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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of
December 8, 2000 between Visual Data Corporation, a Florida corporation with
offices at 1291 S.W. 29th Avenue, Pompano Beach, Florida 33069 (the "COMPANY")
and each of the entities listed under "PURCHASERS" on the signature page hereto
(each a "PURCHASER" and collectively the "PURCHASERS"), each with offices at the
address listed under such Purchaser's name on Schedule I hereto.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement by and between the
Company and the Purchasers (the "PURCHASE AGREEMENT"), the Company has agreed to
sell and issue to the Purchasers, and the Purchasers have agreed to purchase
from the Company, an aggregate of $2 million principal amount of the Company's
6% Convertible Debentures Due December 8, 2003 (the "INITIAL DEBENTURES") on the
terms and conditions set forth therein;
WHEREAS, the Purchase Agreement contemplates that the Debentures will
be convertible into shares (the "INITIAL COMMON SHARES") of common stock, par
value $.0001, of the Company ("COMMON STOCK");
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Purchasers' agreement to enter into the Purchase Agreement, the Company has
agreed to issue warrants exercisable for shares of Common Stock (the "INITIAL
WARRANT SHARES") (the "INITIAL WARRANTS") in connection with the issuance of the
Debentures;
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company
has the right, under certain conditions, to sell, in the aggregate, in two
separate tranches, an additional $2,040,000 principal amount of Debentures (the
"ADDITIONAL DEBENTURES") and Warrants to purchase 100,000 Warrant Shares (the
"ADDITIONAL WARRANTS") (collectively the "ADDITIONAL SECURITIES")
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Purchasers' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Purchasers with certain registration rights with respect
to the Common Shares, Warrant Shares, shares of Common Stock issuable upon
conversion of the Additional Debentures (the "ADDITIONAL COMMON SHARES") and
upon exercise of the Additional Warrants (the "ADDITIONAL WARRANT SHARES") and
certain other rights and remedies with respect to the Debentures as set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Purchasers agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement, the
Warrants or the
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Debentures. As used in this Agreement, the following terms shall have the
following respective meanings:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"COMMON SHARES" shall mean the Initial Common Shares and the Additional
Common Shares.
"CONVERSION PRICE" shall have meaning ascribed to such term in Section
5(c) of the Debentures.
"CONVERSION VALUE" shall mean the value that a Holder would be entitled
to receive upon (i) conversion of the Debentures at the Conversion Price then in
existence, without reference to Section 11 of the Debentures or to Section 3.13
of the Purchase Agreement, followed by (ii) the subsequent sale of the Common
Shares received thereby at the greater of the Market Price for Shares of Common
Stock in existence at the time (A) of the closing of a redemption of a Debenture
or (B) of the event triggering the right to redemption.
"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"DEBENTURE AMOUNT" shall mean the Outstanding Principal Amount of, the
accrued but unpaid interest on, and the accrued but unpaid Delay Payments on,
the Debentures.
"DEBENTURES" shall mean the Initial Debentures and the Additional
Debentures.
"DELAY PAYMENT" shall mean a payment equal to 2% of the Debenture
Amount held by the relevant Holder.
"EFFECTIVENESS DEADLINE" shall have the meaning set forth in Section
2(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" shall have the meaning set forth in the Warrants.
"HOLDER" and "HOLDERS" shall mean the Purchaser or the Purchasers,
respectively, and any transferee of the Debentures, Warrants, Warrant Shares,
Common Shares, Additional Securities or Registrable Securities which have not
been sold to the public to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement.
"INTERFERING EVENTS" shall have the meaning set forth in Section 2(b).
"MARKET PRICE FOR SHARES OF COMMON STOCK" shall have the meaning
ascribed to such term in the Debentures.
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"OUTSTANDING PRINCIPAL AMOUNT" shall have the meaning ascribed to such
term in the Debentures.
