As Filed with the Securities and Exchange Commission on August 21,1998
Registration No._______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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VISUAL DATA CORPORATION
-----------------------
(Exact name of registrant as specified in its charter)
Florida 65-0420146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1291 SW 29 Avenue
Pompano Beach, Florida 33069
(954) 917-6655
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Randy S. Selman
Chief Executive Officer
1291 SW 29 Avenue
Pompano Beach, Florida 33069
(954) 917-6655
---------------------------------------------
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Joel D. Mayersohn, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
(954) 763-1200
---------------------------------------------
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
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If this Form is filed to register to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the 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 Proposed
class of securities Amount maximum maximum Amount
to be registered to be registered offering price aggregate of registration
per unit (1) offering price fee
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Common Stock,
$.0001 par value,
issuable upon
conversion of
Series A Convertible
Preferred Stock 1,000,000 $2.75 $2,750,000 $811.25
Common Stock,
$.0001 par value,
issuable upon
conversion of
Series A-1 Convertible
Preferred Stock 1,000,000 $2.75 2,750,000 811.25
Common Stock,
$.0001 par value 421,665 $2.75 1,159,579 342.08
Common Stock,
$.0001 par value,
issuable upon
exercise of
outstanding
options or warrants 216,875 2.75 596,406 175.94
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TOTALS 2,638,540 $7,255,485 $2,140.52
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933 (the
"Securities Act") based on the average of the high and low sale price
of the Common Stock as reported in The Nasdaq SmallCap Market(TM) on
August 19, 1998.
(2) For purposes of estimating the number of shares of the Company's Common
Stock, par value $.0001 per share ("Common Stock"), to be included in
this registration statement, the Company included (i)
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1,000,000 shares of Common Stock issuable upon conversion of 300 shares
of Series A Convertible Preferred Stock ("Series A Preferred"), or
otherwise, pursuant to the Company's Articles of Amendment to its
Articles of Incorporation setting forth the designations, rights and
preferences of the Series A Preferred and (ii) 1,000,000 shares of
Common Stock issuable upon conversion of 150 shares of Series A-1
Convertible Preferred Stock ("Series A-1 Preferred"), or otherwise,
pursuant to the Company's Articles of Amendment to its Articles of
Incorporation setting forth the designations, rights and preferences of
the Series A-1 Preferred, both such amounts being pursuant to the
registration rights agreements between the Company and each of the
holders of the Series A Preferred and the Series A-1 Preferred. See
"Description of Securities." Pursuant to Rule 416, the number of shares
of Common Stock to be registered hereunder also includes an
indeterminate number of shares which may become issuable upon
conversion of or otherwise with respect to the Series A Preferred,
Series A-1 Preferred and upon the future exercise of the options or
warrants (the "Selling Security Holders Options and Warrants") of which
the underlying shares of Common Stock are being registered hereunder,
to prevent dilution resulting from stock splits, stock dividends or
similar transactions in accordance with the applicable terms thereof.
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.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 21, 1998
2,638,540 Shares
VISUAL DATA CORPORATION
Common Stock
This Prospectus (the "Prospectus") relates to the offer and sale of up
to 2,638,540 shares (the "Shares") of Common Stock, $.0001 par value per share
(the "Common Stock") of Visual Data Corporation (the "Company") by certain of
the selling shareholders named herein (the "Selling Security Holders"). Of the
2,638,540 Shares, (i) up to 1,000,000 Shares are issuable upon conversion of or
otherwise with respect to 300 shares of the Company's Series A Convertible
Preferred Stock (the "Series A Preferred"), (ii) up to 1,000,000 Shares are
issuable upon conversion of or otherwise with respect to 150 shares of the
Company's Series A-1 Convertible Preferred Stock (the "Series A-1 Preferred"),
(iii) an aggregate of 421,665 Shares are currently owned by certain of the
Selling Security Holders, and (iv) 216,875 Shares are issuable upon exercise of
outstanding stock options or warrants at prices ranging from $3.00 to $5.00 per
share (the "Selling Security Holders Options and Warrants") granted by the
Company to unaffiliated third parties in connection with services rendered to
the Company or in connection with the Company's acquisition of EDnet. See "The
Company", "Selling Security Holders" and "Description of Securities."
The number of Shares indicated as being issuable upon the conversion of
the Series A Preferred or the Series A-1 Preferred represents the number of
Shares the Company was contractually obligated to register pursuant to the terms
and conditions of each transaction. Each share of the Series A Preferred and the
Series A-1 Preferred is convertible into the Company's Common Stock at a price
per share equal to the lesser of (i) $3.0428, subject to adjustment or (ii) a
floating conversion price determined by multiplying a Conversion Percentage in
effect as of such date by the Market Price for the Company's Common Stock. The
Conversion Percentage shall be 87.76% for the first 180 days from the issuance
date of the preferred stock and 82.76% for any day thereafter. The Market Price
for the Company's Common Stock shall be the average of the three lowest closing
bid prices for such Common Stock during the 20 consecutive trading days
immediately preceding such date.
Pursuant to Rule 416, the number of shares of Common Stock to be
registered hereunder also includes an indeterminate number of shares which may
become issuable upon conversion of, or otherwise with respect to, the Series A
Preferred, Series A-1 Preferred and the Selling Security Holders Options and
Warrants to prevent dilution resulting from stock splits, stock dividends or
similar transactions in accordance with the terms thereof. See "Description of
Securities" and "Selling Security Holders."
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. 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, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
----------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
----------------------
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 _____________, 1998
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The Selling Security Holders have advised the Company that they propose
to sell the Shares, from time to time, publicly or through broker-dealers as
agents for others, or in private sales. See "Selling Security Holders" and "Plan
of Distribution." The Company has informed the Selling Security Holders that the
anti-manipulative rules under the Securities Exchange Act of 1934 (the "Exchange
Act"), including Regulation M promulgated thereunder, may apply to their sales
in the market and have furnished the Selling Security Holders with a copy of
these rules. The Company has also informed the Selling Security Holders of the
need for delivery of copies of this Prospectus in connection with any sale of
securities registered hereunder.
Although the Company will receive the proceeds from the sale of an
additional 150 shares of Series A Preferred and upon the exercise of Selling
Security Holders Options and Warrants, the Company will not receive any of the
proceeds from the sale by the Selling Security Holders of the Shares being
registered for resale by this Prospectus.
The Company will pay all offering expenses of this offering including
the Securities and Exchange Commission ("Commission") registration fee, legal
fees and expenses, blue sky fees, accounting fees and expenses, printing
expenses and miscellaneous expenses estimated to be $42,000, but will not pay
discounts or commissions incurred by the Selling Security Holders in connection
with the sale of the Shares.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of this material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site at http//www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.
The Company has filed with the Commission a Registration Statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the resale of the securities described
herein. This Prospectus, which is Part I of the Registration Statement, omits
certain information contained in the Registration Statement. For further
information with respect to the Company and the securities offered by this
Prospectus, reference is made to the Registration Statement, including the
exhibits thereto. Statements in this Prospectus as to any document are not
necessarily complete, and where any such document is an exhibit to the
Registration Statement or is incorporated by reference herein, each such
statement is qualified in all respects by the provisions of such exhibit or
other document, to which reference is hereby made, for a full statement of the
provisions thereof. A copy of the Registration Statement, with exhibits, may be
obtained from the Commission's office in Washington, D.C. (at the
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above address) upon payment of the fees prescribed by the rules and regulations
of the Commission, or examined there without charge, or from the Commission's
Web site at http://www.sec.gov.
TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION............................................................................ 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE................................................ 5
RISK FACTORS..................................................................................... 6
THE COMPANY...................................................................................... 14
USE OF PROCEEDS.................................................................................. 20
SELLING SECURITY HOLDERS ........................................................................ 21
PLAN OF DISTRIBUTION............................................................................. 24
DESCRIPTION OF SECURITIES........................................................................ 27
LEGAL MATTERS.................................................................................... 36
EXPERTS.......................................................................................... 36
INDEMNIFICATION.................................................................................. 36
</TABLE>
The Common Stock and Warrants are traded on The Nasdaq SmallCap Market
(TM) under the symbols "VDAT" and "VDATW," respectively. On August 20, 1998 the
last sale price of the Common Stock and Warrants, as reported on The Nasdaq
SmallCap Market(TM), were $2.50 and $.50, respectively.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
contained in this Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Security Holders. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Shares offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of the Company since the date hereof.
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The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports and other information
with the Commission.
The Company has previously and intends in the future to furnish its
stockholders with annual reports containing audited financial statements and to
distribute quarterly reports containing unaudited summary financial information
for each of the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
1. Report on Form 8-K as filed by the Company on June 3, 1998.
2. Report on Form 8-K as filed by the Company on May 19, 1998.
3. Quarterly Reports of the Company on Form 10-QSB for the quarters and
periods ended December 31, 1997, March 31, 1998 and June 30, 1998.
4. Definitive Proxy Statement for the Company's 1998 Annual Meeting as
filed by the Company on March 30, 1998.
5. Annual Report of the Company on Form 10-KSB for the fiscal year ended
September 30, 1997.
6. Registration Statement on Form SB-2, Registration No. 333-18819, and all
pre-effective and post-effective amendments thereto, as declared effective
by the Commission on July 30, 1997.
7. Definitive Proxy Statement for a Special Meeting of Stockholders to be
held on September 4, 1998 as filed with the Commission on July 31,
1998.
8. Report on Form 8-K as filed on August 11, 1998.
9. Report on Form 8-K as filed on August 21, 1998.
10. All reports and documents filed by the Company pursuant to Sections 13,
14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered
hereby have been sold or which de-registers all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective date of filing of
such documents.
Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein
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or in any other subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement modified or superseded shall not be deemed, except as so modified or
superseded, to constitute part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, Visual Data
Corporation at the Company's principal executive office, 1291 SW 29 Avenue,
Pompano Beach, Florida 33069, Telephone (954) 917-6655, Facsimile (954)
917-6660.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE THESE
SECURITIES. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN INVESTMENT DECISION,
SHOULD CAREFULLY READ THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS
REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS.
Forward Looking Statements
The 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 of 1996. 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
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. 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.
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Risks Related to the Company's Acquisition Strategy
The Company's strategy is to increase its revenue and the markets it
serves through the acquisition of media developers with emphasis on developers
of video media. There can be no assurance that the Company will be able to
identify, acquire or profitably manage additional companies or successfully
integrate the operations of additional companies into those of the Company
without encountering substantial costs, delays or other problems. In addition,
there can be no assurance that companies acquired in the future will achieve
profitability that justify the Company's investment in them or that acquired
companies will not have unknown liabilities that could materially adversely
effect the Company's results of operations or financial condition. The Company
may compete for acquisition and expansion opportunities with companies that have
greater resources than the Company. There can be no assurance that suitable
acquisition candidates will continue to be available, that financing for
acquisitions will be obtainable on terms acceptable to the Company, that
acquisitions can be consummated or that acquired businesses can be integrated
successfully and profitably into the Company operations. Further, the Company's
results of operations in fiscal quarters immediately following a material
acquisition may be materially adversely effected while the Company integrates
the acquired business into its existing operations. The Company may acquire
certain businesses that have either been unprofitable or that have had
inconsistent profitability prior to their acquisition. The inability of the
Company to improve the profitability of these acquired businesses could have a
material adverse effect on the Company. Finally, the Company's acquisition
strategy places significant demands on the Company's resources and there can be
no assurance that the Company's management, operational systems and structure
can be expanded to effectively support the Company's continued acquisition
strategy. If the Company is unable to implement successfully its acquisition
strategy, this inability may have a material adverse effect on the Company's
business, results of operations or financial condition.
Dependence on Management to Integrate the Acquisitions and Ability to Manage
Growth
The business strategy of the Company involves growth through
acquisition and internal development. The Company is subject to various risks
associated with its growth strategy, including the risk that it will be unable
to identify and recruit suitable acquisition candidates in the future or to
integrate and manage the acquired companies.
The Company has recently completed its acquisition of 51% of EDnet,
Inc. ("EDnet"), as well as the acquisition of certain other assets, and is in
the process of integrating these operations into the Company. While the business
plan of EDnet is similar, its history, geographical location, business model and
business culture is different in many respects. The directors and senior
management of the Company face a significant challenge in their efforts to
integrate the businesses of the Company and the acquired companies or assets,
and effectively manage the continued growth of the Company. While
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management of the Company believes that the diverse experience of the Company
and the acquired company will strengthen the Company, there can be no assurance
that management's efforts to integrate the operations of this acquired company
and assets will be successful, that management can manage the Company's growth
or that the anticipated benefits of the acquired company or assets will be fully
realized. The dedication of management resources to such efforts may detract
attention from the day-to-day business of the Company. There can be no assurance
that there will not be substantial costs associated with such activities or the
success of integration efforts, which could have a material adverse effect on
the Company's operating results.
Absence of Profitability; Accumulated Deficit; Prior Loss; Future Operating
Results
Although the Company has achieved increased levels of revenues to date
during fiscal 1998 from those reported for the year ended September 30, 1997,
the Company continues to incur operating losses. For the year ended September
30, 1997 and nine months ended June 30, 1998, the Company incurred losses of
$3,573,962 and $1,908,779 (unaudited), respectively. The Company's operating
expenses have increased and can be expected to increase significantly in
connection with the Company's recent acquisitions and continued proposed
expansion and, accordingly, the Company's future profitability will depend on
continued corresponding increases in revenues from operations. Future events,
including unanticipated expenses, increased competition or inability to
effectively integrate its acquisitions, could have an adverse affect on the
Company's operating margins and results of operations. As a result of the
Company's losses from operations, together with the costs associated with
acquisitions, the Company may experience liquidity and cash flow problems if it
is not able to raise additional capital as needed. There can be no assurance
that the Company's rate of revenue growth will continue in the future or that
the Company's future operations will be profitable.
Need for Additional Financing
The Company currently intends to effect future acquisitions with cash,
promissory notes and future issuances of debt or equity securities. There can be
no assurance that the Company will be able to obtain financing if and when it is
needed on terms the Company deems acceptable. The inability of the Company to
obtain financing would have a material adverse effect on the Company's ability
to implement its acquisition strategy, and as a result, could require the
Company to diminish or suspend its acquisition strategy.
Risks Relating to Capital Requirements
The Company's acquisition and internal growth strategy requires
substantial capital investment. Capital is typically needed not only for the
acquisition of additional companies, but also for the effective integration,
operation and expansion of these businesses as well as the start-up of on-line
multi-media libraries. The acquired businesses may require capital for working
capital and expansion. Therefore, the Company will need to raise capital,
possibly through the issuance of long-term or short-term indebtedness or the
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issuance of its equity securities in private or public transactions in order to
complete further acquisitions and expansion. This could result in dilution of
existing equity positions and increased interest expense. There can be no
assurance that acceptable financing for future acquisitions or for the
integration and expansion of existing operations can be obtained on suitable
terms, if at all.
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, resorts
and care facilities. 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 the resources necessary to produce a
competitive advantage. There are no assurances that the Company will be able to
compete favorably in the future.
Dependence on Key Personnel
Implementation of the Company's acquisition strategy is largely
dependent on the efforts of a few senior officers. In particular, the Company's
operations are dependent to a great degree on the continued efforts of the
President and Chief Executive Officer of the Company, Randy S. Selman, the
Executive Vice President of the Company, Alan M. Saperstein, and the Company's
Executive Vice President and Chief Operating Officer, David E. Goodman.
