As filed with the Securities and Exchange Commission on May 9, 1997
Registration No. 333-18819
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VISUAL DATA CORPORATION
(Name of Small Business Issuer in its Charter)
FLORIDA 2741 65-0420146
------- ---- ----------
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
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)
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)
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Copies to:
<S> <C>
DALE S. BERGMAN, P.A.
CHARLES B. PEARLMAN, ESQ. LINDA C. FRAZIER, ESQ.
ATLAS, PEARLMAN, TROP & BORKSON, P.A. BROAD AND CASSEL
200 EAST LAS OLAS BOULEVARD, SUITE 1900 201 SOUTH BISCAYNE BOULEVARD, SUITE 3000
FORT LAUDERDALE, FLORIDA 33301 MIAMI, FLORIDA 33131
(954) 763-1200 (305)373-9400
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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 basis 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 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 number of the earlier effective 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
---------------- ------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock
(par value
$.0001 per share) 1,000,000 $ 6.00 $ 6,000,000 $ 1,818
Warrants 1,150,000 $ .10 $ 115,000 35
Common Stock
(par value
$.0001 per share)(2)(3) 1,150,000 $ 6.00 $ 6,900,000 2,091
Underwriters'
Warrants (4)(5) 100,000 -- -- --
Common Stock
(par value $.0001 per share)
included in Underwriters'
Warrants(5) 100,000 $ 7.20 $ 720,000 218
Warrants included in the
Underwriters' Warrants(5) 100,000 $ .12 $ 12,000 4
Common Stock
(par value $.0001 per share)
underlying warrants included
in Underwriters' Warrants(3) 100,000 $ 8.64 $ 864,000 262
Common Stock
(par value
$.0001 per share(6)(7) 1,207,680 $ 6.00 $ 7,246,080 $ 2,196
TOTAL........................................................................................ $ 6,624
<FN>
- ------------
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 (the "Securities Act").
2. Represents shares of Common Stock issuable upon the exercise of the
Warrants.
3. Pursuant to Rule 416, there is also being registered such additional
securities as may become issuable pursuant to the anti-dilution
provisions of the Warrants and/or the Underwriters' Warrants.
4. No fee required pursuant to Section 457(g) of the Securities Act.
5. Includes 100,000 shares of Common Stock, 100,000 Warrants and 100,000
shares of Common Stock underlying the Warrants. See "Underwriting."
6. Includes 150,000 shares of Common Stock which may be purchased by the
Underwriters from certain members of management of the Company to cover
over-allotments, if any. See "Concurrent Offering" and
"Underwriting."
7. The Company will receive no proceeds from the re-sale of these shares.
See "Concurrent Offering" and "Underwriting."
</FN>
</TABLE>
ii
<PAGE>
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, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
iii
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VISUAL DATA CORPORATION
-----------------
CROSS REFERENCE SHEET FOR PROSPECTUS UNDER FORM SB-2
FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
<S> <C> <C>
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 Inside Front and Outside Back
Pages of Prospectus Cover Pages
3. Summary Information and Prospectus Summary; Risk Factors
Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Risk Factors; Underwriting
6. Dilution Dilution
7. Selling Security Holders Concurrent Offering; Selling Security
Holders(1): Plan of Distribution(1)
8. Plan of Distribution
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders; Management
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Management - Limitation of Liability;
Position on Indemnification for Underwriting; Management - Indemnification
for Securities Act Liabilities of Officers and Directors
15. Organization within Last Five Years Business
16. Description of Business Business
</TABLE>
iv
<PAGE>
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<CAPTION>
FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
<S> <C> <C>
15. Management's Discussion Management's Discussion and Analysis of
and Analysis or Plan of Financial Condition and Results of Operations;
Operation Business
16. Description of Property Business
17. Certain Relationships and Certain Relationships and
Related Transactions Related Transactions
18. Market for Common Equity and Risk Factors; Dividend Policy; Description of
Related Shareholder Matters Securities; Shares Eligible for Future Sale
19. Executive Compensation Management - Executive Compensation
20. Financial Statements Financial Statements
21. Changes in and Disagreements with Not Applicable
Accountants on Accounting and
Financial Disclosure
</TABLE>
(1) Set forth on the alternate pages for the Selling Security Holders'
Prospectus included herewith.
v
<PAGE>
EXPLANATORY NOTE
This Registration Statement covers the registration of the sale of: (i) up to
1,000,000 shares of Common Stock, $.0001 par value ("Common Stock"), and
1,000,000 redeemable common stock purchase warrants ("Warrants") of Visual Data
Corporation, a Florida corporation (the "Company"), for sale by the Company in
an underwritten public offering; (ii) up to an additional 150,000 Warrants to
cover over-allotments as to the Warrants in the underwritten public offering, if
any; and (iii) warrants issued to the Underwriters to purchase up to an
aggregate of 100,000 shares of Common Stock, 100,000 warrants and 100,000 shares
of Common Stock issuable upon the exercise of such warrants. In addition, this
Registration Statement also covers the re-sale of an additional 1,207,680 shares
of Common Stock (including 150,000 shares of Common Stock to cover the
Underwriters' over-allotment option as to the shares of Common Stock in the
underwritten public offering, if any, for sale by the holders thereof from
time to time by the certain selling security holders ("Selling Security
Holders")). See "Concurrent Offering" and "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
Security Holders' stock, including an alternative front and back cover pages and
the section entitled "The Offering," "Initial Public Offering," "Concurrent
Offering," and "Plan of Distribution," to be used in lieu of sections entitled
"The 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 Security
Holders' Stock such as "Dilution."
<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. 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 ANY SUCH STATE.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 9, 1997
VISUAL DATA CORPORATION
1,000,000 SHARES OF COMMON STOCK
AND 1,000,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Visual Data Corporation (the "Company") is offering (the "Offering") 1,000,000
shares ("Shares") of common stock, $.0001 par value per share ("Common Stock"),
at a purchase price of $6.00 per share and 1,000,000 Redeemable Common Stock
Purchase Warrants ("Warrants") at a purchase price of $.10 per Warrant. The
Common Stock and the Warrants are being offered separately and not as units, and
each are separately tradeable.
Each Warrant entitles the holder to purchase one share of Common Stock at $6.00
per share (the "Warrant Exercise Price") commencing six months from the date of
this Prospectus and continuing for a period of five years from the date hereof.
The Warrants are redeemable by the Company at $.05 per Warrant, at any time,
commencing six months from the date of this Prospectus, upon 30 days' prior
written notice, if the closing bid price of the Common Stock, as reported by the
principal exchange on which the Common Stock is traded, equals or exceeds $7.20
per share for 20 consecutive trading days and ending within 30 days prior to the
date the notice is given.
Prior to this offering, there has been no public market for the Common Stock or
the Warrants and there can be no assurances that any such markets will develop
or, if developed, that it will be sustained. The Company has applied for
quotation of the Common Stock and Warrants on The Nasdaq SmallCap Market
("Nasdaq") under the symbols "VDAT" and "VDATW," respectively. There can be no
assurance that such securities will be accepted for quotation or, if accepted,
that an active trading market will develop.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. INVESTMENT IN THE SECURITIES 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 of Common Stock $6.00 $0.60 $5.40
Per Warrant $.10 $0.01 $0.09
Total(3) $6,100,000 $610,000 $5,490,000
(1) Does not include additional compensation payable to Noble International
Investments, Inc., the representative of the several Underwriters (the
"Representative"), in the form of a non-accountable expense allowance and
warrants (the "Underwriters' Warrants") entitling the Underwriters to
purchase up to an aggregate of 100,000 shares of Common Stock and 100,000
Warrants. In addition, the Company has agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses of the offering payable by the Company estimated
at $500,000, which excludes the non-accountable expense allowance,
commissions and discounts.
(3) Certain management of the Company has granted to the Underwriters an
option, exercisable within 45 days from the date hereof, to purchase up to
an additional 150,000 shares of Common Stock upon the same terms and
conditions as set forth herein solely to cover over-allotments, if any, as
to the shares of Common Stock (the "Common Stock Over-Allotment Option".)
In addition, the Company has granted to the Underwriters an option,
exercisable within 45 days from the date hereof, to purchase up to 150,000
additional Warrants upon the same terms and conditions set forth above
solely to cover over-allotments, if any, as to the Warrants (the "Warrant
Over-Allotment Option"). The Common Stock Over-Allotment Option and the
Warrant Over-Allotment Option are hereinafter collectively referred to as
the "Underwriters' Over-Allotment Option." If such Warrant Over-Allotment
Option is exercised in full, the Price to Public, Underwriting Discounts
and
<PAGE>
Proceeds to Company will be $6,115,000, $611,500 and $5,503,500,
respectively. The Company will receive no proceeds from the exercise, if
any, of the Common Stock Over-Allotment Option. See "Concurrent Offering"
and "Underwriting."
The shares of Common Stock and Warrants are offered, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters, and subject to
the approval of certain legal matters by counsel and to certain other
conditions. The Underwriter reserves 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 and Warrants
will be made against payment therefor at the office of Noble International
Investments, Inc., 1801 Clint Moore Road, Boca Raton, Florida 33487 , on or
about _____________, 1997.
NOBLE INTERNATIONAL INVESTMENTS, INC.
The date of this Prospectus is May __, 1997
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND WARRANTS 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.
2
<PAGE>
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 (I) ASSUMES NO EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION TO PURCHASE UP TO AN ADDITIONAL
150,000 SHARES OF COMMON STOCK AND 150,000 WARRANTS, (II) ASSUMES NO EXERCISE OF
THE UNDERWRITERS' WARRANTS, (III) ASSUMES THAT AN AGGREGATE OF 456,143 OPTIONS
AND WARRANTS CURRENTLY OUTSTANDING ARE NOT EXERCISED; AND (IV) DOES NOT GIVE
EFFECT TO THE EXERCISE OF THE 1,000,000 WARRANTS ISSUED IN CONNECTION WITH THIS
OFFERING. SEE "MANAGEMENT" AND "UNDERWRITING." UNLESS OTHERWISE INDICATED, THIS
PROSPECTUS GIVES EFFECT TO THE 1 FOR 1.6 STOCK SPLIT TO OCCUR IMMEDIATELY PRIOR
TO THE EFFECTIVE DATE OF THIS PROSPECTUS. 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 (the "Company") is a multi-media content developer
specializing in the production, marketing and distribution of visual information
for the Internet, other On-line services and, eventually, interactive television
(ITV). "Content" is defined as the information carried on the information
superhighways. Through its international network of independent camera crews and
state-of-the-art digital video production studio, the Company develops
full-motion visual libraries containing short, concise vignettes relating to
various topics of consumer interest such as travel, education, health, fitness,
medicine and consumer products. The Company's focus is to develop high quality
content at a low cost which is edited into short entertaining pieces for
distribution to consumers regardless of the mediums (e.g. Internet, On-line
services or ITV). The Company owns or, in the instance of libraries yet to be
developed, will own all of the content. The Company is not dependent on the
technological architecture of the provider service that will deliver this
content to the viewer (Internet, ITV, digital video discs, etc.) and the Company
is developing its products and services to be fully operational on any potential
platform.
Several of the Company's libraries are under development. The first product the
Company has completed and introduced, the HotelView(R) Library, operated through
the Company's currently wholly owned subsidiary HotelView Corporation ("HVC"),
is an interactive visual library for the hotel and travel industry that provides
an overview of amenities available at various hotels and resorts, as well as
local attractions and services. On a fee for service basis paid for by the hotel
or resort property, 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, describing the hotel or resort's rooms, suites,
conference facilities, lobby, pool, restaurants, grounds, and sports facilities.
The HotelView(R) Library is currently installed in travel agencies nationwide
and is used to market hotel and resort accommodations including such well-know
properties as the Fountainbleau in Miami, the Arizona Biltmore, Walt Disney
World Dolphin and Swan, Ritz Carlton Laguna Niguel, the Essex House in New York
City and the Mirage in Las Vegas. The Company has also established relationships
with a number of the larger hotel chains
3
<PAGE>
such as Hilton, Wyndham, Hyatt and SuperClubs as well as a number of the major
travel agency consortiums including American Express(R), VTS(R) and Carlson(R).
Pegasus Systems, Inc., one of the largest companies providing transaction
processing services between travel agents, airline reservation systems and
hotels, resorts and hotel chains, has agreed to endorse and promote the
HotelView(R) Library to its client base of approximately 40,000 hotels, resorts
and hotel chains, including securing contracts between their hotel clients and
the Company.
In addition to the HotelView(R) Library, the Company is currently developing
ConventionView(TM), CruiseView(TM), AttractionView(TM) and CareView(TM) and
plans to create and distribute additional libraries on topics of general
consumer interest including AdventureView(TM), CondoView(TM), TalentView,
CampView(TM), CampusView(TM), Health & FitnessView(TM), MedicalView(TM) and
ProductView(TM).
The Company's method of generating revenue may be generally analogized to
magazine publishers in that there is a one-time fee for creating the
advertisement and the magazine receives revenues each time the ad is run in the
publication. In the Company's case, the ads are video vignettes and the ad fee
is paid annually by the participating hotel or resort, with the production costs
incurred in the first year. Management believes the Company is able to produce
broadcast quality videos at much lower costs by virtue of its use of independent
camera crews and state-of-the-art digital video editing systems. See "Business"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operation."
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 office 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
<S> <C>
Common Stock Outstanding
Prior to Offering(1)(2)................... 1,889,849 shares
Securities Offered by the Company
Common Stock. ............................ 1,000,000 shares
Warrants ................................. 1,000,000
Common Stock Outstanding
After the Offering........................ 2,889,849 shares
Use of Proceeds ............................. The net proceeds of this offering will be used for
the acquisition of content, technology and equipment;
marketing and advertising; hiring of additional
personnel; repayment of debt and general corporate
and working capital. See "Use of Proceeds."
Proposed Nasdaq SmallCap Market Symbols
Common Stock............................... VDAT
Warrants................................... VDATW
</TABLE>
4
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RISK FACTORS
Investment in the shares of Common Stock and Warrants 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
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following summary consolidated financial and operating data has been derived
from the consolidated financial statements of the Company for the periods
indicated. The following financial data should be read in conjunction with the
Company's Consolidated Financial Statements and Notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere herein.
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<CAPTION>
FROM MAY 17,
1993 (INCEPTION) SIX MONTHS
TO SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
1994 1995 1996 1996 1997
---------------- -------------------------- ---------------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenue $ 0 $ 0 $ 111,719 $ 6,806 $ 139,703
Net Income(Loss) $ (188,766) $ (500,559) $ (1,891,702) $ (568,665) $ (644,982)
Net Income(Loss) per
Common Share outstanding $ (0.18) $ (0.43) $ (1.35) $ (0.39) $ (0.37)
Weighted average shares
outstanding 1,066,091 1,173,413 1,405,228 1,462,843 1,743,337
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
MARCH 31, 1997
ACTUAL AS ADJUSTED(1)
-------------- --------------
(unaudited)
<S> <C> <C>
Working capital (deficit) $ (621,144) $ 4,358,856
Total assets $ 1,369,571 $ 5,526,981
Long-term debt $ 120,427 $ 120,427
Shareholders' equity (deficit) $ 536,932 $ 4,694,342
<FN>
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(1) Gives effect to the sale of 1,000,000 shares of Common Stock and 1,000,000
Warrants offered hereby and the receipt of the proceeds therefrom by the
Company.
</FN>
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6
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK AND WARRANTS OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK AND IS HIGHLY SPECULATIVE IN NATURE. PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS OTHERS
DESCRIBED ELSEWHERE IN THE PROSPECTUS, RELATING TO THE BUSINESS OF THE COMPANY
AND THIS OFFERING. THE DISCUSSION BELOW HIGHLIGHTS SOME OF THE MORE IMPORTANT
RISKS REGARDING THE COMPANY. THE RISKS HIGHLIGHTED BELOW SHOULD NOT BE ASSUMED
TO BE THE ONLY THINGS THAT COULD AFFECT FUTURE PERFORMANCE. IN ADDITION, THE
DISCUSSION IN THIS PROSPECTUS REGARDING THE COMPANY AND ITS BUSINESS AND
OPERATIONS CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF PRIVATE
SECURITIES LITIGATION REFORM ACT 1995. SUCH STATEMENTS CONSIST OF ANY STATEMENT
OTHER THAN A RECITATION OF HISTORICAL FACT AND CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "EXPECT," "ANTICIPATE," "ESTIMATE" OR
"CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY. THE READER IS CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS ARE
NECESSARILY SPECULATIVE AND THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE REFERRED TO IN
SUCH FORWARD- LOOKING STATEMENTS. THE COMPANY DOES NOT HAVE A POLICY OF UPDATING
OR REVISING FORWARD-LOOKING STATEMENTS AND THUS IT SHOULD NOT BE ASSUMED THAT
SILENCE BY MANAGEMENT OF THE COMPANY OVER TIME MEANS THAT ACTUAL EVENTS ARE
BEARING OUT AS ESTIMATED IN SUCH FORWARD LOOKING STATEMENTS.
LIMITED OPERATING HISTORY, HISTORY OF LOSSES AND ACCUMULATED DEFICIT. 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 raising capital. Potential investors, therefore, have limited
historical financial information upon which to base an evaluation of the
Company's performance and an investment in the securities. 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. The Company reported net losses of $188,766,
$500,559 and $1,891,702 from May 17, 1993 (inception) to September 30, 1994 and
for the years ended September 30, 1995 and 1996, respectively. In addition for
the six months ended March 31, 1997, the Company reported net losses of
$644,982. There can be no assurance that the Company will be profitable in
future periods. If the Company is unable to attain profitability or positive
cash flow from operating activities, it may be unable to meet its working
capital requirements which would have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company has an accumulated deficit at March 31, 1997 of $3,226,009. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Financial Statements.
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 director. Each of
these individuals are parties to three-year employment agreements with the
Company. In addition, the Company currently carries key-man insurance coverage
on Mr. Saperstein and intends to purchase key-man insurance for Mr. Selman
within 60 days of the
7
<PAGE>
consummation of this offering. The loss of the services of either Messrs. Selman
or Saperstein, however, could have a material adverse effect upon the Company's
business and future prospects. See "Management".
IMMEDIATE AND SUBSTANTIAL DILUTION. Investors purchasing shares of Common Stock
in this offering will incur immediate and substantial dilution of approximately
$4.53 per share, or approximately 74% of the initial public offering price per
share, in net tangible book value of the Company's Common Stock . See
"Capitalization" and "Dilution."
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. Additional financings may result in dilution to
existing shareholders. Moreover, if funds are needed but not available in
adequate amounts from additional financing sources or from operations, the
Company may be materially and adversely affected. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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 or
that other libraries being developed by the Company will have any commercial
appeal or success. See "Business."
COMPETITION. The Company is engaged in a highly competitive segment of the
industry. 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. There can be no assurance that the Company will be able
to compete favorably in the future. See "Business - Competition."
REALIZATION OF PERFORMANCE BASED FEES. Currently the Company offers hotels and
resorts interested in being included in the HotelView(R) Library the option of
either paying the contract in full in cash at the time of execution or paying a
cash deposit of $3,000, with the balance of the contract amount due under a
performance-based arrangement whereby the Company invoices hotels as rooms are
booked by the HVC travel agency network. The hotels and resorts are billed all
or a portion of the balance due under the contract in amounts corresponding with
all or a portion of amounts of bookings. At March 31, 1997 the total amount to
be billed under such
8
<PAGE>
performance-based arrangements was $294,733. Because there is no time limitation
on when or if the balance of the fees will become billable, the Company cannot
predict when these funds will be available. Although management believes it will
continue to bill and collect amounts due under this performance-based
arrangement during the balance of the current fiscal year, any long term delay
in or inability to bill these amounts may have an adverse affect on the Company.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operation" and "Business."
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 obsolete. 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.
MODIFICATIONS BY PROVIDERS OF PRODUCTS AND SERVICES. While each of the hotels
and resorts included in the HotelView(R)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, 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. The Company is currently not insured
against such liability nor does it intend to obtain insurance to cover this
potential liability in reliance upon the indemnification provisions of its
contracts with participating hotels and resorts. In the event that a verdict for
monetary damages were assessed against the Company for liability in this regard,
the Company would be required to pay such damages from its revenues, which could
have an adverse affect on its operations and earnings.
UNCERTAINTY OF PRODUCT LINE EXPANSION AND DEPENDENCE ON CERTAIN INDUSTRIES. The
Company plans to create and maintain additional video libraries for travel
related topics as well as on other topics of general consumer interest. However,
certain of these libraries will not be available to the general public until
such time as high speed data transmission capability, such as cable modems,
become readily available. While cable companies such as Time Warner Cable,
Continental Cablevision, Cox Cable Communications, Comcast Corp. and
Tele-Communications Inc. began selling cable modems to their customers in the
later part of 1996, it is not anticipated this hardware will become widely
available until later in 1997. The delay in the availability to the general
public could delay the introduction of certain of the Company's libraries which
may have a material adverse effect on the Company and its operations. See
"Business."
LACK OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE; POSSIBILITY
OF VOLATILITY OF PRICES OF THE SECURITIES. Prior to this offering, there has
been no public market for the
9
<PAGE>
Company's securities and there can be no assurances that an active public market
for the securities will be developed or, if developed, sustained after this
offering. The initial public offering prices of the securities offered hereby
and the exercise price and terms of the Warrants have been arbitrarily
determined by negotiations between the Company and the Representative and bear
no relationship to the Company's current earnings, book value, net worth or
other established valuation criteria. The factors considered in determining the
initial public offering price included an evaluation by management of the
Company and the Representative of the history of and prospects for the industry
in which the Company competes, an assessment of the Company's management, the
prospects of the Company, its capital structure (including the investments made
by private investors in the Company prior to this offering) and certain other
factors deemed relevant. See "Underwriting."
The stock market from time to time experiences significant price and volume
fluctuations that may be unrelated to the operating performance of specific
companies. The trading prices of the securities could be subject to wide
fluctuations in response to variations in the Company's operating results,
announcements by the Company or others, developments affecting the Company or
its competitors, suppliers or clients and other events or factors which may or
may not be in the Company's control.
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 one year may sell such
securities during any three month period, subject to certain exceptions, in
amounts equal to the greater of one percent (1%) of the Company's outstanding
Common Stock or 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 two year holding period. Upon the sale of the Common Stock offered
hereby and the registration pursuant to the Alternative Prospectus of the shares
for the Selling Security Holders, the Company will have 2,889,849 shares of its
Common Stock issued and outstanding, of which 682,169 shares are "restricted
securities. Of the 1,057,680 shares being registered pursuant to the Alternate
Prospectus (excluding the 150,000 shares underlying the Common Stock
Over-Allotment Option), 85,000 shares may be sold without any lock-up period,
181,152 are subject to a 12-month lock-up period from the date hereof, 120,768
shares are subject to an 18-month lock-up period from the date hereof, and the
remaining 670,760 are subject to a 24-month lock-up period from the date hereof.
Additionally, all other shares of Common Stock held by shareholders of the
Company are also subject to a 24 month lock-up period. These lock-up periods
may be subject to earlier release at the sole discretion of the Representative.
The Representative does not have a general policy with respect to the release of
these shares prior to the expiration of the lock-up. 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
10
<PAGE>
additional capital through the sale of its equity securities. See "Principal
Shareholders," "Concurrent Offering," and "Shares Eligible for Future Sale."
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 $5.00 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. 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.
Although the Company intends to apply for quotaton of the Common Stock and
Warrants on The Nasdaq SmallCap Market, there can be no assurances that the
Company's securities will be accepted for quotation or that a public market for
the Common Stock or Warrants will develop or, if developed, will be sustained or
that the securities purchased by the public hereunder may be resold at their
original offering price or at any other price. Under the previous quotation
criteria for The Nasdaq SmallCap Market, in order to qualify for initial
quotation on The Nasdaq SmallCap Market, a company must, among other things,
have at least $4,000,000 in total assets, $2,000,000 net worth, $1,000,000
"public float," and a minimum bid price for its securities of $3.00 per share.
For continued listing on The Nasdaq SmallCap Market, a company must maintain
$2,000,000 in total assets, a $200,000 market value of the public float and
$1,000,000 in total capital and surplus. In addition, continued inclusion
requires two market-makers and a minimum bid of $1.00 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 $1,000,000 and the Company has $2,000,000
in capital and surplus.
Effective February 28, 1997 The NASDAQ Stock Market, Inc. adopted certain
changes to the entry and maintenance criteria for listing eligibility on The
Nasdaq SmallCap Market which become effective 60 days therefrom. In addition to
increased listing criteria, new maintenance standards requiring at least
$2,000,000 in net tangible assets (total assets less total liabilities and
goodwill) or $500,000 in net income in two of the last three years, a public
float of at least 500,000 shares, a $1,000,000 market value of public float, a
minimum bid price of $1.00 per share, at least two market makers, at least 300
shareholders and at least two outside directors. 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 on the OTC Electronic Bulletin Board. In such an event,
the market price of the Common Stock may be adversely impacted and an investor
may find it difficult to dispose of, or to obtain accurate quotations as to the
market value of the Common Stock.
11
<PAGE>
UNDERWRITERS' WARRANTS. At the consummation of this offering, the Company will
sell to the to the Underwriters and/or their designees, for nominal
consideration, warrants (the "Underwriters' Warrants") to purchase up to 100,000
shares of Common Stock and 100,000 Warrants. The Underwriters' Warrants will be
exercisable for a period of four years commencing one year after the date
hereof, and will entitle the Underwriters to purchase shares of Common Stock for
$7.20 per share and Warrants at a price of $.12 per Warrant, which Warrants will
entitle the holder to purchase one share of Common Stock at $8.64 per share. For
the term of the Underwriters' Warrants, the holders thereof will have, at
nominal cost, the opportunity to profit from a rise in the market price of the
Company's securities without assuming the risk of ownership, with a resulting
dilution in the interest of other security holders. As long as the Underwriters'
Warrants remain unexercised, the Company's ability to obtain additional capital
might be adversely affected. Moreover, the Underwriter may be expected to
exercise the Underwriters' Warrants at a time when the Company would, in all
likelihood, be able to obtain any needed capital through a new offering of its
securities on terms more favorable than those provided in the Underwriters'
Warrants. See "Underwriting."
REPRESENTATIVE'S POTENTIAL INFLUENCE ON THE COMPANY AND THE MARKET. Pursuant to
the terms of the Underwriting Agreement between the Company and the
Representative, the Representative has the right to designate a member to the
Company's Board of Directors for a period of 60 months from the date hereof,
such member to be reasonably acceptable to management of the Company. Mr.
Swirsky shall initially serve as the Representative's designee to the Board of
Directors. The ability to designate a member to the Company's Board of Directors
will provide the Representative with a certain amount of continuing influence
over the Company's business and operations, even though such single designee
will constitute a minority of the Board of Directors. In addition, it is
anticipated that a significant amount of the Common Stock and the Warrants will
be sold to customers of the Representative. Although the Representative has
advised the Company that it intends to make a market in the Common Stock and the
Warrants, it will have no legal obligation to do so. If it participated in the
market, the Representative may influence the market, if one develops, for the
Company's securities. Such market-making activity may be discontinued at any
time. Moreover, if the Representative sells the securities issuable upon the
exercise of the Underwriters' Warrants or acts as a warrant solicitation agent
for the Warrants, it may be required under the Securities Exchange Act of 1934,
as amended, to temporarily suspend its market-making activities. The prices and
liquidity of the Company's securities may be significantly affected by the
degree, if any, of the Representative's participation in such market. See
"Underwriting."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE
WARRANTS. Holders of the Warrants will have the right to exercise the Warrants
for the purchase of shares of Common Stock only if a current prospectus relating
to such shares is then in effect and only if the shares have been qualified for
sale under the securities laws of the applicable state or states. The Company
has undertaken to use its best efforts to file and keep effective and current a
prospectus which will permit the purchase and sale of the Warrants and the
Common Stock underlying the Warrants, but there can be no assurances that the
Company will be able to do so. Although the Company has undertaken to use its
best efforts to qualify for sale the Warrants and the shares of
12
<PAGE>
Common Stock underlying the Warrants in those states in which the securities are
to be offered, no assurance can be given that such qualifications will occur.
The Warrants may lose or be of no value if a prospectus covering the shares
issuable upon the exercise thereof is not kept current or if such underlying
shares are not, or cannot be, registered in the applicable states. See
"Description of Securities."
ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCES OF PREFERRED STOCK; CONTROL BY
MANAGEMENT. 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. 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."
FORWARD-LOOKING STATEMENTS. This discussion in this Prospectus regarding the
Company and its business and operations includes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act 1995. Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. Prospective investors are
cautioned that all forward-looking statements are necessarily speculative and
there are certain risks and uncertainties that could cause actual events or
results to differ materially from those referred to in such forward-looking
statements. The Company does not have a policy of updating or revising
forward-looking statements and thus it should not be assumed that silence by
management of the Company over time means that actual events are bearing out as
estimated in such forward looking statements.
13
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company, assuming an initial public offering price of
$6.00 per share and $.10 per Warrant, are estimated to be $4,807,000 ($4,822,000
if the Warrant Over-Allotment Option is exercised in full) after deducting the
estimated underwriting discounts and commissions and other offering expenses
payable by the Company. The Company intends to use the estimated net proceeds as
follows:
ANTICIPATED USE APPROXIMATE
OF NET PROCEEDS AMOUNT PERCENTAGE
--------------- ---------------- ----------
Acquisition of content, technology
and equipment(1)(2)(3)(4) $ 2,260,000 47.0%
Marketing and Advertising(5) $ 980,000 20.4%
Hiring of Additional Personnel(6) $ 490,000 10.2%
Repayment of Debt(7) $ 550,000 11.4%
General Corporate and Working Capital(8) $ 527,000 11.0%
----------- -------
Total $ 4,807,000 100.0%
(1) Includes the purchase of existing video content from third parties that
can be incorporated into the HotelView(R) Library as well as other
libraries the Company intends to develop. Also includes the acquisition
of the necessary technology in areas such as communications, marketing
and transaction processing to enable the Company to do business on the
Internet. 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. No portion of the
proceeds from this Offering will be used to satisfy the purchase price
of the software products as contemplated by the Company from DCST. See
"Business."
(2) The Company is currently searching for a location to construct
additional editing facilities in Palm Beach or Broward County, Florida.
The Company intends to use a portion of these proceeds to finance the
purchase of additional equipment for video editing, graphic design and
other production services. The funds allocated will be used for down
payments for potential real estate acquisition, down payment for such
editing equipment as well as for the purchase of certain other
equipment and software. See ABusiness - Filming and Production.@
(3) Includes approximately 400 additional hardware systems for use by
travel agents in order to display the HotelView(R) 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(R) Library."
(4) Includes deposits towards 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.
(5) Includes national consumer advertising, advertising in trade
publications, attendance at 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(R) Library, some of these funds may be used in the future for
the marketing and advertising of other libraries, as they become
available.
14
<PAGE>
(6) Includes the hiring of a Chief Financial Officer, a General Manager for
the Company's Internet systems, and approximately eight 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.
(7) Represents payment in full of outstanding unsecured promissory notes in
the aggregate principal amount of $550,000, bearing interest at 10% per
annum, issued by the Company to unaffiliated third parties between
December 1996 and March 1997 which are due upon the earlier of 30 days
from the date of this Prospectus or 12 months from the date of the
note. See Note 4 to the Financial Statements.
(8) 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 as well as the
$61,000 consulting fee payable to the Representative. See
"Underwriting."
The foregoing represents the Company's best estimate of the allocation of the
net proceeds of the offering, based upon the current status of its operations
and anticipated business plans. It is possible, however, that the application of
funds may vary depending on numerous factors including, but not limited to,
changes in the economic climate or unanticipated complications, delay and
expenses. The Company currently estimates that the net proceeds from this
offering will be sufficient to meet the Company's liquidity and working capital
requirements for a period of at least 24 months from the completion of this
offering. However, there can be no assurance that the net proceeds of this
offering will satisfy the Company's requirements for any particular period of
time. Additional financing may be required to implement the Company's long-term
business plan. There can be no assurance that any such additional financing will
be available when needed on terms acceptable to the Company, if at all. Pending
the foregoing uses, the net proceeds of this offering will be invested in
short-term, investment grade, interest bearing securities. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation."
15
<PAGE>
DILUTION
At March 31, 1997, the Company had a net tangible book value of ($337,396),
or approximately ($.18 ) per share of outstanding Common Stock. "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. After giving effect to the receipt of the
estimated net proceeds from the Company's sale of the 1,000,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $6.00 per
share and 1,000,000 Warrants offered hereby at an assumed initial public
offering price of $.10 per Warrant (after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company), the net
tangible book value of the Company at March 31, 1997 would have been
approximately $4,469,604 or $1.57 per share of Common Stock, representing an
immediate increase in net tangible book value of $ 1.76 per share to existing
shareholders and an immediate dilution of $4.53 per share to investors in this
offering. "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 and warrant $ 6.10
------
Net tangible book value per share,
before the offering (.18)
Increase attributable to new investors 1.76
------
Proforma net tangible book value after the offering 1.57
------
Dilution to new investors $ 4.53
======
If the Warrant Over-Allotment Option is exercised in full, the proforma net
tangible book value per share of Common Stock after this offering would be $1.58
per share, which would result in dilution to new investors in this offering of
$4.52 per share of Common Stock.
The following table summarizes the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by (i) existing shareholders of the Company at March 31, 1997 and (ii) new
investors purchasing shares of Common Stock in this offering, before deducting
the underwriting discounts and commissions and estimated offering expenses
payable by the Company. The following table does not reflect the consideration
paid for the Warrants.
<TABLE>
<CAPTION>
TOTAL AVERAGE
SHARES PURCHASED CONSIDERATION PAID PRICE PER
---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders(1)........ 1,889,849 65.4% $3,762,941 38.5% $1.99
New Investors................... 1,000,000 34.6 $6,000,000 61.5 $6.00
--------- ------- ---------- ------ -----
Total........................... 2,889,849 100% $9,762,941 100.00% $3.38
</TABLE>
16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at March
31, 1997, and (ii) proforma adjusted to give effect to the sale of the 1,000,000
shares of Common Stock and 1,000,000 Warrants offered hereby and the application
of the estimated net proceeds therefrom assuming an offering price of $6.00 per
share for the Common Stock and $.10 per Warrant. See "Use of Proceeds."
ADJUSTED FOR
SHARES AND WARRANTS
MARCH 31, 1997 SOLD (1)(2)
-------------- -----------
Debt:
Loans payable, shareholders, net $ 313,575 $ 0
Shareholder's Equity
Common Stock, par value $.0001
1,889,849 shares issued and
outstanding, actual
2,889,849 shares issued and
outstanding, as adjusted 189 289
Paid-in Capital 3,762,752 8,569,652
Accumulated Deficit (3,226,009) (3,226,009)
----------- -----------
Total capitalization $ 850,507 $ 5,343,932
========== =============
(1) Assumes repayment of shareholder loans from working capital.
(2) After deducting underwriting discounts, commissions and offering expenses
estimated to be $1,293,000.
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 dividends 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.
CONCURRENT OFFERING
Concurrent with this offering, the Company is registering pursuant to an
Alternate Prospectus, for the account of the Selling Security Holders, an
additional 1,207,680 shares of Common Stock (the "Concurrent Offering"). These
securities are not being underwritten in this Offering and the Company will not
receive any proceeds from the sale of such shares.
Of the shares being registered pursuant to the Alternate Prospectus, 150,000
shares are shares of Common Stock owned beneficially and of record by certain
management of the Company which may, at the Underwriters sole discretion, be
used to cover the Common Stock Over-Allotment Option, if exercised by the
Underwriters. Of the remaining 1,057,680 shares, 85,000 shares may
17
<PAGE>
be sold without regard to any lock-up period, 181,152 are subject to a 12-month
lock-up period from the date hereof, 120,768 shares are subject to an 18-month
lock-up period from the date hereof, and the remaining 670,760 are subject to a
24 month lock-up period from the date hereof. Additionally, of these 1,057,680
shares (i) an aggregate of 521,541 shares were acquired in four separate private
placements during calendar years 1995, 1996 and 1997 to accredited and otherwise
knowledgeable investors; (ii) an aggregate of 96,205 were acquired in private,
isolated transactions; (iii) an aggregate of 152,701 shares of Common Stock
underly certain warrants exercisable at prices ranging from $5.00 to $6.60 per
share; (iv) an aggregate of 224,866 shares of Common Stock were acquired
pursuant to financial and other consulting services performed on behalf of the
Company; (v) 2,679 shares of Common Stock are issuable upon the exercise of
options at $1.40 per share; and (vi) 59,688 shares of Common Stock are issuable
upon the exercise of warrants at prices ranging from $1.40 to $2.80 per share.
Expenses of the Concurrent Offering, other than fees and expenses of counsel to
the Selling Security Holders and the selling commissions, will be paid by the
Company. The resale of the securities of the Selling Security Holders is subject
to prospectus delivery requirements and other sales at any time may have an
adverse 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.
18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The statement of operations data as set forth below for the period from May 17,
1993 (inception) to September 30, 1994, and for the years ended September 30,
1995 and 1996 and the balance sheet data at September 30, 1995 and 1996 have
been derived from the Company's financial statements, which have been audited by
Goldstein, Lewin & Co., independent auditors, whose report with respect thereto
is included elsewhere in this Prospectus. The statement of operations data for
the six months ended March 31, 1996 and 1997, and the balance sheet data at
March 31, 1997, are derived from the unaudited financial statements of the
Company included elsewhere in this Prospectus. In the opinion of management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the Company's
financial condition and results of operations for such periods. The results of
operations for the six months ended March 31, 1997 are not necessarily
indicative of the results to be expected for any other interim period or the
entire year. The following financial data should be read in conjunction with the
Company's Consolidated Financial Statements and Notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere herein.
<TABLE>
<CAPTION>
FROM MAY 17,
1993 (INCEPTION) YEAR ENDED SIX MONTHS
TO SEPTEMBER 30, SEPTEMBER 30, ENDED MARCH 31,
1994 1995 1996 1996 1997
--------------- ------------------------ ---------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENTS OF
OPERATIONS DATA:
Operating Revenue $ 0 $ 0 $ 111,719 $ 6,806 $ 139,703
----------- ----------- ----------- ----------- -----------
Operating Expenses
Selling, General and Administrative
Compensation and
Related Costs 0 206,935 985,441 277,372 371,549
Production 0 17,982 121,239 49,752 37,686
Occupancy 38,409 62,991 43,875 21,171 20,900
Professional Fees 77,886 87,662 298,815 61,893 73,742
Interest 5,797 9,606 27,112 11,161 53,266
Other 66,674 117,092 527,692 154,581 228,544
----------- ----------- ----------- ----------- -----------
Total Operating Expenses 188,766 502,268 2,004,174 575,930 785,687
----------- ----------- ----------- ----------- -----------
Income (Loss) from Operations (188,766) (502,268) (1,892,455) (569,124) (645,984)
Other Income 0 1,709 753 459 1,002
----------- ----------- ----------- ----------- -----------
Net (Loss) $ (188,766) $ (500,559) $(1,891,702) $ (568,665) $ (644,982)
=========== =========== =========== =========== ===========
Primary Earnings (Loss)
per Share $ (0.18) $ (0.43) $ (1.35) $ (0.39) $ (0.37)
=========== =========== =========== =========== ===========
Fully Diluted
Earnings (Loss) per Share $ (0.18) $ (0.43) $ (1.35) $ (0.39) $ (0.37)
=========== =========== =========== =========== ===========
</TABLE>
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BALANCE SHEET DATA:
SEPTEMBER 30, MARCH 31,
1995 1996 1997
----------------------------- ------------
(unaudited)
Working Capital (Deficit) $ 166,492 $ ( 118,918) $ (621,144)
Total Assets $ 483,032 $ 1,329,151 $ 1,369,571
Long-Term Debt $ 116,256 $ 788,435 $ 120,427
Shareholders' Equity $ 297,596 $ 189,401 $ 536,932
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The discussion in this section as well as other sections of this Prospectus
regarding the Company and its business and operations contains "forward-looking
statements" within the meaning of Private Securities Litigation Reform Act 1995.
Such statements consist of any statement other than a recitation of historical
fact and can be identified by the use of forward-looking terminology such as
"may," "expect," "anticipate," "estimate" or "continue" or the negative thereof
or other variations thereon or comparable terminology. The reader is cautioned
that all forward-looking statements are necessarily speculative and there are
certain risks and uncertainties that could cause actual events or results to
differ materially from those referred to in such forward looking statements. The
Company does not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by management of the
Company over time means that actual events are bearing out as estimated in such
forward looking statements.
PLAN OF OPERATIONS
The Company exited the development stage during the fourth quarter of fiscal
1996. During its development stage, the Company produced and edited the
vignettes which presently comprise the HotelView(R) Library which is currently
installed in over 200 travel agencies in the United States. The implementation
of the Company's plan of operation is dependent upon the Company receiving the
net proceeds of approximately $4.8 million from this offering. Management of the
Company estimates such proceeds will satisfy the Company's cash requirements for
approximately 24 months following the closing of this offering.
Assuming the Company's receipt of the proceeds from this offering, the Company's
current plan of operation will include continuing its plan to expand its base of
200 travel agencies equipped with the HotelView(R) Library as well as to
establish the distribution of the HotelView(R) Library over the Internet. The
Company intends to continue the development of additional content and the
purchase of the requisite hardware and software to link the Company to the
Internet and provide links to other websites. Management presently anticipates
the Company's Internet links will be operational within 60 days following the
closing of this offering. See "Use of Proceeds" and "Business - HotelView(R) on
the Internet."
The Company, subject to receipt of proceeds from this offering, further intends
to complete the development of certain additional content libraries for travel
related topics as well as other topics of general consumer interest. During the
12-month period following the date of this offering, management intends to
expand the HotelView(R) Library as well as complete initial volumes of the
ConventionView(TM), CruiseView(TM), AttractionView(TM) and CareView(TM)
libraries. Based upon other opportunities which may present themselves to the
Company, the Company may seek acquisitions of additional content or technology
to facilitate the expansion of the Company's operations. While none of these
additional libraries will be dependent upon the technological architecture of
the service (Internet, On-line or ITV) which will deliver the content to the
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consumer, the usage will be dependent upon the availability to the consumer of
high-speed data transmission capability such as digital satellite technology and
cable modems. In conjunction with the sale of cable modems by cable companies
such as Time Warner Cable, Cox Cable Communications, Continental Cablevision,
Comcast Corp. and Tele-Communications Inc. which began in late 1996, management
of the Company anticipates access to the Internet will be made more available
through cable companies via such cable modems during the balance of calendar
1997. Any delay, however, in such availability may delay the Company's broad
introduction of additional libraries. See "Use of Proceeds" and "Business -
Additional Libraries Under Development."
In conjunction with the Company's intended 12-month plan of operation (following
the closing of this offering) to expand its libraries, the Company intends to
complete the acquisition of certain software products from DCST during the next
fiscal quarter. To date, no definitive agreement has been reached. Accordingly,
no assurance can be given that such acquisition will be completed. The software
products being acquired will form the basis for the Company's TalentView(TM)
Library. No proceeds from this offering will be used for the acquisition of
these software products. See "Business - Additional Libraries Under
Development."
As of March 31, 1997, the Company had incurred operating losses of $3,226,009
since inception. Approximately 70 hotel vignettes were produced up to that point
in time. Revenues of $139,703 for the six months ended March 31, 1997 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
$57,500 collected through March 31, 1997 will be recognized as revenue by the
Company in fiscal 1997 as it fulfills certain obligations; i.e., to install
the videos into the travel agencies. Currently the Company offers hotels and
resorts the option of either paying the contract in full in cash at the time of
execution or paying a cash deposit of $3,000, with the balance of the contract
amount due under a performance-based arrangement whereby the Company invoices
hotels for the balance due under the contract as rooms are booked by the HVC
travel agency network. The hotels and resorts are billed all or a portion of the
balance due under the contract in amounts corresponding with all or a portion of
amounts of bookings. At March 31, 1997 the total amount to be billed under such
performance-based arrangements was $294,733. Because there is no time limitation
on when or if the balance of the fees will become billable, the Company cannot
predict when these funds will be available. Although management believes it will
continue to bill and collect amounts due under these performance-based
arrangements during the balance of the current fiscal year, any long term delay
in or inability to bill these amounts may have an adverse affect on the Company.
The Company has budgeted additional dollars to be spent on advertising the
HotelView(R) Library to the trade (including hotel chains, travel agencies and
travel industry associations) as well as to consumers to expand product
awareness. See "Use of Proceeds."
The Company intends to increase the number of hotels participating in its
library through joint ventures and alliances with travel service companies
having the ability to penetrate the corporate hotel chain and management company
markets. On January 14, 1997, the Company entered into a written agreement with
Pegasus Systems, Inc., wherein Pegasus, which provides transaction
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processing services between travel agents, airline reservation systems and to
hotels, resorts and hotel chains, has agreed to use its reasonable efforts to
market, endorse and promote the Library to each of its hotel clients and to
obtain executed agreements from hotels for inclusion in the Library. Discussions
with other several companies are expected to result in marketing and sales
agreements during fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
From inception (May 17, 1993) through March 31, 1997, 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 $3,110,282 .
These funds have been used for production ($176,907), compensation ($1,179,681),
acquisition of equipment ($162,710) 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(R) 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. Additionally, the
Company anticipates moving its principal offices to larger facilities and
increasing the number of its employees, as required. See "Use of Proceeds."
The Company expects to expand its video production capability by adding
additional editing suites as demand for the Company's products increases. A
portion of the use of proceeds from this offering will be used by the Company
for down payments on up to an additional 10 editing suites as well as the
initial costs of staff for the editing suites. See "Use of Proceeds." Should the
demand for the Company's products continue to increase, of which there are no
assurances, the Company has the option of adding a second shift of editing suite
personnel thereby increasing its post-production capacity without additional
capital expenditures.
During July and August 1996, through its placement agent, the Company raised
$850,000 through a private placement offering of certain of its securities.
During December 1996 through March 1997, the Company raised an additional
$550,000 through private placements. These proceeds were used to finance
operations, further market the HotelView(R) Library and repay shareholder loans
of $35,000 and payables incurred in the ordinary course of business. 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.
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The Company currently leases its operating facility in Boca Raton, Florida under
a lease which expires on April 30, 1997. The Company intends to continue its
lease thereafter on a month to month basis. The lease provides for a monthly
base rent of $3,525. In conjunction with the lease, the Company is also paying
back rent in the amount of $1,494 per month. At March 31, 1997, the remaining
back rent due was $1,494 . Management believes the Company's obligations for
back rent will be satisfied as of April 30, 1997. See Note 8 (Commitments -
Operating Leases) to Notes to the Financial Statements.
Employment contracts with the Company's President and Vice President expiring
October 21, 1999, which may be terminated by the Company on not less than three
months prior notice, provide for minimum annual compensation of $125,000 each.
Additionally, each of them may be entitled to a performance based bonus in cash
or stock equal to 3% of the earnings of the Company before income tax,
depreciation and amortization (EBITDA) in excess of the EBITDA for the previous
year with the base year being fiscal 1996. Each of them, at their sole
discretion, may elect to be paid in cash or in shares of Common Stock of the
Company. Further, each of them is entitled to receive options to purchase
125,000 shares of Common Stock at an exercise price of $6.00 per share, which
options are exercisable for a period of five years from the date of grant and
contain certain anti-dilution provisions. Finally, each of these executives is
entitled to an automobile allowance. See Note 8 (Commitments - Employment
Agreements) to Notes to Financial Statements and "Executive Compensation."
24
<PAGE>
BUSINESS
GENERAL
The Company is a multi-media content developer specializing in the production,
marketing and distribution of interactive visual information for delivery by a
variety of platforms including the Internet, On-line services and, eventually,
Interactive Television (ITV). As used herein, "content" is defined as the
information carried on the information superhighways. The Company's focus is to
develop high quality content at a low cost which is edited into short
entertaining pieces for distribution to consumers regardless of the medium. The
Company is not dependent on the technological architecture of the service that
will deliver this content to the consumer and is developing its products and
services to be fully operational on any potential platform.
Consumers today are accustomed to television, a visual medium of full-motion,
full-color video, that is sound enhanced and readily available to every
consumer's home or business. On-line computer users are accustomed to TV-like
monitors and displays providing access to graphics and text databases on every
topic imaginable through service providers that make connections to these
databases affordable and easy. Computers outsold television sets in 1995 for the
first time in history. The combination of accessible, indexed, on-line
information in full-motion, full-color video forms the basis and the requirement
for multi-media Internet capability or ITV. In the opinion of management, the
demographics of the Internet offer the Company a very favorable platform for its
products and services. For instance, according to Nielsen Media and the U.S.
Census Bureau, it is currently estimated there are 50,000,000 Internet users
worldwide, with an excess of 30,000,000 in the United States. The total number
of worldwide users is expected to reach 200,000,000 by next year. Of the people
on-line, the average annual income is $72,000 (compared to $ ,000 nationwide),
25% generate income of $80,000 annually and 50% are professional or managerial.
These demographics represent an ideal target for the Company's products and
services.
Billions of dollars are being invested by companies such as Microsoft, AT&T,
TCI, Time Warner, Viacom, Intel, GTE and others to develop the communications,
storage, access and user interface technology that will enable information,
entertainment and communications to converge. These converging technologies form
the basis of a global consumer and commercial information source offering
unprecedented access to all kinds of media. Whether it is through the Internet
or the impending ITV, information connectivity between the consumer and the
source is the basis of these companies' investments.
Management of the Company concurs with Microsoft's Chairman Bill Gates when he
stated "Content is King" in response to an inquiry as to why he was purchasing
photographic libraries, artwork rights and other visual media. In management's
opinion, content is the determining factor that will create the demand as well
as determine the ultimate success of the new communication and information
services. The Company owns or, in the case of libraries under development, will
own, all of the content included in its products and services. Management of
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the Company believes content such as that offered by the Company will become
more increasingly in demand to fill the voids created by the expanded capacity
these new technologies provide.
THE COMPANY'S PRODUCTS AND SERVICES
THE HOTELVIEW(R) LIBRARY
The Company's first product, the HotelView(R) Library , is an interactive visual
library of hotels and resorts which is being marketed through the Company's
wholly-owned subsidiary, HotelView Corporation ("HVC"), a Florida corporation
incorporated on September 15, 1993. The HotelView(R) Library contains short,
concise visual brochures ("vignettes") depicting the specific characteristics
and amenities of hotels and resorts in full-motion video. Each vignette is
approximately two to three minutes in length and provides the viewer with a look
at the hotel's amenities. All facilities included in the HotelView(R) Library
are videotaped in a uniform 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(R) Library to be fair and consistent
in its presentation. Professionally videotaped with a voice narrative, the
vignette shows the features of the hotel, including rooms, conference
facilities, lobby, pool, restaurants, grounds, sports facilities, and spas.
Information concerning the location of the property relative to area attractions
and airport facilities is also provided. The HotelView(R) Library is marketed to
hotels and resorts, travel agencies, and potential travelers. By inclusion in
the HotelView(R) Library, a hotel reaches thousands of travel agents and
potential guests through a convenient, low cost, and effective method. The
Company's HotelView(R) Library is initially being distributed on laser discs to
its travel agency network. The Company is developing additional capabilities to
make both the HotelView(R) Library and its other libraries available on the
Internet, On-line services and ITV.
HOTELVIEW(R) IN TRAVEL AGENCIES
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 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 HotelView(R) Library is simple to use. The viewer loads the
laser disc for the region they wish to view into the player and a menu appears
that asks the viewer to select from a list of hotels by name or location. . 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 facilities. The Company's concept is for
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a potential traveler to "Look Before You Book(TM)" 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(R)
Library videos are also available through the mail. A traveler wishing to
receive videos on specific hotels can call a HotelView(R) 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 are
currently supplied at no charge by the Company to the travel agents.
The HotelView(R) 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(R) Library to
actually "see" the property. The Company believes that by using the HotelView(R)
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(R) Library) or provide
access to the library to their clients.
Each hotel or resort pays an annual fee of between $6,000 and $12,000 for
inclusion in the HotelView(R) Library and must renew its agreement and pay a fee
to the Company each year to remain in the Library. The Company owns all rights
to the content contained in the HotelView(R) Library. Currently, the Company
offers hotels and resorts the option of either paying the contract amount in
full at the time of execution or payment of a cash deposit of $3,000, with the
balance of the contract amount due under a performance-based arrangement. The
hotel or resort is invoiced by the Company for the balance due under the
original contract as rooms are booked by the HVC travel agency network. The
Company generates quarterly reports which reflect the amount of room revenue a
particular hotel or resort received from bookings made by the HVC travel agency
network during that quarter. The performance-based arrangements provide that the
balance due the Company by the hotel or resort is paid in an amount equal to a
percentage (ranging from 100% to 30%) of the room revenue generated by the HVC
travel agency network until the balance due under the contract is paid in full.
Approximately 91% of the existing performance-based payment arrangements
currently in place are either at the 100% level or the 50% level. As of the date
hereof, all of the hotels or resorts which have contracted with the Company have
opted to pay the cash deposit, with the balance payable under the
performance-based arrangements. At March 31, 1997, the Company had a total
service fee balance of $294,733 due under the performance based contracts, which
revenue is not recorded by the Company until billed. While there can be no
assurances, based upon the room revenues generated by the HVC travel agency
network to date, management of the Company reasonably believes this balance will
continue to be billed and collected by the Company pursuant to its terms.
The HotelView(R) 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 hotel bookings of at least $2,000,000. As
of March 31, 1997, the HotelView(R) Library is installed in over 200 travel
agencies in the United States. Each travel agency enters into a written
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agreement (the "Travel Agency Agreement") with the Company for an initial term
of one year which term may be automatically renewed for additional one year
periods unless terminated by either party upon 30 days prior written notice.
