-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G/f4ZyYKa8/DrW5yXaobzQMVvB/igTK5NgJH3Ips/Gh7tCfv1USU0HgSzkW7MAVi Oo69vADACniOcMTb5/npIg== 0000950144-02-006033.txt : 20020524 0000950144-02-006033.hdr.sgml : 20020524 20020524144225 ACCESSION NUMBER: 0000950144-02-006033 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISUAL DATA CORP CENTRAL INDEX KEY: 0000919130 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PUBLISHING [2741] IRS NUMBER: 650420146 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-89042 FILM NUMBER: 02662096 BUSINESS ADDRESS: STREET 1: 1291 SW 29 AVE STREET 2: STE 3A CITY: POMPANO BEACH STATE: FL ZIP: 33069 BUSINESS PHONE: 9549176655 MAIL ADDRESS: STREET 1: 1600 S DIXIE HIGHWAY STREET 2: SUITE 3A CITY: BOCA RATON STATE: FL ZIP: 33432 S-3 1 g75693s-3.txt VISUAL DATA CORPORATION FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY , 2002 Registration No. 333 - SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- VISUAL DATA CORPORATION (Exact name of registrant as specified in its charter) Florida 65-0420146 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1291 SW 29th Avenue Pompano Beach, Florida 33069 (954) 917-6655 (Name, address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Randy S. Selman, CEO Visual Data Corporation 1291 SW 29th Avenue Pompano Beach, Florida 33069 (954) 917-6655 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Joel D. Mayersohn, Esq. Atlas Pearlman, P.A. 350 East Las Olas Boulevard Suite 1700 Fort Lauderdale, Florida 33301 (954) 763-1200 telephone (954) 766-7800 telecopier Approximate date of commencement of proposed sale to public: From time to time after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
Proposed Proposed Title of each maximum maximum Class of securities of Amount to be offering price aggregate amount to be registered registered per security offering price(1) registration fee - ---------------------- ------------ -------------- ----------------- ---------------- Common Stock(2) 7,773,898 $0.40 $3,109,559 $290 Total Registration Fee
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933 (the "Securities Act") based on the average of the high and low sale price of the common stock as reported on the Nasdaq National Market on May 15, 2002. (2) For purposes of estimating the number of shares of the registrant's common stock to be included in this registration statement, the registrant included up to 1,003,758 shares of common stock issuable upon the exercise of outstanding options and warrants and 6,770,140 shares of its common stock presently issued and outstanding. Pursuant to Rule 416, there are also being registered such additional number of shares as may be issuable as a result of the anti-dilution provisions of the warrants and options. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS SUBJECT TO COMPLETION, DATED MAY __, 2002 VISUAL DATA CORPORATION 7,773,898 shares of common stock This prospectus relates to 7,773,898 shares of our common stock which may be offered by certain selling security holders, which includes 1,003,758 shares of our common stock issuable upon the exercise of currently outstanding options and warrants at exercise prices ranging from $0.50 to $12.50 per share. We will not receive any proceeds from the sale of shares of our common stock offered hereunder. The shares may be offered in transactions on the Nasdaq Stock Market, in negotiated transactions, or through a combination of such methods of distribution at prices relating to the prevailing market prices or at negotiated prices. See "Plan of Distribution." Our common stock is traded on the Nasdaq Stock Market under the trading symbol "VDAT". On May 15, 2002, the last sale price for our common stock was $0.40. THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 6. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is ____________ , 2002 1 TABLE OF CONTENTS Page ---- Business.................................................................. 3 Risk Factors.............................................................. 7 Cautionary Statement about Forward-Looking Information.................... 13 Use of Proceeds........................................................... 13 Description of Common Stock............................................... 13 Selling Security Holders.................................................. 14 Plan of Distribution...................................................... 22 Where You Can Find More Information....................................... 24 Legal Matters............................................................. 25 Experts................................................................... 25 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the SEC is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. 2 BUSINESS We are a full service broadband media company that specializes in webcasting, networking solutions for the entertainment industry and marketing solutions for the travel industry. For the year ended September 30, 2001, we reported revenues from continuing operations of $6,908,043 and a net loss of $11,552,745 and for the year ended September 30, 2000, we reported revenues from continuing operations of $5,862,465 and a net loss of $11,401,583. For the six months ended March 31, 2002 we reported revenues from continuing operations of $4,036,795 and a net loss of $7,361,293. We offer our products and services through three operating groups: * VISUAL DATA NETWORK SOLUTIONS GROUP, which is comprised of our subsidiary Entertainment Digital Network, Inc. (EDNET), provides connectivity within the entertainment and advertising industries through its private network, which encompasses production and post-production companies, advertisers, producers, directors, and talent. The network enables high-speed exchange of high quality audio, compressed video and multimedia data communications, utilizing long distance carriers, regional phone companies, satellite operators, and major Internet Service Providers (ISP). The Networking Solutions Group also provides systems integration and engineering services, application-specific technical advice, audio equipment, proprietary and off-the-shelf codecs, teleconferencing equipment, and other innovative products to facilitate our broadcast and production applications. Based in San Francisco, EDNET develops and markets integrated systems for the delivery, storage and management of professional quality digital communications for media-based applications, including audio and video production for the North American advertising and entertainment industries. EDNET has established a private wide-area network (WAN) through strategic alliances with long distance carriers, regional telephone companies, satellite operators and independent fiber optic telecommunications providers, which enables the exchange of high quality audio, compressed video and multimedia data communications. EDNET provides engineering services, application-specific technical advice, and audio, video and networking hardware and software as part of its business. Our Networking Solutions Group manages an expanding global network 3 of over 500 North American affiliates, and nearly 200 international associates, in cities throughout the United States, Canada, Mexico, Europe, and the Pacific Rim. Our Networking Solutions Group, which represented approximately 57% and 71% of our revenues from continuing operations for the years ended September 30, 2001 and 2000, respectively, and approximately 44% of our revenues from continuing operations for the six months ended March 31, 2002, generates revenues from the sale of equipment, installation of equipment, performance or bridging services and usage of bandwidth. * VISUAL DATA WEBCASTING GROUP which provides an array of corporate-oriented, web-based media services to the corporate market including live audio and video webcasting, packaged corporate announcements, and information distribution (Internet, broadcast TV and radio) for any business entity, and can provide point-to-point audio and video transport worldwide. Our Webcasting Group was created to provide a cost effective means for corporations to broadcast analyst conference calls live, making them available to the investing public, the media and worldwide to anyone with Internet access. We market the products through a direct sales channel, and in conjunction with our business partners. Each webcast can be archived for replay for an additional fee and the archived material can be accessed through a company's own web site. Major corporations and small businesses are hiring us to produce live webcasts and custom videos for the web to communicate corporate earnings announcements, conference calls on the web, speeches on demand, product launches, internal training, corporate video news and profiles, crisis communications, visual trade shows, and basic online multimedia fulfillment. Significant to this business division is our strategic partnership with the Internet's leading press release service, PR Newswire, providing a global sales force to promote our broadband corporate services packages. We also completed development of a suite of trade show related broadband media services including a "Virtual Exhibit Hall", rich-video filming, key-note speaker interview vignettes, and conference webcasting, all of which have the benefit of extending the