Furthermore, the Company will likely be dependent on the senior management of
companies that are acquired. Competition for highly qualified personnel is
intense, and the loss of any executive officer or other key employee, or the
failure to attract and retain other skilled employees, could have a material
adverse effect upon the Company's business, results of operations or financial
condition. The Company is a party to employment agreements with each of Messrs.
Selman, Saperstein and Goodman. Each of the employment agreements terminate in
January 2001, unless terminated earlier pursuant to the agreements, and each
contains confidentiality provisions and covenants not to compete. The Company
has designated itself the beneficiary of key man life insurance in the amount of
$1,000,000 on the life of Mr. Selman and $500,000 on the life of Mr. Saperstein.
There can be no assurance, however, that the Company can maintain the polices in
effect or that the coverage will be sufficient to compensate the Company for the
loss of the services of Mr. Selman or Mr. Saperstein.
Government Regulation and Regulatory Uncertainties
The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses generally,
and there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. However, due to the increasing popularity and use
of the Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as user privacy,
pricing, characteristics and quality of products and services.
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Moreover, the applicability to the Internet of existing laws in various
jurisdictions governing issues such as property ownership, libel and personal
privacy is uncertain. Any such new legislation or regulation could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Exercise of Warrants and Conversion of Series A Convertible Preferred Stock Will
Have Dilutive Effect
As of August 11, 1998 the Company has options and warrants to purchase
a total of 2,875,451 shares of Common Stock at prices ranging between $.00016
and $8.40 per share, including 1,049,460 options issued to directors and members
of management of the Company. The existence of such options and warrants may
adversely affect the terms under which the Company could obtain additional
equity capital. The exercise of these warrants and options may materially
adversely affect the market price of the Common Stock.
Further, as of July 30, 1998, 150 shares of the Company's Series A
Preferred were issued and outstanding pursuant to a private placement of such
securities in May 1998 and 150 shares of the Company's Series A-1 Preferred were
issued and outstanding pursuant to a private placement of securities in August
1998. Each of the Series A Preferred and Series A-1 Preferred are convertible
into the Company's Common Stock at a price equal to the lesser of (i) $ 3.0428,
subject to adjustment, or (ii) a floating conversion price determined by
multiplying a Conversion Percentage in effect as of such date by the Market
Price for the Company's Common Stock. The conversion percentage shall be 87.76%
for the first 180 days from the issuance date of the preferred stock and 82.76%
for any day thereafter. The Market Price for the Company's Common Stock shall be
the average of the three lowest closing bid prices for such Common Stock during
the 20 consecutive trading days immediately preceding such date. The Company is
obligated to sell the holders of the Series A Preferred an additional 150 shares
providing that the Company's shareholders approve the issuance thereof. In this
regard, the Company is holding a Special Meeting of it Shareholders on September
4, 1998 to permit the shareholders to vote on the possible issuance of Common
Stock in excess of 19.99% of the presently issued and outstanding Common Stock
as required by Rule 4460(i)(1)(D) of The Nasdaq Stock Market, Inc. Nasdaq
Marketplace Rules. See "Incorporation of Certain Information by Reference."
Accordingly, the ultimate number of shares of Common Stock into which the shares
of Series A Preferred are convertible is unknown at this time. However, based
upon (i) a closing bid price of $2.6458 per share (the closing bid price of the
Company's Common Stock being the average of the three lowest closing bid prices
of the Company's Common Stock as reported on The Nasdaq Small Cap Market(TM)
during the preceding 20 consecutive trading days preceding August 7, 1998), (ii)
a conversion on September 4,1998 and (iii) assuming the conversion of all 300
shares of Series A Preferred and 150 shares of Series A-1 Preferred, the Company
would issue an additional 638,378 shares of Common Stock to the Series A
Preferred holders and an additional 315,126 shares of Common Stock to the Series
A-1 Preferred holders. The 638,378 shares of Common Stock issuable upon the
conversion of the Series A Preferred would represent approximately
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17.1% of the currently issued and outstanding Common Stock, or approximately
14.6% of the Company's issued and outstanding Common Stock, giving proforma
effect to such issuance. The 315,126 shares of Common Stock issuable upon the
conversion of the Series A-1 Preferred would represent approximately 8.4% of the
currently issued and outstanding Common Stock, or approximately 7.8% of the
Company's issued and outstanding Common Stock, giving proforma effect to such
issuance. The amount of shares and percentage of Common Stock ultimately
issuable upon conversion of all 300 shares of Series A Preferred and the 150
shares of Series A-1 Preferred may increase or decrease substantially, depending
on changes in the closing bid price of the Company's Common Stock and other
anti-dilutive provisions contained in the Series A Preferred and Series A-1
Preferred. See "Description of Securities."
Possible Applicability of Rules Relating to Low-Priced Stocks; Penny Stock;
Possible Failure to Maintain Criteria for Nasdaq Securities
The Company's Common Stock and Warrants are traded on The Nasdaq
SmallCap Market(TM) under the symbols "VDAT" and "VDATW", respectively. If, for
any reason, the Common Stock and/or Warrants do not remain accepted for
inclusion on The Nasdaq SmallCap Market(TM), then, in such case, the Company's
Common Stock and/or Warrants would be expected to trade in the over-the-counter
markets through the "pink sheets" or on the NASD's OTC Bulletin Board. In the
event the Common Stock and/or Warrants were not included on The Nasdaq SmallCap
Market(TM), the Company's Common Stock and/or Warrants would be covered by a
Commission rule that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their shares in
the secondary market. The ability of the Company to secure a symbol on The
Nasdaq SmallCap Market(TM) does not imply that a meaningful trading market in
its Common Stock or Warrants will ever develop, or, if developed, will be
sustained.
Shares Eligible for Future Sale
As of August 7, 1998, there were 3,732,100 shares of the Company's
Common Stock outstanding, of which approximately 2,499,100 were "restricted
securities" as that term is defined by Rule 144 under the Securities Act,
including 1,182,681 shares registered under an Alternate Prospectus in the
Company's initial public offering in July 1997. See "Incorporation of Certain
Information by Reference." Such shares will be eligible for public sale only if
registered under the Securities Act or if sold in accordance with Rule 144.
Under Rule 144, a person who is not an affiliate of the Company and who has held
restricted securities for a period of one year may sell a limited number of
shares to the
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<PAGE>
public in ordinary brokerage transactions. Sales under Rule 144 may have a
depressive effect on the market price of the Company's Common Stock due to the
potential increased number of publicly held securities. The timing and amount of
sales of Common Stock covered by the Registration Statement of which this
Prospectus is a part, as well as sales pursuant to other filed registration
statements, could also have a depressive effect on the market price of the
Company's Common Stock.
Anti-Takeover Provisions; Possible Issuances of Preferred Stock
Certain provisions of the Company's Articles of Incorporation and
Bylaws may be deemed to have anti-takeover effects and may delay, defer or
prevent a takeover attempt of the Company, which include when and by whom
special meetings of the Company may be called. In addition, certain provisions
of the Florida Business Corporation Act also may be deemed to have certain
anti-takeover effects which include that control of shares acquired in excess of
certain specified thresholds will not possess any voting rights unless these
voting rights are approved by a majority of a corporation's disinterested
shareholders. In addition, the Company's Articles of Incorporation authorize the
issuance of up to 5,000,000 shares of preferred stock with such rights and
preferences as may be determined from time to time by the Board of Directors, of
which 4,999,550 shares remain without designation. Accordingly, while the
Company has agreed not to issue any shares of preferred stock while the Series A
Preferred and Series A-1 Preferred is outstanding, thereafter the Board of
Directors may, without shareholder approval, issue preferred stock with
dividends, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Company's Common
Stock or other classes of preferred stock. See "Description of Securities."
Further, the Company's Articles of Incorporation, Bylaws and Florida
law authorize the Company to indemnify its directors, officers, employees and
agents and limit the personal liability of corporate directors for monetary
damages, except in certain instances.
See "Indemnification."
Absence of Dividends
Holders of the Company's Common Stock are entitled to cash dividends
when, as and if declared by the Board of Directors out of funds legally
available therefor. However, pursuant to the respective designations, rights and
preferences of the outstanding Series A Preferred and Series A-1 Preferred, the
Company has agreed to not directly or indirectly, redeem or declare or pay any
cash dividend or cash distribution on its Common Stock without the express
written consent of the holders of not less than two-thirds of the then
outstanding shares of Series A Preferred and two-thirds of the then outstanding
shares of Series A-1 Preferred. See "Description of Securities." The Company has
never paid dividends and management of the Company does not anticipate the
declaration or payments of any dividends in the foreseeable future. The Company
intends to retain earnings, if any, to finance the developments and expansion of
its business. Future dividend policy will be subject to the discretion of the
Board of Directors and will be
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<PAGE>
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors. Therefore,
there can be no assurance that cash dividends of any kind will ever be paid.
Volatility of Stock Price
Historically there has been and there may continue to be volatility in
the market price for the Company's Common Stock. Quarterly operating results of
the Company and their relationship to analysts' projections, changes in general
conditions in the economy, the financial markets or the marketing industry, or
other developments affecting the Company or its competitors, could cause the
market price of the Common Stock to fluctuate substantially.
Year 2000 Compliance
The Company is aware of the issues associated with the programming code
in existing computer systems as the year 2000 approaches. The Year 2000 issue
relates to whether computer systems will properly recognize and process
information relating to dates in and after the year 2000. These systems could
fail or produce erroneous results if they cannot adequately process dates beyond
the year 1999 and are not corrected. Significant uncertainty exists in the
software industry concerning the potential consequences that may result from the
failure of software to adequately address the Year 2000 issue. The Company has
reviewed all software and hardware used internally by the Company in all support
systems to determine whether they are Year 2000 compliant. Most of the Company's
software has already been upgraded by the manufacturer or was recently purchased
and is Year 2000 compliant. The Company expects to have its remaining Year 2000
compliant systems in place by December 1998. The Company also intends to
implement and test these solutions prior to any anticipated impact of the Year
2000 issue on these systems. The Company does not believe that the aggregate
cost for the Year 2000 issue will be material. The Company, however, cannot
predict the effect of the Year 2000 issue on entities with which the Company
transacts business, and there can be no assurance that the effect of the Year
2000 issue on such entities will not have a material adverse effect on the
Company's business, financial condition or results of operations. The Company
will be formulating a contingency plan with respect to such entities with which
it does business.
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<PAGE>
THE COMPANY
Visual Data Corporation, a Florida corporation (the "Company"), was
formed in May 1993 with the goal of becoming the predominant digital multi-media
content provider in the advertising industry. In August 1997, one year after
exiting from its development stage activities, the Company completed its initial
public offering. As used herein, the Company includes HotelView Corporation, a
Florida corporation ("HVC") incorporated in September 1993, CareView
Corporation, a Florida corporation ("CareView") incorporated in August 1997,
Video News Wire Corporation, a Florida corporation ("Video NewsWire")
incorporated in March 1998 and ResortView Corporation, a Florida corporation
("ResortView") incorporated in December 1997, all of which are wholly-owned
subsidiaries of the Company.
The Company develops digital multi-media libraries of interactive
visual information which can be marketed and distributed through a variety of
media, including the Internet, other On-line services, laser disc, DVD and,
eventually, Interactive Television ("ITV"). Much like a magazine selling
advertising space, the Company generates revenues through fees paid by companies
which advertise and showcase their products in one of the Company's innovative
multi-media libraries, each of which are targeted to a specific industry, such
as travel, health care and interval ownership. Each of the libraries, or
"Views," is essentially a marketing company designed to distribute advertising
over new, non-traditional media, supplementing traditional advertising media
such as print, television and radio. Unlike traditional advertising which is
essentially passive, the use of non-traditional media should, in management's
opinion, allow the Company's messages to have greater impact and higher recall
because of the active interface between the advertiser and the consumer and the
proactive nature of the medium. The ability of the product to be revisited at
the consumer's discretion, combined with the detail of the message provided by
the video, will also permit a more aggressive promotion by the advertiser (the
Company's client) by allowing the client the opportunity to supplement their
traditional advertising, broaden reach and frequency, and, hopefully, improve
market position.
The Company's current libraries include:
HotelView(R), www.hotelview.com, a full-motion video library containing
informative vignettes on internationally known hotels and resorts in the United
States as well as internationally, including in the Caribbean, Bermuda and
Europe. HotelView(R) provides the consumer with an inside look at accommodations
and amenities of select hotels before booking a reservation. Maps, showing
distances to nearby attractions and airports are also provided.
AttractionView(TM), www.attractionview.com, a full-motion video library
containing informative vignettes on theme parks, attractions, and other points
of interest. AttractionView(TM) provides the consumer a quick view of
attractions such as Knott's Berry Farm Theme Park,
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<PAGE>
the Kennedy Space Center Spaceport, the Bronx Zoo and Busch Gardens Tampa in a
commercial-like format.
Video News Wire(TM), www.videonewswire.com, creates a full motion "TV news like"
video clip of a company's written press release, digitizes the clip and makes
the Video News release available to anyone via the Internet. Using the Company's
worldwide camera crew network, Video News Wire(TM) videotapes press conferences
and events incorporating them into each press release. As hereinafter described,
in March 1998 the Company signed an exclusive production and marketing agreement
with PR Newswire Corporation, the world's leading electronic distributor of
corporate news releases.
ResortView(TM), www.resortview.com, a video library of condominium/timeshare
resort properties available from all over the world. Professional,
easy-to-understand, narrated video "walking tours" allow a viewer to see the
accommodations from studios to three-bedroom units, and include a clear picture
of the lobby, restaurant/lounges, pool and beach, sports and exercise facilities
available at a particular location. As hereinafter described, in March 1998,
ResortView(TM) formed a strategic alliance with Interval International, Inc., a
Miami, Florida based company with 31 offices worldwide, which provides
developers of high quality vacation-ownership resorts with a full range of
services and solutions, including vacation exchange, program design, sales and
marketing tools, technology and operational support.
CareView(TM), which assists viewers in choosing adult care facilities, from
assisted living apartment to full care nursing homes, is currently available on
PC-based kiosks located in hospitals, with access to the Internet scheduled for
the fourth quarter of 1998.
The Company currently has eight additional libraries in various stages
of development, including:
CruiseView, which will permit viewers to "see before you go to sea" giving
cruise lovers a glimpse at each ship's cabins, on-board activities, dining rooms
and itinerary maps.
CampusView will provide a video database of American colleges and universities
permitting students and parents with a "magna-cum-helpful" look at each school's
facilities, programs and campus life.
AdventureView(TM) will permit viewers to get a glimpse at some of the world's
most exotic and exciting activities, from a rafting trip to a safari to a diving
expedition to a hike through the Amazon.
FitnessView(TM), "a library which is like having your own personal trainer,"
permits the viewer to customize a workout by watching and selecting only the
exercise segments they need.
Special sport-specific exercises will also be presented.
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<PAGE>
MedicalView, targeted for viewers or their families who are facing surgery or
medical treatments, where certain medical treatments will be presented in-depth,
in easy to understand, comfortable terms by a physician specializing in that
field.
ProductView(TM) is being developed as the "ultimate consumer catalog." Viewers
will be able to locate products they are considering purchasing and review the
item's features and capabilities before they purchase.
ConventionView(TM) is being developed as the "ultimate meeting planner tool" and
will permit viewers who have selected a particular area to obtain information on
available conference and meeting space, both in the local hotels and municipal
convention centers.
TalentView is being developed to provide professional voice, actor and director
talent a means of promoting themselves to producers, advertising agencies, movie
studios, etc. via a multi-media library available over the Internet.
