SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[x] Definitive Proxy Statement Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VISUAL DATA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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VISUAL DATA CORPORATION
1291 Southwest 29th Avenue
Pompano Beach, Florida 33069
Telephone 954-917-6655 Facsimile 954-917-6660
July 29, 1998
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the
Stockholders of Visual Data Corporation to be held on Friday, September 4, 1998
at 9:00 a.m. at the Company's offices at 1291 Southwest 29th Avenue, Pompano
Beach, Florida 33069.
We hope you will attend the meeting in person. Whether you expect to be
present and regardless of the number of shares you own, please mark, sign and
mail the enclosed proxy in the envelope provided. Matters on which action will
be taken at the meeting are explained in detail in the notice and proxy
statement following this letter.
Sincerely,
/s/ Randy S. Selman
Randy S. Selman
President and Chief Executive Officer
<PAGE>
PROXY STATEMENT
VISUAL DATA CORPORATION
1291 SOUTHWEST 29TH AVENUE
POMPANO BEACH, FLORIDA 33069
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 4, 1998
Notice is hereby given that a Special Meeting of the Stockholders of
Visual Data Corporation (the "Company") will be held at the Company's offices,
1291 Southwest 29th Avenue, Pompano Beach, Florida 33069, at 9:00 a.m. on
Friday, September 4, 1998 for the following purposes:
1. To approve 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 Convertible
Preferred Stock ("Series A Convertible Preferred Stock"), and
to approve such other matters as may come before the meeting
which are incident to the meeting.
Holders of shares of the Company's Common Stock of record at the close
of business on July 6, 1998 will be entitled to notice of and to vote at the
meeting.
Stockholders unable to attend the Special Meeting in person are
required to read the enclosed Proxy Statement and then complete and deposit the
Proxy together with the power of attorney or other authority, if any, under
which it was signed, or a notarized certified copy thereof, with the Company
prior to the commencement thereof. Stockholders who received the Proxy through
an intermediary must delivery the Proxy in accordance with the instructions
given by such intermediary.
By Order of the Board of Directors
/s/ Randy S. Selman
Randy S. Selman, President and Chief
Executive Officer
July 29, 1998
THE PROXY WHICH ACCOMPANIES THIS NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
CONTAINS MATERIAL INFORMATION CONCERNING THE MATTERS TO BE CONSIDERED AT THE
MEETING, AND SHOULD BE READ IN CONJUNCTION WITH THIS NOTICE.
<PAGE>
PROXY STATEMENT
VISUAL DATA CORPORATION
1291 SOUTHWEST 29TH AVENUE
POMPANO BEACH, FLORIDA 33069
(PRINCIPAL EXECUTIVE OFFICE)
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PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
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INTRODUCTION
This Proxy Statement is being furnished to stockholders in connection
with the solicitation of proxies by the Board of Directors of Visual Data
Corporation (the "Company") for use at a Special Meeting of Stockholders of the
Company (the "Meeting") to be held at the Company's offices, 1291 Southwest 29th
Avenue, Pompano Beach, Florida 33069, at 9:00 a.m. on Friday, September 4, 1998,
and at any adjournments thereof, for the purpose of considering and voting upon
the matters set forth in the accompanying Notice of Special Meeting of
Stockholders. This Proxy Statement and the accompanying form of proxy are first
being mailed to stockholders on or about August 3, 1998.
The close of business on July 6, 1998, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and any adjournment thereof. As of the record date, there were
3,300,435 shares of the Company's common stock, par value $.0001 per share
("Common Stock"), issued and outstanding and entitled to vote at the Meeting.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock, entitled to vote on the record date is
necessary to constitute a quorum at the Meeting. Abstentions and broker
non-votes will be counted towards a quorum. If a quorum is not present or
represented at the Meeting, the stockholders present at the Meeting or
represented by proxy have the power to adjourn the Meeting from time to time,
without notice other than an announcement at the Meeting, until a quorum is
present or represented. At any such adjournment Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Meeting.
The affirmative vote of a majority of the shares of Common Stock,
present in person or by proxy at the Meeting are required for approval of
Proposal 1. Abstentions will have the same effect as a vote against a proposal
and broker non-votes will be disregarded.
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All shares represented by properly executed proxies, unless such
proxies previously have been revoked, will be voted at the Meeting in accordance
with the directions on the proxies. IF NO DIRECTION IS INDICATED, THE SHARES
WILL BE VOTED TO APPROVE THE POSSIBLE ISSUANCE OF IN EXCESS OF 19.99% OF THE
PRESENTLY ISSUED AND OUTSTANDING COMMON STOCK UPON THE CONVERSION OF THE SERIES
A CONVERTIBLE PREFERRED STOCK, AND SUCH OTHER MATTERS WHICH ARE INCIDENT TO THE
CONDUCT OF THE MEETING. The enclosed proxy, even though executed and returned,
may be revoked at any time prior to the voting of the proxy by one of the
following methods: (a) execution and submission of a revised proxy, (b) written
notice to the Secretary of the Company, or (c) voting in person at the Meeting.
Proposal 1
TO APPROVE THE POSSIBLE ISSUANCE OF IN EXCESS OF 19.99% OF THE
PRESENTLY ISSUED AND OUTSTANDING COMMON STOCK UPON THE
CONVERSION OF THE SERIES A CONVERTIBLE PREFERRED STOCK
The Series A Convertible Preferred Stock
On May 8, 1998 (the "Initial Closing Date") the Company sold an
aggregate 150 shares of its Series A Convertible Preferred Stock ("Series A
Convertible Preferred Stock"), at a purchase price of $5,000 per share
("Purchase Price"), to Themis Partners, L.P., a Delaware limited partnership
("Themis") and Heracles Fund ("Heracles"), a corporation domiciled in the Cayman
Islands, each an unaffiliated third party in a private transaction exempt from
registration under the Securities Act of 1933, as amended (the "Act") pursuant
to Section 4(2) of the Act. The designations, rights and preferences of the
Preferred Stock are described below.
The Preferred Stock is convertible into the Company's Common Stock at a
price equal to the lesser of (i) $4.40, subject to adjustment, provided,
however, that in the event that the Company elects to file a registration
statement on Form S-3, such amount shall be the lesser of $4.40 or one hundred
ten percent (110%) of the closing bid price of the Company's Common Stock on
August 1, 1998 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 ninety percent (90%)
for the first one hundred eighty (180) days from the closing date and
eighty-five percent (85%) 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 twenty (20) consecutive trading days
immediately proceeding such date.
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 Convertible Preferred Stock 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 underlining the
Series A Convertible Preferred Stock in accordance with applicable law, (ii) the
Company's registration statement
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relating to the Common Stock issuable upon conversion of the Series A
Convertible Preferred Stock has been declared effective, (iii) there has been no
change in the listing or threat of delisting thereof of the Company's Common
Stock from the Nasdaq Stock Market, (iv) the closing bid price of the Company's
Common Stock is greater than $2.50 per share on the day immediately proceeding
the notification of such closing, and (v) there has not been a material adverse
change in the business or financial condition or results of operations of the
Company.
Under the terms of the securities purchase agreement for the Series A
Convertible Preferred Stock, the Company is obligated to prepare and file a
registration statement providing for the resale of the shares of Common Stock
issuable upon conversion of the Series A Convertible Preferred Stock within
sixty (60) days after May 15, 1998 if the Company intends to file the
registration statement Form SB-2 or August 15, 1998 if the Company intends to
file the registration statement Form S-3. The Company has elected to file a
registration statement on Form S-3. The Company shall use its best efforts to
have such registration declared effective by September 30, 1998 (provided that
if the Securities and Exchange Commission reviews the registration statement on
Form S-3 and in connection with such review requests the audited financial
statements of the Company for the 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 two percent and would be further reduced by an additional .06 percent
for each calendar day thereafter until such registration statement has been
declared effective.
Assuming the approval of this Proposal 1, and the sale of all 300
shares of Series A Convertible Preferred Stock, the gross proceeds to the
Company from the sale of such stock would be $1,500,000. The Company received
gross proceeds of $750,000 from the sale of the first 150 shares of Series A
Convertible Preferred Stock. After payment of the fees and expenses totaling
approximately $57,500, or approximately 7.7% of the gross proceeds, the Company
received net proceeds of approximately $692,500. The Company used these proceeds
for general working capital, including, but not limited to, equipment purchases.
Should the Company obtain stockholder approval for this Proposal 1, the gross
proceeds to the Company will be $1,500,000. After payment of fees and expenses
of $102,500, the net proceeds to the Company will be $1,397,500. Such net
proceeds will be used by the Company for general working capital.
Rule 4460(i)(1)(D) of The Nasdaq Stock Market, Inc. Nasdaq Marketplace
Rules requires certain companies whose securities are traded on the Nasdaq
SmallCap Market (such as the Company) to obtain stockholder approval prior to
issuing common stock (or shares convertible into common stock) in a transaction
other than a public offering at a price less than the market value of the common
stock when the amount of common stock to be issued (or issuable upon conversion)
is or will be greater than 20% of the common stock or voting power of the
company outstanding prior to issuance. The initial purchase of 150 shares of
Series A Convertible Preferred Stock did not require stockholder approval
pursuant to Rule 4460(i)(1)(D) as the Company is not contractually obligated to
issue any shares of its Common Stock upon conversion of the Series A Convertible
Preferred Stock which would breach the Company's obligation under the rules or
regulations of the Nasdaq Stock Market, being a maximum of 19.99% of the then
currently issued and outstanding
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Common Stock. The Company, however, must obtain stockholder approval of this
Proposal 1 prior to the sale of the remaining 150 shares of Series A Convertible
Preferred Stock. If the Company fails to hold a meeting of its Stockholders by
September 5, 1998, then, as partial relief, the Company shall pay to each holder
of the Series A Convertible Preferred Stock an amount in cash per preferred
share equal to the product of (i) $5,000 multiplied by (ii) .025 multiplied by
(iii) the quotient of (x) the number of days after the stockholder meeting
deadline that a meeting of the Company's Stockholder is not held, divided by (y)
30.
Assuming approval of this Proposal 1, the ultimate number of shares of
Common Stock into which the 300 shares of Series A Convertible Preferred Stock
are convertible is unknown at this time. However, based upon (i) a closing bid
price of $3.00 per share (the closing bid price of the Company's Common Stock on
being the average of the three (3) lowest closing bid prices of the Company's
Common Stock as reported on The Nasdaq Small Cap Market during the 20
consecutive trading days preceding July 27, 1998 (ii) a conversion on September
4, 1998 and (iii) assuming the conversion of all 300 shares of Series A
Convertible Preferred Stock at the applicable Conversion Percentage, the Company
would issue an additional 560,351 shares of Common Stock. Such 560,351 shares of
Common Stock would represent approximately 16.98% of the currently issued and
outstanding Common Stock, or approximately 14.52% 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 Convertible Preferred Stock 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
Convertible Preferred Stock.