Pursuant to the terms of the Travel Agency Agreement, the Company provides the
travel agency with one complete HotelView(R) Library (including updates) on
laser discs, a laser disc interactive player and TV/VCR combination (the
hardware necessary to both view the HotelView(R) Library and make copies of
selected vignettes for the travel agency clients to view at home) as well as
requisite marketing materials. Both the discs and hardware remain the property
of the Company. In turn, each travel agency is responsible for booking an
average of at least $400 per month of room revenue in hotels or resorts
contained in the HotelView(R) Library. In the event any travel agency does not
generate room revenue of at least $1,200 in any given quarter, the Company in
its sole discretion can remove the hardware and HotelView(R) Library and
terminate the Travel Agency Agreement. Of the 400 travel agencies currently
under contract with the Company approximately 200 of them have been equipped
with the HotelView(TM) viewing system and received the first set of HotelView(R)
Library discs in November 1996. The Company is currently in the process of
evaluating the travel agencies' performance under the terms of the Travel Agency
Agreements. As of the date of this Prospectus, the Company has not had
sufficient time to make definitive evaluations regarding the travel agencies'
performance.
As an additional incentive for travel agencies to promote hotels and resorts
featured in the HotelView(R) Library, travel agencies who book in excess of
$3,000 per quarter are entitled to participate in a pool to receive cash
incentives from the Company. The amount of cash available to be distributed is
equal to a maximum of 10% of the cash receipts received by the Company during
the fiscal quarter from both contract fees and deposits under contracts. The
travel agencies entitled to participate in the incentive pool are divided into
four levels based upon the amount of business booked in the quarter as verified
by the Company. Currently these levels are Level 1 - $3,001-$5,000, Level II -
$5,001-$10,000, Level III - $10,001-$20,000, and Level IV - over $20,000. One
quarter of the available cash incentive is divided equally among all the
eligible pool participants; one quarter is divided equally among the agents in
the Levels I, II and III; one quarter is divided equally among the agents in the
Levels I and II; and the final one quarter is divided equally between the agents
in Level I. The total cash incentives for the six months ended March 31, 1997
was $5,086 which is to be distributed to a total of approximatley 35 travel
agencies. As collection of revenues based on bookings increases and the number
of HotelView travel agencies grows, so will the amount paid to the travel
agencies and the number of agencies qualifying for incentive payments. The
Company may, however, at its sole discretion from time to time elect to change
either the amount of cash available to be distributed as cash incentives or the
parameters of the incentive pool, or both.
As set forth above, the Company has currently selected laser discs as the
storage medium for the HotelView(R) 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 viewing
system used in the HotelView(R) Library system is provided by several leading
manufacturers. The Company purchases the equipment comprised of a laser disc
player and a
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combination television/VCR at a price of under $600. The Company has entered
into a capital lease for certain of this equipment with an unaffiliated third
party leasing company. The monthly lease obligation for 92 television/laser disc
players and 75 VCRs is approximately $2,300 for a period of 26 months. A portion
of the use of proceeds from this offering will be used to purchase an additional
400 viewing systems. See "Use of Proceeds."
The Company has also established pricing with Imation, a division of 3M
Corporation, 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. There are many other major suppliers of disc masters and laser discs,
including Sony and Pioneer. Accordingly, the Company is not dependent on any one
supplier for its equipment. The Company also uses local companies for its video
tape replication, and there are many similar suppliers of these services at a
local, state and national level.
HOTELVIEW(R) ON THE INTERNET
Because most Internet users have been raised on television, the Company believes
video capabilities will prove to be an important part of the eventual success of
the Internet. As previously discussed, many companies are developing full
multi-media capabilities for the Internet which will include video transmission.
These capabilities include video file streamers, a currently available software
based product which allows transmission of files in a streaming method
permitting the viewer to see the file (video) as it is being transmitted. This
enables slower speed modems to view video in a faster way than waiting for the
entire file to be downloaded. The Company is currently developing content for
distribution over the Internet using existing technology. Because management of
the Company believes that this will benefit hotels and resorts seeking exposure,
the Company has continued to develop marketing and content relationships where
the Company will offer Internet access to the HotelView(TM) Library of content
as well as any of the Company's other libraries.
As high speed access (such as cable modems and digital satellite technology)
becomes available, the Company plans to provide hotels and resorts with a single
video storage location (file server) that will be connected to the Internet and
linked to all major travel related websites. In this arrangement, Internet users
visiting a travel website such as TravelWebJ (www.travelweb. com) can make
airline reservations, select a hotel, see the HotelView(R) video and book the
hotel without leaving the travel services' website. See "Business - Strategic
Alliances." The hotel or resort's annual fee allows each of them to participate
in both the HVC travel agency distribution network as well as to be included in
the HotelView(R) Library on the Internet, when available, with links to all
participating travel service websites. This exposure provides, in management's
opinion, a competitive advantage to hotels and resorts included in the
HotelView(R) Library in that the Company will store and distribute the video,
thereby eliminating the front end costs associated with the costly hardware and
communications necessary to distribute video over the Internet. A portion of the
use of proceeds from this offering will be used to acquire the requisite
hardware and software to link the Company to the Internet and provide links to
other websites. It is
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anticipated the Company's Internet links will be operational within 60 days
following the closing of this Offering. See "Use of Proceeds."
ADDITIONAL LIBRARIES UNDER DEVELOPMENT
Management of the Company believes the rapid development of high speed data
transmission capability (such as cable modems) as well as new high speed file
transfer technology will permit consumers to view on-line information in
full-motion, full-color video and will generate an increasing demand for high
quality video content. In addition to the HotelView(R) 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. These
additional libraries will not be dependent on the technological architecture of
the service (Internet, On-line service or ITV) which will deliver the content to
the consumer.
The availability of such additional libraries, however, will be dependent upon
the availability of high speed data transmission capability such as cable modems
to the consumer. Currently, access to the Internet is available, for the most
part, through telephone lines. Cable modems can move text, voice and pictures 50
to 100 times faster over cable television lines than standard telephone modems
that send and receive information on personal computers. Cable modems are also
faster than the telephone industry's high-speed data lines using "ISDN"
technology.
Cable modem makers include Motorola, Bay Networks' LAN-city, General Instrument,
Scientific-Atlanta and Hewlett-Packard. Cable companies such as Time Warner
Cable, Cox Cable Communications, Continental Cablevision, Comcast Corp. and
Tele-Communications Inc. began selling cable modems during late 1996. Some of
the markets where the service is now offered include New Orleans, Louisiana;
Akron, Ohio; Baltimore, Maryland; Hartford, Connecticut; Sarasota, Florida;
Orange County, California and San Diego, California with many more markets
slated to be added. Prudential Securities estimates the cable modem hardware
business will grow from $40 million in 1997 to more than $450 million in 2000,
with cable companies making an estimated $1.6 billion from high-speed data
services. Management of the Company believes that content such as that owned and
being developed by the Company will become in more demand as the cable modem
market expands.
The following are examples of the libraries already in development stages by the
Company.
CRUISEVIEW(TM) - A visual database of top cruise ships and facilities.
ATTRACTIONVIEW(TM) - A visual database of attractions and services
located at destinations where the Company has hotel properties included
in the HotelView(TM) Library.
CONDOVIEW(TM) - A collection of time share residences in connection with
other marketing partners in the interval ownership business.
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ADVENTUREVIEW(TM) - 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.
CAMPVIEW(TM) - A collection of video tours of seasonal camps, sports
camps and other types of campgrounds for children and adults.
CONVENTIONVIEW(TM) - A visual library of convention centers and meeting
facilities.
CAMPUSVIEW(TM) - 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(TM) - A library of nursing homes, adult care centers and
rehabilitation facilities.
HEALTH & FITNESSVIEW(TM) - A collection of specific exercise videos. The
viewer can customize a workout by watching and selecting only the
exercise segments they need.
MEDICALVIEW(TM) - Medical treatments are presented in-depth, in
easy-to-understand, comforting terms by a physician specializing in that
field.
PRODUCTVIEW(TM) - A collection of consumer products presented in a
format enabling consumers to review 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.
TALENTVIEW - A collection of four independent talent-related libraries
providing multi-media information, including:
VOICE SELECT, a library of voice talent, by region, with up to five
actual recordings of the talent's work and complete experience
profile.
DIRECTOR SELECT, a library of directors, by region, with resumes,
profiles and actual video clips of their work.
ACTOR SELECT, a library of actors and actresses with resumes,
profiles and actual video clips of their work.
MODEL SELECT, a library of models, by region, with actual clips of
runway work and product presentations.
31
<PAGE>
Based upon other opportunities which may present themselves to the Company, the
Company may seek acquisitions of additional content or technology to facilitate
the expansion of the Company's operations.
In conjunction with the planned expansion of the Company's product offerings,
the Company is negotiating the terms which will permit it to acquire all rights
and interests in four software products from Digital Criteria Search
Technologies, Inc. ("DCST") including Voice-Select (a library of voice talent),
ModelSelect (a library of modeling talent), DirectorSelect (a library of film
and video directors) and ActorSelect (a library of acting talent), together with
certain computer hardware and software related thereto. In addition, it is
presently anticipated the Company will obtain the worldwide exclusive marketing
rights for Checkmate, a multimedia dating service, and CareerSelect, a
multimedia job opportunity library which also contains information concerning
potential employment candidates and which will be available through the
Internet. This software has not been marketed by DCST nor has DCST realized any
revenue from it. It is presently anticipated the Company will tender shares of
its Common Stock in payment for the rights to be acquired, however, the Company
has not executed a definitive agreement as of the date hereof and; accordingly,
the final terms of the transaction are not finalized nor are there any
assurances the proposed transaction will be consummated.
VIDEOTAPING AND PRODUCTION
The HotelView(R) Library is being produced using an international network of
independent professional camera crews, cultivated over 13 years by the Company's
co-founder, Alan Saperstein, who was Executive Director/Entertainment Division
of NFL Films where he was responsible for supervision of all projects, budgets,
screens and staffing. See AManagement.@ The camera crews are independent
contractors, enabling the Company to pay for services only as required. The
Company has developed a network of camera crews in 40 states as well as in
Europe, Japan, and the Far East. Crews in areas such as New York, Washington,
D.C., Boston, Florida, Arizona, California, Nevada, Louisiana, Oregon, Hawaii
and the Caribbean and Europe have already taped HotelView(R) vignettes. These
crews have been trained by the Company to tape properties in an efficient and
low cost manner. The Company's production staff has been trained to create
vignettes which conform in content, quality and duration. The Company will use
the same camera crews and cookie-cutter format employed in the HotelView(R)
vignettes when developing its additional libraries.
The Company has a Media 100, a state-of-the-art non-linear video editing system,
as well as a digital sound editing system fully operational in its Boca Raton,
Florida facility. During the past few years, the advanced technology available
through the use of digital editing systems, such as the Company's, have
significantly reduced both the costs for the equipment as well as the
post-production costs associated with creating full-motion videos such as those
which form the basis of the Company's products. According to literature provided
by Media 100 Inc. (MDA, Nasdaq), systems similar to those used by the Company
are in use by nearly 10,000 users worldwide including a wide variety of
companies such as Microsoft, Apple Computers, Hanna Barbera, BBC, CBS, CNN, MTV,
TCI Cable, Time Warner Cable, Smithsonian Institution, DuPont,
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<PAGE>
General Motors, Sega Enterprises, Warren Miller Entertainment, the Central
Intelligence Agency and the Los Alamos National Lab. Editing equipment once
costing close to $1 million per editing suite is being replaced by digital
editing systems such as those in use by the Company for less than $200,000.
According to management based upon their previous experience, the sophistication
of the digital technology is reducing the post-production time for similar type
videos from as much as four days to as little as four hours.
The Company has hired and trained personnel to perform editing and final
production tasks. Each editing suite will be staffed with a team consisting of
an editor, a writer/producer and a graphic 3D artist. Each suite will be able to
complete post-production on five to six vignettes per week on one shift, thereby
permitting the Company to produce approximately 250 to 300 vignettes per year
per editing suite. The Company currently has one editing suite. The editing
equipment and software, which costs approximately $170,000, is being financed
under capital lease agreements with an unaffiliated third party leasing company
which terminate in 1998 with payments totaling approximately $5,500 per month.
The Company expects to expand its video production capability by adding
additional editing suites as demand for the Company's products increases. A
portion of the use of proceeds from this Offering will be used by the Company
for down payments on up to an additional 10 editing suites as well as the
initial costs of staff for the editing suites. See "Use of Proceeds." Should the
demand for the Company's products continue to increase, of which there are no
assurances, the Company has the option of adding a second shift of editing suite
personnel thereby increasing its post-production capacity without additional
capital expenditures.
STRATEGIC ALLIANCES AND GENERAL MARKETING STRATEGIES
STRATEGIC ALLIANCES
One of the Company's marketing strategies is to enter into strategic alliances
with enterprises that have the ability to reach customers in the Company's
targeted markets. In this regard, the Company has successfully established
relationships with prominent companies in the travel industry to assist the
Company in the marketing and distribution of the HotelView(R) Library.
The Company has entered into a two year agreement (the "Pegasus Agreement") with
Pegasus Systems, Inc. ("Pegasus") whereby Pegasus has agreed to use its
reasonable efforts to market, endorse and promote the HotelView(R) Library to
each of its hotel clients and to obtain executed agreements from hotels for
inclusion in the HotelView(R) Library. Pegasus receives a commission of 20% on
sales made for initial contracts and 10% for renewals of contracts obtained by
it. The Pegasus Agreement also gives Pegasus an option to purchase up to 33-1/3%
of the outstanding capital stock of HVC (currently a wholly-owned subsidiary of
the Company) based upon the number of contracts between Pegasus member-based
hotels and the Company. Specifically: at such time as the Company has entered
into at least 1,000 initial contracts with Pegasus member hotels, Pegasus has
the option to purchase up to 5% of HVC for $500,000 in cash; at such time as the
Company has entered into at least an additional 1,500 initial contracts with
Pegasus member hotels (for a total of 2,500 initial contracts) Pegasus has the
option to
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<PAGE>
purchase up to an additional 10% of HVC for $1 million in cash; at such time as
the Company has entered into at least 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 in
cash; and, finally, at such time as the Company has entered into at least 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 in cash. Assuming all performance
levels were met by Pegasus, it would have the option to acquire 33 1/3% of HVC
for a total cash payment of $3,333,333.
To the extent that Pegasus meets these levels and exercises its option, the
Company's equity interest in HVC will be reduced by 33-1/3% to 66-2/3%.
Management of the Company, however, does not believe this reduction in the
Company's equity interest in HVC would have any adverse affect on the Company
and the investors in this offering in that the Company would remain the majority
shareholder of HVC, reporting HVC's revenues (which would be significantly
enhanced by virtue of the revenue generated under the execution of the contracts
with the Pegasus members) and assets on a consolidated basis with the Company,
the Company would have received $3,333,333 of additional working capital in
exchange for the minority interest in HVC, the Company's relationship with
Pegasus would be further strengthened and the initial contracts with the
Pegasus' members would, in the opinion of management of the Company, provide a
recurring revenue stream to the Company by virtue of an annual renewal of a
majority, if not all, of the initial contracts. For example, 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 (based upon information provided by Pegasus that the
average Pegasus member hotel is a domestic hotel whose annual fee will be
$8,000), the Company would have realized gross revenues of (i) $8 million (for a
5% equity interest in HVC); (ii) an additional $12 million (for an additional
10% equity interest) for a total of $20 million, totaling a 15% equity interest;
(iii) an additional $20 million (for an additional 10% equity interest) for a
total of $40 million totaling a 25% equity interest; and (iv) an additional $40
million (for an additional 8% equity interest) for a total of $80 million,
totaling 33-1/3%. The Company believes, but there can be no assurances, that the
additional revenues that will need to be generated in order for Pegasus to
exercise its options will increase the Company's earnings, which, in turn, will
increase shareholder value in the Company to a degree that it would not
otherwise realize.
The Company has recently entered into negotiations with Advancestar
Communications, which publishes Premier Hotels and Resorts magazine. It is the
intent that Advancestar Communications will use its best efforts to market,
endorse, and promote the HotelView(R) Library to its hotel clients and to
obtain executed agreements between its hotels clients and the Company for
inclusion in the HotelView(R) Library. The Company has not finalized terms of
this agreement, and there are no assurances a formal agreement will be reached.
In June 1996 pursuant to a one year agreement, the Company retained the services
of Stratus Management Group, Inc., ("SMGI") to provide the Company with
consulting services which include developing marketing plans for HVC, developing
products and services, analyzing
34
<PAGE>
partnership and acquisition opportunities, and structuring business
relationships. SMGI is a management consulting firm with a worldwide management,
strategic planning, marketing, technology and executive search practice
specializing in hospitality and other travel related industries. In
consideration for SMGI's services, the Company has the option to pay SMGI either
$7,000 per month during the term of the agreement or $3,000 in cash and 938
shares of common stock per month. At all times during the term of its agreement
with SMGI, the Company has elected the latter option.
In August 1996, the Company retained Keating Communications, Inc. ("Keating") as
a consultant for public relation services for HVC which services include acting
as a liaison with the press and providing press kits, setting up media
interviews, assisting in special events, trade shows and seminars, undertaking a
media audit on behalf of HVC, and general public relations counseling. In
consideration for these services, the Company paid Keating $3,500 per month over
the term of the agreement which terminated on December 31, 1996. Keating has
over 30 years experience in international public relations and marketing
communications and represents companies in the hospitality and other
travel-related industries such as the Barbados Hotel Association, Chalet Susse,
Consort Hotels, Elegant Resorts of Barbados, The Grande Collection of Hotels,
Jarvis Hotels, Loews Hotels and Turnberry Scotland as well as numerous other
companies including airlines, car rental agencies, cruise lines, financial
institutions, governments, health care companies, rail lines and restaurants.
Following the completion of this offering, the Company intends to engage Keating
for an additional one year term.
The Company also anticipates engaging Irma S. Mann, Strategic Marketing, Inc.
following the closing of this Offering to design trade show booths and
collateral materials for the Company. Irma S. Mann, Strategic Marketing, Inc. is
a full-service marketing and advertising firm specializing in the hospitality
and travel industry. The Boston-based company's clients include Four Seasons
Hotels and Resorts, ITT Sheraton Corporation, ANA Hotels, Sonesta International
Hotels Corporation, Best Western International, Utell International and the
Islands of the Bahamas.
MARKETING
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. While the Company has
established relationships with a number of the larger hotel chains such as
Hilton, Wyndham, Hyatt and SuperClubs, 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 currently focuses on those hotels that
have at least 100 rooms and a minimum daily room price of not less than $100 per
day. 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(R) Library. The Company has already established relationships with
agencies that are part of a number of the major consortiums including American
Express7, VTS(R), and Carlson7.
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<PAGE>
The Company has begun a national advertising program in both newspapers and
travel magazines introducing the HotelView(R) Library to consumers as well as to
hotels and travel agents. The credibility the Company may gain 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(R) system. The video contains examples of hotel
vignettes and shows the benefits of the system to the traveler, travel agent and
hotel and resort operators. The video, 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 in travel
agencies nationwide to promote the program and test its operation. The initial
library consisting of four discs with hotels from New York; Boston;
Washington, D.C.; California; Arizona; Nevada; Florida and the Caribbean was
distributed in November 1996. Through March 31, 1997, HVC travel agencies have
produced approximately $1,180,000 in hotel bookings for hotels participating
in the HotelView(R) Library.
To date, signed contracts with hotels for inclusion in the HotelView(R) Library
have primarily resulted from the Company's 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. The Company currently has four outside
sales representatives located in New Jersey, California, Hawaii and Munich,
Germany. As needed, the Company may increase its customer service staff.
The Company markets the HotelView(R) Library to travel agencies through the
Company's in-house telemarketing staff which currently consists of one person.
Marketing materials are provided to travel agencies that include a sample
videotape of the Company's products and an explanation of the Library.
Subsequent follow-up telephone calls are made by the Company's in-house staff.
At that time, the travel agency usually determines whether it intends to enter
into a written agreement with the Company.
As previously mentioned, the Company has established a sales office in Munich,
Germany. To date, minimal revenues have been generated through this office;
however, during the 12 months following this offering management of the Company
believes, although there can be no assurances, that the Company's international
operations will generate signed contracts with approximately 25 to 50 hotel
properties for inclusion in the HotelView(R) Library generating approximately
$250,000 in revenues and expenses of approximately $175,000. It is also
anticipated by management that through the efforts of this Munich, Germany
office the HotelView(R) Library will be installed in 40 to 50 European travel
agencies. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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
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<PAGE>
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 developing products
using the same format, style, content and delivery as the Company's, although
similar products may exist in different formats. Although individual hotels may
undertake the production of a video of their property as a marketing tool, the
Company knows of no other company that is assembling and distributing a library
similar to the Company's HotelView(R) Library.
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). As of May 30, 1995, the Company obtained federal trademark
protection for its mark HotelView(R). The Company has also filed applications
for federal trademark registration for the marks CruiseView(TM), CampusView(TM),
Health & FitnessView(TM), MedicalView(TM), ConventionView(TM),
AdventureView(TM), ProductView(TM) and Look Before You Book(TM). If and when a
federal trademark registration is granted, the Company must file a statement of
use during the fifth and sixth years from the date of grant. A trademark is
granted for a period of 10 years and may be renewed for additional 10 year
periods.
EMPLOYEES
The Company and its wholly owned subsidiary, HVC, currently have 13 full-time
employees and one part-time employee, of which three are in management, two are
in sales, two are in telemarketing/customer relations, three are in video
production, and four are administrative.
37
<PAGE>
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 is not
exercising the renewal option available under the lease. The Company and the
landlord have agreed that the Company will continue on a month to month basis
after April 30, 1997. The Company's monthly rent is $3,525. In addition, the
Company is obligated for back rent which amount, as of March 31, 1997, was
$1,494, which amount shall be satisfied as of April 30, 1997. The Company is
currently searching for a location to relocate its corporate offices which will
include space for additional editing suites in either Palm Beach or Broward
county, Florida. Management does not anticipate the Company will have any
difficulty locating adequate space at competitive prices. A portion of the
proceeds from this offering will be used for such purchase and relocation
expenses. See "Use of Proceeds."
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 41 President, Chief Executive Officer, acting
Chief Financial Officer, Director
Alan M. Saperstein 38 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
since September 1996, its acting Chief Financial Officer. 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 was involved in the company's initial public offering 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. From March 1989 until
May 1993, Mr. Saperstein was 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
he was responsible for supervision of all projects, budgets, screenings and
staffing.
Officers are elected annually 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. The officers of the Company devote full time to the
business of the Company. The Company has purchased key-man insurance on the
life of Mr. Saperstein and intends to purchase similar insurance for Mr. Selman
within 60 days from the date of this Prospectus. Additionally, following the
date hereof the Company intends to undertake an employment search to hire a
full-time Chief Financial Officer. See "Use of Proceeds."
There is no family relationship between any of the executive officers and
directors.
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<PAGE>
BOARD DESIGNEES
On the date of this Prospectus, the Company expanded its Board of Directors by
the addition of the following three individuals. Of the additional directors,
Messrs. Swirsky and Service are deemed to be outside directors.
BEN SWIRSKY. Since June 1993, Mr. Swirsky, 55, has been 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., a chain of
first class hotels located throughout the world.
BRIAN K. SERVICE. Mr. Service, 49, 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 CEO
and Managing Director of Salmond Smith Biolad, a New Zealand publicly-traded
company . From October 1986 to October 1992 he was 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.
ERIC JACOBS. Mr. Jacobs, 49, has been Vice President and General Manager of the
Company's wholly owned subsidiary, HotelView Corporation since March 1996. Since
1976, Mr. Jacobs has served as the Chairman of the Miami Beach Visitor and
Convention Authority and since September 1993, he has served as Chairman of the
Greater Miami and the Beaches Hotel Association. Since 1972 Mr. Jacobs has been
a member of Miami Beach Chamber of Commerce and has served as its Chairman since
September 1996. From 1972 through October 1993, Mr. Jacobs was the owner,
President, and General Manager of the Tarleton Hotel, Miami Beach, Florida.
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 his
successor is elected and qualified. At present, the Company's bylaws provide for
not less than two directors. 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.
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 Company's 1996 Stock Option Plan (the "Plan"), directors who are not 10%
shareholders or employees may receive a grant of Common
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Stock and non-qualified stock options as described under the Plan. In the
alternative, at the option of the Company and subject to the terms of the
Underwriting Agreement, the Company may grant outside directors fair market
value options outside of the Plan.
On the date of this Prospectus, the Company granted to each of Messrs. Service
and Swirsky options outside of the Plan to each acquire 50,000 shares of the
Company's Common Stock at an exercise price of $6.00 per share, being the fair
market value on the date of grant. The term of these options is five years from
the date of grant, with 25,000 options vesting on the first anniversary of the
date of grant, 12,500 vesting on the second anniversary of the date of grant and
the remaining 12,500 vesting on the third anniversary of the date of grant. Once
vested, the options remain exercisable until the expiration date thereof. In the
event, however, either Mr. Service or Mr. Swirsky are not members of the
Company's Board of Directors at the time the options vest, they will no longer
be entitled to receive such options.
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<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table shows, for the three year period ended September
30, 1996, 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- 137,230 -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- 137,230 -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
<FN>
- --------------
(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).
</FN>
</TABLE>
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, as amended on
April 30, 1997, is substantially similar. The term of the Agreements is for
three 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 is $125,000, which amount will be increased by 10% each year. Messrs.
Selman and Saperstein are also each eligible to receive an annual bonus in cash
or stock equal to 3% of the Company's earnings before income tax, depreciation
and amortization (EBITDA) on that portion of EBITDA that has increased over the
previous year's EBITDA. Additionally, on January 1 of each year
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<PAGE>
Messrs. Selman and Saperstein shall receive options (which contain certain
anti-dilution provisions) to purchase 125,000 shares of Common Stock at a $6.00
per share for an exercise period of five 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 and contain certain non-disclosure and
non-competition provisions. 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 may terminate the employment of
Mr. Selman or Mr. Saperstein either with or without cause. If the Agreement 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 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.
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<PAGE>
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 137,230 50% $.00016 12/31/01
Alan Saperstein, Vice President
Secretary, Director 137,230 50% $.00016 12/31/01
</TABLE>
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
On February 9, 1997 the Board of Directors and a majority of the Company's
shareholders adopted the Plan.
The purpose of the Plan is 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 shareholders.
The purpose of the Plan is also to enable the Company to attract and retain
the services of experienced and highly qualified employees and non-employee
directors.
The Company has reserved an aggregate of 200,000 shares of Common Stock for
issuance pursuant to options granted under the Plan ("Plan Options"). As of the
date of this Prospectus, no options have been granted under the Plan. The Board
of Directors or a Committee of the Board of Directors (the "Committee") 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 (the "Code"), 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
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<PAGE>
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 and key employees of and consultants to the Company and its
subsidiaries will be eligible to receive Non-Qualified Options under the Plan.
Only 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 Code, 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
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<PAGE>
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.
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.
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.
In February 1995 the Company granted each of Messrs. Selman and Saperstein,
executive officers and directors of the Company, options to acquire 137,230
shares of the Company's Common Stock at an exercise price of $.00016 per share
as a bonus. See "Management - Executive Compensation" and the Financial
Statements.
In addition, the Company and Messrs. Selman and Saperstein were parties to a
stock repurchase agreement under which, upon the death of either Mr. Selman or
Mr. Saperstein, the Company would have been obligated to purchase the shares of
Common Stock owned by the estate of the deceased shareholder. This agreement was
terminated as of the date of this Prospectus. See Note 8 - Financial Statements.
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<PAGE>
PRINCIPAL SHAREHOLDERS
At March 31, 1997 there were 1,889,849 shares of the Company's Common Stock
issued and outstanding. The following table sets forth certain information
regarding the Company's Common Stock (currently the sole class of voting
securities) beneficially owned at March 31, 1997 (i) by each person who is known
by the Company to beneficially own more than 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.
<TABLE>
<CAPTION>
CLASS AMOUNT AND NATURE PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF COMMON STOCK OWNED
OF BENEFICIAL OWNER PRIOR TO OFFERING AFTER OFFERING PRIOR TO OFFERING AFTER OFFERING
- -------------------- ----------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Randy S. Selman (1) 318,639 242,746 15.7% 8.0%
Alan M. Saperstein (2) 338,513 262,620 16.7% 8.7%
Ben Swirsky(3) 0 0 0 0
Brian K. Service(4) 10,938 0 (5) 0
Eric Jacobs 4,390 781 (5) (5)
Fleet National Bank, N.A. Trustee,
U/A Frederick A. DeLuca 102
Qualified Annuity Trust(6) 157,683 135,362 8.3% 4.7%
All Officers and
Directors as a group
(five persons)(1)(2)(3)(4) 672,480 506,147 31.0% 23.3%
<FN>
- --------------
(1) Includes presently exercisable options and warrants to acquire an
aggregate of 140,021 shares of Common Stock and assumes the sale of
75,000 shares of Common Stock by Mr. Selman to the Underwriters to
cover the exercise of the Common Stock Over-Allotment Option, as well
as the sale of 893 shares of Common Stock in the Concurrent Offering.
See "Management", "Concurrent Offering" and "Underwriting."
(2) Includes presently exercisable options and warrants to acquire an
aggregate of 138,570 shares of Common Stock and assumes the sale of
75,000 shares of Common Stock by Mr. Saperstein to the Underwriters to
cover the exercise of the Common Stock Over-Allotment Option, as well
as the sale of 893 shares of Common Stock in the Concurrent Offering.
See "Management", "Concurrent Offering" and "Underwriting."
(3) Does not include options to acquire an aggregate of 50,000 shares of
Common Stock at an exercise price of $6.00 per share which will be
granted immediately following the closing of this offering. See
"Management - Directors Compensation."
(4) Shares are owned of record by International Business Consultancy, of
which Mr. Service is the sole owner. Does not include options to
acquire an aggregate of 50,000 shares of Common Stock at an exercise
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<PAGE>
price of $6.00 per share which will be granted immediately following
the closing of this offering. See "Management - Directors
Compensation."
(5) Represents less than 1%.
(6) The address is P.O. 40460, Rochester, New York 44609.
</FN>
</TABLE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 20,000,000 shares of Common Stock, par value
$.0001, of which 1,889,849 shares are issued and outstanding as of March 31,
1997, which are held of record by 128 shareholders. 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 50% of such shares voting for the election
of directors can elect 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. 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 previously designated two series of
preferred stock consisting of 650,000 shares which were designated as Series A
Convertible Preferred Stock and 1,000,000 shares which were designated as
Series B Convertible Preferred Stock. Both such series of preferred stock have
been converted into shares of the Company's Common Stock pursuant to each
series' designations, rights and preferences. Upon such conversion, the shares
of preferred stock so designated have been returned to the treasury of the
Company and remain preferred
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stock with no designation. As of the date hereof, the Company has no shares of
preferred stock issued and 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, redemption price, liquidation or dissolution
preferences, conversion rights, voting rights and other preferences and
privileges.
WARRANTS
COMMON STOCK PURCHASE WARRANTS
The Company is offering 1,000,000 redeemable Common Stock Purchase Warrants
("Warrants"). Each Warrant entitles the holder to purchase one share of Common
Stock at $6.00 per share ("Warrant Exercise Price") commencing six months from
the date of this Prospectus ("Effective Date") until five years after the
Effective Date. The Warrants are redeemable by the Company for $.05 per Warrant,
at any time commencing six months from the date of this Prospectus, upon 30
days' prior written notice, if the closing bid price of the Company's Common
Stock as reported by the principal exchange on which the Common Stock is traded
equals or exceeds $7.20 per share for 20 consecutive trading days and ending 30
days prior to the notice of redemption.
The Warrants can only be exercised when there is a current effective
registration statement covering the shares of Common Stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement, the Warrant holders will be unable to exercise the
Warrants and the Warrants may become valueless. In addition, because the
Warrants may be transferred, it is possible that the Warrants may be acquired by
persons residing in states where the Company has not registered, or is not
exempt from registration. In such event, if the shares of Common Stock
underlying the Warrants are not registered or qualified for sale in the state in
which a Warrant holder resides, such holder might not be permitted to exercise
the Warrants. Moreover, even if the Warrants could be transferred, the shares of
Common Stock underlying the Warrants may not be sold or transferred upon
exercise of the Warrants. Warrant holders residing in those states would have no
choice but to attempt to sell their Warrants or to let them expire unexercised.
See "Risk Factors."
Each Warrant may be exercised by surrendering the Warrant certificate, with the
form of election to purchase on the reverse side of the Warrant certificate
properly completed and executed, together with payment of the exercise price to
the Warrant Agent. The Warrants may be exercised in whole or from time to time
in part. If less than all of the Warrants evidenced by a Warrant certificate are
exercised, a new Warrant certificate will be issued for the remaining number of
Warrants.
Holders of the Warrants are protected against dilution of the equity interest
represented by the underlying shares of Common Stock upon the occurrence of
certain events, including, but not limited to, issuance of stock dividends. If
the Company merges, reorganizes or is acquired in
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<PAGE>
such a way as to terminate the Warrants, the Warrants may be exercised
immediately prior to such action. In the event of liquidation, dissolution or
winding up of the Company, holders of the Warrants are not entitled to
participate in the distribution of the Company's assets.
For the life of the Warrants, subject to the redemption provision, the holders
thereof are given the opportunity to profit from a rise in the market price of
the Common Stock of the Company. The exercise of the Warrants will result in the
dilution of the then book value of the Common Stock of the Company held by the
public investors and would result in a dilution of their percentage ownership of
the Company. The terms upon which the Company may obtain additional capital may
be adversely affected through the period that the Warrants remain exercisable.
The holders of these Warrants may be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain equity capital on terms
more favorable than those provided for by the Warrants.
In the event that the Warrants are called for redemption, the Warrant holders
may not be able to exercise their Warrants in the event that the Company has not
updated this Prospectus in accordance with the requirements of the Securities
Act or these securities have not been qualified for sale under the laws of the
state where the Warrant holder resides. See "Risk Factors." In addition, in the
event that the Warrants have been called for redemption, such call for
redemption could force the Warrant holder to either (i) assuming the necessary
updating to the Prospectus and state blue sky qualifications have been effected,
exercise the Warrants and pay the exercise price at a time when, in the event of
a decrease in market price from the period preceding the issuance of the call
for redemption, it may be less than advantageous economically to do so, or (ii)
accept the redemption price, which, in the event of an increase in the price of
the stock, could be substantially less than the market value thereof at the time
of redemption.
THE FOREGOING DISCUSSION DOES NOT ADDRESS THE TAX CONSIDERATIONS THAT MAY
INVOLVE A PARTICULAR PURCHASER. ACCORDINGLY, ALL PROSPECTIVE PURCHASERS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISERS REGARDING THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF THE
SHARES OF COMMON STOCK AND WARRANTS.
OTHER OUTSTANDING WARRANTS
Additionally, as of the date of this Prospectus, there are warrants outstanding
to purchase an aggregate of 173,425 shares of Common Stock, of which 90,201
shares are exercisable at 110% of the initial offering price of the Company's
Common Stock ($6.60 per share) through the second anniversary of the date of
this Prospectus; 62,500 shares of which are exercisable at $5.00 per share
through the second anniversary of the date of this Prospectus; 8,334 shares of
which are exercisable at $2.80 per share through May 20, 1999; 5,581 of which
are exercisable at $1.40 per share through March 31, 1998; 2,679 of which are
exercisable at $1.40 per share through December 1, 1997; and 4,130 of which are
exercisable at $1.40 per share through July 26, 1998, which warrants are held by
Randy S. Selman, the Company's President, Chief Executive Officer
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<PAGE>
and acting Chief Financial Officer (2,791 warrants) and by Alan Saperstein, the
Company's Executive Vice President and Secretary (1,339 warrants). The shares of
Common Stock underlying the warrants described in this paragraph may not be
sold, transferred or assigned for a period of 24 months from the date of this
Prospectus without the prior written consent of the Representative. The
Representative does not have any general policy with respect to the release of
shares prior to the expiration of the lock-up.
STOCK OPTIONS
As of the date of this Offering, there are stock options to purchase an
aggregate of 282,720 shares of Common Stock outstanding, which includes (i)
1,395 of which are exercisable at $5.60 per share through March 31, 1999, (ii)
2,679 of which are exercisable at $1.40 per share through May 30, 1998, (iii)
4,186 of which are exercisable at $1.40 per share through March 31, 1999, and
(iv) 274,460 are exercisable at $.00016 per share commencing January 1, 1997 and
continue for a period of five years thereafter, which options are held by Randy
S. Selman, the Company's President, Chief Executive Officer and Chief Financial
Officer (137,230 options) and by Alan Saperstein, the Company's Executive Vice
President and Secretary (137,230 options). See "Management."
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.
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. In general, Rule 144 provides, in
essence, that a person holding "restricted securities" for a period of one year
may sell only an amount every three months equal to the greater of (a) 1% of the
Company's issued and outstanding shares, or (b) the average weekly volume of
sales
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<PAGE>
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 one year if there is adequate current public information
available concerning the Company.
Upon the sale of the Common Stock offered hereby, the Company will have
2,889,849 shares of its Common Stock issued and outstanding, of which 682,169
shares are "restricted securities," 1,000,000 shares are being registered under
the registration statement of which this Prospectus is a part and 1,207,680
shares are being registered pursuant to an Alternate Prospectus of even date (of
which an aggregate of 166,333 are being offered by affiliates, including
principal shareholders of the Company). Included in the Alternate Prospectus are
150,000 shares of Common Stock being registered should the Underwriters elect,
in their sole discretion, to exercise the Common Stock Over-Allotment Option.
See "Underwriting." Of the remaining 1,057,680 shares of Common Stock being sold
pursuant to the Alternate Prospectus, 85,000 shares are not subject to any
lock-up period, 181,152 shares of Common Stock may not be transferred for 12
months from the date hereof, 120,768 shares of Common Stock may not be
transferred for 18 months from the date hereof, and the remaining 670,760 shares
may not be transferred for 24 months from the date hereof, subject to earlier
release at the sole discretion of the Underwriters. Additionally, all securities
held by the Company's shareholders, other than those included in the Alternate
Prospectus, are subject to the 24-month lock-up 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. Prospective investors should be aware that the possibility of such
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", "Principal Shareholders," "Concurrent Offering,"
and "Risk Factors."
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<PAGE>
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
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), the Underwriters named below (the "Underwriters"),
for whom Noble International Investments, Inc. is acting as representative (the
" Representative"), have severally agreed to purchase from the Company and the
Company has agreed to sell to the Underwriters on a firm commitment basis the
respective number of securities set forth opposite their respective names.
NAME OF UNDERWRITER NUMBER OF SHARES NUMBER OF WARRANTS
------------------- ---------------- ------------------
Noble International Investments, Inc.
Total 1,000,000 1,000,000
The Underwriters are committed to purchase all of the shares of Common Stock and
Warrants offered hereby, if any of such securities are purchased.
Notwithstanding the foregoing, the Underwriting Agreement provides that the
obligations of the several Underwriters are subject to conditions precedent,
including the absence of any material change in the Company's business and the
receipt of certain certificates, opinions and letters from the Company and
certain certificates from the Selling Security Holders.
Messrs. Selman and Saperstein, executive officers and directors of the Company,
have granted the Underwriters the Common Stock Over-Allotment Option,
exercisable during the 45-day period from the date of this Prospectus, to
purchase up to a maximum of 150,000 additional shares of Common Stock at the
offering price, less the underwriting discounts and commissions, solely to cover
over-allotments, if any. In addition, the Company has granted to the
Underwriters the Warrant Over-Allotment Option, exercisable during the 45-day
period from the date of this Prospectus, to purchase up to a maximum of 150,000
additional Warrants at the offering price, less the underwriting discounts and
commissions, solely to cover over-allotments, if any. To the extent the
Underwriters exercise such options, each Underwriters will have a firm
commitment, subject to certain conditions, to purchase a number of the
additional shares of Common Stock and/or Warrants proportionate to such
Underwriters' initial commitment. The Underwriters may, in their sole
discretion, elect to exercise either the Common Stock Over-Allotment Option, the
Warrant Over-Allotment Option, or both.
The Company has been advised by the Representative that the Underwriters propose
to offer the shares of Common Stock and the Warrants to the public at the
initial public offering prices set forth on the cover page of this Prospectus
and to certain dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at such prices less concessions not to exceed
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<PAGE>
$____ per share of Common Stock and $___ per Warrant. After the initial public
offering, the public offering price, concession and reallowance may be changed
by the Representative.
The Company has also agreed to pay the Representative a non-accountable expense
allowance equal to 3% of the gross proceeds derived from the sale by the Company
of the shares of Common Stock and Warrants, of which $35,000 has been paid to
date.
In connection with this offering, the Company has agreed to sell to the
Underwriters, or their designees, for nominal consideration, warrants (the
"Underwriters' Warrants") to purchase from the Company an aggregate of 100,000
shares of Common Stock and 100,000 Warrants. The Underwriters' Warrants are
initially exercisable at an exercise price of $7.20 per share of Common Stock
and $.12 per Warrant, which are in turn exercisable at $8.64 per share,
representing 120% of the initial public offering prices, for a period of four
years, commencing one year from the date of this Prospectus. The Underwriters'
Warrants, which are restricted from sale, transfer, assignment or hypothecation
for a period of 12 months from the date hereof, except to officers, consultants
and partners of the Underwriters, contain provisions providing for adjustment of
the exercise price and the number and type of securities issuable upon exercise
of the Underwriters' Warrants upon the occurrence of certain events including
subdivisions and combinations of Common Stock. The Underwriters' Warrants grant
to the holders thereof certain registration rights under the Securities Act for
the securities issuable upon the exercise thereof.
During the exercise period of the Underwriters' Warrants, the Underwriters (or
the then holders of a majority of the Underwriters' Warrants) shall have the
right to require the Company to prepare and file one post-effective amendment to
the Registration Statement of which this Prospectus forms a part thereof or a
new Registration Statement, if then required under the Securities Act, covering
all or any portion of the Underwriters' Warrants and/or underlying shares of
Common Stock. The Underwriters or the holders of the Underwriters' Warrants are
also entitled to request "piggy back" registration rights on two occasions
during the period such Underwriter's Warrants remain outstanding. The Company
shall bear all expenses incurred in the preparation and filing of any such
Registration Statement or post-effective amendment.
The Underwriting Agreement provides that the Company and its affiliates have
granted the Underwriters a right of first refusal for a period of three years
from the date of this Prospectus for the underwriting of any public or private
sale of securities of the Company to be made by the Company, or for any public
or private sale of securities of the Company to be made by its principal
shareholders or subsidiaries, subject to certain provisions. The Underwriting
Agreement further provides that except for the issuance of shares of Common
Stock upon the exercise of any currently outstanding options and warrants
(including options to be granted pursuant to the Plan), or in connection with a
merger or acquisition transaction involving non-affiliates, or in a subsequent
public offering at a price not less than 90% of the average of the closing bid
prices of the Common Stock as reported on The Nasdaq SmallCap Market for the 21
consecutive trading days immediately preceding such offering, or in a private
sale at not less than 70% of
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<PAGE>
such average closing bid prices, the Company will not sell or otherwise dispose
of any securities without the prior written consent of the Representative.
The Underwriting Agreement provides that the Company agrees to appoint the
Representative to act as warrant solicitation agent for five years from the date
hereof and the Underwriters shall be entitled to receive a 7% conversion fee
upon the exercise of the Warrants, subject to the Underwriters' compliance with
the rules and regulations of the NASD. In accordance with NASD Notice of Members
81-38, no warrant solicitation fee shall be paid (i) upon exercise where the
market price of the underlying Common Stock is lower than the exercise price;
(ii) for the exercise of warrants held in any discretionary account; (iii) upon
the exercise of warrants where disclosure of compensation arrangements has not
been made in documents provided to customers both as part of the original
offering and at the time of exercise; and (iv) upon the exercise of warrants in
unsolicited transactions.
In connection with this offering, certain Underwriters and selling group members
and their respective affiliates may engaged in transactions that stabilize,
maintain or otherwise affect the market price of the Common Stock. Such
transactions may including stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position, up to 150,000 shares of Common Stock, by
exercising the Common Stock Over-Allotment Option. In addition, the
Representative may impose "penalty bids" under contractual arrangements with the
Underwriters, whereby it may reclaim from an Underwriter (or dealer
participating in the offering) for the account of other Underwriters, the
selling concession with respect to the Common Stock that is distributed in any
offering but subsequently purchased for the account of the Underwriters in the
open market. Any of the transactions described in this paragraph may result in
the maintenance of the price of the Common Stock at a level above that which
might otherwise prevail in the open market. None of the transactions described
in this paragraph is required, and, if they are undertaken, they may be
discontinued at any time.
The Company has also agreed that for a period of five years the Company shall
cause one individual selected by the Representative to be appointed to the Board
of Directors of the Company, provided that such person is reasonably acceptable
to the Company. Management of the Company has obtained agreements from the
Company's directors, officers and 5% shareholders to vote all shares of the
Company owned by such individuals or entities in favor of such designee. See
"Management."
The Company has also agreed to enter into a financial consulting agreement with
the Representative which agreement will provide for a one year term with a
consulting fee of $61,000 per year, the entire fee to be paid in advance at the
closing of this offering. Pursuant to such
55
<PAGE>
agreement, the Company has agreed to pay the Representative a finder's fee of 5%
in the event the Representative originates any merger, acquisition, joint
venture or similar event to which the Company or a subsidiary is a party.
The Representative has informed the Company that it does not expect sales to
discretionary accounts by the Underwriters to exceed 5% of the securities
offered hereby. The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make.
Prior to this offering, there has been no public market for the Company's
securities. The initial public offering price for the Common Stock and Warrants,
and the exercise price thereof, 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.
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. See "Additional Information."
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 3,348 shares of Common Stock of the Company,
of which an aggregate of 1,674 shares are being registered pursuant to the
Alternate Prospectus of even date. Broad and Cassel, a general partnership
including professional associations, Miami, Florida, has acted as counsel to the
Underwriters in connection with this Offering.
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.
56
<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.
57
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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-22
Unaudited Condensed Consolidated Balance Sheet
as of March 31, 1997 F-23 - F-24
Unaudited Condensed Consolidated Statements of
Operations for the Six Months Ended March
31, 1996 and 1997 F-25
Unaudited Condensed Consolidated Statement of
Stockholders Equity (Deficit) for the Six
Months Ended March 31, 1997 F-26
Unaudited Condensed Consolidated Statements of
Cash Flows for the Six Months Ended March
31, 1996 and 1997 F-27 - F-28
Notes to the Condensed Consolidated Financial
Statements F-29 - F-32
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.
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
December 4, 1996
F-2
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
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 in 1996 -- 42,168
Prepaid Expenses 8,837 32,145
---------- ----------
Total Current Assets 269,515 282,690
---------- ----------
PROPERTY AND EQUIPMENT, Net 193,885 272,393
---------- ----------
OTHER ASSETS
Financing Costs, Net of
Accumulated Amortization of
$51,000 in 1996 -- 102,000
Security Deposits 19,059 21,691
Organization Expenses, Net 573 377
Deferred Offering Costs -- 650,000
---------- ----------
19,632 774,068
---------- ----------
$ 483,032 $1,329,151
========== ==========
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
873,306 Shares at September 30,
1995; 1,166,275 Shares at September
30, 1996 87 117
----------- -----------
Additional Paid-In Capital 986,815 2,770,281
----------- -----------
Accumulated Deficit (689,325) (2,581,027)
----------- -----------
297,596 189,401
----------- -----------
$ 483,032 $ 1,329,151
=========== ===========
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) YEAR ENDED SEPTEMBER 30,
TO 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 1,066,091 1,173,413 1,405,228
=========== =========== ===========
Net Loss Per Common Share
Primary $ (0.18) $ (0.43) $ (1.35)
=========== =========== ===========
Fully Diluted $ (0.18) $ (0.43) $ (1.35)
=========== =========== ===========
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)
SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------- --------------- ---------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
-------- ------ ------ ------- -------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance, May 17, 1993 -- $-- -- $-- -- $-- $ -- $ --
Issuance for:
Cash -- -- -- -- 479,799 48 36,052 --
Services and Incentives -- -- -- -- 22,936 2 1,951 --
Net Loss -- -- -- -- -- -- -- (188,766)
------- --- ------- --- --------- ---- ---------- -----------
Balance, September 30, 1994 -- -- -- -- 502,735 50 38,003 (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 -- -- -- -- 155,553 16 13,884 --
Minority Interest in Subsidiary -- -- -- -- 11,940 1 59 --
Interest -- -- -- -- 4,228 -- 6,518 --
Services and Incentives -- -- -- -- 19,319 2 27,044 --
Exercise of Warrants -- -- -- -- 179,531 18 251,326 --
Net Loss -- -- -- -- -- -- -- (500,559)
------- --- ------- --- --------- ---- ---------- -----------
Balance, September 30, 1995 185,716 19 -- -- 873,306 87 986,815 (689,325)
Issuance for Services and Incentives -- -- -- -- 224,219 23 724,240 --
Issuance for Cash -- -- 113,750 11 -- -- 454,989 --
Issuance for Cash -- -- -- -- 15,625 2 49,998 --
Discount on Convertible Notes -- -- -- -- 53,125 5 169,995 --
Compensation Expense on
Stock Option Grants -- -- -- -- -- -- 384,244 --
Net Loss -- -- -- -- -- -- -- (1,891,702)
------- --- ------- --- --------- ---- ---------- -----------
Balance, September 30, 1996 185,716 $19 113,750 $11 1,166,275 $117 $2,770,281 $(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, YEAR ENDED
1993 (INCEPTION) SEPTEMBER 30,
TO 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 Equipment (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, YEAR ENDED
1993 (INCEPTION) SEPTEMBER 30,
TO 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, YEAR ENDED
1993 (INCEPTION) SEPTEMBER 30,
TO 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 $1,108,507
Subscription Receivable -- -- 50,000
Minority Interest In Subsidiary -- 60 --
Interest on Debentures -- 6,518 --
------- ---------- ----------
$ 1,953 $ 33,624 $1,158,507
======= ========== ==========
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.
REVENUE RECOGNITION
The Company is currently engaged in the production and sale of video vignettes
to hotels. Upon the completion and shipment of the videos, the pre-production
deposits are recognized as revenue. Contingent service fees associated with the
hotel video are based upon the amount received by the hotel from bookings by the
HVC travel agents network and are recognized as the hotels receive their
revenue.
F-10
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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.
DEFERRED OFFERING COSTS
Deferred offering costs, consisting only of costs directly related to a proposed
initial public offering of VDC's common stock, have been deferred. It is
anticipated that these costs will be deducted from the proceeds of the offering
or charged to operations upon the ultimate resolution of the offering.
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 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.
F-11
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of common and
common equivalent shares outstanding during the period.
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,
----------------------- LIVES
1995 1996 (YEARS)
--------- --------- -------
Furniture and Fixtures $ 16,814 $ 16,814 7
Equipment 13,280 91,272 5
Editing Equipment 136,084 168,305 3-10
Computer Equipment 24,700 26,608 3-5
Leasehold Improvements 13,532 13,532 7
--------- ---------
204,410 316,531
Less: Accumulated Depreciation
and Amortization (10,525) (44,138)
--------- ---------
$ 193,885 $ 272,393
========= =========
F-12
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
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.
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.
F-13
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
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
53,125 shares. Each Unit consists of a $50,000 note and 3,125 shares of common
stock. The Notes are unsecured and bear interest at 10%. Each Note may be
converted into 12,500 additional shares of common stock at $4.00 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 $3.20 for all shares issued
or to be issued upon conversion. All convertible notes were converted into
common stock in October, 1996 (Note 17). Accordingly, such notes have been
classified as long-term debt at September 30, 1996.
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 25,000 warrants to purchase common stock at $1.40 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.
F-14
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: COMMITMENTS (CONTINUED)
OPERATING LEASES (CONTINUED)
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. (Notes 17 and 18)
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.
F-15
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 9: CAPITAL STOCK (NOTE 17)
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
1.25 shares of common stock. Accordingly, at September 30, 1996 232,145 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
1.25 shares of common stock. Accordingly, at September 30, 1996 142,188 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.
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.
Although the Company intends to offer shares to the public at a price per share
in excess of $4.27, prior transactions were based upon valuation by Company
management, of the non-public entity with little or no opportunity for
liquidation. The price ranges were as follows:
a) Services at prices ranging from $1.40 to $4.27 per share for
450,276 shares. The fair market value was determined by
comparison to transactions on or about the time the shares to be
issued were agreed to by the Company and the recipient.
b) Services valued at $14.66 per share for 1,563 shares. The amount
ascribed related to the value of the services rendered.
c) Incentives at .00016 for 804 shares having nominal fair value.
The Company, at September 30, 1996, has reserved 521,859 shares of common stock
for issuance relating to unexpired options and warrants.
F-16
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10: STOCK OPTIONS
Since inception VDC granted unqualified stock options to purchase 10,938 shares
of common stock of the Company at prices ranging from $1.40 to $5.60 per share.
Such per share prices related to previous private placement memoranda offering
amounts. The options expire between May, 1998 and April, 1999. Options were
granted in September 1996 to two officers to purchase 274,460 shares of common
stock at $.00016 per share expiring December 31, 2001. Management determined
that the stock option prices for the stock options issued in September, 1996 was
$1.40 since these options relate to conditions set forth in previous private
placement memoranda. The difference between the option price (.00016 per share)
and the fair market value of the options has been recorded as compensation
expense in the accompanying financial statements in the amount of $384,244.
NOTE 11: STOCK WARRANTS (NOTE 16)
In conjunction with the issuance of debentures in 1994, the Company issued
warrants redeemable for a total of 11,161 shares of VDC common stock at $1.40
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
225,300 shares of common stock, have an exercise price ranging from $1.40 to
$6.00 per share and expire between January, 1997 and June, 2000.
NOTE 12: INCOME TAXES
The deficit accumulated during the development stage (inception through August
31, 1996) of approximately $2,025,000 is capitalized for income tax purposes as
accumulated start-up costs, and is being amortized over a sixty month period
beginning September 1, 1996. The Company has a net operating loss carryforward
as of September 30, 1996 of approximately $590,000 for federal income tax
purposes, inclusive of the amortization of the start-up-costs, which expires
September 30, 2001. The Company has recorded a valuation allowance of
approximately $880,000 with respect to any future tax benefits arising from any
net operating losses and the amortization of the start-up costs due to the
uncertainty of their ultimate realization.
F-17
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13: 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 14: 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.
F-18
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15: NEW ACCOUNTING STANDARD
In March, 1995, Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," was issued. SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used or disposed of by an entity
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS 121 becomes
effective for fiscal years beginning after December 15, 1995. The Company
believes that this pronouncement will not have a significant impact on the
Company's financial statments.