"PREMIUM REDEMPTION PRICE" shall mean the following:
(a) as to the Debentures, the greater of (i) 120% of the
Debenture Amount and (ii) the Conversion Value;
(b) as to the Warrant Shares, 120% of the dollar amount which
is the product of (i) the number of shares to be redeemed, and (ii) the Market
Price for Shares of Common Stock in existence at the time (x) of the closing of
a redemption of the Warrant Shares or (y) of the event triggering the right to
redemption, whichever results in a greater Premium Redemption Price.
"PUT NOTICE" shall have the meaning set forth in Section 2(b)(i)(B).
"REGISTRABLE SECURITIES" shall mean: (a) the Common Shares and Warrant
Shares issued or issuable to each Holder or its permitted transferee or designee
upon conversion of the Debentures or exercise of the Warrants, as applicable, or
upon any stock split, stock dividend, recapitalization or similar event with
respect to such Common Shares or Warrant Shares; (b) any securities issued or
issuable to each Holder upon the conversion, exercise or exchange of any
Debentures, Warrants, Warrant Shares or Common Shares; and (c) any other
security of the Company issued as a dividend or other distribution with respect
to, conversion or exchange of, or in replacement of, Registrable Securities.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "BLUE SKY"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, which shall in no event exceed $5,000 and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company).
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
2(a) herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of 1933, as
amended.
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"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for Holders not included within "REGISTRATION EXPENSES"
and if the Holders engage a third party as an underwriter for the purpose of
distributing Registrable Securities on an underwritten basis, the fees and
expenses of such underwriting and any additional expenses of an accountant
incurred in order to obtain a "COMFORT LETTER."
"WARRANTS" shall mean the Initial Warrants and the Additional Warrants.
"WARRANT SHARES" shall mean the Initial Warrant Shares and the
Additional Warrant Shares.
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "BLUE SKY" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by the
Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible
after the Closing Date:
(i) But in any event by the later of: (A) 30 days after
the Closing Date; (B) 10 days after the filing of the
Company's Annual Report on Form 10-KSB, pursuant to the
Exchange Act; or (C) January 24, 2001, prepare and file a
registration statement with the Commission on Form S-3 under
the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act) covering the
Registrable Securities (such registration statement, including
any amendments or supplements thereto and prospectuses
contained therein, is referred to herein as the "REGISTRATION
STATEMENT"), which Registration Statement, to the extent
allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), shall state that such
Registration Statement also covers such number of additional
shares of Common Stock as may become issuable to prevent
dilution resulting from stock splits, stock dividends or
similar events. The number of shares of Common Stock initially
included in such Registration Statement shall be no less than
the sum of (A) 175% of the sum of the number of shares of
Common Stock that as of the date of this Agreement would be
issuable upon conversion of the Debentures and the Additional
Debentures plus (B) the number of Warrant Shares that would be
issuable upon exercise of the Warrants and the Additional
Warrants in each case without regard to any limitation on the
Purchaser's ability to convert or exercise such securities.
Thereafter, the Company shall use its best efforts to cause
such Registration Statement to be declared effective as soon
as
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practicable, and in any event prior to 90 days after the
Closing Date, in the event that the Registration Statement is
not reviewed by the SEC or the NASD or 150 days after the
Closing Date, in the event that such review takes place (the
"EFFECTIVENESS DEADLINE"). The Company shall provide Holders
and their legal counsel reasonable opportunity to review any
such Registration Statement or amendment or supplement thereto
prior to filing.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
Registration Statement in accordance with the intended methods
of disposition by the seller thereof as set forth in the
Registration Statement and notify the Holders of the filing
and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) After the registration, furnish to each Holder such
numbers of copies of a current prospectus conforming with the
requirements of the Act, copies of the Registration Statement,
any amendment or supplement thereto and any documents
incorporated by reference therein and such other documents as
such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such
other securities or "BLUE SKY" laws of all U.S. jurisdictions;
provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such
states or jurisdictions.