life of a trade show, a highly attractive proposition for show producers and exhibitors alike. Our Webcasting Group, which represented approximately 29% and 17% of our revenues from continuing operations for the years ended September 30, 2001 and 2000, respectively, and approximately 48% of our revenues from continuing operations for the six months ended March 31, 2002, generates revenues through production and distribution fees. 4 * VISUAL DATA TRAVEL GROUP which produces high quality, Internet-based multi-media streaming videos such as hotel, resort, golf facility, travel destination and time-share productions designed to keep a high level of viewer interest. These concise, broadband-enabled "vignettes" generally have running times from two to four minutes. In addition to the high-end vignettes, we offer a commercial on the web which consists of a two minute narrated photo presentation of corporate properties. By incorporating the services of many of the largest travel and leisure websites, we believe we have created a unique distribution channel for travel industry businesses such as hotel chains and golf courses to significantly augment their marketing programs using highly effective multi-media applications. In March 2002 we launched our multimedia broadband travel portal, Travelago (TM) at www.travelago.com. The new Travelago portal hosts more than 22,000 video clips, including thousands of destinations, hotels, time share resorts, cruise ships, local attractions and golf courses, as well as information on local entertainment and nightlife. Video clips hosted at the Travelago portal include almost 2,000 designations, over 900 hotels, 80 cruise ships and hundreds of attractions and other venues, all of which are in multiple formats and speeds. The Visual Data Travel Group, which represented approximately 9% and 7% of our revenues from continuing operations for each of the years ended September 30, 2001 and 2000, respectively, and approximately 8% of our revenues from continuing operations for the six months ended March 31, 2002, generates revenues from production and distribution fees. We own or co-own virtually all the content we create, which we believe provides us with desirable content for syndication. Sales and marketing We use a variety of marketing methods, including our internal sales force, to market our products and services. One key element of our marketing strategy has been to enter into distribution agreements with recognized leaders in each of the markets for our products and services. By offering our products and services in conjunction with the distributors products, we believe these distribution agreements enable us to take advantage of the particular distributors' existing marketing programs, sales forces and business relationships. Contracts with these distributors generally range from one to two years. For the fiscal years ended September 30, 2001 and 2000, respectively, revenues from our agreements with PR Newswire have represented approximately 26% and 17% of our revenues from continuing operations, and revenues from our agreements with PR Newswire represented approximately 20% of our revenues from 5 continuing operations for the six months ended March 31, 2002. Our agreement with PR Newswire may be terminated on short notice. See Risk Factors below. Other than this agreement, no other agreement with a distributor has represented more than 10% of our revenues during this period. Discontinued operations During the fiscal year ended September 30, 2001 we had two additional operating groups, the Visual Data Financial Solutions Group and the Visual Data Golf, Leisure and Syndication Group. The Financial Solutions Group was established in November 1999 to address the information needs of the financial sector. For the fiscal years ended September 30, 2001 and 2000 it represented less than 1% of our revenues. The Golf, Leisure and Syndication Group was formed in December 2000 with the acquisition of the Golf Society of the U.S. which is a membership business that markets to the golfing community. Its members are provided with the opportunity to acquire equipment, greens fees, trips and various other benefits at a discounted price. While the Golf, Leisure and Syndication Group represented approximately 19% of our total revenues for the fiscal year ended September 30, 2001, its operations represented approximately 23% of our net loss for fiscal 2001. In December 2001 we determined to discontinue the operations of both the Financial Solutions Group and the Golf, Leisure and Syndication Group as a result of their adverse impact on our financial condition and in keeping with our overall strategic plan. In January 2002 we sold the stock of the Golf Society of the U.S. to an unaffiliated third party in exchange for a $6.5 million convertible debenture. The revenues and net losses from Financial Solutions Group and the Golf, Leisure and Syndication Group are included under discontinued operations on our consolidated financial statements for the years ended September 30, 2001 and 2000 and the six months ended March 31, 2002. We have fully reserved the $6.5 million convertible debenture issued to us by Golf Society International, Inc. (GSI) as part of GSI's January 2002 acquisition of all of the outstanding capital stock in our Golf Society of the U.S. subsidiary. We determined to fully reserve the debenture, as well as filing a civil lawsuit against GSI and the President/CEO of GSI, in response to GSI's default in April 2002 on an additional obligation to us, plus other recent actions by GSI and its management. Our executive offices Our executive offices are located at 1291 SW 29th Avenue, Pompano Beach, Florida 33069. Our telephone number at that location is (954) 917-6655. 6 RISK FACTORS Before you invest in our securities, you should be aware that there are various risks. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. You should consider carefully these risk factors, together with all of the other information included in or incorporated by reference into this prospectus before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. WE HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE CONTINUING LOSSES WHICH WILL RESULT IN SIGNIFICANT LIQUIDITY AND CASH FLOW PROBLEMS. We have incurred operating losses since our inception and we have an accumulated deficit of $47,084,622 at March 31, 2002. For the years ended September 30, 2001 and 2000, we incurred net losses of $11,552,745 and $11,401,583, respectively, and for the six months ended March 31, 2002 we reported a net loss of $7,361,293. Our operating expenses have increased and we continue to incur significant operating losses. Our liquidity has substantially diminished because of these continuing operating losses. Our future profitability will depend on substantial increases in revenues from operations. There can be no assurance that future revenues will grow sufficiently to generate a positive cash flow or otherwise enable us to be profitable. We will experience significant liquidity and cash flow problems which will require us to raise additional capital to continue operations if we are not able to substantially increase our revenues. We cannot guarantee that future revenues will grow sufficiently to generate positive cash flow or otherwise enable us to become profitable. WE CANNOT PREDICT OUR FUTURE REVENUES OR WHETHER OUR PRODUCTS WILL BE ACCEPTED. IF THE MARKETS FOR OUR PRODUCTS AND SERVICES DO NOT DEVELOP, OUR FUTURE RESULTS OF OPERATIONS WILL BE ADVERSELY AFFECTED. Revenues from our products and services have been limited. We reported revenues from continuing operations of $6,908,043 and $5,862,465 for the years ended September 30, 2001 and 2000, respectively, and revenues from continuing operations of $4,036,795 for the six months ended March 31, 2002. In addition, the markets for our products and services have only recently begun to develop, are rapidly evolving and are increasingly competitive. Demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty and risk. It is difficult to predict whether, or how fast, these markets will grow. We cannot guarantee either that the demand for our products and services will continue to develop or that such demand will be sustainable. If the market develops more slowly than expected or 7 becomes saturated with our competitors' products and services, or do not sustain market acceptance, our business, operating results, and financial condition will be materially and adversely affected. WE WILL NEED ADDITIONAL FINANCING WHICH WE MAY NOT BE ABLE TO OBTAIN ON ACCEPTABLE TERMS. IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL AS NEEDED, THE FUTURE GROWTH OF OUR BUSINESS AND OPERATIONS WILL BE SEVERELY LIMITED. Historically, our operations have been financed primarily through the issuance of equity and debt. Our acquisition and internal growth strategy requires substantial capital investment. Capital is typically needed not only for the acquisition of additional companies, but also for the effective integration, operation and expansion of these businesses. Capital is also necessary for the production and marketing of additional on-line multi-media libraries. Our future capital requirements, however, depend on a number of factors, including our ability to grow our revenues and manage our business. Our growth will depend upon our ability