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 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.
F-19
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15: NEW ACCOUNTING STANDARD (CONTINUED)
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.
NOTE 16: 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, a one to 3.5 reverse split in May, 1996 by reclassifying amounts to
paid-in capital from common stock (Note 18).
NOTE 17: 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 shareholders, 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.
F-20
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
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 374,333 shares of
common stock. Options for 2,678 shares were exercised for $3,750. Warrants
for 59,687 shares were exercised for $86,690. Additionally, the noteholders
elected to convert the convertible notes into 212,500 shares of common
stock.
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 in cash or
stock equal to 3% of the Company's increase in earnings as defined therein,
an annual granting of stock options for 125,000 shares of common stock to
each at fair market value, 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 18).
NOTE 18: 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 and 1,000,000 warrants for the
purchase 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.
F-21
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 18: EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT (CONTINUED)
PUBLIC OFFERING OF COMMON STOCK (CONTINUED)
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 certain officers and
directors and sold by the underwriters.
In connection with the offering, the Company granted to the underwriters, for
nominal consideration, rights to purchase from the Company up to 200,000 shares
of common stock. They are initially exercisable at a price of 120% of the
initial public offering price per share of common stock (or the exercise price
per share for the warrants) for a period of four years commencing one year from
the effective date of the registration statement and are restricted from sale,
transfer and assignment for a specified period.
REVERSE STOCK SPLIT
The financial statements have been adjusted to reflect the effect of a one to
1.6 reverse stock split to occur prior to the effective date of the registration
statement.
EMPLOYMENT CONTRACTS
As amended April 1997, effective October 1996, the Company entered into three
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 in cash or stock
equal to 3% of the Company's increase in earnings as defined therein, an annual
granting of stock options (which contain certain anti-dilutive provisions) for
125,000 shares of common stock to each at $6.00 per share for an exercise period
of five years from the grant date 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.
F-22
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
MARCH 31,
1997
----------
CURRENT ASSETS
Cash $ 34,380
Accounts Receivable, Net of
Allowance for Doubtful
Account of $20,159 80,645
Prepaid Expenses 58,653
----------
Total Current Assets 173,678
----------
PROPERTY AND EQUIPMENT, Net 297,591
----------
OTHER ASSETS
Financing Costs, Net of
Accumulated Amortization of
$13,542 51,458
Security Deposits 23,974
Organization Expenses, Net 280
Deferred Offering Costs 822,590
----------
898,302
----------
$1,369,571
==========
The Accompanying Notes are an Integral
Part of These Financial Statements
F-23
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
MARCH 31,
1997
----------
CURRENT LIABILITIES
Current Portion of Liability
Under Capital Leases $ 82,610
Accounts Payable and Accrued
Liabilities 340,884
Customer Deposits 57,500
Deferred Rent Benefit 253
Loans Payable-Stockholders,
Net of Discount 313,575
----------
Total Current Liabilities 794,822
----------
LONG-TERM LIABILITIES
Liability Under Capital Leases,
Net of Current Portion 37,817
----------
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Par Value $.0001
Per Share; Authorized 5,000,000 Shares
Issued -0- Shares:
Common Stock, Par value $.0001 Per
Share; Authorized 20,000,000
Shares; Issued and Outstanding
1,889,849 Shares 189
Additional Paid-In Capital 3,762,752
Accumulated Deficit (3,226,009)
----------
536,932
----------
$1,369,571
==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-24
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31,
--------------------------
1996 1997
---------- ----------
REVENUE $ 6,806 $ 139,703
---------- ----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Compensation and Related
Costs 277,372 371,549
Production 49,752 37,686
Occupancy 21,171 20,900
Professional Fees 61,893 73,742
Interest 11,161 53,266
Other 154,581 228,544
---------- ----------
Total Selling,
General and
Administrative 575,930 785,687
---------- ----------
Loss Before
Other Income (569,124) (645,984)
OTHER INCOME
Interest 459 1,002
---------- ----------
Net Loss $ (568,665) $ (644,982)
========== ==========
Weighted Average Number
of Shares 1,462,843 1,743,337
========== ==========
Net Loss Per Common Share
Primary $ (0.39) $ (0.37)
========== ==========
Fully Diluted $ (0.39) $ (0.37)
========== ==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-25
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK COMMON STOCK
---------------------- ---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1996 185,716 $ 19 113,750 $ 11 1,166,275 $ 117
Conversion of Convertible Notes
to Common Stock -- -- -- -- 212,500 21
Exercise of Warrants and Options -- -- -- -- 62,365 6
Issuance for Services and Incentives -- -- -- -- 5,625 1
Discount on Issuance of Notes Payable -- -- -- -- 68,750 7
Conversion of Preferred Stock
to Common Stock (185,716) (19) (113,750) (11) 374,334 37
Net Loss -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance, March 31, 1997 -- $ -- -- $ -- 1,889,849 $ 189
======== ======== ======== ======== ======== ========
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
CAPITAL DEFICIT
---------- -----------
<S> <C> <C>
Balance, September 30, 1996 $2,770,281 $(2,581,027)
Conversion of Convertible Notes
to Common Stock 584,354 --
Exercise of Warrants and Options 90,432 --
Issuance for Services and Incentives 23,999 --
Discount on Issuance of Notes Payable 293,693 --
Conversion of Preferred Stock
to Common Stock (7) --
Net Loss -- ( 644,982)
---------- -----------
Balance, March 31, 1997 $3,762,752 $(3,226,009)
========== ===========
</TABLE>
The Accompanying Notes are an Integral
Part of these Financial Statements
F-26
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31,
--------------------------
1996 1997
---------- ----------
Cash Flows Used in Operating Activities $ (396,868) $(445,814)
---------- ----------
Cash Flows Used In Investing Activities (3,617) (12,210)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Preferred Stock 75,000 --
Payments on Capital Leases (16,752) (33,821)
Exercise of Warrants and Options -- 90,438
Issuance of Notes 100,000 550,000
Financing Costs -- (65,000)
Repayments of Stockholder Loans (4,500) (35,000)
Deferred Offering Costs -- (172,590)
---------- ----------
Cash Flows (Used in) Provided by
Financing Activities 153,748 334,027
---------- ----------
Net Decrease in Cash (246,737) (123,997)
CASH:
Beginning 249,678 158,377
---------- ----------
Ending $ 2,941 $ 34,380
========== ==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-27
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SIX MONTHS ENDED
MARCH 31,
----------------------
1996 1997
---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash Payments for Interest $ 11,161 $ 10,991
========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of Common Shares for:
Services and Incentives $ 9,375 $ 24,000
Conversion of Convertible Notes -- 584,375
Discount on Shareholder Loans -- 293,700
---------- ----------
$ -- $ 902,075
========== ==========
Issuance of Preferred Shares for
Notes Receivable $ 60,000 $ --
========== =========
Property and Equipment Financed
By Capital Leases $ 7,495 $ 45,813
========== ==========
The Accompanying Notes are an Integral
Part of these Financial Statements
F-28
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Visual Data Corporation ("VDC") and HotelView Corporation ("HVC"), collectively
known as the "Company", 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.
INTERIM FINANCIAL DATA
The accompanying financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements of the Company as of September
30, 1996 should be read in conjunction with these statements. The financial
information included herein has not been audited. However, in the opinion of
management, the accompanying unaudited interim financial statements contain all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the consolidated financial position of VDC and subsidiary as of
March 31, 1997, and the results of their operations and cash flows and changes
in stockholders' equity for the six months ended March 31, 1996 and 1997. The
results of operations and cash flows for the periods are not necessarily
indicative of the results of operations or cash flows for a full year.
STOCK BASED COMPENSATION
As permitted under SFAS123 Accounting for Stock Based Compensation, the Company
has elected not to adopt the fair value based method of accounting for its stock
based compensation plan but will continue to account for such compensation using
the intrinsic value method under the provisions of APB opinion 25.
F-29
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2: PROPERTY AND EQUIPMENT
Property and equipment, including equipment acquired under capital leases,
consists of:
MARCH 31,
1997
---------
Furniture and Fixtures $ 16,814
Equipment 147,012
Editing Equipment 168,305
Computer Equipment 26,608
Leasehold Improvements 13,532
---------
372,271
Less: Accumulated Depreciation
and Amortization (74,680)
---------
$ 297,591
=========
NOTE 3: 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.
MARCH 31,
1997
--------
Year Ending March 31,:
1998 $101,011
1999 40,934
--------
Total Minimum Lease Payments 141,945
Less: Amount Representing Interest (21,518)
--------
Present Value of Minimum Lease
Payments 120,427
Current Portion (82,610)
--------
Long-Term Portion $ 37,817
========
Equipment held under capital leases have a book value of $163,808 as of March
31, 1997. Accumulated Depreciation related to this equipment was $44,545 as of
March 31, 1997.
F-30
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4: NOTES PAYABLE - SHAREHOLDERS
Certain stockholders made loans to the Company for working capital purposes.
These loans bear interest at 10% per annum and are to be repaid the earlier of
one month following the effective date of the Form SB-2 registration or 12
months from the date of the notes. These shareholders also received 68,750
shares of common stock valued by management at $4.27 per share, reflecting
amounts ascribed to shares issued for services during the six months ended March
31, 1997. The notes have been recorded at a discount of $293,700 reflecting this
average per share price. This discount is being amortized by the straight-line
method over a twelve month period, amortization amounted to $42,275 during the
six months ended March 31, 1997.
NOTE 5: CONVERSION OF SECURITIES
During the six months ended March 31, 1997 all of the Company's Series A
preferred stock and Series B preferred stock were converted into 374,333 shares
of common stock. Options for 2,678 shares were exercised for $3,750. Warrants
for 59,687 shares were exercised for $86,690. Additionally, the noteholders
elected to convert the convertible notes into 212,500 shares of common stock.
NOTE 6: COMMON STOCK
During the six months ended March 31, 1997, the Company issued common stock for
services valued at $4.27 based upon agreed-upon contract amounts.
The Company, at March 31, 1997 has reserved 456,143 shares of common stock for
issuance relating to unexpired options and warrants.
NOTE 7: 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 March 31, 1997, the Company has a total service fee balance of
$294,733 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.
F-31
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8: NEW ACCOUNTING STANDARDS
In March 1997, Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share" was issued. SFAS No. 128 requires that public companies
present basic earnings per share (EPS) and diluted EPS, instead of primary and
fully diluted EPS. Basic EPS is computed by dividing income available to
stockholders by the weighted average number of common shares (computed without
considering common stock equivalents) during the period. Diluted EPS is measured
similar to basic EPS but takes into consideration dilutive potential common
shares.
SFAS 128 becomes effective for financial statements issued for periods ending
after December 15, 1997. The effect of adopting SFAS 128 has not been
determined.
NOTE 9: STOCK OPTION PLAN
STOCK OPTION PLAN
In February, 1997, the stockholders approved the adoption of the 1996 stock
option plan.
F-32
<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.............
Concurrent Offering........
Selected Financial Data....
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations...............
Business...................
Management.................
Certain Transactions.......
Principal Shareholders.....
Description of Securities..
Shares Eligible for Future
Sale.....................
Underwriting...............
Legal Matters..............
Experts....................
Additional Information
Index to Financial
Statements...............
Until _________, 1997 (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
and 1,000,000 Redeemable Common
Stock Purchase Warrants
-----------------------
PROSPECTUS
-----------------------
NOBLE INTERNATIONAL
INVESTMENTS, INC.
-----------------------
MAY __, 1997
<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.
The provisions of the Corporation Act that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (i) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (ii) deriving an improper personal
benefit from a transaction, (iii) voting for or assenting to an unlawful
distribution and (iv) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the Federal securities laws.
The effect of the foregoing is to require the Company to indemnify the officers
and directors of the Company for any claim arising against such persons in their
official capacities if such person acted in good faith and in a manner that 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.
Pursuant to the terms of the Underwriting Agreement, the directors and officers
of the Company also are indemnified against certain civil liabilities that they
may incur under the Securities Act of 1933, as amended, in connection with this
offering.
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 expressed in the act and is therefore unenforceable.
II-1
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission/Registration fee and other documents*............... 6,657
NASD filing fee*....................................................................... 3,829
Nasdaq filing*......................................................................... 10,000
Printing and engraving expenses*....................................................... 60,000
Legal fees and expenses*............................................................... 175,000
Accounting Fees and Expenses*.......................................................... 150,000
Blue Sky Fees and Expenses*............................................................ 50,000
Transfer agent, warrant agent, registrar fees*........................................ 5,000
Miscellaneous.......................................................................... 39,514
------
Total* .............................................................................. $500,000
</TABLE>
*Estimated
The Company is paying for the benefit of the Selling Security Holders certain of
their expenses in connection with this offering. These expenses consist of:
$2,196 (SEC filing fee attributable to the Selling Security Holders'
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). USUAL AND CUSTOMARY OR SPECIFICALLY NEGOTIATED BROKERAGE
FEES OR COMMISSIONS WILL BE PAID BY THE SELLING SECURITY HOLDERS IN CONNECTION
WITH SUCH SALES OF SECURITIES. Certain of the Selling Security Holders 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.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following discussion does not give effect to the 1:1.6 reverse split of the
Company's Common Stock which will occur immediately prior to the effective date
of this Prospectus. Accordingly, there has been no adjustment in the number of
shares or per share price so disclosed.
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 15 accredited 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").
II-2
<PAGE>
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. As hereinafter described, holders of an aggregate of $47,500 of the
Debentures subsequently elected to convert the Debentures pursuant to the
February 1995 Offering 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 Debenture
holders of $37,500 (Messrs. Selman and Saperstein, officers and directors of the
Company, waived any interest on the Debentures held by each of them).
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.
Between January and June 1994, the Company sold an aggregate of 12,857 shares of
Common Stock and warrants to purchase 7,143 shares of Common Stock at an
exercise price of $.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 was provided with and had access to relevant
information concerning the Company, in consideration of business consulting
services relative to the Company's capital structure. 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 services performed
on behalf of the Company. Each of the persons receiving such securities were
accredited or otherwise sophisticated investors within the meaning of Section
4(2) of the Securities Act, 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. Of these shares, (i) 1,786 shares were
issued in consideration for $5,000 of accounting services; (ii) 3,571 were
issued for financial consulting services in the amount of
II-3
<PAGE>
$2,250; (ii) 13,393 were issued for general business consulting services in the
amount of $11,700; and (iv) 3,571 shares were issued in consideration for $3,125
of financial consulting services,
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 investors
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. Accordingly, these securities were exempt
from registration pursuant to Section 4(2) of the Securities Act. The Company
received gross proceeds of $20,000 from the sale of these securities.
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 a
total of 17 accredited investors and one non-accredited investor who is a
sophisticated investor within the meaning of Section 4(2) of the Securities Act,
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. As part of the
February 1995 Offering, the HotelView Debenture holders 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 terms and conditions
of the February 1995 Offering. 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), being four accredited investors and two
non-accredited investors who were sophisticated investors within the meaning of
Section 4(2) of the Securities Act, elected to convert their Debentures. 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.
On March 31, 1995, the Company issued an aggregate of 3,572 shares of Common
Stock to certain investors in the February Offering as interest on funds that
were held in escrow by the Company for up to a year until such time as the
Company reached is minimum offering of $650,000, based upon accrued interest of
$6,251 (based upon $1.75 per share). These funds were held on behalf of five
accredited investors who participated in the February Offering. Additionally,
the Company issued 2,857 shares of Common Stock in consideration for legal
services. The law firm is an accredited investor, had access to and was provided
with relevant information concerning the Company, and had a pre-existing
relationship with the Company.
II-4
<PAGE>
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 financial consulting and public relations services performed on behalf of
the Company, and valued at $17,125, by an accredited investor. In May 1996, the
Company issued warrants to purchase 13,715 shares of Common Stock at an exercise
price of $.875 per share for a period of four years from the date of issuance to
the same consultant in consideration for certain additional financial consulting
and public relations services and valued at $3,500. 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
was an accredited investor, had access to and was provided with relevant
information concerning the Company, and with whom had pre-existing relationships
with the Company, in consideration of certain general business consulting
services, including consulting related to the hotel industry. 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 an exercise price of $.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 Section 4(2) of the Securities Act.
Pursuant to a private offering commencing in November 1995 (the "November 1995
Offering") the Company sold 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 eight accredited and six
non-accredited investors who were sophisticated persons, within the meaning of
Section 4(2) of the Securities Act, each of whom was 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.
In December 1995, the Company issued 10,716 shares of Common Stock in
consideration for business and advisory services to an accredited investor who
had a pre-existing relationship with the Company, and was provided with and had
access to relevant information concerning the
II-5
<PAGE>
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 an exercise price of $.875 per share for period
of four years from the date of issuance. Each of these shareholders had a
pre-existing relationship with the Company, was 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 of
the 15 investors were accredited investors who had access to and were 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 July 1996 and September 1996 the Company issued 346,750 shares as
consideration for various services rendered to the Company. Of these shares, (i)
an aggregate of 50,000 shares were issued in consideration for legal services
valued at $117,180 (ii) 25,000 shares were issued in consideration for medical
consulting services in connection with the Company's additional proposed
libraries (CareView and MedicalView) and valued at $50,000; (iii) 5,250 shares
were issued in connection with the Company's agreement with Stratus Management
and were valued at $14,000; (iv) 31,500 shares were issued in consideration for
the development of the Company's overseas operations and valued at $63,000; (v)
5,000 shares were issued in connection with hotel management consulting services
valued at $10,000; and (vi) the remaining 220,000 shares were issued in
consideration for general business and strategic planning consulting services
and were valued at $440,000.
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. Accordingly, the shares were exempt from registration
pursuant to Section 4(2) of the Securities Act. In connection with this
transactions, the Company received gross proceeds of $50,000.
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 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. The services performed by this
entity
II-6
<PAGE>
included advising on the structure of the Company's initial public offering,
public relations and other general business consulting services.
During October and November 1996, holders of warrants to purchase an aggregate
of 95,501 shares of Common Stock at prices ranging from $.875 to $1.75 per share
exercised such warrants resulting in proceeds to the Company of an aggregate of
$86,690. Options to purchase an aggregate of 4,286 shares at $.875 per share
for an aggregate 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.
Between December 1996 and March 1997, the Company issued an aggregate of 110,000
shares of Common Stock of the Company to 14 accredited investors who 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. These shares were issued in connection for an
aggregate of $550,000 principal amount of promissory notes at 10% per annum,
which notes are due upon the earlier of (i) one month following the effective
date of the Company's Registration Statement or (ii) 12 months from the of the
notes.
ITEM 27. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1(a) Form of Underwriting Agreement(2)
1(b) Form of Selected Dealers Agreement(3)
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(ii)(c) Articles of Amendment dated___________________ ,1997(3)
3(iii) Bylaws of Visual Data Corporation(1)
3(iv) Bylaws of HotelView Corporation(1)
4(a) Form of Underwriters' Warrant(2)
II-7
<PAGE>
4(b) Warrant Agreement (3)
4(c) Specimen Common Stock certificate(3)
4(d) Specimen Common Stock Purchase Warrant(3)
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.(2)
10(a) Agreement between the HotelView Corporation and Pegasus
Systems, Inc. dated January 14, 1997.(2)
10(b) Lease between HotelView Corporation and Life Insurance
Company of Georgia(1)
10(c) Amended and Restated Employment Agreement, dated
October 21, 1996 between the Company and Randy S.
Selman, as amended on April 30, 1997(2)
10(d) Amended and Restated Employment Agreement, dated
October 21, 1996 between the Company and Alan
Saperstein, as amended on April 30, 1997(2)
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)
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)
10(n) Equipment Lease Agreement with Crocker Capital(2)
10(o) Lease Agreement with Coastal Leasing, Inc. (6014)(2)
10(p) Lease Agreement with Coastal Leasing, Inc.(6006)(2)
10(q) Lease Agreement with Coastal Leasing, Inc.(6454)(2)
10(r) Form of Financial Consulting Agreement(2)
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 (2)
27 Financial Data Schedule (2)
- -------------
(1) Previously filed
(2) Filed herewith
(3) 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:
II-8
<PAGE>
(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 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
II-9
<PAGE>
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.
(c) The undersigned registrant hereby further undertakes that in the
event that underwriter(s) in this Offering enters into transactions with any of
the selling security holders or waive the lock-up periods applicable to such
selling security holders' securities under the following circumstances:
involving from 5% to 10% of the registered selling security holders securities,
to file "sticker" supplements pursuant to Rule 424(c); and involving over 10% of
the registered selling security holders securities, to file a post-effective
amendment to the Registration Statement.
II-10
<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 Amendment to the Registration Statement to be signed on its
behalf by the undersigned, in the City of Boca Raton, State of Florida, on this
8th day of May, 1997.
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 May 8, 1997
- -------------------- Executive Officer and
Randy S. Selman Director (Principal
Executive Officer)
/s/ ALAN SAPERSTEIN Vice President, May 8, 1997
- -------------------- and Director
Alan Saperstein
II-11
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION SEQUENTIALLY
NUMBER NUMBERED
PAGE
1(a) Form of Underwriting Agreement
4(a) Form of Underwriters' Warrant
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
10(a) Agreement between HotelView Corporation and Pegasus Systems, Inc
dated January 14, 1997
10(c) Amended and Restated Employment Agreement, dated October 21, 1996
between the Company and Randy S. Selman, as amended on April 30,
1997
10(d) Amended and Restated Employment Agreement, dated October 21, 1996
between the Company and Alan Saperstein, as amended on April 30,
1997
10(n) Equipment Lease Agreement with Crocker Capital
10(o) Lease Agreement with Coastal Leasing Inc.(6014)
10(p) Lease Agreement with Coastal Leasing Inc.(6006)
10(q) Lease Agreement with Coastal Leasing Inc.(6454)
10(r) Form of Financial Consulting Agreement
23.2 Consent of Goldstein Lewin & Co. Certified Public Accountants
27 Financial Data Schedule
<PAGE>
[ALTERNATE PAGE]
ALTERNATE PROSPECTUS
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. 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.
SUBJECT TO COMPLETION, DATED MAY ____, 1997
VISUAL DATA CORPORATION
1,207,680 Shares of Common Stock
This Prospectus relates to the sale of 1,207,680 shares of Common
Stock, $.0001 par value per share (the "Common Stock"), of Visual Data
Corporation (the "Company"), a Florida corporation, held by shareholders who
have aquired such shares of Common Stock in various private placements, or as
consideration for services rendered to the Company or will acquire such shares
upon the exercise of options or warrants (collectively, the "Selling Security
Holders"). The Company will not receive any of the proceeds on the sale of the
securities by the Selling Security Holders. Of the 1,207,680 shares of Common
Stock offered hereby, 235,000 shares may be sold without regard to any lock-up
period, 181,152 are subject to a 12 month lock-up period from the date hereof,
120,768 shares are subject to an 18 month lock-up period from the date hereof,
and the remaining 670,760 shares are subject to a 24 month lock-up period from
the date hereof, subject to earlier release at the sole discretion of Noble
International Investments, Inc., which is acting as the Representative (the
"Representative") of several underwriters (the "Underwriters") in connection
with an initial public offering of the Company's securities. These lock-up
periods may be subject to earlier release of the sole discretion of the
Representative. The Representative does not have a general policy with respect
to the release of shares prior to the expiration of a lock-up period. The
certificates evidencing such securities will include a legend with such
restrictions. See "Selling Security Holders" and "Plan of Distribution."
The Company has applied for quotation of its Common Stock and
Redeemable Common Stock Purchase Warrants (the "Warrants") on the Nasdaq Small
Cap Market. There can be no
<PAGE>
[ALTERNATE PAGE]
assurance, that such securities will be accepted for quotation or, if accepted,
that an active trading market will develop.
The securities offered by this Prospectus may be sold from time to time
by the Selling Security Holders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Security Holders. The
distribution of the securities by the Selling Security Holders may be effected
in one or more transactions that may take place on the over-the-counter market
including ordinary brokers transactions, privately negotiated transactions or
through sale 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 and commissions may be paid by the
Selling Security Holders in connection with the sale of such securities.
The Selling Security Holders and intermediaries through whom such
securities may be sold may be deemed "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securites Act"), with respect to the
securities offered and any profits realized or commission received may be deemed
underwriting compensation.
All costs incurred in the registration of the re-sale of the securities
of the Selling Security Holdings are being borne by the Company, other than fees
and expenses of counsel to the Selling Security Holders and selling commissions.
On the date hereof, the Company commenced an initial public offering of
1,000,000 shares of Common Stock and 1,000,000 Warrants (the "Company Offering")
which was underwritten on a firm commitment basis by the Underwriters.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION. 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 ______, 1997.
A-2
<PAGE>
[ALTERNATE PAGE]
THE OFFERING
Securities Offered ................... 1,207,680 shares
Common Stock Outstanding
Prior to Company Offering .......... 1,889,849 shares
Common Stock Outstanding
After the Company Offering .......... 2,889,849 shares
Use of Proceeds ...................... The Company will not receive any
proceeds from the sale of the shares
of Common Stock by the Selling
Security Holders.
Risk Factors ......................... The securities are subject to
substantial dilution.
Proposed Nasdaq Small Cap Market Symbol
Common Stock ....................... VDAT
Warrants ........................... VDATW
COMPANY OFFERING
On the date of this Prospectus, a registration statement under the
Securities Act with respect to the Company Offering of 1,000,000 shares of
Common Stock and 1,000,000 Warrants was declared effective by the Securities and
Exchange Commission ("Commission"), and the Company commenced the sale of the
shares of Common Stock and Warrants offered thereby. Sales of securities under
this Prospectus by the Company and the Selling Security Holders or even the
potential of such sales may have an adverse effect on the market price of the
Company's securities.
SELLING SECURITY HOLDERS
The registration statement of which this Prospectus is a part covers
the registration of the re-sale of an additional 1,207,680 shares of Common
Stock owned beneficially and of record by the Selling Security Holders. The
Company will not receive any proceeds on the sale of the securities by the
Selling Security Holders. Of the 1,207,680 shares of Common Stock offered
hereby, 235,000 shares may be sold without regard to any lock-up period, 181,152
shares are subject to a 12 month lock-up period from the date hereof, 120,768
shares are subject to an 18 month lock-up period from the date hereof and the
remaining 670,760 shares are subject to a 24 month lock-up period from the date
hereof, subject to earlier release at the sole discretion of the Representative.
These lock-up periods may be subject to earlier release at the sole discretion
of
A-3
<PAGE>
[ALTERNATE PAGE]
the Representative. The Representative does not have a general policy with
respect to the release of shares prior to the expiration of a lock-up period.
The certificates evidencing such securities include a legend with such
restrictions.
The following table sets forth the holders of the shares of Common
Stock which are being offered by the Selling Security Holders, the number of
shares owned before the offering, the number of shares being offered and the
number of shares and the percentage of the class to be owned after the offering
is complete.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITY HOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING(1) OFFERING
- ----------------------- ------------------- -------------------- ------------------- -----------
<S> <C> <C> <C> <C>
Lisa Aboud 856 465 391 *
Aeron Marine
Shipping Company 31,251 8,929 22,322 *
Afton Corporation 62,500 62,500 -0- -0-
Atlas, Pearlman, Trop
& Borkson, P.A 3,348 1,674 1,674 *
Martin Amhrein 18,750 9,375 9,375 *
Raynor Baldwin 5,385 2,009 3,376 *
Neil Berman 5,803 2,232 3,571 *
Herman Blank 20,447 11,518 8,929 *
Shirley Blank 25,000 4,464 20,536 *
Darell Boyd 5,803 2,232 3,571 *
Abraham & Cheryl
Chamely 1,711 930 781 *
Greg Catinella 2,232 2,232 -0- -0-
Peter Conzatti 18,750 9,375 9,375 *
Rona Coty 17,857 6,250 11,607 *
DBC Corporation 35,714 8,929 26,785 *
Frances DaSilva 1,711 930 781 *
Harvey Delott 15,625 15,625 -0- -0-
Fleet Trust Company, N.A
Trustee, U/A Frederick
A. Deluca 102 Qualified
Annuity Trust 157,683 22,321 135,362 4.68%
Alex Dohner 2,343 1,172 1,171 *
Carl Domino 16,071 4,464 11,607 *
Meir Eliakim 31,250 31,250 -0- -0-
FPI, Inc. 121,451 105,826 15,625 *
Cheri Ferguson 6,250 1,786 4,464 *
Hans Frank 4,687 2,344 2,343 *
David Glassman 6,250 1,786 4,464 *
<FN>
- ------------------
* Less Than 1%
</FN>
</TABLE>
A-4
<PAGE>
[ALTERNATE PAGE]
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITY HOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING(1) OFFERING
- ----------------------- ------------------- ------------------- ------------------- -----------
<S> <C> <C> <C> <C>
Harvey and Carolyn
Glicker 5,803 4,018 1,785 *
Jerome R. Grigoli 9,375 9,375 -0- -0-
HST Partners 53,125 53,125 -0- -0-
Dominic Hadeed 12,500 12,500 -0- -0-
Joseph & Rosemary
Hadeed 4,837 4,056 781 *
Monica Hadeed 856 465 391 *
Robert Hadeed 856 465 391 *
Stephen & Elizabeth
Hadeed, JTBE 1,711 930 781 *
Patricia A. Herman 3,125 3,125 -0- -0-
Lisa Holmes 15,625 7,813 7,812 *
Intervest, Inc. 6,250 6,250 -0- -0-
Eric Jacobs(2) 4,390 3,609 781 *
Richard Jacobs 3,423 1,860 1,563 *
Neil H. Jones 15,625 15,625 -0- -0-
Susan G. Joyalle &
Andre Weinlich, JTROS 1,562 446 1,116 *
Marjorie Kalikow Trust
f/b/o Nathan Kalikow 15,625 4,465 11,160 *
Kensington Capital Corp. 7,812 7,812 -0- -0-
Olaf Koester 9,375 4,687 4,688 *
Marian Korff 9,375 4,687 4,688 *
Stefani J. Lennon 15,625 15,625 -0- -0-
Christian Lepple 3,125 1,563 1,562 *
William Low 7,813 7,813 -0- -0-
Colin Magg 4,688 2,344 2,344 *
James Massetti 3,376 893 2,483 *
Metro Consulting, Inc. 14,062 14,062 -0- -0-
Victor Moftakhar 4,688 2,344 2,344 *
Arthur Nasso 37,811 1,116 36,695 1.27%
Robert E. Newman 15,625 15,625 -0- -0-
Frederick J. Oswald 7,812 7,812 -0- -0-
Sid Paterson 16,071 4,465 11,606 *
Potenza Investments, Inc. 15,625 15,625 -0- -0-
Providence Holding Co. 6,250 6,250 -0- -0-
<FN>
- ------------------
* Less Than 1%
</FN>
</TABLE>
A-5
<PAGE>
[ALTERNATE PAGE]
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OWNED COMMON STOCK COMMON STOCK OWNED OWNED AFTER
SELLING SECURITY HOLDER PRIOR TO OFFERING TO BE SOLD AFTER OFFERING(1) OFFERING
- ----------------------- ------------------- ------------------- ------------------- -----------
<S> <C> <C> <C> <C>
Khalid Ramadan 856 465 391 *
Roger Rankin 66,965 25,893 41,072 1.42%
Cornelie Raiser 2,344 1,172 1,172 *
David Ratcliff 678 558 120 *
Burt Rhodes 8,929 8,929 -0- -0-
Gary Rhodes 3,571 3,571 -0- -0-
Robert Rogoff 10,268 5,581 4,687 *
Hart Rotenberg 18,125 18,125 -0- -0-
Joseph Rotenberg 19,375 19,375 -0- -0-
Alan Saperstein(3) 338,513 75,893 262,620 9.09%
Allan L. Schrager 7,812 7,812 -0- -0-
Tony Schweiger 15,625 4,464 11,161 *
Randy S. Selman(4) 318,639 75,893 242,746 8.40%
Socrates Skiadas 15,625 15,625 -0- -0-
Sterling Factors, Inc. 46,875 46,875 -0- -0-
Orrin & Jeffrie Stern, JTBE 13,393 1,786 11,607 *
Statistical Analytics Corp 51,562 51,562 -0- -0-
Stratus Management
Group, Inc. 8,906 8,906 -0- -0-
William Talmadge 2,716 1,004 1,712 *
Town and Country Ltd. 64,063 64,063 -0- -0-
Univest Management EPSP 25,246 4,465 20,781 *
John Varacchi 7,813 7,813 -0- -0-
Voltava IV Inc. 7,812 7,812 -0- -0-
David Wajnberg 3,125 3,125 -0- -0-
Elizabeth Wajnberg 3,571 3,571 -0- -0-
Phil Waldbaum 6,250 1,786 4,464 *
Bernd Wolpert 9,375 4,687 4,688 *
Yosef Yud 46,875 46,875 -0- -0-
Ruth Zelinka 16,072 4,464 11,608 *
Robert Zelinka 38,549 17,143 21,406 *
Boyd & Chang LLP 15,625 15,625 -0- -0-
International Business
Consultancy(5) 10,938 10,938 -0- -0-
Joseph Shapiro 9,375 9,375 -0- -0-
Robert Abrams 3,125 3,125 -0- -0-
Enrique Darer 1,562 1,562 -0- -0-
Elliot Ostro 6,250 6,250 -0- -0-
Arthur Scheinholz 1,562 1,562 -0- -0-
Brian Sly Separate
Property Trust 12,500 12,500 -0- -0-
Lawrence Goldman 6,250 6,250 -0- -0-
J&C Resources 6,250 6,250 -0- -0-
Robert Brvenik 6.250 6,250 -0- -0-
Charles Xue 6,250 6,250 -0- -0-
Ari Friedman 3,125 3,125 -0- -0-
A-6
<PAGE>
[ALTERNATE PAGE]
Delaware Charter &
Guaranty as Trustee for
Robert Zelinka IRA 62,499 17,857 44,642 1.54%
--------- ---------- ----------
2,283,638 1,207,680 1,075,958
<FN>
- ------------------
* Less than 1%
</FN>
</TABLE>
(1) Gives no effect to the possible exercise of the Underwriters'
Over-Allotment Option in the Company Offering, or the exercise of the
Underwriter's Warrants or outstanding options and warrants to acquire an
additional 456,143 shares of Common Stock. See "Description of Securities"
and "Underwriting."
(2) Mr. Jacobs is a director of the Company. See "Management."
(3) Mr. Saperstein is an executive officer and director of the Company.
Includes presently exercisable options and warrants to acquire an aggregate
of 138,570 shares of Common Stock and assumes the sale of 75,000 shares of
Common Stock by Mr. Saperstein to the Underwriters to cover the exercise of
the Common Stock Over- Allotment Option. See "Management", "Company
Offering" and "Underwriting."
(4) Mr. Selman is an executive officer and director of the Company. Includes
presently exercisable options and warrants to acquire an aggregate of
140,021 shares of Common Stock and assumes the sale of 75,000 shares of
Common Stock by Mr. Selman to the Underwriters to cover the exercise of the
Common Stock Over- Allotment Option. See "Management", "Company Offering"
and "Underwriting."
(5) Mr. Service, a director of the Company, is the sole owner of International
Business Consultancy. See "Management."
PLAN OF DISTRIBUTION
The sale of Common Stock by the Selling Security Holders offered hereby may
be effected from time to time in transactions (which may include block
transactions by or for the account of the Selling Security Holders).
Alternatively, the Selling Security Holders may from time to time offer such
securities through underwriters (including the Representative), dealers or
agents. The distribution of the securities by the Selling Security Holders 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 Security Holders in connection with
such sales of securities. The securities offered by the Selling Security Holders
may be sold by one or more of the following methods, without limitations: (a) a
block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions which the broker solicit
purchases, and (d) face-to-face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by the
Selling Security Holders may arrange for other brokers or dealers to
participate. The Selling Security Holders and
A-7
<PAGE>
[ALTERNATE PAGE]
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.
At the time a particular offer of the securities is made by or on
behalf of a Selling Security Holder, 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 Security
Holder and any discounts, commissions or concessions allowed or reallowed or
paid to dealers, and the proposed selling price to the public.
Sales of securities by the Company and the Selling Security Holders or
even the potential of such sales would likely have an adverse effect on the
market prices of the securities offered hereby.
A-8
<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......................
Shares Eligible For Future Sale................
Selling Security Holders.......................
Underwriting...................................
Legal Matters..................................
Experts........................................
Index to Financial
Statements...................................
Until _________, 1997 (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 obliga tions of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
___________________
VISUAL DATA CORPORATION
1,207,680 shares of
Common Stock
_______________________
PROSPECTUS
_______________________
______________
, 1997
EXHIBIT 1.(a)
[FORM OF UNDERWRITING AGREEMENT --
SUBJECT TO ADDITIONAL REVIEW]
VISUAL DATA CORPORATION
1,000,000 SHARES
OF COMMON STOCK, $.0001 PAR VALUE PER SHARE,
AND
1,000,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
UNDERWRITING AGREEMENT
As of __________________, 1997
Nico P. Pronk, President
Noble International Investments, Inc.
1801 Clint Moore Road, Suite 110
Boca Raton, Florida 33487
Ladies and Gentlemen:
Visual Data Corporation, a Florida corporation (the "Company"),
proposes to sell to Noble International Investments, Inc., a Florida corporation
(the "Representative"), and the several other underwriters named on Schedule 1
attached hereto (collectively, the "Underwriters"), and the Underwriters
severally propose to purchase from the Company, an aggregate of 1,000,000 shares
("Shares") of the Company's common stock, par value $.0001 per share ("Common
Stock"), and 1,000,000 redeemable common stock purchase warrants (the
"Warrants"), as more fully described in Section 1 hereinbelow (the Shares, the
Warrants, and the shares of Common Stock of the Company underlying the Warrants
are hereinafter sometimes collectively referred to as the "Securities").
In addition, either the Company or Randy S. Selman and Alan M.
Saperstein (collectively, and jointly and severally, the "Selling Shareholders")
shall grant to the Underwriters the option to purchase up to an additional
150,000 shares of Common Stock (the "Optional Shares") solely for the purpose of
covering over-allotments (the "Over-Allotment Option"), if any, in connection
with the sale of the Securities. The Company shall grant to the Underwriters the
option to purchase up to an additional 150,000 warrants ("Optional Warrants")
solely for the purpose of covering the Over-Allotment Option. (The Optional
Warrants are referred to collectively as the "Optional Securities" described
above and Optional Securities are referred to collectively as the "Securities,"
unless the context otherwise requires).
1. PURCHASE, SALE, AND DELIVERY OF THE SECURITIES AND UNDERWRITERS'
WARRANTS.
(a) PURCHASE AND SALE OF THE SECURITIES. On the basis of the
representations, warranties, covenants, and agreements of the Company and the
Selling Shareholders herein contained, and subject to the terms and conditions
herein set forth, the Company agrees to sell to the several Underwriters, and
the Underwriters, severally and not jointly, agree to purchase
<PAGE>
from the Company, (i) the Shares at a purchase price of $6.00 per share and (ii)
the Warrants at a purchase price of $.10 per Warrant. Each Warrant shall entitle
the holder to purchase one share of Common Stock at a price of $7.20 per share
commencing six months from the Effective Date until five years after the
Effective Date. The Warrants shall be redeemable by the Company for $.05 per
Warrant at any time, commencing six months from the Effective Date and upon the
Company's providing 30 days' prior written notice, if the closing bid price for
Common Stock as reported by the principal exchange on which the Common Stock is
then traded equals or exceeds $9.00 per share for 20 consecutive days. The form
of the Warrant to be used is attached as an exhibit to the Registration
Statement (defined below).
The Underwriters plan to offer the Securities for sale to the
public at the price (the "Public Offering Price") and upon the terms set forth
in the Prospectus (as defined below) (the "Public Offering") as soon as
practicable after the date the Registration Statement (as defined below) is
declared effective (the "Effective Date") by the U.S. Securities and Exchange
Commission (the "Commission"). The Company and the Selling Shareholders
acknowledge that the Representative shall have the right to select and form a
syndicate of selected dealers and other Underwriters, reasonably acceptable to
the Company, to assist the Representative in the Public Offering.
(b) PURCHASE AND SALE OF THE OPTIONAL SECURITIES. The Company
or the Selling Shareholders hereby grant to the Underwriters an option to
purchase from the Company and/or the Selling Shareholders, as the case may be,
solely for the purpose of covering over-allotments in connection with the sale
of the Securities, all or any portion of the Optional Securities for a period of
45 days from the Effective Date at the same purchase price per security payable
by the Underwriters for each security as provided in Subsection 1(a) above.
The option to purchase Optional Securities granted in
Subsection 1(b) hereof may be exercised on such number of occasions as is
determined by the Representative during the term thereof by written notice to
the Company and/or the Selling Shareholders, as the case may be, from the
Representative. Such notice shall set forth the aggregate number of Optional
Securities as to which the option is being exercised and the time and date of
payment and delivery therefor. Such time and date of delivery shall not be later
than either the Closing Date (as defined below) or the second business day after
the day on which the option shall have been exercised (the "Option Closing
Date"). The Option Closing Date shall also refer to any subsequent Option
Closing Date in the event such option is exercised in part on more than one
occasion. Delivery and payment for such Optional Securities shall be at the
offices set forth below for delivery and payment of the Securities.
The obligation of the Underwriters to purchase and pay for any
of the Optional Securities is subject (as of the date hereof and as of the
Closing Date and/or the Option Closing Date) to the accuracy and completeness of
and compliance in all material respects with the representations and warranties
of the Company and the Selling Shareholders herein, to the accuracy and
completeness of the statements of the Company or its officers made in any
certificate or other documents to be delivered by the Company and/or the Selling
Shareholders pursuant to this Agreement, to the performance in all material
respects by the Company and/or the Selling Shareholders of its or their
obligations hereunder, to the satisfaction by the Company and/or the Selling
Shareholders of the conditions as of the date hereof and as of the Closing Date
-2-
<PAGE>
and/or Option Closing Date, set forth in Subsection 1(c) hereof, and to the
delivery to the Representative of opinions, certificates and letters dated the
Closing Date and/or Option Closing Date substantially similar in scope to those
specified in Section 7, but with each reference to the "Securities" and the
"Closing Date" being deemed to be the "Optional Securities" and "Option Closing
Date." In the event that the Representative purchases any Optional Shares from
the Selling Shareholders, the Selling Shareholders shall pay to the
Representative the Representative's discount provided in Subsection 5(b) of this
Agreement, the non-accountable expense allowance provided in Subsection 5(c) of
this Agreement, and all other expenses and costs attributable to such purchase
of Optional Shares.
(c) DELIVERY OF AND PAYMENT FOR THE SECURITIES. Delivery of
the certificates representing the Securities shall be made to the Underwriters
at the offices of the Representative, or such other location as the
Representative shall determine and advise the Company upon at least two full
business days' notice in writing, against payment therefor by federal wire
transfer to the Company as appropriate at 11:00 A.M., Eastern Time, on
_____________, 1997, or at such other time and business day (Saturdays, Sundays,
and legal holidays in Boca Raton, Florida, not being considered business days
for the purposes of this Agreement), not later than the third business day
following the date the Underwriters began trading the Securities, as shall be
agreed upon by the Representative and the Company, which time and date are
herein called the "Closing Date." If the Underwriters purchase any Optional
Shares pursuant to the Over-Allotment Option, delivery and payment for the
certificates representing the Optional Shares shall be made in the same manner
described herein on the Option Closing Date.
Delivery of the certificates representing the Securities shall
be made in registered form in such name or names and in such denominations as
the Representative shall specify to the Company upon at least two full business
days' notice in writing prior to the Closing Date or the Option Closing Date, as
the case may be. The Company will make the certificates available to the
Representative for examination at the offices of the Representative or at such
other location as the Representative shall specify to the Company, not later
than 2:00 P.M., Eastern Time, on the business day immediately preceding the
Closing Date or the Option Closing Date, as the case may be.
(d) DELIVERY AND PAYMENT OF THE UNDERWRITERS' WARRANTS. On the
Closing Date, the Company will sell to the Representative or its designee, and
the Representative or its designee shall purchase, the Underwriters' Warrants,
as more fully described in Section 6(a) herein. The Underwriters' Warrants will
be in the form of, and in accordance with, the provisions of the Underwriters'
Warrants attached as an exhibit to the amendment to the Registration Statement
(as defined below). Payment for the Underwriters' Warrants will be made to the
Company by check or checks payable to its order on the Closing Date against
delivery of the certificates representing the Underwriters' Warrants. The
certificates representing the Underwriters' Warrants will be in such
denominations and in such names as the Representative may request at least two
business days prior to the Closing Date.
(e) USE OF PROSPECTUS. The Company and the Selling
Shareholders hereby confirm their authorization to the Underwriters to use, and
to make available for use by dealers, the Preliminary Prospectus and Prospectus
(as defined below), and the Company and the Selling Shareholders hereby
authorize the Underwriters, all selected dealers, and all other dealers to
-3-
<PAGE>
whom any of the Securities may be sold by the Underwriters or selected dealers,
to use the Preliminary Prospectus and Prospectus, as from time to time amended
or supplemented, in connection with the sale of the Securities in accordance
with the applicable provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the rules and regulations of the Commission thereunder (the
"Regulations"), and applicable state law until completion of the Public Offering
and for such longer period as the Underwriters may request if the Prospectus is
required to be delivered in connection with sales of the Securities by the
Underwriters or a dealer.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each, and agrees with the Underwriters, that:
(1) REGISTRATION STATEMENT ON FORM SB-2. The Company
has prepared in conformity with the requirements under the Securities Act and
the Regulations, and has filed with the Commission under the Securities Act, a
registration statement on Form SB-2, File No. 333-18819 (the "Registration
Statement"), including the related Prospectus, for the registration of the sale
of the Securities and the Underwriters' Warrants and the securities underlying
the Underwriters' Warrants (collectively, the "Warrant Securities"). The
conditions for the use of a registration statement on Form SB-2 set forth in the
General Instructions thereto have been satisfied with respect to the Company,
the transactions contemplated herein, and the Registration Statement. As used in
this Agreement, the term "Registration Statement" means such registration
statement of the Company, as amended (pre- or post-effectiveness), on file with
the Commission at the time the registration statement or any post-effective
amendment thereto becomes effective under the Securities Act (including all
financial statements and financial schedules, exhibits, all other documents
filed as a part thereof or incorporated by reference therein, and all the
information contained in any final Prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act or deemed by virtue of Rule 430A under
the Securities Act to be part of the Registration Statement). The term
"Prospectus" as used herein means the final Prospectus included as part of the
Registration Statement, including, if applicable, the information contained in
any final Prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act or deemed by virtue of Rule 430A under the Securities Act to be
part of the Registration Statement. The term "Preliminary Prospectus" refers to
and means any prospectus included in the Registration Statement or any amendment
thereto prior to the Registration Statement becoming effective under the
Securities Act.
(2) USE AND ACCURACY OF PROSPECTUS. Neither the
Commission nor any state regulatory authority has issued any order preventing or
suspending the use of any Prospectus or any part thereof, and no proceedings for
that purpose have been instituted or, to the Company's knowledge, are pending,
threatened or contemplated. Each Prospectus delivered to the Underwriters for
dissemination in connection with the Public Offering, at the time of filing
thereof and delivery to the Underwriters for such dissemination, did not contain
any untrue statement of a material fact, or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; the
foregoing shall not apply, however, to statements in, or
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omissions from, any Prospectus that are based upon and conform to written
information furnished to the Company with respect to any Underwriter (or any
affiliate or associate thereof) by or on behalf of the Underwriters or such
Underwriters specifically for use in the preparation thereof.
(3) EFFECTIVENESS AND ACCURACY OF REGISTRATION
STATEMENT. The Registration Statement has or will become effective under the
Securities Act as of the Effective Date. The Registration Statement and the
Prospectus, from the Effective Date through the Closing Date and, if Optional
Securities are purchased, up to and including the Option Closing Date (and if
there are multiple Option Closing Dates, up to and including the last Option
Closing Date), will comply in all respects with the applicable requirements of
the Securities Act and the Regulations, and neither the Registration Statement
nor the Prospectus will, on such dates, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and, on such dates, no event will have
occurred that should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus that has not then been set forth in
such an amendment or supplement; the foregoing shall not apply, however, to
statements in, or omissions from, the Registration Statement or the Prospectus
that are based upon and conform to written information furnished to the Company
with respect to the Underwriters (or any affiliate or associate thereof) by or
on behalf of the Underwriters specifically for use in the preparation thereof.
The descriptions in the Registration Statement and the Prospectus of contracts
and other documents of the Company are accurate and present fairly the
information required to be disclosed, and there are no contracts or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement under the
Securities Act or the Regulations which have not been so described or filed as
required. The Company has complied with all requests of the Commission and any
state securities commission in a state designated by the Representative pursuant
to Subsection 3(e) hereof for additional information to be included in the
Registration Statement and Prospectus or otherwise.
(4) INDEPENDENT PUBLIC ACCOUNTANTS. Goldstein, Lewin
& Co., the accountants whose reports on the financial statements of the Company
are filed with the Commission as a part of the Registration Statement are, and
were during the periods covered by their respective reports, independent public
accountants as required by the Securities Act and the Regulations.
(5) ORGANIZATION, QUALIFICATION, ETC. The Company
does not have any subsidiaries and the Company does not own, and at the Closing
Date and any Option Closing Date will not own, directly or indirectly, any stock
or other equity interest in, or control, directly or indirectly, any other
corporation, partnership or other entity, other than HotelView Corporation, a
[Florida] corporation and wholly-owned subsidiary ("HotelView"). Each of the
Company and HotelView is (i) a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, with
full power and authority to own or lease all of the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus and (ii) duly qualified to do business and in good standing as a
foreign corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
qualification
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necessary, except where the failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise), earnings, business,
assets, properties, results of operations or prospects (financial or otherwise)
of the Company (hereinafter a "Material Adverse Effect"). Complete and correct
copies of the articles of incorporation and the by-laws of each of the Company
and HotelView in effect on the date hereof have been delivered to the
Representative, and no changes therein will be made on or subsequent to the date
hereof and prior to the Closing Date and/or any Option Closing Date.
(6) PERMITS AND LICENSES. Each of the Company and
HotelView has all approvals, licenses, franchises, authorizations and permits
(collectively, "Permits") necessary under all applicable statutes, codes, rules,
regulations, orders and decrees of governments or governmental bodies
(collectively, "Laws") to own, lease or use its assets and to conduct its
business as described in the Prospectus, except where the failure to have any
such Permits, singly or in the aggregate, will not have a Material Adverse
Effect. Neither the Company nor HotelView has received notice of any proceedings
relating to the revocation or modification of any such Permits and the Company
and HotelView are each in all respects in compliance with all of their Permits,
except where the failure to comply, either singly or in the aggregate, will not
have a Material Adverse Effect. The Company is not aware of any breach,
violation or default with respect to such Permits.
(7) CAPITALIZATION AND LEGALITY OF SECURITIES. The
authorized, issued and outstanding capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization." The Company will have the
adjusted capitalization set forth therein on the Closing Date and each Option
Closing Date, if any, based on the assumptions set forth therein. There are no
preemptive rights with respect to any outstanding securities of the Company. The
capital stock and other securities of the Company conform to the descriptions
thereof contained in the Prospectus under the caption "Description of
Securities," and consists of 20,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $.001 per share ("Preferred Stock"). As of
the date hereof, there are 1,889,849 shares of Common Stock issued and
outstanding. There are no shares of Preferred Stock outstanding. In addition,
the Company has outstanding options to purchase an aggregate of ______ shares of
Common Stock and warrants to purchase an additional ______ shares of Common
Stock, as such options and warrants are more fully described in the Registration
Statement and the Prospectus. The Company has sufficient authorized (and neither
issued nor outstanding) Common Stock to be offered and sold as contemplated
herein, and to be issued upon exercise of the Warrants and the Underwriters'
Warrants. Except as otherwise set forth in the Prospectus, there are no
outstanding options, warrants, or other rights to purchase any shares of Common
Stock or other capital stock of the Company, or to purchase any other securities
convertible into or exchangeable for Common Stock or any other capital stock of
the Company. The outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All the shares of
Common Stock to be offered by the Prospectus have been duly authorized and, when
issued and delivered against payment therefor as provided in this Agreement, the
Prospectus, and the Representative's Warrant, as applicable, will be validly
issued, fully paid and nonassessable. The Representative's Warrant will
constitute, when sold and delivered as contemplated, a valid and binding
obligation of the Company enforceable in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws
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and court decisions now or hereafter in effect relating to or affecting
creditors' rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
in equity). A sufficient number of shares of Common Stock have been reserved for
issuance upon sale and exercise of the Warrants, and the Underwriters' Warrants.
(8) REGISTRATION OF SECURITIES, UNDERWRITERS'
WARRANTS AND WARRANT SECURITIES. Upon the effectiveness of the Registration
Statement, the Securities, Underwriters' Warrants and Warrant Securities shall
have been listed on The Nasdaq SmallCap Market(R). The Company has taken no
action designed, or likely, to have the effect of terminating the registration
of the Securities under Section 12(g) of the Exchange Act, nor has the Company
received any notification that the Commission is contemplating terminating such
registration. The registration of the Securities, Underwriters' Warrants and
Warrant Securities under the Exchange Act was declared effective on the
Effective Date, and the Company has not received any notification that the
Commission is contemplating terminating such registration.
(9) EXCHANGE ACT FILINGS. As of the filing date, each
report or statement filed by the Company with the Commission pursuant to the
Exchange Act complied as to form in all respects with the requirements of the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. From the Effective Date thereafter, the Company shall comply with
all periodic reporting and proxy solicitation requirements imposed by the
Commission pursuant to the Exchange Act, and shall promptly furnish the
Representative with copies of all material filed with the Commission pursuant to
the Exchange Act or otherwise furnished to the shareholders of the Company.
(10) TAXES. No transfer tax, stamp duty or other
similar tax is payable by or on behalf of the Underwriters in connection with
(i) the issuance by the Company of the Securities, including the Warrant
Securities, (ii) the purchase by the Underwriters of the Securities from the
Company or the Selling Shareholders and the purchase by the Representative of
the Underwriters' Warrants from the Company, (iii) the consummation by the
Company of any of its obligations under this Agreement, or (iv) resales of the
Securities in connection with the distribution contemplated hereby.