(v) Notify each Holder promptly of the happening of any
event as a result of which the prospectus (including any
supplements thereto or thereof and any information
incorporated or deemed to be incorporated by reference
therein) included in such Registration Statement, as then in
effect, includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, use its best efforts
to promptly update and/or correct such prospectus.
(vi) Notify each Holder promptly of the issuance by the
Commission or any state securities commission or agency of any
stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose. The Company shall use its best efforts to prevent the
issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible time.
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(vii) Permit a single firm of counsel, designated as
Holders' counsel by the Holders of a majority of the
Registrable Securities included in the Registration Statement,
to review the Registration Statement and all amendments and
supplements thereto within a reasonable period of time prior
to each filing, and shall not file any document in a form to
which such counsel reasonably objects.
(viii) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common
Stock is then listed and prepare and file any required filings
with the National Association of Securities Dealers, Inc. or
any exchange or market where the Common Stock is then traded.
(ix) If applicable, take all steps necessary to enable
Holders to avail themselves of the prospectus delivery
mechanism set forth in Rule 153 (or successor thereto) under
the Act.
(x) File additional Registration Statements if the number
of Registrable Securities at any time exceeds 85% of the
number of shares of Common Stock then registered in the
existing Registration Statements hereunder.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the Purchasers consider will interfere with the full enjoyment of
their rights under the Debentures, Warrants, Additional Securities, the
Registrable Securities, the Purchase Agreement and this Agreement (the
"INTERFERING EVENTS"), and (II) certain remedies applicable in each of these
events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Purchasers if an
Interfering Event occurs and provide that the Purchasers may
require that the Company redeem outstanding Debentures,
Warrants, or Registrable Securities at a specified price if
certain Interfering Events are not timely cured.
Paragraph (v) provides, inter alia, that each Holder shall
have the option as to whether it would like to receive any
payment required as a remedy in the case of certain of the
Interfering Events in cash or shares of Common Stock.
Paragraph (vi) provides, inter alia, that if payments required
as the remedy in the case of certain of the Interfering Events
are not paid when due, the Company may be required by the
Purchasers to redeem outstanding Debentures, Warrants, or
Registrable Securities at a specified price.
Paragraph (viii) provides, inter alia, that the Purchasers
have the right to specific performance.
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The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
In the event that the Registration Statement has not
been declared effective by the Effectiveness Deadline,
unless such failure is as a result of any action or
inaction taken or not taken, as the case may be, by the
Holders, then the Conversion Price and the Exercise Price
shall each be reduced by 2% for each 30 day period (or
portion thereof) thereafter during which the Registration
Statement has not been declared effective; provided,
however, that if the Registrable Securities can be resold
by the Holders pursuant to Rule 144 under the Act, the
aggregate amount of adjustments to each of the Conversion
Price and the Exercise Price shall not exceed 16%.
(ii) No Listing; Premium Price Redemption for Delisting of
Class of Shares.
(A) In the event that the Company fails, refuses or is
unable to cause the Registrable Securities covered by the
Registration Statement to be listed with the applicable
Approved Markets and each other securities exchange and
market on which the Common Stock is then traded at all
times during the period ("Listing Period") commencing the
earlier of the effective date of the Registration
Statement or the 90th day following the Closing Date, and
continuing thereafter for so long as the Debentures are
outstanding, then the Company shall pay in cash or Common
Stock, as provided in Section 2(b)(v), to each Holder a
Delay Payment for each 30-day period (or portion thereof)
during the Listing Period from and after such failure,
refusal or inability to so list the Registrable Securities
until the Registrable Securities are so listed, which
Delay Payments shall not in the aggregate exceed the
maximum percentage permitted by law.