Series A Convertible Preferred Stock
The following is a summary description of the preferences, rights and
limitations of the Series A Convertible Preferred Stock as set forth in the
Articles of Amendment to the Articles of Incorporation of the Company as filed
with the Secretary of State of Florida on May 5, 1998 and attached hereto as
Appendix A.
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Voting Rights
The shares of Series A Convertible Preferred Stock carry no voting
rights except as required by law. The affirmative vote of holders of not less
than 2/3 of then outstanding Series A Convertible Preferred Stock shall be
required for (a) any change to the Articles of Amendment or the Company's
Certificate of Incorporation which would also amend, alter, change or repeal any
of the powers, designations, preferences and rights of the Series A Convertible
Preferred Stock or (b) the Company to issue any shares of Preferred Stock other
than pursuant to the Securities Purchase Agreement under which the Series A
Convertible Preferred Stock was issued. A vote of holders of not less than 2/3
of the then outstanding Series A Convertible Preferred Stock shall also be
required to authorize or issue any additional or the capital stock that is of
senior or equal rank to Series A Convertible Preferred Stock 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 Convertible
Preferred Stock 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 Convertible
Preferred Stock shall maintain their relative powers, designations and
preferences provided and no merger shall result inconsistent therewith.
Dividends
The holders of the Series A Convertible Preferred Stock are not
entitled to any dividends. Until all the Series A Convertible Preferred Stock
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 2/3 of the then outstanding Series A Convertible Preferred Stock.
Liquidation Preference
The Series a Convertible Preferred Stock 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 Convertible Preferred Stock 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
Convertible Preferred Stock 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) (N/3655) x ($5,000), where N shall be the number of days
outstanding.
At any time, the Company may elect to redeem the Series A Convertible
Preferred Stock
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submitted for conversion in lieu of converting such Series A Convertible
Preferred Stock 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 Convertible Preferred Stock equal to the product of
90% if the conversion is within 180 days after the issue date of such stock or
85% 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 Convertible Preferred Stock shall have the
right, at such holders' option, to require the Company to redeem all or a
portion of such holders Preferred Stock 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 Convertible Preferred Stock shall have the right, at such
holders' option, to require the Company to redeem all or a portion of such
holders' Preferred Stock 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
proceeding 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 the registration
statement relating to Series A Convertible Preferred Stock to be declared
effective by the SEC on or prior to the date which was 45 days after September
30, 1998 (on 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 (5) days; (iv) the Company's stockholders' failure
to approve Proposal 1 on or before October 5, 1998 or (v) 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.
Optional Conversion
The Preferred Stock is convertible into the Company's Common Stock at a
price equal to the lesser of (i) $4.40, subject to adjustment, provided,
however, that in the event that the Company elects to file a registration
statement on Form S-3, such amount shall be the lesser of $4.40 or one hundred
ten percent (110%) of the closing bid price of the Company's Common Stock on
August 1, 1998 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 ninety percent (90%)
for the first one hundred eighty (180) days from the
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closing date and eighty-five percent (85%) for any day thereafter.
Brian Service, Benjamin Swirsky, Randy Selman, Eric Jacobs, David
Goodman, and Alan Saperstein, the Company's Directors and Principal Executive
Officers, have executed irrevocable proxies to vote for Proposal 1. Messrs.
Service, Swirsky, Selman, Jacobs, Goodman and Saperstein own an aggregate of
288,814 shares of Common Stock eligible to vote for such transaction.
THE BOARD OF DIRECTORS HAS APPROVED THE OFFERING AND
RECOMMENDS A VOTE FOR THE APPROVAL OF THE OFFERING. SUCH APPROVAL
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AT THE MEETING.
STOCK OWNERSHIP
As of July 6, 1998 there were 3,300,435 shares of Common Stock issued
and outstanding. The 150 Series A Convertible Preferred Stock which are issued
and outstanding are the subject of this Proxy do not have voting rights. The
following table sets forth, as of July 6, 1998, certain information with respect
to the beneficial ownership of the Company's Common Stock class of the Company's
voting securities by (i) each person known to the Company who beneficially owns
more than 5% of each class of the Company's voting securities (ii) each
director; (iii) all named executive officers, (iv) all directors and officers as
a group:
Name and Amount of Percentage
Address of Beneficial of
of Beneficial Owner Ownership of Stock Class
- ------------------- ------------------ -----
Randy S. Selman(1) 493,640 13.38%
Alan M. Saperstein(2) 513,513 13.92%
David E. Goodman(3) 135,714 4.00%
Benjamin Swirsky(4) 0
Brian K. Service(5) 10,938(6)
Eric Jacobs(7) 18,600(6)
All Officers and
Directors(1)(2)(3)(4)(5)(7) 1,172,405 28.02%
(1) Includes warrants to purchase 2,791 shares at $1.40 per share, options
to acquire an aggregate of 137,230 shares of Common Stock at an
exercise price of $.00016 per share and
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options to acquire an aggregate of 250,000 shares of Common Stock at an
exercise price of $2.50 per share. Excludes options to purchase 375,000
shares of Common Stock at an exercise price of $2.50 per share that
have not yet vested.
(2) Includes warrants to purchase 1,340 shares at $1.40 per share, options
to acquire an aggregate of 137,230 shares of Common Stock at an
exercise price of $.00016 per share and options to acquire an aggregate
of 250,000 shares of Common Stock at an exercise price of $2.50 per
share. Excludes options to purchase 375,000 shares of Common Stock at
an exercise price of $2.50 per share that have not yet vested.
(3) Includes options to acquire an aggregate of 100,000 shares of Common
Stock at an exercise price of $2.50 per share but excludes an
additional 400,000 options, exercisable at $2.50 per share, which have
not yet vested.
(4) Excludes options to acquire an aggregate of 100,000 shares of Common
Stock at an exercise price of $2.50 per share granted in August 1997
immediately following the Company's initial public offering, which have
not yet vested.
(5) Excludes options to acquire an aggregate of 100,000 shares of Common
Stock at an exercise price of $2.50 per share granted in August 1997
immediately following the Company's initial public offering, which have
not yet vested.
(6) Less than 1%.
(7) Includes 5,000 warrants purchased in the open market; excludes options
to acquire an aggregate of 50,000 shares of Common Stock at an exercise
price of $2.50 per share granted in January 1998, which have not yet
vested.
OTHER MATTERS
Management is not aware of any other matters to be presented for action
at the Meeting. However, if any other matter is properly presented, it is the
intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matter.
COST OF SOLICITATION
The Company will bear the costs of the solicitation of proxies from its
stockholders. In addition to the use of the mail, proxies may be solicited by
directors, officers and regular employees of the Company in person or by
telephone or other means of communication. The directors, officers and employees
of the Company will not be compensated additionally for the solicitation but may
be reimbursed for out-of-pocket expenses in connection with the solicitation.
Arrangements are also being made with brokerage houses and any other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of the Company, and the Company will reimburse the brokers,
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the 1999 Annual Meeting must be received by
the Company no later than November 27, 1998 in order to have them included in
the proxy statement and form of proxy relating to that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Randy S. Selman
Randy S. Selman, President
and Chief Executive Officer
July 29, 1998
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VISUAL DATA CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
SEPTEMBER 4, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VISUAL DATA
CORPORATION. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of Visual Data Corporation (the "Company") hereby
appoints Randy S. Selman the true and lawful attorney, agent and proxy of the
undersigned with full power of substitution for and in the name of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned may be entitled to vote at the Special Meeting of Stockholders of
the Company to be held at 1291 Southwest 29th Avenue, Pompano Beach, Florida
33069, on Friday, September 4, 1998 at 9:00 a.m., and any and all adjournments
thereof, with all of the powers which the undersigned would possess if
personally present, for the following purposes:
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. To approve the possible issuance of in [ ] [ ] [ ]
excess of 19.9% of the presently issued
and outstanding Common Stock upon
the conversion of the Series A
Convertible Preferred Stock and on any
other matters incident to Proposal 1 contained
in the Proxy Statement accompanying this Proxy.
</TABLE>
THIS PROXY WILL BE VOTED FOR THE CHOICE SPECIFIED. IF NO CHOICE IS
SPECIFIED FOR PROPOSAL 1, THIS PROXY WILL BE VOTED FOR THAT ITEM.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement dated July 29, 1998.
DATED:
------------------------ --------------------------
(Signature)
--------------------------
(Signature if jointly held)
--------------------------
(Printed name(s))
Please sign exactly as name appears on the stock certificate(s). Joint owners
should each sign. Trustees and others acting in a representative capacity should
indicate the capacity in which they sign.
<PAGE>
APPENDIX A
ARTICLES OF AMENDMENT
to
ARTICLES OF INCORPORATION
of
VISUAL DATA CORPORATION
(Pursuant to Sections 607.1006 and 607.0602 of the
Florida Business Corporation Act)
Visual Data Corporation, a corporation organized and existing under the
Florida Business Corporation Act (the "Corporation") bearing Document Number
P93000035279, hereby certifies that the following resolutions were adopted by
the Board of Directors of the Corporation on May 1, 1998 pursuant to the
authority of the Board of Directors:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Articles of Incorporation, the Board of
Directors hereby authorizes a series of the Corporation's previously authorized
Preferred Stock (the "Preferred Stock"), and hereby amends Article IV of the
Articles of Incorporation to include the following which states the designation
and number of shares, and fixes the relative rights, preferences, privileges,
powers and restrictions thereof as follows:
The following shall be added to Article IV of the Corporation's
Articles of Incorporation, and shall be inserted at the end of such article:
ARTICLE IV
Series A Convertible Preferred Stock:
1. Designation, Amount and Dividends. The designation of this
series, which consists of 300 shares of Preferred Stock, is the Series
A Convertible Preferred Stock (the "Preferred Shares") and the stated
value shall be Five Thousand Dollars ($5,000.00) per share (the "Stated
Value"). The Preferred Shares shall not bear any dividends.