(11) FINANCIAL STATEMENTS. The financial statements
(audited and unaudited), and related financial schedules and notes
(collectively, the "Financial Statements"), filed with and as part of the
Registration Statement, comply in all respects with the applicable accounting
requirements of the Securities Act and the Regulations and present fairly the
financial position of the Company as of the dates thereof and results of
operations and changes in cash flows of the Company for the periods to which
they apply, and such Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. All adjustments that, in the opinion of
management, are necessary for a fair presentation of the results for all such
periods have been made. The Financial Statements included in the Registration
Statement and the Prospectus are the only financial statements required under
the Securities Act or the Regulations to be included in the Registration
Statement and the Prospectus. The other financial and statistical information
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included in the Prospectus, including, without limitation, "Prospectus Summary",
"Summary Consolidated Financial and Operating Data" and "Selected Consolidated
Financial Data" presents fairly the information shown therein, and has been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement and the books and records of the Company.
(12) MATERIAL LOSS. Neither the Company nor HotelView
has, since the date of the latest financial statements included in the
Prospectus or the Registration Statement, sustained any material loss or
interference with its business from fire, explosion, flood, or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order, or decree, other than as set forth in the
Prospectus. Since the respective dates as of which information is set forth in
the Prospectus, and except as otherwise set forth therein: (i) there has not
been any change in the capital stock, or material increase in the short term or
long-term debt, of the Company or HotelView taken as a whole; (ii) there has not
been any material adverse change or any prospective material adverse change in
the condition (financial or otherwise), business, prospects (financial or
otherwise), results of operations, general affairs, or management of the Company
or HotelView, whether or not arising in the ordinary course of business; (iii)
no event has occurred that would result in a material write-down of assets of
the Company or HotelView (iv) neither the Company nor HotelView has incurred any
material liability or obligation, direct or contingent, or entered into any
material transaction, other than those in the ordinary course of business; (v)
neither the Company nor HotelView has purchased any of its outstanding capital
stock; (vi) there has been no dividend or distribution of any kind declared,
paid, or made by the Company in respect of the Common Stock; and (vii) there has
not been any execution or imposition of any material lien, charge, or
encumbrance upon the respective property or assets of the Company or HotelView.
(13) INSURANCE. The Company and HotelView each
maintain such insurance policies, including, but not limited to, general
liability, product and property insurance as are necessary to insure the
Company, HotelView and their respective employees, against such losses and risks
generally insured against by comparable businesses. Neither the Company nor
HotelView has (i) failed to give notice or present any insurance claim with
respect to any matter, including but not limited to such entity's business,
property or employees, under any insurance policy or surety bond in a due and
timely manner, (ii) disputes or claims against any underwriter of such insurance
policies or surety bonds or has not failed to pay any premiums due and payable
thereunder, or (iii) failed to comply with all conditions contained in such
insurance policies and surety bonds. There are no facts or circumstances under
any such insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company or HotelView.
(14) COMPLIANCE WITH DOCUMENTS AND LAWS. Neither the
Company nor HotelView is in violation of its articles of incorporation, by-laws,
or other governing documents. Neither the Company nor HotelView is in default in
the due performance of any lease or other contract, indenture, mortgage, deed of
trust, note, loan, or other agreement or instrument to which the Company or
HotelView is a party or by which either of them is, or any of their respective
properties or businesses are subject, or any applicable license, franchise,
certificate, permit, authorization, statute, rule or regulation of or from any
public, regulatory, or
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governmental agency or authority having jurisdiction over the Company or
HotelView or any of their respective properties or assets, or any approval,
consent, order, judgment or decree. The Company and HotelView are each in
compliance with all laws, rules and regulations applicable to their respective
businesses. The execution and performance of this Agreement by the Company will
not conflict with or result in a breach or violation of, or default under, any
lease or other material contract, indenture, mortgage, deed of trust, note,
loan, or other material agreement or instrument to which the Company or
HotelView is a party or by which either of them, or any of their respective
properties or businesses are, subject and no consent, approval, authorization,
or order of any court or governmental authority or agency having jurisdiction
over the Company or HotelView or any of their respective properties or assets is
required to be obtained by the Company or HotelView for the consummation by the
Company or HotelView of the transactions contemplated herein, except such as
have been obtained or may be required under the Securities Act or the
Regulations or under state securities laws or the applicable rules and
regulations promulgated thereunder.
(15) AUTHORIZATION OF AGREEMENTS. Each of this
Agreement, the Warrants, the Underwriters' Warrants and the Financial Consulting
Agreement (as described herein and in the Prospectus), has been duly authorized,
executed, and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement, the Warrants, the
Underwriters' Warrants and the Financial Consulting Agreement by the Company,
the consummation by the Company of the transactions herein and therein
contemplated, and the compliance by the Company with the terms of this
Agreement, the Warrants, the Underwriters' Warrants and the Financial Consulting
Agreement have been duly authorized by all necessary corporate action and do not
and will not, with or without the giving of notice or the lapse of time, or
both, (i) result in any violation of the articles of incorporation or by-laws of
the Company, (ii) result in a breach of or conflict with any of the terms or
provisions of, or constitute default under, or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to any indenture, mortgage, note, contract, commitment or other
agreement or instrument to which the Company is a party or under which the
Company or any of its properties or assets are or may be bound or affected,
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company, or any of its properties or business, or (iv)
violate any Permits of the Company except for any Permits, the violation of
which will not cause a material adverse effect on the business, financial
condition or prospects of the Company. The Agreement, Warrants, the
Underwriters' Warrants and the Financial Consulting Agreement conform to the
descriptions thereof in the Prospectus.
(16) TITLE TO PROPERTY. The Company and HotelView
each have good and marketable title to, and valid and enforceable leasehold
estates in, all items of property described in the Registration Statement or the
Prospectus as owned or leased by each of them, as the case may be, or that are
material to the conduct of their businesses free and clear of all liens,
encumbrances, claims, security interests, and other restrictions, other than
those described in the Registration Statement or Prospectus. The leases,
licenses or other contracts or instruments under which either the Company or
HotelView leases, holds or is entitled to use any property, real or personal,
are valid, subsisting and enforceable, and neither the Company nor
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HotelView is in material default thereunder and, no event has occurred which,
with the passage of time or the giving of notice, or both, would constitute a
default thereunder. Neither the Company nor HotelView has received notice of any
violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties. The Company and HotelView have
insured their properties against loss or damage by fire or other casualty and
maintain such other insurance as management of the Company and HotelView
believes is adequate for their respective present business operations.
(17) INTELLECTUAL PROPERTY. Except as set forth in
the Prospectus, the Company and HotelView each own or possess the requisite
licenses, registrations or other evidences of adequate and full rights to use
all copyrights, patents, trademarks, service marks, trade names, trade dress
logos, know-how, trade secrets, licenses, Internet domain names and rights in
any way thereof ("Intellectual Property") presently used in or necessary to
conduct their respective businesses as described in the Prospectus and the
Registration Statement. Neither the Company nor HotelView has knowingly
infringed the rights of another with respect to any item of Intellectual
Property, and there is no outstanding claim of or notice from others alleging
any such infringement. There is no claim, notice or action by any person
pertaining to, or proceeding pending or, to the Company's knowledge, threatened,
which challenges the rights of the Company or HotelView with respect to any
Intellectual Property used in the conduct of their respective businesses.
(18) LITIGATION. There is no litigation or
governmental or other proceeding or investigation before any court or before or
by any public, regulatory, or governmental agency or authority (or any judgment,
decree, or order of such court, agency, or authority) pending or, to the best
knowledge of the Company, threatened to which the Company or HotelView is a
party or of which their respective businesses or properties are subject which is
not disclosed in the Prospectus or Registration Statement as required by the
Securities Act or the Regulations. There are no outstanding orders, judgments or
decrees of any court, governmental agency or other tribunal naming the Company
or HotelView or enjoining the Company or HotelView from taking, or requiring the
Company or HotelView to take, any action, or to which they or their respective
properties or businesses are bound or subject.
(19) RELATED PARTY TRANSACTIONS. Except as set forth
in the Prospectus, no officer, director, shareholder or partner of the Company
or HotelView or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Regulations) of any of the foregoing persons or
entities has or has had, either directly or indirectly, (i) an interest in any
person or entity which (A) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company or
HotelView, or (B) purchases from or sells or furnishes to the Company or
HotelView any goods or services, or (ii) a beneficial interest in any contract
or agreement to which the Company or HotelView is a party or by which it may be
bound or affected. Except as set forth in the Prospectus under "Certain
Relationships and Related Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company or
HotelView and any officer, director or 5% or greater securityholder of the
Company or HotelView, or any partner, affiliate or associate of any of the
foregoing persons or entities.
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(20) PROHIBITED PAYMENTS. Neither the Company nor
HotelView, nor any of their respective directors or officers acting in any
capacity on their behalf has used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
(21) INTERNAL ACCOUNTING CONTROLS. The Company and
HotelView each maintain a system of internal accounting controls which, taken as
a whole, is sufficient to cause them to comply with the Foreign Corrupt
Practices Act of 1977, as amended, and to meet the broad objectives of
preventing and detecting errors or irregularities in amounts that would be
material to the Company's or HotelView's financial statements. Except as
specifically disclosed in the Prospectus, neither the Company nor HotelView, nor
any employee or agent of either of them, has made any payment or transfer of any
funds or assets of the Company or HotelView, conferred any personal benefit by
the use of the assets of the Company or HotelView, or received any funds,
assets, or personal benefit in each case in violation of any law, rule, or
regulation, which is required to be disclosed in the Prospectus or necessary to
make the statements therein not misleading.
(22) TAX RETURNS. The Company and HotelView (i) have
paid all federal, state, local and foreign taxes for which they are liable and
have furnished all information returns they are required to furnish pursuant to
the Internal Revenue Code of 1986, as amended, (ii) have established adequate
reserves for such taxes which are not yet due and payable and (iii) do not have
any tax deficiency or claims outstanding, proposed or assessed against them.
Neither the Company nor HotelView has executed or filed with any taxing
authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes, nor are either of them parties to
any pending action or proceeding by any foreign or domestic governmental agency
for assessment or collection of taxes; and no claims for assessment or
collection of taxes have been asserted against either of them. Neither the
Company nor HotelView has been, nor is currently being, audited by any taxing
authority, nor has the Company nor HotelView entered into any agreement to toll
any applicable statute of limitations with respect to the payment of any taxes.
(23) EMPLOYEE PLANS. Except as set forth in the
Registration Statement or the Prospectus, neither the Company nor HotelView has
any employee benefit plans (including, without limitation, pension, profit
sharing, and welfare benefit plans) or deferred compensation arrangements.
(24) LABOR DISPUTES. The Company and HotelView have
each generally enjoyed a satisfactory employer-employee relationship with their
respective employees and are in compliance with all federal, state, local, and
foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours. There are no pending
investigations involving the Company or HotelView by the U.S. Department of
Labor, or any other governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or HotelView pending before the
National Labor Relations
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Board or any lockout, strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or HotelView, or any
predecessor entity, and none has ever occurred. No representation question
exists respecting the employees of the Company or HotelView, no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company or HotelView nor is the Company or HotelView a party to any such
agreement. No grievance or arbitration proceeding is pending under any expired
or existing collective bargaining agreements of the Company or HotelView. No
labor dispute exists or, to the knowledge of the Company, is imminent with the
employees of the Company or HotelView.
(25) REGISTRATION RIGHTS. Except as set forth in the
Registration Statement or the Prospectus, no person, firm, or entity of any
nature whatsoever has any right to require the Company to register or attempt to
register under the Securities Act or any other securities law any shares of
capital stock, including Common Stock or securities convertible into or
exchangeable or exercisable for any shares of capital stock including Common
Stock, by reason of the filing of the Registration Statement with the Commission
or otherwise.
(26) STABILIZATION. Neither the Company, nor
HotelView, nor any person that controls, is controlled by or is under common
control with, the Company has taken or will take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation under the Exchange Act of the price of any
security in order to facilitate the sale or resale of any of the Securities.
(27) INVESTMENT COMPANY. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus under
the caption "Use of Proceeds" will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(28) FINDER OR BROKER. The Company has not retained
or dealt with any broker or finder with respect to the transactions contemplated
hereby, and the Company knows of no outstanding claims for services in the
nature of a finder's fee or origination fee with respect to the sale of the
Securities hereunder. The Company will indemnify and hold harmless the
Underwriters with respect to any claim for a finder's fee by any party claiming
to be owed such fee based on contacts, conversations, or arrangements with the
Company.
(29) CONTRACTS. Each contract or other instrument to
which either the Company or HotelView is a party or by which their respective
properties or businesses are or may be bound or affected and to which reference
is made in the Registration Statement or Prospectus has been duly and validly
executed by the Company or HotelView, as the case may be, is in full force and
effect in all material respects and, based on the fact that each other party has
full power, corporate or otherwise, to execute, deliver and perform such
contracts, is enforceable against the parties thereto in accordance with its
terms. None of such contracts or instruments has been assigned by the Company or
HotelView, as the case may be, nor are they in default thereunder and, no event
has occurred which, with the lapse of time or the giving of notice, or both,
would constitute a default thereunder which individually or in the aggregate
could reasonably be expected to have a material adverse effect upon the
business, financial condition or prospects of the Company or HotelView.
Additionally, none of the material
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provisions of such contracts or instruments violates any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or
court having jurisdiction over the Company or Hotelview or any of their
respective assets or businesses.
(30) NASD INFORMATION. All information provided by
the Company to the Representative or its counsel in connection with any filings
made with the National Association of Securities Dealers, Inc. ("NASD") with
respect to the Public Offering is true and correct.
(31) COMPLIANCE WITH ENVIRONMENTAL LAWS AND
REGULATIONS. The Company and HotelView are each in compliance in all material
respects with all applicable federal, state and local environmental laws and
regulations, including, without limitation, those applicable to emissions to the
environment, waste management and waste disposal (collectively, the
"Environmental Laws"), except for any such noncompliance as may be described in
the Registration Statement or Prospectus and, to the Company's knowledge, there
are no circumstances that would prevent, interfere with, or materially increase
the cost of such compliance in the future. Except as set forth in the
Registration Statement or Prospectus, there is no claim under any Environmental
Laws ("Environmental Claim"), pending or threatened against or affecting the
Company or HotelView and, there are no past or present actions, activities,
circumstances, events or incidents, including, without limitation, releases of
any material into the environment that could form the basis of any Environmental
Claim against or affecting the Company or HotelView.
(32) BUSINESS WITH CUBA. Neither the Company nor
HotelView is doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(33) INDEBTEDNESS. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company or HotelView to or for
the benefit of any of the officers or directors of the Company or HotelView or
any of the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
(34) ACQUISITIONS OR DISPOSITIONS. Except as set
forth in the Registration Statement and Prospectus, neither the Company nor
HotelView has consummated the acquisition or disposition of any business or
property which is "significant" to them within the meaning of Regulation S-X
under the Securities Act, and no such acquisition or disposition is probable.
(35) CHANGES. At any time, if there is any change in
the information referred to in this Subsection 2(a), the Company will
immediately notify Representative of such change.
(36) REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. The Company is not aware, and has no reason to believe, that any
representation or warranty of the Selling Shareholders set forth in Subsection
2(b) below is untrue or inaccurate in any material respect.
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(37) ADDITIONAL REPRESENTATIONS. To the Company's
knowledge, no director, officer, or key employee of the Company has been
convicted of any felony, experienced a personal bankruptcy, or been an officer,
director, or key employee of any company that during their tenure with such
company experienced any bankruptcy, or had any trustee, receiver, or conservator
appointed with respect to its business or assets.
(b) REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. The Selling Shareholders, jointly and severally, represent and
warrant to and agree with each Underwriter that:
(1) AUTHORIZATION OF AGREEMENTS. This Agreement has
been duly authorized, executed, and delivered by the Selling Shareholders and
constitutes valid and binding obligation of each Selling Sharholder, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by the Selling Shareholders, the consummation by the Selling
Shareholders of the transactions herein contemplated, and the compliance by the
Selling Shareholders with the terms of this Agreement have been duly authorized
by all necessary action and do not and will not, with or without the giving of
notice or the lapse of time, or both, (i) result in a breach of or conflict with
any of the terms or provisions of, or constitute a default under, or result in
the modification or termination of, indenture, mortgage, note, contract,
commitment or other agreement or instrument to which either of the Selling
Shareholders is a party or under which either of the Selling Shareholders or any
of their respective properties or assets are or may be bound or affected (ii)
violate any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over either of the Selling Shareholders, or any of their respective properties
or business, or (iii) violate any Permits held by either of the Selling
Shareholders except for any Permits, the violation of which will not cause a
material adverse effect on the business, financial, conditional or prospectus of
the Company.
(2) TRANSACTIONS. No transaction has occurred between
either of the Selling Shareholders and the Company that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(3) OWNERSHIP. Each of the Selling Shareholders is
the lawful owner of the Securities to be sold by such Selling Sharholder
pursuant to this Agreement and has, and on the Closing Date will have, good and
clear title to such Securities, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever and has legal right and
full power to sell, transfer and deliver the Securities and will transfer such
title to the Underwriters.
(4) TITLE TO SECURITIES. Upon delivery of and payment
for such Securities pursuant to this Agreement, good and clear title to such
Securities will pass to the Underwriters, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(5) DELIVERY OF CERTIFICATES. Certificates in
negotiable form for each Selling Shareholders' shares of Common Stock to be
transferred pursuant to Subsection 1(b) of this Agreement have been delivered to
the transfer agent for delivery pursuant to the terms of
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this Agreement; the shares of Common Stock represented by the certificates so
held in custody for such Selling Shareholders are subject to the interests
hereunder of the Underwriters; the arrangements for custody and delivery of such
certificates made by such Selling Shareholders hereunder are not subject to
termination by any acts of such Selling Shareholders, or by operation of law,
and if any such event shall occur before the delivery of such shares of Common
Stock hereunder, certificates for the shares of Common Stock will be delivered
in accordance with the terms and conditions of this Agreement as if such event
had not occurred, regardless of whether or not the custodian shall have received
notice of such event.
(6) STABILIZATION. Neither of the Selling
Shareholders has taken, and neither will take, directly or indirectly, any
action designed to, or which might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the shares of Common Stock pursuant to the
distribution contemplated by this Agreement, and other than as permitted by the
Securities Act, the Selling Shareholders have not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities.
(7) ABSENCE OF CONFLICTS WITH AGREEMENTS. The
execution, delivery and performance of this Agreement by the Selling
Shareholders, compliance by the Selling Shareholders with all the provisions
hereof and the consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body (except as
such may be under the Securities Act or state securities laws) and will not
conflict with or constitute a breach of any of the terms or provisions of any
agreement, indenture or other instrument to which either Selling Sharholder is a
party or by which either Selling Sharholder or property of either Selling
Sharholder is bound, or violate or conflict with any laws, administrative
regulation or ruling or court decree applicable to either Selling Sharholder or
property of either Selling Sharholder.
(8) ACCURACY OF INFORMATION. All information
furnished to the Company by or on behalf of the Selling Shareholders with
respect to the Selling Shareholders for use in connection with the preparation
of the Registration Statement is true, correct and complete in all material
respects as of the stated date of such information and the date hereof; the
Selling Shareholders have each read the information appearing in the Prospectus
and, as it pertains to each Selling Sharholder, such information does not
contain an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading.
(9) FINDER OR BROKER. Neither of the Selling
Shareholders has retained or dealt with any broker or finder with respect to the
transaction contemplated hereby, and neither Selling Sharholder knows of any
outstanding claims for services in the nature of a finder's fee or origination
fee with respect to the sale of Securities by such Selling Sharholder hereunder.
The Selling Shareholders will indemnify and hold harmless the Underwriters with
respect to any claims for a finder's fee by any party claiming to be owed such
fee based on contacts, conversations, or arrangements with the Company or the
Selling Sharholder.
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(10) REASON FOR SALE. The sale of Securities by the
Selling Shareholders pursuant to this Agreement is not prompted by any
information concerning the Company which is not set forth in the Registration
Statement.
3. COVENANTS OF THE COMPANY. The Company covenants to and agrees with
the Underwriters that:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. If the Effective
Date is not prior to the execution and delivery of this Agreement, the Company
will use its best efforts to cause the Registration Statement and any subsequent
amendments thereto to become effective as promptly as possible. The Company will
notify the Underwriters promptly (i) when the Registration Statement or any
subsequent amendment thereto has become effective or any supplement to the
Prospectus has been filed and (ii) of the receipt of any requests, and the
nature and substance thereof, by the Commission for any amendment or supplement
to the Registration Statement or Prospectus or for any other additional
information. The Company will prepare and file with the Commission, promptly
upon the Representative's reasonable request, any amendment or supplement to the
Registration Statement or Prospectus that may be necessary or advisable in
connection with the sale or distribution of the Securities, any of the
Underwriters' Warrants or the Warrant Securities. The Company will file no
amendment or supplement to the Registration Statement or Prospectus (other than
any document required to be filed under the Exchange Act that upon filing is
deemed to be incorporated by reference therein) to which the Representative
shall reasonably object by notice to the Company after having been furnished a
copy within a reasonable time, but no later than five business days, prior to
the proposed filing thereof. The Company will furnish to the Underwriters at or
prior to the filing thereof with the Commission a copy of any document that upon
filing is deemed to be incorporated by reference in whole or in part in the
Registration Statement or the Prospectus.
(b) NOTICE OF STOP ORDER. The Company will advise the
Underwriters promptly, and confirm in writing, when and if it receives notice or
obtains knowledge of (i) the issuance by the Commission or any state securities
commission in a state designated by the Representative pursuant to Subsection
3(e) hereof of any stop order or other order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the effectiveness of the
Registration Statement or (ii) the suspension of the qualification of any of the
Securities, the Underwriters' Warrants or the Warrant Securities for offering or
sale in any jurisdiction in which they were previously qualified, or (iii) the
initiation or threat of any proceeding for that purpose. The Company will
promptly use its reasonable best efforts to prevent the issuance, and to obtain
the withdrawal if such issuance is not prevented, of any such stop order or
other suspension.
(c) COMPLIANCE WITH THE SECURITIES ACT AND THE EXCHANGE ACT.
Within the time during which a Prospectus relating to the Securities, the
Underwriters' Warrants, or the Warrant Securities is required to be delivered
under the Securities Act, the Company will use its best efforts to comply with
all requirements imposed upon it by the Securities Act and the Exchange Act, as
now in effect and as hereafter amended, and by the Regulations, as from time to
time in force, to permit the continuance of sales of or dealings in the
distribution of the Securities or the Underwriters' Warrants or the Warrant
Securities, as contemplated by the provisions therein, herein, and in the
Registration Statement or Prospectus. If during such
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period any event as to which the Company has knowledge occurs as a result of
which the Registration Statement or the Prospectus as then amended or
supplemented includes an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Securities Act, the Company will notify the Representative
promptly, will amend the Registration Statement or supplement the Prospectus so
as to correct such statement or omission or otherwise to effect such compliance,
and will furnish without charge to the Underwriters and to any dealer in
securities as many copies of such amended or supplemented Prospectus as the
Underwriters may from time to time reasonably request. Furthermore, the Company
will prepare and file with the Commission, promptly upon the request of the
Representative, any amendments or supplements to the Registration Statement or
the Prospectus, which in the opinion of the Representative may be necessary to
enable the Underwriters to continue the distribution of the Securities, and will
use its best efforts to cause the same to become effective as promptly as
possible.
(d) COPIES OF SECURITIES ACT DOCUMENTS. The Company will
deliver to the Representative and the Selling Shareholders, from time to time
without charge, such number of copies of the Registration Statement (two of
which delivered to the Representative shall be manually signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments
and supplements thereto, in each case as soon as available and in such
quantities and to such persons as requested by the Underwriters. The Company
consents to the use of any Preliminary Prospectus as originally filed, any
amended Preliminary Prospectus, the Prospectus and any amendments or supplements
thereto by the Underwriters and by any dealer for the purpose contemplated by
the Securities Act and the Regulations.
(e) STATE SECURITIES LAWS QUALIFICATIONS. The Company will use
its best efforts, in cooperation with the Representative and the
Representative's counsel, to register or qualify the Securities, the
Underwriters' Warrants and the Warrant Securities for offer and sale under the
securities laws of such jurisdictions as the Representative may reasonably
designate, and will continue such qualifications in effect for so long as may be
necessary to complete the distribution and sale of such securities.
(f) SECTION 11(A) EARNINGS STATEMENT. The Company will make
generally available to its security holders (within the meaning of Section 11(a)
of the Securities Act) and deliver to the Representative as soon as practicable
an earnings statement that shall satisfy the requirements of Section 11(a) and
Rule 158 under the Securities Act, covering a period of at least 12 consecutive
months after the Effective Date.
(g) REPORT SR TO BE FILED BY COMPANY. Within ten days after
the end of the first three-month period following the Effective Date, the
Company will prepare and file with the Commission a report on Form SR as
prescribed by Rule 463 of Regulation C under the 1933 Act.
(h) INFORMATION PROVIDED TO THE REPRESENTATIVE. Until the
fifth anniversary of the Effective Date, the Company will furnish or cause to be
furnished to the Representative and the Representative's counsel, with
reasonable promptness, copies of (i) quarterly balance
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sheets, statements of income of the Company (which need not be audited) and all
other reports prepared and issued to the public. Additionally, for a period of
three years after the Effective date, the Company shall furnish to the
Representative: (i) all reports, if any, to its shareholders, (ii) all reports
filed by the Company with the Commission, any securities exchange and/or the
NASD; and (iii) such other material documents and information with respect to
the Company and its affairs as the Representative may from time to time
reasonably request and the Company can produce at reasonable cost. The Company
shall cause the Board of Directors to meet, at least quarterly, upon proper
notice, and shall also cause the agenda and minutes of the last meeting to be
mailed to each Director prior to each meeting and a copy of such report to be
sent to the Representative. The Company shall cause its transfer agent to
provide the Representative with copies of the Company's monthly transfer sheets
and Depository Trust Company transfer sheets. Upon request, the Company shall
also provide the Representative with current lists of its shareholders and
warrant holders, if any. The Representative will maintain the confidentiality of
any documents or information provided to it pursuant to this Subsection 3(h) and
will comply fully with federal and state securities laws regarding the use of
such documents or information.
(i) LISTING IN SECURITIES MANUAL; AFTER-MARKET TRADING
MEMORANDUM; NON-ISSUER TRANSACTION. The Company shall have become listed at or
prior to the Effective Date, and shall use its best efforts to maintain such
listing in Standard and Poor's Corporation Records Service and/or Moody's
Industrial Manual for at least five years after the Effective Date. For a period
of five years from the Effective Date, at the Company's sole expense, the
Company shall cause its counsel to provide to the Representative a list of those
states in which the Company's securities may be traded in non-issuer
transactions under the securities laws of the 50 states.
(j) LISTING ON THE NASDAQ SMALLCAP MARKET(R). Prior to the
Effective Date, the Company, at its cost, shall use its best efforts to have
caused the Securities, Warrants and Common Stock to be listed for trading on The
Nasdaq SmallCap Market(R) system under symbols which are acceptable to the
Representative, and the Company shall use its best efforts to have the
Securities, the Underwriters' Warrants and the Warrant Securities remain listed
for at least five years from the Effective Date, and to ensure that the Company
otherwise complies with the prevailing requirements of The Nasdaq Stock Market,
Inc..
(k) SECTION 12(G) REGISTRATION. Upon the Effective Date, the
Securities, the Underwriters' Warrants and the Warrant Securities will be
registered with the Commission under the provisions of Section 12(g) of the
Exchange Act. The Company will use its best efforts to maintain the registration
of the Securities and the Underwriters' Warrants and the Warrant Securities
under Section 12(g) of the Exchange Act for a minimum of five years after the
Effective Date. The Company shall comply with the Securities Act, the
Regulations, the Exchange Act and the rules and regulations promulgated
thereunder, the applicable rules and regulations of the NASD, and applicable
state securities laws so as to permit the continuance of sales of and dealings
in the Securities and the exercise of the Underwriters' Warrants and the
issuance and sale of the Warrant Securities upon such exercise in compliance
with applicable provisions of such laws, rules, and regulations, including the
filing with the Commission, the NASD and state securities commissions in all
states where the Securities, including the Warrant Securities, have been issued
or sold, all reports required to be so filed, and the Company will deliver to
the holders of the Securities and/or Warrant Securities all reports required to
be
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provided to such holders pursuant to such laws, rules, or regulations. The
Company shall promptly file with the Commission and deliver to the
Representative, from time to time as required to make the same reasonably
current, such statements and reports as are required to be filed by a company
registered under Section 12(g) of the Exchange Act.
(l) USE OF PROCEEDS. The Company shall apply the net proceeds
received from the sale of the Securities and the exercise of the Underwriters'
Warrants in the manner set forth under the caption "Use of Proceeds" in the
Registration Statement and Prospectus, which shall state that the primary
application of the proceeds to be realized by the Company will be for expansion
of existing operations and for working capital.
(m) BOARD MEETINGS AND MEMBERSHIP. For a period of five years
commencing on the Effective Date, the Representative shall have the right to
designate one nominee for election to the Company's Board of Directors, which
member shall be reasonably acceptable to the Company. The Company shall, prior
to the Effective Date, obtain from the officers, directors and holders of 5% or
more of the outstanding Common Stock of the Company, agreements in writing to
vote the shares of Common Stock respectively owned by them, whether directly or
indirectly, during such five-year period in favor of the election of such
nominee. Following the election of such nominee as director, such person shall
receive the same compensation paid to other non-officer directors of the Company
for attendance at meetings of the Board of Directors of the Company and shall be
entitled to receive reimbursement for all reasonable costs incurred in attending
such meetings including, but not limited to, food, lodging and transportation.
The Company agrees to indemnify and hold such director harmless, to the maximum
extent permitted by law, against any and all claims, actions, awards and
judgments arising out of his or her service as director and, in the event the
Company maintains a liability insurance policy affording coverage for the acts
of its officers and directors, to include such director as insured under such
policy. The rights and benefits of such indemnification and the benefits of such
insurance shall, to the extent possible, extend to the Representative insofar as
it may be or may be alleged to be responsible for such director, provided that
the extension of such rights and benefits to the Representative may be done
without additional cost to the Company.
In the event that the Representative does not elect to
designate one member to the Company's Board of Directors, the Representative
shall have the right during such five-year period to have one representative
attend all meetings of the Board of Directors of the Company, which meetings
shall be held at least quarterly, including any meetings of any committees of
the Board of Directors. All information received by such representative at such
meetings shall be kept confidential, shall not be disclosed by the
representative to any third party, and shall be dealt with in full compliance
with federal and state securities laws.
Additionally, the Company shall elect a cause to be elected, a
minimum of two (2) "outside" persons (i.e., excluding affiliates of the Company
and family members of the Company's existing directors, officers and
shareholders) to the Company's Board of Directors within 90 days after the
Effective Date, and shall designate an audit committee consisting of a majority
of such "outside" directors, which will generally supervise the financial
affairs of the Company, including, but not limited to, the application of the
proceeds of the Public Offering.
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(n) FUTURE SALES. The Company will not, during the period of
the Public Offering and for a period of twelve months from the Effective Date,
without the Representative's prior written consent, offer, sell, contract to
sell, grant an option relating to, or otherwise dispose of, any securities of
the Company, except for the issuance of shares of Common Stock to be issued (a)
pursuant to the exercise of options or options currently reserved for future
grant and disclosed in the Registration Statement and Prospectus, (b) pursuant
to and in order to consummate a merger with or acquisition from an unaffiliated
party in a transaction negotiated at arms' length and approved by a majority of
the Company's Board of Directors, (c) in a public offering, at a price not less
than 90% of the average of the closing bid prices of the Common Stock as
reported on The Nasdaq SmallCap Market(R) for the 21 consecutive trading day
period immediately preceding the date of sale (the "Exempt Price"), and (d) in a
private sale at a price not less than 70% of the Exempt Price.
(o) UNDERTAKINGS. The Company will comply with the provisions
of all undertakings contained in the Registration Statement or made in
connection with any application to register or qualify any of the Securities,
including the Warrant Securities, under state securities laws.
(p) CERTAIN DELIVERIES TO THE REPRESENTATIVE. The Company
shall obtain from its officers, counsel, and accountants those certificates,
opinions, and letters referred to in Section 7. The Company shall, upon request
of the Representative, furnish to the Representative as early as practicable
prior to each of the date hereof, the Closing Date and any Option Closing Date,
but not later than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company (which in no
event shall be as of a date more than 30 days prior to the date of the
Registration Statement) which have been read by the Company's independent public
accountants, as stated in the accountants' letter to be furnished pursuant to
Subsection 7(k) hereof.
(q) REDEMPTION AND DIVIDENDS. For a period of one year from
the Effective Date, the Company shall not redeem any of its securities and shall
not pay any dividends or make any other cash distribution in respect of its
securities in excess of the amount of the Company's current and retained
earnings after the Closing Date, without obtaining the Representative's prior
written consent. The Representative shall either approve or disapprove such
contemplated redemption of securities or dividend payment or distribution within
five business days from the date the Representative receives written notice of
the Company's proposal with respect thereto; a failure of the Representative to
respond within such period of five business days shall be deemed consent to the
transaction.
(r) RESTRICTIONS ON SALES, OPTIONS AND VOTING BY AFFILIATES.
Except upon prior written consent of the Representative, all directors,
officers, and holders of 5% or more of the Company's capital stock issued and
outstanding as of the Effective Date, as well as options, warrants or rights
thereto, shall agree not to sell any shares of any class of capital stock owned
by them, privately or publicly (either pursuant to Rule 144 of the Regulations
or otherwise) for a period of not less than 24 months following the Effective
Date. An appropriate restrictive legend shall be placed on the face of all stock
certificates representing such share of capital stock prior to the Effective
Date. The Company will cause its transfer agent to note such restriction on the
transfer books and records of the Company and will obtain "lock-up
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agreements" from such directors, officers, and shareholders prior to the
Effective Date. Notwithstanding the foregoing, the holders of the Company's
capital stock specified on Schedule 3(r) attached hereto shall not be subject to
the restrictions set forth in this Section 3(r), and the Company's directors,
officers and existing shareholders may make gifts and intrafamily transfers of
Common Stock provided that the transferees agree to be bound by the terms of the
restrictions, on transfer provided in this Section 3(r).
(s) OUTSTANDING WARRANTS, OPTIONS AND OTHER RIGHTS. Unless the
Representative has given its written consent prior to the Effective Date, which
consent shall not be unreasonably withheld, there shall not be outstanding on
the Closing Date any warrants, options, or other rights to purchase any shares
of Common Stock, except as otherwise set forth in the Registration Statement or
Prospectus.
(t) ACCOUNTING FIRM. The Company shall retain a nationally
recognized, reputable independent public accounting firm reasonably acceptable
to the Representative for a period of five years from the Effective Date. The
Representative hereby acknowledges that Goldstein, Lewin & Co. is such a firm.
(u) BUSINESS WITH CUBA. The Company will inform the Florida
Department of Banking and Finance (the "Department") if at any time it or
HotelView commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the Effective Date. Such information
will be provided to the Department within 90 days after the commencement of
business in Cuba or within 90 days after the change occurs with respect to
previously reported information.
(v) CLOSING BINDERS. The Company shall, at its sole cost and
expense, supply and deliver to the Representative and the Representative's
counsel, within a reasonable period not to exceed 180 days after the Closing
Date, five sets of hard-bound transaction binders, each of which shall include
the Registration Statement, as amended or supplemented, all exhibits to the
Registration Statement, each Preliminary Prospectus, the Prospectus, the
Preliminary Blue Sky Memorandum and any supplement thereto, correspondence filed
with or received from the Commission or the NASD and all underwriting and other
closing documents.
(w) ANNUAL REPORTS. Until the fifth anniversary of the
Effective Date, the Company shall distribute an annual report to all
shareholders setting forth clearly the financial position of the Company.
(x) REPAYMENT OF INDEBTEDNESS. Prior to the Closing Date, the
Company shall not repay (or agree to repay) any indebtedness to any of its
shareholders (or incur any indebtedness to any of its shareholders) unless the
terms thereof are approved in advance by the Representative.
(y) PUBLIC RELATIONS FIRM. Within 30 days of the date hereof,
the Company shall engage a public relations firm acceptable to the Company and
the Representative and shall maintain a relationship with such public relations
firm for a minimum of five years from the date hereof.
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(z) TRANSFER AND WARRANT AGENTS. The Company acknowledges that
it has appointed Interwest Transfer Co. as its transfer agent for the Common
Stock, and the Company shall appoint a warrant agent for the Warrants reasonably
acceptable to the Representative.
(aa) INSURANCE. The Company shall have, prior to the Effective
Date, obtained directors and officers insurance and "key man" life insurance in
the amount of $1,500,000 on the life or lives of its key officers, directors and
employees as deemed necessary by the mutual agreement of the Company and the
Representative and on terms acceptable to both the Company and the
Representative. The Company shall pay the premiums for such insurance and
maintain such insurance in force for a period of not less than five years from
the Effective Date; the Company shall be the named beneficiary on all such
insurance policies.
(ab) EXEMPTIONS FOR NON-ISSUER TRANSACTIONS. The Company shall
cause its counsel to provide to the Representative at the Effective Date a list
to be updated as of the Closing Date and at least annually thereafter for a
minimum of three years, in these states in which the Company's securities may be
traded in non-issuer transactions under the Blue Sky laws of the 50 states. The
Company may, by providing written notice thereof upon execution of this
Agreement, elect to have the Representative's counsel provide the initial
opinion of the opinions required pursuant to this Subsection 3(ab), in exchange
for payment of a fee equal to $2,500.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REPRESENTATIVE. The
Representative severally represents and warrants to, and agrees with, the
Company and the Selling Shareholders that:
(a) REGISTRATION AS BROKER-DEALER AND MEMBER OF NASD. The
Representative is registered as a broker-dealer with the Commission and in all
states in which it shall offer the Securities, and is a member in good standing
of the NASD. Additionally, any firm with which the Representative associates to
act as an Underwriter shall also be registered as a broker-dealer with the
Commissioner and a member in good standing of the NASD or shall be a foreign
broker-dealer and a member of the national stock exchange of its country of
residency.
(b) NO PENDING PROCEEDINGS. There is not now pending or
threatened against the Representative any action or proceeding of which it has
been advised, either in any court of competent jurisdiction or before the
Commission, or before any state securities commission or the NASD, concerning
its activities as a broker or dealer, that could have a material adverse effect
upon its ability to perform under its obligations this Agreement.
(c) NO UNTRUE STATEMENTS. No information furnished to the
Company in writing by or on behalf of the Representative for the express purpose
of use in or for preparation of the Registration Statement or the Prospectus
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. For
all purposes under this Agreement, the only information which shall be deemed to
have been provided by or on behalf of the Representative for the express purpose
of use in or for preparation of the Registration Statement or the Prospectus
shall be the information contained in the "Underwriting" section of the
Prospectus.
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(d) FINDER OR BROKER. Except as contemplated by this
Agreement, the Representative (i) has not retained or dealt with any broker or
finder or financial consultant with respect to the transactions contemplated
hereby, and (ii) does not know of any outstanding claims for services in the
nature of a finder's fee or origination fee with respect to transactions
contemplated hereby. The Representative will indemnify and hold harmless the
Company with respect to any claims for a finder's fee by any party claiming to
be owed such fee based on contacts, conversations, or arrangements with the
Representative.
5. OFFERING EXPENSES AND RELATED MATTERS.
(a) GENERAL. The Company agrees to pay or reimburse the
Representative, if paid by the Representative, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the issuance, sale and delivery of the Securities, the
Underwriters' Warrants and the Warrant Securities and the performance of the
obligations of the Company hereunder, including without limiting the generality
of the foregoing, (i) the preparation, printing, filing, and copying of the
Registration Statement, Preliminary Prospectus, Prospectus, this Agreement, Blue
Sky memoranda, the Agreement Among Underwriters, if any, the Selected Dealers
Agreement, and other underwriting documents, if any, and any drafts, amendments
or supplements thereto, including the cost of all copies thereof supplied to the
Underwriter in such quantities as reasonably requested by the Representative,
the costs of mailing Preliminary and Final Prospectuses to offerees and
purchasers of the Securities; and the out-of-pocket travel expenses of the
Representative and counsel to the Representative or other professionals
designated by the Representative to visit the Company's facilities for purposes
of discharging due diligence responsibilities; (ii) the printing, engraving,
issuance and delivery of certificates representing the Securities, including any
transfer or other taxes payable thereon; (iii) the registration or qualification
of the Securities, including the Underwriters' Warrants and the Warrant
Securities, under state securities laws, including the reasonable fees and
disbursements of counsel (regardless of whether such counsel is also counsel to
the Representative, subject to the limitation set forth in Subsection 5(c)
below) and filing fees in connection therewith; (iv) all fees and expenses of
the Company's counsel, accountants and all transfer or warrant agent fees; (v)
all costs, expenses and filing fees in connection with review of the terms of
the Public Offering by the NASD; (vi) all costs and expenses and filing fees,
including legal fees, of any listing of the Securities on The Nasdaq SmallCap
Market(R) and/or on a stock exchange and/or in Standard and Poor's Corporate
Reports and/or in any other securities manuals; (vii) all costs and expenses of
five bound volumes provided to the Representative of all closing documents,
paper exhibits, correspondence and records forming the materials included in the
Public Offering; (viii) the reasonable costs and expenses of all pre-closing and
post-closing advertisements relating to the Public Offering (such as tombstone
advertisements); (ix) all costs of holding informational meetings and "road
shows"; and (x) all other costs and expenses incurred or to be incurred by the
Company in connection with the transactions contemplated by this Agreement. The
parties hereto acknowledge that the Registration Statement and the exhibits
thereto have been prepared by counsel for the Company, and that the various
state securities and Blue Sky law applications and the survey distributed by the
Representative in connection therewith have been prepared by the
Representative's counsel, Broad and Cassel, whose costs and expenses shall have
been paid for by the Company at the time such services are rendered. The Company
further acknowledges that the Representative's legal fees incurred in connection
with Blue Sky filings for the Public
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Offering, which filings are being or have been undertaken in _____ states are
currently estimated at $____________ ("Blue Sky Fees"). The Company shall have
paid at least one half of the Blue Sky Fees at the time that it files its
amendment to the Registration Statement with the Commission, and shall pay the
entire outstanding balance of Blue Sky Fees due immediately upon completion of
such Blue Sky filings. The obligations of the Company under this Subsection 5(a)
shall survive any termination or cancellation of this Agreement.
(b) REPRESENTATIVE'S DISCOUNT. The Representative shall be
entitled to, and the Company agrees to pay to Representative, an underwriting
discount equal to 10% of the Public Offering Price paid on each sale of
Securities in the Public Offering, payable at the closing date and any Option
Closing Date.
(c) NON-ACCOUNTABLE EXPENSE ALLOWANCE. In addition to the
Company's payment of the foregoing expenses and Representative's discount, the
Company shall pay to the Representative a non-accountable expense allowance
equal to 3% of the gross proceeds of the Public Offering, including in the
computation of such amount the proceeds from any sale of Optional Securities.
The non-accountable expense allowance due shall be paid at the Closing Date and
on each Option Closing Date, as applicable.
(d) EXPENSES IF THE PUBLIC OFFERING IS NOT COMPLETED. The
Representative hereby acknowledges its prior receipt from the Company of
$35,000, which amount shall be applied to the non-accountable expense allowance.
If the proposed Public Offering is not completed because: (i) of any reason
solely within the control of the Company or its shareholders, (ii) the Company
unilaterally withdraws the proposed Public Offering from the Representative,
(iii) of any material inaccuracy in any representation or warranty made to the
Representative or the failure of the Company to meet any of its obligations
hereunder, or (iv) the Company does not permit the Registration Statement to
become effective for any reason whatsoever, then the $35,000 paid shall be
retained by the Representative as and for its expenses and without any further
liability whatsoever on the part of the Company except in the case of fraud or
willful misconduct on the part of the Company, in which case the Company shall
be responsible for the greater of: (A) such $35,000 or (B) the Representative's
actual costs, expenses, and legal fees incurred without limitation in connection
with the transaction contemplated hereunder. If the Representative unilaterally
withdraws from the Public Offering for any reason other than those reasons set
forth in this Subsection 5(c) above, the Company will be obligated to reimburse
only the actual expenses of the Representative incurred in connection herewith.
It is understood and agreed by the parties hereto that any expenses incurred by
the Representative will be deemed to be reasonable and unobjectionable upon
demonstration by the Representative that such expenses were incurred directly or
indirectly in connection with the proposed transaction and/or relationship of
the parties hereto, as described herein.
(e) ENGAGEMENT OF THE REPRESENTATIVE AS WARRANT SOLICITATION
AGENT. The Company hereby appoints the Representative as warrant solicitation
agent for a period of five years commencing one year from the Effective Date,
and the Representative shall be entitled to receive a 7% warrant conversion fee
upon exercise of the Warrants, pursuant to the NASD Notice to Members 81-38. The
solicitation fee shall relate to the Public Offering and shall be paid for the
period of one to five years from the Effective Date.
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(f) COMPLIANCE WITH STATE SECURITIES LAWS. The Representative
shall determine in which states or jurisdictions the Securities, including the
Underwriters' Warrants and the Warrant Securities (as described below), shall be
registered or qualified for sale. Copies of all applications and related
documents for the registration or qualification of securities (except for the
Registration Statement and Prospectus) filed with the various states shall be
supplied to the Company's counsel as soon as possible following their
transmission to the various states, and copies of all comments and orders
received from the various states shall be made available promptly to the
Company's counsel. Immediately prior to the Effective Date, counsel for the
Representative shall advise counsel for the Company in writing of all states in
which the offering has been registered or qualified for sale or has been
cancelled, withdrawn, or denied, the date of each such event, and the number of
Securities, including the Underwriters' Warrants and the Warrant Securities,
registered or qualified for sale in each such state. The Company shall be
responsible for the cost of state registration or qualification filing fees and
the legal fees of the Representative's counsel in connection with such filings,
which filing fees are payable to the Representative's counsel in advance of such
filings.
6. UNDERWRITERS' WARRANTS; OTHER FINANCIAL ARRANGEMENTS.
(a) UNDERWRITERS' WARRANTS. On the Closing Date, the Company
will sell to the Representative the Underwriters' Warrants, for an aggregate
price of the lesser of $.001 per Representative's Warrant or an aggregate of
$100, evidencing the Representative's right to purchase the equivalent of 10% of
the Securities sold in the Public Offering, at an exercise price of $7.20 per
share of Common Stock and $.12 per Warrant (120% of the Public Offering Price
per share of Common Stock and per Warrant). The Underwriters' Warrants will be
in the form of EXHIBIT A attached hereto. The Underwriters' Warrants shall be
non-exercisable and non-transferable (other than to officers, consultants,
partners or directors of and members of the underwriting or selling group) for a
period of 12 months following the Effective Date. The Underwriters' Warrants
shall be exercisable, in whole or in part, commencing 12 months after the
Effective Date and for a period of four years thereafter (the "Term"). In lieu
of any cash payment required by the Representative in connection with the
exercise of the Underwriters' Warrants, the Underwriters' Warrants shall provide
for the cashless exercise thereof. If the Underwriters' Warrants are not
exercised during the Term, they shall, by their terms, automatically expire. The
Underwriters' Warrants shall contain customary anti-dilutive provisions relating
to any recapitalization, stock split, stock dividend or similar event involving
the Company. The Underwriters' Warrants shall also contain provisions providing
for demand and "piggyback" registration rights with respect to the Underwriters'
Warrants and the Warrant Securities, and shall not be redeemable.
The Underwriters' Warrants shall otherwise be
transferable after one year from the Effective Date pursuant to available
exemptions from registration under the Securities Act.
(b) FINANCIAL CONSULTING AGREEMENT; RIGHT OF FIRST REFUSAL AND
FINDER'S FEE. On the Closing Date, the Company and the Representative shall
enter into a financial consulting agreement in the form of EXHIBIT B attached
hereto, pursuant to which the Representative will offer to provide financial
consulting services to the Company for a 12-month period beginning on the date
hereof (the "Financial Consulting Agreement"). The Company
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shall pay to the Representative a consulting fee equal to 1% of the gross
proceeds generated from the Public Offering, which will be payable in full on
the Closing Date. In addition, the Company agrees to pay to the Representative a
finder's fee based on 5% of the Transaction Value (as defined in the Financial
Consulting Agreement) of any merger, acquisition, joint venture or other similar
transaction to which the Company or a subsidiary of the Company is a party.
(c) REPRESENTATIVE'S RIGHT OF FIRST REFUSAL. The Company and
its affiliates hereby grant to the Representative a right of first refusal, for
a period of three years after the Effective Date, for the underwriting of any
public or private sale of securities by the Company undertaken by or on behalf
of the Company in the future, and for any public or private sale of securities
by the company to be made by its principal shareholders or subsidiaries. The
Company shall, in the event of any such proposed offering or sale, first give
written notice of the proposed offering or sale to the Representative, including
in such notice the terms of such proposed offering or sale ("Proposed Offering")
and an offer by the Company to engage the Representative to underwrite the
Proposed Offering on terms comparable to the current underwriting pursuant to
this Agreement ("Company's Offer"). The Representative shall have ten days from
the date of confirmed receipt of such notice from the Company to either accept
or reject, in writing, the Company's Offer. The Representative's failure to
accept or reject the Company's Offer within such period shall be deemed a
rejection of the Company's Offer, in which case the Company shall be free to
engage other underwriters for such Proposed Offering.
Notwithstanding the foregoing, should an investment banking firm that
is generally recognized to be of a higher tier than the Representative agree to
undertake the underwriting of any public or private sale of securities of the
Company resulting in aggregate gross proceeds of $15,000,000 or more and the
Representative is permitted to participate in such offering to the extent of at
least 10% of the value of such offering, then the right of first refusal
provided herein shall not apply to such offering and any related offering.
Should the Company prefer to work with another investment
banking firm in connection with a future underwriting of any public or private
sale of securities by the Company and the investment banking firm is not
generally recognized to be of a higher tier than the Representative and/or the
underwriting will not result in aggregate gross proceeds of at least
$15,000,000, then upon payment of a fee in the amount of $200,000 to the
Representative, the right of first refusal provided herein shall not apply to
such offering or any related offerings.
(d) FINDER'S FEE. In the event the Company effectuates a
corporate restructuring, merger, joint venture, or acquisition subsequent to the
date hereof and on or prior to two years after the date of termination of this
Agreement, irrespective of any reason for such termination, and such corporate
restructuring, merger, joint venture, or acquisition is effectuated as a result
or consequence of any introduction made directly by the Representative or
indirectly by the Representative through any third party introduced by the
Representative, or by a person whose introduction to the Company can be traced
back to the Representative, to the Company during the term of this Agreement, or
which corporate restructuring, merger, joint venture, or acquisition was
initiated, directly or indirectly through any person introduced by the
Representative to the Company during the term of this Agreement, then the
Company hereby agrees to pay the Representative a finder's fee based on five
percent (5%) of the "Transaction
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Value" (as hereinafter defined) of any such transaction, which payment shall be
due and payable in cash on the date of any such closing with respect thereto.
For purposes of this Agreement, "Transaction Value" shall mean the
aggregate value of all cash, securities, and other property (a) paid to the
Company, its affiliates, or their shareholders in connection with any
transaction referred to hereinabove involving an investment in or acquisition of
the Company or any affiliate (or the assets of either); (b) paid by the Company
or any affiliate in any such transaction involving an investment in or
acquisition of another party or its equity holdings by the Company or any
affiliate; or (c) paid or contributed by the Company or any affiliate and by the
other party or parties in the event of any such transaction involving a joint
venture or similar joint enterprise or undertaking. The value of any such
securities (whether debt or equity) or other property shall be the fair market
value thereof as determined by mutual agreement of the Company and the
Representative or by an independent appraiser jointly selected by the Company
and the Representative.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE UNDERWRITERS.
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, the Underwriters' obligations to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Section 7, except to the extent that such
satisfaction is waived in writing by the Representative.
(a) EFFECTIVENESS OF REGISTRATION STATEMENT.
(i) The Registration Statement shall have been
declared effective by the Commission not later than 5:00 P.M.,
Eastern Time, on ______________, 1997, or such later time or
date as shall have been consented to by the Representative in
writing.
(ii) On the Closing Date, no stop order suspending
the effectiveness of the Registration Statement or the
qualification or registration of the Securities, the
Underwriters' Warrants and the Warrant Securities, under the
securities laws of any jurisdiction (whether or not a
jurisdiction specified by the Representative) shall have been
issued, and no proceeding for that purpose shall have been
initiated or shall be threatened or contemplated by the
Commission or the authorities of any such jurisdiction.
(iii) Any request of the Commission or any such
authorities for additional information to be included in the
Registration Statement or Prospectus or otherwise shall have
been complied with to the reasonable satisfaction of counsel
for the Representative.
(b) REPRESENTATIONS; COMPLIANCE WITH AGREEMENT. The
representations and warranties of the Company in this Agreement shall be true
and correct on and as of the Closing Date, with the same effect as if made on
the Closing Date, and the Company shall have complied with all the agreements
and satisfied all the obligations required to be performed or satisfied by it at
or prior to the Closing Date.
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(c) SUFFICIENT AUTHORIZED COMMON STOCK. The Company shall
have, as of the Effective Date, sufficient authorized (and neither issued nor
outstanding) Common Stock to be offered and sold in the Public Offering, and to
be issued and sold upon exercise of the Warrants, Underwriters' Warrants, and
Warrants included in the Warrant Securities.
(d) NO UNTRUE STATEMENTS. The Registration Statement and the
Prospectus shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and, since the Effective Date, there shall not have occurred any
event required to be set forth in an amended or supplemented Prospectus that has
not been so set forth (except any such statement or omission based upon
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement).