(B) In the event that shares of Common Stock of the
Company are delisted from the applicable Approved Markets
at any time following the Closing Date and remain delisted
for 5 consecutive business days, then at the option of
each Holder and to the extent such Holder so elects, the
Company shall on 5 business days notice either (1) pay in
cash or Common Stock (as provided in Section 2(b)(v)) to
such Holder a Delay Payment for each 30-day period that
the shares are delisted or (2) redeem the Debentures
and/or Warrants and/or Common Shares and/or Warrant Shares
held by such Holder, in whole or in part, at a
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redemption price equal to the Premium Redemption Price (as
defined above); provided, however, that such Holder may
revoke such request at any time prior to receipt of
payment of such Delay Payments or Premium Redemption
Price, as the case may be. Delay Payments shall no longer
accrue on Debentures after such Debentures have been
redeemed by the Company pursuant to the foregoing
provision.
(iii) Blackout Periods. In the event any Holder is unable
to sell Registrable Securities under the Registration
Statement for more than (A) seven (7) consecutive days or (B)
an aggregate of thirty (30) days in any 12 month period
("Suspension Grace Period"), including without limitation by
reason of a suspension of trading of the Common Stock on the
Approved Market, any suspension or stop order with respect to
the Registration Statement or the fact that an event has
occurred as a result of which the prospectus (including any
supplements thereto) included in such Registration Statement
then in effect includes an untrue statement of material fact
or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, or the
number of shares of Common Stock covered by the Registration
Statement is insufficient at such time to make such sales (a
"Blackout"), then the Company shall pay in cash or Common
Stock (as provided in Section 2(b)(v)) to each Holder a Delay
Payment for each 30-day period (or portion thereof) from and
after the expiration of the Suspension Grace Period, which
Delay Payment shall not exceed the maximum percentage
permitted by law. In lieu of receiving the Delay Payment as
provided above, a Holder shall have the right but not the
obligation to elect to have the Company redeem its Debentures,
Warrants, Common Shares and Warrant Shares at the price equal
to the Premium Redemption Price.
(iv) Conversion Deficiency; Premium Price Redemption for
Conversion Deficiency. In the event that the Company does not
have a sufficient number of Common Shares available to satisfy
the Company's obligations to any Holder upon receipt of a
Conversion Notice (as defined in the Debenture) or is
otherwise unable or unwilling to issue such Common Shares in
accordance with the terms of the Debenture for any reason
after receipt of a Conversion Notice, then:
(A) The Company shall pay in cash or Common Stock (as
provided in Section 2(b)(v)) to each Holder a Delay
Payment for each 30-day period (or portion thereof) that
the Company fails or refuses to issue Common Shares in
accordance with the Debenture terms, which Delay Payment
shall not exceed the maximum percentage permitted by law;
provided, however, that if such failure is the result of
there being insufficient shares authorized to make such
issuance, such amount shall not be
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payable if the Company promptly (but in any event within
five (5) calendar days) authorizes and issues such shares,
and
(B) At any time five days after the commencement of
the running of the first 30-day period described above in
clause (A) of this paragraph (iv), at the request of any
Holder pursuant to a redemption notice, the Company
promptly (1) shall purchase from such Holder, at a
purchase price equal to the Premium Redemption Price, the
Debenture Amount of Debentures equal to such Holder's pro
rata share of the Deficiency (as such term is defined
below), if the failure to issue Common Shares results from
the lack of a sufficient number thereof and (2) shall
purchase all (or such portion as such Holder may elect) of
such Holder's Debentures at such Premium Redemption Price
if the failure to issue Common Shares results from any
other cause. The "Deficiency" shall be equal to the
Debenture Amount of Debentures that would not be able to
be converted for Common Shares, due to an insufficient
number of Common Shares available, if all the outstanding
Debentures were submitted for conversion at the Conversion
Price set forth in the Debentures as of the date such
Deficiency is determined. Any request by a Holder pursuant
to this paragraph (iv)(B) shall be revocable by that
Holder at any time prior to its receipt of the Premium
Redemption Price.
Notwithstanding the foregoing, in the event that the Company
is in compliance with its obligations under Section 3.13 of
the Purchase Agreement, and has not yet obtained the
stockholder approval set forth therein, then the Company shall
not be obligated to redeem Debentures to the extent that the
failure to satisfy the Company's obligations pursuant to a
Conversion Notice is due to the limitation set forth in
Section 3.13 of the Purchase Agreement.