2. Holder's Conversion of Preferred Shares. A holder of
Preferred Shares shall have the right, at such holder's option, to
convert the Preferred Shares into shares
<PAGE>
of the Company's common stock, no par value per share (the "Common
Stock"), on the following terms and conditions:
a. Conversion Right. Subject to the provisions of
Sections 12 and 2(j) below, at any time or times, any holder of
Preferred Shares shall be entitled to convert any whole number of
Preferred Shares into fully paid and nonassessable shares (rounded to
the nearest whole share in accordance with Section 2(i) below) of
Common Stock, at the Conversion Rate (as defined below); provided,
however, that in no event shall any holder be entitled to convert
Preferred Shares in excess of that number of Preferred Shares which,
upon giving effect to such conversion, would cause the aggregate number
of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common
Stock following such conversion. For purposes of the foregoing proviso,
the aggregate number of shares of Common Stock beneficially owned by
the holder and its affiliates shall include the number of shares of
Common Stock issuable upon conversion of the Preferred Shares with
respect to which the determination of such proviso is being made, but
shall exclude the number of shares of Common Stock which would be
issuable upon (i) conversion of the remaining, nonconverted Preferred
Shares beneficially owned by the holder and its affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially
owned by the holder and its affiliates. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. Each holder may waive the
foregoing limitations with respect to its conversions by written notice
to the Company upon not less than 61 days prior notice (with such
waiver taking effect only upon the expiration of such 61 day notice
period).
b. Conversion Rate. The number of shares of Common
Stock issuable upon conversion of each of the Preferred Shares pursuant
to Sections (2)(a) and 2(h) shall be determined according to the
following formula (the "Conversion Rate"):
(.05)(N/365)(5,000) + 5,000
---------------------------
Conversion Price
For purposes of these Articles of Amendment, the following terms shall
have the following meanings:
(i) "Conversion Price" means, as of any
Conversion Date (as defined below) or other date of determination, the lower of
the Fixed Conversion Price and the Floating Conversion Price, each in effect as
of such date and subject to adjustment as provided herein;
(ii) "Fixed Conversion Price" means $4.40,
subject to adjustment as provided herein; provided, however, that in the event
the Company elects, pursuant to Section 2(h) of the Registration Rights
Agreement (as defined below), to file the Registration Statement (as defined
below) on Form S-3, then the Fixed Conversion Price shall be the lesser of $4.40
and 110% of the Closing Bid Price on August 1, 1998, subject to adjustment as
provided herein;
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(iii) "Floating Conversion Price" means, as
of any date of determination, the amount obtained by multiplying the Conversion
Percentage in effect as of such date by the Market Price for the Common Stock,
subject to adjustment as provided herein;
(iv) "Conversion Percentage" means (A)
during the period beginning on the Issuance Date of the relevant Preferred
Shares and ending on and including the date which is 180 days after such
Issuance Date, 90% and (B) on and after the date which is 181 days after the
Issuance Date of the relevant Preferred Shares, 85%; subject in each case to
adjustment as provided herein;
(v) "Market Price" means, with respect to
any security for any date, the average of the three lowest Closing Bid Prices
for such security during the twenty (20) consecutive trading days immediately
preceding such date;
(vi) "Closing Bid Price" means, for any
security as of any date, the last closing bid price for such security on the
Nasdaq SmallCap Market as reported by Bloomberg Financial Markets ("Bloomberg"),
or, if the Nasdaq SmallCap Market is not the principal trading market for such
security, the last closing bid price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last closing trade price of such
security as reported by Bloomberg, or, if no last closing trade price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such
security on such date on any of the foregoing bases, the Closing Bid Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the holders of a majority of the outstanding Preferred
Shares. If the Company and the holders of Preferred Shares are unable to agree
upon the fair market value of the Common Stock, then such dispute shall be
resolved pursuant to Section 2(g)(iii) below with the term "Closing Bid Price"
being substituted for the term "Market Price." (All such determinations to be
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period).
(vii) "N" means the number of days from, but
excluding, the Issuance Date through and including the Conversion Date for the
Preferred Shares for which conversion is being elected; and
(viii) "Issuance Date" means, with respect
to each Preferred Share, the date of issuance of the applicable Preferred Share.
c. Effect of Failure to Obtain and Maintain
Effectiveness of Registration Statement. If the registration statement (the
"Registration Statement") covering the resale of all of the shares of Common
Stock issuable upon conversion or exercise of the Preferred Shares (as defined
in the Securities Purchase Agreement), respectively, and required to be filed by
the Company pursuant to the Registration Rights Agreement between the Company
and the Buyers referred to therein (the "Registration Rights Agreement") is not
(i) filed by the Filing Deadline (as defined in the Registration Rights
Agreement) (the "Scheduled Filing Date"), (ii) declared effective by the SEC on
or before the Effectiveness Deadline (as defined
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in the Registration Agreement (the "Scheduled Effective Date"), except where the
failure to meet such deadline is the result solely of actions by the holders of
Registrable Securities (as defined in the Registration Rights Agreement) or
(iii) if after the Registration Statement has been declared effective by the
SEC, sales of all such shares of Common Stock cannot be made pursuant to the
Registration Statement (whether because of a failure to keep the Registration
Statement effective, to disclose such information as is necessary for sales to
be made pursuant to the Registration Statement, to register sufficient shares of
Common Stock or otherwise), then, as partial relief for the damages to any
holder by reason of any such delay in or reduction of its ability to sell the
underlying shares of Common Stock (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Conversion Percentage and the
Fixed Conversion Price shall be adjusted as follows:
(I) Conversion Percentage. The Conversion
Percentage in effect at such time shall be reduced by a number of percentage
points equal to the sum of (x) 2 and (y) the product of (I) .06 and (II) the sum
of (i) the number of days after the Scheduled Filing Date that the relevant
Registration Statement is not filed with the SEC, (which number of days shall
not include days for which the sole reason that the relevant Registration
Statement was not filed was because of actions by holders of Registrable
Securities) (ii) the number of days after the Scheduled Effective Date that the
relevant Registration Statement is not declared effective by the SEC and (iii)
the number of days (excluding days during an Allowable Grace Period (as defined
in the Registration Rights Agreement)) that sales cannot be made pursuant to the
Registration Statement in accordance with the Registration Statement after the
Registration Statement has been declared effective (which number of days shall
not include days for which the sole reason that sales cannot be made is because
of actions by holders of Registrable Securities (such number of days being
collectively referred to as the "Registration Statement Default Days"); and
(II) Fixed Conversion Price. The Fixed
Conversion Price in effect at such time shall be reduced by an amount equal to
the sum of (x) the product of .02 and the Fixed Conversion Price in effect as of
the Issuance Date and (y) the product of (I) the Fixed Conversion Price in
effect as of the Issuance Date and (II) .0006 multiplied by the number of
Registration Statement Default Days.
Notwithstanding the foregoing, in no event shall the Conversion Percentage be
reduced pursuant to Section 2(c)(A) above by a number of percentage points which
in the aggregate exceeds 20 nor shall the Fixed Conversion Price be reduced
pursuant to Section 2(c)(B) above by an amount which in the aggregate exceeds
the product of .20 and the Fixed Conversion Price in effect as of the Issuance
Date.
d. Adjustment to Conversion Price -- Dilution and
Other Events. In order to prevent dilution of the rights granted under these
Articles of Amendment, the Conversion Price will be subject to adjustment from
time to time as provided in this Section 2(d).
(i) Adjustment of Fixed Conversion Price
upon Issuance of Common Stock. If and whenever on or after the date of issuance
of the Preferred Shares, the Company issues or sells, or is deemed to have
issued or sold, any shares of Common Stock (other than shares of Common Stock
deemed to have been issued by the Company in connection with Approved Issuances
(as defined below)) for a consideration per share less than the Market
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Price in effect immediately prior to such time (the "Applicable Price"), then
immediately after such issue or sale, the Fixed Conversion Price shall be
reduced to an amount equal to the product of (x) the Fixed Conversion Price in
effect immediately prior to such issue or sale and (y) the quotient determined
by dividing (1) the sum of (I) the product of the Applicable Price and the
number of shares of Common Stock Deemed Outstanding (as defined below)
immediately prior to such issue or sale, and (II) the consideration, if any,
received by the Company upon such issue or sale, by (2) the product of (I) the
Applicable Price and (II) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale. For purposes of determining
the adjusted Fixed Conversion Price under this Section 2(d)(i), the following
shall be applicable:
(A) Issuance of Options. If the
Company in any manner grants any rights or options to subscribe for or
to purchase Common Stock (other than in connection with an Approved
Issuance or upon conversion of the Preferred Shares) or any stock or
other securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities is less than the Applicable
Price, then the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For
purposes of this Section 2(d)(i)(A), the "price per share for which
Common Stock is issuable upon exercise of such Options or upon
conversion or exchange of such Convertible Securities" is determined by
dividing (I) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon
the issuance or sale of such Convertible Securities and the conversion
or exchange thereof, by (II) the total maximum number of shares of
Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No adjustment of the Fixed Conversion
Price shall be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options or upon
the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible
Securities. If the Company in any manner issues or sells any
Convertible Securities (other than in connection with an Approved
Issuance or upon conversion of the Preferred Shares) and the price per
share for which Common Stock is issuable upon such conversion or
exchange is less than the Applicable Price, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For the
purposes of this Section 2(d)(i)(B), the "price per share for which
Common Stock is issuable upon such conversion or exchange" is
determined by dividing (I) the total amount received or receivable by
the Company as consideration for the issue or sale of
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such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (II) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No adjustment of the Fixed Conversion
Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of the Fixed Conversion Price had been
or are to be made pursuant to other provisions of this Section 2(d)(i),
no further adjustment of the Fixed Conversion Price shall be made by
reason of such issue or sale.
(C) Change in Option Price or Rate
of Conversion. If the purchase price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion or
exchange of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exchangeable for Common
Stock change at any time, the Fixed Conversion Price in effect at the
time of such change shall be readjusted to the Fixed Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold;
provided that no adjustment shall be made if such adjustment would
result in an increase of the Fixed Conversion Price then in effect.
(D) Certain Definitions. For
purposes of determining the adjusted Fixed Conversion Price under this
Section 2(d)(i), the following terms have meanings set forth below:
(I) "Approved Issuances"
shall mean (i) a loan from a commercial bank (not having any equity
feature), (ii) any transaction involving the Company's issuances of
securities (A) as consideration in a merger or consolidation or (B) as
consideration for the acquisition of a business, product or license or
other assets by the Company, (iii) the issuance of Common Stock in a
firm commitment, underwritten public offering, (iv) the issuance of
securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date
hereof, (v) the issuance of securities under existing agreements of the
Company listed on Schedule 4(g) of the Securities Purchase Agreement
between the Company and the initial holders of the Preferred Shares
(the "Securities Purchase Agreement") or (vi) the grant of additional
options or warrants, or the issuance of additional securities, under
any Company stock option plan, restricted stock plan, stock purchase
plan or other plan or written compensation contract for the benefit of
the Company's employees or directors.