(e) NO MATERIAL CHANGE. Subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
and except as set forth or contemplated in the Prospectus, (i) there shall have
been no Material Adverse Effect, actual or threatened, for whatever reason, with
respect to the properties operations, business, financial condition, results of
operations or prospects of the Company or HotelView, (ii) neither the Company
nor HotelView shall have entered into any material transaction not in the
ordinary course of business, (iii) neither the Company nor HotelView shall have
paid or declared any dividends or other distributions on its capital stock, (iv)
the conduct of the business and operations of the Company and HotelView shall
not have been materially interfered with by strike, fire, flood, hurricane,
accident or other calamity (whether or not insured), or by any court or
governmental action, order or decree, and the respective properties of the
Company and HotelView shall not have sustained any material loss or damage
(whether or not insured) as a result of any such occurrence.
(f) NASD. The NASD shall have indicated that it has no
objection (i) to the underwriting arrangements pertaining to the sale of the
Securities by the Underwriters and (ii) the participation by the Underwriters in
the sale of the Securities. No action shall have been taken by the Commission or
the NASD the effect of which would make it improper, at any time prior to the
Closing Date, for any member firm of the NASD to execute transactions (as
principal or as agent) in the Common Stock and no proceedings for the purpose of
taking such action shall have been instituted or shall be pending, or, to the
best of the Underwriters' or the Company's knowledge, shall be contemplated by
the Commission or the NASD. The Company represents at the date hereof, and shall
represent as of the Closing Date or Option Closing Date, as the case may be,
that it has no knowledge that any such action is in fact contemplated by the
Commission or the NASD.
(g) OFFICERS' CERTIFICATE. The Company shall have furnished to
the Underwriters a certificate of the President and of the Chief Financial
Officer of the Company, dated as of the Closing Date, to the effect that each
signer of such certificate has examined the Registration Statement, the
Prospectus, and this Agreement, and the conditions set forth in Subsections 7(a)
through 7(d) have been satisfied.
(h) OPINION OF COMPANY COUNSEL. At the time this Agreement is
executed and as of the Closing Date and the Option Closing Date, as applicable,
the Company shall have
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furnished to the Underwriters the opinion of counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to counsel for the
Representative and substantially in the form of EXHIBIT C attached hereto.
(i) ADDITIONAL DOCUMENTS. At the Closing Date and any Option
Closing Date, the Underwriters shall have been furnished such additional
documents, opinions and certificates, as they shall reasonably request.
(j) CERTIFICATES, BYLAWS AND PROCEEDINGS. The Company's and
HotelView's Certificate of Incorporation and By-Laws, and all proceedings taken
in connection with the authorization, issuance, or sale of the Securities, the
Underwriters' Warrants and the Warrant Securities, as herein contemplated, shall
be reasonably satisfactory in form and substance to the Underwriters.
(k) ACCOUNTANTS' LETTER. At the time this Agreement is
executed and as of the Closing Date and each Option Closing Date, as applicable,
Goldstein, Lewin & Co., the current independent public accountants for the
Company shall have furnished to the Underwriters a letter addressed to the
Underwriters and dated the date of this Agreement and/or the Closing Date, and
each Option Closing Date, as applicable, in form and substance satisfactory to
the Representative and counsel to the Representative, confirming that it is the
independent public accountant with respect to the Company within the meaning of
the Securities Act and the Regulations and published instructions, and stating
to the effect that:
(i) In its opinion, the audited financial
statements included in the Registration Statement and
Prospectus covered by its report included therein, comply as
to form in all material respects with the applicable
requirements of the Securities Act and the Regulations and
published instructions.
(ii) On the basis of a reading of the minutes of the
shareholders' and directors' meetings of the Company since
their respective inceptions, inquiries of officials of the
Company responsible for financial and accounting matters, and
other specified procedures and inquiries, nothing came to its
attention causing it to believe that:
(A) the unaudited financial information set
forth in the Prospectus does not comply as to form in
all material respects with the applicable
requirements of the Securities Act and the related
published instructions and Regulations and is not
fairly presented in accordance with generally
accepted accounting principles applied on a basis
consistent basis with the audited financial
statements set forth in the Prospectus, or
(B) with respect to the period subsequent to
_______________, 1997, there were, at a specified
date not more than three business days prior to the
date of such letter, any changes in the capital stock
or long-term debt obligations of the Company, or any
changes or decreases in shareholders' equity, net
assets, or current net assets of the Company, or any
material adverse change in the financial position,
revenues,
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expenses, or results of operations of the Company,
each as compared with the amounts shown in the most
recent balance sheet of the Company included in the
Registration Statement.
(iii) It has compared specific dollar amounts,
numbers of shares of securities, percentages of revenues and
earnings, and statements about other financial or statistical
information pertaining to the Company set forth in the
Prospectus, in each case to the extent that such amounts,
numbers, percentages, statements, and information may be
derived from the general accounting records, which are subject
to the system of internal accounting controls, including
worksheets, of the Company (and excluding any questions
requiring an interpretation by legal counsel), with the
results obtained from the application of specific readings,
inquiries, and other appropriate procedures (which procedures
do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and
found them to be in agreement.
(l) CHANGE IN CAPITALIZATION. Subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there shall not have been any Material Adverse Effect on or decrease
in the capitalization of the Company that makes it impractical or inadvisable in
the reasonable judgment of the Representative to proceed with the Public
Offering or the delivery of the Securities, as the case may be, as contemplated
in the Prospectus.
(m) OPINION OF REPRESENTATIVE'S COUNSEL. At the Closing Date
and the Option Closing Date, if any, Broad and Cassel, counsel for the
Representative, shall have furnished to the Company such opinion or opinions,
dated as of the date of its delivery, with respect to such matters as the
Company may reasonably request, and such counsel shall have received such
documents as they may reasonably request to enable them to opine upon such
matters.
(n) THE NASDAQ SMALLCAP MARKET(R). On or before the Closing
Date, the Securities shall have been approved for listing on The Nasdaq SmallCap
Market(R).
(o) "MARKET-OUT" PROVISION. The Representative's obligations
hereunder shall be subject to, among other things, there being, in its opinion:
(i) no material adverse change in the conditions or obligations of the Company,
HotelView or their respective present or proposed businesses and affairs; and
(ii) no market conditions which might render the offer and sale of the shares of
Securities herein contemplated inadvisable.
(p) CERTIFICATE OF SELLING SHAREHOLDERS. The Selling
Shareholders shall have furnished to the Underwriters a certificate, signed by
the Selling Shareholders, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and that the
representations and warranties of each such Selling Sharholder in this Agreement
are true and correct in all material respects on and as of the Closing Date to
the same effect as if made on the Closing Date.
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(q) LETTER AGREEMENTS. The Company will obtain letter
agreements executed by each of its officers, directors and principal
shareholders with respect to those matters referred to in Subsection 3(q).
(r) OTHER INFORMATION. Prior to the Closing Date, the Company
and the Selling Shareholders shall have furnished to the Representative such
further information, certificates, and documents in connection with the
Company's and the Selling Shareholders' obligations set forth herein as the
Representative may reasonably request.
If any of the conditions specified in this Section 7 shall not
have been fulfilled when and as required by this Agreement or expressly waived
in writing by the Representative, this Agreement and all obligations of the
Representative hereunder may be terminated by the Representative at, or at any
time prior to, the Closing Date. Notice of such termination shall be given to
the Company and the Selling Shareholders in writing, or by telegraph, facsimile
transmission or telephone and confirmed in writing. In such event, the Company,
the Selling Shareholders and the Representative shall not be under any
obligation to each other except to the extent provided in Sections 6 and 8
hereof.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify and hold harmless the Representative, each of the other Underwriters
and each person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each of
them, from and against any and all loss, liability, claim, damage, expense or
action, joint or several (including, but not limited to, any and all reasonable
expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any amount paid
in settlement of any litigation), commenced or threatened, or of any claim
whatsoever, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, liability, claim, damage, expense
or action arises out of or is based upon (i) any untrue statement or alleged
untrue statement or breach of any representation, warranty or covenant made by
the Company in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in a Preliminary Prospectus or the Prospectus (or
any amendment or supplement thereto), or any omission or alleged omission
therefrom of a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (iv) any untrue statement or
alleged untrue statement of a material fact contained in any application or
other document executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify all or any of the Securities, the Underwriters' Warrants or the Warrant
Securities under the securities laws thereof or filed with the Commission, the
NASD or any securities exchange, or any omission or alleged omission therefrom
of a material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that the Company shall
not be liable in any such case to the extent that such untrue statement or
omission or such
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alleged untrue statement or omission was made in reliance upon and in conformity
with information furnished in writing by or on behalf of any of the Underwriters
to the Company expressly for use in the Registration Statement (or any amendment
thereto), any such Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) or any such application or document. The Company
acknowledges that the statements under the caption "Underwriting" contained in
any Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. The
indemnity agreement contained in this Subsection 8(a) is in addition to any
liability which the Company may otherwise have to the Underwriters or any
controlling person of the Underwriters. The Company agrees to pay any legal and
other expenses for which it is liable under this subsection (a) from time to
time (but not more frequently than monthly) within 30 days after its receipt of
a bill therefor.
(b) INDEMNIFICATION BY THE REPRESENTATIVE. The Representative
agrees that it will indemnify and hold harmless the Company, the Selling
Shareholders, each of the Company's officers who signs the Registration
Statement, each of its directors, and each person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage, expense or
action, joint or several, to the same extent as the foregoing indemnity from the
Company and the Selling Shareholders to the Underwriters in Subsection 8(a), but
only with respect to statements or omissions made in the Registration Statement
(or any amendment thereto) or a Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing by the Representative to the Company expressly
for use in the Registration Statement (or any amendment thereto). The indemnity
agreement contained in this Subsection 8(b) is in addition to any liability
which the Representative may otherwise have to the Company and the Selling
Sharholders or any of the Company's directors, officers, or controlling persons.
The Company and the Selling Shareholders acknowledge that the statements in any
Preliminary Prospectus and in the Prospectus made under the caption
"Underwriting" constitute the only information furnished in writing by the
Representative expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. The Representative agrees to pay any
legal and other expenses for which it is liable under this Subsection 8(b) from
time to time (but not more frequently than monthly) within 30 days of receipt of
a bill therefor.
(c) INDEMNIFICATION BY THE SELLING SHAREHOLDERS. The Selling
Shareholders, jointly or severally, agree to indemnify and hold harmless the
Company, each of the Company's officers who signs the Registration Statement,
the Representative, each of the other Underwriters and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and each of them, to the same extent as
the foregoing indemnity from the Company to the Underwriters in Section 8(a)
above but only with respect to (i) statements or omissions of a material fact,
if any, made in any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Selling Shareholders expressly for use in any
Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or in any application,
as the case may be, or (ii) any breach
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of any representation, warranty, covenant or agreement of the Selling
Shareholders contained in this Agreement. In case any action shall be brought
against the Company, any Underwriter or any other person so indemnified based on
any Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement
or the Prospectus, or any amendment or supplement thereto, or in any
application, or with respect to any such breach, and in respect of which
indemnity may be sought against any of the Selling Shareholders, the Selling
Shareholders shall have the rights and duties given to the indemnifying parties,
and the Company, the Underwriters and each other person so indemnified shall
have the rights and duties given to the indemnified parties under the provisions
of this Section 8.
(d) CLAIMS. Promptly after receipt by an indemnified party
under this Section 8 of notice of any claim, threatened claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the claim, threatened claim or the
commencement of that action; provided, however, that the failure to notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with its counsel, who shall be reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim, threatened claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Representative shall have
the right to employ counsel to represent it and its controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the Representative against the Company and/or the Selling
Shareholders under this Section 8 if, in the Representative's reasonable
judgment, it is necessary for the Representative and its controlling persons to
be represented by separate counsel in order to avoid an actual or potential
conflict of interest or if the Representative shall have reasonably concluded
that there may be defenses available to the Representative and its controlling
persons different from or in addition to those available to the Company or the
Selling Shareholders, and in either such event the reasonable fees and expenses
of such separate counsel shall be paid by the Company and the Selling
Shareholders. An indemnifying party shall not be liable for any settlement of
any action or claims effected without its written consent (which consent shall
not unreasonably be withheld).
[Anything herein to the contrary notwithstanding, the
indemnity agreement of the Company in Subsection 8(a) hereof, the
representations and warranties in this Agreement and any representation or
warranty as to the accuracy of the Registration Statement or the Prospectus
contained in any certificate furnished by the Company pursuant to Section 7
hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any interest therein of a
controlling person or partner of the Representative who is a director, officer
or controlling person of the Company when the Registration Statement has become
effective, except in each
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<PAGE>
case to the extent that an interest of such person shall have been determined by
a court of appropriate jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for the Company the matter
has been settled by a controlling precedent, the Company will, if a claim for
such indemnification is asserted, submit to a court of appropriate jurisdiction
the question whether such interest is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.]
(e) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which indemnification provided for in
Subsections 8(a), or 8(b) or 8(c) is unavailable, the Company, the Underwriters
or the Selling Shareholders shall contribute to the aggregate loss, claim,
damage, expense and liability to which the Company, the Underwriters or the
Selling Shareholders may be subject (and, in any case where the Company is
seeking contribution, after seeking contribution from persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may be
liable for contribution and after deducting from such loss, claim, damage,
expense and liability the amount of contribution obtained from such persons or
the Representative) in such proportions as are applicable to reflect the
relative benefits received by the Company, the Underwriters and the Selling
Shareholders from the offering of the Securities; provided, however, that if
such allocation is not permitted by applicable law or if the indemnified party
failed to give the notice required under Subsection 8(d), then the relative
fault of the Company, the Underwriters or the Selling Shareholders, in
connection with the statements or omissions which resulted in such losses,
claims, damages and liabilities and other relevant equitable considerations will
be considered together with such relative benefits. The relative benefits
received by the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the Public Offering (before deducting expenses)
received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters (the
"Underwriters Portion"), in each case appearing on the cover page of the
Prospectus; provided, however, that (i) the provisions of the Agreement Among
Underwriters, if any, shall govern the contribution among Underwriters, (ii) in
no case shall the Underwriters (except as may be provided in the Agreement Among
Underwriters, if any) be responsible for any amount in excess of their
respective pro rata shares, based on the number of Securities purchased by each
of them, of the amount of the Underwriters Portion, and (iii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The relative fault of the Company
and the Selling Shareholders, on the one hand, and of the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether in
the case of an untrue statement or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact, such statement or
omission relates to information supplied by the Company or the Selling
Shareholders, on the one hand, or by the Underwriters, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statements or omission. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Subsection 8(e) were determined by
pro-rata allocation (even if the Underwriters are treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in this Subsection 8(e). The amount paid or
payable by the indemnified party as a result of the losses, claims,
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<PAGE>
damages or liabilities referred to above in this Subsection 8(e) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against or appearing as a
third-party witness in any such action or claim. For purposes of this Subsection
8(e), each person, if any, who controls any of the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Underwriter and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clause
(iii) of this Subsection 8(e). Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought, it
will promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligations it may have hereunder or otherwise (except as
specifically provided in Subsection 8(d)). No party shall be liable for
contribution with respect to any action or claim settled without its consent
(which consent shall not unreasonably be withheld).
(f) SURVIVAL. The respective indemnity and contribution
agreements by the Underwriters, the Selling Shareholders and the Company
contained in this Section 8, and the covenants, representations and warranties
of the Selling Shareholders and the Company set forth herein, shall remain
operative and in full force and effect regardless of (i) any investigation made
by the Underwriters or on their behalf or by or on behalf of any person who
controls the Underwriters, by the Company or any controlling person of the
Company or any director or any officer of the Company, (ii) acceptance and
delivery of the Securities, the Underwriters' Warrants and Warrant Securities
and payment therefor, or (iii) any termination of this Agreement, and any
successor to the Company or to the Underwriters or any person who controls any
of Underwriters or the Company, as the case may be, shall be entitled to the
benefit of such respective indemnity and contribution agreements.
9. EFFECTIVENESS. This Agreement shall become effective
contemporaneously with the effectiveness of the Registration Statement, or at
such date after the Effective Date as the Underwriters, in their discretion,
shall first release the Securities for sale to the public; PROVIDED, HOWEVER,
that the provisions of Sections 5, 8, and 9 hereof shall at all times be in full
force and effect from the date first written above. For the purposes of this
Section 9, the Securities shall be deemed to have been released for sale to the
public upon release by the Underwriters after the Effective Date of a newspaper
advertisement relating to the Securities or upon release by the Underwriters
thereafter of telegrams advising securities dealers of the effectiveness of the
Registration Statement, whichever shall first occur.
10. TERMINATION. This Agreement may be terminated, in the
Representative's sole and absolute discretion, by notice given to the Selling
Shareholders and the Company prior to the Closing Date if the Company or the
Selling Shareholders shall have failed, refused, or been unable, prior to the
Closing Date, to perform any material agreement required to be performed by it
hereunder, or if any other condition precedent to the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled. In addition,
this Agreement may be
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<PAGE>
terminated, as set forth above, if, prior to the Closing Date, any of the
following shall have occurred: (i) material governmental restrictions (not in
force and effect on the date hereof) have been imposed on trading in securities
on The Nasdaq SmallCap Market(R) or in the over-the-counter market; (ii) a
material adverse change, beyond normal fluctuations, in general financial market
or economic conditions from such conditions on the date hereof; (iii) a material
interruption in mail or telecommunications service or other general means of
communications within the United States after the execution and delivery of this
Agreement; (iv) a banking moratorium has been declared by federal or New York or
Florida state authorities; (v) an outbreak of major international hostilities or
other national or international calamity has occurred; (vi) the passage by the
Congress of the United States or by any state legislative body of any act or
measure, or the adoption of any orders, rules, or regulations by any
governmental body or executive or any authoritative accounting institute or
board, that the Underwriters believe will have a Material Adverse Effect on the
business, financial condition, or financial statements of the Company or the
distribution of the Securities or market for the Securities; or (vii) any
Material Adverse Effect has occurred, since the respective dates of which
information is given in the Registration Statement and Prospectus, in the
condition of the Company or HotelView, financial or otherwise, whether or not
arising in the ordinary course of business. Any such termination shall be
without liability of any party to any other party, except as provided in Section
8 herein and except that the Company shall remain obligated to pay costs and
expenses pursuant to Section 5 herein. If the Representative elects to prevent
this Agreement from becoming effective, or to terminate this Agreement, as
provided in this Section 10, the Representative shall promptly notify the
Company and the Selling Shareholders by telegram or telephone, and confirm by
letter, and the Representative shall not be under any liability to the Company
or the Selling Shareholders.
11. DEFAULT BY THE UNDERWRITERS. If the Underwriters shall fail at the
Closing Date to purchase the Securities that they are respectively obligated to
purchase pursuant to this Agreement (the "Defaulted Securities"), the
Underwriters shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriter, to purchase all, but not less than all, of the Defaulted Securities
in such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Underwriters shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the total number of Securities, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations bear to the
underwriting obligations of the non-defaulting Underwriters; and
(b) if the number of Defaulted Securities exceeds 10% of the
total number of Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters.
In the event of any such default that does not result in a termination of this
Agreement, either the Underwriters or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement
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<PAGE>
or Prospectus or in any other documents or arrangements. Nothing contained
herein shall relieve a defaulting Underwriter of any liability it may have for
damages caused by its default.
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND INDEMNITIES. The
respective agreements, representations, warranties, and indemnities contained in
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the Company or the Underwriters or their
respective officers or directors or controlling persons, and will survive
delivery of and payment for the Securities and the Underwriters' Warrants and
the Warrant Securities.
13. NOTICES. All notices and other communications hereunder (unless
otherwise expressly provided for herein) shall be in writing and shall be deemed
given when delivered in person, on the business day (before 5:00 P.M.) sent by
facsimile transmission with confirmation of receipt, or on the date indicated on
the return receipt if sent by registered or certified mail (return receipt
requested) to the party to receive the same at the following addresses (or at
such other address for a party as shall be specified by like notice):
<TABLE>
<S> <C>
If to the Company: Visual Data Corporation
1600 South Dixie Highway
Suite 3A
Boca Raton, Florida 33432
Attention: Mr. Randy S. Selman, President
with a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Attention: Charles B. Pearlman, Esquire
If to the Selling Shareholders: Randy S. Selman
Alan M. Saperstein
[Insert addresses]
If to the Representative: Noble International Investments, Inc.
1801 Clint Moore Road
Suite 110
Boca Raton, Florida 33487
Attention: Mr. Nico P. Pronk, President
In each case with a copy to: Broad and Cassel
201 South Biscayne Boulevard
Suite 3000
Miami, Florida 33131
Attention: Dale S. Bergman, P.A.
or Linda C. Frazier, Esquire
</TABLE>
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<PAGE>
14. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors. Except as only
to the extent stated in Section 8 herein with respect to the officers, directors
and controlling persons referred to in such Section 8, no person other than the
parties hereto and their respective successors will have any right or obligation
hereunder. The terms "successor" and "successors and assigns" as used in this
Agreement shall not include any buyer, as such, of any of the Securities from
the Underwriters.
15. CONSENTS AND PRIOR APPROVALS. Any consent or approval by the
Underwriters required hereunder to any corporate action of the Company shall not
be unreasonably withheld, and, notwithstanding any other provision hereof, any
such consent or approval to any corporate action of the Company after the
Closing Date, shall not be required if the Company obtains an opinion from an
AV-rated law firm that the requirement of such consent or approval constitutes
an abrogation of the Board of Directors' duties under the corporate law of such
jurisdiction.
16. ENTIRE UNDERSTANDING; INCORPORATION BY REFERENCE. This Agreement,
together with the Financial Consulting Agreement, the Representative's Warrant,
and the other documents, exhibits and schedules referred to herein, contains the
entire understanding between the parties hereto and supersedes any prior
understandings or oral or written agreements between them respecting the subject
matter hereof. The documents, exhibits and schedules referred to in this
Agreement are incorporated herein by reference.
17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original but all of which taken together
shall constitute one and same agreement.
18. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida, without giving
effect to choice of law or conflict of laws principles thereof, and any
proceeding arising between the parties in any manner pertaining or related to
this Agreement shall, to the extent permitted by law, be held in Palm Beach
County, Florida.
Please confirm, by signing and returning to the Company counterparts of
this Underwriting Agreement, that the foregoing correctly sets forth the
understanding between the Company, the Selling Shareholders and the
Representative, whereupon this Agreement will constitute a binding agreement
among us.
Very truly yours,
VISUAL DATA CORPORATION, a Florida corporation
By:
-------------------------------
Name: Randy S. Selman
Title: President
[SIGNATURES CONTINUED]
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<PAGE>
SELLING SHAREHOLDERS
-------------------------------
Randy S. Selman
-------------------------------
Alan M. Saperstein
Confirmed and Accepted as of the date first above-written:
NOBLE INTERNATIONAL INVESTMENTS, INC.,
a Florida corporation
By:________________
Name: NICO P. PRONK
Title: PRESIDENT
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<PAGE>
SCHEDULE 1
NUMBER OF
UNDERWRITERS SECURITIES
------------ ----------
Noble International Investments, Inc.
Total
<PAGE>
SCHEDULE 3(q)
COMPANY SHAREHOLDERS NOT
SUBJECT TO RESTRICTIONS ON TRANSFERS
<PAGE>
EXHIBIT A
REPRESENTATIVE'S WARRANT
<PAGE>
EXHIBIT B
FINANCIAL CONSULTING AGREEMENT
<PAGE>
EXHIBIT C
OPINION OF COMPANY COUNSEL
1. Each of the Company and HotelView is duly organized and validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to own or lease
all of the assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus.
2. Each of the Company and HotelView is qualified to do business and in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted by it or the character of the assets owned or leased
by it makes such qualification necessary, except for such jurisdictions where
the failure, either singly or in the aggregate, to do so or be in good standing
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business, assets, properties, results of operations or
prospects (financial or otherwise) of the Company (hereinafter a "Material
Adverse Effect"). The Company owns, directly or indirectly, 100% of the
outstanding capital stock of HotelView, and all of such shares have been validly
issued, are fully paid and non-assessable, were not issued in violation of any
preemptive rights, and, except as set forth in the Prospectus, are owned free
and clear of any liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind whatsoever. The
Company does not own, directly or indirectly, any shares of stock or any other
securities of any corporation, or have any equity interest in any firm,
partnership, joint venture, association or other entity, other than HotelView.
3. The Company has full corporate power and authority to execute and
deliver the Underwriting Agreement, the Representative's Warrant, and the
Financial Consulting Agreement (collectively, the "Transaction Documents"), to
perform its obligations thereunder and to consummate the transactions provided
for therein. The execution and delivery of the Transaction Documents by the
Company, the performance of its obligations thereunder, the consummation by the
Company of the transactions contemplated thereby and the Company's compliance
with the terms of the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Company. The Transaction Documents
have been duly executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that (i)
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles or a requirement as to commercial
reasonableness, and (ii) enforceability of the indemnification and contribution
provisions set forth in the Underwriting Agreement may be limited by federal or
state securities laws or public policy underlying such laws.
4. The "lock-up" agreements described in Section 3(r) of the
Underwriting Agreement delivered to the Representative have been duly executed
and delivered by the shareholders who are parties thereto, and constitute legal,
valid and binding obligations of such shareholders, enforceable against each of
them in accordance with their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
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reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles.
5. None of (i) the Company's issue and sale of the Securities, the
Representative's Warrant and Warrant Securities (collectively, the "Registered
Securities"), and (ii) the execution and delivery of the Transaction Documents,
performance of the Company's obligations thereunder, consummation of the
transactions contemplated therein or the conduct by the Company of its business
as described in the Prospectus, conflicts with, or will conflict with, results
in, or will result in, any breach or violation of any of the terms or provisions
of, constitutes, or will constitute, a default under, or results in, or will
result in, the creation of any lien, charge, claim, encumbrance or security
interest of any kind or nature whatsoever upon any property or assets of the
Company pursuant to (A) the articles of incorporation or by-laws of the Company
or HotelView, (B) to such counsel's knowledge after due inquiry, any note,
contract, commitment, indenture, deed of trust, mortgage, voting trust
agreement, shareholders agreement, license or other agreement or instrument to
which the Company or HotelView is a party, by which it is bound or to which any
of its properties may be subject, or (C) any federal, state or local law, rule
or regulation applicable to the Company or, to such counsel's knowledge after
due inquiry, any judgment, order or decree of any federal or [state] court,
arbitrator, regulatory administrative or other governmental agency or body
having jurisdiction over the Company or any of its properties or businesses.
6. No consent, approval, authorization or order of, and no registration
or filing with, any third party or any court, regulatory body, administrative
agency or other governmental agency or official (other than such as may be
required under the Securities Act or the Exchange Act, by the NASD or state
securities laws, as to which such counsel need not express an opinion) is
required for the valid authorization, issuance, sale and delivery of the
Registered Securities pursuant to the Transaction Documents, for the execution
and delivery by the Company of, and the performance by the Company of its
obligations under, the Transaction Documents and for the consummation by the
Company of the transactions contemplated by the Transaction Documents.
7. The Registration Statement has become effective under the Securities
Act. To such counsel's knowledge after due inquiry, no stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus has
been issued, and no proceedings for that purpose have been instituted or are
pending or threatened.
8. Each of the Registration Statement and the Prospectus, and each
amendment or supplement thereto, comply as to form in all material respects with
the requirements of the Securities Act (except for the financial statements,
notes and schedules, and other statistical or other financial data included
therein, as to which such counsel need not express an opinion). The conditions
to use Form SB-2 have been satisfied with respect to the Registration Statement.
9. There are no laws, rules or regulations, judgments, orders or
decrees, required to be described in the Registration Statement and the
Prospectus other than those described in the Registration Statement and
Prospectus. The statements in the Prospectus, insofar as such statements
constitute a summary of laws, rules, regulations or legal conclusions, are
accurate
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<PAGE>
summaries and fairly and correctly present in all material respects the
information called for in the Securities Act with respect to such laws, rules,
regulations or conclusions.
10. To such counsel's knowledge after due inquiry, there are no
agreements, contracts or other documents or instruments required to be described
in the Registration Statement and the Prospectus or required to be filed as an
exhibit to the Registration Statement other than those described in the
Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement.
11. The persons listed under the caption "Principal and Selling
Shareholders" in the Prospectus are the respective record and, to such counsel's
knowledge after due inquiry, "beneficial owners" (as such phrase is defined in
Regulation 13d-3 under the Exchange Act) of the Common Stock set forth opposite
their respective names as and to the extent set forth therein.
12. Except as described in the Prospectus, to such counsel's knowledge
after due inquiry, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the Registered Securities.
13. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
14. No transfer tax, stamp duty or other tax, levy, impost, deduction,
charge or withholding is payable by or on behalf of the Underwriters in
connection with (i) the issuance by the Company of the Registered Securities,
(ii) the purchase by the Underwriters of the Registered Securities, (iii) the
purchase by the Representative of the Underwriters' Warrants or the purchase of
the Warrant Securities by the Representative (or its permitted assignees) upon
the exercise of the Underwriters' Warrants, and (iv) the execution and delivery
by the Company of, or the performance by the Company of its obligations under,
the Transaction Documents or the issuance of the certificates and instruments
representing the Registered Securities.
15. All of the agreements of the Company and HotelView described in,
required to be described in or attached as an exhibit to the Registration
Statement have been validly authorized, executed and delivered by the Company or
HotelView and constitute legal, valid and binding agreements of the Company or
HotelView, enforceable against the Company and HotelView in accordance with
their respective terms, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
equitable principles. None of the provisions of any such agreements, contracts,
documents or instruments violates any judgment, order, consent or decree or any
federal or state governmental agency or court having jurisdiction over the
Company, Hotelview or their respective properties or businesses, except where
such violation has not and will not have a Material Adverse Effect.
16. Except as described in the Prospectus, the Company and HotelView
are not in violation of, or breach of, or in default under (i) their respective
articles of incorporation or bylaws, or (ii) to such counsel's knowledge after
due inquiry, any material license, contract,
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<PAGE>
indenture, mortgage, installment contract, deed of trust, lease, voting trust
agreement, shareholders agreement, note, loan or credit agreement, or other
agreement or instrument to which the Company or HotelView is a party, by which
the Company or HotelView is bound or to which any of its properties are subject.
17. The Company and HotelView hold all licenses, permits,
certifications, registrations, approvals, consents and franchises from all
governmental or regulatory authorities, officials or agencies necessary to own
or lease and operate its properties and to conduct its business as described in
the Prospectus.
18. To such counsel's knowledge after due inquiry, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries pending,
or to such counsel's knowledge after due inquiry, threatened, against or
involving the Company, HotelView or any of its properties (i) that are required
to be disclosed in the Registration Statement in accordance with the Securities
Act and are not so disclosed, (ii) which question the validity of the capital
stock of the Company or HotelView, (iii) which question the validity,
performance or enforceability of the Agreement or any action taken or to be
taken by the Company or HotelView pursuant thereto or in connection therewith,
or (iv) which, in such counsel's opinion, if adversely determined, would have a
Material Adverse Effect.
19. Except as disclosed in the Prospectus, (i) there is no claim or
action by any person pertaining to, or proceeding pending or threatened, that
challenges the ownership or use by the Company or HotelView of any copyright,
trademark, service mark, service name, and trade name used by the Company or
HotelView in the conduct of its business; and (ii) each of the Company and
HotelView owns and has full right, title and interest in and to, or has the
valid and exclusive right to, all copyright, trademarks, service marks, service
names and trade names necessary in the conduct of its business as presently
conducted, or as proposed to be conducted as described in the Prospectus, except
where such failure has not and will not have a Material Adverse Effect.
20. The Company has the capitalization set forth in the Prospectus. All
of the issued and outstanding shares of Common Stock of the Company have been
duly authorized, validly issued and are fully paid and nonassessable. The
holders thereof have no rights of rescission with respect thereto and are not
subject to personal liability solely by reason of being such holders. None of
such securities were issued in violation of any preemptive or similar right.
Except as described in the Prospectus, to such counsel's knowledge after due
inquiry, the Company is not a party to or bound by any outstanding options,
warrants or similar rights to subscribe for, or contractual rights or
obligations to issue, sell, transfer or acquire, any of the capital stock of the
Company or any securities convertible into or exchangeable for any of the
capital stock of the Company. All issuances of capital stock by the Company
prior to the date hereof either complied with or were not subject to the
registration requirements of the Securities Act and were made in full compliance
with all applicable federal or state laws, rules and regulations.
21. The certificates representing the Warrants and shares of Common
Stock are in due and proper form. The Securities conform to the descriptions
thereof set forth in the Prospectus.
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<PAGE>
22. Except as described in the Prospectus, no person (i) has the right
to include and/or register any securities of the Company in the Registration
Statement or to require the Company to file any registration statement or, if
filed, to include any security in any registration statement filed by the
Company, or (ii) holds any anti-dilution rights with respect to any securities
of the Company.
23. The Securities to be sold by the Company under the Agreement, the
shares of Common Stock to be sold by the Company pursuant to the Warrants, the
Underwriters' Warrants to be sold by the Company under the Agreement, and the
shares of Common Stock and Warrants to be sold by the Company upon the exercise
of the Underwriters' Warrants have been duly authorized, are not and will not be
in violation of any preemptive rights or any similar rights and, when issued,
paid for and delivered in accordance with the terms of the Agreement and will be
validly issued, fully paid and nonassessable. The holders thereof will not be
subject to any restriction on the voting or transfer thereof (other than in
accordance with their terms) or to any personal liability solely by reason of
being such holders, and the issuance thereof is not in violation of any
preemptive or similar right.
24. All corporate action required to be taken for the authorization,
issue and sale of (i) the Securities, (ii) the Underwriters' Warrants, and (iii)
the shares of Common Stock and Warrants underlying the Underwriters' Warrants,
and for the reservation of the shares of Common Stock required to be reserved
for issuance upon the exercise of the Warrants and Underwriters' Warrants, have
been duly and validly taken.
25. The Warrants and Underwriters' Warrants constitute valid and
binding obligations of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company called for
thereby. The shares of Common Stock issuable upon exercise of the Warrants and
Underwriters' Warrants have been reserved for issuance at the exercise prices
and under the other terms and conditions provided for in the Warrant Agreement
and Underwriters' Warrants.
26. When the certificates for the Securities being sold under the
Agreement by the Company are duly countersigned by the Company's transfer agent
and delivered to the Underwriters against payment therefor, as provided in the
Agreement, the Underwriters will acquire the Registered Securities free and
clear of any adverse claim that has been identified in a written claim received
by the Company, assuming the Underwriters acquired such shares in good faith and
without notice of any such adverse claim.
27. Counsel has participated in conferences with officers and other
representatives of the Company, representatives of the Company's accountants,
the Representative and counsel to the Representative, at which the contents of
the Registration Statement, the Prospectus and related matters were discussed.
Although counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus, on the basis of the foregoing, no
facts or circumstances have come to their attention which lead them to believe
that, on the Effective Date and on the Closing Date, the Registration Statement
and the Prospectus contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
C-5
<PAGE>
which they were made, not misleading (other than the financial statements and
other financial and statistical data included therein, as to which such counsel
need not express an opinion).
C-6
EXHIBIT 4.(a)
[Form of Underwriters' Warrant
- Subject to Additional Review]
VISUAL DATA CORPORATION
1600 SOUTH DIXIE HIGHWAY
SUITE 3A
BOCA RATON, FLORIDA 33432
UNDERWRITERS' WARRANT
WARRANT NO. CERT. NO.~
<TABLE>
<S> <C>
Date of Issuance: As of ______________ 1997 hase ____ Shares and _____ Warrants
</TABLE>
FOR VALUE RECEIVED, Visual Data Corporation, a Florida corporation (the
"Company"), promises to issue in the name of, and sell and deliver to, Holder~
(the "Holder") a certificate or certificates for an aggregate of ____ shares
(the "Warrant Shares") of the Company's common stock, $.0001 par value per share
(the "Common Stock"), and ____ redeemable common stock purchase warrants (the
"Underlying Warrants"), each said Underlying Warrant entitling the Holder to
purchase one share of Common Stock ("Underlying Warrant Share") at a purchase
price of $8.64 per share, upon payment by the Holder of the exercise price of
$7.20 per share for the Warrant Shares (the "Warrant Share Exercise Price") and
$.12 per Underlying Warrant ("Underlying Warrant Exercise Price") in lawful
funds of the United States of America, with the Warrant Share Exercise Price
being subject to adjustment in the circumstances set forth hereinbelow. This
Warrant expires in its entirety at 5:00 p.m. Eastern Time on ________________,
2002 (the "Expiration Date"). This Warrant is one of a series of Underwriters'
Warrants dated ____________, 1997. The terms and conditions of the Underwriters'
Warrants shall be identical in all material respects except that the number of
Warrant Shares and Underlying Warrants to which the Holder is entitled to
purchase may differ.
SECTION 1.
CERTAIN DEFINITIONS
As used in this Warrant, the following terms have the meanings set
forth below:
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Section 4 of this
Warrant.
"DATE OF ISSUANCE" is the date set forth on the front page of this
Warrant, and the terms "date hereof," "date of this Warrant," and similar
expressions shall be deemed to refer to the Date of Issuance, as specified in
Section 11 of this Warrant.
"EFFECTIVE DATE" means the date the Company's Registration Statement
(as defined below) is declared effective by the U.S. Securities and Exchange
Commission.
<PAGE>
"EXERCISE PERIOD" means the period of time commencing at 12:01 A.M.,
Eastern Time, on the first anniversary of the Effective Date and ending at 5:00
p.m., Eastern Time, on the fifth anniversary of the Effective Date.
"MARKET PRICE" means, as to any security, the average of the closing
prices of such security's sales on the principal domestic securities exchange on
which such security may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
security is not so listed, the average of the representative bid and asked
prices listed on The Nasdaq SmallCap as of the close of trading in New York City
on such day, or, if on any day such security is not listed on The Nasdaq
SmallCap, the average of the high and low bid and asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of 20 consecutive business days consisting of the
business day immediately preceding the day as of which "Market Price" is being
determined and the 19 consecutive business days prior to such day; PROVIDED that
if such security is listed on any domestic securities exchange or listed on The
Nasdaq SmallCap, the term "business day" or "business days" as used in this
sentence means a day or days, as applicable, on which such exchange or the
Nasdaq SmallCap is open for trading or quotation, as the case may be. If at any
time such security is not listed on any domestic securities exchange or listed
on the Nasdaq SmallCap or the domestic over-the-counter market, the "Market
Price" will be the fair value thereof determined jointly by the Company and the
Holders of Warrants representing at least 50% of the Common Stock purchasable
upon the exercise of all the Warrants then outstanding; PROVIDED that if such
parties are unable to reach agreement, such fair value will be determined by an
appraiser jointly selected by the Company and the Holders of Warrants
representing at least 25% of the Common Stock purchasable upon the exercise of
all the Warrants then outstanding.
"NASDAQ SMALLCAP" means The Nasdaq SmallCap Market or such other
similar quotation system as may in the future be used generally by members of
the National Association of Securities Dealers, Inc. for transactions in
securities.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, a trust, a joint venture, an unincorporated organization, and
a government or any department or agency thereof.
"REGISTRATION STATEMENT" means the Company's Registration Statement on
Form SB-2, File No. 333-18819.
"UNDERLYING SECURITIES" means the Warrant Shares, the Underlying
Warrants, and the Underlying Warrant Shares issuable upon exercise of the
Underlying Warrants, collectively.
"WARRANTS" mean this Warrant and all other Warrants issued in exchange
or substitution for this Warrant or any such other Warrants issued pursuant to
the terms hereof or thereof, as the case may be.
SECTION 2.
EXERCISE OF WARRANT
2.1 EXERCISE PERIOD. The Holder may exercise this Warrant, in whole or
in part (but not as to a fractional share), at any time and from time to time,
during the Exercise Period.
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<PAGE>
2.2 EXERCISE PROCEDURE.
(a) This Warrant will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
(i) a completed Exercise Agreement, in the form set
forth as Exhibit I hereto, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant (subject to delivery by the
Company of a new Warrant with respect to any unexercised portion, as provided in
Subsection 2.2(b));
(iii) if this Warrant is not registered in the name
of the Purchaser, an Assignment or Assignments in the form set forth as Exhibit
II hereto, evidencing the assignment of this Warrant to the Person; and
(iv) a cashier's or official bank check or other
immediately available funds payable to the Company in an amount equal to the sum
of the following: (A) the product of the Warrant Share Exercise Price multiplied
by the number of Warrant Shares being purchased upon such exercise; and (B) the
product of the Underlying Warrant Exercise Price multiplied by the number of
Underlying Warrants being purchased upon such exercise.
(b) Certificates for Warrant Shares and Underlying Warrants
purchased upon exercise of this Warrant will be delivered by the Company to the
Purchaser within five calendar days after the Exercise Date. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised, the Company will prepare a new Warrant representing the rights
formerly represented by this Warrant that have not expired or been exercised.
The Company will, within such five-day period, deliver such new Warrant to the
Person designated for delivery in the Exercise Agreement.
(c) The Warrant Shares and Underlying Warrants issuable upon
the exercise of this Warrant will be deemed to have been transferred to the
Purchaser on the Exercise Date, and the Purchaser will be deemed for all
purposes to have become the record holder of such Common Stock on the Exercise
Date.
(d) The issuance of certificates for Warrant Shares and
Underlying Warrants upon exercise of this Warrant and the issuance of
certificates for the Underlying Warrant Shares upon exercise of the Underlying
Warrants will be made without charge to the Holder or the Purchaser for any
issuance tax in respect thereof or any other cost incurred by the Company in
connection with such exercise and the related transfer of the Underlying
Securities; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any certificate or instrument in a name other than that of the
Holder of this Warrant, and the Company shall not be required to issue or
deliver any such certificate or instrument unless and until the Person or
Persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
(e) The Company will not close its books for the transfer of
this Warrant or of any of the Underlying Securities in any manner that
interferes with the timely exercise of this Warrant. The Company will from time
to time take all such action as may be necessary to assure that the par value
per share of the unissued Common Stock acquirable upon exercise of this Warrant
and the Underlying
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<PAGE>
Warrants is at all times equal to or less than the Warrant Share Exercise Price
(divided by such number of shares) then in effect.
2.3 EXERCISE AGREEMENT. The Exercise Agreement will be substantially in
the form set forth as Exhibit I hereto, except that if the Warrant Shares and
Underlying Warrants are not to be issued in the name of the Holder of this
Warrant, the Exercise Agreement will also state the name of the Person to whom
the certificates or instrument for the Warrant Shares and Underlying Warrants
are to be issued, and if the number of Warrant Shares purchasable does not
include all of such securities purchasable hereunder, it will also state the
name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be delivered.
2.4 FRACTIONAL SHARES OR WARRANTS. If a fractional share of Common
Stock or fractional Underlying Warrant would, but for the provisions of
Subsection 2.1, be issuable upon exercise of the rights represented by this
Warrant, the Company will, within twenty days after the Exercise Date, deliver
to the Purchaser a check payable to the Purchaser, in lieu of such fractional
share or fractional Underlying Warrant, in an amount equal to the Market Price
of such fractional share or fractional Underlying Warrant as of the close of
business on the Exercise Date.
SECTION 3.
WARRANT SHARE EXERCISE PRICE; UNDERLYING WARRANT EXERCISE PRICE
3.1 GENERAL.
(a) The Holder of this Warrant shall be entitled to purchase
such numbers of Warrant Shares at the Warrant Share Exercise Price, and such
numbers of Underlying Warrants at the Underlying Warrant Exercise Price, as set
forth on the front page of this Warrant.
(b) If and whenever the Company issues or sells, or in
accordance with Subsection 3.2 is deemed to have issued or sold, any shares of
its Common Stock for a consideration per share less than the Warrant Share
Exercise Price in effect immediately prior to the time of such issuance or sale
(except for the issuance or deemed issuance of securities in a transaction
described in paragraph (c) of this Subsection 3.1), then immediately upon such
issuance or sale the Warrant Share Exercise Price will be reduced to a price
determined by multiplying the Warrant Share Exercise Price in effect immediately
prior to the issuance or sale by a fraction, the numerator of which shall be the
sum of (i) the number of shares of Common Stock outstanding prior to the
issuance or sale PLUS (ii) the number of shares of Common Stock (in terms of
Warrant Shares issuable upon an exercise of this Warrant) that the maximum
aggregate amount receivable by the Company upon such issuance or sale would
purchase at the Warrant Share Exercise Price in effect immediately prior to the
issuance or sale, and the denominator of which shall be the number of shares of
Common Stock Deemed Outstanding immediately after such issuance or sale.
(c) The following securities or transactions shall be excluded
from the operation of paragraph (b) of this Subsection 3.1 and Subsection 3.2:
(i) The existence and any exercise of the Warrants;
(ii) The existence and any exercise of any option,
warrant, or other right to purchase Common Stock, that is outstanding on the
date of this Warrant; and
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<PAGE>
(iii) Any grant or exercise of options for Common
Stock granted under the Company's stock option plans with an exercise price (as
possibly adjusted) of at least the last reported sale price on date of grant.
3.2 EFFECT ON WARRANT SHARE EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Warrant Share Exercise Price under
Subsection 3.1 above, the following provisions will be applicable:
(a) If the Company in any manner grants any rights or options
to subscribe for or to purchase Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (such rights or options being
herein called "Rights" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Rights or upon conversion or
exchange of such Convertible Securities is less than the Warrant Share Exercise
Price in effect immediately prior to the time of the granting of such Rights,
then the total maximum number of shares of Common Stock issuable upon the
exercise of such Rights or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such Rights
will be deemed to be outstanding and to have been issued and sold by the Company
for such price per share. For purposes of this paragraph, the "price per share
for which Common Stock is issuable upon exercise of such Rights or upon
conversion or exchange of such Convertible Securities" will be determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the granting of such Rights, plus the minimum aggregate amount
of additional consideration payable to the Company upon exercise of all such
Rights, plus, in the case of Rights that relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock then issuable upon the exercise of such Rights or upon the
conversion or exchange of all Convertible Securities issuable upon the exercise
of such Rights. Except as otherwise provided in paragraphs (d) and (e) below, no
adjustment of the Warrant Share Exercise Price will be made when Convertible
Securities are actually issued upon the exercise of such Rights or when Common
Stock is actually issued upon the exercise of such Rights or the conversion or
exchange of such Convertible Securities.
(b) The following adjustments apply to the Warrant Share
Exercise Price of the Warrants with respect to the Warrant Shares and the number
of Warrant Shares purchasable upon exercise of the Warrants.
(c) If the Company in any manner issues or sells any
Convertible Securities, and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Warrant Share
Exercise Price in effect immediately prior to the time of such issuance or sale,
then the maximum number of shares of Common Stock then issuable upon conversion
or exchange of all such Convertible Securities will be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
purposes of this paragraph, the "price per share for which Common Stock is
issuable upon such conversion or exchange" will be determined by dividing (i)
the total amount received or receivable by the Company as consideration for the
issuance or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock then issuable upon the conversion or exchange of all such
Convertible Securities. Except as otherwise provided in paragraphs (d) and (e)
below, no adjustment of the Warrant Share Exercise Price will be made when
Common Stock is actually issued upon the conversion or exchange of such
Convertible Securities, and if any such issuance or sale of such Convertible
Securities is made upon
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<PAGE>
exercise of any options for which adjustments of the Warrant Share Exercise
Price had been or are to be made pursuant to other provisions of this Section 3,
no further adjustment of the Warrant Share Exercise Price will be made by reason
of such issuance or sale.
(d) If the purchase price provided for in any Rights, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time (other
than under or by reason of provisions that are designed to protect against
dilution of the type set forth in this Section 3 and are no more favorable to
the holders of such Rights or Convertible Securities than this Section 3 would
have been if this Section 3 were included in such Rights or Convertible
Securities), then the Warrant Share Exercise Price in effect at the time of such
change will be readjusted to the Warrant Share Exercise Price that would have
been in effect at such time had such Rights or Convertible Securities still
outstanding provided for such changed purchase price, additional consideration,
or changed conversion rate, as the case may be, at the time initially granted,
issued, or sold; such adjustment of the Warrant Share Exercise Price will be
made whether the result thereof is to increase or reduce the Warrant Share
Exercise Price then in effect under this Warrant, provided that no such
adjustment shall increase the Warrant Share Exercise Price above the initial
Warrant Share Exercise Price hereof; such adjustments shall be made by the Board
of Directors of the Company, who shall promptly provide notice of the new
Warrant Share Exercise Price to each Holder.
(e) Upon the expiration of any Right, or the termination of
any right to convert or exchange any Convertible Security, without the exercise
of such Right, the Warrant Share Exercise Price then in effect hereunder will be
adjusted to the Warrant Share Exercise Price that would have been in effect at
the time of such expiration or termination had such Right or Convertible
Security never been issued, but such subsequent adjustment shall not affect the
number of shares of Common Stock issued upon any exercise of this Warrant prior
to the date such adjustment is made.
(f) If any Common Stock, Rights, or Convertible Securities are
issued or sold or are deemed to have been issued or sold for consideration that
includes cash, then the amount of cash consideration actually received by the
Company will be deemed to be the cash portion thereof. If any Common Stock,
Rights, or Convertible Securities are issued or sold or deemed to have been
issued or sold for a consideration part or all of which is other than cash, then
the amount of the consideration other than cash received by the Company will be
the fair value of such consideration as determined by the Board of Directors of
the Company, except where such consideration consists of securities, in which
case the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. If any Common Stock, Rights, or
Convertible Securities are issued in connection with any merger or consolidation
in which the Company is the surviving corporation, then the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving corporation as is attributable
to such Common Stock, Rights, or Convertible Securities, as the case may be.
(g) If any Right is issued in connection with the issuance or
sale of other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such Right by the
parties thereto, the Right will be deemed to have been issued without
consideration.
(h) The number of shares of Common Stock Deemed Outstanding at
any given time does not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held will be
considered an issuance or sale of Common Stock.
-6-
<PAGE>
3.3 SUBDIVISION OR COMBINATION OF COMMON STOCK AND STOCK DIVIDENDS. If
the Company shall at any time after the date hereof (a) issue any shares of
Common Stock or Convertible Securities, or any rights to purchase Common Stock
or Convertible Securities, as a dividend upon Common Stock, (b) issue any shares
of Common Stock, in subdivision of outstanding shares of Common Stock by
reclassification or otherwise, or (c) combine outstanding shares of Common
Stock, by reclassification or otherwise, then the Warrant Share Exercise Price
that would apply if purchase rights hereunder were being exercised immediately
prior to such action by the Company shall be adjusted by multiplying it by a
fraction, the numerator of which shall be the number of shares of Common Stock
Deemed Outstanding immediately prior to such dividend, subdivision, or
combination and the denominator of which shall be the number of shares of Common
Stock Deemed Outstanding immediately after such dividend, subdivision, or
combination.
3.4 CERTAIN DIVIDENDS OR DISTRIBUTIONS. If the Company shall declare a
dividend or distribution upon the Common Stock payable otherwise than out of
earnings or earned surplus AND otherwise than in Common Stock, Rights or
Convertible Securities, the Warrant Share Exercise Price that would apply if
purchase rights hereunder were being exercised immediately prior to the
declaration of such dividend or distribution shall be reduced by an amount
equal, in the case of a dividend or distribution in cash, to the amount thereof
payable per share of the Common Stock or, in the case of any other dividend or
distribution, to the fair value of such dividend or distribution per share of
the Common Stock as determined in good faith by the Board of Directors of the
Company. For purposes of the foregoing, a dividend or distribution other than in
cash shall be considered payable out of earnings or earned surplus only to the
extent that such earnings or earned surplus are charged an amount equal to the
fair value of such dividend or distribution as determined in good faith by the
Board of Directors of the Company. Such reductions shall take effect as of the
date on which a record is taken for the purpose of such dividend or distribution
or, if a record is not taken, the date as of which the holders of Common Stock
of record entitled to such dividend or distribution are to be determined.
3.5 NO DE MINIMIS ADJUSTMENTS. No adjustment of the Warrant Share
Exercise Price shall be made if the amount of such adjustment would be less than
one cent per share, but in such case any adjustment that otherwise would be
required to be made shall be carried forward and shall be made at the time and
together with the next subsequent adjustment that, together with any adjustment
or adjustments so carried forward, shall amount to not less than one cent per
share.
3.6 PROPORTIONATE ADJUSTMENT OF UNDERLYING WARRANT EXERCISE PRICE. In
the event such Warrant Share Exercise Price and number of Warrant Shares is
adjusted, then the Underlying Warrant Exercise Price and the number of
Underlying Warrant Shares purchasable upon exercise of the Underlying Warrants
shall be adjusted proportionately.
SECTION 4.
ADJUSTMENT OF NUMBER OF
SHARES ISSUABLE UPON EXERCISE
Upon each adjustment of the Warrant Share Exercise Price pursuant to
Section 3 hereof and the proportionate adjustment to the Underlying Warrant
Exercise Price pursuant to Section 3.6, the Holder of this Warrant shall
thereafter (until another such adjustment) be entitled to purchase, (i) at the
adjusted Warrant Share Exercise Price in effect on the date purchase rights for
Warrant Shares under this Warrant are exercised, the number of Warrant Shares,
calculated to the nearest whole number, determined by (a) multiplying the number
of Warrant Shares purchasable hereunder immediately prior to the adjustment of
the Warrant Share Exercise Price by the Warrant Share Exercise Price in effect
immediately prior to such
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<PAGE>
adjustment, and (b) dividing the product so obtained by the adjusted Warrant
Share Exercise Price in effect on the date of such exercise; and (ii) at the
adjusted Underlying Warrant Exercise Price in effect on the date purchase rights
for Underlying Warrants under this Warrant are exercised, the number of
Underlying Warrants calculated to the nearest whole number, determined by (a)
multiplying the number of Underlying Warrants purchasable hereunder immediately
prior to such adjustment, and (b) dividing the product so obtained by the
adjusted Underlying Warrant Exercise Price in effect on the date of such
exercise. The provisions of Subsection 2.4 shall apply, however, so that no
fractional Warrant Share or fractional Underlying Warrant shall be issued upon
exercise of this Warrant.
SECTION 5.