(v) Delay Payment Terms; Status of Unpaid Delay Payments.
All Delay Payments (which payments shall be pro rata on a per
diem basis for any period of less than 30 days) required to be
made in connection with the above provisions shall be paid at
any time upon demand, by the fifteenth (15th) day of each
calendar month for the partial or full calendar month
occurring prior to that date. Such Delay Payments shall be
payable in cash or Common Stock, as determined by each Holder
in its sole discretion. If the Holder elects to be paid in
Common Stock, the Holder shall be entitled to that number of
shares of Common Stock as shall equal to the amount of such
Delay Payment multiplied by a fraction, the numerator of which
is one and the denominator of which is equal to the average of
the Market Price for Shares of Common Stock for the three (3)
business days prior to, but not including, the date upon which
such payments are due. Unless the Company shall receive
written notice to the contrary from the respective Holder, the
Delay Payments shall be paid in
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cash. Until paid as required in this Agreement, Delay Payments
shall be deemed added to, and a part of, the Outstanding
Principal Amount of a Holder's Debentures.
(vi) Premium Price Redemption for Delay Payment Defaults.
In the event that the Company fails or refuses to pay any
Delay Payment provided for in the foregoing paragraphs (i)
through (iv) when due, at any Holder's request and option, the
Company shall purchase all or a portion of the Debentures,
Warrants, Common Shares and/or Warrant Shares held by such
Holder (with Delay Payments accruing through the date of such
purchase), within five (5) days of such request, at a purchase
price equal to the Premium Redemption Price (as defined
above); provided that such Holder may revoke such request at
any time prior to receipt of such payment of such purchase
price. Until such time as the Company purchases such
Debentures at the request of such Holder pursuant to the
preceding sentence, at any Holder's request and option the
Company shall as to such Holder pay such amount by adding and
including the amount of such Delay Payment to the Outstanding
Principal Amount of a Holder's Debentures.
(vii) Cumulative Remedies. Each Delay Payment triggered by
an Interfering Event provided for in the foregoing paragraphs
(ii) through (iv) shall be in addition to each other Delay
Payment triggered by another Interfering Event; provided,
however, that in no event shall the Company be obligated to
pay to any Holder Delay Payments in an aggregate amount
greater than one Delay Payment for any 30-day period (or
portion thereof). The Delay Payments and mandatory redemptions
provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in
equity or under the terms of the Debentures, the Purchase
Agreement, the Warrants or this Agreement, including without
limitation the right to specific performance. Each Holder
shall be entitled to specific performance of any and all
obligations of the Company in connection with the registration
rights of the Holders hereunder.
(viii) Certain Acknowledgments. The Company acknowledges
that any failure, refusal or inability by the Company
described in the foregoing paragraphs (i) through (iv) and
paragraph (vi) will cause the Holders to suffer damages in an
amount that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in
holding the Registrable Securities. Accordingly, the parties
agree that it is appropriate to include in this Agreement the
foregoing provisions for Delay Payments and mandatory
redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the Delay
Payments and mandatory redemptions set forth above represent
the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such Delay Payments
and mandatory redemptions are
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reasonable and will not constitute a penalty. The parties
agree that the provisions of this clause (viii) consist of
certain acknowledgments and agreements concerning the remedies
of the Holders set forth in clauses (i) through (iv) and
paragraph (vi) of this paragraph; nothing in this clause
(viii) imposes any additional default payments and mandatory
redemptions for violations under this Agreement.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by investment bankers
reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities. In the event that
the offering in which the Registrable Securities are to be sold is deemed to be
an underwritten offering or an Purchaser selling Registrable Securities is
deemed to be an underwriter, the Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any,
opinions of independent counsel to the Company, on and dated
as of the effective day (or in the case of an underwritten
offering, dated the date of delivery of any Registrable
Securities sold pursuant thereto) of the Registration
Statement, and within ninety (90) days following the end of
each fiscal year thereafter, which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to
the Holders and the underwriter(s), if any, and their counsel
and covering, without limitation, such matters as the due
authorization and issuance of the securities being registered
and compliance with securities laws by the Company in
connection with the authorization, issuance and registration
thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the
Holders and each underwriter, if any.