(II) "Common Stock Deemed
Outstanding" means, at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of
Common Stock deemed to be outstanding pursuant to Sections 2(d)(i)(A)
and 2(d)(i)(B) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any
shares of Common Stock issuable upon conversion of the Preferred
Shares.
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(E) Treatment of Expired Options and
Unexercised Convertible Securities. If, in any case, the total number
of shares of Common Stock issuable upon the exercise of any Option or
upon exercise, conversion or exchange of any Convertible Security is
not, in fact, issued and the rights to exercise such Option or to
exercise, convert or exchange such Convertible Securities shall have
expired or terminated, the Fixed Conversion Price then in effect will
be readjusted to the Fixed Conversion Price which would have been
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination (other than in respect of the actual
number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(F) Effect on Fixed Conversion Price
of Certain Events. For purposes of determining the adjusted Fixed
Conversion Price under this Section 2(d)(i), the following shall be
applicable:
(I) Calculation of
Consideration Received. If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor will be deemed to be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable
expenses paid or incurred by the Company in connection with such
issuance or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price of such
security on the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the
surviving entity the amount of consideration therefor will be deemed to
be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Options
or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined jointly
by the Company and the holders of a majority of the Preferred Shares
then outstanding. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the
"Valuation Event"), the fair value of such consideration will be
determined within forty-eight (48) hours of the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser
selected by the Company. The determination of such appraiser shall be
deemed binding upon all parties absent manifest error.
(II) Integrated
Transactions. In case any Option is issued in connection with the issue
or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated
to such Options by the parties thereto, the Options will be deemed to
have been issued for a consideration of $.01.
(III) Treasury Shares. The
number of shares of Common Stock outstanding at any given time does not
include shares owned or held by
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or for the account of the Company, and the disposition of any shares so
owned or held will be considered an issue or sale of Common Stock.
(IV) Record Date. If the
Company takes a record of the holders of Common Stock for the purpose
of entitling them (1) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities or (2) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ii) Adjustment of Fixed Conversion Price
upon Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Fixed Conversion Price in
effect immediately prior to such subdivision will be proportionately
reduced. If the Company at any time combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Fixed Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
(iii) Adjustment of Floating Conversion
Price upon Issuance of Convertible Securities. If the Company in any
manner issues or sells Convertible Securities that are convertible into
Common Stock at a price which varies with the market price of the
Common Stock (the formulation for such variable price being herein
referred to as, the "Variable Price") and such Variable Price is not
calculated using the same formula used to calculate the Floating
Conversion Price in effect immediately prior to the time of such issue
or sale, the Company shall provide written notice thereof via facsimile
and overnight courier to each holder of the Preferred Shares ("Variable
Notice") on the date of issuance of such Convertible Securities. If the
holders of Preferred Shares representing at least two-thirds (2/3) of
the Preferred Shares then outstanding provide written notice via
facsimile and overnight courier (the "Variable Price Election Notice")
to the Company within five (5) business days of receiving a Variable
Notice that such holders desire to replace the Floating Conversion
Price then in effect with the Variable Price described in such Variable
Notice, the Company shall prepare and deliver to each holder of the
Preferred Shares via facsimile and overnight courier a copy of an
amendment to these Articles of Amendment (the "Variable Price
Amendment") that substitutes the Variable Price for the Floating
Conversion Price (together with such modifications to these Articles of
Amendment as may be required to give full effect to the substitution of
the Variable Price for the Floating Conversion Price) within five (5)
business days after receipt of the requisite number of Variable Price
Election Notices set forth above. The Company shall file such Variable
Price Amendment with the Secretary of State of the State of Florida
within five (5) business days after delivery of the Variable Price
Amendment to the holders of the Preferred Shares; provided that in the
event that the Company receives a notice prior to the filing of the
Variable Price Amendment from any holder who has delivered a Variable
Price Election Notice in connection with such Variable Price Amendment
that such holder objects to the form of the Variable Price Amendment,
the Company shall not file such
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Variable Price Amendment until such time as the Variable Price
Amendment has been revised to the reasonable satisfaction of such
holder and approved in writing by the holders of the Preferred Shares
representing at least two-thirds (2/3) of the Preferred Shares then
outstanding. Except as provided in the preceding proviso, a holder's
delivery of a Variable Price Election Notice shall serve as the consent
required to amend these Articles of Amendment pursuant to Section 13
below.
(iv) Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially
all of the Company's assets to another Person (as defined below) or
other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as "Organic Change."
Prior to the consummation of any Organic Change, the Company will make
appropriate provision (in form and substance reasonably satisfactory to
the holders of a majority of the Preferred Shares then outstanding) to
insure that each of the holders of the Preferred Shares will thereafter
have the right to acquire and receive in lieu of or in addition to (as
the case may be) the shares of Common Stock otherwise acquirable and
receivable upon the conversion of such holder's Preferred Shares, such
shares of stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for the
number of shares of Common Stock which would have been acquirable and
receivable upon the conversion of such holder's Preferred Shares had
such Organic Change not taken place (without taking into account any
limitations or restrictions on the timing or amount of conversions). In
any such case, the Company will make appropriate provision (in form and
substance reasonably satisfactory to the holders of a majority of the
Preferred Shares then outstanding) with respect to such holders' rights
and interests to insure that the provisions of this Section 2(d) and
Section 2(e) below will thereafter be applicable to the Preferred
Shares (including, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is other than
the Company, an immediate adjustment of the Fixed Conversion Price to
the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, if the value so reflected is less than
the Fixed Conversion Price in effect immediately prior to such
consolidation, merger or sale and an immediate revision to the Floating
Conversion Price to reflect the price of the common stock of the
surviving entity and the market in which such common stock is traded).
The Company will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if
other than the Company) resulting from consolidation or merger or the
entity purchasing such assets assumes, by written instrument (in form
and substance reasonably satisfactory to the holders of a majority of
the Preferred Shares then outstanding), the obligation to deliver to
each holder of Preferred Shares such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may
be entitled to acquire. "Person" shall mean an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any
department or agency thereof.
(v) Certain Events. If any event occurs of
the type contemplated by the provisions of this Section 2(d) but not
expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights,
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phantom stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the
Preferred Shares; provided that no such adjustment will increase the
Conversion Price as otherwise determined pursuant to this Section 2(d).
The good faith determination of the Board of Directors regarding the
appropriate adjustment pursuant to this Section 2(d)(v) shall be
binding on the holders of the Preferred Shares.
(vi) Notices.
(A) Immediately upon any adjustment
of the Conversion Price, the Company will give written notice thereof
to each holder of Preferred Shares, setting forth in reasonable detail
and certifying the calculation of such adjustment.
(B) The Company will give written
notice to each holder of Preferred Shares at least fifteen (15) days
prior to the date on which the Company closes its books or takes a
record (I) with respect to any dividend or distribution upon the Common
Stock, (II) with respect to any pro rata subscription offer to holders
of Common Stock or (III) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation and in no event shall
such notice be provided to such holder prior to such information being
made known to the public.
(C) The Company will also give
written notice to each holder of Preferred Shares at least fifteen (15)
days prior to the date on which any Organic Change, dissolution or
liquidation will take place and in no event shall such notice be
provided to such holder prior to such information being made known to
the public.
e. Purchase Rights. In addition to any adjustments of
the Conversion Price pursuant to Section 2(d) above, if at any time after the
Issuance Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the "Purchase
Rights"), then the holders of Preferred Shares will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such holder could have acquired if such holder had held the number of
shares of Common Stock acquirable upon complete conversion of the Preferred
Shares (without taking into account any limitations or restrictions on the
timing or amount of conversions) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
f. Fixing of Conversion Price - Major Corporate Event
Announcement. Notwithstanding anything contained in Section 2(b) above, in the
event (i) the Company makes a public announcement that it intends to consolidate
or merge with or into another Person or engage in a business combination
involving the issuance or exchange of 30% or more of the Company's outstanding
Common Stock, other than pursuant to an Exempt Major Transaction (as defined in
Section 3(c)(i) below) (ii) the Company makes a public announcement that it
intends to sell or transfer substantially all of the Company's assets, or (iii)
any person, group or entity (including the Company) publicly announces a
purchase, tender or exchange offer for 50% or more of the Company's outstanding
Common Stock (the transactions described
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in clauses (i), (ii) and (iii) above are hereinafter referred to as "Major
Corporate Events" and the date of the announcement referred to in clause (i),
(ii) or (iii) is hereinafter referred to as the "Announcement Date"), then the
Fixed Conversion Price shall, effective upon the Announcement Date and
continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the Conversion Price which would have been applicable for a
conversion by the holder pursuant to Section 2(a) occurring on the Announcement
Date. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in Section 2(a). For purposes
hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to
any proposed Major Corporate Event for which a public announcement as
contemplated by this Section 2(f) has been made, the date upon which the Company
or the person, group or entity (in the case of clause (iii) above) publicly
announces the consummation, termination or abandonment of the proposed Major
Corporate Event which was the subject of the previous public announcement.
g. Mechanics of Conversion. Subject to the Company's
inability to fully satisfy its obligations under a Conversion Notice (as defined
below) as provided for in Section 4 below:
(i) Holder's Delivery Requirements. To
convert Preferred Shares into full shares of Common Stock on any date
(the "Conversion Date"), the holder thereof shall (A) transmit by
facsimile (or otherwise deliver), for receipt on or prior to 11:59
p.m., Eastern Time on such date, a copy of a fully executed notice of
conversion as described in Section 19 (the "Conversion Notice"), to the
Company, and (B) surrender to a common carrier for delivery to the
Company as soon as practicable following such date, the original
certificates representing the Preferred Shares being converted (or an
indemnification undertaking with respect to such shares in the case of
their loss, theft or destruction) (the "Preferred Stock Certificates")
and the originally executed Conversion Notice.
(ii) Company's Response. Upon receipt by the
Company of a facsimile copy of a Conversion Notice, the Company shall
promptly, but in no event later than the next business day, send, via
facsimile, a confirmation of receipt of such Conversion Notice to such
holder. Upon receipt by the Company of the Preferred Stock Certificates
to be converted pursuant to a Conversion Notice, together with the
originally executed Conversion Notice, the Company or its designated
transfer agent (the "Transfer Agent") (as applicable) shall, on the
next business day following the date of receipt of both (or the second
business day following the date of receipt of both if received after
11:00 a.m. local time of the Company), (I) issue and surrender to a
common carrier for overnight delivery to the address as specified in
the Conversion Notice, a certificate, registered in the name of the
holder or its designee, for the number of shares of Common Stock to
which the holder shall be entitled, or (II) credit such aggregate
number of shares of Common Stock to which the holder shall be entitled
to the holder's or its designee's balance account with The Depository
Trust Company. If the number of Preferred Shares represented by the
Preferred Stock Certificate(s) submitted for conversion is greater than
the number of Preferred Shares being converted, then the Company shall,
as soon as practicable and in no event later than two business days
after receipt of the Preferred Stock Certificate(s) and at its own
expense, issue and deliver to the holder a new Preferred Stock
Certificate representing the number of Preferred Shares not converted.