to raise additional capital, possibly through the issuance of long-term or short-term indebtedness or the issuance of our equity securities in private or public transactions. If we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of Visual Data held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. There can be no assurance that acceptable financing for future acquisitions or for the integration and expansion of existing operations can be obtained on suitable terms, if at all. Our ability to continue our growth and acquisition strategy could suffer if we are unable to raise the additional funds on acceptable terms which will have the effect of limiting our ability to increase our revenues or possibly attain profitable operations in the future. ALL OF OUR ASSETS SERVE AS COLLATERAL UNDER AN OUTSTANDING LOAN AND AS COLLATERAL TO ENSURE THE PAYMENT OF THE REDEMPTION AMOUNT OF OUR DEBENTURES. IF WE SHOULD DEFAULT ON THE REPAYMENT OF THIS LOAN OR THE REDEMPTION PAYMENTS, THE LENDER OR THE FORMER DEBENTURE HOLDERS COULD FORECLOSE ON OUR ASSETS. On December 4, 2001 we entered into a private debt financing transaction under which the lender agreed to lend us up to $3 million. We have borrowed an aggregate of $ 2 million from this lender at March 31, 2002. We granted the lender a security interest in all of our assets. If we should default under the repayment provisions of the 8 secured promissory note, the lender could seek to foreclose on our assets in an effort to seek repayment under the note. We also granted our former debenture holders a second position security interest in our assets to collateralize our payment of the redemption amount of $1,179,000. If we should default under the payment provisions of for the redemption of the debentures, the former debenture holders could likewise seek to foreclose on our assets. If either party was successful, we would be unable to conduct our business as it is presently conducted and our ability to generate revenues and fund our ongoing operations would be materially adversely affected. IF WE ARE UNABLE TO MAINTAIN OUR NASDAQ LISTING THE LIQUIDITY OF OUR COMMON STOCK IN THE PUBLIC MARKET MAY BE ADVERSELY AFFECTED. On May 9, 2002, we filed an application with The Nasdaq Stock Market to transfer the trading of our securities to the Nasdaq SmallCap Market from the Nasdaq National Market in response to a letter we received from Nasdaq on February 14, 2002 that granted us 90 days to comply with the $1.00 minimum bid price required to maintain listing on the Nasdaq National Market. This transfer application will be reviewed by Nasdaq and, if approved, we will be afforded a 180-calendar day Nasdaq SmallCap Market grace period with respect to Nasdaq's $1.00 minimum bid price requirement. We may also be eligible for an additional 180-calendar day grace period, provided we meet the initial listing criteria for the Nasdaq SmallCap Market. We believe that we meet the initial listing criteria for the Nasdaq SmallCap Market. While we believe that our application to transfer our securities to the Nasdaq SmallCap Market will be approved, if it is not approved it is likely our securities will be quoted on the OTC Bulletin Board. Because the OTC Bulletin Board is not considered an "exchange," if the trading price of our securities remains less than $5.00 per share, our common stock will be considered a "penny stock," and trading in our common stock will be subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a "penny stock," including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market. 9 FLUCTUATIONS IN OUR OPERATING RESULTS MAY ADVERSELY AFFECT OUR STOCK PRICE AND PURCHASERS OF OUR SHARES OF COMMON STOCK MAY LOSE ALL OR A PORTION OF THEIR INVESTMENT. Historically, there has been volatility in the market price for our common stock. Our quarterly operating results, changes in general conditions in the economy, the financial markets or the marketing industry, or other developments affecting us or our competitors, could cause the market price of our common stock to fluctuate substantially. We expect to experience significant fluctuations in our future quarterly operating results due to a variety of factors. Factors that may adversely affect our quarterly operating results include: - the announcement or introduction of new services and products by us and our competitors; - our ability to upgrade and develop our systems in a timely and effective manner; - our ability to retain existing clients and attract new clients at a steady rate, and maintain client satisfaction; - the level of use of the Internet and online services and the rate of market acceptance of the Internet and other online services for transacting business; - technical difficulties, system downtime, or Internet brownouts; - the amount and timing of operating costs and capital expenditures relating to expansion of our business and operations; - government regulation; and - general economic conditions and economic conditions specific to the Internet and e-commerce. As a result of these factors, in one or more future quarters, our operating results may fall below the expectations of securities analysts and investors. In this event, the market price of our common stock would likely be materially adversely affected. In addition, the stock market in general and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of those companies. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance. 10 WE ARE DEPENDENT ON CONTRACTS, SOME OF WHICH ARE SHORT TERM. IF THESE CONTRACTS ARE TERMINATED, OUR RESULTS OF OPERATIONS WOULD BE MATERIALLY ADVERSELY AFFECTED. We are dependent upon contracts and distribution agreements with our strategic partners and clients including PR Newswire Corporation. Revenue from PR Newswire represented approximately 26% and 17% of our revenue from continuing operations for the years ended September 30, 2001 and 2000, respectively, and approximately 20% of our revenue from continuing operations for the six months ended March 31, 2002. These contracts are generally for terms ranging from one to two years, however, many of them permit our clients and partners to terminate their agreements with us on short term notice. Because of the significant nature of the revenues from these contracts to our consolidated results of operations, the termination of any of these contracts could have a material adverse effect on our business operations and prospects. OUR MANAGEMENT MAY BE UNABLE TO EFFECTIVELY INTEGRATE OUR ACQUISITIONS AND TO MANAGE OUR GROWTH AND WE MAY BE UNABLE TO FULLY REALIZE ANY ANTICIPATED BENEFITS OF THESE ACQUISITIONS. Our business strategy includes growth through acquisition and internal development. We are subject to various risks associated with our growth strategy, including the risk that we will be unable to identify and recruit suitable acquisition candidates in the future or to integrate and manage the acquired companies. We completed the acquisition of 51% of EDNET in June 1998 and the remaining 49% in July 2001, and in February 2002 we completed our acquisition of Media OnDemand, Inc. Acquired companies' histories, geographical locations, business models and business cultures can be different from ours in many respects. Our directors and senior management face a significant challenge in their efforts to integrate our businesses and the business of the acquired companies or assets, and to effectively manage our continued growth. There can be no assurance that our efforts to integrate the operations of any acquired assets or companies acquired in the future will be successful, that we can manage our growth or that the anticipated benefits of these proposed acquisitions will be fully realized. The dedication of management resources to these efforts may detract attention from our day-to-day business. There can be no assurance that there will not be substantial costs associated with these activities or of the success of our integration efforts, either of which could have a material adverse effect on our operating results. 11 THE EXERCISE OF OPTIONS AND WARRANTS WILL BE DILUTIVE TO OUR EXISTING STOCKHOLDERS. As of April 30, 2002 we had outstanding options and warrants to purchase a total of 16,406,333 shares of our common stock at prices ranging between $0.50 and $17.188 per share. We have included 1,003,758 shares of our common stock issuable upon exercise of these options and warrants in this prospectus which means that when the option or warrant is exercised, the holder may resell the common stock received on the exercise in the public market. The exercise of these warrants and options may materially adversely affect the market price of our common stock and will have a dilutive effect on our existing stockholders. IF THE SELLING SECURITY HOLDERS ALL ELECT TO SELL THEIR SHARES OF OUR COMMON STOCK AT THE SAME TIME, THE MARKET PRICE OF OUR SHARES MAY DECREASE. It is possible that the selling security holders will offer all of the shares for sale. Further, because it is possible that a significant number of shares could be sold at the same time hereunder, the sales, or the possibility thereof, may have a depressive effect on the market price of our common stock. PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS MAY DELAY OR PREVENT A TAKE-OVER WHICH MAY NOT BE IN THE BEST INTERESTS OF OUR SHAREHOLDERS. Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Florida Business Corporation Act also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested shareholders. In addition, our articles of incorporation authorize the issuance of up to 5,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors, of which no shares are currently issued and outstanding. Our board of directors may, without shareholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our common stock. 12 CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION Some of the information in this prospectus may contain forward-looking statements. These statements can be identified by the use of forward-looking words such as "may," "will," "expect," "anticipate," "estimate," "continue" or other similar words. These statements discuss future expectations, contain projections of results of operations or financial condition or state other "forward-looking" information. When considering such forward-looking statements, you should keep in mind the risk factors and other cautionary statements in or incorporated by reference into this prospectus. The risk factors noted in this section and other factors noted throughout this prospectus or incorporated herein, including certain risks and uncertainties, could cause our actual results to differ materially from those contained in any forward-looking statement. USE OF PROCEEDS We will receive up to an additional $2,135,920 in gross proceeds from the exercise of outstanding options and warrants. We presently intend to use these proceeds for general working capital. The actual allocation of proceeds realized from the exercise of these securities will depend upon the amount and timing of such exercises, our operating revenues and cash position at such time and our working capital requirements. There can be no assurances that any of the outstanding options or warrants will be exercised. Pending utilization of the proceeds as described above, the net proceeds of the offering will be deposited in interest bearing accounts or invested in money market instruments, government obligations, certificates of deposits or similar short-term investment grade interest bearing investments. DESCRIPTION OF COMMON STOCK We are authorized to issue 75,000,000 shares of common stock, par value $.0001. 27,047,708 shares are issued and outstanding as May 15, 2002. The outstanding shares of common stock are fully paid and non-assessable. The holders of common stock are entitled to one vote per share for the election of directors and with respect to all other matters submitted to a vote of shareholders. Shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such shares voting for the election of directors can elect 100% of the directors if they choose to do so and, in such event, the holders of the remaining shares so voting will not be able to elect any directors. Upon any liquidation, dissolution or winding-up, our assets, after the payment of our debts and liabilities and any liquidation preferences of, and unpaid dividends on, any class of preferred stock then outstanding, will be distributed pro-rata to the holders 13 of our common stock. The holders of our common stock do not have preemptive or conversion rights to subscribe for any of our securities and have no right to require us to redeem or purchase their shares. The holders of our shares of common stock are entitled to share equally in dividends if, as and when declared by our board of directors, out of funds legally available therefor, subject to the priorities accorded any class of preferred stock which may be issued. Our consolidation or merger, or a sale, transfer or lease of all or substantially all of our assets, which does not involve distribution by us of cash or other property to the holders of our shares of common stock, will not be a liquidation, dissolution or winding up of Visual Data. SELLING SECURITY HOLDERS We have included an aggregate of 7,773,898 shares of our common stock in this prospectus, which includes: * 1,568,000 shares of our common stock issued in December 2001 upon the conversion of the shares of preferred stock held by our shareholders of our subsidiary, The FirstNews.com, under the terms of such security in a private transaction exempt from registration under the Securities Act in reliance on Section 4(2) of that act, * 1,000,000 shares of our common stock issued in connection with a December 2001 private debt financing transaction pursuant to the terms and conditions of a loan agreement, a secured promissory note in the principal amount of $3 million and a security agreement. The loan bears interest at approximately 12%, which was prepaid in with the issuance of 1,000,000 shares of common stock, * 1,230,400 shares of our common stock, issued in under a private placement we consummated in March 2002 under which we sold an aggregate of 1,103,000 shares of our common stock to nine accredited investors in a private placement exempt from registration under the Securities Act in reliance on Section 4(2) and Rule 506 of Regulation D resulting in gross proceeds to us of $550,000. Hornblower & Weeks acted as placement agent for us in this transaction and we issued it 127,400 shares of our common stock as compensation for their services. No general solicitation or advertising was used in connection with this offering and the certificates evidencing the shares that were issued contained a legend restricting their transferability absent registration under the Securities Act or the availability of an applicable exemption, 14 * 103,758 shares of our common stock underlying options and warrants with exercise prices ranging from $1.00 to $12.50 per share issued in exchange for outstanding options and warrants of EDNET. We issued these options and warrants following our the completion of our acquisition of EDNET in 2001, * 200,000 shares of our common stock issuable upon the exercise of a warrant with an exercise price of $0.50 per share issued as additional consideration to the debenture holders in connection with the conversion of our 6% debentures, * 1,145,407 shares of our common stock which were issued in settlement of obligations of MediaOnDemand.com, Inc. at the time of our acquisition of that company, and for other obligations we have incurred, * 1,038,333 shares of our common stock, including 410,000 shares issuable upon the exercise of options and warrants at exercise prices ranging from $1.00 to $2.50 per share, issued by us as compensation to consultants and advisors who have performed services to us, * 700,000 shares of our common stock, including 200,000 shares underlying an option exercisable at $1.00 per share, issued in connection with our acquisition of interests in OnStream Media Corporation and Golf Society International, Inc., * 690,000 shares of our common stock, including 90,000 shares of our common stock issuable upon the exercise of a warrant at $1.00 per share and 600,000 shares of our common stock issued on the conversion of preferred stock. The preferred stock and warrant were sold by us in December 2001 to an accredited investor in a private transaction exempt from registration under the Securities Act in reliance on Section 4(2) of the act. We received gross proceeds of $300,000 from this transaction, no placement or selling agent was involved, no general solicitation or advertising was used in connection with this offering and the certificates evidencing the shares and the warrant that were issued contained a legend restricting their transferability absent registration under the Securities Act or the availability of an applicable exemption, and * 98,000 shares of our common stock issued in connection with our acquisition of MediaOnDemand.com, Inc. 15 This prospectus relates to periodic offers and sales of up to 7,773,898 shares of common stock by the selling security holders listed and described below and their pledgees, donees and other successors in interest. The following table sets forth o the name of each selling security holder, o the number of shares owned, and o the number of shares being registered for resale by each selling security holder. We may amend or supplement this prospectus from time to time to update the disclosure set forth herein. All of the shares being registered for resale under this prospectus for the selling security holders may be offered hereby. Because the selling security holders may sell some or all of the shares owned by them which are included in this prospectus, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares, no estimate can be given as to the number of shares being offered hereby that will be held by the selling security holders upon termination of any offering made hereby. We have, therefore, for the purposes of the following table assumed that the selling security holders will, if applicable, exercise the options described below, and sell all of the shares owned by them which are being offered hereby, but will not sell any other shares of our common stock that they presently own. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities and includes any securities which the person has the right to acquire within 60 days through the conversion or exercise of any security or other right. The information as to the number of shares of our common stock owned by each selling security holder is based upon the information contained in a record list of our shareholders.