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
of an underwritten offering, at the time of delivery of any
Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which
the Company's independent certified public accountants shall
have reviewed any of the Company's books or records, a
"COMFORT" letter from the Company's independent certified
public accountants addressed to the Holders and each
underwriter, if any, stating that such
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accountants are independent public accountants within the
meaning of the Securities Act and the applicable published
rules and regulations thereunder, and otherwise in customary
form and covering such financial and accounting matters as are
customarily covered by letters of the independent certified
public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such
letter to update the same during each such fiscal year in
which such books or records are being reviewed so that each
such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the
Holders.
(iv) if an underwriting agreement is entered into, the
same shall include customary indemnification and contribution
provisions to and from the underwriters and procedures for
secondary underwritten offerings;
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable
Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any; and
(vi) deliver to the Holders on the effective day (or in
the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto)
of the Registration Statement, and at the beginning of each
fiscal quarter thereafter, a certificate in form and substance
as shall be reasonably satisfactory to the Holders, executed
by an executive officer of the Company and to the effect that
all the representations and warranties of the Company
contained in the Purchase Agreement are still true and correct
except as disclosed in such certificate; the Company shall, as
to each such certificate delivered at the beginning of each
fiscal quarter, update or cause to be updated each such
certificate during such quarter so that it shall remain
current, complete and correct throughout such quarter; and
such updates received by the Holders during such quarter, if
any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection, upon
reasonable written notice and during regular business hours, by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and use its reasonable best efforts to
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in
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connection with such Registration Statement, provided that such parties agree to
keep such information confidential.
(f) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved shares, with respect to its
obligation to reserve or register Registrable Securities, within 30 days of any
corporate action authorizing or reserving same and shall file a Registration
Statement with respect to additional Registrable Securities within 30 days of
the occurrence of an event referred to in Section 2(a)(x) and shall use its best
efforts to cause, in either case, such Registration Statement to become
effective within seventy-five (75) days of such corporate action or such
occurrence, as the case may be. If the Holders become entitled, pursuant to an
event described in clause (iii) of the definition of Registrable Securities, to
receive any securities in respect of Registrable Securities that were already
included in a Registration Statement, subsequent to the date such Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration Statement, the
Company shall promptly file, in accordance with the procedures set forth herein,
an additional Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any such
additional Registration Statement, when filed, to become effective under the
Securities Act, and (ii) keep such additional Registration Statement effective
during the period described in Section 5 below. All of the registration rights
and remedies under this Agreement shall apply to the registration of such newly
reserved shares and such new Registrable Securities, including without
limitation the remedy provisions contained in Section 2(b) herein.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3; Other Forms. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until sales are permitted of all Registrable
Securities without registration under Rule 144(k).
6. Indemnification.
(a) The Company Indemnity. The Company will indemnify each
Holder, each of its officers, directors and partners, and each person
controlling each Holder, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person
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who controls, within the meaning of Section 15 of the Securities Act and the
rules and regulations thereunder, any underwriter, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances when
made, not misleading, or any violation by the Company of the Securities Act or
any state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors and partners,
and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to a Holder to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by such
Holder or the underwriter (if any) therefor and stated to be specifically for
use therein. The indemnity agreement contained in this Section 6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s), against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company and such other
Holder(s) and their directors, officers and partners, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement
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<PAGE> 15
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under
this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the
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Holders or the underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraphs. The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraphs
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall reasonably promptly
furnish to the Company such information regarding such Holder and the
distribution and/or sale proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement. The
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Purchaser shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder, except that such
Holder may not require an intended method of disposition which violates
applicable securities law.