As discussed above, the Company's libraries will be offered to the
general public through various media. Additional libraries which possess certain
synergies to HotelView(R), including CruiseView, AdventureView(TM) and
ConventionView(TM) will be offered through the travel agency distribution
channel and the Internet as these libraries are developed. Management of the
Company currently anticipates that many of the Company's other libraries, such
as MedicalView, CampusView, FitnessView(TM) and ProductView(TM) will be fully
developed and launched as soon as high speed data transmission capability, such
as cable modems, are more widely available. The Company owns, or in the case of
libraries under development will own, all of the content included in its
libraries.
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. Beginning in 1997, certain
technological advancements, including cable modems, digital satellite, highspeed
wireless modems and streaming digital video software, began to become available
to consumers. These advancements will enable suppliers and users of the Internet
to access multi-media information efficiently. Management of the Company
believes content such as that offered by the Company will become increasingly
more in demand to fill voids created by the expanded capacity these new
technologies provide.
In the opinion of management, the current demographics of the Internet
consumer offers the Company a very favorable platform for using the Company's
products and services to advertise and promote client products and services. For
instance, according to
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Matrix Information and Directory Services (MIDS), in January 1998 there were
approximately 102 million individuals worldwide accessing the Internet, a one
year increase of approximately 79% from January 1997. Nielsen Media and the U.S.
Census Bureau currently estimate the total number of worldwide users is expected
to reach 200,000,000 by the end of 1998. Current statistics reflect that total
Internet advertising revenues in 1996 were approximately $267 million, with only
38% of those advertising dollars spent on computer products. By the year 2000,
it is estimated that 41% of Internet commerce will be travel related, one reason
the Company chose HotelView(R) as its first library. Of the people on-line, the
average annual income is $72,000 (compared to $32,000 nationwide), 25% generate
income of at least $80,000 annually and 50% are professional or managerial.
Further, there is expected to be a continuing notable increase in E- Commerce.
According to a forecast by International Data Corporation, users buying goods
and services over the Web will increase from approximately 27.6 million
individuals in 1998 to approximately 83.6 individuals in 2001, with year-end
commerce revenues increasing from an estimated $32 billion in 1998 to
approximately $237 billion in 2001.
RECENT DEVELOPMENTS
The Company's business strategy is to expand its operations through
acquisitions of media developers with emphasis on developers of video media
together with growth of its organic businesses. In furtherance thereof, in March
1998, the Company formed a strategic alliance with Miami, Florida-based Interval
International, Inc. to introduce ResortView (TM), a new lead generation program
developed specifically for the vacation ownership industry, which advertises a
resort via full-motion video over the Internet. The ResortView (TM) product
employs the latest media technology and multi-faceted distribution networks to
help developers of vacation ownership resorts promote properties to potential
renters.
In March 1998, the Company signed an exclusive agreement with PR
Newswire Corporation for the promotion and sale of the Company's video news
release service, Video NewsWire (TM) to PR Newswire's base of over 20,000 member
clients. Under the terms of the agreement, PR Newswire will also create all
necessary marketing collateral materials for distribution to each of their 28
bureaus nationwide and their London office. The Company will work with PR
Newswire to create custom-made video productions, with costs to clients starting
at about $700, based upon clients' own news releases, and then distribute them
over the Internet. Management of the Company believes the resulting television
news-like video clips will add a fresh dimension to news releases and provide an
innovative forum for presenting companies, their earnings results and other
material news, especially new products.
On May 8, 1998, the Company completed the sale of 150 shares of the
Company's Series A Preferred at a purchase price of $5,000 per share to two
institutional investors in a private transaction exempt from registration under
the Securities Act pursuant to Section 4(2) of such act. The purchasers have
agreed to purchase an additional 150 shares of Series A Preferred subject to
certain conditions contained in the agreement between the
17
<PAGE>
Company and such buyers as are hereinafter summarized. The initial purchase
resulted in net proceeds to the Company of, after fees and expenses of the
transaction, of approximately $692,500. See "Description of Securities" for the
designations, rights and preferences of the Series A Preferred.
Following the initial closing date, the buyers shall be obligated to
purchase and the Company will be obligated to sell an additional 150 shares of
Series A Preferred under the same terms and conditions as the initial shares so
issued, provided a series of conditions have been met, including, but not
limited to, (i) the Company shall have attained shareholder approval permitting
issuance of the shares of Common Stock underlying the Series A Preferred in
accordance with applicable law, (ii) the Company's registration statement
relating to the Common Stock issuable upon conversion of the Series A Preferred
has been declared effective by the Commission, (iii) there has been no change in
the listing or threat thereof of the Common Stock, (iv) the closing bid price of
the Common Stock is greater that $2.50 per share on the day immediately
preceding the notification of such additional purchase, and (v) there has not
been a materially adverse change in the business or financial condition or
results of operations of the Company. Under the terms of the agreement, the
Company is obligated to prepare and file a registration statement with the
Commission providing for the resale of the shares of Common Stock issuable upon
conversion of the Series A Preferred by August 15, 1998. The Company filed a
Registration Statement on Form S-3 of which this Prospectus forms a part on
August 21, 1998. As a result of the delay in the filing of the Registration
Statement of which this Prospectus forms a part, the fixed conversion price was
reduced to $3.0428 pursuant to the designations, rights and preferences of the
Series A Preferred. See "Selling Security Holders" and Exhibits. The Company
shall use its best efforts to have such registration statement declared
effective by September 30, 1998; provided, that if the Commission reviews the
registration statement on Form S-3 and in connection with such review requests
the audited financial statements of the Company's year ending September 30, 1998
in order to declare such registration effective, the deadline shall be extended
to October 30, 1998. In the event such registration is not declared effective by
such date, both the fixed conversion price and the variable conversion price
would be reduced by 2% and would be further reduced by an additional .06% each
calendar day thereafter up to a maximum of 20% until such registration statement
has been declared effective.
The Company will hold a special meeting of its shareholders on
September 4, 1998 for the purposes of approving the possible issuance of in
excess of 19.99% of the presently issued and outstanding Common Stock of the
Company upon the conversion of the Company's Series A Preferred as required
above.
In March 1998, the Company entered into an agreement with Digital
Criteria Technologies, Inc. ("DCT") to become the exclusive marketer of DCT's
proprietary VoiceSelect product, a multi-media database of professional voice
talent. Under the terms of the agreement, for which the Company received a
$250,000 fee, the Company will act as the Internet host for VoiceSelect and will
market the product to production companies,
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<PAGE>
advertising agencies and talent agencies and voice talent, for which the Company
will also earn a percentage of the gross revenues generated by VoiceSelect. The
Company was also granted the first right of refusal to purchase VoiceSelect from
DCT.
On May 20, 1998, in a separate transaction, the Company acquired
certain assets of DCT, including a 30% interest in CareerSelect (TM) and a 40%
interest in Real Estate Select, for a total consideration of 140,000 shares of
the Company's restricted Common Stock and warrants to purchase an additional
70,000 shares of the Company's restricted Common Stock, exercisable at any time
and from time to time until April 7, 2002 at $3.18 per share. See "Selling
Security Holders." CareerSelect(TM) is a database and data search program
designed to provide a membership based service that allows prospective employers
to review resumes as well as hear potential job candidates that meet their
criteria on a computer display and to compare results of certain compatibility
factors before the prospective employer arranges an interview with the
candidate. Real Estate Select is a program designed to allow the viewer to enter
specific criteria and be provided with real estate properties that fit such
criteria.
In July 1998, the Company acquired 51% of the issued and outstanding
stock of EDnet, Inc. ("EDnet") (OTCBB: DNET) for a total purchase price of $1.4
million payable in a combination of cash, stock and secured note. EDnet, based
in San Francisco, develops and markets integrated systems for the delivery,
storage and management of professional- quality digital communications for
media-based applications, including audio and video production for the North
American advertising and entertainment industry. Following the closing of the
transaction, EDnet's Board of Directors was expanded to include four members
selected by the Company, including Randy S. Selman (Chairman), Alan Saperstein,
David E. Goodman and Brian K. Service.
In July 1998, the Company sold 100,000 shares of Common Stock in a
private placement exempt from registration under the Securities Act in reliance
on Section 4(2) and Regulation D thereof at a purchase price of $3.00 per share
to an accredited investor. The proceeds were used for general working capital by
the Company. See "Selling Security Holders."
In August 1998, the Company sold an aggregate of 166,665 shares of
Common Stock in a private placement exempt from registration under the
Securities Act in reliance on Section 4(2) and Regulation D thereof at a
purchase price equal to 75% of the then fair market value of the Company's
Common Stock which resulted in a sale price of $2.25 per share to a group of
accredited or otherwise sophisticated investors. The proceeds were used for
general working capital by the Company. See "Selling Security Holders."
In August 1998, the Company also completed the sale of 150 shares of
the Company's Series A-1 Preferred and a warrant to purchase 20,000 shares of
Common Stock, exercisable until August 11, 2002 at $4.00 per share, for an
aggregate purchase price of $750,000 to an institutional investor in a private
transaction exempt from registration under the Securities Act pursuant to
Section 4(2) of such act. See "Selling
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<PAGE>
Security Holders." The initial purchase resulted in net proceeds to the Company
of, after fees and expenses of the transaction, of approximately $685,000. See
"Description of Securities" for the designations, rights and preferences of the
Series A-1 Preferred. Under the terms of the agreement, the Company is obligated
to prepare and file a registration statement with the Commission providing for
the resale of the shares of Common Stock issuable upon conversion of the Series
A-1 Preferred and the exercise of the Warrant. The Company filed a Registration
Statement on Form S-3 of which this Prospectus forms a part on August 21, 1998.
The Company shall use its best efforts to have such registration statement
declared effective by September 30, 1998; provided, that if the Commission
reviews the registration statement on Form S-3 and in connection with such
review requests the audited financial statements of the Company's year ending
September 30, 1998 in order to declare such registration effective, the deadline
shall be extended to October 30, 1998. In the event such registration is not
declared effective by such date, both the fixed conversion price and the
variable conversion price of the Series A-1 Preferred would be reduced by 2% and
would be further reduced by an additional .06% each calendar day thereafter up
to a maximum of 20% until such registration statement has been declared
effective.
USE OF PROCEEDS
No proceeds will be obtained by the Company from the conversion of the
Series A or Series A-1 Preferred. In the event the remaining 150 shares of
Series A Preferred are sold and all of the Selling Security Holder Options and
Warrants are exercised, the Company would receive net proceeds of approximately
$1,475,875, after payment of offering expenses estimated to be approximately
$50,000. It is anticipated that the net proceeds, if any, from the sale of an
additional 150 shares of Series A Preferred and the exercise of the Selling
Security Holders Options and Warrants will be used by the Company for
acquisitions and for working capital associated with continuing operations. The
actual allocation of proceeds realized from the exercise of these securities
will depend upon the amount and timing of such exercises, the Company's
operating revenues and cash position at such time and its working capital
requirements during the course of such exercise period. There can be no
assurances that remaining 150 shares of Series A Preferred will be sold or that
any of the Selling Security Holders Options and Warrants will be exercised.
While the intended use of proceeds is consistent with the Company's
current business plan objectives, the Company reserves the right to change the
use of proceeds depending on working capital requirements and opportunities
afforded to the Company. Pending utilization of the proceeds as described above,
the net proceeds of the offering will be deposited in interest bearing accounts
or invested in money market instruments, government obligations, certificates of
deposits or similar short-term investment grade interest bearing investments.
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SELLING SECURITY HOLDERS
Stock Ownership
The following table set forth the name of each Selling Security Holder,
the number or shares of Common Stock beneficially owned by such Selling Security
Holder as of August 7, 1998, and the number of Shares being offered by each
Selling Security Holder. The Shares being offered hereby are being registered to
permit public secondary trading, and the Selling Security Holders may offer all
or part of the Shares for resale from time to time. However, such Selling
Security Holders are under no obligation to either (a) convert their shares of
Series A Preferred or their shares of Series A-1 Preferred or exercise the
Selling Security Holders Options and Warrants, as the case may be, or (b) if
converted or exercised, to sell all or any portion of such Shares immediately
under this Prospectus. All information with respect to Share ownership has been
furnished by the Selling Security Holders. Because the Selling Security Holders
may sell all or a portion of their Shares, no estimate can be given as to the
number of Shares that will be held by any Selling Security Holder upon
termination of any offering made hereby; accordingly, the following table
assumes (i) shareholder approval of the possible issuance of in excess of 19.99%
of the presently issued and outstanding Common Stock upon the conversion of the
Series A Preferred Stock at the September 4, 1998 Special Meeting of
Stockholders, (ii) the conversion of 300 shares of Series A Preferred and the
150 shares of Series A-1 Preferred and the exercise of the Selling Security
Holders Options and Warrants, and (iii) the sale of all Shares by the Selling
Security Holders immediately following the date of this Prospectus.
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
No. of Shares No. of Shares %
No. of Shares of Common of Common Stock Owner-
Name of Selling of Common Stock Stock Beneficially ship
Security Holder Beneficially Owned Offered Owned After(4)
as of August 7, 1998(1) Hereby After Offering(4) Offering
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Heracles Fund(5) 425,585(2) 666,667(3) 0 0
Themis Partners, L.P.(5) 212,793(2) 333,333(3) 0 0
WEC Investors IV, LLC 303,468(6) 1,020,000(6) 0 0
T.H. Holloway(7) 16,111 11,111 1,875 *
Socrates Skiadas(8) 47,847 22,222 3,750 *
Joseph Rotenberg(9) 32,736 11,111 2,250 *
Hart Rotenberg(10) 30,736 11,111 1,500 *
Hans Donerstag(11) 22,222 22,222 0 0
Rebecca C. Perrine(11) 22,222 22,222 0 0
Charles Xue(12) 75,555 55,555 7,500 0
John Quackenbush(11) 11,111 11,111 0 0
Allentown Partners(13) 180,000 170,000 0 0
Cardinal Capital
Management, Inc.(14) 50,000 50,000 0 0
Morgan Fuller
Capital Group LLC(15) 125,000 125,000 0 0
Focus Financial Corp.(16) 46,875 46,875 0 0
Avon Brill, LLC(17) 50,000 50,000 0 0
Eric Ellenhorn(18) 5,000 5,000 0 0
Patrick Rooney(18) 5,000 5,000 0 0
--------- --------- --------
1,662,261 2,638,540 16,875
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with
respect to securities and includes any securities which the person has
the right to acquire within 60 days of August 7, 1998 through the
conversion or exercise of any security or other right.
(2) Beneficial ownership is determined as of August 7, 1998 and is based
upon a conversion price of the Series A Preferred shares equal to
$2.6458 (which is the average of the three lowest closing bid prices of
the Common Stock for the 20 consecutive trading days ended August 6,
1998). The actual number of shares of Common Stock issuable upon
conversion of the Series A Preferred shares is that number of shares of
Common Stock equal to the quotient of (i) the aggregate stated value of
the Series A Preferred shares ($5,000 per share), plus an accrued and
unpaid premium of 5% per annum from May 1, 1998 divided by (ii) the
conversion price. The conversion price is the lesser of (a) $3.0428 per
share, subject to adjustment, or (b) the Market Price of the Common
Stock, where the Market Price is the average of the three lowest
closing bid prices for the Common Stock for the 20 consecutive trading
days immediately preceding such date of determination divided by a
conversion percentage which shall be 87.76% for the first 180 days
after the issuance date of the Series A Preferred and 82.76%
thereafter. No holder of Series A Preferred shares is entitled to
convert or exercise such securities to the extent that the shares to be
received by such holders upon such conversion or exercise would cause
such holders in the aggregate to beneficially own more than 4.99% of
the Common Stock of the Company (other than shares deemed to be
beneficially owned through ownership of Series A Preferred shares)
except upon 61 days prior notice to the Company.