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(iii) Dispute Resolution. In the case of a
dispute as to the determination of the Market Price or the arithmetic
calculation of the Conversion Rate, the Company shall promptly issue to
the holder the number of shares of Common Stock that is not disputed
and shall submit the disputed determinations or arithmetic calculations
to the holder via facsimile as soon as possible, but in no event later
than two (2) business days after receipt of such holder's Conversion
Notice. If such holder and the Company are unable to agree upon the
determination of the Market Price or arithmetic calculation of the
Conversion Rate within one (1) business day of such disputed
determination or arithmetic calculation being submitted to the holder,
then the Company shall within one (1) business day submit via facsimile
(A) the disputed determination of the Market Price to an independent,
reputable investment bank or (B) the disputed arithmetic calculation of
the Conversion Rate to its independent, outside accountant. The Company
shall cause the investment bank or the accountant, as the case may be,
to perform the determinations or calculations and notify the Company
and the holder of the results no later than forty-eight (48) hours from
the time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as the
case may be, shall be binding upon all parties absent manifest error.
The period of time in which the Company is required to effect
conversions or redemptions under these Articles of Amendment shall be
tolled with respect to the subject conversion or redemption pending
resolution of any dispute by the Company made in good faith and in
accordance with this Section 2(g)(iii).
(iv) Record Holder. The person or persons
entitled to receive the shares of Common Stock issuable upon a
conversion of Preferred Shares shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on the
Conversion Date.
(v) Company's Failure to Timely Convert. If
within five (5) business days of the Company's receipt of the Preferred
Stock Certificates to be converted and the Conversion Notice (the
"Share Delivery Period") the Company shall fail to issue a certificate
to a holder or credit the holder's balance account with The Depository
Trust Company for the number of shares of Common Stock to which such
holder is entitled upon such holder's conversion of Preferred Shares or
to issue a new Preferred Stock Certificate representing the number of
Preferred Shares to which such holder is entitled pursuant to Section
2(g)(ii) (a "Conversion Failure"), in addition to all other available
remedies which such holder may pursue hereunder and under the
Securities Purchase Agreement (including indemnification pursuant to
Section 8 thereof), the Company shall pay additional damages to such
holder on each date after such fifth (5th) business day that such
conversion is not timely effected in an amount equal 0.5% of the
product of (A) the sum of the number of shares of Common Stock not
issued to the holder on a timely basis pursuant to Section 2(g)(ii) and
to which such holder is entitled and, in the event the Company has
failed to deliver a Preferred Stock Certificate to the holder on a
timely basis pursuant to Section 2(g)(ii), the number of shares of
Common Stock issuable upon conversion of the Preferred Shares
represented by such Preferred Stock Certificate, as of the last
possible date which the Company could have issued such Preferred Stock
Certificate to such holder without violating Section 2(g) (ii) and (B)
the Closing Bid Price of the Common Stock on the last possible date
which the Company could have issued such Common Stock and such
Preferred Stock Certificate, as the case may be, to such holder without
violating Section 2(g)(ii). In addition to the
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foregoing, if for any reason a holder has not received all of the
shares of Common Stock prior to the tenth (10th) business day after the
expiration of the Share Delivery Period with respect to a conversion of
Preferred Shares, then the Fixed Conversion Price in respect of any
Preferred Shares held by such holder (including Preferred Shares
submitted for conversion, but for which shares of Common Stock have not
been issued to such holder) shall thereafter be the lesser of (i) the
Fixed Conversion Price on the Conversion Date specified in the
Conversion Notice which resulted in a Conversion Failure and (ii) the
lowest Conversion Price in effect during the period beginning on, and
including, such Conversion Date through and including the day such
shares of Common Stock are delivered to the holder. The Fixed
Conversion Price shall thereafter be subject to further adjustment for
any other events described in this Section 2. If the Company fails to
pay the additional damages set forth in this Section 2(g)(v) within
five business days of the date incurred, then the holder entitled to
such payments shall have the right at any time, so long as the Company
continues to fail to make such payments, to require the Company, upon
written notice, to immediately issue, in lieu of the cash additional
damages set forth in this Section 2(g)(v), the number of shares of
Common Stock equal to the quotient of (X) the aggregate amount of the
additional damages payments described above divided by (Y) the
Conversion Price in effect on such Conversion Date as is specified by
the holder in writing to the Company.
h. Mandatory Conversion. Subject to Section 12, if
any Preferred Shares remain outstanding on the Mandatory Conversion
Date (as defined below), then all such Preferred Shares shall be
converted as of such date in accordance with this Section 2 as if the
holders of such Preferred Shares had given the Conversion Notice on the
Mandatory Conversion Date; provided, however, that if a Triggering
Event has occurred and is continuing on the Mandatory Conversion Date,
then the Company shall, within five business days following the
Mandatory Conversion Date (unless otherwise notified in writing by the
holder of its request to have the Preferred Shares converted into
Common Stock), pay to each holder of Preferred Shares then outstanding,
in immediately available funds, an amount equal to the Triggering Event
Redemption Price as of the Mandatory Conversion Date. All holders of
Preferred Shares shall thereupon surrender all Preferred Stock
Certificates, duly endorsed for cancellation, to the Company or the
Transfer Agent, provided that the Company has complied with its
obligations under this Section 2(h). Notwithstanding the foregoing, if
the Common Stock is not designated for quotation on the Nasdaq SmallCap
Market, the Nasdaq National Market or listed on The New York Stock
Exchange, Inc. or The American Stock Exchange, Inc. but such events do
not constitute a Triggering Event, then the Mandatory Conversion Date
shall be extended until the Common Stock is so designated or listed.
"Mandatory Conversion Date" means the date which is five years after
the applicable Issuance Date, subject to extension (i) as described in
the immediately preceding sentence and (ii) pursuant to Section 3(u) of
the Registration Rights Agreement, which extension shall be equal to
one day for each day in any Allowable Grace Period (as defined in the
Registration Rights Agreement).
i. Fractional Shares. The Company shall not issue any
fraction of a share of Common Stock upon any conversion. All shares of
Common Stock (including fractions thereof) issuable upon conversion of
more than one Preferred Share by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the
issuance of a fraction of a share of Common Stock. If, after the
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aforementioned aggregation, the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up or down to the nearest whole
share.
j. Conversion Restrictions. The right of a holder of
Preferred Shares to convert Preferred Shares pursuant to this Section 2
shall be limited as set forth below. Without the prior consent of the
Company, a holder shall not be entitled to convert any Initial
Preferred Shares (as defined in the Securities Purchase Agreement) at a
conversion price less than the applicable Fixed Conversion Price during
the period beginning on the Initial Closing Date and ending on the
earlier of (i) the date the Registration Statement is declared
effective by the SEC and (ii) the Effectiveness Deadline.
Notwithstanding the foregoing, the conversion restrictions set forth in
this Section 2(j) shall not apply (y) if there shall have occurred a
Material Adverse Change (as defined below) or (z) the Company files a
registration statement covering the issuance or resale of any shares of
Common Stock other than the Registration Statement under the
Registration Rights Agreement. For purposes of this Section 2(j),
"Material Adverse Change" means any change, event, result or happening
involving the Company or any of its subsidiaries resulting in a
material adverse effect on the business, financial condition or results
or operations of the Company and its subsidiaries, taken as a whole,
including, without limitation, an event constituting a Major
Transaction (as defined in Section 3(c)) or a Triggering Event (as
defined in Section 3(d)) shall have occurred or the Company shall have
been notified by the exchange or automated quotation system on which
the Common Stock trades that it is beginning or has begun proceedings
or steps to delist or suspend the Common Stock from trading on such
market.
k. Taxes. The Company shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery
of Common Stock upon the conversion of the Preferred Shares except for
taxes as a result of a transfer to a party other than an initial
holder.
3. Redemption at Option of Holders.
a. Redemption Option Upon Major Transaction. In
addition to all other rights of the holders of Preferred Shares
contained herein, simultaneous with the occurrence of a Major
Transaction (as defined below), each holder of Preferred Shares shall
have the right, at such holder's option, to require the Company to
redeem all or a portion of such holder's Preferred Shares at a price
per Preferred Share equal to 125% of the Liquidation Preference (as
defined in Section 9 below) ("Major Transaction Redemption Price").
b. Redemption Option Upon Triggering Event. In
addition to all other rights of the holders of Preferred Shares
contained herein, after a Triggering Event (as defined below), each
holder of Preferred Shares shall have the right, at such holder's
option, to require the Company to redeem all or a portion of such
holder's Preferred Shares at a price per Preferred 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 date immediately preceding such Triggering Event
on which the exchange or market on which the Common Stock is traded is
open
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("Triggering Event Redemption Price" and, collectively with "Major
Transaction Redemption Price," the "Redemption Price").
c. "Major Transaction". A "Major Transaction" shall
be deemed to have occurred at such time as any of the following events:
(i) the consolidation, merger or other
business combination of the Company with or into another Person (other
than (A) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company or (B) a
consolidation, merger or other business combination 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, directly or indirectly, 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 a purchase, tender or
exchange offer made to the holders of more than 30% of the outstanding
shares of Common Stock.