10. NASDAQ Limit on Stock Issuances. Section 3.13 of the Purchase
Agreement shall govern limits imposed by NASDAQ National Market rules on the
conversion of Debentures to the extent provided in the Purchase Agreement.
11. Replacement Certificates. The certificate(s) representing the
Common Shares, Warrant Shares or Additional Shares held by the Purchaser (or
then Holder) may be exchanged by the Purchaser (or such Holder) at any time and
from time to time for certificates with different denominations representing an
equal aggregate number of Common Shares, Warrant Shares or Additional Shares, as
reasonably requested by the
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Purchaser (or such Holder) upon surrendering the same. No service charge will be
made for such registration or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchasers by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Debentures, Warrants or Additional Securities, and all other
rights granted to the Purchasers by the Company hereunder may be transferred or
assigned to any transferee or assignee of any Debentures Warrants or Additional
Securities; provided in each case that: (i) any transfer of Debentures or New
Debentures shall be for at least $50,000 in principal amount thereof; and (ii)
the Company must be given written notice by the such Purchaser at the time of or
within a reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned;
provided that the transferee or assignee of such rights agrees in writing to be
bound by the provisions of this Agreement.
13. Miscellaneous.
(a) Remedies. The Company and the Purchasers acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) Jurisdiction. THE COMPANY AND EACH OF THE PURCHASERS (I)
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES
SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT
IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND EACH OF THE
PURCHASERS CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS
PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
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(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
1291 S.W. 29th Avenue
Pompano Beach, Florida 33069
Phone: (954) 917-6655
Fax: (954) 917-0525
Attention: Randy Selman,
Chief Executive Officer
with copies to:
Atlas Pearlman, P.A.
350 East Las Olas Boulevard
Fort Lauderdale, Florida 33301
Phone: (954) 766-7816
Fax: (954) 766-7800
Attention: Joel Mayersohn, Esq.
to the Purchasers:
To each Purchaser at the address and/or fax number
set forth on Schedule I of this Agreement
with copies to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Phone: (212) 986-6000
Facsimile: (212) 986-8866
Attention: Stephen M. Schultz, Esq.
Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.
(d) Indemnity. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a
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continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Purchaser contained herein shall survive the
Closing.
(f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of any Purchaser
without its express written approval, unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. The Company agrees to deliver a copy of any public announcement
regarding the matters covered by this Agreement or any agreement or document
executed herewith to each Purchaser and any public announcement including the
name of an Purchaser to such Purchaser, prior to the publication of such
announcements.
(h) No Piggyback on Registration. Except as set forth on
Schedule 3.18 to the Purchase Agreement, neither the Company nor any of its
security holders (and other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other than
the Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its security
holders.
(i) Entire Agreement. This Agreement, together with the
Purchase Agreement, the Debentures, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be modified or terminated except by a
written agreement signed by both parties.
(j) Governing Law. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
(k) Severability. The parties acknowledge and agree that the
Purchasers are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Purchasers
hereunder are several and not joint, that no Purchaser shall have any
responsibility or liability for the representations, warrants, agreements, acts
or omissions of any other Purchaser, and that any rights granted to "PURCHASERS"
hereunder shall be enforceable by each Purchaser hereunder.
(l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY.
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(m) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(n) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least a majority of the then issued or issuable
Registrable Securities; provided, however, that, for the purposes of this
sentence, Registrable Securities that are owned, directly or indirectly, by the
Company, or an affiliate of the Company are not deemed outstanding.
Signature page follows
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
VISUAL DATA CORPORATION
By:
----------------------------------------
Name:
Title:
INVESTORS:
HALIFAX FUND, L.P.
By:
----------------------------------------
Name:
Title:
PALLADIN OPPORTUNITY FUND, L.L.C.
By:
----------------------------------------
Name:
Title:
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
<PAGE> 22
SCHEDULE I
PURCHASER
Halifax Fund, L.L.C.
Palladin Opportunity Fund, L.L.C.
c/o The Palladin Group, L.P.
195 Maplewood Avenue
Maplewood, New Jersey 07040