Shares to Percentage Number Percentage Shares be owned owned of shares owned before to be after after Name of selling security holder owned offering offered offering offering - ------------------------------- --------- ------------ --------- --------- ---------- Russell Armstrong (1) 37,500 * 37,500 0 -- All Mobile Video, Inc.(2) 3,000 * 3,000 0 -- Jon Buttles (31) 1,875 * 1,875 0 -- Baptist Community Services, Inc.(3) 157,000 * 152,000 5,000 * Masood Bhatti 32,000 * 32,000 0 -- Bryan Bumsted 5,000 * 5,000 0 -- Coral Investments(4) 125,000 * 25,000 100,000 * CLR Associates(5) 92,000 * 25,000 67,000 * The Company Car(6) 2,353 * 2,353 0 -- Bill Ciosek 101,000 * 101,000 0 -- Ella Chesnutt 30,000 * 30,000 0 -- David Chestler(7) 166,766 * 16,766 150,000 * Frederick DeLuca(8) 1,800,000 6.7% 1,000,000 800,000 3.0% Dr. H.C. Donnerstag 64,000 * 64,000 0 -- Eric Ellenhorn(9) 35,000 * 25,000 10,000 *
16
Zachary Ellenhorn Trust(9) 11,250 * 11,250 0 -- Zoe Ellenhorn Trust(9) 11,250 * 11,250 0 -- Element Technologies, Inc.(10) 2,435 * 2,435 0 -- Double Eagle Advisory(11) 300,000 1.1 100,000 200,000 -- Fred Florio(12) 100,000 * 100,000 0 -- Scott Farb(43) 130,000 * 30,000 100,000 -- Amy Fisher 6,555 * 6,555 0 -- Diane Golightly(13) 25,000 * 25,000 0 -- Neil Berman 300,000 1.1% 300,000 0 -- T.H. Holloway(14) 106,063 * 92,000 14,063 * Martin Hodas(37) 330,000 1.2% 330,000 0 -- Adrian Hyde 200,000 * 200,000 0 -- H.B. Stage and Screen Inc.(15) 3,075 * 3,075 0 -- Itochu Technology, Inc.(16) 90,000 * 90,000 0 -- Charles Johnston(17) 890,000 3.3% 890,000 0 -- Neil Jones 309,000 1.1% 304,000 5,000 * Eric Jacobs(18) 531,989 1.9% 20,510 511,479 1.9% J&C Resources(19) 510,000 1.9% 320,000 190,000 * JRJ Capital LLC(42) 20,000 * 20,000 0 * Tom Kobayashi(20) 163,246 * 100,000 63,246 * Lantana Center(21) 5,000 * 5,000 0 -- Matt McGovern(31) 1,875 * 1,875 0 -- Angela McCleer(31) 750 * 750 0 -- Howard Muchnick 64,000 * 64,000 0 -- Simone Mencaglia(44) 242,000 * 192,000 50,000 -- Newbridge Securities Corp.(22) 600,000 2.2% 350,000 250,000 -- Irawan Onggara (23) 34,900 * 34,900 0 -- Simon Ostrowiecki 82,750 * 64,000 18,750 * OnStream Media Corporation(24) 400,000 1.5% 400,000 0 -- Official Offset Printing Corporation(25) 3,923 * 3,923 0 -- Gary Perrine and Rebecca Perrine 128,000 * 128,000 0 -- Planetary Networks(26) 3,620 * 3,620 0 -- Metrovision Production Services(27) 12,308 * 12,308 0 -- Rhodes Group(28) 400 * 400 0 -- Joseph Rotenberg 124,000 * 124,000 0 -- Hart Rotenberg 124,000 * 124,000 0 -- John Rooney 57,500 * 47,500 10,000 * Reel Communications(29) 1,697 * 1,697 0 -- SBI E2-Capital USA Ltd.(31) 7,500 * 7,500 0 -- Shelly Singhal(31) 3,000 * 3,000 0 -- Singh Funds(32) 242,000 * 192,000 50,000 -- Socrates Skiadas 102,750 * 64,000 38,750 * C. Leng Smith 52,000 * 32,000 20,000 * StorNet, Inc.(33) 960 * 960 0 -- Len Spilka 10,829 * 10,829 0 -- Charles Xue(34) 30,000 * 30,000 0 -- Hornblower & Weeks(35) 427,400 1.1% 227,400 200,000 -- Thornhill Investments Ltd.(36) 639 * 639 0 -- Frederick Weil 2,376 * 2,376 0 -- Winston & Strawn(45) 415,000 1.5% 415,000 0 --
17
Persaud & Decker(38) 120,000 * 120,000 0 -- National Securities Corporation 100,000 * 100,000 0 -- Ion Zaydelman(40) 319 * 319 0 -- Atlas Pearlman, P.A.(41) 300,000 1.1 300,000 0 -- Halifax Fund, LP(30) 936,695 3.4% 100,000 836,695 3.1% Palladin Opportunity Fund, LLC(39) 857,450 3.2% 100,000 757,450 2.8% Morgenthau Holdings, LLC 33,333 * 33,333 0 -- --------- Total 7,773,898 =========
* represents less than 1% (1) Includes shares issuable upon the exercise of a warrant expiring in September 2002 to purchase 37,500 shares of our common stock at $12.50 per share. The warrant was issued to Mr. Armstrong in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. (2) Mr. Anton Duke is the control person of All Mobile Video, Inc. (3) Mr. TH Holloway is the control person of Baptist Community Services, Inc. Excludes shares owned by Mr. Holloway individually. (4) Shares owned includes 100,000 shares of common stock issuable upon the exercise of warrants at exercise prices ranging from $2.50 to $4.00 per share. Shares offered includes shares issuable upon the exercise of a warrant expiring in October 2002 to purchase 25,000 shares of our common stock at $2.50 per share. The option was granted as compensation for consulting services being rendered to us. Ms. Susan Ribman is the control person of Coral Investments. (5) Shares owned includes 67,000 shares of common stock issuable upon the exercise of warrants at an exercise price of $2.125 per share. Shares offered includes shares issuable upon the exercise of a warrant expiring in September 2003 to purchase 25,000 shares of our common stock at $2.125 per share. The option was granted as compensation for consulting services being rendered to us. Mr. Burt Rhodes is the control person of CLR Associates. (6) Mr. Natan Atzbi is the control person of The Company Car. (7) Shares owned includes 150,000 shares of common stock issuable upon the exercise of options at exercise prices ranging from $1.00 to $2.125 per share. Shares offered Mr. Chestler was employed by us from October 1997 to December 2001. (8) On December 4, 2001 we entered into a private debt financing transaction with Mr. DeLuca who is an accredited investor pursuant to the terms and conditions of a Loan Agreement, a Secured Promissory Note in the principal amount of $3 million and a Security Agreement. The loan bears interest at approximately 12%, which was prepaid in January 2002 with the issuance of 1,000,000 shares of common stock. (9) Mr. Ellenhorn is trustee of both the Zachary Ellenhorn Trust and the Zoe Ellenhorn Trust. (10) Mr. Matt Roth is the control person of Element Technologies, Inc. 18 (11) Shares owned includes 200,000 shares of common stock issuable upon the exercise of a warrant at an exercise price of $2.75 per share. Shares offered includes shares issuable upon the exercise of a option expiring in April 2005 to purchase 100,000 shares of our common stock at $1.00 per share. This option was issued to Double Eagle Advisory as compensation for consulting services being rendered to us. Mr. Ronald Ameerali is the control person of Double Eagle Advisory. (12) Includes shares issuable upon the exercise of a warrant expiring in December 2004 to purchase 100,000 shares of our common stock at $1.00 per share. This warrant was issued to Mr. Florio by us as compensation for consulting services being rendered to us. (13) Includes shares issuable upon the exercise of a warrant expiring in September 2002 to purchase 25,000 shares of our common stock at $12.50 per share. The warrant was issued to Ms. Golightly in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. (14) The number of shares owned includes 157,000 shares of our common stock held of record by Baptist Community Services, Inc. and the number of shares to be offered includes 152,000 shares held of record by Baptist Community Services, Inc. Mr. Holloway is the control person of Baptist Community Services, Inc. (15) Mr. Joseph Bondulich is the control person of H.B. Stage and Screen, Inc. (16) Itochu Corp., a Japanese publicly-held company, is the control person of Itochu Technology, Inc. (17) The number of shares beneficially owned and shares to be offered includes 410,000 shares held of record by J&C