d. "Triggering Event". A "Triggering Event" shall be
deemed to have occurred at such time as any of the following events:
(i) the failure of the Registration
Statement to be declared effective by the SEC on or prior to the date
which is 45 days after the Effectiveness Deadline except where the
failure of the Registration Statement to be declared effective was the
result solely of actions by the holders of Registrable Securities;
(ii) while the Registration Statement is
required to be maintained effective pursuant to the terms of the
Registration Rights Agreement, the effectiveness of the Registration
Statement lapses for any reason (including, without limitation, the
issuance of a stop order) or is unavailable to the holder of the
Preferred Shares for sale of the Registrable Securities (as defined in
the Registration Rights Agreement) in accordance with the terms of the
Registration Rights Agreement, and such lapse or unavailability
continues for a period of five consecutive trading days, provided that
the cause of such lapse or unavailability is not due to factors solely
within the control of such holder of Preferred Shares;
(iii) the suspension from listing or the
failure of the Common Stock to be listed on the Nasdaq SmallCap Market,
the Nasdaq National Market, The New York Stock Exchange, Inc. or The
American Stock Exchange, Inc. for a period of five consecutive days;
(iv) Company's notice to any holder of
Preferred Shares, including by way of public announcement, at any time,
of its intention not to comply with proper requests for conversion of
any Preferred Shares into shares of Common Stock, including any of the
reasons set forth in Section 4(a) below;
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(v) the Company's stockholders fail to
approve the proposal contemplated by Section 4(j) of the Securities
Purchase Agreement on or before the earlier of the first meeting of the
Company's stockholders after the initial Issuance Date and 150 days
after the initial Issuance Date;
(vi) the Company breaches any
representation, warranty, covenant or other term or condition of the
Securities Purchase Agreement, the Registration Rights Agreement, this
Article IV or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated
thereby or hereby, except to the extent that such breach would not have
a Material Adverse Effect (as defined in Section 3(a) of the Securities
Purchase Agreement) and except, in the case of a breach of a covenant
which is curable, only if such breach continues for a period of at
least ten days; or
(vii) Randy S. Selman ceases to hold at
least one of the offices of Chief Executive Officer or President of the
Company prior to March 1, 2000 for any reason other than because of
death or disability.
e. Mechanics of Redemption at Option of Buyer Upon
Major Transaction. No sooner than 15 days nor later than 10 days prior
to the consummation of a Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver
written notice thereof via facsimile and overnight courier ("Notice of
Major Transaction") to each holder of Preferred Shares. At any time
after receipt of a Notice of Major Transaction (or, in the event a
Notice of Major Transaction is not delivered at least 10 days prior to
a Major Transaction, at any time within 10 days prior to a Major
Transaction), any holder of Preferred Shares then outstanding may
require the Company to redeem, effective immediately prior to the
consummation of such Major Transaction, all of the holder's Preferred
Shares then outstanding by delivering written notice thereof via
facsimile and overnight courier ("Notice of Redemption at Option of
Buyer Upon Major Transaction") to the Company, which Notice of
Redemption at Option of Buyer Upon Major Transaction shall indicate (i)
the number of Preferred Shares that such holder is electing to redeem
and (ii) the applicable Major Transaction Redemption Price, as
calculated pursuant to Section 3(a) above.
f. Mechanics of Redemption at Option of Buyer Upon
Triggering Event. Within one (1) business day after the occurrence of a
Triggering Event, the Company shall deliver written notice thereof via
facsimile and overnight courier ("Notice of Triggering Event") to each
holder of Preferred Shares. At any time after the earlier of a holder's
receipt of a Notice of Triggering Event and such holder becoming aware
of a Triggering Event, any holder of Preferred Shares then outstanding
may require the Company to redeem all of the Preferred Shares by
delivering written notice thereof via facsimile and overnight courier
("Notice of Redemption at Option of Buyer Upon Triggering Event") to
the Company, which Notice of Redemption at Option of Buyer Upon
Triggering Event shall indicate (i) the number of Preferred Shares that
such holder is electing to redeem and (ii) the applicable Triggering
Event Redemption Price, as calculated pursuant to Section 3(b) above.
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g. Payment of Redemption Price. Upon the Company's
receipt of a Notice(s) of Redemption at Option of Buyer Upon Triggering
Event or a Notice(s) of Redemption at Option of Buyer Upon Major
Transaction from any holder of Preferred Shares, the Company shall
immediately notify each holder of Preferred Shares by facsimile of the
Company's receipt of such Notice(s) of Redemption at Option of Buyer
Upon Triggering Event or Notice(s) of Redemption at Option of Buyer
Upon Major Transaction and each holder which has sent such a notice
shall promptly submit to the Company or its Transfer Agent such
holder's Preferred Stock Certificates which such holder has elected to
have redeemed. The Company shall deliver the applicable Triggering
Event Redemption Price, in the case of a redemption pursuant to Section
3(f), to such holder within five (5) business days after the Company's
receipt of a Notice of Redemption at Option of Buyer Upon Triggering
Event and, in the case of a redemption pursuant to Section 3(e), the
Company shall deliver the applicable Major Transaction Redemption Price
immediately prior to the consummation of the Major Transaction;
provided that a holder's Preferred Stock Certificates shall have been
so delivered to the Company; provided further that if the Company is
unable to redeem all of the Preferred Shares to be redeemed, the
Company shall redeem an amount from each holder of Preferred Shares
being redeemed equal to such holder's pro-rata amount (based on the
number of Preferred Shares held by such holder relative to the number
of Preferred Shares outstanding) of all Preferred Shares being
redeemed. If the Company shall fail to redeem all of the Preferred
Shares submitted for redemption (other than pursuant to a dispute as to
the arithmetic calculation of the Redemption Price), in addition to any
remedy such holder of Preferred Shares may have under these Articles of
Amendment and the Securities Purchase Agreement, the applicable
Redemption Price payable in respect of such unredeemed Preferred Shares
shall bear interest at the rate of 2.5% per month (prorated for partial
months) until paid in full. Until the Company pays such unpaid
applicable Redemption Price in full to a holder of Preferred Shares
submitted for redemption, such holder shall have the option (the "Void
Optional Redemption Option") to, in lieu of redemption, require the
Company to promptly return to such holder(s) all of the Preferred
Shares that were submitted for redemption by such holder(s) under this
Section 3 and for which the applicable Redemption Price has not been
paid, by sending written notice thereof to the Company via facsimile
(the "Void Optional Redemption Notice"). Upon the Company's receipt of
such Void Optional Redemption Notice(s) and prior to payment of the
full applicable Redemption Price to such holder, (i) the Notice(s) of
Redemption at Option of Buyer Upon Triggering Event or the Notice(s) of
Redemption at Option of Buyer Upon Major Transaction, as the case may
be, shall be null and void with respect to those Preferred Shares
submitted for redemption and for which the applicable Redemption Price
has not been paid, (ii) the Company shall immediately return any
Preferred Shares submitted to the Company by each holder for redemption
under this Section 3(g) and for which the applicable Redemption Price
has not been paid, (iii) the Fixed Conversion Price of such returned
Preferred Shares shall be adjusted to the lesser of (A) the Fixed
Conversion Price as in effect on the date on which the Void Optional
Redemption Notice(s) is delivered to the Company and (B) the lowest
Closing Bid Price during the period beginning on the date on which the
Notice(s) of Redemption of Option of Buyer Upon Major Transaction or
the Notice(s) of Redemption at Option of Buyer Upon Triggering event,
as the case may be, is delivered to the Company and ending on the date
on which the Void Optional Redemption Notice(s) is delivered to the
Company; provided that no adjustment shall be made if such adjustment
would result in an increase of the Fixed Conversion Price then
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in effect, and (iv) the Conversion Percentage in effect at such time
shall be reduced by a number of percentage points equal to the product
of (A) .50 and (B) the number of days in the period beginning on the
date which is the last date on which the Triggering Event Redemption
Price or Major Transaction Redemption Price, as the case may be, is
required to be delivered in accordance with the foregoing provisions of
this Section 3(g) and ending on the date on which the Void Optional
Redemption Notice(s) is delivered to the Company. Notwithstanding the
foregoing, in the event of a dispute as to the determination of the
Closing Bid Price or the arithmetic calculation of the Redemption
Price, such dispute shall be resolved pursuant to Section 2(g)(iii)
above with the term "Closing Bid Price" being substituted for the term
"Average Market Price" and the term "Redemption Price" being
substituted for the term "Conversion Rate". A holder's delivery of a
Void Optional Redemption Notice and exercise of its rights following
such notice shall not effect the Company's obligations to make any
payments which have accrued prior to the date of such notice. Payments
provided for in this Section 3 shall have priority to payments to other
stockholders in connection with a Major Transaction.
4. Inability to Fully Convert.
a. Holder's Option if Company Cannot Fully Convert.
If, upon the Company's receipt of a Conversion Notice or on the
Mandatory Conversion Date, the Company can not issue shares of Common
Stock registered for resale under the Registration Statement for any
reason, including, without limitation, because the Company (x) does not
have a sufficient number of shares of Common Stock authorized and
available, (y) is otherwise prohibited by applicable law or by the
rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization with jurisdiction over the
Company or its Securities, including without limitation the Exchange
Cap, from issuing all of the Common Stock which is to be issued to a
holder of Preferred Shares pursuant to a Conversion Notice or (z) fails
to have a sufficient number of shares of Common Stock registered for
resale under the Registration Statement, then the Company shall issue
as many shares of Common Stock as it is able to issue in accordance
with such holder's Conversion Notice and pursuant to Section 2(g) above
and, with respect to the unconverted Preferred Shares, the holder,
solely at such holder's option, can elect to:
(i) require the Company to redeem from such
holder those Preferred Shares for which the Company is unable to issue
Common Stock in accordance with such holder's Conversion Notice
("Mandatory Redemption") at a price per Preferred Share (the "Mandatory
Redemption Price") equal to the Triggering Event Redemption Price as of
such Conversion Date;
(ii) if the Company's inability to fully
convert Preferred Shares is pursuant to Section 4(a)(z) above, require
the Company to issue restricted shares of Common Stock in accordance
with such holder's Conversion Notice and pursuant to Section 2(g)
above;
(iii) void its Conversion Notice and retain
or have returned, as the case may be, the nonconverted Preferred Shares
that were to be converted pursuant to such holder's Conversion Notice
(provided that a holder's voiding its Conversion Notice
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shall not effect the Company's obligations to make any payments which
have accrued prior to the date of such notice); or
(iv) if the Company's inability to fully
convert Preferred Shares is pursuant to the Exchange Cap described in
Section 4(a)(y) above, and the issuance of additional Conversion Shares
at a Conversion Price equal to the Market Price would not violate the
rules or regulations of The Nasdaq Stock Market, Inc., then, subject to
Section 12, require the Company to issue shares of Common Stock in
accordance with such holder's Conversion Notice and pursuant to Section
2(g) above at a Conversion Price equal to the Market Price of the
Common Stock on the date of such holder's Notice in Response to
Inability to Convert (as defined below).
b. Mechanics of Fulfilling Holder's Election. The
Company shall immediately send via facsimile to a holder of Preferred
Shares, upon receipt of a facsimile copy of a Conversion Notice from
such holder which cannot be fully satisfied as described in Section
4(a) above, a notice of the Company's inability to fully satisfy such
holder's Conversion Notice (the "Inability to Fully Convert Notice").