EFFECT OF REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION, MERGER, OR SALE
If at any time while this Warrant is outstanding there shall be any
reorganization or reclassification of the capital stock of the Company (other
than a subdivision or combination of shares provided for in Subsection 3.3
hereof), any consolidation or merger of the Company with another corporation
(other than a consolidation or merger in which the Company is the surviving
entity and which does not result in any change in the Common Stock), or any sale
or other disposition by the Company of all or substantially all of its assets to
any other corporation, then the Holder of this Warrant shall thereafter upon
exercise of this Warrant be entitled to receive the number of Warrant Shares,
Underlying Warrants or other securities or property of the Company, or of the
successor corporation resulting from such consolidation or merger, as the case
may be, to which the Holders of the Underlying Securities (and any other
securities and property) of the Company, deliverable upon the exercise of this
Warrant, would have been entitled upon such reorganization, reclassification of
capital stock, consolidation, merger, sale, or other disposition if this Warrant
had been exercised immediately prior to such reorganization, reclassification of
capital stock, consolidation, merger, sale, or other disposition. In any such
case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth in this Warrant with respect to the rights and interests thereafter of the
Holder of this Warrant to the end that the provisions set forth in this Warrant
(including those relating to adjustments of the Warrant Share Exercise Price,
Underlying Warrant Exercise Price, and the number of Warrant Shares and
Underlying Warrants issuable upon the exercise of this Warrant) shall thereafter
be applicable, as near as reasonably may be, in relation to any shares or other
property thereafter deliverable upon the exercise hereof as if this Warrant had
been exercised immediately prior to such reorganization, reclassification of
capital stock, consolidation, merger, sale, or other disposition and the Holder
hereof had carried out the terms of the exchange as provided for by such
reorganization, reclassification of capital stock, consolidation, or merger. If
in any such reorganization, reclassification, consolidation, or merger,
additional Common Stock shall be issued in exchange, conversion, substitution,
or payment, in whole or in part, for or of a security of the Company other than
Common Stock deliverable from exercise of this Warrant, any such issue shall be
treated as an issue of Common Stock covered by the provisions of Section 3, with
the amount of the consideration received upon the issue thereof being determined
in good faith by the Board of Directors of the Company. The Company shall not
effect any such reorganization, consolidation, or merger unless, upon or prior
to the consummation thereof, the successor corporation shall assume by written
instrument the obligation to deliver to the Holder hereof such shares of stock
or other securities, cash, or property as such Holder shall be entitled to
purchase in accordance with the foregoing provisions. Notwithstanding any other
provisions of this Warrant, in the event of sale or other disposition of all or
substantially all of the assets of the Company as a part of a plan for
liquidation of the Company, all rights to exercise the Warrant shall terminate
upon the earlier of the expiration of the Exercise Period and 60 days after the
Company gives written notice to the Holder of this Warrant that such sale or
other disposition has been consummated.
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<PAGE>
SECTION 6.
NOTICE OF ADJUSTMENT
Immediately upon any adjustment of the Warrant Share Exercise Price,
Underlying Warrant Exercise Price or increase or decrease in the number of
Warrant Shares and Underlying Warrants purchasable upon exercise of this
Warrant, the Company will send written notice thereof to all Holders, stating
the adjusted Warrant Share Exercise Price, adjusted Underlying Warrant Exercise
Price, and the increased or decreased number of Warrant Shares and Underlying
Warrants purchasable upon exercise of this Warrant and setting forth in
reasonable detail the method of calculation for such adjustment and increase or
decrease. When appropriate, such notice may be given in advance and included as
part of any notice required to be given pursuant to Section 7 below.
SECTION 7.
PRIOR NOTICE OF CERTAIN EVENTS
If at any time:
(a) the Company shall pay any dividend payable in stock upon
its Common Stock or make any distribution (other than cash dividends) to the
holders of its Common Stock;
(b) the Company shall offer for subscription PRO RATA to the
holders of its Common Stock any additional shares of stock of any class or any
other rights;
(c) there shall be any reorganization or reclassification of
the capital stock of the Company, any consolidation or merger of the Company
with another corporation, or a sale or disposition of all or substantially all
its assets; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company, then, in each such case, the Company
shall give prior written notice, by hand delivery or by certified mail, postage
prepaid, addressed to the Holder of this Warrant at the address of such holder
as shown on the books of the Company, of the date on which (i) the books of the
Company shall close or a record shall be taken for such stock dividend,
distribution, or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up shall take place, as the case may be. A copy of each such notice
shall be sent simultaneously to each transfer agent of the Company's Common
Stock. Such notice shall also specify the date as of which the holders of Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such written notice shall be given at least 30
days prior to the record date or the effective date, whichever is earlier, of
the subject action or other event.
If any other event (not listed above) would require adjustment to the
Warrant Share Exercise Price or the Underlying Warrant Exercise Price, then the
Company shall give prior written notice thereof (in substance as set forth
above) to the Holders, at their addresses and in the manner provided in
Subsection
-9-
<PAGE>
14.3. Notwithstanding the foregoing, the Company shall not be required to give
prior written notice where it is not reasonably possible.
SECTION 8.
NEW PRO RATA PURCHASE RIGHTS
If at any time the Company grants, issues, or sells any warrants,
Convertible Securities, or rights to purchase stock, warrants, securities, or
other property pro rata to the record holders of Common Stock (the "Purchase
Rights"), then the Holder of this Warrant will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights that
such Holder could have acquired if such Holder had held the number of Warrant
Shares acquirable upon exercise of this Warrant had this Warrant been fully
exercised immediately prior to the date on which a record was taken for the
grant, issuance, or sale of such Purchase Rights, or, if no such record was
taken, the date as of which the record holders of Common Stock were determined
for the grant, issuance, or sale of such Purchase Rights.
SECTION 9.
RESERVATION OF COMMON STOCK
The Company will at all times reserve and keep available such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants and the Underlying Warrants. Upon exercise of this
Warrant and the Underlying Warrants, the Holder will acquire fully paid and
non-assessable ownership rights of the Common Stock, free and clear of any
liens, claims or encumbrances.
SECTION 10.
NO SHAREHOLDER RIGHTS OR OBLIGATION
This Warrant will not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company. Until the shares of Common Stock
issuable upon exercise of this Warrant or the Underlying Warrants are recorded
as issued on the books and records of the Company's transfer agent, the Holder
shall not be entitled to any voting rights or other rights as a shareholder;
provided, however, the Company uses its best efforts to ensure that, upon
receipt of an Exercise Agreement, the appropriate documentation necessary to
effectuate the exercise of the Warrant and issuance of the Common Stock is
accomplished as expeditiously as possible. No provision of this Warrant, in the
absence of affirmative action by the Holder to purchase Common Stock, and no
enumeration in this Warrant of the rights or privileges of the Holder, will give
rise to any obligation of such Holder for the Warrant Share Exercise Price of
the Warrant Shares or the Underlying Warrant Exercise Price of the Underlying
Warrants acquirable by exercise hereof or as a shareholder of the Company.
-10-
<PAGE>
SECTION 11.
EXCHANGEABLE FOR DIFFERENT DENOMINATIONS
This Warrant is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants, as set forth on the front page hereof, will represent such portion
of such rights as is designated by the Holder at the time of such surrender. The
date the Company initially issued this Warrant, which is set forth on the front
page hereof, will be deemed to be the "Date of Issuance" of this Warrant and any
purchase warrant exchanged or substituted herefor, regardless of the number of
times (and dates on which) new certificates representing the unexpired and
unexercised rights formerly represented by this Warrant are issued.
SECTION 12.
TRANSFERABILITY
Subject to the transfer conditions referred to in Section 2 or in the
remaining provisions or this Section 12, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Holder, upon
surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit II hereto) at the principal office of the Company. This Warrant and the
Underlying Securities may not be offered, sold, or transferred except in
compliance with the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws; and then only against receipt of an agreement
of the Person to whom such offer or sale is made to comply with the provisions
of this Section 12 with respect to any resale or other disposition of such
securities; provided that no such agreement shall be required from any Person
purchasing this Warrant or any Underlying Security pursuant to a registration
statement effective under the Act. The Holder of this Warrant agrees that, prior
to the disposition of any security purchased on the exercise hereof under
circumstances that might require registration of such security under the Act, or
any similar statute then in effect, the Holder shall give written notice to the
Company, expressing his intention as to such disposition. Promptly upon
receiving such notice, the Company shall present a copy thereof to its
securities counsel. If, in the opinion of such counsel, the proposed disposition
does not require registration of such security under the Act, or any similar
statute then in effect, the Company shall, as promptly as practicable, notify
the Holder of such opinion, whereupon the Holder shall be entitled to dispose of
such security in accordance with the terms of the notice delivered by the Holder
to the Company. The above agreement by the Holder of this Warrant shall not be
deemed to limit or restrict in any respect the exercise of rights set forth in
Section 13 hereof.
SECTION 13.
REGISTRATION RIGHTS
13.1 DEMAND REGISTRATION RIGHT. At any time during the Exercise Period,
the Holders of Warrants whose holdings thereof comprise a majority of the Common
Stock purchasable upon the exercise of outstanding Warrants and outstanding
Underlying Warrants (collectively, the "Warrant Securities") shall have the
right to require the Company (a) to prepare and file with the Commission up to
one new registration statement under the Act (or, in lieu of either, a
post-effective amendment or amendments to the Registration Statement, if then
permitted under the Act), covering all or any portion of the Warrant Securities
and to use its best efforts to obtain promptly and maintain the effectiveness
thereof for at least 120 days and (b) to register or qualify the subject Warrant
Securities for sale in up
-11-
<PAGE>
to ten states identified by such holders. The Company shall bear all expenses
other than the expenses of Holders' counsel incurred in the preparation and
filing of such registration statement or post-effective amendments (and related
state registrations, to the extent permitted by applicable law) and the
furnishing of copies of the preliminary and final prospectus thereof to such
Holders of Warrant Securities.
13.2 PIGGY BACK REGISTRATION RIGHTS. In addition, if at any time during
the Exercise Period, the Company shall prepare and file one or more registration
statements under the Act, with respect to a public offering of equity or debt
securities of the Company, or of any such securities of the Company held by its
security holders, the Company will include in any such registration statement
such information as is required, and such number of shares of Common Stock held
by, or shares of Common Stock underlying outstanding Warrants held by, the
Holders thereof or their respective designees or transferees as may be requested
by them, to permit a public offering of the Shares so requested; PROVIDED,
HOWEVER, that if, in the written opinion of the Company's managing underwriter,
if any, for such offering, the inclusion of the shares requested to be
registered, when added to the securities being registered by the Company or the
selling security holder(s), would exceed the maximum amount of the Company's
securities that can be marketed without otherwise materially and adversely
affecting the entire offering, then the Company may exclude from such offering
that portion of the shares requested to be so registered, so that the total
number of securities to be registered is within the maximum number of shares
that, in the opinion of the managing underwriter, may be marketed without
otherwise materially and adversely affecting the entire offering, provided that
the Company shall be required to include in the offering and in the following
order: FIRST, the pro rata number of securities requested by the Holder of
Warrants along with all other holders of securities requesting registration
pursuant to registration rights which were granted on or prior to the date
hereof and are described in the Company's Registration Statement; and, SECOND,
the pro rata number of securities requested by all other holders of securities
requesting registration pursuant to other registration rights. In the event of
such a proposed registration, the Company shall furnish the then Holders with
not less than 30 days' written notice prior to the proposed date of filing of
such registration statement. The Company shall use its best efforts to ensure
that such registration statement is declared effective and remains effective
until such time as all of the shares have been registered or may be sold without
registration under the Act or applicable state securities laws and regulations,
and without limitation as to volume, pursuant to Rule 144 of the Act. The
Holders shall be entitled to exercise the rights provided for in this Subsection
13.2 on two separate occasions by giving written notice to the Company, within
20 days of receipt of the Company's notice of its intention to file a
registration statement. The Company shall bear all fees and expenses incurred by
it in connection with the preparation and filing of such registration statement.
SECTION 14.
MISCELLANEOUS
14.1 ORIGINAL ISSUE TAXES. The Company will pay all United States,
state and local (but not foreign) original issue taxes, if any, upon the
issuance of this Warrant and the Underlying Securities.
14.2 AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended, and the Company may take any action
herein prohibited or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holders of the
Warrants and the Underlying Warrants representing at least 50% of the shares of
Common Stock obtainable upon the exercise of the Warrants and the Underlying
Warrants outstanding at the time of such consent.
-12-
<PAGE>
14.3 NOTICES. Any notices required to be sent to a Holder of this
Warrant or of any Warrant Securities purchased upon the exercise hereof will be
delivered to the address of such Holder shown on the books of the Company. All
notices referred to herein will be delivered in person or sent by registered or
certified mail, postage prepaid, and will be deemed to have been given when so
delivered in person or on the third business day following the date so sent by
mail.
If to the Holder: Noble International Investments, Inc.
1801 Clint Moore Road
Suite 110
Boca Raton, Florida 33487
Attention: Nico P. Pronk, President
With a copy to: Broad and Cassel
Miami Center
201 S. Biscayne Boulevard
Suite 3000
Miami, Florida 33131
Attention: Dale S. Bergman, P.A.
or Linda C. Frazier, Esquire
If to the Company: Visual Data Corporation
1600 South Dixie Highway
Suite 3A
Boca Raton, Florida 33432
Attention: Randy S. Selman, President
With a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
Attention: Charles B. Pearlman, Esquire
14.4 DESCRIPTIVE HEADINGS. The descriptive headings of the sections and
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
14.5 GOVERNING LAW; ARBITRATION. This Warrant is governed by,
interpreted under and construed in all respects in accordance with the
substantive laws of the State of Florida, without regard to the conflicts of law
provisions thereof, and irrespective of the place of domicile or residence of
the party. In the event of a controversy arising out of the interpretation,
construction, performance or breach of this Warrant, the parties hereby agree
and consent to the jurisdiction and venue of the Courts of the State of Florida,
or the United States District Court for the Southern District of Florida; and
further agree and consent that personal service of process in any such action or
proceeding outside the State of Florida shall be tantamount to service in person
in Florida.
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and attested by its duly authorized officers.
VISUAL DATA CORPORATION, a Florida corporation
By:
----------------------------------------
Randy S. Selman, President
Attest:
__________________________________
-14-
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned Record Holder, pursuant to the provisions set forth in
the within Warrant, hereby subscribes for and purchases _____ Warrant Shares and
________ Underlying Warrants covered by such Warrant and herewith makes full
cash payment of $________________ for such Warrant Shares at the Warrant Share
Exercise Price and for such Underlying Warrants at the Underlying Warrant
Exercise Price provided by such Warrant.
----------------------------------
(Signature)
----------------------------------
(Print or type name)
----------------------------------
(Address)
----------------------------------
----------------------------------
NOTICE: The signature on this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the Assignment
thereof if applicable, in every particular, without alteration, enlargement, or
any change whatsoever, and must be medallion guaranteed by a bank, other than a
saving bank, having an office or correspondent in New York, New York, or Fort
Lauderdale or Miami, Florida, or by a firm having membership on a registered
national securities exchange and an office in New York, New York, or Fort
Lauderdale or Miami, Florida.
MEDALLION SIGNATURE GUARANTEE
Authorized Signature:_________________________________________________________
Name of Bank or Firm:_________________________________________________________
Dated:________________________________________________________________________
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, __________________________________________, the
undersigned Holder hereby sells, assigns, and transfers all of the rights of the
undersigned under the within Warrant with respect to the number of Warrant
Shares and Underlying Warrants (and the Underlying Warrant Shares issuable upon
exercise of the Underlying Warrants) covered thereby set forth below, unto the
Assignee identified below, and does hereby irrevocably constitute and appoint
___________________________________ to effect such transfer of rights on the
books of the Company, with full power of substitution:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME OF ASSIGNEE ADDRESS OF ASSIGNEE WARRANT SHARES UNDERLYING WARRANTS
- ---------------- ------------------- -------------- -------------------
<S> <C>
</TABLE>
Dated:
-----------------------
----------------------------------
(Signature of Holder)
----------------------------------
(Print or type name)
NOTICE: The signature on this Assignment must correspond with the name
as written upon the face of the within Warrant, in every particular, without
alteration, enlargement, or any change whatsoever, and must be medallion
guaranteed by a bank, other than a savings bank, having an office or
correspondent in New York, New York, or Fort Lauderdale or Miami, Florida, or by
a firm having membership on a registered national securities exchange and an
office in New York, New York, or Fort Lauderdale or Miami, Florida.
MEDALLION SIGNATURE GUARANTEE
Authorized Signature:_________________________________________________________
Name of Bank or Firm:_________________________________________________________
Dated:________________________________________________________________________
EXHIBIT 5
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
May 8, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: VISUAL DATA CORPORATION
REGISTRATION STATEMENT TO FORM SB-2
FILED DECEMBER 26, 1996
FILE NO. 333-18819
Dear Sir/Madam:
We have acted as special counsel to Visual Data Corporation, a Florida
corporation, in connection with the sale of up to 1,000,000 shares of Common
Stock, $.0001 par value per share and an additional 1,207,680 shares of Common
Stock for sale by the holders thereof (the "Selling Securityholders") for resale
from time to time by the Selling Securityholders (collectively the
"Securities"), as set forth in the above Registration Statement.
In our capacity as such counsel to the Company, we have examined the
original or certified copies of all such records of the Company and all such
agreements, certificates of public officials, certificates of officers or
representatives of the Company and others, and such other documents as we deem
relevant and necessary as a basis for the opinions hereinafter expressed. In
such examination we have assumed the genuineness of all signatures on original
documents and the conformity to original documents of all copies submitted to us
as conformed or photostat copies. As to various questions of fact material to
such opinions, we have relied upon statements or certificates of officials and
representatives of the Company and others.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Florida.
2. When (i) the Registration Statement has become effective
under the Securities Act of 1933, as amended, (ii) the
Securities have been issued
<PAGE>
Securities and Exchange Commission
May 8, 1997
Page 2
and sold as contemplated in the Registration Statement and the
Underwriting Agreement referred to therein, and (iii) the
Securities have been duly executed, delivered and paid for,
such Securities will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. We also hereby consent to the use of our name under
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Very truly yours,
/s/ ATLAS, PEARLMAN, TROP & BORKSON, P.A.
------------------------------------------
Atlas, Pearlman, Trop & Borkson, P.A.
EXHIBIT 10.(a)
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this 14TH day
of January, 1997 (the "Effective Date") by and between HotelView Corporation, a
Florida corporation ("HVC") and Pegasus Systems, Inc., a __________ corporation
("Pegasus").
RECITALS
A. HVC, a wholly owned subsidiary of Visual Data Corporation ("VDC"),
produces and markets the HotelView/registered trademark/ Library (the "HVC
Library") containing short, concise visual brochures ("vignettes") depicting the
specific characteristics and amenities of hotels and resorts in full-motion
visual form (collectively the "HVC Business").
B. Pegasus provides transaction processing services between travel
agents, airline reservation systems and to hotels, resorts, and hotel chains
(individually the "Property" and collectively the "Properties").
C. HVC wishes to engage Pegasus to promote the HVC Library to
Properties, pursuant to the terms and conditions set forth herein and Pegasus
wishes to be engaged by HVC to provide the services set forth herein.
D. HVC wishes to grant Pegasus an irrevocable option to purchase up to
thirty-three and one-third (33-1/3%) percent of the outstanding capital stock of
HVC, pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements contained herein, the parties mutually agree as follows:
1. RECITALS. The recitals set forth above are true, correct and are
herein incorporated by reference.
2. ENGAGEMENT. HVC hereby engages Pegasus to perform the services
pursuant to the terms and conditions set forth herein and Pegasus hereby
accepts such engagement.
3. SERVICES TO BE PROVIDED BY PEGASUS.
a. Pegasus shall make its marketing and sales staff available for
training by HVC to market and promote the HVC Library to Properties for
inclusion in the HVC Library and as contemplated by this Agreement.
b. Pegasus shall use reasonable efforts to make appointments with
Properties to market the HVC Library to Properties for inclusion in the HVC
Library and as contemplated by this Agreement.
<PAGE>
c. Pegasus shall use reasonable efforts to market, endorse, and promote
the HVC Library to Properties; provided that the HVC Library may be sold along
or bundled with other Pegasus products including, but not limited, to web pages,
booking services, and other Internet related products and/or services.
d. Pegasus shall use reasonable efforts to obtain "Initial Contracts",
as hereinafter defined, and to obtain deposits from Propert(ies) in connection
with such Initial Contract(s) in order that HVC shall create a vignette to be
included in the HVC Library for each Property that is the subject matter of an
Initial Contract. The Initial Contract shall be substantially in the form and
based substantially upon the terms and conditions described on Exhibit A and
which pricing shall substantially be based upon the pricing schedule described
on Exhibit B hereto and incorporated herein, which terms, conditions, and
pricing shall be consistent with all terms, conditions and pricing to other
entities entering into similar agreements as this Agreement with HVC. HVC
reserves the right to modify Exhibit A or Exhibit B, in its sole discretion,
upon thirty (30) days prior written notice.
e. Pegasus shall use reasonable efforts to obtain "Renewal Contracts,"
as hereinafter defined, and to obtain deposits from Properties in connection
with such Renewal Contract for each Property that is the subject matter of an
Initial Contract obtained by Pegasus.
f. Pegasus shall provide HVC with a monthly production report itemizing
hotel bookings processed through its THISCO/HCC Systems with regard to
participating HVC hotels (a list of such HVC hotels shall be provided by HVC to
Pegasus, and which list shall be updated, as additional hotels are added to the
list of HVC hotels) that are booked by participating HVC travel agencies (a list
of such participating HVC travel agencies which shall be provided by HVC to
Pegasus and which list shall be updated, as additional travel agencies are added
to the list of participating HVC travel agencies). At the option of Pegasus, the
report may be either based on (i) net reservations based on the date or arrival
or (ii) transactions (i.e. new bookings, modifications and cancellations), based
on the date of transaction. Additionally, Pegasus shall provide HVC with a
monthly production report itemizing the volume of Internet users visiting the
TravelWeb Internet site and that have selected to view HVC hotels.
g. Pegasus agrees to list HVC as its preferred marketing provider of
hotel and attraction vignettes.
h. For purposes of this Agreement, the term
i. "Initial Contract" means a written agreement between one
Property, on the one hand, and HVC, on the other hand, that is obtained by
Pegasus and which Property shall not have previously contracted with HVC;
provided that if a written agreement includes more than one Property, that
written agreement shall constitute such number of Initial Contracts as shall be
equal to the number of Properties contained in such agreement. By way of
example, if Pegasus obtains contracts with Best Western hotels for 5,000 hotels,
but such agreements is contained in only one written contract, that written
agreement shall constitute 5,000 Initial Contracts; and
2
<PAGE>
ii. "Renewal Contract" or "Renewals" means a renewal of an
Initial Contract.
4. SERVICES TO BE PROVIDED BY HVC. HVC agrees to provide the following
services to Pegasus:
a. Upon execution of an Initial Contract, HVC shall undertake the video
taping and production of vignettes of such hotels, on a first priority basis;
b. HVC shall include the vignettes described in Section 4(a) on HVC's
file server;
c. All vignettes derived from videotaping or other HVC owned media that
has been fixed in a tangible medium of expression in connection with Properties
who contract with the Company (the "HVC Content") by HVC, shall be stored on (i)
HVC's file server and shall be accessible via hyperlink through the Internet
from the TravelWeb Internet site; or (ii) stored on HVC's file server with a
point to point high speed link to Pegasus' file server; provided that at all
times, HVC's copyright and other applicable intellectual property notices set
forth, as required by HVC, shall be visible where HVC Content is displayed
and/or viewed; provided that it shall be HVC's sole responsibility to include
all copyright and other applicable intellectual property notices on all relevant
tangible media of expressions; and provided further that the choice of the
method of storage of the HVC Content shall be at the sole discretion of HVC.
d. HVC will guarantee that its file server and related equipment will
be of such capacity and operational speed to provide acceptable response times
and availability to system users.
e. Subject to the provisions of this Section 4(e), HVC shall process
its transactions by Internet users as follows:
i. If an Internet user accesses the HVC Library via Pegasus'
website, then any bookings and/or processing of reservations shall be forwarded
to the Pegasus website; and
ii. If an Internet user accesses the HVC Library via a website
owned by a hotel reservation service or other entity that can provide hotel
booking services ("Competitor"), then any bookings and/or processing of
reservations shall be forwarded back to that Competitor; and
iii. If an Internet user accesses the HVC Library from any
website other than through a Competitor website, HVC shall forward any bookings
and/or processing to Pegasus' website, making Pegasus the preferred booking
vendor; provided that Pegasus has the ability to undertake the bookings and/or
processing and the hotel was not contracted by a competitor marketing partner.
This includes all Internet users who originate at the HVC website.
3
<PAGE>
iv. On a monthly basis, in a jointly agreed upon format, HVC
shall provide Pegasus with a list of participating hotels and a list of IATA
numbers of participating travel agencies.
f. HVC shall train Pegasus sales staff at Pegasus locations to market
and promote the HVC Library to Properties for inclusion in the HVC Library,
which training shall be at the expense of HVC.
5. OBLIGATIONS OF PEGASUS. In consideration of the execution of this Agreement
by HVC and for Pegasus becoming HVC's preferred booking vendor, Pegasus agrees
to use its reasonable efforts to attain a minimum of 1,000 Initial Contracts
during the Term (the "Minimum Contracts), as set forth in Section 13 of this
Agreement; provided that in the event that Pegasus does not attain the Minimum
Contracts, the effect on the parties and the provisions of this Agreement shall
be that (i) Pegasus shall not be considered HVC's preferred booking vendor; and
(ii) the provisions of Section 8 and the Option shall be null and void.
6. OBLIGATIONS OF BOTH PARTIES.
a. Pegasus and HVC shall mutually agree upon a market program that may
include the creation of marketing collaterals, press releases and other
marketing materials, and which costs and expenses shall be shared by Pegasus and
HVC on a 50%/50% basis. If no agreement can be reached, this Contract shall
terminate.
b. Pegasus and HVC shall be responsible on a 50%/50% basis for all
documented costs and out of pocket related expenses in connection with the point
to point link from a major telecommunication provider, as described in Section
4(c) hereof.
7. CONSIDERATION.
a. Except as set forth in Section 7(c), 7(d) and Section 8 hereof, as
the sole consideration for the services to be provided by and the obligations of
Pegasus to the Company, Pegasus shall receive the following commission:
i. Twenty (20%) percent of all "Net Revenues" (as defined
below) received on all Initial Contracts obtained by Pegasus during the first
year of such Initial Contracts; and
ii. Ten (10%) percent of all Net Revenues received by HVC for
each Renewal obtained by Pegasus and which consideration for such renewals shall
be paid to Pegasus by HVC for a period of up to three years following the
termination of this Agreement for all Renewals.
b. For purposes of this Section 7, the term "Net Revenues" shall mean
the total dollar amount of funds received by the Company, based upon the terms
and conditions set forth on Exhibit B hereto and incorporated herein, less
applicable taxes, if any.
4
<PAGE>
c. The provisions of Section 7(a) and 7(b) notwithstanding, to the
extent that agreements with Properties are obtained by Pegasus at prices that
are less than as set forth on Exhibit B, attached hereto and incorporated herein
or as otherwise agreed upon between HVC and Pegasus, then the commission
schedules shall be adjusted as mutually agreed upon by HVC and by Pegasus.
d. To the extent that a conflict occurs whereby a Property is solicited
by two or more representatives of entities under this Agreement or any similar
agreement with HVC, then HVC, in its reasonable and fair discretion, shall
determine to which entity consideration shall be paid by HVC in connection with
the Initial Contract between HVC and such Property.
e. All fees due to Pegasus pursuant to this Agreement shall be paid by
HVC within thirty (30) days after receipt of funds by HVC. All commission on
installment sales shall be paid in corresponding installments. In connection
therewith, HVC shall furnish Pegasus with a full, complete and accurate
accounting showing dollar amounts received in connection with the Initial
Contracts (or Renewals) and such accounting shall also include detailed
information sufficient for Pegasus to determine the status of all contracts and
payments made on each of the Initial Contracts and Renewals obtained by Pegasus
on behalf of HVC. Pegasus shall have free and full access to such documentation
at any reasonable hour of the day during which the HVC's offices are open. HVC
shall retain such books of account and records and other documents and material
in HVC's possession or under its control insofar as they relate to the Initial
Contracts and Renewals for at least three (3) years following the termination or
expiration of this Agreement. Pegasus shall be responsible for any audits that
it may undertake in connection with such accounting or audit; provided that HVC
agrees to reimburse Pegasus for the cost of any audits deemed necessary and
proper and for which such audit finds a discrepancy of five percent (5%) or more
in favor of Pegasus.
8. OPTION TO PURCHASE. HVC shall grant Pegasus an option to purchase up to
thirty-three and one-third (33-1/3%) percent of the outstanding capital stock of
HVC for an aggregate of three million three hundred thirty-three thousand
($3,333,000) dollars as described more fully on Exhibit C (Option to Purchase
Common Stock of HotelView Corporation (the "Option")); provided that Pegasus has
met the requirements of the terms set forth in the Option which include as
follows:
At such time, on behalf of HVC, as Pegasus has obtained
i. not less than (A) one thousand (1000) Initial Contracts on
behalf of HVC and (B) for which HVC shall have received (I) executed
agreements and (II) full payment of the deposit amount stated in such
applicable Initial Contract, then the option to purchase up to five
(5%) percent of the outstanding Common Shares of HVC for an aggregate
of Five Hundred Thousand ($500,000) Dollars shall vest in Pegasus;
ii. not less than an additional (A) one thousand five
hundred (1,500) Initial Contracts on behalf of HVC (for a total of
2,500 Initial Contracts) and (B) for which
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HVC shall have received (I) executed agreements and (II) full payment
of the deposit amount stated in such applicable Initial Contract, then
the option to purchase up to an additional ten (10%) percent of the
outstanding Common Shares of HVC for an aggregate of One Million
($1,000,000) Dollars shall vest in Pegasus;
iii. not less than an additional (A) two thousand five hundred
(2,500) Initial Contracts on behalf of HVC (for a total of 5,000
Initial Contracts) and for which HVC shall have received (I) executed
agreements and (II) full payment of the deposit amount stated in such
applicable Initial Contract, then the option to purchase up to an
additional ten (10%) percent of the outstanding Common Shares of HVC
for an aggregate of One Million ($1,000,000) Dollars shall vest in
Pegasus; and
iv. not less than an additional (A) five thousand (5,000)
Initial Contracts on behalf of HVC (for a total of 10,000 agreements)
and for which HVC shall have received (I) executed agreements and (II)
full payment of the deposit amount stated in such applicable Initial
Contract, then the option to purchase up to an additional eight and
one-third (8-1/3%) percent of the outstanding Common Shares of HVC for
an aggregate of Eight Hundred Thirty-three Thousand ($833,000) Dollars
shall vest in Pegasus.
This option shall be cumulative during the Term, as set forth in Section 13, and
any renewals thereof, provided that once Initial Contract levels have been met
as described in this Section 8, this Option may be exercised at any time during
the Term of the Agreement and for a period of two (2) years after termination of
the Agreement (the "Option Period"), for whatever reason, at which time the
exercise period shall terminate. At all times during the Option Period, Pegasus
shall have the right to purchase such percentage of the outstanding capital
stock as is set forth in this Section 8 and in Exhibit C; provided that during
any such time during the Option Period that Pegasus shall not have obtained (A)
1000 Initial Contracts on behalf of HVC and (B) for which HVC shall have
received (I) executed Agreements and (II) full payment of the deposits stated in
such applicable Initial Contract, HVC or its affiliates shall have the absolute
right to sell, merge or consolidate all of the outstanding capital stock or all
of the assets of HVC and Pegasus shall have no rights whatsoever in connection
with such sale, merger, or consolidation.
9. THE BUSINESS. The parties to this Agreement specifically agree that the
Business as defined in Recital A of this Agreement, is the only business of HVC
and any additional products or services that may be developed, created,
produced, marketed or distributed, including without limitation, any additional
libraries or content, by Visual Data Corporation ("VDC"), the parent company of
HVC, or any affiliates of VDC, shall not be deemed to be a part or portion of
the Business or an asset or assets of HVC or in any other manner be related to
HVC.
10. REPRESENTATIONS AND WARRANTIES.
a. Pegasus represents and warrants that
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i. it is a validly formed corporation, existing under the laws
of the state of __________ and has all requisite power and authority to execute
and deliver this Agreement and to consummate and perform the transactions
contemplated herein. This Agreement has been duly and validly executed and
delivered by Pegasus and the performance by Pegasus of its obligations hereunder
have been taken or will be taken in accordance with the terms hereof. This
Agreement constitutes the valid and binding obligation of Pegasus;
ii. it or its subsidiaries is the owner of all rights, title
and interest in and to the mark TravelWeb, Click-It, WebRes, UltraDirect,
THISCO, UltraSwitch, UltraAccess, HCC Link, ChainLink and HCC (collectively the
Pegasus Marks") and all related proprietary rights thereto including 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 (the
"Proprietary Rights").
b. HVC represents and warrants that
i. it is a validly formed corporation, existing under the laws
of the state of Florida and has all requisite power and authority to execute and
deliver this Agreement and to consummate and perform the transactions
contemplated herein. This Agreement has been duly and validly executed and
delivered by HVC and the performance by HVC of its obligations hereunder have
been taken or will be taken in accordance with the terms hereof. This Agreement
constitutes the valid and binding obligation of HVC;
ii. it is the owner of all rights, title and interest in and
to the mark HOTELVIEW (the "HVC Mark") and all related proprietary rights
thereto including 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 (the "Proprietary Rights").
iii. it is or shall be the owner of all rights, title and
interest in and to each vignette and the HVC Library now in existence or
hereinafter created or modified and all related Proprietary Rights.
11. COPYRIGHT. Pegasus shall not assert any right, title or interest in or to
the HVC Content, HVC Library or any vignettes contained therein. Pegasus
acknowledges and agrees that HVC has reserved all right, title and interest in
and to the copyright, the right to apply for copyright registration, and any
extensions and renewals, in all publication, reproduction, broadcast or other
derivative rights of each vignette and the HVC Library 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 other grant of license to Pegasus by HVC in connection with any vignette
or the HVC Library.
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12. GRANT OF NON-EXCLUSIVE LICENSES.
a. During the Term (and any renewals thereof) as set forth in Section
13 of this Agreement, Pegasus hereby agrees to grant to HVC, a limited,
non-exclusive, personal right and license to use the Pegasus Marks under the
Proprietary Rights in connection with its marketing and promotional materials
and HVC accepts such grant, provided Pegasus gives prior written approval of all
uses.
b. During the Term (and any renewals thereof), HVC hereby agrees to
grant to Pegasus,
i. a limited, non-exclusive, world-wide, non-assignable,
personal right and license (the "HVC License") to unlimited access HVC
Content from Pegasus' Internet website at no charge.
ii. a limited, non-exclusive, world-wide, non-assignable,
personal right and license, subject to the prior written consent of
HVC, which approval shall not be unreasonably withheld, to private
label the HVC product (i.e. as Pegasus' HotelView).
c. The above grant of licenses notwithstanding, all modifications,
improvements, derivative works or otherwise created in connection with any
property by any party, and specifically including the Pegasus Marks, the HVC
Marks, the HVC Content, the vignettes and the HVC Library, that is the subject
of a grant of such licenses shall be the property of the party with whom the
original property was owned.
13. TERM.
a. INITIAL TERM. Except as otherwise provided herein, this Agreement
shall commence on the Effective Date and shall remain in full force and effect
for a period of two (2) years thereafter.
b. AUTOMATIC RENEWAL. The Term shall automatically be renewed for an
additional one (1) year periods, pursuant to the terms and conditions set forth
in this Agreement, unless (i) prior written notice is given to the
non-terminating party no less then ninety (90) days prior to the expiration of
the Term or any renewal Term, or (ii) this Agreement is terminated pursuant to
this Section 14.
14. TERMINATION.
a. IMMEDIATE TERMINATION. This Agreement may be terminated immediately
by either party upon the occurrence of any of the following events:
i. Any assignment of this Agreement by either party in
violation of Section 17(c) herein;
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ii. Commencement of voluntary proceedings by the
non-terminating party or of any involuntary proceedings against the
non-terminating party under any provision of any Federal or State act
relating to bankruptcy or insolvency;
iii. Any legal or equitable proceeding against the
non-terminating party, resulting in a judgment or decree, if the sale
of all or substantially all of the non-terminating party's assets are
contemplated or threatened as a result of such judgment or decree;
b. TERMINATION AFTER FAILURE TO CURE BREACH. If either party commits a
material breach of any of the provisions of this Agreement, the non-breaching
party may terminate the Agreement at any time, if after providing written notice
to the breaching party of the alleged breach or failure, the breach or failure
remains uncured for a period of ten (10) days after receipt of such notice (or
for a period of sixty (60) days as provided in Section 14(b) hereof).
c. NOTICE BEFORE EXPIRATION. If either party desires to not renew this
Agreement, it may terminate this Agreement by giving to the other party not less
than ninety (90) days' written notice prior to the end of any Term (or any
renewals thereof) of this Agreement.
d. WITHOUT PREJUDICE OF RIGHTS. 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.
e. AUTHORITY AFTER TERMINATION. After termination of this Agreement,
Pegasus shall have no further express authorization or consent from HVC to use
its Library free of charge, as set forth in Section 4(c) hereof.
15. INDEMNIFICATION
a. HVC shall indemnify and hold Pegasus harmless from and against, and
shall be responsible or liable for, any claims, liabilities, damages, losses,
costs, attorneys' fees, including, but not limited to, any indirect, special,
incidental, consequential or punitive losses or damages of any kind, including
lost profits with respect to any action, inaction or activities by HVC,
concerning, either directly or indirectly, the subject matter of this Agreement.
b. Pegasus shall indemnify and hold HVC harmless from and against, and
shall be responsible or liable for, any claims, liabilities, damages, losses,
costs, attorneys' fees, including, but not limited to, any indirect, special,
incidental, consequential or punitive losses or damages of any kind, including
lost profits with respect to any action, inaction or activities by Pegasus,
concerning, either directly or indirectly, the subject matter of this Agreement.
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16. RELATIONSHIP OF THE PARTIES. The relationship of HVC to Pegasus shall be
that of independent parties to this Agreement. Nothing in this Agreement shall
be construed to place the parties in the relationship of partners, joint
venturers or agents, and neither Pegasus nor HVC shall have the power to
obligate or bind each other in any manner whatsoever.
17. MISCELLANEOUS PROVISIONS.
a. 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, addressed as follows:
If to HVC:
HotelView Corporation
1600 S. Dixie Highway
Suite 300
Boca Raton, Florida 33432
Attention: Randy S. Selman, President
With a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Attention: Gayle Coleman, Esq.
If to Pegasus:
Pegasus Systems, Inc.
==========
Attention: __________
b. 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.
c. 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 either party without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except that an assignment to a subsidiary or affiliate under the control of
assignor is permissible without approval.
d. 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.
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e. CAPTIONS. The captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit, extend or prescribe the
scope of this Agreement or the intent of any of the provisions hereof.
f. COMPLETENESS AND MODIFICATION. This Agreement constitutes the entire
understanding between the parties and supersedes and cancels any and all
previous agreements and understandings between the parties pertaining to the
subject matter of this Agreement. This Agreement may be amended, modified,
superseded or canceled, and any of its terms, covenants, representations,
warranties or conditions may be waived, only in writing signed by duly
authorized representatives of both parties.
g. WAIVER. The waiver of a breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
h. 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.
i. CHOICE OF LAW. This Agreement shall become valid when executed and
accepted by HVC at its address as stated above. The parties agree that this
Agreement shall be deemed negotiated, 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.
j. ARBITRATION. The parties to this Agreement agree that in the event
of any dispute arising, either directly or indirectly, under or in connection
with this Agreement, that they will arbitrate the dispute or disputes in Boca
Raton, Florida pursuant to the rules and regulations of the American Arbitration
Association. The parties hereto consent to the award of damages by the
arbitration if so warranted. In the event of an arbitration, the prevailing
party shall be entitled to recover any and all reasonable attorneys' fees and
costs incurred at the arbitration level and/or any appeal of the arbitration.
k. CONSTRUCTION. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth in the first paragraph of this Agreement.
Witness: HVC:
______________________________ HOTELVIEW CORPORATION,
a Florida corporation
By: /S/ RANDY S. SELMAN, PRESIDENT
-------------------------------
Randy S. Selman, President
Witness: PEGASUS SYSTEMS, INC.,
a ____________ corporation
______________________________ By: /S/ JOHN F. DAVIS III
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
Notwithstanding any other provision contained in this Agreement, the
sole and exclusive remedy for Pegasus' failure, for whatever reason, to obtain
the Initial Contracts, the Minimum Contracts or the Renewal Contracts shall be
termination of this Contract and the option contained herein, all other
remedies, claims, damages or otherwise being hereby waived.
-----------------------------
Initials
EXHIBIT 10.(c)
SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into as of the 30TH day of APRIL, 1997 but is
effective 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 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
<PAGE>
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.
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 three (3) 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;
provided that its the Executive's sole discretion, to elect to take his bonus in
cash or in restricted common stock of the Company, based upon an amount of such
restricted common stock which shall be equal to Seventy-Five (75%) of the fair
market value of the Company's common stock, which fair market value shall be
equal to the average of the closing price for the five (5) prior trading days
immediately prior to the determination of such Bonus.
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c. STOCK OPTIONS. On January 1 of each year (the Grant Date"),
the Executive shall receive options to purchase 125,000 shares of Common Stock
at an exercise price of $6.00, subject to anti-dilution provisions relating to
adjustments in the event that the Company, among other things, declares stock
dividends, effects forward or reverse stock splits, effects a merger with or
into another entity, sells all or substantially all of the Company's assets at
less than market value or sells stock at below the market or conversion price
thereof. The previous sentence notwithstanding, the options to purchase 125,000
shares of Common Stock shall not be affected by the contemplated 1:1.6 reverse
stock split to be undertaken by the Company during the Company's third quarter
of fiscal 1997.
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, 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
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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.
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
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<PAGE>
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 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
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<PAGE>
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 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
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(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, 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:
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(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,
(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.
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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 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,
9
<PAGE>
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 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.
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<PAGE>
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.
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.
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<PAGE>
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 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.
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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.
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.
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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.
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/ KATHLEEN M. KOSTYK By: /S/ ALAN SAPERSTEIN
- ------------------------- ---------------------------
Alan Saperstein, Vice President
Witness: The Executive
/S/ KATHLEEN M. KOSTYK /S/ RANDY S. SELMAN
- ------------------------- ---------------------------
RANDY S. SELMAN
14
EXHIBIT 10.(d)
SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") is made and entered into as of the 30TH day of APRIL, 1997 but is
effective 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
<PAGE>
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.
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 three (3) 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;
provided that its the Executive's sole discretion, to elect to take his bonus in
cash or in restricted common stock of the Company, based upon an amount of such
restricted common stock which shall be equal to Seventy-Five (75%) of the fair
market value of the Company's common stock, which fair market value shall be
equal to the average of the closing price for the five (5) prior trading days
immediately prior to the determination of such Bonus.
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c. STOCK OPTIONS. On January 1 of each year (the Grant Date"),
the Executive shall receive options to purchase 125,000 shares of Common Stock
at an exercise price of $6.00, subject to anti-dilution provisions relating to
adjustments in the event that the Company, among other things, declares stock
dividends, effects forward or reverse stock splits, effects a merger with or
into another entity, sells all or substantially all of the Company's assets at
less than market value or sells stock at below the market or conversion price
thereof. The previous sentence notwithstanding, the options to purchase 125,000
shares of Common Stock shall not be affected by the contemplated 1:1.6 reverse
stock split to be undertaken by the Company during the Company's third quarter
of fiscal 1997.
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, 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
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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.
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
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<PAGE>
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 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
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<PAGE>
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 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
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(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, 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:
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(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,
(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.
8
<PAGE>
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 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,
9
<PAGE>
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 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.
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<PAGE>
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.
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.
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<PAGE>
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 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.
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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.
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.
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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.
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/ KATHLEEN M. KOSTYK By: /S/ RANDY S. SELMAN
- ------------------------- ---------------------------
Randy S. Selman, President
Witness: The Executive
/S/ KATHLEEN M. KOSTYK /S/ ALAN SAPERSTEIN
- ------------------------- ---------------------------
ALAN SAPERSTEIN
14
EXHIBIT 10.(n)
LESSOR: Crocker Capital EQUIPMENT
1201 Dove Street, Ste. 600 LEASE AGREEMENT
Newport Beach, CA 92660
LEASE AGREEMENT NO. 01-1196-01046
Lease Agreement made this 26TH day of NOVEMBER 1996 between CROCKER
CAPITAL ("Lessor") with a place of business located at NEWPORT BEACH, CA and
VISUAL DATA CORPORATION/HOTELVIEW CORPORATION as Co-Lessees ("Lessee") having
its principal place of business located at 1600 S. DIXIE HWY., 3RD FL., BOCA
RATON, FL 33432 .
1. LEASE AGREEMENT. Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor all of the personal property ("Equipment") described in Equipment Lease
Schedule(s), which are or may from time to time be executed by Lessor and Lessee
and attached hereto or incorporated herein by reference ("Schedules"), upon the
terms and conditions set forth in this Lease, as supplemented by the terms and
conditions set forth in the appropriate Schedule(s) identifying such items of
Equipment. All terms and conditions of this Lease shall govern the rights and
obligations of Lessor and Lessee except as specifically modified in writing.
Whenever reference is made herein to the "Lease", it shall be deemed to include
each of the various Schedules identifying all items of Equipment, all of which
constitute one undivided Lease of the Equipment and the terms and conditions of
which are incorporated herein by reference.
2. SELECTION OF EQUIPMENT; ACCEPTANCE. Lessee will select the type, quantity sad
supplier of each item of Equipment designated in the appropriate Schedule, and
in reliance thereon such Equipment will then be ordered by Lessor from such
supplier or Lessor will accept an assignment of any existing purchase order
therefore. Lessor will have no liability for any delivery or failure by the
supplier to fill the purchase order or to meet the conditions thereof. Lessee
acknowledges that Lessor has not participated and will not participate in any
way in Lessee's selection of the Equipment or of the supplier. Lessee agrees to
inspect the Equipment and to execute an Acknowledgment and Acceptance of
Equipment by Lessee notice, as provided by Lessor, after the Equipment has been
delivered and after Lessee is satisfied that the Equipment is satisfactory in
every respect Lessee hereby authorizes Lessor to insert in this Lease serial
numbers or other identifying data with respect to the Equipment.
3. DISCLAIMER OF WARRANTIES AND CLAIMS; LIMITATION OF REMEDIES. LESSOR, NOT
BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S AGENT, MAKES NO
EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE
EQUIPMENT, INCLUDING, BUT NOT LIMITED TO, THE MERCHANTABILITY OF THE EQUIPMENT
OR ITS FITNESS
<PAGE>
FOR ANY PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF THE EQUIPMENT; THE
QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE EQUIPMENT;
COMPLIANCE OF THE EQUIPMENT WITH THE REQUIREMENT OF ANY LAW, RULE, SPECIFICATION
OR CONTRACT PERTAINING THERETO; PATENT INFRINGEMENT; OR LATENT DEFECTS. LESSEE
LEASES THE EQUIPMENT "AS IS" AND WITH ALL FAULTS. Lessee accordingly agrees not
to assert any claim whatsoever against Lessor for loss of anticipatory profits
or consequential damages. Lessor shall have no obligation to install, erect,
test, service, or maintain the Equipment. Lessee shall look to the manufacturer
and/or seller for any claims related to the Equipment.
IF THE EQUIPMENT IS NOT PROPERLY INSTALLED, DOES NOT OPERATE AS
REPRESENTED OR WARRANTED BY THE SUPPLIER OR MANUFACTURER, OR IS UNSATISFACTORY
FOR ANY REASON, REGARDLESS OF CAUSE OR CONSEQUENCE, LESSEE'S ONLY REMEDY, IF
ANY, SHALL BE AGAINST THE SUPPLIER OR MANUFACTURER OF THE EQUIPMENT AND NOT
AGAINST LESSOR.
LESSOR HEREBY ACKNOWLEDGES THAT ANY MANUFACTURER'S AND/OR SELLER'S
WARRANTIES ARE FOR THE BENEFIT OF BOTH LESSOR AND LESSEE. NOTWITHSTANDING THE
FOREGOING, LESSEE'S OBLIGATIONS TO PAY THE RENTALS OR OTHERWISE UNDER THIS LEASE
SHALL BE AND ARE ABSOLUTE AND UNCONDITIONAL. TO THE EXTENT PERMITTED BY THE
MANUFACTURER OR SELLER, AND PROVIDED LESSEE IS NOT IN DEFAULT UNDER THIS LEASE,
LESSOR SHALL MAKE AVAILABLE TO LESSEE ALL MANUFACTURER AND/OR SELLER WARRANTIES
WITH RESPECT TO EQUIPMENT.
LESSEE SPECIFICALLY ACKNOWLEDGES THAT THE EQUIPMENT IS LEASED TO LESSEE
SOLELY FOR COMMERCIAL OR BUSINESS PURPOSES AND NOT FOR PERSONAL, FAMILY,
HOUSEHOLD, OR AGRICULTURAL PURPOSES.
THE PARTIES HAVE SPECIFICALLY NEGOTIATED AND AGREED TO THE FOREGOING PARAGRAPH:
LESSEE INITIALS:___________
4. STATUTORY FINANCE LEASE. Lessee agrees and acknowledges that it is the intent
of both parties to this Lease that it qualify as a statutory finance lease under
Article 2A of the Uniform Commercial Code. Lessee acknowledges and agrees that
Lessee has selected both: (1) the Equipment; and (2) the supplier from whom
Lessor is to purchase the Equipment Lessee acknowledges that Lessor has not
participated in any way in Lessee's selection of the Equipment or of the
supplier, and Lessor has not selected, manufactured, or supplied the Equipment.
LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING
THE LESSOR'S PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER CHOSEN BY LESSEE AND
THAT LESSEE SHOULD CONTACT THE SUPPLIER OF THE EQUIPMENT FOR A DESCRIPTION OF
ANY SUCH RIGHTS.
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5. ASSIGNMENT BY LESSEE PROHIBITED. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY INTEREST
THEREIN, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE EQUIPMENT
COVERED HEREBY.
6. COMMENCEMENT AND TERMINATION. The obligations under this Lease shall commence
upon the written acceptance thereof by Lessor and shall end upon full
performance and observance of each and every term, condition and covenant set
forth in this Lease, each Schedule hereto and any extensions hereof. The rental
term of the Equipment listed in each Schedule shall commence on the date that
the first rental payment is due and shall terminate on the last day of the term
stated in such Schedule unless such schedule has been extended or otherwise
modified. Lessor shall have no obligation to Lessee under this Lease if the
Equipment, for whatever reason, is not delivered to Lessee within 90 days after
Lessee signs this Lease. Lessor shall have no obligation to Lessee under this
Lease if Lessee fails to execute and deliver to Lessor an Acknowledgment and
Acceptance of Equipment by Lessee notice for the Equipment within 30 days after
it is delivered to Lessee, with respect to any Schedule.
7. RENTAL PAYMENTS. The rent for the Equipment described in each Schedule shall
be due and payable on the dates set forth therein. Such rents shall be payable
at Lessor's principal place of business unless Lessor otherwise designates.
Lessee shall not abate, set off, deduct any amount or reduce any payment for any
reason.
8. SECURITY DEPOSIT. As security for the prompt and full payment of rent, and
the faithful and timely performance of all provisions of this Lease, and any
extensions or renewals thereof, Lessee shall pledge and deposit with Lessor the
security amount set forth in the section shown as "Security Deposit" on each
respective Schedule. In the event any default shall be made in the performance
of any of Lessee's obligations under this Lease, Lessor shall have the right,
but shall not be obligated, to apply said security to the curing of such
default. Within 15 days after Lessor mails notice to Lessee that Lessor has
applied any portion of the Security Deposit to the curing of any default, Lessee
shall restore said Security Deposit to the full amount set forth in the
Schedules. On the expiration or earlier termination of each Schedule to this
Lease, or any extension or renewal thereof, provided Lessee has paid all of the
rent herein called for and fully performed all other provisions of this Lease
with respect to such schedule, Lessor will return to Lessee any then remaining
balance of the security deposit with respect to such Schedule, without interest.
Said security deposit may be commingled with Lessor's other funds.
9. LIMITED PREARRANGED AMENDMENTS. SPECIFIC POWER OF ATTORNEY. In the event it
is necessary to amend the terms of this Lease or the terms of any Schedule to
reflect a change in one or more of the following conditions:
(1) Lessor's actual cost of procuring the Equipment; or
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<PAGE>
(2) Lessor's actual cost of providing Equipment to Lessee; or
(3) A change in the Lease payments as a result of (1) and/or (2)
above; or
(4) Description of the leased Equipment,
Lessee agrees that any such amendment shall be described in a letter from Lessor
to Lessee, and unless within 15 days after the date of such letter Lessee
objects thereto in a writing delivered to Lessor, this Lease and any affected
Schedules shall be deemed amended and such amendments shall be incorporated
herein/therein as if originally set forth herein/therein.
Lessee grants to Lessor a specific power of attorney for Lessor to use as
follows: (1) Lessor may sign and file on Lessee's behalf any document Lessor
deems necessary to perfect or protect Lessor's interest in the Equipment or
pursuant to the Uniform Commercial Code; and (2) Lessor may sign, endorse or
negotiate for Lessor's benefit any instrument representing proceeds from any
policy of insurance covering the Equipment.
10. LOCATION. The equipment shall be kept at the location specified in each
Schedule or, if none is specified, at Lessee's address as set forth above, and
shall not be removed therefrom without Lessor's prior written consent.
11. USE. Lessee shall use the Equipment in a careful manner, shall make all
necessary repairs at Lessee's expense, and shall comply with all laws relating
to its possession, use or maintenance, and shall not made any alterations,
additions or improvements to the Equipment without Lessor's prior written
consent. All additions, repairs or improvements made to the Equipment shall
belong to Lessor.
12. OWNERSHIP; PERSONALTY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain personal
property even though installed in or attached to real property.
13. SURRENDER. By this Lease, Lessee acquires no ownership rights in the
Equipment and has no option to purchase same. Upon the expiration or termination
of any Schedule or this Lease, or in the event of a default pursuant to
Paragraph 21 hereof, Lessee, at its expense, shall return the Equipment in good
repair, ordinary wear and tear resulting from proper use thereof alone expected,
by delivering it, packed and ready for shipment, to such place or carrier as
Lessor may specify.