Resources of which Mr. Johnston is the control person, and includes shares issuable upon the exercise of a warrant expiring in October 2004 to purchase 90,000 shares of our common stock at $1.00 per share. This warrant issued by us in connection with a private placement of our securities in which Mr. Johnston invested. (18) Shares owned includes 450,000 shares of common stock issuable upon the exercise of options at exercise prices ranging from $0.75 to $2.125 per share. Mr. Jacobs is a member of our board of directors and serves as our secretary. We issued the 20,510 shares of our common stock to him as interest on loans made to us. (19) Shares owned includes 100,000 shares of common stock issuable upon the exercise of a warrant at an exercise price of $2.28 per share. Mr. Charles Johnston is the control person of J&C Resources. Excludes shares owned by Mr. Johnston individually. (20) Shares owned includes 22,000 shares of common stock issuable upon the exercise of options at exercise prices ranging from $1.00 to $10.00 per share. We issued 100,000 shares of our common stock to Mr. Kobayashi as compensation for consulting services he is rendering to us. Mr. Kobyashi served as CEO of EDNET from June 1992 to June 2000. (21) Includes shares issuable upon the exercise of a warrant expiring in April 2003 to purchase 5,000 shares of our common stock at $1.00 per share. This warrant was issued in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. Mr. Alex Winintski is the control person of Lantana Center. 19 (22) Number of Shares Owned includes shares issuable upon the exercise of a warrant to purchase an aggregate of 250,000 shares of common stock at exercise prices ranging from $1.00 to $3.00 per shares. The 350,000 shares of our common stock were issued to Newbridge Securities Corp. as compensation for investment banking services this broker-dealer is rendering to us. (23) Includes shares issuable upon the exercise of a warrant expiring in September 2002 to purchase 34,900 shares of our common stock at $12.50 per share. The warrant was issued to Mr. Onggara in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. (24) Includes shares issuable upon the exercise of an option expiring in April 2005 to purchase 200,000 shares of our common stock at $1.00 per share. We issued these securities to OnStream Media Corporation as consideration for an aggregate of 4,000,000 shares of its common stock owned by us, which represents approximately 20% of its currently issued and outstanding capital stock. OnStream Media Corporation is a development stage media asset management company. Messrs. Clifford Friedland and David Glassman are the control persons of OnStream Media Corporation. Messrs. Randy S. Selman and Alan Saperstein, executive officers and directors of our company, are members of the board of directors of OnStream Media Corporation. (25) Mr. Benjamin Paulino is the control person of Official Offset Printing Corporation. (26) Mr. Ken McKinnon is the control person of Planetary Networks. (27) Mr. James McGillion is the control person of Metrovision Production Services. (28) Includes shares issuable upon the exercise of a warrant expiring in April 2003 to purchase 400 shares of our common stock at $1.00 per share. This warrant was issued in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. Mr. James MacPherson, Jr. is the control person of Rhodes Group. (29) Mr. Gary Russo is the control person of Reel Communications. (30) Shares owned includes 236,144 shares of common stock issuable upon the exercise of warrants at exercise prices ranging from $0.50 to $1.955 per share. Shares offered includes shares issuable upon the exercise of a warrant expiring in March 2005 to purchase 100,000 shares of our common stock at $0.50 per share. Mr. Jeffrey Devers is the control person of Halifax Fund, L.P. (31) We issued SBI E-2 Capital USA Ltd. an aggregate of 15,000 shares of our common stock as compensation for services rendered to us. This firm subsequently transferred an aggregate of 7,500 of those shares to Messrs. Buttles and McGovern, Ms. Singhal and McCleer, its employees. Softbank Investment Corp. is the control person of SBI E-2 Capital USA Ltd. (32) Shares owned includes 50,000 shares of common stock issuable upon the exercise of a warrant at an exercise price of $2.28 per share. Mr. Satbir Singh is the control person of Singh Funds. (33) Michael Phelan is the control person of StorNet, Inc. (34) Includes shares issuable upon the exercise of an option expiring in October 2002 to purchase 30,000 shares of our common stock at $2.50 per share. We issued the option to Mr. Xue as compensation for consulting services being rendered to us. 20 (35) Shares owned includes 100,000 shares of common stock issuable upon the exercise of a warrant at an exercise price of $1.75 per share. Shares offered includes shares issuable upon the exercise of an option expiring in April 2005 to purchase 100,000 shares of our common stock at $1.00 per share. We issued the option to Hornblower & Weeks as compensation for consulting services being rendered to us. (36) Includes shares issuable upon the exercise of a warrant expiring in July 2003 to purchase 639 shares of our common stock at $2.50 per share. The warrant was issued in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. Ms. Regina Rekiter is the control person of Thornhill Investments, Ltd. (37) Includes shares issuable upon the exercise of an option expiring in March 2005 to purchase 30,000 shares of our common stock at $1.00 per share. The option was issued as compensation for consulting services being rendered to us by Mr. Hodas. (38) Mr. Michael Decker is the control person of Persaud & Decker. (39) Shares owned includes 236,145 shares of common stock issuable upon the exercise of warrants at exercise prices ranging from $2.50 to $4.00 per share. Shares offered Includes shares issuable upon the exercise of a warrant expiring in March 2005 to purchase 100,000 shares of our common stock at $0.70 per share. Mr. Jeffrey Devers is the control person of Palladin Opportunity Fund, L.L.C. (40) Includes shares issuable upon the exercise of a warrant expiring in July 2003 to purchase 319 shares of our common stock at $2.50 per share. The warrant was issued in conjunction with our acquisition of EDNET in exchange for an outstanding EDNET warrant. (41) Charles B. Pearlman, Esq. is a control person of Atlas Pearlman, P.A. (42) Evan Klein is the control person for JRJ Capital LLC. (43) Shares owned includes 100,000 shares of common stock issuable upon the exercise of an option at an exercise price of $2.00 per share. (44) Shares owned includes 50,000 shares of common stock issuable upon the exercise of an option at an exercise price of $2.28 per share. (45) Robert E. Bostrom is a control person of Winston & Strawn. None of the selling security holders has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessors or affiliates, other than as described previously in this section. Each of Newbridge Securities, SBI E-2 Capital USA, Ltd., Hornblower & Weeks, Mr. Eric Ellenhorn, Mr. John Rooney, National Securities Corporation, Halifax Fund, L.P., Palladin Opportunity Fund, LLC and Morgenthau Holdings, LLC. are either registered broker-dealers or affiliates of registered broker-dealers. Each of Halifax Fund, L.P. and Palladin Opportunity Fund, LLC, which had previously purchased convertible debentures from us, received the securities as additional compensation for the conversion of those debentures. Each of the remaining individuals and firms received the securities as compensation for investment advisory or other financial or business related services rendered to us in the ordinary course of their business. To our knowledge none of these firms or individuals have any arrangement with any person to participate in the distribution of such securities. We have agreed to pay full costs and expenses, incentives to the issuance, offer, sale and delivery of the shares, including all fees and expenses in preparing, filing and printing the registration statement and prospectus and related exhibits, amendments and supplements thereto and mailing of those items. We will not pay selling commissions and expenses associated with any sale by the selling security holders. 