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In addition, pursuant to the rules of The Nasdaq SmallCap Market (TM),
in absence of shareholder approval, the aggregate number of shares
issuable to the Selling Security Holder upon the conversion of the
Series A Preferred Shares may not exceed 19.99% of the outstanding
Common Stock as of May 8, 1998 (approximately 3,105,435 shares). Unless
such shareholder approval is obtained, none of such Selling Security
Holders will be able to acquire more than its proportionate share of
such maximum amount. The Company may be required to redeem any Series A
Preferred shares which may not be converted because of such limitation.
(3) Represents the allocation among such Selling Security Holders of
1,000,000 shares of Common Stock potentially issuable as of August 7,
1998, upon conversion and exercise of the 300 shares of Series A
Preferred held by such Selling Security Holders which the Company is
registering pursuant to the Registration Rights Agreement between the
Company and such Selling Security Holder. See Exhibits. The number of
shares of Common Stock registered pursuant to the Registration
Statement of which this Prospectus forms a part on behalf of the
Selling Security Holders holding shares of Series A Preferred and the
number of shares offered hereby by such holders have been determined by
agreement between the Company and such Selling Security Holder. Because
the number of shares of Common Stock that will ultimately be issued
upon conversion of the Series A Preferred is dependent, subject to
certain limitations, upon the average of certain closing bid prices of
the Common Stock prior to conversion, as described in footnote (2)
above, and certain antidilution adjustments, such number of shares (and
therefore the number of shares of Common Stock offered hereby) cannot
be determined at this time. The number of shares of Common Stock
offered by the Selling Security Holders holding shares of Series A
Preferred, in accordance with Rule 416 under the Securities Act, also
includes such presently undeterminate number of additional shares as
may be issuable upon conversion of the Series A Preferred, based upon
stock splits, stock dividends or similar transactions in accordance
with the terms of the Articles of Amendment to the Articles of
Incorporation.
(4) Gives effect to the conversion of all shares of Series A Preferred and
Series A-1 Preferred and the sale of the shares of Common Stock
issuable upon such conversion.
(5) Promethean Investment Group L.L.C. is the general partner of Themis
Partners L.P. and the investment advisor for Heracles Fund
(collectively, the "Promethean Entities") and consequently has voting
control and investment discretion of securities held by the Promethean
Entities. Promethean Investment Group L.L.C. is indirectly controlled
by Mr. James F. O'Brien. The ownership for each of the Promethean
Entities does not include the ownership information for the other
Promethean Entities. Promethean Investment Group L.L.C. and each of the
Promethean Entities disclaims beneficial ownership of the shares held
by the other Promethean Entities. Mr. O'Brien disclaims beneficial
ownership of the shares owned by Promethean Investment Group L.L.C. and
the Promethean Entities.
(6) WEC Investors IV, LLC purchased an aggregate of 150 shares of Series
A-1 Preferred and a warrant to purchase 20,000 shares of Common Stock.
Includes 20,000 shares of Common Stock underlying such warrant. See
"The Company - Recent Developments." Beneficial ownership is determined
as of August 7, 1998 and is based upon a conversion price of the Series
A-1 Preferred shares equal to $2.6458 (which is the average of the
three lowest closing bid prices of the Common Stock for the 20
consecutive trading days ended August 6, 1998). The actual number of
shares of Common Stock issuable upon conversion of the Series A-1
Preferred shares is that number of shares of Common Stock equal to the
quotient of (i) the aggregate stated value of the Series A Preferred
shares ($5,000 per share) divided by (ii) the conversion price. The
conversion price is the lesser of (a) $3.0428 per share, subject to
adjustment, or (b) the Market Price of the Common Stock, where the
Market Price is the average of the three lowest closing bid prices for
the Common Stock for the 20 consecutive trading days immediately
preceding such date of determination divided by a conversion percentage
which shall be 87.76% for the first 180 days after the issuance date of
the Series A-1 Preferred and 82.76% thereafter. No holder of Series A-1
Preferred shares is entitled to convert or exercise such
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securities to the extent that the shares to be received by such holders
upon such conversion or exercise would cause such holders in the
aggregate to beneficially own more than 4.99% of the Common Stock of
the Company (other than shares deemed to be beneficially owned through
ownership of Series A-1 Preferred shares). Represents the contractual
obligation to include 1,000,000 shares of Common Stock potentially
issuable as of August 7, 1998, upon conversion and exercise of the 150
shares of Series A-1 Preferred held by such Selling Security Holder
which the Company is registering pursuant to the Registration Rights
Agreement between the Company and such Selling Security Holder. See
Exhibits. The number of shares of Common Stock registered pursuant to
the Registration Statement of which this Prospectus forms a part on
behalf of the Selling Security Holder holding shares of Series A-1
Preferred and the number of shares offered hereby by such holder have
been determined by agreement between the Company and such Selling
Security Holder. Because the number of shares of Common Stock that will
ultimately be issued upon conversion of the Series A-1 Preferred is
dependent, subject to certain limitations, upon the average of certain
closing bid prices of the Common Stock prior to conversion, as
described herein, and certain antidilution adjustments, such number of
shares (and therefore the number of shares of Common Stock offered
hereby) cannot be determined at this time. The number of shares of
Common Stock offered by the Selling Security Holder holding shares of
Series A-1 Preferred, in accordance with Rule 416 under the Securities
Act, also includes such presently undeterminate number of additional
shares as may be issuable upon conversion of the Series A-1 Preferred,
based upon stock splits, stock dividends or similar transactions in
accordance with the terms of the Articles of Amendment to the Articles
of Incorporation.
(7) Includes 3,125 shares covered by an Alternate Prospectus pursuant to
the Company's initial public offering in July 1997 and 11,111 shares
purchased from the Company in August 1998 at a purchase price equal to
75% of the then fair market value of the Company's Common Stock which
resulted in a sale price of $2.25 per share. Assumes the sale of an
aggregate of 14,236 shares either pursuant to the Alternate Prospectus,
as to the 3,125 shares, or pursuant to this Prospectus, as to the
11,111 shares. See "The Company - Recent Developments."
(8) Includes 21,875 shares covered by an Alternate Prospectus pursuant to
the Company's initial public offering in July 1997 and 22,222 shares
purchased from the Company in August 1998 at a purchase price equal to
75% of the then fair market value of the Company's Common Stock which
resulted in a sale price of $2.25 per share. Assumes the sale of an
aggregate of 44,097 shares either pursuant to the Alternate Prospectus,
as to the 21,875 shares, or pursuant to this Prospectus, as to the
22,222 shares. See "The Company - Recent Developments."
(9) Includes 19,375 shares covered by an Alternate Prospectus pursuant to
the Company's initial public offering in July 1997 and 11,111 shares
purchased from the Company in August 1998 at a purchase price equal to
75% of the then fair market value of the Company's Common Stock which
resulted in a sale price of $2.25 per share. Assumes the sale of an
aggregate of 30,486 shares either pursuant to the Alternate Prospectus,
as to the 19,375 shares, or pursuant to this Prospectus, as to the
11,111 shares. See "The Company - Recent Developments."
(10) Includes 18,125 shares covered by an Alternate Prospectus pursuant to
the Company's initial public offering in July 1997 and 11,111 shares
purchased from the Company in August 1998 at a purchase price equal to
75% of the then fair market value of the Company's Common Stock which
resulted in a sale price of $2.25 per share. Assumes the sale of an
aggregate of 29,236 shares either pursuant to the Alternate Prospectus,
as to the 18,125 shares, or pursuant to this Prospectus, as to the
11,111 shares. See "The Company - Recent Developments."
(11) Represents shares purchased from the Company in August 1998 at $2.25
per share. See "The Company - Recent Developments."
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(12) Includes 12,500 shares covered by an Alternate Prospectus pursuant to
the Company's initial public offering in July 1997 and 55,555 shares
purchased from the Company in August 1998 at a purchase price equal to
75% of the then fair market value of the Company's Common Stock which
resulted in a sale price of $2.25 per share. Assumes the sale of an
aggregate of 68,055 shares either pursuant to the Alternate Prospectus,
as to the 12,500 shares, or pursuant to this Prospectus, as to the
55,555 shares. See "The Company - Recent Developments."
(13) Includes 100,000 shares purchased by Allentown Partners from the
Company in July 1998 at $3.00 per share (see "The Company - Recent
Developments") and 70,000 shares of Common Stock granted as
compensation under a 24 month consulting agreement between the Company
and Allentown Partners, of which Charles Johnston is a partner. Also
includes 10,000 shares of Common Stock owned by J&C Resources, of which
Mr. Johnston is the beneficial owner, of which 6,250 shares are covered
by an Alternate Prospectus pursuant to the Company's initial public
offering in July 1997. Assumes the sale of an aggregate of 176,250
hares either pursuant to the Alternate Prospectus, as to the 6,250
shares, or pursuant to this Prospectus, as to the 170,000 shares.
(14) Represents 50,000 shares of Common Stock underlying a warrant,
exercisable at $3.23 per share until August 11, 2003 issued as a fee in
connection with the WEC Investors IV, LLC transaction. Messrs. Rob
Rosenstein and Scott Kock are the officers and directors of Cardinal
Capital Management, Inc.
(15) Represents securities issued by the Company in the acquisition of 51%
of EDnet and includes 50,000 shares of Common Stock underlying a
warrant, exercisable at $3.00 per share until June 30, 2003, which such
securities were subsequently transferred by EDnet to such Selling
Security Holder. See "The Company - Recent Developments."
(16) Represents shares of Common Stock underlying an option, exercisable at
$5.00 per share until September 30, 2002, issued to Focus Financial
Corp. as compensation under a consulting agreement with the Company.
Messrs. David Portnoy, Gilbert Portnoy and Mark Portnoy are the
officers and directors of Focus Financial Corp.
(17) Represent shares of Common Stock underlying a warrant, exercisable at
$3.00 per share until June 30, 2003, issued in connection with the
EDnet transaction.
(18) Represents shares issued as interest for a loan made to the Company in
1997, the proceeds of which were used for general working capital,
which such loan has subsequently been repaid in full.
The Company has agreed to pay full costs and expenses related to the
offering, including but not limited to all fees and expenses in preparing,
filing and printing the Registration Statement and Prospectus and related
exhibits, amendments and supplements thereto and mailing of such items. The
Company will not pay selling commissions and expenses associated with any sale
by the Selling Security Holders.
PLAN OF DISTRIBUTION
The Common Stock offered by this Prospectus is being offered on behalf
of the Selling Security Holders. Such Common Stock may be sold or distributed
from time to time by the Selling Security Holders, or by donees or transferees
or, or other successors in interest to, the Selling Security Holders, directly
to one or more purchasers or through brokers, dealers or underwriters who may
act solely as agents or may acquire such Common Stock as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
The sale of the Common Stock offered hereby may be effected in one or more of
the following methods: (i) ordinary brokers' transactions; (ii) transactions
involving
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cross or block trades or otherwise on The Nasdaq SmallCap Market (TM); (iii)
purchases by brokers, dealers or underwriters as principal and resale by such
purchasers for their own accounts pursuant to this Prospectus; (iv) "at the
market" to or through market markers or into an existing market for the Common
Stock; (v) in other ways not involving market markers or established trading
markets, including direct sales to purchasers or sales effected through agents;
(vi) through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise); (vii) in privately negotiated transactions (viii)
to cover short sales; or (ix) any combination of the foregoing.
From time to time, one or more of the Selling Security Holders may
pledge, hypothecate or grant a security interest in some or all of the Shares
owned by them, and the pledgees, secured parties or persons to whom such Shares
have been hypothecated shall, upon foreclosure in the event of default, be
deemed to be Selling Security Holders hereunder. The number of Selling Security
Holders' Shares beneficially owned by those Selling Security Holders who so
transfer, pledge, donate or assign Selling Security Holders' Shares will
decrease as and when they take such actions. The plan of distribution for
Selling Security Holders' Shares sold hereunder will otherwise remain unchanged,
except that the transferees, pledgees, donees or other successors will be
Selling Security Holders hereunder. In addition, a Selling Security Holder may,
from time to time, sell short the Common Stock, and in such instances, this
Prospectus may be delivered in connection with such short sales and the Shares
offered hereby may be used to cover such short sales.
A Selling Security Holder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with such Selling
Security Holder, including, without limitation, in connection with distributions
of the Common Stock by such broker-dealers. A Selling Security Holder may also
enter into option or other transactions with broker-dealers that involve the
delivery of the Shares to the broker-dealers, who may then resell or otherwise
transfer such Shares. A Selling Security Holder may also loan or pledge the
Shares to a broker-dealer and the broker-dealer may sell the Shares so loaned or
upon a default may sell or otherwise transfer the pledged Shares.
Brokers, dealers, underwriters or agents participating in the
distribution of the Shares as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Security Holders and/or
purchasers of the Common Stock for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be less than or in excess of customary
commissions). The Selling Security Holders and any broker-dealers who act in
connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission they
receive and proceeds of any sale of the Shares may be deemed to be underwriting
discounts and commissions under the Securities Act. Neither the Company nor any
Selling Security Holder can presently estimate the amount of such compensation.
The Company knows of no existing arrangements between any Selling Security
Holder, any other stockholder, broker, dealer,
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underwriter or agent relating to the sale or distribution of the Shares included
in this Prospectus.
The Company will pay substantially all of the expenses incident to the
registration, offering and sale of the Shares included in this Prospectus to the
public, other than commission or discounts of underwriters, broker-dealers or
agents. The Company has also agreed to indemnify the Selling Security Holders
and certain related persons against liabilities, including liabilities under the
Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company, the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
The Company had advised the Selling Security Holders that during such
time as they may be engaged in a distribution of the Shares included herein they
are required to comply with Regulation M promulgated under the Exchange Act.
With certain exceptions, Regulation M precludes any Selling Security Holder, any
affiliated purchasers, and any broker-dealers or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. All of the
foregoing may affect the marketability of the Shares.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized by its Articles of Incorporation to issue
20,000,000 shares of Common Stock, of which 3,732,100 were issued and
outstanding as of August 7, 1998. The holders of the Company's Common Stock are
entitled to receive dividends at such time and in such amounts as may be
determined by the Company's Board of Directors, and upon liquidation are
entitled to share ratably in the assets of the Company, subject to the rights of
the holders of any shares of preferred stock which may be outstanding, remaining
after the payment of all debts and other liabilities.
All shares of the Company's Common Stock have equal voting rights, each
share being entitled to one vote per share for the election of directors and all
other purposes. Holders of such Common Stock are not entitled to any preemptive
rights to purchase or subscribe for any of the Company's securities. All of the
Company's Common Stock which is issued and outstanding is fully paid and
non-assessable. Stockholders, including the holders of any series of preferred
stock outstanding, do not have cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Directors are
able to elect 100% of the Company's Directors.