14. RENEWAL. At the expiration of the term set forth in each Schedule, Lessee
shall return the Equipment subject to said Schedule in accordance with Paragraph
13 hereof At Lessor's option, this Lease, with respect to each Schedule, may be
continued on a month-to-month basis until 30 days after Lessee returns the
Equipment subject to the Schedule to Lessor. In the event that the Lease, with
respect to a Schedule, is so
4
<PAGE>
continued, Lessee shall pay to Lessor rentals in the same periodic amounts as
indicated under "Rental" on the Schedule.
15. LOSS AND DAMAGE. Lessee shall bear the entire risk of loss, theft, damage or
destruction of the Equipment from any cause whatsoever, and no loss, theft,
damage or destruction of the Equipment shall relieve Lessee of the obligation to
pay rent or to comply with any other obligation under this Lease.
In the event of damage to any item of Equipment, Lessee shall immediately place
the same in good repair at Lessee's expense. If Lessor determines that any item
of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall
at Lessee's option do one of the following:
(a) Replace the same with like Equipment in good repair; acceptable to
Lessor;
or
(b) Pay Lessor in cash the following: (i) all amounts due by Lessee to
Lessor with respect to all affected Schedules up to the date of the loss; (ii)
the unpaid balance of the total rent for the remaining term of the affected
Schedules attributable to said item, reduced to present value at a discount rate
of 9% as of the date of the loss; and (iii) the Lessor's estimate as of the time
this Lease was entered into of Lessor's residual interest in the Equipment,
discounted to present value at a discount rate of 9(degree)/. as of the date of
the loss. Upon Lessor's receipt of payment as set forth above, Lessee shall be
entitled to the Equipment, without any warranties. If insurance proceeds are
used to fully comply with this subparagraph, the balance of any such proceeds
shall go to Lessee to compensate for loss of use of the Equipment for the
remaining term of the Lease.
16. INSURANCE; LIENS; TAXES. Lessee shall provide and maintain insurance against
loss, theft, damage or destruction of the Equipment in an amount not less than
the full replacement value of the Equipment, with loss payable to the Lessor.
Lessee shall also provide and rnaintain comprehensive general all-risk liability
insurance, including but not limited to product liability coverage, insuring
Lessor and Lessee wilh a severability of interest endorsement or its equivalent,
against any and all loss or liability for damages either to persons or property
or otherwise, which might result from or happen in connection with the
condition, use or operation of the Equipment, with such limits and with an
insurer as are satisfactory to Lessor. Each policy shall expressly provide that
said insurance as to Lessor and its assigns shall not be invalidated by any act,
omission or neglect of Lessee and cannot be canceled without 30 days written
notice to Lessor. As to each policy, Lessee shall furnish to Lessor a
certificate of insurance from the insurer, which certificate shall evidence the
insurance coverage required by this Paragraph and shall designate Lessor as loss
payee and/or additional insured. Lessor shall have no obligation to ascertain
the existence or adequacy of insurance, or to provide any insurance coverage for
the Equipment or for Lessee's benefit.
5
<PAGE>
Lessee shall keep the Equipment free and clear of all levies, liens and
encumbrances. Lessee shall pay all charges and taxes (local, slate and federal)
which may now or hereafter be imposed upon the ownership, leasing, rental, sale,
purchase, possession or use of the Equipment excluding, however, all taxes on or
measured by Lessor's net income.
If Lessee fails to procure or maintain said insurance or to pay said
charges or taxes, Lessor shall have the right, but shall not be obligated, to
effect such insurance, or pay such charges or taxes. In that event, Lessor shall
notify Lessee of such payment and Lessee shall repay to Lessor the cost thereof
within 15 days after such notice is mailed to Lessee.
17. INDEMNITY. Lessee shall indemnify Lessor against any claims, actions,
damages or liabilities, including all attorney fees, arising aut of or connected
with the Equipment, without limitation. Such indemnification shall survive the
expiration, cancellation or termination of this Lease. Lessee waives any
immunity Lessee may have under any industrial insurance act with regard to
indemnification of Lessor.
18. ASSIGNMENT BY LESSOR. Any assignee of Lessor shall have all the rights but
none of the obligations of Lessor under this Lease. Lessee shall recognize and
hereby consents to any assignment of this Lease by Lessor, and Lessee shall not
assert against the assignee any defense, counterclaim or set-off that Lessee may
have against Lessor. Subject to the foregoing, this Lease inures to the benefit
of and is binding upon the heirs, devisees, personal representatives, survivors,
successors in interest and assigns of the parties hereto.
19. SERVICE CHARGES; INTEREST. If Lessee shall fail to make any payment required
by this Lease within 10 days of the due date thereof, Lessee shall pay to Lessor
a service charge of 10% of the amount due, provided, however, that not more than
one such service charge shall be made on any delinquent payment regardless of
the length of delinquency. In addition, Lessee shall pay to Lessor any actual
additional expenses incurred by Lessor in collection efforts, including but not
limited to long-distance telephone charges and travel expenses.
Further, Lessee shall pay to Lessor interest on any delinquent payment
or amount due under this Lease from the due date thereof until paid, at the
lesser of the maximum rate of interest allowed by law or 18% per annum.
20. TIME OF ESSENCE. Time is of the essence of this Lease, and this provision
shall not bc impliedly waived by the acceptance on occasion of late or defective
performance.
21. DEFAULT. Lessee shall be in default of this Lease if:
6
<PAGE>
(a) Lessee shall fail to make any payment due under the terms of this
Lease for a period of 10 days from the due date thereof; or
(b) Lessee shall fail to observe, keep or perform any other provision
of this Lease, and such failure shall continue for a period of 10 days; or
(c) Lessee has made any misleading or false statement in connection
with application for or performance of this Lease; or
(d) The Equipment or any part thereof shall be subject to any lien,
levy, seizure, assignment, transfer, bulk transfer, encumbrance, application,
attachment, execution, sublease, or sale without prior written consent of
Lessor, or if Lessee shall abandon the Equipment or permit any other entity or
person to use the Equipment without the prior written consent of Lessor, or
(e) Lessee dies or ceases to exist; or
(f) Lessee defaults on any other agreement it has with Lessor; or
(g) Any guarantor of this Lease defaults on any obligation to Lessor,
or any to the above-listed events of default occur with respect to any
guarantor, or any such guarantor files or has filed against it a petition under
the bankruptcy laws.
(h) Lessee ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to W
its debts as they become due, files a voluntary petition in bankruptcy, is
adjudicated a bankrupt or an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar arrangement under any present or future statute, law or regulation or
files an answer admitting the material allegations of a petition filed against
it in any such proceeding, consents to or acquiesces in the appointment of a
trustee, receiver, or liquidator of it or of all or any substantial part of its
assets or properties, or if it or its shareholders shall take any action looking
to its dissolution or liquidation.
22. REMEDIES. If Lessee is in default, Lessor, with or without notice to Lessee,
shall have the right to exercise any one or more of the following remedies,
concurrently or separately and without any election of remedies being deemed to
have been made:
(a) Lessor may enter upon Lessee's premises and without any court order
or other process of law may repossess and remove the Equipment, or render the
Equipment unusable without removal, either with or without notice to Lessee,
Lessee hereby waives any trespass or right of action for damages by reason of
such entry, removal or disabling. Any such repossession shall not constitute a
termination of this Lease;
7
<PAGE>
(b) Lessor may require Lessee, at its expense, to return the equipment
in good repair, ordinary wear and tear resulting from proper use thereof alone
excepted, by delivering it, packed and ready for shipment, to such place or
carrier as Lessor may specify;
(c) Lessor may cancel or terminate this Lease and may retain any and
all prior payments paid by Lessee;
(d) Lessor may declare all sums due and to become due under this Lease
immediately due and payable, including as to any or all items of Equipment,
without notice or demand to Lessee;
(e) Lessor may re-lease the Equipment to any third party, without
notice to Lessee, upon such terms and conditions as Lessor alone shall
determine, or may sell the Equipment without notice to Lessee, at private or
public sale, at which sale Lessor may be the purchaser;
(f) Lessor may sue for and recover from Lessee the sum of all unpaid
rents and other payments due under this Lease then accrued, plus all accelerated
future payments due under this Lease, reduced to their present value using a
discount rate of 9%, as of the date of default, plus Lessor's estimate at the
time this Lease was entered into of Lessor's residual interest in the Equipment,
reduced to present value at a discount rate of 9%, as of the date of default,
less the net proceeds of disposition, if any, of the Equipment;
(g) To pursue any other remedy available at law, by statute or in
equity.
No right or remedy conferred upon or reserved to Lessor is exclusive of any
other right or remedy herein, or by law or by equity provided or permitted, but
each shall be cumulative of every other right or remedy given herein or now or
hereafter existing by law or equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. No single or partial
exercise by Lessor of any right or remedy hereunder shall preclude any other or
further exercise of any other right or remedy.
23. MULTIPLE LESSEES. Lessee and each of them are jointly and severally
responsible and liable to Lessor under this Lease. Lessor may, with the consent
of any one of the Lessees hereunder, modify, extend or change any of the terms
hereof without consent or knowledge of the others, without in any way releasing,
waiving or impairing any right granted to Lessor against the others.
24. EXPENSE OF ENFORCEMENT. In the event of any legal action with respect to
this Lease, the prevailing party in any such action shall be entitled to
reasonable attorney fees, including attorney fees incurred at the trial level,
including action in bankruptcy
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<PAGE>
court, on appeal or review, or incurred without action, suits or proceedings,
together with all costs and expenses incurred in pursuit thereof.
25. MISCELLANEOUS.
(1) LESSEE HEREBY ACKNOWLEDGES THAT THIS LEASE IS NONCANCELABLE FOR THE
ORIGINAL RENTAL TERM SET FORTH IN EACH SCHEDULE.
(2) LESSEE UNDERSTANDS AND ACKNOWLEDGES THAT NO BROKER OR SUPPLER NOR
ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR SUPPLER IS AN AGENT OF LESSOR NO
BROKER OR SUPPLER, NOR ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR SUPPLER IS
AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO
REPRESENTATION AS TO THE EQUIPMENT OR ANY OTHER MATTER BY A BROKER OR SUPPLER OR
ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR SUPPLER SHALL IN ANY WAY AFFECT
LESSEE'S DUTY TO PAY THE RENTALS AND TO PERFORM LESSEE'S OBLIGATIONS SET FORTH
IN THIS LEASE.
26. SEVERABILITY. This Lease is intended to constitute a valid and enforceable
legal instrument. In the event any provision hereof is declared invalid, such
provision will be deemed severable from the remaining provisions of this Lease,
all of which will remain in full force and effect.
27. ENTIRE AGREEMENT; WAIVER. This instrument and the Schedules executed by
Lessor and Lessee constitute the entire agreement between Lessor and Lessee with
respect to the Equipment and the subject matter of this Lease. No provision of
this Lease shall be modified unless in writing signed by an authorized
representative of Lessor. Waiver by Lessor of any provision hereof in one
instance shall not constitute a waiver of any other instance.
Lessee initials__________
28. CHOICE OF LAW; JURISDICTION. This Lease shall not be effective until signed
by Lessor at its principal place of business listed above. This Lease shall be
considered to have been made in the state of Lessor's principal place of
business and shall be interpreted in accordance with the laws and regulations of
that state.
Lessee agrees to Jurisdiction in the state of Lessor's principal place of
business in any action, suit or proceeding arising out of this Lease, and
concedes that it, and each of them, transacted business in the said state by
entering into this Lease. In the event of legal action to enforce this Lease,
Lessee agrees that venue may be laid in county of Lessor's principal place of
business.
Lessee initials__________
9
<PAGE>
LESSEE: VISUAL DATA CORPORATION / LESSOR: CROCKER CAPITAL
HOTEL VIEW CORPORATION
AS CO-LESSEES
/S/ RANDY SELMAN Date 11/08/96 /S/ J. HERNANDEZ Date 11/08/96
- ----------------------- -------- ---------------- --------
Randy Selman, President
_____________________ Date _____________
_____________________ Date _____________
_____________________ Date _____________
_____________________ Date _____________
Sworn and subscribed before me this 8th day
of November 1996 by Randy S. Selman, to me
personally known.
/S/ JOANNE M. TEPPER
-------------------------
Joanne M. Tepper
10
EXHIBIT 10.(o)
#6014
LEASE AGREEMENT
Visual Data Corporation 1600 S. Dixie Highway, Suite 3A, Boca Raton, FL 33432
Computer Video & Graphics 6157 NW 167th Street, #F14, Miami, FL 33015
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF
Same as Above Palm Beach
36 Payments of $1633.41 $98.00 $1,731.41 36
Advance Payment of $ N/A which equlas the first and last N/A payment(s) and a $
595.00 documentation fee MUST ACCOMPANY LEASE.
EQUIPMENT LEASE TERMS AND CONDITIONS
1. LEASE AND PAYMENTS. LESSOR hereby leases to LESSEE and LESSEE hereby
leases from Lessor, the Equipment pursuant to the terms and conditions of this
Lease which include those on the reverse side hereof. LESSEE agrees to make all
of the payments ("Monthly Lease Payment(s)") as set forth above at the LESSOR'S
address shown above or such other addresses as LESSOR may direct on or before
each monthly due date and shall commence with acceptance of the Equipment and
continuing on such date of each month thereafter for the entire Lease term,
including any extended or renewal term. Said Lease term shall be automatically
extended at the Monthly Lease Payment in effect at the end of said term unless
and until terminated by either party hereto giving the other not less than
ninety (90) days prior written notice. ALL RENTS SHALL BE PAID WITHOUT NOTICE OR
DEMAND AND WITHOUT ABATEMENT, DEDUCTION, SET-OFF OF ANY AMOUNT WHATSOEVER. Each
such Monthly Lease Payment is due and payable whether or not LESSEE is invoiced
or supplied with a payment coupon book. Without LESSOR prior written consent,
any Monthly Lease Payment of a sum less than due shall not constitute a lease or
accord and satisfaction of what is due (or to become due) regardless of any
endorsement restriction. If either party declines to execute this Lease, LESSOR
may retain any LESSEE moneys to include, but not limited to, Security
Deposit(s), Monthly Lease Payments, Taxes, Documentation/Filing and commitment
fees.
2. SELECTION OF EQUIPMENT, LESSEE acknowledges the selection by it of
both the Equipment and supplier thereof and has requested LESSOR to purchase the
Equipment for Lease and shipment to LESSEE. Upon receipt thereof LESSEE shall
execute LESSOR's certificate of delivery and acceptance. In the event that
LESSEE has not executed and delivered to LESSOR such certificate of delivery and
acceptance within ten (10) business days after receipt of the Equipment, it
shall be conclusively presumed, as between LESSOR and LESSEE, that the Equipment
is acknowledged to be in good working order and condition and the LESSEE has
accepted and is satisfied with the Equipment for all of the intended uses and
purposes and LESSEE shall be required to commence Monthly Lease Payments due on
the tenth business day after LESSEE's receipt of the Equipment.
LESSEE AGREES AND ACKNOWLEDGES THAT IS THE INTENT OF BOTH PARTIES TO THIS
AGREEMENT THAT THIS LEASE QUALIFY AS STATUTORY FINANCE LEASE UNDER ARTICLE 2A
OF THE UNIFORM COMMERCIAL CODE. LESSEE REPRESENTS AND ACKNOWLEDGES THAT THE
LESSOR HAS NOT SELECTED, MANUFACTURED OR SUPPLIED THE EQUIPMENT AND LESSOR HAS
ACQUIRED THE EQUIPMENT OR THE RIGHT TO POSSESSION AND USE OF THE EQUIPMENT
SPECIFICALLY FOR LEASE TO LESSEE AT LESSEE'S REQUEST AND DIRECTION IN
CONNECTION WITH THIS LEASE. LESSEE, IN LESSEE'S SOLE DISCRETION, SELECTED THE
EQUIPMENT AND SUPPLIER AND ONLY LESSEE WILL ACCEPT DELIVERY OF, INSPECT, USE
AND MAINTAIN THE EQUIPMENT, LESSEE IS ALSO ADVISED THAT IT MAY HAVE RIGHTS
UNDER THE CONTRACT EVIDENCING THE LESSOR'S PURCHASE OF THE EQUIPMENT AND THAT
IT SHOULD CONTACT THE SUPPLIER FOR THE DESCRIPTION OF ANY SUCH RIGHTS. The
<PAGE>
Lease, including the provisions on the reverse, contains the entire agreement
between the LESSOR and LESSEE and may not be amended, modified, terminated or
otherwise changed, except by prior agreement in writing signed by an executive
officer of the LESSOR. Notwithstanding the foregoing, LESSEE hereby authorizes
the LESSOR without further notice, to complete the description of the Equipment
to be leased and the quantity thereof, to insert the serial numbers or other
identification data for the Equipment when determined, to fill any blank spaces
of this Lease and to date this Lease.
3. TAXES, FEES and ASSESSMENTS. LESSEE shall promptly pay when due all
licensing, filing and registration fees and all sales, use, personal property,
income or any other taxes (other than LESSOR'S income taxes) which may be levied
by any taxing authority with respect to the Equipment or the Monthly Lease
Payments or other payments due hereunder whether now or hereafter required
(including, but not limited to, increase in the rate of such taxes and any
penalties, fines, fees or interest imposed in connection therewith). LESSEE
agrees to file, in behalf of LESSOR, all required tax returns and reports
concerning the Equipment with all appropriate governmental agencies, and within
not more than forty-five (45) days after the due date of such filing to send
LESSOR confirmation, in form satisfactory to LESSOR, of such filing. LESSEE
further agrees to pay LESSOR a $179.01 documentation fee to cover the expense of
originating this Lease.
4. TITLE; FILINGS. Title to the Equipment shall at all times remain
with the LESSOR and LESSEE shall at no time make any assertion to the contrary
and shall keep the Equipment free and clear of all encumbrances, liens, or
levies of any kind or nature and shall defend LESSOR'S title at LESSEE'S
expense. LESSEE shall immediately give LESSOR notice in writing of the pendency
of any claim to the Equipment adverse to LESSOR'S ownership. LESSEE grants to
LESSOR or its agents or assigns a limited power of attorney to execute in
LESSEE'S name and file any financing statement or other document reflecting the
existence of the Lease and agrees to pay LESSOR $35.00 as LESSOR'S expense in
effecting any such filing. LESSEE shall cause to be placed on each piece of
Equipment identification noting LESSOR'S ownership. LESSEE warrants that the
Equipment will at all times remain personal property, regardless of h ow it may
be affixed to any real property, LESSEE agrees to hold LESSOR harmless and
indemnify LESSOR with regard to any and all claims, actions, damages, costs and
attorney's fees asserted by any landlord or mortgagee against LESSOR or the
Equipment herein.
5. REPRESENTATIONS AND WARRANTIES OF LESSEE. LESSEE represents and
warrants to LESSOR as follows: (i) the Equipment is Leased and will be used
exclusively for business purposes, (ii) the financial information provided by
LESSEE to LESSOR is, in all respects, true and correct, (iii) LESSEE has read,
understands and freely accepts the terms of this Lease, (iv) no representation
or warranty whatsoever concerning the Equipment has been made to LESSEE by
LESSOR, (v) LESSEE is duly and validly established under the laws of the state
in which it is organized, (vi) the person executing this Lease on behalf of
LESSEE has the power, authority and legal right to execute, deliver and perform
this Lease, and (vii) LESSEE is qualified to do business in each jurisdiction
where the Equipment is located, (viii) LESSEE will comply with all governmental
laws, ordinances, regulations, requirements and rules with respect to the use,
maintenance and operation of the Equipment.
6. NO WARRANTIES BY LESSOR. LESSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO THE EQUIPMENT INCLUDING THOSE OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND DISCLAIMS ANY AND ALL SUCH WARRANTIES.
LESSOR shall not be liable to LESSEE or any other persons to any extent
whatsoever for any claim arising out of the manufacture, selection, delivery,
possession, use, suitability, operation, return or condition of the Equipment
(including, without limitation, latent or other defects whether or not
discoverable by LESSEE.) LESSEE agrees to make such claims which may arise
directly to the supplier or manufacturer of the Equipment and provided LESSEE is
not in default, LESSOR grants to LESSEE the right to assert any and all warranty
claims which LESSOR may otherwise have by reason of its purchase and ownership
of the Equipment. THIS DISCLAIMER OF WARRANTIES IS FUNDAMENTAL TO
<PAGE>
THE NATURE OF THIS TRANSACTION, IS EXPRESSLY BARGAINED FOR AND SUCH LESSOR WOULD
NOT HAVE ENTERED INTO THE LEASE WITHOUT SUCH DISCLAIMER. THE PENDENCY OF ANY
CLAIM BY LESSEE ARISING IN CONNECTION WITH THE EQUIPMENT WHETHER OR NOT COVERED
BY ANY WARRANTY SHALL NOT AFFECT THE OBLIGATION OF LESSEE TO MAKE LEASE
PAYMENTS.
______ INITIAL
______ INITIAL
SEE REVERSE SIDE FOR ADDITIONAL TERMS
AND CONDITIONS
Visual Data Corporation
LESSEE
SIGNATURE DATE: 5-25-95
/S/ RANDY S. SELMAN
---------------------------------------------
PRINT NAME AND TITLE BELOW:
RANDY S. SELMAN
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SIGNATURE DATE: 5-29-95
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PRINT NAME AND TITLE BELOW:
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ACCEPTED BY LESSOR: COASTAL LEASING, INC.
BY: /S/ MELANIE M. KAELIGN, VP ADMIN
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Date: MAY 25, 1995
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THIS IS AN NON-CANCELABLE LEASE FOR THE TERM
INDICATED
<PAGE>
7. LOSS, THEFT, DAMAGE, DESTRUCTION. LESSEE agrees to bear the entire
risk of any loss, theft, damage or destruction of the Equipment from any cause
whatsoever. NOTWITHSTANDING THE COMMENCEMENT DATE OF THE TERM OF THIS LEASE WITH
RESPECT TO ANY ITEM OF EQUIPMENT, LESSEE AGREES THAT ALL RISK OF LOSS OF THE
EQUIPMENT SHALL BE ON LESSEE FROM AND AFTER SHIPMENT OF THE EQUIPMENT TO LESSEE
BY THE SELLER THEREOF, F.O.B. seller's point of shipment. LESSEE agrees that no
such loss, theft, damage or destruction, whether upon delivery or thereafter,
shall relieve LESSEE of its obligation to pay rent or of any other of its
obligations under the Lease. In the event the Equipment is physically damaged to
a material extent by any occurrence whatsoever, LESSEE shall immediately notify
LESSOR of such damage and, unless LESSOR shall determine, in its sole and
absolute discretion, that the Equipment is damaged beyond repair, LESSEE at the
sole and absolute option and direction of LESSOR but at LESSEE'S sole expense,
shall immediately:
a) Replace the same with like Equipment in good condition and
repair and provide LESSOR with clear title thereto; or
b) Pay to LESSOR the total of the following amounts:
i) All Monthly Lease Payments and other payments due under
this Lease at the time of payment plus
ii) All Monthly Lease Payments and other amounts due under
this Lease from date of such payment to the end of the Lease term plus LESSOR'S
estimated residual value, discounted at the time of payment to present value by
an annual factor of six (6%). Upon LESSOR'S receipt of such payment, LESSOR
agrees that its entire interest in said item shall become the property of LESSEE
and LESSEE'S insurer (as their interests appear) in its then condition. AS IS,
WHERE IS, WITHOUT WARRANTY FROM LESSOR, EXPRESS OR IMPLIED WARRANTY, INCLUDING
ANY IMPLIED OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8. INSURANCE. LESSEE agrees to procure at its own expense and maintain
in force until the Equipment is returned to LESSOR the following insurance with
companies and in form acceptable to LESSOR:
(a) A policy of general liability insurance, including bodily injury
and property damage, protecting the interest of LESSOR and LESSEE with such
limits as LESSOR may specify, naming LESSOR as additional insured.
(b) A policy of all risk, physical damage insurance, including burglary
and theft, covering the Equipment for not less than the grater of the
replacement value or the original total cost of the Equipment, naming the LESSOR
as loss payee.
LESSEE shall furnish to LESSOR satisfactory evidence of the required
insurance. The proceeds of any insurance received by LESSOR on account of any
loss or casualty which has been satisfied by LESSEE shall be released to LESSEE
upon appropriate proof, unless at that time the LESSEE is in default, whereupon
LESSOR shall apply such insurance proceeds toward all amounts due under this
lease as a result of LESSEE'S default. Such policies of insurance shall provide
for at least thirty (30) days written notice of cancellation to Equipment.
LESSEE assigns to LESSOR all its rights, title and interest to any insurance
policies insuring the Equipment, including all rights to receive the proceeds of
insurance not in excess of the unpaid obligations under the Lease plus LESSOR'S
estimated residual value of the Equipment at the end of the Lease (discounted as
provided in paragraph 8 and directs any insurer to pay all such proceeds
directly to LESSOR and authorizes LESSOR to endorse LESSEE'S name on any draft
of other instrument for such proceeds.
9. LOCATION AND LESSORS INSPECTION. Equipment shall be delivered and
thereafter kept at the location specified above, if none specified above, if
none specified, at LESSEE'S address set forth above and shall not be removed
therefrom without LESSOR'S prior written consent. Any and all costs incurred by
LESSOR as a result of such relocation shall be borne by LESSEE. Any charges
hereunder shall not abate during the period the Equipment is out of service due
to any such relocation requested by LESSEE. LESSEE shall permit LESSOR on its
premises to inspect the Equipment and the business records to the LESSEE
relating to it during normal business hours.
10. ADDITIONS TO AND USE OF EQUIPMENT. Without LESSOR'S prior written
consent, LESSEE shall not make any alterations or additions to the Equipment
which would adversely affect the Equipment's intended use or value. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by LESSOR, shall become a part of the Equipment. LESSEE, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use of
the Equipment are to be provided by LESSEE at its expense and are to meet the
Equipment manufacturer's specifications.
11. CONCLUSION OF LEASE TERM. At the conclusion of the term of this
Lease, unless other selections are available under End Of Lease Option(s),
LESSEE shall, at its expense, return the Equipment to LESSOR, properly packaged
or crated, in good condition and repair, in working order, ordinary wear and
tear permitted, at the address of LESSOR above, or such other location as LESSOR
shall direct. In lieu of returning such Equipment to LESSOR, LESSEE agrees that
LESSEE will, upon request of LESSOR, store such Equipment on LESSEE'S premises,
at an inside location protected from the weather and elements, without charge to
LESSOR for a period of 180 days following the date of expiration or termination
of this Lease. During such storage period LESSEE shall not use the Equipment for
any purpose. Upon expiration of such storage period LESSEE will return such
Equipment to LESSOR in accordance with the proceeding provisions. If the LESSEE
fails to return the Equipment to LESSOR, for any reason whatsoever, (unless
LESSEE has exercised its End Of Lease Options, with all or part of the security
deposit being applied thereto), LESSOR shall retain LESSEE'S Security deposit in
partial consideration thereof.
12. DEFAULT; REMEDIES. In the event LESSEE (i) fails to make any
Monthly Lease Payment when due; breaches any covenant, representation or
warranty contained in this Lease; (iii) makes an assignment for the benefit of
creditors or a petition for relief under any bankruptcy or insolvency law is
filed by or against LESSEE; (iv) is in default under any other lease, note or
obligation; (v) misrepresents or falsely warrants the financial information
given in connection with this Lease; (vi) makes a Build Sale or change int he
majority ownership
<PAGE>
interest of LESSEE; (vii) ceases to operate as a going concern, then LESSOR
shall have the right, to exercise any one or more of the following cumulative
remedies:
/bullet/ without notice,the entire amount of the Monthly Lease
Payments remaining and other amounts which have accrued
hereunder to be paid over the balance of the Lease term,
together with all other obligations as herein set forth,
shall become immediately due and payable;
/bullet/ proceed to appropriate court action or actions at law or
in equity or in bankruptcy to enforce performance by
LESSEE of the covenants and terms of this Lease and/or to
recover damages for the breach thereof;
/bullet/ terminate this Lease.
/bullet/ whether or not this Lease be so terminated, and without
notice to LESSEE, repossess the Equipment wherever found,
with or without legal process, and for this purpose LESSOR
and/or its agents may enter upon any premises under the
control or jurisdiction of LESSEE or any agent of LESSEE
without liability for suit, action or proceeding by LESSEE
(any damages occasioned by such repossession being hereby
expressly waived by LESSEE) and remove the Equipment
therefrom; or
/bullet/ at LESSOR'S sole option, LESSOR may perform for LESSEE and
LESSEE will be responsible for cost of performance plus
interest thereon.
Notwithstanding the fact that any or all of the Equipment is returned to or
repossessed by LESSOR, LESSEE shall remain liable for the entire amount of
unpaid Monthly Lease Payment(s), plus all other unpaid sums or charges that
accrue prior to the date of LESSEE'S default, together with all costs and
expenses incurred by LESSOR as set forth herein, including its reasonable
attorneys' fees, with accelerated payments being discounted to present value as
of the date of default at an annual discount rate of six percent (6%).
If LESSEE fails to redeliver any Equipment to LESSOR or LESSOR is
unable for any reason to effect repossession of any Equipment, or LESSOR in its
sole discretion does not repossess any of the Equipment, then, with respect to
such Equipment, LESSEE shall be liable for, in addition the entire amount of
unpaid Monthly Lease Payments, LESSOR'S estimated residual value, with both the
accelerated payments and residual value being discounted to present value as of
the date of default at an annual factor of six percent (6%), plus all other
unpaid sums of charges together with all costs and expenses incurred by, LESSOR
including its reasonable attorneys' fees. LESSOR, at its option,may apply the
Initial Payments against the LESSEE'S obligations under this Lease.
Any repossession, resale or re-Lease of any Equipment by LESSOR shall
not be a bar to the institution of litigation by LESSOR against LESSEE for
damages for breach of this Lease, as hereinbefore provided, and the commencement
of any obligation or the entry of judgment against LESSEE shall not be a bar of
LESSOR'S rights to repossess any or all of the Equipment.
To the extent permitted by applicable law, LESSEE hereby waives any
rights now or hereafter conferred by stature of otherwise which may require
LESSOR to sell, lease or otherwise use any Equipment in mitigation of LESSEE'S
damages, as set forth in this Paragraph or which may otherwise limit or modify
any of LESSOR'S rights or remedies under this Paragraph.
In the event that any court of competent jurisdiction determines that
any provision of this Lease is invalid or unenforceable in whole or in part,
such determination shall not prohibit LESSOR from establishing its damages
sustained as a result of any breach of this Lease in any action or proceeding in
which LESSOR seeks to recover such damages or the return of the Equipment.
All remedies of LESSOR hereunder are cumulative and may, to the extent
permitted by law, be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed to be an election of such remedy or to
preclude the exercise of any other remedy. No failure on the part of LESSOR to
exercise, and no delay in exercising any right or remedy hereunder preclude.
Damages occasioned by LESSOR'S taking possession of Equipment are hereby waived
by LESSEE. All legal and equitable, actions between LESSEE and LESSOR can be
brought in a court of competent jurisdiction at the said election and
determination of LESSOR, and LESSEE consents thereto.
13. INDEMNITY. To the fullest extend permitted by law, LESSEE shall
indemnify and hold harmless the LESSOR, its assigns, successors, agents and
employees, from and against all claims, damages, losses and expenses, including
but not limited to attorneys' fees, arising out of or resulting in any way from
or related to the Equipment including, without limitation, the manufacture,
selection, delivery, possession, use, suitability, operation,return or condition
(including, without limitation, latent or other defecters whether or not
discoverable by LESSOR). This indemnification shall not be limited in any way by
any limitation on the amount or type of damages, compensation or benefits
payable by or for the LESSEE under any Workers Compensation or other employee
benefit act. LESSEE'S indemnities and liabilities shall continue in full force
and effect, notwithstanding the expiration, termination, or cancellation of this
Lease for any reason, including without limitation, the expiration of time,
operation of law, or otherwise.
14. ASSIGNMENT. LESSEE shall not assign or hypothecate this Lease, and
shall not sublet, lend or encumber any Equipment without LESSOR'S prior written
consent. The Equipment shall remain personal property regardless or whether
affixed to real property, and LESSEE agrees to execute and obtain the execution
of all agreements and documents in recordable form by all parties having an
interest in real property to which the Equipment is affixed, as LESSOR may
request, to protect LESSOR'S title to the Equipment. LESSOR may assign, sell,
transfer, mortgage, encumber, or otherwise dispose of this lease of the
Equipment in whole or in part without notice or consent of LESSEE. In the event
of any such transfer or assignment of the Lease or the Equipment, LESSEE agrees
to pay to the assignee or transferee all sums and to perform all obligations
under the Lease without defense, offset, or counterclaim whatsoever, including
breach of warranty, and such assignee or transferee shall have all the rights
and powers of LESSOR, but shall not be obligated to perform any of LESSOR's
obligations under this Lease; provided that no such assignment or transfer shall
deprive LESSEE of its right to use the Equipment in accordance
<PAGE>
with the terms of the Lease. If LESSEE is given notice of any such transfer or
assignment, LESSEE agrees to acknowledge receipt thereof in writing and to pay
directly to the transferee or assignee all rents and other sums so assigned.
15. COLLECTION CHARGES. LESSEE AGREES THAT TIME IS OF THE ESSENCE TO
THIS LEASE. Accordingly, if any part of sum is not paid when due, LESSEE agrees
to pay LESSOR upon demand;
in the event any Monthly Lease Payment is not received within ten (10)
days of the due date, a later charge on the Monthly Lease Payment equal to the
grater of five (5%) or $15.00; and
other amounts allowed by law.
16. APPLICABLE LAW; JURISDICTION AND VENUE; WAVERS. This Lease will be
deemed to have been made, executed and delivered in the State of Florida and
shall be governed and construed for all purposes in accordance with the laws of
the State of Florida without giving effect to principals of conflicts of law.
LESSEE and Guarantor waive, insofar as permitted by law, trial by jury. LESSEE
and Guarantor hereby irrevocably consent that the jurisdiction and venue in any
action under this lease shall occur solely in state courts encompassing Broward
County, Florida LESSEE and Guarantor agree that any process served for any
action or proceeding shall be valid if mailed by regular or certified mail,
return receipt requested, with delivery restricted to either the addressee, its
registered agent or any agent appointed in writing to accept service of process.
17. CAPTIONS. Captions are intended for convenience or reference only,
and shall not be construed to alter or vary the text.
18. SEVERABILITY. In the event any one or more of the provisions of
this Lease shall for any reason be held invalid or unenforceable, such provision
shall be effective to the extent valid and enforceable, the remaining provisions
of this Lease shall remain in full force and effect.
19. ENTIRE LEASE; CHANGES. This Lease contains the entire agreement
between the LESSOR and LESSEE and may not be altered, amended, modified,
terminated or otherwise changed, except by a writing signed by an executive
officer of LESSOR. Each of the parties hereto declare that they have
participated in drafting this Lease Agreement and that, accordingly, this Lease
Agreement shall not be construed more strongly against any party hereto because
it drafted this Lease Agreement.
20. FURTHER ASSURANCES.
/bullet/ LESSEE shall execute and deliver other necessary
documents as LESSOR may reasonably require to
complete this transaction.
/bullet/ LESSEE hereby appoints LESSOR as LESSEE'S
attorney-in-fact to execute any and all documents
necessary to carry out the intent of this Lease;
including the loss or damages to the Equipment.
THIS IS A NON-CANCELABLE LEASE FOR THE TERM INDICATED
<PAGE>
PAGE 1 OF 3
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6014 by and
between Visual Data Corporation, as LESSEE and Coastal Leasing Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway B & H Photo - Video, Inc.
Suite 3A 119 West 17th Street
Boca Raton, FL 33432 New York, NY 10011
EQUIPMENT DESCRIPTION:
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(1) SONY PVW-2800 BETA SD EDIT RECORDER/PLAYER (1) JVC BR-7030U 3-IN-1 HI-FI VHS
DUPLICATOR (1) JVC TM-9U 9" COLOR VIDEO MONITOR (1) TIME CODE GENERATOR - FAST
FORWARD MODEL F30
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
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1600 S. Dixie Highway H.M. Seiden Consulting, Inc.
Suite 3A Techworks: H.M. Seiden 8930 State Road 84, Suite 243
Boca Raton, FL 33432 Davie, FL 33324
EQUIPMENT DESCRIPTION:
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AUDIO EQUIPMENT:
(150) AUDIO CABLE FOR VTR AND MACHINE WIRING
(75) MIC CABLE 2 PR. STAR QUAD CANARE OR EQUIV
(500) AUDIO CABLE FOR INTER RACK WIRING
(200) SPEAKER WIRE
(1) NEUTRIK AUDIO PATCH PANEL 2X48
(100) 3 CKT PHONE PLUGS
(50) XLR CONNECTORS
(50) XLR CONNECTORS
VIDEO EQUIPMENT:
(1500) PRECISION 75Q RG59 CABLE, COLORS
(250) VIDEO CONNECTOR, BNC
(1) 8X1 VIDEO/AUDIO SWITCHER
(1) BLACK BURST GENERATOR 1X8
(1) BRAS MODULE
(1) FRAME & BLANK PANEL
(1) ADC PATCH PANEL VIDEO (24 POSITION)
(2) RACK RAIL ASSEMBLIES (PVW VTR)
(1) RACK 78HX22WX25"D W/DOOR, SIDES, WHEELS, BLK
(3) TRIPP LITE 12 OUTLET BOX RFI/SPIKE PROTECTION
INITIALS ______
<PAGE>
PAGE 2 OF 3
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6014 by and
between Visual Data Corporation, as LESSEE and Coastal Leasing Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway Sam Ash Professional
Suite 3A 723 Seventh Ave. 3rd Floor
Boca Raton, FL 33432 New York, NY 10019
EQUIPMENT DESCRIPTION:
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(1) FURMAN AR-117 AC POWER REGULATOR, 120V, 15A
(1) NEUMANN TLM193 STUDIO CONDENSER MIC LARGE DIAPHRAGM, CARDLOID W/SWIVEL MOUNT
STAND ADAPTER
(1) TASCAM CD-401MKII RACK MT. CD PLAYER XLR BALANCED OUT
(1) MACKIE DESIGNS MB16 16 CHANNEL METER BRIDGE
(1) KRK 6000 CLOSE FIELD MONITOR PAIR CLOSE FIELD MONITOR
(1) NEUMANN EA193 SHOCK MOUNT FOR TLM193 MICROPHONE
(1) FURMAN HA6 HEADPHONE 20W/CH POWER AMP
(3) SONY MDR-7506 PRO HEADPHONE
(4) FURMAN PL-8 POWER/LIGHT MODULE
(1) GENELEC 1030A TWO WAY 6 1/2" BASS, 3/4" TREB NEAR FIELD
(2) TASCAM DA-30 MK II RDAT DIGITAL RECORDER WITH SHUTTLE WHEEL
(1) DIGIDESIGN PRO TOOLS III CORE SYSTEM INCLUDES TCM
(1) DIGIDESIGN 888 AUDIO INTERFACE
(1) APPLE POWER MAC 7100/80 8/500
(1) APPLE EXTENDED KEYBOARD II
(2) MEMORY 8MB 72 PIN SIMM MODULE
(1) GLYPH 2.1 GB RACK HARD DRIVE
(1) MACKIE DESIGNS 16X8 8 BUSS CONSOLE
(1) ALESIS MATICA 500 POWER AMPLIFIER 250W/CH. AT 4 OHMS FAN COOLED
(1) MACKIE DESIGNS CR-1604 MIC/LINE MIXER, 16 CHANNELS, RACK-MOUNTABLEW, 7 AUX
SENDS, 3 BAND EQ
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway Columbia Audio/Video
Suite 3A 172 Fist Street
Boca Raton, FL 33432 Highland Park, IL 60036
EQUIPMENT DESCRIPTION:
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(1) SON 19" MONITOR
(1) SON BETA CAM EDITOR
(1) SON 4 CHANNEL S-VHS
(2) SON 20" MONITOR/RECEIV
(2) SON REPL. SVO1410
INITIALS __________
<PAGE>
PAGE 3 OF 3
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6014 by and
between Visual Data Corporation, as LESSEE and Coastal Leasing Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway J & R CORPORATE SALES
Suite 3A 15 Park Row 2nd Floor
Boca Raton, FL 33432 New York, NY 10038
EQUIPMENT DESCRIPTION:
- ----------------------
(1) APPLE MULTIPLE SCAN
(1) 100 DISC CD CHANGER
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway Markerteck Video Supply
Suite 3A 4 High Street Box 397
Boca Raton, FL 33432 Saugerties, NY 12477
EQUIPMENT DESCRIPTION:
- ----------------------
(1) A2642E BRETFORD CART W/ E UNIT
(1) TVM-1 BRETFORD CEILING MOUNT
(1) FSL-2 STOP RECORDING LIGHT
(1) FSL-3 IN SESSION LIGHT
(2) LCR2400 LINE CONDITIONER/RACK MT.
(1) PVS-4366 PANASONIC VCR S-VHS
(2) SW-2 LARGE DISPLAY STOPWATCH
(1) RMCD RACK MOUNT DISC HOLDER
(1) RMDAT RACK MOUNT DAT HOLDRE
(1) PVS-6WC POPLESS VOICE SCREEN/CLAMP
(1) SB-36 ATLAS BOOM W/CASTERS
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway Broadcast Store, Inc.
Suite 3A 460 West 34th Street
Boca Raton, FL 33432 New York, NY 10001
EQUIPMENT DESCRIPTION:
- ----------------------
(1) 61661 TEKTRONIC 1750
LESSOR: COASTAL LEASING, INC. LESSEE: VISUAL DATA CORPORATION
BY: /S/ MELANIE M. KAELIGN BY: /S/ RANDY S. SELMAN
--------------------------- ----------------------
Title: VP ADMIN Title: PRESIDENT
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Dated: MAY 29 1995 Dated: 5-25-95
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<PAGE>
FIRST AMENDMENT
AMENDMENT TO LEASE AGREEMENT #6014 ("LEASE") DATED 5-25-95
BETWEEN
COASTAL LEASING, INC. ("LESSOR")
AND
VISUAL DATA CORPORATION ("LESSEE")
With respect to the above referenced Lease Agreement only, the terms
and conditions of the Lease shall be modified as follows:
Notwithstanding any provision contained in the Lease to the contrary,
upon the expiration of the initial Term and payment by Lessee of all rental
payments and other amounts due under the Lease, and provided that no Event of
Default shall have occurred and be continuing, Lessee shall have the option,
upon written notice to Lessor at least 90 days prior to the expiration of the
Initial Term, to purchase all, but not less than all, of the Equipment covered
under the Lease for Ten Percent (10%) of the original cost of the Equipment to
Lessor, plus applicable taxes. Lessee's payment to Lessor of the purchase price
as determined above shall be due Lessor no later than the expiration date of the
Initial Term. If Lessee for any reason does not purchase the Equipment in
accordance with the terms set forth above, the Lease term shall automatically
and without further action on the part of Lessor and Lessee be extended for an
additional term of 12 months at a monthly rental of 1.1% of the original cost of
the Equipment to Lessor, plus applicable taxes, with such rental payments
commencing as of the expiration date of the Initial Term (the "Extension Term").
Upon the expiration of the Extension Term as set forth above, Lessee
shall have the option to renew the Lease, upon ninety (90) days written notice
to Lessor, at the then fair market rental value. If Lessee does not exercise
such renewal option, Lessee shall further have the option to purchase the
Equipment upon ninety (90) days written notice to Lessor, at its then fair
market value. Should Lessee fail to exercise such renewal or purchase option,
Lessee shall be obligated to continue to pay rent and/or return the Equipment to
Lessor in accordance with the terms of the Lease.
The Lessor shall determine the fair market rental value for purpose of
the renewal option or purchase option at the expiration of the Extension Term.
If Lessee disagrees with Lessor's quote, Lessee shall, within thirty (30) days
after receipt of Lessor's quote provide an appraisal from an independent third
party appraiser selected by Lessee. The Appraiser shall have no conflicts of
interest, shall not be affiliated with, or be an employee of, Lessee and, or any
of its subsidiaries or affiliates and shall have such working knowledge of the
specific equipment to be appraised and the market value thereof as would
reasonably be expected of any individual or organization requested to provide a
fair market appraisal in its ordinary course of business. The appraiser selected
shall document its qualifications and its basis for the appraised valuation. The
parties shall be bound by such appraisal. All costs and expenses of appraisal
shall be paid by Lessee.
The notices to Lessor relative to Lessee's exercise of any renewal
option or purchase option should be sent via certified mail to:
Coastal Leasing, Inc.
4901 NW 17th Way, Suite 100
<PAGE>
Fort Lauderdale, FL 33309
Except as amended hereby, the Lease shall remain in full force and effect. In
the event of any conflict between the Lease and this Amendment to Lease, the
Amendment to Lease shall govern.
IN WITNESS WHEREOF, the parties have executed this amendment to Lease effective
as of the dates set forth above.
COASTAL LEASING, INC. (LESSOR) VISUAL DATA CORPORATION (LESSEE)
BY: /S/ MELANIE M. KAELIGN, VP ADMIN BY: /S/ RANDY SELMAN, PRES.
--------------------------------- -----------------------------
(AUTHORIZED SIGNATURE/TITLE) (AUTHORIZED SIGNATURE/TITLE)
DATED: MAY 29 1995 DATED: 5-25-95
---------------------------- --------------
EXHIBIT 10.(p)
6006
LEASE AGREEMENT
Visual Data Corporation 1600 S. Dixie Highway, Suite 3A, Boca Raton, FL 33432
Computer Video & Graphics 6157 NW 167th Street, #F14, Miami, FL 33015
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF
Same as Above Palm Beach
36 Payments of $1983.43 $119.01 $2,102.44 36
Advance Payment of $ N/A which equlas the first and last N/A payment(s) and a $
445.00 documentation fee MUST ACCOMPANY LEASE.
EQUIPMENT LEASE TERMS AND CONDITIONS
1. LEASE AND PAYMENTS. LESSOR hereby leases to LESSEE and LESSEE hereby
leases from Lessor, the Equipment pursuant to the terms and conditions of this
Lease which include those on the reverse side hereof. LESSEE agrees to make all
of the payments ("Monthly Lease Payment(s)") as set forth above at the LESSOR'S
address shown above or such other addresses as LESSOR may direct on or before
each monthly due date and shall commence with acceptance of the Equipment and
continuing on such date of each month thereafter for the entire Lease term,
including any extended or renewal term. Said Lease term shall be automatically
extended at the Monthly Lease Payment in effect at the end of said term unless
and until terminated by either party hereto giving the other not less than
ninety (90) days prior written notice. ALL RENTS SHALL BE PAID WITHOUT NOTICE OR
DEMAND AND WITHOUT ABATEMENT, DEDUCTION, SET-OFF OF ANY AMOUNT WHATSOEVER. Each
such Monthly Lease Payment is due and payable whether or not LESSEE is invoiced
or supplied with a payment coupon book. Without LESSOR prior written consent,
any Monthly Lease Payment of a sum less than due shall not constitute a lease or
accord and satisfaction of what is due (or to become due) regardless of any
endorsement restriction. If either party declines to execute this Lease, LESSOR
may retain any LESSEE moneys to include, but not limited to, Security
Deposit(s), Monthly Lease Payments, Taxes, Documentation/Filing and commitment
fees.
2. SELECTION OF EQUIPMENT, LESSEE acknowledges the selection by it of
both the Equipment and supplier thereof and has requested LESSOR to purchase the
Equipment for Lease and shipment to LESSEE. Upon receipt thereof LESSEE shall
execute LESSOR's certificate of delivery and acceptance. In the event that
LESSEE has not executed and delivered to LESSOR such certificate of delivery and
acceptance within ten (10) business days after receipt of the Equipment, it
shall be conclusively presumed, as between LESSOR and LESSEE, that the Equipment
is acknowledged to be in good working order and condition and the LESSEE has
accepted and is satisfied with the Equipment for all of the intended uses and
purposes and LESSEE shall be required to commence Monthly Lease Payments due on
the tenth business day after LESSEE's receipt of the Equipment.
LESSEE AGREES AND ACKNOWLEDGES THAT IS THE INTENT OF BOTH PARTIES TO THIS
AGREEMENT THAT THIS LEASE QUALIFY AS STATUTORY FINANCE LEASE UNDER ARTICLE 2A OF
THE UNIFORM COMMERCIAL CODE. LESSEE REPRESENTS AND ACKNOWLEDGES THAT THE LESSOR
HAS NOT SELECTED, MANUFACTURED OR SUPPLIED THE EQUIPMENT AND LESSOR HAS ACQUIRED
THE EQUIPMENT OR THE RIGHT TO POSSESSION AND USE OF THE EQUIPMENT SPECIFICALLY
FOR LEASE TO LESSEE AT LESSEE'S REQUEST AND DIRECTION IN CONNECTION WITH THIS
LEASE. LESSEE, IN LESSEE'S SOLE DISCRETION, SELECTED THE EQUIPMENT AND SUPPLIER
AND ONLY LESSEE WILL ACCEPT DELIVERY OF, INSPECT, USE AND MAINTAIN THE
EQUIPMENT, LESSEE IS ALSO ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT
EVIDENCING THE LESSOR'S PURCHASE OF THE EQUIPMENT AND THAT IT SHOULD CONTACT THE
SUPPLIER FOR THE DESCRIPTION OF ANY SUCH RIGHTS. The Lease, including the
provisions on the reverse, contains the entire agreement between the LESSOR and
LESSEE and may not be amended, modified, terminated or otherwise changed, except
by prior agreement
<PAGE>
in writing signed by an executive officer of the LESSOR. Notwithstanding the
foregoing, LESSEE hereby authorizes the LESSOR without further notice, to
complete the description of the Equipment to be leased and the quantity thereof,
to insert the serial numbers or other identification data for the Equipment when
determined, to fill any blank spaces of this Lease and to date this Lease.
3. TAXES, FEES and ASSESSMENTS. LESSEE shall promptly pay when due all
licensing, filing and registration fees and all sales, use, personal property,
income or any other taxes (other than LESSOR'S income taxes) which may be levied
by any taxing authority with respect to the Equipment or the Monthly Lease
Payments or other payments due hereunder whether now or hereafter required
(including, but not limited to, increase in the rate of such taxes and any
penalties, fines, fees or interest imposed in connection therewith). LESSEE
agrees to file, in behalf of LESSOR, all required tax returns and reports
concerning the Equipment with all appropriate governmental agencies, and within
not more than forty-five (45) days after the due date of such filing to send
LESSOR confirmation, in form satisfactory to LESSOR, of such filing. LESSEE
further agrees to pay LESSOR a $179.01 documentation fee to cover the expense of
originating this Lease.
4. TITLE; FILINGS. Title to the Equipment shall at all times remain
with the LESSOR and LESSEE shall at no time make any assertion to the contrary
and shall keep the Equipment free and clear of all encumbrances, liens, or
levies of any kind or nature and shall defend LESSOR'S title at LESSEE'S
expense. LESSEE shall immediately give LESSOR notice in writing of the pendency
of any claim to the Equipment adverse to LESSOR'S ownership. LESSEE grants to
LESSOR or its agents or assigns a limited power of attorney to execute in
LESSEE'S name and file any financing statement or other document reflecting the
existence of the Lease and agrees to pay LESSOR $35.00 as LESSOR'S expense in
effecting any such filing. LESSEE shall cause to be placed on each piece of
Equipment identification noting LESSOR'S ownership. LESSEE warrants that the
Equipment will at all times remain personal property, regardless of h ow it may
be affixed to any real property, LESSEE agrees to hold LESSOR harmless and
indemnify LESSOR with regard to any and all claims, actions, damages, costs and
attorney's fees asserted by any landlord or mortgagee against LESSOR or the
Equipment herein.
5. REPRESENTATIONS AND WARRANTIES OF LESSEE. LESSEE represents and
warrants to LESSOR as follows: (i) the Equipment is Leased and will be used
exclusively for business purposes, (ii) the financial information provided by
LESSEE to LESSOR is, in all respects, true and correct, (iii) LESSEE has read,
understands and freely accepts the terms of this Lease, (iv) no representation
or warranty whatsoever concerning the Equipment has been made to LESSEE by
LESSOR, (v) LESSEE is duly and validly established under the laws of the state
in which it is organized, (vi) the person executing this Lease on behalf of
LESSEE has the power, authority and legal right to execute, deliver and perform
this Lease, and (vii) LESSEE is qualified to do business in each jurisdiction
where the Equipment is located, (viii) LESSEE will comply with all governmental
laws, ordinances, regulations, requirements and rules with respect to the use,
maintenance and operation of the Equipment.
6. NO WARRANTIES BY LESSOR. LESSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO THE EQUIPMENT INCLUDING THOSE OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND DISCLAIMS ANY AND ALL SUCH WARRANTIES.
LESSOR shall not be liable to LESSEE or any other persons to any extent
whatsoever for any claim arising out of the manufacture, selection, delivery,
possession, use, suitability, operation, return or condition of the Equipment
(including, without limitation, latent or other defects whether or not
discoverable by LESSEE.) LESSEE agrees to make such claims which may arise
directly to the supplier or manufacturer of the Equipment and provided LESSEE is
not in default, LESSOR grants to LESSEE the right to assert any and all warranty
claims which LESSOR may otherwise have by reason of its purchase and ownership
of the Equipment. THIS DISCLAIMER OF WARRANTIES IS FUNDAMENTAL TO THE NATURE OF
THIS TRANSACTION, IS EXPRESSLY BARGAINED FOR AND SUCH LESSOR WOULD NOT HAVE
ENTERED INTO THE LEASE WITHOUT SUCH DISCLAIMER. THE PENDENCY OF ANY CLAIM BY
LESSEE ARISING IN CONNECTION WITH THE EQUIPMENT WHETHER OR NOT COVERED BY ANY
<PAGE>
WARRANTY SHALL NOT AFFECT THE OBLIGATION OF LESSEE TO MAKE LEASE PAYMENTS.
______ INITIAL
______ INITIAL
SEE REVERSE SIDE FOR ADDITIONAL TERMS
AND CONDITIONS
Visual Data Corporation
LESSEE
SIGNATURE DATE: 5-25-95
/S/ RANDY S. SELMAN
-----------------------------------
PRINT NAME AND TITLE BELOW:
RANDY S. SELMAN, PRESIDENT
-----------------------------------
SIGNATURE DATE: 5-29-95
-----------------------------------
PRINT NAME AND TITLE BELOW:
-----------------------------------
ACCEPTED BY LESSOR: COASTAL LEASING, INC.