Such Inability to Fully Convert Notice shall indicate (i) the reason
why the Company is unable to fully satisfy such holder's Conversion
Notice, (ii) the number of Preferred Shares which cannot be converted
and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election pursuant to Section 4(a) above by
delivering written notice via facsimile to the Company ("Notice in
Response to Inability to Convert").
c. Payment of Redemption Price. If such holder shall
elect to have its shares redeemed pursuant to Section 4(a)(i) above,
the Company shall pay the Mandatory Redemption Price in cash to such
holder within thirty (30) days of the Company's receipt of the holder's
Notice in Response to Inability to Convert, provided that prior to the
Company's receipt of the holder's Notice in Response to Inability to
Convert the Company has not delivered a notice to such holder stating,
to the satisfaction of the holder, that the event or condition
resulting in the Mandatory Redemption has been cured and all Conversion
Shares issuable to such holder can and will be delivered to the holder
in accordance with the terms of Section 2(g). If the Company shall fail
to pay the applicable Mandatory Redemption Price to such holder on a
timely basis as described in this Section 4(c) (other than pursuant to
a dispute as to the determination of the arithmetic calculation of the
Redemption Price), in addition to any remedy such holder of Preferred
Shares may have under these Articles of Amendment and the Securities
Purchase Agreement, such unpaid amount shall bear interest at the rate
of 2.5% per month (prorated for partial months) until paid in full.
Until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to
those Preferred Shares for which the full Mandatory Redemption Price
has not been paid and (i) receive back such Preferred Shares and (ii)
the Fixed Conversion Price of such returned Preferred Shares shall be
adjusted to the lesser of (A) the Fixed Conversion Price as in effect
on the date on which the holder voided the Mandatory Redemption and (B)
the lowest Closing Bid Price during the period beginning on the
Conversion Date and ending on the date the holder voided the Mandatory
Redemption. Notwithstanding the foregoing, if the Company fails to pay
the applicable Mandatory Redemption Price within such thirty (30) days
time period due to a dispute as to the determination of the arithmetic
calculation of the Redemption Rate,
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such dispute shall be resolved pursuant to Section 2(g)(iii) above with
the term "Redemption Price" being substituted for the term "Conversion
Rate".
d. Pro-rata Conversion and Redemption. In the event
the Company receives a Conversion Notice from more than one holder of
Preferred Shares on the same day and the Company can convert and redeem
some, but not all, of the Preferred Shares pursuant to this Section 4,
the Company shall convert and redeem from each holder of Preferred
Shares electing to have Preferred Shares converted and redeemed at such
time an amount equal to such holder's pro-rata amount (based on the
number of Preferred Shares held by such holder relative to the number
of Preferred Shares outstanding) of all Preferred Shares being
converted and redeemed at such time.
5. Company's Right to Redeem in Lieu of Conversion. (a)
Notwithstanding Section 2 or anything herein to the contrary, but
subject to Section 5(e), at any time after the initial Issuance Date,
the Company may elect to redeem Preferred Shares submitted for
conversion in lieu of converting such Preferred Shares, provided that
the Floating Conversion Price for such Preferred Shares on the
Conversion Date is less than $2.50 (appropriately adjusted for any
stock dividend, stock split or other similar transaction) (a "Company
Redemption in Lieu of Conversion"). If the Company elects to redeem
some, but not all, of the Preferred Shares submitted for conversion,
the Company shall redeem a number of Preferred Shares from each holder
of Preferred Shares submitted for conversion on the applicable date
equal to such holder's pro-rata amount (based on the number of
Preferred Shares held by such holder relative to the number of
Preferred Shares outstanding) of all Preferred Shares submitted for
conversion which the Company elects to redeem.
(b) Redemption Price of Company Redemption in Lieu of
Conversion. The "Redemption Price of Company Redemption in Lieu of
Conversion" shall be an amount per Preferred Share equal to the product
of (i) the Conversion Rate of the Preferred Shares on the Conversion
Date and (ii) the last reported sale price of the Common Stock (as
reported by Bloomberg) on the Conversion Date.
(c) Mechanics of Company Redemption in Lieu of
Conversion. The Company shall exercise its right to redeem by
delivering written notice by facsimile and overnight courier ("Notice
of Company Redemption in Lieu of Conversion") to (i) each holder of the
Preferred Shares and (ii) the Transfer Agent. Such Notice of Company
Redemption in Lieu of Conversion shall indicate (A) the maximum, if
any, number of Preferred Shares which shall be subject to Company
Redemption in Lieu of Conversion which maximum number of Preferred
Shares, if less than all of the Preferred Shares outstanding, shall be
allocated pro rata among the holders of Preferred Shares (based on the
number of Preferred Shares held by each holder on the date of the
Company's delivery of Notice of Company Redemption in Lieu of
Conversion relative to the total number of Preferred Shares outstanding
on such date), (B) confirm the time period during which the Company may
effect Company Redemption in Lieu of conversion, which period shall
begin on and include the date which is five business days after the
date of receipt by all of the holders' of the Notice of Redemption in
Lieu of Conversion and shall end on and include the date which is 30
calendar days after the fifth business day following the date of
receipt by all of the holders of the Notice of Redemption in Lieu of
Conversion (the "Redemption in Lieu of Conversion Period").
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The Company may terminate a Redemption in Lieu of Conversion Period at
any time with respect to Preferred Shares which have not been submitted
for conversion by delivering written notice of such termination to each
holder of Preferred Shares by facsimile and overnight courier at least
five days business days prior to the date of such termination. Any
Preferred Shares submitted for conversion after the termination of the
Redemption in Lieu of Conversion Period or the number of which is in
excess of the maximum number of Preferred Shares designated in the
Notice of Company Redemption in Lieu of Conversion shall be converted
in accordance with Section 2.
(d) Payment of Redemption Price. The Company shall
pay the applicable Redemption Price of Company Redemption in Lieu of
Conversion to the holder of the Preferred Shares being redeemed in cash
within five business days after the Conversion Date, but not prior to
such holder's delivery to the Company of the Preferred Stock
Certificates representing the Preferred Shares being redeemed. If the
Company shall fail to pay the applicable Redemption Price of Company
Redemption in Lieu of Conversion to such holder on a timely basis as
described in this Section 5(d), in addition to any remedy such holder
of Preferred Shares may have under these Articles of Amendment, the
Securities Purchase Agreement and the Registration Rights Agreement,
such unpaid amount shall bear interest at the rate of 2.5% per month
(or the maximum rate permitted by law, whichever is lower), pro rated
for partial months, until paid in full. Until the Company pays such
unpaid applicable Redemption Price of Company Redemption in Lieu of
Conversion in full to each holder, each holder of Preferred Shares
submitted for redemption pursuant to this Section 5 and for which the
applicable Redemption Price of Company Redemption in Lieu of Conversion
has not been paid, shall have the option (the "Void Company Redemption
Option") to, in lieu of redemption, require the Company to promptly
return to each holder all of the Preferred Shares that were submitted
for redemption by such holder under this Section 5 and for which the
applicable Redemption Price of Company Redemption in Lieu of Conversion
has not been paid, by sending written notice thereof to the Company via
facsimile (the "Void Company Redemption Notice"). Upon the Company's
receipt of such Void Company Redemption Notice(s) prior to payment of
the full applicable redemption price to each holder, (i) the Company's
Redemption in Lieu of Conversion shall be null and void with respect to
those Preferred Shares submitted for redemption and for which the
applicable Redemption Price has not been paid, (ii) the Company shall
immediately return any Preferred Shares submitted to the Company by
each holder for redemption under this Section 5 and for which the
applicable Redemption Price of Company Redemption in Lieu of Conversion
has not been paid and (iii) the Fixed Conversion Price of such returned
Preferred Shares shall be adjusted to the lesser of (A) the Conversion
Price applicable to such conversion on the date on which such Preferred
Shares were originally presented for conversion and (B) the Conversion
Price which would have been effect if such Preferred Shares were
presented for conversion on the business day immediately following the
last day on which the Company could have effected a timely Company
Redemption in Lieu of Conversion. Notwithstanding the foregoing, if the
Company fails to pay the applicable Redemption Price of Company
Redemption in Lieu of Conversion to a holder within the time period
described in this Section 5(d) due to a dispute as to the arithmetic
calculation of the Redemption Price of Company Redemption in Lieu of
Conversion, such dispute shall be resolved pursuant to Section
2(f)(iii) above with the term "Redemption Price of Company Redemption
in Lieu of Conversion" being substituted for the term "Conversion
Rate." If the Company fails to timely effect a
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Company Redemption in Lieu of Conversion in accordance with this
Section 5, the Company shall not be allowed to submit another Notice of
Company Redemption in Lieu of Conversion without the prior written
consent of the holders of at least two-thirds (2/3) of the Preferred
Shares then outstanding.
(e) Company Must Have Immediately Available Funds or
Credit Facilities. The Company shall not be entitled to send any Notice
of Company Redemption in Lieu of Conversion pursuant to Section 5(b)
above and begin the redemption procedure under this Section 5, unless
it has:
(1) the full amount of the Redemption Price
of Company Redemption in Lieu of Conversion in cash, available in a
demand or other immediately available account in a bank or similar
financial institution;
(2) credit facilities, with a bank or
similar financial institutions that are immediately available and
unrestricted for use in redeeming the Preferred Shares, in the full
amount of the Redemption Price of Company Redemption in Lieu of
Conversion;
(3) a written agreement with a standby
underwriter or qualified buyer ready, willing and able to purchase from
the Company a sufficient number of shares of stock to provide proceeds
necessary to redeem any stock that is not converted prior to a Company
Redemption in Lieu of Conversion; or
(4) a combination of the items set forth in
the preceding clauses (i), (ii) and (iii), aggregating the full amount
of the Redemption Price of Company Redemption in Lieu of Conversion.
6. Reissuance of Certificates. In the event of a conversion or
redemption pursuant to these Articles of Amendment of less than all of
the Preferred Shares represented by a particular Preferred Stock
Certificate, the Company shall promptly cause to be issued and
delivered to the holder of such Preferred Shares a preferred stock
certificate representing the remaining Preferred Shares which have not
been so converted or redeemed.
7. Reservation of Shares. The Company shall, so long as any of
the Preferred Shares are outstanding, reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Shares then outstanding; provided
that the number of shares of Common Stock so reserved shall at no time
be less than 200% of the number of shares of Common Stock for which the
Preferred Shares are at any time convertible. The initial number of
shares of Common Stock reserved for conversions of the Preferred Shares
and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Preferred Shares based on
the number of Preferred Shares held by each holder at the time of
issuance of the Preferred Shares or increase in the number of reserved
shares, as the case may be. In the event a holder shall sell or
otherwise transfer any of such holder's Preferred Shares, each
transferee shall be allocated a pro rata portion of the number of
reserved shares of Common Stock reserved for such transferor. Any
shares of Common Stock reserved and
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<PAGE>
which remain allocated to any person or entity which does not hold any
Preferred Shares shall be allocated to the remaining holders of
Preferred Shares, pro rata based on the number of Preferred Shares then
held by such holder.