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It is not contemplated that any dividends will be paid on the Common
Stock, and the future ability to pay dividends will be dependent upon the
success of the Company's operations and the decision by its Board of Directors
at that time. However, pursuant to the designations, rights and preferences of
the outstanding Series A Preferred and Series A-1 Preferred, the Company has
agreed to not directly or indirectly, redeem or declare or pay any cash dividend
or cash distribution on its Common Stock without the express written consent of
the holders of not less than two-thirds of the then outstanding shares of Series
A Preferred and two-thirds of the then outstanding shares of Series A-1
Preferred.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock,
par value $.0001 per share. 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. As of the date hereof, the Company has
designated a series consisting of 300 shares of Series A Preferred, of which 150
shares are currently issued and outstanding, and a series consisting of 150
shares of Series A-1 Preferred, all of which are issued and outstanding. The
remaining 4,999,550 shares of preferred stock remain without designation.
Series A Preferred
The following is a summary of the designations, rights and preferences
of the Series A Preferred. See "Incorporation of Certain Documents by Reference"
and "Exhibits."
Conversion
The Series A Preferred is convertible into the Company's Common Stock
at a price per share equal to the lesser of (i) $3.0428, subject to adjustment,
or (ii) a floating conversion price determined by multiplying a Conversion
Percentage in effect as of such date by the Market Price for the Company's
Common Stock. The Conversion Percentage shall be 87.76% for the first 180 days
from the issuance date of the Series A Preferred Stock and 82.76% for any day
thereafter. The Market Price for the Company's Common Stock shall be the average
of the three lowest closing bid prices for such Common Stock during the 20
consecutive trading days immediately preceding such date.
Voting Rights
The shares of Series A Preferred carry no voting rights except as
required by law. The affirmative vote of holders of not less than two-thirds of
then outstanding shares of Series A Preferred shall be required for (a) any
change to the Articles of Amendment or the Company's Articles of Incorporation
which would also amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series A Preferred or (b) the Company to issue any
shares of Series A Preferred other than pursuant to the securities purchase
agreement under which the Series A Preferred was issued. A vote of holders
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of not less than two-thirds of the then outstanding shares of Series A Preferred
shall also be required to authorize or issue any additional or the capital stock
that is of senior or equal rank to the Series A Preferred in respect to the
preferences as to distribution and payments upon the all liquidation,
dissolution and winding up of the Company. The Company shall not authorize or
make any amendments of the Company's Articles of Incorporation or By-Laws or
file any resolutions of the Board of Directors of the Company containing any
provisions, which would adversely effect or otherwise impair the rights or
relative holders of the priority of the holders of the Series A Preferred
relative to the Common Stock or the holders of other class of capital stock,
without such consent. In the event of the merger or consolidation of the Company
with or into another corporation, the Series A Preferred shall maintain their
relative powers, designations and preferences provided and no merger shall
result inconsistent therewith.
Dividends
The holders of the Series A Preferred are not entitled to any
dividends. Until all the Series A Preferred have been converted or redeemed as
provided in the Articles of Amendment to the Company's Articles of
Incorporation, the Company shall not directly or indirectly, redeem, or declare
or pay any cash dividend or cash distribution on, its Common Stock without the
prior express written consent of the holders of not less than two-thirds of the
then outstanding Series A Preferred.
Liquidation Preference
The Series A Preferred has a stated value of $5,000 per share (the
"Face Value"). In the event that any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of the Series A Preferred
shall be entitled to receive in cash out of the assets of the Company, before
any amount shall be paid to the holders of any of the capital stock of the
Company of any class junior in rank to the Series A Preferred in respect of the
preferences as to distributions and payments on the liquidation, dissolution and
winding up of the Company an amount per share equal to the sum of (i) the Face
Value and an amount equal to the product of (.05) x (N/365) x ($5,000), where N
shall be the number of days outstanding (the "Liquidation Preference").
Redemption
Subject to certain conditions, including prior notice, the Company may
elect to redeem the Series A Preferred submitted for conversion in lieu of
converting such Series A Preferred provided that the floating conversion price
is less that $2.50. The redemption price of Company redemption in lieu of
conversion shall be an amount per share of Series A Preferred equal to the
product of 87.76% if the conversion is within 180 days after the issue date of
such stock or 82.76% if such conversion date is 181 days after the issuance of
the stock times the last reported sale price of the Common Stock on such
conversion date.
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The holders of the Series A Preferred shall have the right, at such
holders' option, to require the Company to redeem all or a portion of such
holders Series A Preferred at a price per share equal to 125% of the Liquidation
Preference upon the occurrence of a Major Transaction, as defined below. In
addition, after a Triggering Event, as defined below, each holder of the Series
A Preferred shall have the right, at such holders' option, to require the
Company to redeem all or a portion of such holders' Series A Preferred at a
price per share equal to the greater of (i) 125% of the Liquidation Preference
and (ii) the product of (a) the conversion rate at such time and (b) the closing
bid price calculated as of the day immediately preceding such Triggering Event.
A Major Transaction shall include (i) the consolidation, merger or
other business combination of the Company with or into another person (other
than a migratory merger or a transaction in which the Company is the surviving
entity and holders of the Company's voting power immediately prior to the
transaction continue after the transaction to hold the voting power necessary to
elect a majority of the members of the Board of Directors of the Company); (ii)
the sale or transfer of all or substantially all of the Company's assets or
(iii) consummation of purchase, tender offer or exchange offer made to the
holders of more than 30% of the Company's outstanding shares of Common Stock. A
Triggering Event shall have been deemed to occur at such time as any of the
following events shall have occurred: (i) the failure of this registration
statement relating to the shares of Common Stock issuable upon conversion of the
Series A Preferred, as filed by the Company with the Commission on August 21,
1998, to be declared effective by the Commission on or before a date which is 45
days after September 30, 1998 (or October 30, 1998, if extended), (ii) failure
to keep such registration statement effective pursuant to the terms of the
registration rights agreement subject to certain agreed blackout provisions,
(iii) the suspension from listing or the failure of the Common Stock to be
listed on an exchange for a period of five days; (iv) the Company's
stockholders' failure to approve on or before October 5, 1998 the proposal at
its upcoming September 4, 1998 special meeting of shareholders to permit the
possible issuance of in excess of 19.99% of the presently issued and outstanding
shares of Common Stock upon the possible conversion of the Series A Preferred or
(v) if Randy S. Selman ceases to be either the Chief Executive Officer or
President of the Company prior to March 1, 2000 for any reason other than death
or disability.
Series A-1 Preferred
The following is a summary of the designations, rights and preferences
of the Series A-1 Preferred. See "Incorporation of Certain Documents by
Reference" and "Exhibits."
Conversion
The Series A-1 Preferred is convertible into the Company's Common Stock
at a price per share equal to the lesser of (i) $3.0428, subject to adjustment,
or (ii) a floating conversion price determined by multiplying a Conversion
Percentage in effect as of such date by the Market Price for the Company's
Common Stock. The Conversion Percentage shall be 87.76% for the first 180 days
from the closing date and 82.76% for any day
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thereafter. The Market Price for the Company's Common Stock shall be the average
of the three lowest closing bid prices for such Common Stock during the 20
consecutive trading days immediately preceding such date. In no event shall any
holder of Series A-1 Preferred be entitled to convert shares in excess of the
number of shares of Series A-1 Preferred which, upon conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by such holder and
its affiliates to exceed 4.99% of the outstanding shares of Common Stock
following such conversion.
Voting Rights
The shares of Series A-1 Preferred carry no voting rights except as
required by law. The affirmative vote of holders of not less than two-thirds of
then outstanding shares of Series A-1 Preferred shall be required for (a) any
change to the Articles of Amendment or the Company's Articles of Incorporation
which would also amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series A-1 Preferred or (b) the Company to issue
any shares of Series A-1 Preferred other than pursuant to the securities
purchase agreement under which the Series A-1 Preferred was issued. A vote of
holders of not less than two-thirds of the then outstanding shares of Series A-1
Preferred shall also be required to authorize or issue any additional or the
capital stock that is of senior or equal rank to the Series A-1 Preferred in
respect to the preferences as to distribution and payments upon the all
liquidation, dissolution and winding up of the Company. The Company shall not
authorize or make any amendments of the Company's Articles of Incorporation or
By-Laws or file any resolutions of the Board of Directors of the Company
containing any provisions, which would adversely effect or otherwise impair the
rights or relative holders of the priority of the holders of the Series A-1
Preferred relative to the Common Stock or the holders of other class of capital
stock, without such consent. In the event of the merger or consolidation of the
Company with or into another corporation, the Series A-1 Preferred shall
maintain their relative powers, designations and preferences provided and no
merger shall result inconsistent therewith.
Dividends
The holders of the Series A-1 Preferred are not entitled to any
dividends. Until all the Series A-1 Preferred have been converted or redeemed as
provided in the Articles of Amendment to the Company's Articles of
Incorporation, the Company shall not directly or indirectly, redeem, or declare
or pay any cash dividend or cash distribution on, its Common Stock without the
prior express written consent of the holders of not less than two-thirds of the
then outstanding Series A-1 Preferred.
Liquidation Preference
The Series A-1 Preferred has a stated value of $5,000 per share (the
"Face Value"). In the event that any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of the Series A-1
Preferred shall be entitled to receive in cash out of the assets of the Company,
after payment to any holder of the Series A Preferred, but before any amount
shall be paid to the holders of any of the capital stock of the Company
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of any class junior in rank to the Series A-1 Preferred in respect of the
preferences as to distributions and payments on the liquidation, dissolution and
winding up of the Company an amount per share equal to the sum of (i) the Face
Value and an amount equal to the product of (.05) x (N/365) x ($5,000), where N
shall be the number of days outstanding.
Redemption
At any time, the Company may elect to redeem the Series A-1 Preferred
submitted for conversion in lieu of converting such Series A-1 Preferred
provided that the floating conversion price is less that $2.50. The redemption
price of Company redemption in lieu of conversion shall be an amount per share
of Series A-1 Preferred equal to the product of 87.76% if the conversion is
within 180 days after the issue date of such stock or 82.76% if such conversion
date is 181 days after the issuance of the stock times the last reported sale
price of the Common Stock on such conversion date.
The holders of the Series A-1 Preferred shall have the right, at such
holders' option, to require the Company to redeem all or a portion of such
holders Series A-1 Preferred at a price per share equal to 125% of the
liquidation preference upon the occurrence of a Major Transaction, as defined
below. In addition, after a Triggering Event, as defined below, each holder of
the Series A-1 Preferred shall have the right, at such holders' option, to
require the Company to redeem all or a portion of such holders' Series A-1
Preferred at a price per share equal to the greater of (i) 125% of the
liquidation preference and (ii) the product of (a) the conversion rate at such
time and (b) the closing bid price calculated as of the day immediately
preceding such Triggering Event.
A Major Transaction shall include (i) the consolidation, merger or
other business combination of the Company with or into another person (other
than a migratory merger or a transaction in which the Company is the surviving
entity and holders of the Company's voting power immediately prior to the
transaction continue after the transaction to hold the voting power necessary to
elect a majority of the members of the Board of Directors of the Company); (ii)
the sale or transfer of all or substantially all of the Company's assets or
(iii) consummation of purchase, tender offer or exchange offer made to the
holders of more than 30% of the Company's outstanding shares of Common Stock. A
Triggering Event shall have been deemed to occur at such time as any of the
following events shall have occurred: (i) the failure of this registration
statement relating to the shares of Common Stock issuable upon conversion of the
Series A-1 Preferred, as filed by the Company with the Commission on August 21,
1998, to be declared effective by the Commission on or before a date which is 45
days after September 30, 1998 (or October 30, 1998, if extended), (ii) failure
to keep such registration statement effective pursuant to the terms of the
registration rights agreement subject to certain agreed blackout provisions or
(iii) the suspension from listing or the failure of the Common Stock to be
listed on an exchange for a period of five days.
32
<PAGE>
Warrants
Common Stock Purchase Warrants
The Company has issued and outstanding 1,150,000 redeemable Common
Stock Purchase Warrants ("Warrants") which were sold in the Company's initial
public offering ("IPO") in July 1997. Each Warrant entitles the holder to
purchase one share of Common Stock at $6.00 per share ("Warrant Exercise Price")
commencing February 1, 1998 until the expiration of the Warrants on July 30,
2002. The Warrants are redeemable by the Company for $.05 per Warrant, at any
time commencing February 1, 1998, 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.
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 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.
33
<PAGE>
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. 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.
Underwriters' Warrants
In connection with the IPO, the Company sold the Underwriters, or their
designees, for nominal consideration, the Underwriters' Warrants to purchase an
aggregate of 100,000 shares of Common Stock and 100,000 Warrants. The
Underwriters' Warrants are initially exercisable at an exercise price of $8.40
per share of Common Stock and $.14 per Warrant, each Warrant being in turn
exercisable at $8.40 per share, representing 140% of the initial public offering
price of the Company's securities. The Underwriter's Warrants are exercisable
for a period of four years commencing July 30, 1998. The Underwriters' Warrants,
which were restricted from sale, transfer, assignment or hypothecation until
July 30, 1998 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 original registration statement or a new
registration statement 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
requires
34
<PAGE>
"piggy back" registration rights on two occasions during the period such
Underwriters' Warrants remain outstanding. The Company shall bear all expenses
incurred in the preparation and filing of any such registration statement or
post-effective amendment.
Other Outstanding Warrants
Additionally, as of the date of this Prospectus, there are warrants
outstanding to purchase an aggregate of 393,535 shares of Common Stock, of which
90,201 shares are exercisable at $6.60 per share through July 30, 1999; 8,334 of
which are exercisable at $2.80 per share through May 20, 1999; 20,000 of which
are exercisable at $4.00 per share through August 11, 2002; 50,000 of which are
exercisable at $3.23 per share through August 11, 2003; 90,000 of which are
exercisable at $6.00 per share through June 30, 1999; 10,000 of which are
exercisable at $3.00 per share through February 17, 2003; and 125,000 of which
are exercisable at $3.00 per share through June 30, 2003. An aggregate of 98,535
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 July 30,
1997 without the prior written consent of the Representative of the several
underwriters in the Company's initial public offering. The Representative has
advised the Company that it does not have a 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 Prospectus, there are stock options to purchase
an aggregate of 1,131,916 shares of Common Stock outstanding, which includes
options to purchase (i) 5,581 shares which are exercisable at $5.60 per share
through March 31, 1999, (ii) 274,460 shares which are exercisable at $.00016 per
share through January 1, 2001, 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), (iii) 46,875 shares which are exercisable at
$5.00 per share through September 30, 2002, (iv) 50,000 shares which are
exercisable at $2.50 per share through March 1, 2001, (v) 150,000 shares which
are exercisable at $2.50 per share through July 30, 2002, of which 50,000
options are held by Eric Jacobs, 50,000 options are held by Ben Swirsky and
50,000 options are held by Brian Service, all directors of the Company, (vi)
250,000 shares which are exercisable at $2.50 per share through December 31,
2000, of which 125,000 options are held by each of Randy S. Selman and Alan
Saperstein, (vii) 50,000 shares which are exercisable at $2.50 per share though
September 30, 2001 which are held by David E. Goodman, the Company's Chief
Operating Officer, (viii) 300,000 shares which are exercisable at $2.50 per
share through January 8, 2002, of which 125,000 options are held by each of
Randy S. Selman and Alan Saperstein and 50,000 options which are held by David
E. Goodman, and (viii) 5,000 shares exercisable at $2.75 per share through April
21, 2002.
35
<PAGE>
The Nasdaq SmallCap Market(TM)
The Company's Common Stock and Warrants are traded on The Nasdaq
SmallCap Market(TM) under the symbols "VDAT" and "VDATW", respectively.
Transfer Agent
The Company's transfer agent and registrar for the Common Stock and
Warrants is Interwest Transfer Co., Inc., 1981 East Murray Holladay Road, Suite
100, Salt Lake City, UT 84117.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Atlas, Pearlman, Trop & Borkson,
P.A., Counsel for the Company, Fort Lauderdale, Florida.