BY: /S/ MELANIE M. KAELIGN, VP ADMIN.
-----------------------------------
THIS IS AN NON-CANCELABLE LEASE FOR THE TERM
INDICATED
<PAGE>
7. LOSS, THEFT, DAMAGE, DESTRUCTION. LESSEE agrees to bear the entire
risk of any loss, theft, damage or destruction of the Equipment from any cause
whatsoever. NOTWITHSTANDING THE COMMENCEMENT DATE OF THE TERM OF THIS LEASE WITH
RESPECT TO ANY ITEM OF EQUIPMENT, LESSEE AGREES THAT ALL RISK OF LOSS OF THE
EQUIPMENT SHALL BE ON LESSEE FROM AND AFTER SHIPMENT OF THE EQUIPMENT TO LESSEE
BY THE SELLER THEREOF, F.O.B. seller's point of shipment. LESSEE agrees that no
such loss, theft, damage or destruction, whether upon delivery or thereafter,
shall relieve LESSEE of its obligation to pay rent or of any other of its
obligations under the Lease. In the event the Equipment is physically damaged to
a material extent by any occurrence whatsoever, LESSEE shall immediately notify
LESSOR of such damage and, unless LESSOR shall determine, in its sole and
absolute discretion, that the Equipment is damaged beyond repair, LESSEE at the
sole and absolute option and direction of LESSOR but at LESSEE'S sole expense,
shall immediately:
a) Replace the same with like Equipment in good condition and
repair and provide LESSOR with clear title thereto; or
b) Pay to LESSOR the total of the following amounts:
i) All Monthly Lease Payments and other payments due under
this Lease at the time of payment plus
ii) All Monthly Lease Payments and other amounts due under
this Lease from date of such payment to the end of the Lease term plus LESSOR'S
estimated residual value, discounted at the time of payment to present value by
an annual factor of six (6%). Upon LESSOR'S receipt of such payment, LESSOR
agrees that its entire interest in said item shall become the property of LESSEE
and LESSEE'S insurer (as their interests appear) in its then condition. AS IS,
WHERE IS, WITHOUT WARRANTY FROM LESSOR, EXPRESS OR IMPLIED WARRANTY, INCLUDING
ANY IMPLIED OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8. INSURANCE. LESSEE agrees to procure at its own expense and maintain
in force until the Equipment is returned to LESSOR the following insurance with
companies and in form acceptable to LESSOR:
A policy of general liability insurance, including bodily injury and
property damage, protecting the interest of LESSOR and LESSEE with such limits
as LESSOR may specify, naming LESSOR as additional insured.
A policy of all risk, physical damage insurance, including burglary and
theft, covering the Equipment for not less than the grater of the replacement
value or the original total cost of the Equipment, naming the LESSOR as loss
payee.
LESSEE shall furnish to LESSOR satisfactory evidence of the required
insurance. The proceeds of any insurance received by LESSOR on account of any
loss or casualty which has been satisfied by LESSEE shall be released to LESSEE
upon appropriate proof, unless at that time the LESSEE is in default, whereupon
LESSOR shall apply such insurance proceeds toward all amounts due under this
lease as a result of LESSEE'S default. Such policies of insurance shall provide
for at least thirty (30) days written notice of cancellation to Equipment.
LESSEE assigns to LESSOR all its rights, title and interest to any insurance
policies insuring the Equipment, including all rights to receive the proceeds of
insurance not in excess of the unpaid obligations under the Lease plus LESSOR'S
estimated residual value of the Equipment at the end of the Lease (discounted as
provided in paragraph 8 and directs any insurer to pay all such proceeds
directly to LESSOR and authorizes LESSOR to endorse LESSEE'S name on any draft
of other instrument for such proceeds.
9. LOCATION AND LESSORS INSPECTION. Equipment shall be delivered and
thereafter kept at the location specified above, if none specified above, if
none specified, at LESSEE'S address set forth above and shall not be removed
therefrom without LESSOR'S prior written consent. Any and all costs incurred by
LESSOR as a result of such relocation shall be borne by LESSEE. Any charges
hereunder shall not abate during the period the Equipment is out of service due
to any such relocation requested by LESSEE. LESSEE shall permit LESSOR on its
premises to inspect the Equipment and the business records to the LESSEE
relating to it during normal business hours.
10. ADDITIONS TO AND USE OF EQUIPMENT. Without LESSOR'S prior written
consent, LESSEE shall not make any alterations or additions to the Equipment
which would adversely affect the Equipment's intended use or value. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by LESSOR, shall become a part of the Equipment. LESSEE, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use of
the Equipment are to be provided by LESSEE at its expense and are to meet the
Equipment manufacturer's specifications.
11. CONCLUSION OF LEASE TERM. At the conclusion of the term of this
Lease, unless other selections are available under End Of Lease Option(s),
LESSEE shall, at its expense, return the Equipment to LESSOR, properly packaged
or crated, in good condition and repair, in working order, ordinary wear and
tear permitted, at the address of LESSOR above, or such other location as LESSOR
shall direct. In lieu of returning such Equipment to LESSOR, LESSEE agrees that
LESSEE will, upon request of LESSOR, store such Equipment on LESSEE'S premises,
at an inside location protected from the weather and elements, without charge to
LESSOR for a period of 180 days following the date of expiration or termination
of this Lease. During such storage period LESSEE shall not use the Equipment for
any purpose. Upon expiration of such storage period LESSEE will return such
Equipment to LESSOR in accordance with the proceeding provisions. If the LESSEE
fails to return the Equipment to LESSOR, for any reason whatsoever, (unless
LESSEE has exercised its End Of Lease Options, with all or part of the security
deposit being applied thereto), LESSOR shall retain LESSEE'S Security deposit in
partial consideration thereof.
12. DEFAULT; REMEDIES. In the event LESSEE (i) fails to make any
Monthly Lease Payment when due; breaches any covenant, representation or
warranty contained in this Lease; (iii) makes an assignment for the benefit of
creditors or a petition for relief under any bankruptcy or insolvency law is
filed by or against LESSEE; (iv) is in default under any other lease, note or
obligation; (v) misrepresents or falsely warrants the financial information
given in connection with this Lease; (vi) makes a Build Sale or change int he
majority ownership interest of LESSEE; (vii) ceases to operate as a going
concern, then LESSOR shall have the right, to exercise any one or more of the
following cumulative remedies:
<PAGE>
/bullet/ without notice,the entire amount of the Monthly Lease
Payments remaining and other amounts which have accrued
hereunder to be paid over the balance of the Lease term,
together with all other obligations as herein set forth,
shall become immediately due and payable;
/bullet/ proceed to appropriate court action or actions at law or
in equity or in bankruptcy to enforce performance by
LESSEE of the covenants and terms of this Lease and/or to
recover damages for the breach thereof;
/bullet/ terminate this Lease.
/bullet/ whether or not this Lease be so terminated, and without
notice to LESSEE, repossess the Equipment wherever found,
with or without legal process, and for this purpose LESSOR
and/or its agents may enter upon any premises under the
control or jurisdiction of LESSEE or any agent of LESSEE
without liability for suit, action or proceeding by LESSEE
(any damages occasioned by such repossession being hereby
expressly waived by LESSEE) and remove the Equipment
therefrom; or
/bullet/ at LESSOR'S sole option, LESSOR may perform for LESSEE and
LESSEE will be responsible for cost of performance plus
interest thereon.
Notwithstanding the fact that any or all of the Equipment is returned to or
repossessed by LESSOR, LESSEE shall remain liable for the entire amount of
unpaid Monthly Lease Payment(s), plus all other unpaid sums or charges that
accrue prior to the date of LESSEE'S default, together with all costs and
expenses incurred by LESSOR as set forth herein, including its reasonable
attorneys' fees, with accelerated payments being discounted to present value as
of the date of default at an annual discount rate of six percent (6%).
If LESSEE fails to redeliver any Equipment to LESSOR or LESSOR is
unable for any reason to effect repossession of any Equipment, or LESSOR in its
sole discretion does not repossess any of the Equipment, then, with respect to
such Equipment, LESSEE shall be liable for, in addition the entire amount of
unpaid Monthly Lease Payments, LESSOR'S estimated residual value, with both the
accelerated payments and residual value being discounted to present value as of
the date of default at an annual factor of six percent (6%), plus all other
unpaid sums of charges together with all costs and expenses incurred by, LESSOR
including its reasonable attorneys' fees. LESSOR, at its option,may apply the
Initial Payments against the LESSEE'S obligations under this Lease.
Any repossession, resale or re-Lease of any Equipment by LESSOR shall
not be a bar to the institution of litigation by LESSOR against LESSEE for
damages for breach of this Lease, as hereinbefore provided, and the commencement
of any obligation or the entry of judgment against LESSEE shall not be a bar of
LESSOR'S rights to repossess any or all of the Equipment.
To the extent permitted by applicable law, LESSEE hereby waives any
rights now or hereafter conferred by stature of otherwise which may require
LESSOR to sell, lease or otherwise use any Equipment in mitigation of LESSEE'S
damages, as set forth in this Paragraph or which may otherwise limit or modify
any of LESSOR'S rights or remedies under this Paragraph.
In the event that any court of competent jurisdiction determines that
any provision of this Lease is invalid or unenforceable in whole or in part,
such determination shall not prohibit LESSOR from establishing its damages
sustained as a result of any breach of this Lease in any action or proceeding in
which LESSOR seeks to recover such damages or the return of the Equipment.
All remedies of LESSOR hereunder are cumulative and may, to the extent
permitted by law, be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed to be an election of such remedy or to
preclude the exercise of any other remedy. No failure on the part of LESSOR to
exercise, and no delay in exercising any right or remedy hereunder preclude.
Damages occasioned by LESSOR'S taking possession of Equipment are hereby waived
by LESSEE. All legal and equitable, actions between LESSEE and LESSOR can be
brought in a court of competent jurisdiction at the said election and
determination of LESSOR, and LESSEE consents thereto.
13. INDEMNITY. To the fullest extend permitted by law, LESSEE shall
indemnify and hold harmless the LESSOR, its assigns, successors, agents and
employees, from and against all claims, damages, losses and expenses, including
but not limited to attorneys' fees, arising out of or resulting in any way from
or related to the Equipment including, without limitation, the manufacture,
selection, delivery, possession, use, suitability, operation,return or condition
(including, without limitation, latent or other defecters whether or not
discoverable by LESSOR). This indemnification shall not be limited in any way by
any limitation on the amount or type of damages, compensation or benefits
payable by or for the LESSEE under any Workers Compensation or other employee
benefit act. LESSEE'S indemnities and liabilities shall continue in full force
and effect, notwithstanding the expiration, termination, or cancellation of this
Lease for any reason, including without limitation, the expiration of time,
operation of law, or otherwise.
14. ASSIGNMENT. LESSEE shall not assign or hypothecate this Lease, and
shall not sublet, lend or encumber any Equipment without LESSOR'S prior written
consent. The Equipment shall remain personal property regardless or whether
affixed to real property, and LESSEE agrees to execute and obtain the execution
of all agreements and documents in recordable form by all parties having an
interest in real property to which the Equipment is affixed, as LESSOR may
request, to protect LESSOR'S title to the Equipment. LESSOR may assign, sell,
transfer, mortgage, encumber, or otherwise dispose of this lease of the
Equipment in whole or in part without notice or consent of LESSEE. In the event
of any such transfer or assignment of the Lease or the Equipment, LESSEE agrees
to pay to the assignee or transferee all sums and to perform all obligations
under the Lease without defense, offset, or counterclaim whatsoever, including
breach of warranty, and such assignee or transferee shall have all the rights
and powers of LESSOR, but shall not be obligated to perform any of LESSOR's
obligations under this Lease; provided that no such assignment or transfer shall
deprive LESSEE of its right to use the Equipment in accordance with the terms of
the Lease. If LESSEE is given notice of any such transfer or assignment, LESSEE
agrees to acknowledge receipt thereof in writing and to pay directly to the
transferee or assignee all rents and other sums so assigned.
15. COLLECTION CHARGES. LESSEE AGREES THAT TIME IS OF THE ESSENCE TO
THIS LEASE. Accordingly, if any part of sum is not paid when due, LESSEE agrees
to pay LESSOR upon demand;
in the event any Monthly Lease Payment is not received within ten (10)
days of the due date,
<PAGE>
a later charge on the Monthly Lease Payment equal to the grater of five (5%)
or $15.00; and
other amounts allowed by law.
16. APPLICABLE LAW; JURISDICTION AND VENUE; WAVERS. This Lease will be
deemed to have been made, executed and delivered in the State of Florida and
shall be governed and construed for all purposes in accordance with the laws of
the State of Florida without giving effect to principals of conflicts of law.
LESSEE and Guarantor waive, insofar as permitted by law, trial by jury. LESSEE
and Guarantor hereby irrevocably consent that the jurisdiction and venue in any
action under this lease shall occur solely in state courts encompassing Broward
County, Florida LESSEE and Guarantor agree that any process served for any
action or proceeding shall be valid if mailed by regular or certified mail,
return receipt requested, with delivery restricted to either the addressee, its
registered agent or any agent appointed in writing to accept service of process.
17. CAPTIONS. Captions are intended for convenience or reference only,
and shall not be construed to alter or vary the text.
18. SEVERABILITY. In the event any one or more of the provisions of
this Lease shall for any reason be held invalid or unenforceable, such provision
shall be effective to the extent valid and enforceable, the remaining provisions
of this Lease shall remain in full force and effect.
19. ENTIRE LEASE; CHANGES. This Lease contains the entire agreement
between the LESSOR and LESSEE and may not be altered, amended, modified,
terminated or otherwise changed, except by a writing signed by an executive
officer of LESSOR. Each of the parties hereto declare that they have
participated in drafting this Lease Agreement and that, accordingly, this Lease
Agreement shall not be construed more strongly against any party hereto because
it drafted this Lease Agreement.
20. FURTHER ASSURANCES.
/bullet/ LESSEE shall execute and deliver other necessary
documents as LESSOR may reasonably require to
complete this transaction.
/bullet/ LESSEE hereby appoints LESSOR as LESSEE'S
attorney-in-fact to execute any and all documents
necessary to carry out the intent of this Lease;
including the loss or damages to the Equipment.
THIS IS A NON-CANCELABLE LEASE FOR THE TERM INDICATED
<PAGE>
PAGE 1 OF 1
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6006 by and
between Visual Data Corporation, as LESSEE and Coastal Leasing Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway Computer Video & Graphics
Suite 3A 6157 N.W. 167th Street, F14
Boca Raton, FL 33432 Miami, FL 33015
EQUIPMENT DESCRIPTION: PROFESSIONAL DESKTOP VIDEO EDITING SYSTEM
- ----------------------
(1) DATA TRANSLATION MEDIA 100 - CARDS, SOFTWARE, CABLES & USER MANUAL
(1) DATA TRANSLATION MEDIA 100 - WHOLE DEAL
(1) DATA TRANSLATION MEDIA 100 - ONE YEAR PLATINUM SUPPORT PLAN
(1) MEDIA 100 FX OPTION - 58 DVE & TRANSITION EFFECTS
(1) MEDIA EDL/DECK CONTROL OPTION
(1) MEDIA 100 CG TILTING OPTION
(1) MEDIA 100 - POWER OPTION
(1) MEDIA 100 - HDR OPTION
(2) APPLE 17" TRINITRON COLOR COMPUTER MONITORS
(1) SUPERMAC 24BIT ACCELERATED GRAPHICS DISPLAY CARD
(1) JEWMS/FEW HAMMER 17.4 GIGABYTE DISK ARRAY
(1) POERMAC 8100-80MB RAM/500 MB H DISK, EXT. KYB, CD-ROM
(1) MEDIA 100 COMPONENT VIDEO OPTION
(1) COSA AFTER EFFECTS 2.0 SPECIAL EFFECTS FOR DIGITAL VIDEO SOFTWARE
(1) COSA SPECIAL EFFECTS PACK #1
(1) COSA SPECIAL KEYING EFFECTS PACK #2
(1) HAMMERDAT 2 VIDEO & AUDIO BACKUP UNIT W/RETROSPECT
(1) 10 BASE T TRANSCEIVER
(1) INFINI-D MODELING, RENDERING & ANNAMATION SOFTWARE
(1) DEBABALIZER FILE CONVERSION UTILITY
(1) PAINTER 3.0 PAINT BOX SOFTWARE & WACOOM DIGITIZING TABLET & CORDLESS PEN
(1) POWERMAC 7100 W/16 MB RAM/700 MB HDISK, EXT. KBD, CD-ROM
(1) SUPERMAC 24BIT ACCELERATED GRAPHICS DISPLAY CARD
(1) APPLE 20" TRINITRON COLOR COMPUTER MONITOR
(1) 10 BASE T TRANSCEIVER
LESSOR: COASTAL LEASING, INC. LESSEE: VISUAL DATA CORPORATION
BY: /S/ MELANIE M. KAELIGN BY: /S/ RANDY S. SELMAN
------------------------ ---------------------------
Title: VP ADMIN. Title: PRESIDENT
-------------------- ------------------------
Dated: MAY 29 1995 Dated: 5-25-95
-------------------- ------------------
<PAGE>
AMENDMENT TO LEASE AGREEMENT
This amendment made and entered into by and between Coastal Leasing,
Inc., a Florida corporation hereafter referred to as LESSOR and Visual Data
Corporation, hereafter referred to as LESSEE, having its principal place of
business at 1600 S. Dixie Hwy., Suite 3A, Boca Raton, FL 33432.
WHEREAS, LESSEE has leased from LESSOR certain equipment as so
described in the lease agreement between the parties dated 5-25-95 , lease
#6006.
NOW, THEREFORE, IT IS AGREED:
(1) LESSOR and LESSEE amend the Lease Agreement, Lease #6006,
dated 5-25-95 , 1995 as follows:
LESSEE will provide LESSOR with 15,000 $.25 Warrants.
LESSEE must maintain a current ratio above 1.25:1 each year for as long as the
lease remains in effect.
LESSEE must maintain a minimum tangible net worth of $100,000.00 for as long as
the lease remains in effect.
LESSEE must provide to LESSOR monthly financial statements each month for as
long as the lease remains in effect.
Should the LESSEE fails to comply with the above Lease covenants, the lease will
be considered in default with a 15 day cure period then with such remedies as
detailed under paragraph 12 of Lease Agreement, Lease #6006.
(2) No modification of this amendment shall be binding upon the parties
or either of them unless such modification shall be in writing and executed by
the parties hereto, with the lease agreement and this amendment governed by and
construed in accordance with the laws of the State of Florida and binding upon
the parties, there successors, legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this document to be
signed and sealed by their duly authorized officers and representatives.
LESSOR: Coastal Leasing, Inc. LESSEE: Visual Data Corporation
By: /S/ MELANIE M. KAELIGN By: /S/ RANDY S. SELMAN
--------------------------- ------------------------
(Authorized Signature) (Authorized Signature)
Title: VP ADMIN Title: PRESIDENT
------------------------- ----------------------
Dated: MAY 29, 1995 Dated: 5-25-95
--------------- --------------
EXHIBIT 10.(q)
6454
LEASE AGREEMENT
Visual Data Corporation 1600 S. Dixie Highway, Suite 3A, Boca Raton, FL 33432
Computer Video & Graphics 6157 NW 167th Street, #F14, Miami, FL 33015
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF
1600 S. Dixie Highway, Suite 3A Boca Raton Palm Beach FL 33432
Payments of $1261.83 $75.71 $1337.54 21
EQUIPMENT LEASE TERMS AND CONDITIONS
1. LEASE AND PAYMENTS. LESSOR hereby leases to LESSEE and LESSEE hereby
leases from Lessor, the Equipment pursuant to the terms and conditions of this
Lease which include those on the reverse side hereof. LESSEE agrees to make all
of the payments ("Monthly Lease Payment(s)") as set forth above at the LESSOR'S
address shown above or such other addresses as LESSOR may direct on or before
each monthly due date and shall commence with acceptance of the Equipment and
continuing on such date of each month thereafter for the entire Lease term,
including any extended or renewal term. Said Lease term shall be automatically
extended at the Monthly Lease Payment in effect at the end of said term unless
and until terminated by either party hereto giving the other not less than
ninety (90) days prior written notice. ALL RENTS SHALL BE PAID WITHOUT NOTICE OR
DEMAND AND WITHOUT ABATEMENT, DEDUCTION, SET-OFF OF ANY AMOUNT WHATSOEVER. Each
such Monthly Lease Payment is due and payable whether or not LESSEE is invoiced
or supplied with a payment coupon book. Without LESSOR prior written consent,
any Monthly Lease Payment of a sum less than due shall not constitute a lease or
accord and satisfaction of what is due (or to become due) regardless of any
endorsement restriction. If either party declines to execute this Lease, LESSOR
may retain any LESSEE moneys to include, but not limited to, Security
Deposit(s), Monthly Lease Payments, Taxes, Documentation/Filing and commitment
fees.
2. SELECTION OF EQUIPMENT, LESSEE acknowledges the selection by it of
both the Equipment and supplier thereof and has requested LESSOR to purchase the
Equipment for Lease and shipment to LESSEE. Upon receipt thereof LESSEE shall
execute LESSOR's certificate of delivery and acceptance. In the event that
LESSEE has not executed and delivered to LESSOR such certificate of delivery and
acceptance within ten (10) business days after receipt of the Equipment, it
shall be conclusively presumed, as between LESSOR and LESSEE, that the Equipment
is acknowledged to be in good working order and condition and the LESSEE has
accepted and is satisfied with the Equipment for all of the intended uses and
purposes and LESSEE shall be required to commence Monthly Lease Payments due on
the tenth business day after LESSEE's receipt of the Equipment.
LESSEE AGREES AND ACKNOWLEDGES THAT IS THE INTENT OF BOTH PARTIES TO THIS
AGREEMENT THAT THIS LEASE QUALIFY AS STATUTORY FINANCE LEASE UNDER ARTICLE 2A OF
THE UNIFORM COMMERCIAL CODE. LESSEE REPRESENTS AND ACKNOWLEDGES THAT THE LESSOR
HAS NOT SELECTED, MANUFACTURED OR SUPPLIED THE EQUIPMENT AND LESSOR HAS ACQUIRED
THE EQUIPMENT OR THE RIGHT TO POSSESSION AND USE OF THE EQUIPMENT SPECIFICALLY
FOR LEASE TO LESSEE AT LESSEE'S REQUEST AND DIRECTION IN CONNECTION WITH THIS
LEASE. LESSEE, IN LESSEE'S SOLE DISCRETION, SELECTED THE EQUIPMENT AND SUPPLIER
AND ONLY LESSEE WILL ACCEPT DELIVERY OF, INSPECT, USE AND MAINTAIN THE
EQUIPMENT, LESSEE IS ALSO ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT
EVIDENCING THE LESSOR'S PURCHASE OF THE EQUIPMENT AND THAT IT SHOULD CONTACT THE
SUPPLIER FOR THE DESCRIPTION OF ANY SUCH RIGHTS. The Lease, including the
provisions on the reverse, contains the entire agreement between the LESSOR and
LESSEE and may not be amended, modified, terminated or otherwise changed, except
by prior agreement in writing signed by an executive officer of the LESSOR.
Notwithstanding the foregoing, LESSEE hereby authorizes the LESSOR without
further notice, to complete the description of the Equipment to be leased and
the quantity thereof,
<PAGE>
to insert the serial numbers or other identification data for the Equipment when
determined, to fill any blank spaces of this Lease and to date this Lease.
3. TAXES, FEES and ASSESSMENTS. LESSEE shall promptly pay when due all
licensing, filing and registration fees and all sales, use, personal property,
income or any other taxes (other than LESSOR'S income taxes) which may be levied
by any taxing authority with respect to the Equipment or the Monthly Lease
Payments or other payments due hereunder whether now or hereafter required
(including, but not limited to, increase in the rate of such taxes and any
penalties, fines, fees or interest imposed in connection therewith). LESSEE
agrees to file, in behalf of LESSOR, all required tax returns and reports
concerning the Equipment with all appropriate governmental agencies, and within
not more than forty-five (45) days after the due date of such filing to send
LESSOR confirmation, in form satisfactory to LESSOR, of such filing. LESSEE
further agrees to pay LESSOR a $179.01 documentation fee to cover the expense of
originating this Lease.
4. TITLE; FILINGS. Title to the Equipment shall at all times remain
with the LESSOR and LESSEE shall at no time make any assertion to the contrary
and shall keep the Equipment free and clear of all encumbrances, liens, or
levies of any kind or nature and shall defend LESSOR'S title at LESSEE'S
expense. LESSEE shall immediately give LESSOR notice in writing of the pendency
of any claim to the Equipment adverse to LESSOR'S ownership. LESSEE grants to
LESSOR or its agents or assigns a limited power of attorney to execute in
LESSEE'S name and file any financing statement or other document reflecting the
existence of the Lease and agrees to pay LESSOR $35.00 as LESSOR'S expense in
effecting any such filing. LESSEE shall cause to be placed on each piece of
Equipment identification noting LESSOR'S ownership. LESSEE warrants that the
Equipment will at all times remain personal property, regardless of h ow it may
be affixed to any real property, LESSEE agrees to hold LESSOR harmless and
indemnify LESSOR with regard to any and all claims, actions, damages, costs and
attorney's fees asserted by any landlord or mortgagee against LESSOR or the
Equipment herein.
5. REPRESENTATIONS AND WARRANTIES OF LESSEE. LESSEE represents and
warrants to LESSOR as follows: (i) the Equipment is Leased and will be used
exclusively for business purposes, (ii) the financial information provided by
LESSEE to LESSOR is, in all respects, true and correct, (iii) LESSEE has read,
understands and freely accepts the terms of this Lease, (iv) no representation
or warranty whatsoever concerning the Equipment has been made to LESSEE by
LESSOR, (v) LESSEE is duly and validly established under the laws of the state
in which it is organized, (vi) the person executing this Lease on behalf of
LESSEE has the power, authority and legal right to execute, deliver and perform
this Lease, and (vii) LESSEE is qualified to do business in each jurisdiction
where the Equipment is located, (viii) LESSEE will comply with all governmental
laws, ordinances, regulations, requirements and rules with respect to the use,
maintenance and operation of the Equipment.
6. NO WARRANTIES BY LESSOR. LESSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO THE EQUIPMENT INCLUDING THOSE OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND DISCLAIMS ANY AND ALL SUCH WARRANTIES.
LESSOR shall not be liable to LESSEE or any other persons to any extent
whatsoever for any claim arising out of the manufacture, selection, delivery,
possession, use, suitability, operation, return or condition of the Equipment
(including, without limitation, latent or other defects whether or not
discoverable by LESSEE.) LESSEE agrees to make such claims which may arise
directly to the supplier or manufacturer of the Equipment and provided LESSEE is
not in default, LESSOR grants to LESSEE the right to assert any and all warranty
claims which LESSOR may otherwise have by reason of its purchase and ownership
of the Equipment. THIS DISCLAIMER OF WARRANTIES IS FUNDAMENTAL TO THE NATURE OF
THIS TRANSACTION, IS EXPRESSLY BARGAINED FOR AND SUCH LESSOR WOULD NOT HAVE
ENTERED INTO THE LEASE WITHOUT SUCH DISCLAIMER. THE PENDENCY OF ANY CLAIM BY
<PAGE>
LESSEE ARISING IN CONNECTION WITH THE EQUIPMENT WHETHER OR NOT COVERED BY ANY
WARRANTY SHALL NOT AFFECT THE OBLIGATION OF LESSEE TO MAKE LEASE PAYMENTS.
INITIAL SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS
LESSEE: Visual Data Corporation
SIGNATURE DATE: 8-9-96
/s/ Randy S. Selman
------------------------------------------
PRINT NAME AND TITLE BELOW:
Randy S. Selman
------------------------------------------
SIGNATURE DATE: 8-9-96
/s/ Alan M. Saperstein
------------------------------------------
PRINT NAME AND TITLE BELOW:
ALan M. Saperstein
------------------------------------------
ACCEPTED BY LESSOR: COASTAL LEASING, INC.
BY:_________________________________________
Date:_______________________________________
THIS IS AN NON-CANCELABLE LEASE FOR THE TERM
INDICATED
<PAGE>
7. SECURITY DEPOSIT. At the LESSOR'S option, any security deposit made
hereunder may be applied by LESSOR to satisfy any amount owed to LESSOR
hereunder, in which event, LESSEE shall promptly restore the security deposit to
its full amount. If all the conditions herein are fully complied with, the
security deposit shall be refunded to the LESSEE, unless applied otherwise,
after the return of the Equipment to the LESSOR in accordance with paragraph 12.
8. LOSS, THEFT, DAMAGE, DESTRUCTION. LESSEE agrees to bear the entire
risk of any loss, theft, damage or destruction of the Equipment from any cause
whatsoever. NOTWITHSTANDING THE COMMENCEMENT DATE OF THE TERM OF THIS LEASE WITH
RESPECT TO ANY ITEM OF EQUIPMENT, LESSEE AGREES THAT ALL RISK OF LOSS OF THE
EQUIPMENT SHALL BE ON LESSEE FROM AND AFTER SHIPMENT OF THE EQUIPMENT TO LESSEE
BY THE SELLER THEREOF, F.O.B. seller's point of shipment. LESSEE agrees that no
such loss, theft, damage or destruction, whether upon delivery or thereafter,
shall relieve LESSEE of its obligation to pay rent or of any other of its
obligations under the Lease. In the event the Equipment is physically damaged to
a material extent by any occurrence whatsoever, LESSEE shall immediately notify
LESSOR of such damage and, unless LESSOR shall determine, in its sole and
absolute discretion, that the Equipment is damaged beyond repair, LESSEE at the
sole and absolute option and direction of LESSOR but at LESSEE'S sole expense,
shall immediately:
a) Replace the same with like Equipment in good condition and
repair and provide LESSOR with clear title thereto; or
b) Pay to LESSOR the total of the following amounts:
i) All Monthly Lease Payments and other payments due under
this Lease at the time of payment plus
ii) All Monthly Lease Payments and other amounts due under
this Lease from date of such payment to the end of the Lease term plus LESSOR'S
estimated residual value, discounted at the time of payment to present value by
an annual factor of six (6%). Upon LESSOR'S receipt of such payment, LESSOR
agrees that its entire interest in said item shall become the property of LESSEE
and LESSEE'S insurer (as their interests appear) in its then condition. AS IS,
WHERE IS, WITHOUT WARRANTY FROM LESSOR, EXPRESS OR IMPLIED WARRANTY, INCLUDING
ANY IMPLIED OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9. INSURANCE. LESSEE agrees to procure at its own expense and maintain
in force until the Equipment is returned to LESSOR the following insurance with
companies and in form acceptable to LESSOR:
A policy of general liability insurance, including bodily injury and
property damage, protecting the interest of LESSOR and LESSEE with such limits
as LESSOR may specify, naming LESSOR as additional insured.
A policy of all risk, physical damage insurance, including burglary and
theft, covering the Equipment for not less than the grater of the replacement
value or the original total cost of the Equipment, naming the LESSOR as loss
payee.
LESSEE shall furnish to LESSOR satisfactory evidence of the required
insurance. The proceeds of any insurance received by LESSOR on account of any
loss or casualty which has been satisfied by LESSEE shall be released to LESSEE
upon appropriate proof, unless at that time the LESSEE is in default, whereupon
LESSOR shall apply such insurance proceeds toward all amounts due under this
lease as a result of LESSEE'S default. Such policies of insurance shall provide
for at least thirty (30) days written notice of cancellation to Equipment.
LESSEE assigns to LESSOR all its rights, title and interest to any insurance
policies insuring the Equipment, including all rights to receive the proceeds of
insurance not in excess of the unpaid obligations under the Lease plus LESSOR'S
estimated residual value of the Equipment at the end of the Lease (discounted as
provided in paragraph 8 and directs any insurer to pay all such proceeds
directly to LESSOR and authorizes LESSOR to endorse LESSEE'S name on any draft
of other instrument for such proceeds.
10. LOCATION AND LESSORS INSPECTION. Equipment shall be delivered and
thereafter kept at the location specified above, if none specified above, if
none specified, at LESSEE'S address set forth above and shall not be removed
therefrom without LESSOR'S prior written consent. Any and all costs incurred by
LESSOR as a result of such relocation shall be borne by LESSEE. Any charges
hereunder shall not abate during the period the Equipment is out of service due
to any such relocation requested by LESSEE. LESSEE shall permit LESSOR on its
premises to inspect the Equipment and the business records to the LESSEE
relating to it during normal business hours.
11. ADDITIONS TO AND USE OF EQUIPMENT. Without LESSOR'S prior written
consent, LESSEE shall not make any alterations or additions to the Equipment
which would adversely affect the Equipment's intended use or value. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by LESSOR, shall become a part of the Equipment. LESSEE, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use of
the Equipment are to be provided by LESSEE at its expense and are to meet the
Equipment manufacturer's specifications.
12. CONCLUSION OF LEASE TERM. At the conclusion of the term of this
Lease, unless other selections are available under End Of Lease Option(s),
LESSEE shall, at its expense, return the Equipment to LESSOR, properly packaged
or crated, in good condition and repair, in working order, ordinary wear and
tear permitted, at the address of LESSOR above, or such other location as LESSOR
shall direct. In lieu of returning such Equipment to LESSOR, LESSEE agrees that
LESSEE will, upon request of LESSOR, store such Equipment on LESSEE'S premises,
at an inside location protected from the weather and elements, without charge to
LESSOR for a period of 180 days following the date of expiration or termination
of this Lease. During such storage period LESSEE shall not use the Equipment for
any purpose. Upon expiration of such storage period LESSEE will return such
Equipment to LESSOR in accordance with the proceeding provisions. If the LESSEE
fails to return the Equipment to LESSOR, for any reason whatsoever, (unless
LESSEE has exercised its End Of Lease Options, with all or part of the security
deposit being applied thereto), LESSOR shall retain LESSEE'S Security deposit in
partial consideration thereof.
13. DEFAULT; REMEDIES. In the event LESSEE (i) fails to make any
Monthly Lease Payment when due; breaches any covenant, representation or
warranty contained in this Lease; (iii) makes an assignment for the benefit of
creditors or a petition for relief under any bankruptcy or insolvency
<PAGE>
law is filed by or against LESSEE; (iv) is in default under any other lease,
note or obligation; (v) misrepresents or falsely warrants the financial
information given in connection with this Lease; (vi) makes a Build Sale or
change int he majority ownership interest of LESSEE; (vii) ceases to operate as
a going concern, then LESSOR shall have the right, to exercise any one or more
of the following cumulative remedies:
/bullet/ without notice,the entire amount of the Monthly Lease
Payments remaining and other amounts which have accrued
hereunder to be paid over the balance of the Lease term,
together with all other obligations as herein set forth,
shall become immediately due and payable;
/bullet/ proceed to appropriate court action or actions at law or
in equity or in bankruptcy to enforce performance by
LESSEE of the covenants and terms of this Lease and/or to
recover damages for the breach thereof;
/bullet/ terminate this Lease.
/bullet/ whether or not this Lease be so terminated, and without
notice to LESSEE, repossess the Equipment wherever found,
with or without legal process, and for this purpose LESSOR
and/or its agents may enter upon any premises under the
control or jurisdiction of LESSEE or any agent of LESSEE
without liability for suit, action or proceeding by LESSEE
(any damages occasioned by such repossession being hereby
expressly waived by LESSEE) and remove the Equipment
therefrom; or
/bullet/ at LESSOR'S sole option, LESSOR may perform for LESSEE and
LESSEE will be responsible for cost of performance plus
interest thereon.
Notwithstanding the fact that any or all of the Equipment is returned to or
repossessed by LESSOR, LESSEE shall remain liable for the entire amount of
unpaid Monthly Lease Payment(s), plus all other unpaid sums or charges that
accrue prior to the date of LESSEE'S default, together with all costs and
expenses incurred by LESSOR as set forth herein, including its reasonable
attorneys' fees, with accelerated payments being discounted to present value as
of the date of default at an annual discount rate of six percent (6%).
If LESSEE fails to redeliver any Equipment to LESSOR or LESSOR is
unable for any reason to effect repossession of any Equipment, or LESSOR in its
sole discretion does not repossess any of the Equipment, then, with respect to
such Equipment, LESSEE shall be liable for, in addition the entire amount of
unpaid Monthly Lease Payments, LESSOR'S estimated residual value, with both the
accelerated payments and residual value being discounted to present value as of
the date of default at an annual factor of six percent (6%), plus all other
unpaid sums of charges together with all costs and expenses incurred by, LESSOR
including its reasonable attorneys' fees. LESSOR, at its option,may apply the
Initial Payments against the LESSEE'S obligations under this Lease.
Any repossession, resale or re-Lease of any Equipment by LESSOR shall
not be a bar to the institution of litigation by LESSOR against LESSEE for
damages for breach of this Lease, as hereinbefore provided, and the commencement
of any obligation or the entry of judgment against LESSEE shall not be a bar of
LESSOR'S rights to repossess any or all of the Equipment.
To the extent permitted by applicable law, LESSEE hereby waives any
rights now or hereafter conferred by stature of otherwise which may require
LESSOR to sell, lease or otherwise use any Equipment in mitigation of LESSEE'S
damages, as set forth in this Paragraph or which may otherwise limit or modify
any of LESSOR'S rights or remedies under this Paragraph.
In the event that any court of competent jurisdiction determines that
any provision of this Lease is invalid or unenforceable in whole or in part,
such determination shall not prohibit LESSOR from establishing its damages
sustained as a result of any breach of this Lease in any action or proceeding in
which LESSOR seeks to recover such damages or the return of the Equipment.
All remedies of LESSOR hereunder are cumulative and may, to the extent
permitted by law, be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed to be an election of such remedy or to
preclude the exercise of any other remedy. No failure on the part of LESSOR to
exercise, and no delay in exercising any right or remedy hereunder preclude.
Damages occasioned by LESSOR'S taking possession of Equipment are hereby waived
by LESSEE. All legal and equitable, actions between LESSEE and LESSOR can be
brought in a court of competent jurisdiction at the said election and
determination of LESSOR, and LESSEE consents thereto.
14. INDEMNITY. To the fullest extend permitted by law, LESSEE shall
indemnify and hold harmless the LESSOR, its assigns, successors, agents and
employees, from and against all claims, damages, losses and expenses, including
but not limited to attorneys' fees, arising out of or resulting in any way from
or related to the Equipment including, without limitation, the manufacture,
selection, delivery, possession, use, suitability, operation,return or condition
(including, without limitation, latent or other defecters whether or not
discoverable by LESSOR). This indemnification shall not be limited in any way by
any limitation on the amount or type of damages, compensation or benefits
payable by or for the LESSEE under any Workers Compensation or other employee
benefit act. LESSEE'S indemnities and liabilities shall continue in full force
and effect, notwithstanding the expiration, termination, or cancellation of this
Lease for any reason, including without limitation, the expiration of time,
operation of law, or otherwise.
15. ASSIGNMENT. LESSEE shall not assign or hypothecate this Lease, and
shall not sublet, lend or encumber any Equipment without LESSOR'S prior written
consent. The Equipment shall remain personal property regardless or whether
affixed to real property, and LESSEE agrees to execute and obtain the execution
of all agreements and documents in recordable form by all parties having an
interest in real property to which the Equipment is affixed, as LESSOR may
request, to protect LESSOR'S title to the Equipment. LESSOR may assign, sell,
transfer, mortgage, encumber, or otherwise dispose of this lease of the
Equipment in whole or in part without notice or consent of LESSEE. In the event
of any such transfer or assignment of the Lease or the Equipment, LESSEE agrees
to pay to the assignee or transferee all sums and to perform all obligations
under the Lease without defense, offset, or counterclaim whatsoever, including
breach of warranty, and such assignee or transferee shall have all the rights
and powers of LESSOR, but shall not be obligated to perform any of LESSOR's
obligations under this Lease; provided that no such assignment or transfer shall
deprive LESSEE of its right to use the Equipment in accordance with the terms of
the Lease. If LESSEE is given notice
<PAGE>
of any such transfer or assignment, LESSEE agrees to acknowledge receipt thereof
in writing and to pay directly to the transferee or assignee all rents and other
sums so assigned.
16. COLLECTION CHARGES. LESSEE AGREES THAT TIME IS OF THE ESSENCE TO
THIS LEASE. Accordingly, if any part of sum is not paid when due, LESSEE agrees
to pay LESSOR upon demand;
in the event any Monthly Lease Payment is not received within ten (10)
days of the due date, a later charge on the Monthly Lease Payment equal to the
grater of five (5%) or $15.00; and
other amounts allowed by law.
17. APPLICABLE LAW; JURISDICTION AND VENUE; WAVERS. This Lease will be
deemed to have been made, executed and delivered in the State of Florida and
shall be governed and construed for all purposes in accordance with the laws of
the State of Florida without giving effect to principals of conflicts of law.
LESSEE and Guarantor waive, insofar as permitted by law, trial by jury. LESSEE
and Guarantor hereby irrevocably consent that the jurisdiction and venue in any
action under this lease shall occur solely in state courts encompassing Broward
County, Florida LESSEE and Guarantor agree that any process served for any
action or proceeding shall be valid if mailed by regular or certified mail,
return receipt requested, with delivery restricted to either the addressee, its
registered agent or any agent appointed in writing to accept service of process.
18. CAPTIONS. Captions are intended for convenience or reference only,
and shall not be construed to alter or vary the text.
19. SEVERABILITY. In the event any one or more of the provisions of
this Lease shall for any reason be held invalid or unenforceable, such provision
shall be effective to the extent valid and enforceable, the remaining provisions
of this Lease shall remain in full force and effect.
20. ENTIRE LEASE; CHANGES. This Lease contains the entire agreement
between the LESSOR and LESSEE and may not be altered, amended, modified,
terminated or otherwise changed, except by a writing signed by an executive
officer of LESSOR. Each of the parties hereto declare that they have
participated in drafting this Lease Agreement and that, accordingly, this Lease
Agreement shall not be construed more strongly against any party hereto because
it drafted this Lease Agreement.
21. FURTHER ASSURANCES.
/bullet/ LESSEE shall execute and deliver other necessary
documents as LESSOR may reasonably require to
complete this transaction.
/bullet/ LESSEE hereby appoints LESSOR as LESSEE'S
attorney-in-fact to execute any and all documents
necessary to carry out the intent of this Lease;
including the loss or damages to the Equipment.
THIS IS A NON-CANCELABLE LEASE FOR THE TERM INDICATED
<PAGE>
PAGE 1 OF 2
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6454 by and
between Visual Data corporation as LESSEE and Coastal Leasing, Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway, Suite 3A Computer Video & Graphics
Boca Raton, FL 33432 6157 N.W. 167th Street, F14
Miami, FL 33015
EQUIPMENT DESCRIPTION
- ---------------------
(1) MEDIA 100-UPGRADE-VINCENT PCI-CARD, JUNCTION BOX, SOFTWARE
(1) ATI PCI MONITOR CARD
(1) DUAL CABLE SCSI ARRAY KIT
(1) POWERMAC 9500/150MHZ-96 MB RAM/2GB HARD DISK, EXT KBD, CD ROM
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway, Suite 3A Techworks: H.M. Seiden
Boca Raton, FL 33432 Consulting, Inc.
8930 State Road 84, Suite 243
Davie, FL 33324
EQUIPMENT DESCRIPTION
- ---------------------
(1) LEITCH LOGC KEY SYSTEM
(12) BNC CONNECTOR PLUG 8281
(4) 10-32X5/8" BLK SCREW+WSH 50 PCS
INITIAL _______
<PAGE>
PAGE 2 OF 2
SCHEDULE "A"
This Schedule "A" is hereby attached to and made a part of Lease #6454 by and
between Visual Data Corporation as LESSEE and Coastal Leasing, Inc. as LESSOR.
EQUIPMENT LOCATION EQUIPMENT SUPPLIER
- ------------------ ------------------
1600 S. Dixie Highway, Suite 3A Markertek Video Supply
Boca Raton, FL 33432 4 High Street, Box 397
Saugerties, NY 12477
EQUIPMENT DESCRIPTION
- ---------------------
(1) YCP-BCR BETACAM TBC REMOTE
(1) APX-107 APHEX MIC PREAMP
(1) AG-W1 PANASONIC MULTI-VCR
(2) l-2/18 18" LITTLELITE LOW INTS.
(1) 12G LITTLELITE 21" GOOSENECK
(1) TMR-4 FRAMEMASTER CALCULATOR
(2) CRK-2 CABLE RACK ACCESSORY HLDR
LESSOR: COASTAL LEASING, INC. LESSEE: Visual Data Corporation
By: By: /s/ Randy S. Selman
------------------------- --------------------------
(Authorized Signature) (Authorized Signature)
Title: Title: President
---------------------- ------------------------
Dated: Dated: 8-9-96
---------------------- ------------------------
EXHIBIT 10.(r)
FINANCIAL CONSULTING AGREEMENT
THIS FINANCIAL CONSULTING AGREEMENT (this "Agreement") is made as of
this ___ day of ________________, 1997, by and between VISUAL DATA CORPORATION,
a Florida corporation (the "Company"), with its principal place of business at
1600 South Dixie Highway, Suite 3A, Boca Raton, Florida, 33422, and NOBLE
INTERNATIONAL INVESTMENTS, INC., a Florida corporation (the "Consultant"),
having its principal place of business at Boca Corporate Plaza, 1801 Clint Moore
Road, Suite 110, Boca Raton, Florida 33487.
R E C I T A L S:
A. The Company desires to retain the Consultant to provide certain
financial consulting services.
B. The Consultant desires to provide certain financial consulting
services to the Company in accordance with the terms and conditions contained
hereinafter.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. CONSULTING SERVICES. During the term of this Agreement, the
Consultant is hereby retained by the Company to provide financial consulting
services to the Company, as said services relate to corporate finance matters,
including, without limitation, advice regarding acquisitions, consolidations,
mergers, joint ventures and financial strategies. The Consultant shall provide
such financial consulting services as reasonably requested by the Company during
the term of this Agreement, provided that nothing hereunder shall require the
Consultant to devote a minimum number of hours per calendar month toward the
performance of services hereunder. The level and scope of services that may
reasonably be requested hereunder shall be dependent, in part, on the amount of
compensation to be paid to the Consultant by the Company hereunder. Unless
otherwise agreed to by the Consultant, all services hereunder shall be performed
by the Consultant, in its sole discretion, at its principal place of business or
other offices. Notwithstanding anything contained herein to the contrary, the
services to be performed by the Consultant hereunder may be performed by any
employee of, or consultant to, the Consultant.
2. TERM. The term of this Agreement shall be for 12 months commencing
as of the date first written above and terminating one day prior to the first
anniversary hereof. Thereafter, this Agreement may be renewed for subsequent
one-year terms upon the mutual agreement of the parties.
<PAGE>
3. COMPENSATION.
(a) In consideration for the performance of services
hereunder, the Company hereby agrees to pay the Consultant the aggregate sum of
one percent (1%) of the gross proceeds raised in the public offering of the
Company's securities (the "Public Offering") pursuant to the Company's
Registration Statement on Form SB-2 (SEC File No. 333-18819) filed with the
Securities and Exchange Commission. Such amount shall be payable in cash upon
the closing of the Public Offering.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that any and all information supplied hereunder to the
Consultant in connection with any and all services to be performed hereunder by
the Consultant for and on behalf of the Company shall be true, complete and
correct as of the date of such dissemination and shall not fail to state a
material fact necessary to make any of such information not misleading. The
Company hereby acknowledges that the ability of the Consultant to adequately
provide financial consulting services hereunder and/or to initiate and/or
effectuate introductions on behalf of the Company with respect to potential
acquisitions is dependent upon the prompt dissemination of accurate, correct and
complete information to the Consultant. In addition, and notwithstanding
anything contained herein to the contrary, nothing hereunder shall obligate the
Consultant to make any minimum number of introductions hereunder or to initiate
any merger or acquisitions involving or relating to the Company. The Company
further represents and warrants hereunder that this Agreement and the
transactions contemplated hereunder, including the issuance of the warrants
hereunder, have been duly and validly authorized by all requisite corporate
action; that the Company has the full right, power and capacity to execute and
deliver this Agreement and perform its obligations hereunder; that the execution
and delivery of this Agreement and the performance by the Company of its
obligations pursuant to this Agreement do not constitute a breach of or a
default under any agreement or instrument to which the Company is a party or by
which it or any of its assets are bound; and that this Agreement, upon execution
and delivery of the same by the Company, will represent the valid and binding
obligation of the Company enforceable in accordance with its terms. The
representations and warranties set forth herein shall survive the termination of
this Agreement.
5. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify, defend and hold
harmless the Consultant, its directors, officers, principals, employees, agents,
affiliates, shareholders and consultants, and their successors and assigns from
and against any and all claims, damages, losses, liability, deficiencies,
actions, suits, proceedings, costs or legal expenses (collectively the "Losses")
arising out of or resulting from: (i) any breach of a representation, warranty
or covenant by the Company contained in this Agreement; or (ii) any activities
or services performed hereunder by the Consultant, unless such Losses were the
result of the intentional misconduct or gross negligence of the Consultant; or
(iii) any and all costs and expenses (including reasonable attorneys' and
paralegals' fees) related to the foregoing, and as more fully described below.
-2-
<PAGE>
(b) If the Consultant receives written notice of the
commencement of any legal action, suit or proceeding with respect to which the
Company is or may be obligated to provide indemnification pursuant to Section 5
above, the Consultant shall, within 30 days of the receipt of such written
notice, give the Company written notice thereof (a "Claim Notice"). Failure to
give such Claim Notice within such 30-day period shall not constitute a waiver
by the Consultant of its right to indemnity hereunder with respect to such
action, suit or proceeding. Upon receipt by the Company of a Claim Notice from
the Consultant with respect to any claim for indemnification which is based upon
a claim made by a third party ("Third Party Claim"), the Consultant may assume
the defense of the Third Party Claim with counsel of its own choosing, as
described below. The Company shall cooperate in the defense of the Third Party
Claim and shall furnish such records, information and testimony and attend all
such conferences, discovery proceedings, hearings, trial and appeals as may be
reasonably required in connection therewith. the Consultant shall have the right
to employ its own counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of the Consultant unless the Company shall not
have promptly employed counsel to assume the defense of the Third Party Claim,
in which event such fees and expenses shall be borne solely by the Company. The
Company shall not satisfy or settle any Third Party Claim for which
indemnification has been sought and is available hereunder, without the prior
written consent of the Consultant, which consent shall not be unreasonably
withheld. If the Company shall fail with reasonable promptness either to defend
or continue to prosecute such Third Party Claim or to satisfy or prosecute the
same, the Consultant may defend, prosecute or settle the Third Party Claim at
the expense of the Company and the Company shall pay to the Consultant the
amount of any such Loss within 10 days after written demand therefor. The
indemnification provisions hereunder shall survive the termination of this
Agreement.
6. AMENDMENT. No modification, waiver, amendment, discharge or change
of this Agreement shall be valid unless the same is evidenced by a written
instrument, executed by the party against which such modification, waiver,
amendment, discharge, or change is sought.
7. NOTICES. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given on the
day when delivered in person or transmitted by facsimile transmission or on the
third calendar day after being mailed by United States registered or certified
mail, return receipt requested, postage prepaid, to the addresses herein above
first mentioned or to such other address as any party hereto shall designate to
the other for such purpose in the manner herein set forth.
8. ENTIRE AGREEMENT. This Agreement contains all of the understandings
and agreements of the parties with respect to the subject matter discussed
herein. All prior agreements, whether written or oral, are merged herein and
shall be of no force or effect.
9. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any
-3-
<PAGE>
one or more of the provisions contained in this Agreement or any portion thereof
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be reformed, construed and enforced as if such
invalid, illegal or unenforceable provision had never been contained herein.
10. CONSTRUCTION AND ENFORCEMENT. This Agreement shall be construed in
accordance with the laws of the State of Florida, without application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
and such legal action results in a final judgment in favor of such party
("Prevailing Party"), then the party or parties against whom said final judgment
is obtained shall reimburse the Prevailing Party for all direct, indirect or
incidental expenses incurred, including, but not limited to, all attorney's
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder, the successful party will be awarded reasonable attorneys' fees at
all trial and appellate levels, expenses and costs. Any suit, action or
proceeding with respect to this Agreement shall be brought in the state or
federal courts located in Palm Beach County in the State of Florida. The parties
hereto hereby accept the exclusive jurisdiction and venue of those courts for
the purpose of any such suit, action or proceeding. The parties hereto hereby
irrevocably waive, to the fullest extent permitted by law, any objection that
any of them may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement or any judgment
entered by any court in respect thereof brought in Palm Beach County, Florida,
and hereby further irrevocably waive any claim that any suit, action or
proceeding brought in Palm Beach County, Florida, has been brought in an
inconvenient forum.
11. BINDING NATURE; NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, and their respective successors and assigns, and is made solely and
specifically for their benefit. No other person shall have any rights, interest
or claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third-party beneficiary or otherwise.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts shall constitute one Agreement,
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
VISUAL DATA CORPORATION, a Florida
corporation
By: -------------------------------
Randy S. Selman, President
NOBLE INTERNATIONAL INVESTMENTS,
INC., a Florida corporation
By:--------------------------------
Nico P. Pronk, President
-5-
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
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
May 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 158,377
<SECURITIES> 0
<RECEIVABLES> 106,224
<ALLOWANCES> (14,056)
<INVENTORY> 0
<CURRENT-ASSETS> 282,690
<PP&E> 316,531
<DEPRECIATION> (44,138)
<TOTAL-ASSETS> 1,329,151
<CURRENT-LIABILITIES> 401,608
<BONDS> 0
0
30
<COMMON> 117
<OTHER-SE> 189,254
<TOTAL-LIABILITY-AND-EQUITY> 1,329,151
<SALES> 111,719
<TOTAL-REVENUES> 111,719
<CGS> 0
<TOTAL-COSTS> 2,007,174
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,891,702)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,891,702)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,891,702)
<EPS-PRIMARY> (1.35)
<EPS-DILUTED> (1.35)
</TABLE>
