Agreement, SMGI and/or its employee(s)
or subcontractor(s) agree to return to VDC all materials, and all copies of such
materials, in its possession, supplied to it in connection with this Agreement,
at the request of VDC. In the event that any such materials remain in its
possession thirty (30) days after said termination, SMGI agrees to destroy,
within sixty (60) days after said termination, all such materials that contain
VDC confidential information, whether provided by VDC or derived from the
parties' relationship, and whether provided or derived prior to or subsequent to
the commencement date of this Agreement.
8
<PAGE>
NOTICES
10. Notices shall be sent by either party to the other in writing by U.S.
registered or certified mail, postage prepaid, return receipt requested, or by
overnight courier, hand delivered, or telecopied, to the following addresses:
If to VDC: Visual Data Corporation
1600 South Dixie Highway, Suite 3A
Boca Raton, FL 33432
ATTENTION: Randy Selman, President
Telephone: 561-367-8505
Telefax: 561-367-7606
If to SMGI, prior to July 1, 1996:
Stratus Management Group, Inc.
1601 Colonial Parkway, Suite 100
Inverness, IL 60067
ATTENTION: Douglas Rice, President
Telephone: 847-705-8140
Telefax: 847-705-8692
If to SMGI, on or after July 1, 1996:
Stratus Management Group, Inc.
500 Remington Road, Suite 103
Schaumburg, IL 60173
ATTENTION: Douglas Rice, President
Telephone: 847-882-3000
Telefax: 847-882-1198
Either party may amend its address for notification by written notification to
the other party.
ASSIGNMENT OF AGREEMENT
11. This Agreement may not be assigned by either party without the written
consent of the other.
9
<PAGE>
ARBITRATION
12. Any dispute hereunder shall be submitted to arbitration (in lieu of
using a judicial forum) by the American Arbitration Association in accordance
with its Rules of Arbitration then in effect. Any arbitration pertaining to this
Agreement shall be held in Chicago, Illinois if the arbitration is initiated by
VDC or in Miami, Florida if the arbitration is initiated by SMGI. The
arbitrators will be jointly selected. If after due notice in accordance with
said Rules of Arbitration any party fails to be present at and fails to obtain
an adjournment of the arbitration, the arbitration may proceed in the absence of
such party. The arbitration award shall be made promptly by the arbitrator no
later than fifteen (15) days after the date of closing of the hearings, or if
oral hearings have been waived, from the date of transmittal of the final
statements and proofs to the arbitrator. The arbitrator may grant any remedy or
relief within the scope of this Agreement applicable to such provisions, which
he or she deems just and equitable, including but not limited to, specific
performance of the terms of such provisions. The decision of the arbitrator
shall be final and binding upon the parties and judgment upon it may be entered
in any court of competent jurisdiction. Each of the parties shall bear its own
expenses in connection with the arbitration and shall each bear equally the
expenses of the arbitrator. In the event that either party deems that the
respective business interests may be damaged before the completion of such
arbitration, such party may seek any useful interim relief therefor from any
court having appropriate jurisdiction.
10
<PAGE>
LAWS GOVERNING AGREEMENT
13. This Agreement and the respective rights and obligations of the parties
hereto shall be governed by the internal laws of the State of Illinois. If any
part of this Agreement shall be held invalid, illegal, or unenforceable, the
validity and enforceability of the remainder of this Agreement shall not be in
any way affected or impaired thereby.
ENTIRE AGREEMENT; MODIFICATION
14. This Agreement evidences the entire Agreement between SMGI and VDC with
respect to the transactions contemplated hereby, and supersede all prior
agreements with respect thereto. This Agreement may only be modified by a
writing signed by both VDC and SMGI.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written.
VISUAL DATA CORPORATION STRATUS MANAGEMENT GROUP, INC.
By: Randy S. Selman By: Douglas C. Rice
------------------------------- -----------------------------------
Printed Name: RANDY S. SELMAN Printed Name: DOUGLAS C. RICE
--------------------- -------------------------
Title: PRESIDENT Title: PRESIDENT
---------------------------- --------------------------------
11
EXHIBIT 21
LIST OF SUBSIDIARIES
1. HOTELVIEW CORPORATION
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated December 4, 1996, relating to the consolidated financial statements
of Visual Data Corporation and subsidiary, and to the reference to our Firm
under the caption "Experts" in the Prospectus
/s/ GOLDSTEIN LEWIN & CO.
-------------------------
GOLDSTEIN LEWIN & CO.
1900 Corporate Blvd., N.W.
East Building, Suite 300
Boca Raton, FL 33431
December 23, 1996
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