21 PLAN OF DISTRIBUTION The shares offered hereby by the selling security holders may be sold from time to time by the selling security holders, or by pledgees, donees, transferees or other successors in interest. These sales may be made on one or more exchanges or in the over-the-counter market including the Nasdaq Stock Market of The Nasdaq Stock Market, or otherwise at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The shares may be sold by one or more of the following methods, including, without limitation: - a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; - purchases by a broker or dealer as principal and resale by a broker or dealer for its account under this prospectus; - ordinary brokerage transactions and transactions in which the broker solicits purchasers; - face-to-face or other direct transactions between the selling security holders and purchasers without a broker-dealer or other intermediary; and - ordinary brokerage transactions and transactions in which the broker solicits purchasers. In effecting sales, brokers or dealers engaged by the selling security holders may arrange for other brokers or dealers to participate in the resales. Brokers, dealers or agents may receive compensation in the form of commissions, discounts or concessions from selling security holders in amounts to be negotiated in connection with the sale. The selling security holders and these broker-dealers and agents and any other participating broker-dealers, or agents may be deemed to be "underwriters" 22 within the meaning of the Securities Act, in connection with the sales. In addition, any securities covered by this prospectus that qualify for sale under Rule 144 might be sold under Rule 144 rather than under this prospectus. In connection with distributions of the shares or otherwise, the selling security holders may enter into hedging transactions with broker-dealers. In connection with the transactions, broker-dealers may engage in short sales of the shares registered hereunder in the course of hedging the positions they assume with selling security holders. The selling security holders may also sell shares short and deliver the shares to close out the positions. The selling security holders may enter into option or other transactions with broker-dealers which require the delivery to the broker-dealer of the shares registered hereunder, which the broker-dealer may resell under this prospectus. The selling security holders may also pledge the shares registered hereunder to a broker or dealer and upon a default, the broker or dealer may effect sales of the pledged shares under this prospectus. Information as to whether an underwriter(s) who may be selected by the selling security holders, or any other broker-dealer, is acting as principal or agent for the selling security holders, the compensation to be received by underwriters who may be selected by the selling security holders, or any broker-dealer, acting as principal or agent for the selling security holders and the compensation to be received by other broker-dealers, in the event the compensation of other broker-dealers is in excess of usual and customary commissions, will, to the extent required, be set forth in a supplement to this prospectus. Any dealer or broker participating in any distribution of the shares may be required to deliver a copy of this prospectus, including the supplement, if any, to any person who purchases any of the shares from or through a dealer or broker. We have advised the selling security holders that during the time as they may be engaged in a distribution of the shares included herein they are required to comply with Regulation M of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With certain exceptions, Regulation M precludes any selling security holders, any affiliated purchasers and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchase made in order to stabilize the price of a security in connection with an at the market offering such as this offering. All of the foregoing may affect the marketability of our common stock. 23 WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-3. This prospectus is part of the registration statement. It does not contain all of the information set forth in the registration statement. For further information about Visual Data and its common stock, you should refer to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete. Where a contract or other document is an exhibit to the registration statement, each of you should review the provisions of the exhibit to which reference is made. You may obtain these exhibits from the SEC as discussed below. We are required to file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C., and at its offices in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more information on the operation of the public reference rooms. Copies of our SEC filings are also available to the public from the SEC's web site at www.sec.gov. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference the documents listed below, any of such documents filed since the date this registration statement was filed and any future filings with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the offering is completed. - our annual report on Form 10-KSB for the fiscal year ended September 30, 2001, - our current reports on Form 8-K filed on February 5, 2002, February 12, 2002 and March 28, 2002, - our quarterly reports on Form 10-QSB for the periods ended December 31, 2001 and March 31, 2002, and - our proxy statement filed on March 8, 2002 for our annual meeting of shareholders held on April 11, 2002. You may request a copy of these filings, at no cost, by writing or calling us at the following address and telephone number: 24 Corporate Secretary Visual Data Corporation 1291 SW 29 Avenue Pompano Beach, Florida 33069 954-917-6655 LEGAL MATTERS The validity of the issuance of the securities offered hereby will be passed upon for us by Atlas Pearlman, P.A., Fort Lauderdale, Florida. Atlas Pearlman, P.A. is offering 300,000 shares of our common stock under this prospectus. EXPERTS The consolidated financial statements of Visual Data Corporation and subsidiaries as of and for the years ended September 30, 2001 and 2000 incorporated by reference in this prospectus have been audited by Arthur Andersen LLP, independent certified public accountants, as indicated in their report with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said report. The consolidated financial statements of MediaOnDemand.com, Inc. as of and for the years ended December 31, 2001 and 2000 incorporated by reference in this prospectus have been audited by Arthur Andersen LLP, independent certified public accountants, as indicated in their report with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said report. 