EXPERTS
The consolidated financial statements as of and for the year ended
September 30, 1997 incorporated by reference in this Prospectus have been
audited by Arthur Andersen LLP, independent certified public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference upon the authority of said firm as experts in giving said reports.
The consolidated balance sheet of Visual Data Corporation and
Subsidiary as of September 30, 1996 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the year then
ended, incorporated by reference in this prospectus, have been incorporated
herein in reliance on the reports of Goldstein Lewin & Co., independent
certified public accountants, given on the authority of that firm as experts in
accounting and auditing.
INDEMNIFICATION
The Company has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Company's Articles of Incorporation provide
that the Company shall indemnify and may insure its officers and directors to
the fullest extent permitted by law.
The provisions of the Florida Business 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
36
<PAGE>
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
preceding by or in the right of the Company to procure a judgment in its favor
or in a preceding 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 preceding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
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 Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
enforceable.
37
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with this offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the Company 2,638,540 shares
or any Underwriter. This Prospectus does not constitute an offer to sell or a of Common Stock
solicitation of any offer to buy any of the securities offered hereby in any
circumstance in which such offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that information herein is correct at any VISUAL DATA
time subsequent to the date of this Prospectus. CORPORATION
--------------
-----------
TABLE OF CONTENTS PROSPECTUS
----------------- -----------
Page
----
AVAILABLE INFORMATION.......................3
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE..................5
____, 1998
RISK FACTORS................................6
THE COMPANY.................................14
USE OF PROCEEDS.............................20
SELLING SECURITY HOLDERS....................21
PLAN OF DISTRIBUTION........................24
DESCRIPTION OF SECURITIES...................27
LEGAL MATTERS...............................36
EXPERTS.....................................36
INDEMNIFICATION.............................36
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses, all of which are
being paid by the Company, in connection with this offering.
Legal fees and expenses............................ $21,500 *
SEC filing fees.................................... 2,200 *
Accounting fees and expenses....................... 12,000 *
Printing expenses.................................. 5,000 *
Miscellaneous...................................... 1,300 *
---------
Total............................................ $42,000 *
=========
- ----------------
*Estimated
Item 15. Indemnification of Directors and Officers.
The Company has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Company's Articles of Incorporation provide
that the Company shall indemnify and may insure its officers and directors to
the fullest extent permitted by law.
The provisions of the Florida Business 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 preceding by or in the
right of the Company to procure a judgment in its favor or 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.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
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 Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
enforceable.
<TABLE>
<CAPTION>
Item 16. Exhibits.
Exhibit Description
- ------- -----------
<S> <C>
1(a) Form of Underwriting Agreement.(1)
1(b) Form of Selected Dealers Agreement.(1)
3(i)(a) Articles of Incorporation(1)
3(i)(b) Articles of Amendment dated July 26, 1993(1)
3(i)(c) Articles of Amendment dated January 17, 1994(1)
3(i)(d) Articles of Amendment dated October 11, 1994(1)
3(i)(e) Articles of Amendment dated March 25, 1995(1)
3(i)(f) Articles of Amendment dated October 31, 1995(1)
3(i)(g) Articles of Amendment dated May 23, 1996(1)
3(i)(h) Articles of Amendment dated May 5, 1998(2)
3(i)(i) Articles of Amendment dated August 11, 1998(7)
3(iii) By-laws(1)
4(a) Form of Underwriters' Warrant(1)
4(b) Warrant Agreement(1)
4(c) Specimen Common Stock Certificate(1)
4(d) Specimen Common Stock Purchase Warrant (issued pursuant to the
Company's initial public offering on July 30, 1997) (1)
4(e) Securities Purchase Agreement for Series A Preferred(2)
4(f) Registration Rights Agreement for Series A Preferred (2)
4(g) Securities Purchase Agreement for Series A-1 Preferred(7)
4(h) Registration Rights Agreement for Series A-1 Preferred(7)
4(i) Form of Warrant to Purchase Common Stock(7)
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
10(a) Agreement between HotelView Corporation and Pegasus Systems, Inc.
dated January 14, 1997(1)
10(c) Third Amended and Restated Employment Agreement between the
Company and Randy S. Selman
10(d) Third Amended and Restated Employment Agreement between the
Company and Alan Saperstein
10(e) Form of Stock Option Plan(1)
10(f) Amended and Restated Employment Agreement between the Company and
David E. Goodman
10(g) Contract for Purchase and Sale of Real Property(3)
10(h) Asset Purchase Agreement between the Company and Digital Criteria
Technologies, Inc.(4)
II-2
<PAGE>
10(i) Securities Purchase Agreement between the Company and EDnet, Inc.(5)
10(j) Option Agreement between the Company and EDnet, Inc.(5)
16 Letter on change of certifying accountants of the Company(6)
21 Subsidiaries of the Company(1)
23.1 Consent of Atlas, Pearlman, Trop & Borkson, P.A. (included in the opinion
filed as Exhibit 5)
23.2 Consent of Goldstein, Lewin & Co.
23.3 Consent of Arthur Andersen LLP
</TABLE>
- ----------------
(1) Incorporated by reference to the exhibit of the same number filed with
the Company's Registration Statement on Form SB-2, Registration No.
333-18819, as amended and declared effective by the Commission on July
30, 1997
(2) Incorporated by reference to the Company's Current Report on Form 8-K
dated May 8, 1998
(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended September 30, 1997
(4) Incorporated by reference to the Company's Current Report on Form 8-K
dated May 20, 1998
(5) Incorporated by reference to the Company's Current Report on Form 8-K
dated August 11, 1998
(6) Incorporated by reference to the Company's Current Report on Form 8-K
dated October 1, 1997
(7) Incorporated by reference to the Company's Current Report on Form 8-K
dated August 21, 1998
Item 17. Undertakings.
(1) The undersigned Registrant hereby undertakes:
(a) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to include
any additional or changed material information on the plan of distribution;
(b) that, for determining any liability under the Securities
Act, treat each such post-effective amendment as a new Registration Statement of
the securities offered at that time shall be deemed to be the initial bona fide
offering thereof; and
(c) to file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(2) Insofar as indemnification for liabilities arising under the 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 Act and is,
therefore, unenforceable. In the event that a claim for
II-3
<PAGE>
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer of 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 Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pompano Beach and the State of Florida, on the
21st day of August, 1998.
VISUAL DATA CORPORATION
By: /s/ Randy S. Selman
-------------------------------------
Randy S. Selman
Chairman of the Board,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Chief Executive
and Operating Officer
(Principal Executive
/s/ Randy S. Selman Operating Officer) and August 21, 1998
- ----------------------------------------- Chairman of the Board
Randy S. Selman
Executive Vice,
/s/ David E. Goodman President and Chief August 21, 1998
- -----------------------------------------
David E. Goodman Operating Officer
/s/ Ben Swirsky
- ----------------------------------------- Director August 21, 1998
Ben Swirsky
/s/ Brian K. Service Director August 21, 1998
- -----------------------------------------
Brian K. Service
</TABLE>
The foregoing represents a
majority of the Board of Directors
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- -----------
5 Consent of Atlas, Pearlman, Trop & Borkson, P.A.
10(c) Third Amended and Restated Employment Agreement
between the Company and Randy S. Selman
10(d) Third Amended and Restated Employment Agreement
between the Company and Alan Saperstein
10(f) Amended and Restated Employment Agreement between the
Company and David E. Goodman
23.1 Consent of Atlas, Pearlman, Trop & Borkson, P.A. (included in
the opinion filed as Exhibit 5)
23.2 Consent of Goldstein, Lewin & Co.
23.3 Consent of Arthur Andersen LLP
EXHIBIT 5
OPINION OF ATLAS, PEARLMAN, TROP & BORKSON, P.A.
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
954-763-1200
August 21, 1998
Visual Data Corporation
1291 SW 29 Avenue
Pompano Beach, FL 33069
Re: Registration Statement on Form S-3: Visual Data Corporation (the
"Company") 2,648,540 shares of Common Stock
Gentlemen:
This opinion is submitted pursuant to applicable rule of the Securities
and Exchange Commission (the "Commission") with respect to the resale of
2,648,540 shares of Common Stock, par value $.0001 per share (the "Common
Stock") to be sold by the Selling Security Holders designated in the
Registration Statement. The shares of Common Stock to be sold consist of (i) up
to 1,000,000 shares issuable upon the conversion of the Company's Series A
Convertible Preferred Stock, (ii) up to 1,000,000 shares issuable upon the
conversion of the Company's Series A-1 Convertible Preferred Stock, (iii) an
aggregate of 421,665 shares of Common Stock currently owned by certain of the
Selling Security Holders, and (iv) an aggregate of 216,875 shares of Common
Stock issuable upon exercise of outstanding stock options or warrants at prices
ranging from $3.00 to $5.00 per share.
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Articles of Incorporation, as amended, By-Laws, instruments pertaining to the
issuance of the Series A Convertible Preferred Stock, Series A-1 Convertible
Preferred Stock, and the shares of Common Stock, options and warrants held by
the Selling Security Holders, and related exhibits and corporate minutes
provided to us by the Company. In all such examinations, we have assumed the
genuineness of all signatures on original documents, and the conformity to
originals or certified documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain corporate records and
documents of the Company, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company and we
express no opinion thereon.
Based upon and in reliance of the foregoing, we are of the opinion that
the Common Stock, when issued in accordance with the applicable agreement will
be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
EXHIBIT 10(c)
THIRD AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT (this "Agreement") is made and entered into as of the 28th day of
February, 1998 but is effective as of the 9th day of January 1998 (the
"Effective Date"), between Visual Data Corporation, a Florida corporation, whose
principal place of business is 1291 S.W. 29th Avenue, Pompano Beach, Florida
33069 (the "Company") and Randy Selman, an individual whose address is 2332 N.E.
28th Court, Lighthouse Point, FL 33064 (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 President, Chairman and Chief Executive
Officer of the Company and shall have general executive operating supervision
over the property, business and affairs of the Company, its subsidiaries and
divisions, subject to the guidelines and direction of the Board of Directors of
the Company. It is further the intention of the parties that at all times during
the "Term," as hereinafter defined, of the Agreement, the Executive shall serve
as a member of the Board of Directors of the Company, in accordance with the
Bylaws of the Company.
1
<PAGE>
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
Thirty-Seven Thousand, Five Hundred Dollars ($137,500.00) for the first year,
with annual incremental increases of ten (10%) percent per year.
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 two percent (2%) 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 1997. 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.
c. Stock Options. The Executive shall be granted options
("Options") to purchase an aggregate of 375,000 shares of Common Stock at an
exercise price of $2.50 and shall be exercisable for a period of four (4) years
from the date of vesting unless sooner terminated, as described herein. The
Options shall vest in three (3) equal installments of 125,000 options on each
anniversary of the Effective Date of this Agreement, subject to anti-dilution
provisions relating to adjustments in the event that the
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Company, among other things, declares stock dividends, effects forward or
reverse stock splits. In addition, the Options shall automatically vest upon the
happening of the following events: (i) change of control of the Company, as
defined herein; (ii) Constructive Termination, as defined herein, of the
Executive; and (iii) termination of Executive other than for cause, as defined
herein. The Options shall automatically terminate upon the happening of the
following: (i) the Executive's termination for Cause, as defined herein; and
(ii) the Executive's voluntary termination.
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 $600.00 per month. The
Company shall pay all insurance premiums for the automobile that is the subject
of the automobile allowance.
h. Memberships, Dues and Charitable Contributions. The Company
shall provide to the Executive, in the Executive's sole discretion (I) a
membership in a social, charitable or religious organization or club, which
membership shall be either in the name of the Executive or in the name of the
Company, as determined by the Executive; or (ii) an equivalent dollar amount of
charitable donations or contributions shall be made, which amounts and which
charities shall be determined in the sole discretion of the Executive; provided
that such Membership, Dues and Charitable Contributions shall not exceed Five
Thousand Dollars ($5,000) per year.
i. Place of Employment - Moving Allowance. This Agreement is
entered into on the basis that the principal place of business of the Company,
and the location from which Executive is to be based for the performance of his
services hereunder, is Pompano Beach, 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
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than Company's current headquarters office at 1291 S.W. 29th Avenue, Pompano
Beach, Florida 33069, 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 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
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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 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
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entitled to continued Compensation and Benefits coverage and credits as provided
in Section 5 or to reimbursement for the cost of providing the Executive with
comparable benefit coverage during the term in which the Executive is receiving
payments from the Company after termination pursuant to Section 6(d). Such
benefit coverage will be offset by comparable coverage provided to the Executive
in connection with subsequent employment.
(2) In the event that the Executive's employment with the
Company is terminated pursuant to this Section 6(d), Section 6(f), Section 6(g),
Section 7(a) of this Agreement and all references thereto shall be inapplicable
as to the Executive and the Company.
e. Voluntary Termination. In the event the Executive
terminates the Executive's employment on the Executive's own volition (except as
provided in Section 6(f) and/or Section 6(g)) prior to the expiration of the
Term of this Agreement, including any renewals thereof, such termination shall
constitute a voluntary termination and in such event the Executive shall be
limited to the same rights and benefits as provided in connection with a
termination for Cause as provided in Section 6(c).
f. Constructive Termination of Employment. If the Executive so
elects, a termination by the Company without Cause under Section 6(d) shall be
deemed to have occurred upon the occurrence of one or more of the following
events without the express written consent of the Executive:
(1) a significant change in the nature or scope of the
authorities, powers, functions, duties or responsibilities attached to
Executive's position as described in Section 3; or
(2) Change in the Executive's principal office to a location
outside the Palm Beach-Broward County, Florida area; or
(3) any reduction in the Executive's salary or any change in
the method of calculating Executive's Bonus Compensation hereunder; or
(4) a material breach of the Agreement by the Company; or
(5) a material reduction of the Executive's benefits under any
employee benefit plan, program or arrangement (for Executive individually or as
part of a group) of the Company as then in effect or as in effect on the
effective date of the Agreement, 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
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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" of the Company
shall occur at any time during the Term hereof, the Executive shall have the
right to terminate the Executive's employment under this Agreement upon thirty
(30) days written notice given at any time within one year after the occurrence
of such event, and such termination of the Executive's employment with the
Company pursuant to this Section 6(g)(1), and, in any such event, such
termination shall be deemed to be a Termination by the Company Other than for
Cause and the Executive shall be entitled to such Compensation and Benefits as
set forth in Subsection 6(h) of this Agreement.
(2). For purposes of this Agreement, a "Change in Control" of
the Company shall mean a change in control (A) as set forth in Section 280G of
the Internal Revenue Code or (B) of a nature that would be required to be
reported in response to Item 1 of the current report on Form 8K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"); provided that, without limitation, such a change
in control shall be deemed to have occurred at such time as:
(A) any "person", other than the Executive, (as such term is
used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's outstanding securities then
having the right to vote at elections of directors; or,
(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.
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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.
(3) In the event that, within twelve (12) months of any Change
in Control of the Company or any "Attempted Change in Control," as hereinafter
defined 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.
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.