8. Voting Rights. Holders of Preferred Shares shall have no
voting rights, except as required by law, including but not limited to
the Florida Business Corporation Act, and as expressly provided in
these Articles of Amendment.
9. Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of the Preferred Shares shall be entitled to
receive in cash out of the assets of the Company, whether from capital
or from earnings available for distribution to its stockholders (the
"Preferred Funds"), 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 Preferred Shares in respect of the preferences as to the
distributions and payments on the liquidation, dissolution and winding
up of the Company, an amount per Preferred Share equal to the sum of
(i) $5,000 and (ii) an amount equal to the product of (.05) (N/365)
($5,000) (such sum being referred to as the "Liquidation Preference");
provided that, if the Preferred Funds are insufficient to pay the full
amount due to the holders of Preferred Shares and holders of shares of
other classes or series of preferred stock of the Company that are of
equal rank with the Preferred Shares as to payments of Preferred Funds
(the "Pari Passu Shares"), then each holder of Preferred Shares and
Pari Passu Shares shall receive a percentage of the Preferred Funds
equal to the full amount of Preferred Funds payable to such holder as a
liquidation preference, in accordance with the Articles of
Incorporation of the Company then in effect, as a percentage of the
full amount of Preferred Funds payable to all holders of Preferred
Shares and Pari Passu Shares. The purchase or redemption by the Company
of stock of any class, in any manner permitted by law, shall not, for
the purposes hereof, be regarded as a liquidation, dissolution or
winding up of the Company. Neither the consolidation or merger of the
Company with or into any other Person, nor the sale or transfer by the
Company of less than substantially all of its assets, shall, for the
purposes hereof, be deemed to be a liquidation, dissolution or winding
up of the Company. No holder of Preferred Shares shall be entitled to
receive any amounts with respect thereto upon any liquidation,
dissolution or winding up of the Company other than the amounts
provided for herein; provided that a holder of Preferred Shares shall
be entitled to all amounts previously accrued with respect to amounts
owed hereunder.
10. Preferred Rank; Participation. (i) All shares of Common
Stock shall be of junior rank to all Preferred Shares in respect to the
preferences as to distributions and payments upon the liquidation,
dissolution and winding up of the Company. The rights of the shares of
Common Stock shall be subject to the preferences and relative rights of
the Preferred Shares. Without the prior express written consent of the
holders of not less than two-thirds (2/3) of the then outstanding
Preferred Shares, the Company shall not hereafter authorize or issue
additional or other capital stock that is of senior or equal rank to
the Preferred Shares in respect of the preferences as to distributions
and payments upon the liquidation, dissolution and winding up of the
Company. Without the prior express written consent of the holders of
not less than two-thirds (2/3) of the then outstanding Preferred
Shares, the Company shall not hereafter authorize or make any amendment
to the Company's Articles of Incorporation or bylaws, or file any
resolution
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<PAGE>
of the board of directors of the Company with the Florida Secretary of
State containing any provisions, which would adversely affect or
otherwise impair the rights or relative priority of the holders of the
Preferred Shares relative to the holders of the Common Stock or the
holders of any other class of capital stock. In the event of the merger
or consolidation of the Company with or into another corporation, the
Preferred Shares shall maintain their relative powers, designations and
preferences provided for herein and no merger shall result inconsistent
therewith.
(ii) Subject to the rights of the holders, if any, of the Pari
Passu Shares, the holders of the Preferred Shares shall, as holders of
Preferred Stock, be entitled to such dividends paid and distributions
made to the holders of Common Stock to the same extent as if such
holders of Preferred Shares had converted the Preferred Shares into
Common Stock (without regard to any limitations on conversion herein or
elsewhere) and had held such shares of Common Stock on the record date
for such dividends and distributions. Payments under the preceding
sentence shall be made concurrently with the dividend or distribution
to the holders of Common Stock.
11. Restriction on Redemption and Cash Dividends with respect
to Other Capital Stock. Until all of the Preferred Shares have been
converted or redeemed as provided herein 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 (2/3) of the
then outstanding Preferred Shares.
12. Limitation on Number of Conversion Shares. Notwithstanding
any other provision herein, the Company shall not be obligated to issue
any shares of Common Stock upon conversion of the Preferred Shares if
the issuance of such shares of Common Stock would exceed that number of
shares of Common Stock which the Company may issue upon Conversion of
the Preferred Shares (the "Exchange Cap") without breaching the
Company's obligations under the rules or regulations of The Nasdaq
Stock Market, Inc., except that such limitation shall not apply in the
event that the Company (a) obtains the approval of its stockholders as
required by applicable rules and regulations of The Nasdaq Stock Market
for issuances of Common Stock in excess of such amount or (b) obtains a
written opinion from outside counsel to the Company that such approval
is not required, which opinion shall be reasonably satisfactory to the
holders of a majority of the Preferred Shares then outstanding. Until
such approval or written opinion is obtained, no purchaser of Preferred
Shares pursuant to the Securities Purchase Agreement (the "Purchasers")
shall be issued, upon conversion of Preferred Shares, shares of Common
Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the
number of Preferred Shares issued to such Purchaser pursuant to the
Securities Purchase Agreement and the denominator of which is the
aggregate amount of all the Preferred Shares issued to the Purchasers
pursuant to the Securities Purchase Agreement (the "Cap Allocation
Amount"). In the event that any Purchaser shall sell or otherwise
transfer any of such Purchaser's Preferred Shares, the transferee shall
be allocated a pro rata portion of such Purchaser's Cap Allocation
Amount. In the event that any holder of Preferred Shares shall convert
all of such holder's Preferred Shares into a number of shares of Common
Stock which, in the aggregate, is less than such holder's Cap
Allocation Amount, then the difference between such holder's Cap
Allocation Amount and the number of shares
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<PAGE>
of Common Stock actually issued to such holder shall be allocated to
the respective Cap Allocation Amounts of the remaining holders of
Preferred Shares on a pro rata basis in proportion to the number of
Preferred Shares then held by each such holder.
13. Vote to Change the Terms of Preferred Shares. The
affirmative vote at a meeting duly called for such purpose or the
written consent without a meeting, of the holders of not less than
two-thirds (2/3) of the then outstanding Preferred Shares, shall be
required for (a) any change to these Articles of Amendment or the
Company's Certificate of Incorporation which would amend, alter, change
or repeal any of the powers, designations, preferences and rights of
the Preferred Shares or (b) the Company to issue any Preferred Shares
other than pursuant to the Security Purchase Agreement.
14. Lost or Stolen Certificates. Upon receipt by the Company
of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Stock Certificates representing the
Preferred Shares, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the holder to the Company and, in
the case of mutilation, upon surrender and cancellation of the
Preferred Stock Certificate(s), the Company shall execute and deliver
new preferred stock certificate(s) of like tenor and date; provided,
however, the Company shall not be obligated to re-issue preferred stock
certificates if the holder contemporaneously requests the Company to
convert such Preferred Shares into Common Stock.
15. Remedies, Characterizations, Other Obligations, Breaches
and Injunctive Relief. The remedies provided in these Articles of
Amendment shall be cumulative and in addition to all other remedies
available under these Articles of Amendment, at law or in equity
(including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of these Articles of
Amendment. The Company covenants to each holder of Preferred Shares
that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the holder
thereof and shall not, except as expressly provided herein, be subject
to any other obligation of the Company (or the performance thereof).
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Preferred
Shares and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such
breach or threatened breach, the holders of the Preferred Shares shall
be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.
16. Specific Shall Not Limit General; Construction. No
specific provision contained in these Articles of Amendment shall limit
or modify any more general provision contained herein. These Articles
of Amendment shall be deemed to be jointly drafted by the Company and
all Buyers and shall not be construed against any person as the drafter
hereof.
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<PAGE>
17. Failure or Indulgence Not Waiver. No failure or delay on
the part of a holder of Preferred Shares in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege.
18. Restrictions on Transfers. Without the prior consent of
the Company, no holder of Preferred Shares shall be entitled to sell
any Preferred Shares to the extent that, immediately following such
sale, there would be more than two holders of Preferred Shares.
THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE>
19. Form of Conversion Notice. Each Conversion Notice required
to be delivered by a holder of Preferred Shares shall be in the
following form:
--------------------------------------
VISUAL DATA CORPORATION
CONVERSION NOTICE
Reference is made to the Articles of Amendment to the Articles of Incorporation
(the "Articles of Amendment"). In accordance with and pursuant to the Articles
of Amendment, the undersigned hereby elects to convert the number of shares of
Series A Convertible Preferred Stock, par value $0.0001 per share (the
"Preferred Shares"), of Visual Data Corporation, a Florida corporation (the
"Company"), indicated below into shares of Common Stock, no par value per share
(the "Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Preferred Shares specified below as of the date
specified below.
Date of Conversion:____________________________________________________
Number of Preferred Shares to be converted:____________________________
Stock certificate no(s). of Preferred Shares to be converted:__________
Please confirm the following information:
Conversion Price:______________________________________________________
Number of shares of Common Stock to be issued:_________________________
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:
Issue to: ________________________________________________
________________________________________________
________________________________________________
Facsimile Number: ________________________________________________
Authorization: ________________________________________________
By:_____________________________________________
Title:__________________________________________
Dated: ________________________________________________
Account Number:
(if electronic book entry transfer):_________________________________
Transaction Code Number (if electronic book entry transfer):___________
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<PAGE>
20. Elimination of Shares. Pursuant to the authorization of the
Company's Board of Directors on March 21, 1995, the Company has designated the
terms and conditions of 650,000 shares of Series A Preferred Stock, $.0001 par
value per share, and pursuant to the authorization of the Company's Board of
Directors on October 31, 1995, the Company has designated the terms and
conditions of 1,000,000 shares of Series B Preferred Stock, $.0001 par value per
share. Inasmuch as no shares of either designation remain outstanding, the Board
of Directors has adopted resolutions setting forth the elimination of the
aforesaid shares of Preferred Stock, and in accordance with said resolutions,
the Company's Articles of Incorporation are hereby amended. The Company does
hereby eliminate the designations of the aforesaid shares of Preferred Stock
authorized pursuant to such designations.
IN WITNESS WHEREOF, the Company has caused these Articles of Amendment
to be signed on behalf of the Company, as of the 1st day of May, 1998.
VISUAL DATA CORPORATION
(a Florida corporation)
By: /s/ Randy S. Selman
--------------------
Name: Randy S. Selman
Its: President
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