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 equal to the lesser of
(A) the number of full months the Executive has been employed by the Company,
whether pursuant to this Agreement or to any other agreement or arrangement, or
(B) two (2) years, and which benefits shall be made for such period (as
determined herein) 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) If Executive has been employed by the Company, whether
pursuant to this Agreement or to any other agreement or arrangement, for a
period of
(a) three (3) years or more, then an amount equal to
(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; or
(b) less than three (3) years, then an amount equal
to the number of Executive's annual Base Salary, divided by twelve (12), times
the number of months the
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Executive has been employed by the Company, and 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;
(c) provided that all Base Compensation (whether
pursuant to Section 6h,(2)(a) or 6h,(2)(b)) shall be payable to the Executive
bi-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) If Executive has been employed by the Company, whether
pursuant to this Agreement or to any other agreement or arrangement, for a
period of
(a) three (3) years or more, 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; or
(b) less than three (3) years, any accrued Bonus, as
computed to the effective date of such termination, computed on the basis of
actual figures through such effective date of termination and based upon the
formula set forth in Section 5(b) above.
The provisions of this Section 6(h) notwithstanding, the Compensation and
Benefits to be received by the Executive pursuant to this Section 6(h) shall not
exceed the amount set forth in Section 162(m) of the Internal Revenue Code, or
its successor provision.
7. Covenant Not to Compete and Non-Disclosure of Information.
a. Covenant Not to Compete. The Executive acknowledges and
recognizes the highly competitive nature of the Company's business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients (as hereinafter defined) constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Accordingly, in consideration of the execution of this Agreement, in the event
the Executive's employment is terminated by reason of disability pursuant to
Section 6(b) or for Cause pursuant to Section 6(c), then the Executive agrees to
the following:
i. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the
Executive will not, individually or in conjunction with others,
directly or indirectly, engage in any Competitive Business Activities
(as hereinafter defined), whether as an officer, director, proprietor,
employer, partner, independent contractor, investor (other than as a
holder solely as an investment of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant, advisor or
agent.
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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.
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
Pompano Beach, Florida.
g. Competitive Business Activities. The term "Competitive
Business Activities" as used herein shall be deemed to mean the Business.
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h. Covenants as Essential Elements of this Agreement. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7(a) and (b) are essential elements of this Agreement, and
that but for the agreement by the Executive to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Executive shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Executive.
I. Survival After Termination of Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7(a) and (b) shall survive the termination of this Agreement and the Executive's
employment with the Company.
j. Remedies.
i. The Executive acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions of
Section 7(a) or (b) herein would be inadequate and a breach thereof will cause
irreparable harm to the Company. In recognition of this fact, in the event of a
breach by the Executive of any of the provisions of Section 7(a) or (b), the
Executive agrees that, in addition to any remedy at law available to the
Company, including, but not limited to monetary damages, all rights of the
Executive to payment or otherwise under this Agreement and all amounts then or
thereafter due to the Executive from the Company under this Agreement may be
terminated and the Company, without posting any bond, shall be entitled to
obtain, and the Executive agrees not to oppose the Company's request for
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available to the Company.
ii. The Executive acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Section 7(a) or (b) and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief prohibiting
any form of competition with the Company. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
8. Indemnification.
a. The Executive shall continue to be covered by the Articles
of Incorporation and/or the Bylaws of the Company with respect to matters
occurring on or prior to the date of termination of the Executive's employment
with the Company, subject to all the provisions of Florida and Federal law and
the Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles 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
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subject to repayment by the Executive pursuant to the provisions of the
Company's Articles of Incorporation or Bylaws, or pursuant to Florida or Federal
law, such repayment shall be due and payable by the Executive to the Company
within twelve (12) months after the termination of all proceedings, if any,
which relate to such repayment and to the Company's affairs for the period prior
to the date of termination of the Executive's employment with the Company and as
to which Executive has been covered by such applicable provisions.
b. The Company specifically acknowledges and agrees that the
Executive has personally guaranteed certain obligations on behalf of the Company
and further that the Executive is personally liable for certain obligations of
the Company. The Company shall indemnify and hold the Executive harmless from
any and all obligations that the Executive may incur, including, without
limitation, costs and attorneys fees in connection with such guaranties or
personal liabilities. Any costs or expenses that may be incurred by the
Executive in connection with such liabilities or guaranties shall be reimbursed
to the Executive, upon receipt by the Company of documented evidence of such
liabilities, within three (3) business days of the receipt of such documented
evidence.
9. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
10. Notices. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the first paragraph of this Agreement, or at such other place as it may
designate.
11. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
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
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waived, only by a written instrument executed by the parties or, in the case of
a waiver, by the party to be charged.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
14. Binding Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
15. Governing Law. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with the laws of the State of Florida. Anything in this Agreement to
the contrary notwithstanding, the Executive shall conduct the Executive's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Executive is located.
16. Further Assurances. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
17. Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
18. Survival. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
19. Severability. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
20. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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
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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
- -----------------------
By: _____________________________________
Alan Saperstein, Executive Vice President
Witness: The Executive
- ------------------------ -----------------------------------------
RANDY SELMAN
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EXHIBIT 10(d)
THIRD AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT (this "Agreement") is made and entered into as of the 28th day of
February, 1998 but is effective as of the 9th day of January 1998 (the
"Effective Date"), between Visual Data Corporation, a Florida corporation, whose
principal place of business is 1291 S.W. 29th Avenue, Pompano Beach, Florida
33069 (the "Company") and Alan Saperstein, an individual whose address is 21136
Birds Nest Terrace, Boca Raton, Florida 33433 (the "Executive").
RECITALS
A. The Company is a Florida corporation and is principally engaged in
the business of acquisition, marketing, development, distributing, and product
production of video information, including without limitation hotel, resort and
attraction specific, travel related information (the "Business").
B. The Company presently employs the Executive and desires to continue
to employ the Executive and the Executive desires to continue in the employ of
the Company.
C. The Company has established a valuable reputation and goodwill in
the Business.
D. The Executive, by virtue of the Executive's employment with the
Company has become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's business,
including the Company's client base.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.
2. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employment, upon the terms and conditions hereinafter
set forth.
3. Authority and Power During Employment Period.
a. Duties and Responsibilities. During the term of this
Agreement, the Executive shall serve as Executive Vice President and Secretary
of the Company and shall have general executive operating supervision over the
property, business and affairs of the Company, its subsidiaries and divisions,
subject to the guidelines and direction of the Board of Directors of the
Company. It is further the intention of the parties that at all times during the
"Term," as hereinafter defined, of the Agreement, the Executive shall serve as a
member of the Board of Directors of the Company, in accordance with the Bylaws
of the Company.
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b. Time Devoted. Throughout the term of the Agreement, the
Executive shall devote substantially all of the Executive's business time and
attention to the business and affairs of the Company consistent with the
Executive's senior executive position with the Company, except for reasonable
vacations and except for illness or incapacity, but nothing in the Agreement
shall preclude the Executive from engaging in personal business including as a
member of the board of directors of related companies, charitable and community
affairs, provided that such activities do not interfere with the regular
performance of the Executive's duties and responsibilities under this Agreement.
In the event Executive shall, at any time, not be on the Board of Directors of
the Company and serving as a member of the Board of Directors, 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
Thirty-Seven Thousand, Five Hundred Dollars ($137,500.00) for the first year,
with annual incremental increases of ten (10%) percent per year.
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 two percent (2%) 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 1997. 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.
c. Stock Options. The Executive shall be granted options
("Options") to purchase an aggregate of 375,000 shares of Common Stock at an
exercise price of $2.50 and shall be exercisable for a period of four (4) years
from the date of vesting unless sooner terminated, as described herein. The
Options shall vest in three (3) equal installments of 125,000 options on each
anniversary of the Effective Date of this Agreement, subject to anti-dilution
provisions relating to adjustments in the event that the
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Company, among other things, declares stock dividends, effects forward or
reverse stock splits. In addition, the Options shall automatically vest upon the
happening of the following events: (i) change of control of the Company, as
defined herein; (ii) Constructive Termination, as defined herein, of the
Executive; and (iii) termination of Executive other than for cause, as defined
herein. The Options shall automatically terminate upon the happening of the
following: (i) the Executive's termination for Cause, as defined herein; and
(ii) the Executive's voluntary termination.
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 $600.00 per month. The
Company shall pay all insurance premiums for the automobile that is the subject
of the automobile allowance.
h. Memberships, Dues and Charitable Contributions. The Company
shall provide to the Executive, in the Executive's sole discretion (I) a
membership in a social, charitable or religious organization or club, which
membership shall be either in the name of the Executive or in the name of the
Company, as determined by the Executive; or (ii) an equivalent dollar amount of
charitable donations or contributions shall be made, which amounts and which
charities shall be determined in the sole discretion of the Executive; provided
that such Membership, Dues and Charitable Contributions shall not exceed Five
Thousand Dollars ($5,000) per year.
i. Place of Employment - Moving Allowance. This Agreement is
entered into on the basis that the principal place of business of the Company,
and the location from which Executive is to be based for the performance of his
services hereunder, is Pompano Beach, 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
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than Company's current headquarters office at 1291 S.W. 29th Avenue, Pompano
Beach, Florida 33069, 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 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
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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 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
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entitled to continued Compensation and Benefits coverage and credits as provided
in Section 5 or to reimbursement for the cost of providing the Executive with
comparable benefit coverage during the term in which the Executive is receiving
payments from the Company after termination pursuant to Section 6(d). Such
benefit coverage will be offset by comparable coverage provided to the Executive
in connection with subsequent employment.
(2) In the event that the Executive's employment with
the Company is terminated pursuant to this Section 6(d), Section 6(f), Section
6(g), Section 7(a) of this Agreement and all references thereto shall be
inapplicable as to the Executive and the Company.
e. Voluntary Termination. In the event the Executive
terminates the Executive's employment on the Executive's own volition (except as
provided in Section 6(f) and/or Section 6(g)) prior to the expiration of the
Term of this Agreement, including any renewals thereof, such termination shall
constitute a voluntary termination and in such event the Executive shall be
limited to the same rights and benefits as provided in connection with a
termination for Cause as provided in Section 6(c).
f. Constructive Termination of Employment. If the Executive so
elects, a termination by the Company without Cause under Section 6(d) shall be
deemed to have occurred upon the occurrence of one or more of the following
events without the express written consent of the Executive:
(1). a significant change in the nature or scope of
the authorities, powers, functions, duties or responsibilities attached to
Executive's position as described in Section 3; or
(2) Change in the Executive's principal office to a
location outside the Palm Beach-Broward County, Florida area; or
(3) any reduction in the Executive's salary or any
change in the method of calculating Executive's Bonus Compensation hereunder; or
(4) a material breach of the Agreement by the
Company; or
(5) a material reduction of the Executive's benefits
under any employee benefit plan, program or arrangement (for Executive
individually or as part of a group) of the Company as then in effect or as in
effect on the effective date of the Agreement, 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
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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" of the
Company shall occur at any time during the Term hereof, the Executive shall have
the right to terminate the Executive's employment under this Agreement upon
thirty (30) days written notice given at any time within one year after the
occurrence of such event, and such termination of the Executive's employment
with the Company pursuant to this Section 6(g)(1), and, in any such event, such
termination shall be deemed to be a Termination by the Company Other than for
Cause and the Executive shall be entitled to such Compensation and Benefits as
set forth in Subsection 6(h) of this Agreement.
(2) For purposes of this Agreement, a "Change in
Control" of the Company shall mean a change in control (A) as set forth in
Section 280G of the Internal Revenue Code or (B) of a nature that would be
required to be reported in response to Item 1 of the current report on Form 8K,
as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have occurred at such
time as:
(A) any "person", other than the Executive,
(as such term is used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's outstanding
securities then having the right to vote at elections of directors; or,
(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.
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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.
(3) In the event that, within twelve (12) months of
any Change in Control of the Company or any "Attempted Change in Control," as
hereinafter defined, 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.
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.
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 equal to the
lesser of (A) the number of full months the Executive has been employed by the
Company, whether pursuant to this Agreement or to any other agreement or
arrangement, or (B) two (2) years, and which benefits shall be made for such
period (as determined herein) 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) If Executive has been employed by the Company,
whether pursuant to this Agreement or to any other agreement or arrangement, for
a period of
(a) three (3) years or more, then an amount equal to
(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; or
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(b) less than three (3) years, then an amount equal
to the number of Executive's annual Base Salary, divided by twelve (12), times
the number of months the Executive has been employed by the Company, and 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; provided that all Base Compensation (whether
pursuant to Section 6h,(2)(a) or 6h,(2)(b)) shall be payable to the Executive
bi-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) If Executive has been employed by the Company, whether
pursuant to this Agreement or to any other agreement or arrangement, for a
period of
(a) three (3) years or more, 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; or
(b) less than three (3) years, any accrued Bonus, as
computed to the effective date of such termination, computed on the basis of
actual figures through such effective date of termination and based upon the
formula set forth in Section 5(b) above.
The provisions of this Section 6(h) notwithstanding, the Compensation and
Benefits to be received by the Executive pursuant to this Section 6(h) shall not
exceed the amount set forth in Section 162(m) of the Internal Revenue Code, or
its successor provision.
7. Covenant Not to Compete and Non-Disclosure of Information.
a. Covenant Not to Compete. The Executive acknowledges and
recognizes the highly competitive nature of the Company's business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients (as hereinafter defined) constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Accordingly, in consideration of the execution of this Agreement, in the event
the Executive's employment is terminated by reason of disability pursuant to
Section 6(b) or for Cause pursuant to Section 6(c), then the Executive agrees to
the following:
i. That during the Restricted Period (as hereinafter defined)
and within the Restricted Area (as hereinafter defined), the Executive will not,
individually or in conjunction with others, directly or indirectly, engage in
any Competitive Business Activities (as hereinafter defined), whether as an
officer, director, proprietor, employer, partner, independent contractor,
investor (other than as a holder solely as an investment of less than 1% of the
outstanding capital stock of a publicly traded corporation), consultant, advisor
or agent.
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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.
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
Pompano Beach, Florida.
g. Competitive Business Activities. The term "Competitive
Business Activities" as used herein shall be deemed to mean the Business.
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h. Covenants as Essential Elements of this Agreement. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7(a) and (b) are essential elements of this Agreement, and
that but for the agreement by the Executive to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Executive shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Executive.
I. Survival After Termination of Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7(a) and (b) shall survive the termination of this Agreement and the Executive's
employment with the Company.
j. Remedies.
i. The Executive acknowledges and agrees that the
Company's remedy at law for a breach or threatened breach of any of the
provisions of Section 7(a) or (b) herein would be inadequate and a breach
thereof will cause irreparable harm to the Company. In recognition of this fact,
in the event of a breach by the Executive of any of the provisions of Section
7(a) or (b), the Executive agrees that, in addition to any remedy at law
available to the Company, including, but not limited to monetary damages, all
rights of the Executive to payment or otherwise under this Agreement and all
amounts then or thereafter due to the Executive from the Company under this
Agreement may be terminated and the Company, without posting any bond, shall be
entitled to obtain, and the Executive agrees not to oppose the Company's request
for equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available to the Company.
ii. The Executive acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Section 7(a) or (b) and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief prohibiting
any form of competition with the Company. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
8. Indemnification.
a. The Executive shall continue to be covered by the Articles
of Incorporation and/or the Bylaws of the Company with respect to matters
occurring on or prior to the date of termination of the Executive's employment
with the Company, subject to all the provisions of Florida and Federal law and
the Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles 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
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subject to repayment by the Executive pursuant to the provisions of the
Company's Articles of Incorporation or Bylaws, or pursuant to Florida or Federal
law, such repayment shall be due and payable by the Executive to the Company
within twelve (12) months after the termination of all proceedings, if any,
which relate to such repayment and to the Company's affairs for the period prior
to the date of termination of the Executive's employment with the Company and as
to which Executive has been covered by such applicable provisions.
b. The Company specifically acknowledges and agrees that the Executive
has personally guaranteed certain obligations on behalf of the Company and
further that the Executive is personally liable for certain obligations of the
Company. The Company shall indemnify and hold the Executive harmless from any
and all obligations that the Executive may incur, including, without limitation,
costs and attorneys fees in connection with such guaranties or personal
liabilities. Any costs or expenses that may be incurred by the Executive in
connection with such liabilities or guaranties shall be reimbursed to the
Executive, upon receipt by the Company of documented evidence of such
liabilities, within three (3) business days of the receipt of such documented
evidence.
9. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
10. Notices. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the first paragraph of this Agreement, or at such other place as it may
designate.
11. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
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
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waived, only by a written instrument executed by the parties or, in the case of
a waiver, by the party to be charged.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
14. Binding Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
15. Governing Law. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with the laws of the State of Florida. Anything in this Agreement to
the contrary notwithstanding, the Executive shall conduct the Executive's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Executive is located.
16. Further Assurances. All parties hereto shall execute and deliver
such other instruments and do such other acts as may be necessary to carry out
the intent and purposes of this Agreement.
17. Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
18. Survival. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
19. Severability. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
20. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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
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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
- -----------------------
By: ______________________________
Randy S. Selman, President
Witness: The Executive
- ------------------------ ----------------------------------
ALAN SAPERSTEIN
14
EXHIBIT 10(f)
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
(this "Agreement") is made and entered into as of the 28th day of February, 1998
but is effective as of the 9th day of January, 1998 (the "Effective Date"),
between Visual Data Corporation, a Florida corporation, whose principal place of
business is 1291 S.W. 29th Avenue, Pompano Beach, Florida 33069 (the "Company")
and David Goodman, an individual whose address is_______________________________
_________________ (the "Executive").
RECITALS
A. The Company is a Florida corporation and is principally engaged in
the business of acquisition, marketing, development, distributing, and product
production of video information including, without limitation, hotel, resort and
attraction specific, travel related information (the "Business").
B. The Company presently employs the Executive and desires to continue
to employ the Executive and the Executive desires to continue in the employ of
the Company.
C. The Company has established a valuable reputation and goodwill in
the Business.
D. The Executive, by virtue of the Executive's employment with the
Company has become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's business,
including the Company's client base.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.
2. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employment, upon the terms and conditions hereinafter
set forth.
3. Authority and Power During Employment Period.
a. Duties and Responsibilities. During the term of this
Agreement, the Executive shall serve as Chief Operating Officer 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.
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
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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.
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
Thirty-Seven Thousand, Five Hundred Dollars ($137,500.00) for the first year,
with annual incremental increases of ten (10%) percent per year.
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 two percent (2%) 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 1997. 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.
c. Stock Options. The Executive shall be granted options
("Options") to purchase an aggregate of 400,000 shares of Common Stock at an
exercise price of $2.50 and shall be exercisable for a period of four (4) years
from the date of vesting unless sooner terminated, as described herein. The
Options shall vest in three (3) installments upon the happening of the following
events: 150,000 Options shall vest upon the first anniversary of the Effective
Date of this Agreement; 125,000 Options shall vest upon the second anniversary
of the Effective Date of this Agreement; and the remaining 125,000 Options shall
vest upon the third anniversary of the Effective Date of this Agreement, 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. In addition, the Options shall automatically vest upon the
happening of the following events: (i) change of control of the Company, as
defined herein; (ii) Constructive Termination, as defined herein, of the
Executive; and (iii) termination of Executive other than for cause, as defined
herein. The Options shall automatically terminate upon the happening of the
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following: (i) the Executive's termination for Cause, as defined herein; and
(ii) the Executive's voluntary termination.
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 $600.00 per month. The
Company shall pay all insurance premiums for the automobile that is the subject
of the automobile allowance.
h. Memberships, Dues and Charitable Contributions. The Company
shall provide to the Executive, in the Executive's sole discretion (I) a
membership in a social, charitable or religious organization or club, which
membership shall be either in the name of the Executive or in the name of the
Company, as determined by the Executive; or (ii) an equivalent dollar amount of
charitable donations or contributions shall be made, which amounts and which
charities shall be determined in the sole discretion of the Executive; provided
that such Membership, Dues and Charitable Contributions shall not exceed Five
Thousand Dollars ($5,000) per year.
i. Place of Employment - Moving Allowance. This Agreement is
entered into on the basis that the principal place of business of the Company,
and the location from which Executive is to be based for the performance of his
services hereunder, is Pompano Beach, 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 1291 S.W. 29th Avenue, Pompano Beach,
Florida 33069, Company shall reimburse Executive for all moving and relocation
expenses paid or incurred in connection with Executive's relocation to a new
residence closer to Company's new principal office.
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6. Consequences of Termination of Employment.
a. Death. In the event of the death of the Executive during
the Term, salary shall be paid to the Executive's designated beneficiary, or, in
the absence of such designation, to the estate or other legal representative of
the Executive for a period of one (1) year from and after the date of death. The
Company shall also be obligated to pay to the Executive's estate or heirs, as
the case may be, such amount of Bonus based upon (I) the formula set forth in
Section 5(b) of this Agreement, and (ii) the greater of (a) the Bonus earned or
accrued for such fiscal year annualized for a 12-month period, or (b) the Bonus
for the prior year multiplied times two. Other death benefits will be determined
in accordance with the terms of the Company's benefit programs and plans.
b. Disability.
(1) In the event of the Executive's disability, as
hereinafter defined, the Executive shall be entitled to compensation in
accordance with the Company's disability compensation practice for
senior executives, including any separate arrangement or policy
covering the Executive, but in all events the Executive shall continue
to receive the Executive's salary for a period, at the annual rate in
effect immediately prior to the commencement of disability, of not less
than 180 days from the date on which the disability has been deemed to
occur as hereinafter provided below. Any amounts provided for in this
Section 6(b) shall not be offset by other long-term disability benefits
provided to the Executive by the Company.
(2) "Disability," for the purposes of this Agreement,
shall be deemed to have occurred in the event (A) the Executive is
unable by reason of sickness or accident, to perform the Executive's
duties under this Agreement for an aggregate of 180 days in any
twelve-month period or (B) the Executive has a guardian of the person
or estate appointed by a court of competent jurisdiction. Termination
due to disability shall be deemed to have occurred upon the first day
of the month following the determination of disability as defined in
the preceding sentence.
Anything herein to the contrary notwithstanding, if,
following a termination of employment hereunder due to disability as
provided in the preceding paragraph, the Executive becomes reemployed,
whether as an Executive or a consultant to the Company, any salary,
annual incentive payments or other benefits earned by the Executive
from such reemployment shall offset any salary continuation due to the
Executive hereunder commencing with the date of re-employment.
c. Termination by the Company for Cause.
(1) Nothing herein shall prevent the Company from
terminating Employment for "Cause," as hereinafter defined. The
Executive shall continue to receive salary only for the period ending
twenty (20) days after the date of such termination plus any accrued
Bonus through such date of termination. Any rights and benefits the
Executive may have in respect of any other compensation shall be
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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 (F) 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; (E) failure to
perform any of Executive's duties or obligations contemplated by this
Agreement, or in a manner that is in contravention of the direction or
policies promulgated by the Company's Board of Directors; provided that
such direction or policies is in the best interest of the Company and
its shareholders, or (F) any assignment of this Agreement by the
Executive in violation of Section 14 of this Agreement. No actions,
events or circumstances occurring or taking place at any time prior to
the date of this Agreement shall in any event constitute or provide any
basis for any termination of this Agreement for Cause;
(3) Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the
Executive a notice of termination stating that the Executive committed
one of the types of conduct set forth in this Section 6(c) contained in
this Agreement and specifying the particulars thereof and the Executive
shall be given a thirty (30) day period to cure such conduct, if
possible.
d. Termination by the Company Other than for Cause.
(1) The foregoing notwithstanding, the Company may
terminate the Executive's employment for whatever reason it deems
appropriate; provided, however, that in the event such termination is
not based on Cause, as provided in Section 6(c) above, the Company may
terminate this Agreement upon giving three (3) months' prior written
notice. During such three (3) month period, the Executive shall
continue to perform the Executive's duties pursuant to this Agreement,
and the Company shall continue to compensate the Executive in
accordance with this Agreement. The Executive will receive, at the
Executive's option, either (A) a lump sum equal to the "Compensation
and Benefits," as hereinafter defined, for the remaining balance of the
Term of this Agreement, at the then current rate, reduced to present
value, as set forth in Section 280G of the Internal Revenue Code or (B)
for the remaining balance of the Term of this Agreement from and after
the date of any such termination, the Company shall on the last day of
each calendar month pay to the Executive such "Compensation and
Benefits," which shall be an amount equal to (Y) One Hundred percent
(100%) of the Executive's compensation and benefits set forth in
Section 5, which shall specifically include the Base Salary and
Executive Benefits (the "Compensation and Benefits"), on the date of
any such termination, divided by (Z) twelve (12); provided, however,
that if (A) there is a
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decrease in the Executive's Compensation and Benefits of more than five
(5%) percent prior to termination for any reason other than for
"Cause", and (B) the Executive is terminated without cause, the
Compensation and Benefits shall be as existed immediately prior to such
a decrease. The Executive will be entitled to continued Compensation
and Benefits coverage and credits as provided in Section 5 or to
reimbursement for the cost of providing the Executive with comparable
benefit coverage during the term in which the Executive is receiving
payments from the Company after termination pursuant to Section 6(d).
Such benefit coverage will be offset by comparable coverage provided to
the Executive in connection with subsequent employment.
(2) In the event that the Executive's employment with
the Company is terminated pursuant to this Section 6(d), Section 6(f),
Section 6(g), Section 7(a) of this Agreement and all references thereto
shall be inapplicable as to the Executive and the Company.
e. Voluntary Termination. In the event the Executive
terminates the Executive's employment on the Executive's own volition (except as
provided in Section 6(f) and/or Section 6(g)) prior to the expiration of the
Term of this Agreement, including any renewals thereof, such termination shall
constitute a voluntary termination and in such event the Executive shall be
limited to the same rights and benefits as provided in connection with a
termination for Cause as provided in Section 6(c).
f. Constructive Termination of Employment. If the Executive so
elects, a termination by the Company without Cause under Section 6(d) shall be
deemed to have occurred upon the occurrence of one or more of the following
events without the express written consent of the Executive:
(1). a significant change in the nature or scope of
the authorities, powers, functions, duties or responsibilities attached
to Executive's position as described in Section 3; or
(2) Change in the Executive's principal office to a
location outside the Palm Beach-Broward County, Florida area; or
(3) any reduction in the Executive's salary or any
change in the method of calculating Executive's Bonus Compensation
hereunder; or
(4) a material breach of the Agreement by the
Company; or
(5) a material reduction of the Executive's benefits
under any employee benefit plan, program or arrangement (for Executive
individually or as part of a group) of the Company as then in effect or
as in effect on the effective date of the Agreement, 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.
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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" of the
Company shall occur at any time during the Term hereof, the Executive
shall have the right to terminate the Executive's employment under this
Agreement upon thirty (30) days written notice given at any time within
one year after the occurrence of such event, and such termination of
the Executive's employment with the Company pursuant to this Section
6(g)(1), and, in any such event, such termination shall be deemed to be
a Termination by the Company Other than for Cause and the Executive
shall be entitled to such Compensation and Benefits as set forth in
Subsection 6(h) of this Agreement.
(2) For purposes of this Agreement, a "Change in
Control" of the Company shall mean a change in control (A) as set forth
in Section 280G of the Internal Revenue Code or (B) of a nature that
would be required to be reported in response to Item 1 of the current
report on Form 8K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred at such time as:
(A) any "person", other than the Executive,
(as such term is used in Section 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing fifty percent (50%)
or more of the combined voting power of the Company's
outstanding securities then having the right to vote at
elections of Directors; or,
(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)
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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.
(3) In the event that, within twelve (12) months of
any Change in Control of the Company or any "Attempted Change in
Control," as hereinafter defined, 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.
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.
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 equal to the lesser of (A) the number of full months the
Executive has been employed by the Company, whether pursuant to this
Agreement or to any other agreement or arrangement, or (B) two (2)
years, and which benefits shall be made for such period (as determined
herein) 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
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(2) If Executive has been employed by the Company,
whether pursuant to this Agreement or to any other agreement or
arrangement, for a period of
(a) three (3) years or more, then an amount
equal to (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; or
(b) less than three (3) years, then an
amount equal to the number of Executive's annual Base Salary, divided
by twelve (12), times the number of months the Executive has been
employed by the Company, and 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;
provided that all Base Compensation (whether pursuant to Section
6h,(2)(a) or 6h,(2)(b)) shall be payable to the Executive bi-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) If Executive has been employed by the Company,
whether pursuant to this Agreement or to any other agreement or
arrangement, for a period of
(a) three (3) years or more, 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; or
(b) less than three (3) years, any accrued
Bonus, 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
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acquired through considerable time, money and effort. Accordingly, in
consideration of the execution of this Agreement, in the event the Executive's
employment is terminated by reason of disability pursuant to Section 6(b) or for
Cause pursuant to Section 6(c), then the Executive agrees to the following:
i. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the
Executive will not, individually or in conjunction with others,
directly or indirectly, engage in any Competitive Business Activities
(as hereinafter defined), whether as an officer, director, proprietor,
employer, partner, independent contractor, investor (other than as a
holder solely as an investment of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant, advisor or
agent.
ii. That during the Restricted Period and within the
Restricted Area, the Executive will not, directly or indirectly,
compete with the Company by soliciting, inducing or influencing any of
the Company's Clients which have a business relationship 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.
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d. Company's Clients. The "Company's Clients" shall be deemed
to be any partnerships, corporations, professional associations or other
business organizations for whom the Company has performed Business Activities.
e. Restrictive Period. The "Restrictive Period" shall be
deemed to be twelve (12) months following termination of this Agreement pursuant
to Sections 6(b) or 6(c) of this Agreement.
f. Restricted Area. The "Restricted Area" shall, if this
Agreement has been terminated pursuant to Section 6(b) or 6(c), be the area
commonly included as part of the "Standard Metropolitan Statistical Area" of
Pompano Beach, 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
11
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or threatened breach of Section 7(a) or (b) and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief
prohibiting any form of competition with the Company. Nothing herein
contained shall be construed as prohibiting the Company from pursuing
any other remedies available to it for such breach or threatened
breach.
8. Indemnification.
a. The Executive shall continue to be covered by the Articles
of Incorporation and/or the Bylaws of the Company with respect to matters
occurring on or prior to the date of termination of the Executive's employment
with the Company, subject to all the provisions of Florida and Federal law and
the Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles 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
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as shown on the records of the Company, or in the case of the Company to its
principal office as set forth in the first paragraph of this Agreement, or at
such other place as it may designate.
11. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
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 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.
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18. Survival. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
19. Severability. The invalidity or unenforceability, in whole or in
part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
20. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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
- -----------------------
By: ______________________________
Randy S. Selman, President
Witness: The Executive
- ------------------------ ----------------------------------
DAVID GOODMAN
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EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Visual Data Corporation
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Visual Data Corporation (the "Company"), of our report
dated December 4, 1996, relating to the financial statements of the Company,
appearing in the Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1996.
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
August 21, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
December 10, 1997 included in the Company's Form 10-KSB for the year ended
September 30, 1997 and to all references to our firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Miami, Florida,
August 20, 1998.