25 7,773,898 Shares VISUAL DATA CORPORATION Common Stock _________________ , 2002 26 PART II INFORMATION NOT REQUIRED IN PROSPECTUS INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution.* Registration Fees - Securities and Exchange Commission $ 290* Listing of Additional Shares - The Nasdaq Stock Market 22,500* Cost of Printing 10,000* Legal Fees and Expenses 15,000* Accounting Fees and Expenses 10,000* Blue Sky Fees and Expenses 1,000* Miscellaneous 1,210* ------- Total $60,000* ======= *Estimated Item 15. Indemnification of Directors and Officers. The Florida Business Corporation Act permits the indemnification of directors, employees, officers and agents of a Florida corporation. Our articles of incorporation and bylaws provide that we shall indemnify to the fullest extent permitted by the Florida Business Corporation Act any person whom we may indemnify under the act. The provisions of Florida law that authorize indemnification do not eliminate the duty of care of a director, and in appropriate circumstances equitable remedies including injunctive or other forms of non-monetary relief will remain available. In addition, each director will continue to be subject to liability for: - violations of criminal laws, unless the director has reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe his conduct was unlawful, - deriving an improper personal benefit from a transaction, - voting for or assenting to an unlawful distribution, and - willful misconduct or conscious disregard for our best interests in a proceeding by or in our right to procure a judgment in its favor or in a proceeding by or in the right of a shareholder. 1 The statute does not affect a director's responsibilities under any other law, including federal securities laws. The effect of Florida law, our articles of incorporation and our bylaws is to require us to indemnify our officers and directors for any claim arising against those persons in their official capacities if the person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. To the extent indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons, we have been informed that in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is unenforceable. Item 16. Exhibits and Consolidated Financial Statement Schedules. Exhibit No. Description - ----------- ----------- 3.1 Articles of Amendment to the Articles of Incorporation 4.1 Specimen Common Stock Certificate(1) 4.2 Form of Common Stock Purchase Warrant(2) 4.3 Form of Option to Purchase Common Stock (2) 4.4 Common Stock Purchase Warrant issued to Frederick A. DeLuca (3) 5 Opinion of Atlas Pearlman, P.A. 10.1 Loan Agreement by and between Visual Data Corporation and Frederick A. DeLuca (3) 10.2 Agreement of Modification with Mr. DeLuca 10.3 Financial Advisory and Consulting Agreement with National Securities Corporation 10.4 Business Advisory Agreement with Newbridge Securities Corporation 23.1 Consent of Arthur Andersen LLP - ------------- (1) Incorporated by reference to the registrant's Registration Statement on Form SB-2, Registration No. 333-18819, as amended and declared effective by the SEC on July 30, 1997. 2 (2) Incorporated by reference to the registrant' s Registration Statement on Form S-3, Registration No. 333-63792, as declared effective by the SEC on July 2, 2001. Item 17. Undertakings. Visual Data will: 1. File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: i. Include any prospectus required by section 10(a)(3) of the Securities Act; ii. Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospects filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. iii. Include any additional or changed material information on the plan of distribution. 2. For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial BONA FIDE offering. 3. File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. 3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pompano Beach and the State of Florida, on the day of May 24th, 2002. VISUAL DATA CORPORATION By: /s/ Randy s. Selman ------------------------------------- Randy S. Selman Chairman of the Board, Chief Executive Officer and President POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Randy S. Selman as his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendment or post-effective amendment to this Registration Statement on Form S-3 or abbreviated registration statement (including, without limitation, any additional registration filed pursuant to Rule 462 under the Securities Act of 1933) with respect hereto and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Randy S. Selman President, Chief Executive May 24, 2002 - ---------------------------------------- and Chairman of the Board Randy S. Selman /s/ Gail Babitt Chief Financial Officer and May 24, 2002 - ---------------------------------------- Principal Accounting Officer Gail Babitt
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/s/ Alan Saperstein Executive Vice President May 24, 2002 - ---------------------------------------- and Director Alan Saperstein /s/ Benjamin Swirsky Director May 24, 2002 - ---------------------------------------- Benjamin Swirsky /s/ Brian K. Service Director May 24, 2002 - ---------------------------------------- Brian K. Service /s/ Eric Jacobs Secretary and Director May 24, 2002 - ---------------------------------------- Eric Jacobs /s/ Robert T. Wussler Director May 24, 2002 - ---------------------------------------- Robert T. Wussler
5 VISUAL DATA CORPORATION REGISTRATION STATEMENT ON FORM S-3 EXHIBITS Exhibit No. Description - ----------- ----------- 3.1 Articles of Amendment to the Articles of Incorporation 5 Opinion of Atlas Pearlman, P.A. 10.2 Agreement of Modification with Mr. DeLuca 10.3 Financial Advisory and Consulting Agreement with National Securities Corporation 10.4 Business Advisory Agreement with Newbridge Securities Corporation 23.1 Consent of Arthur Andersen LLP EX-3.1 3 g75693ex3-1.txt ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION EXHIBIT 3.1 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF VISUAL DATA CORPORATION Pursuant to Section 607.1006 of the Business Corporation Act of the State of Florida, the undersigned, being the President of Visual Data Corporation, a corporation organized and existing under and by virtue of the Business Corporation Act of the State of Florida ("Corporation"), bearing document number P93000035279, does hereby certify: FIRST: Article IV of the Corporation's Articles of Incorporation shall be deleted in its entirety and replaced with the following: ARTICLE IV CAPITAL STOCK The maximum number of shares that this Corporation shall be authorized to issue and have outstanding at any one time shall be (i) seventy five million (75,000,000) shares of common stock, par value $.0001 per share, and (ii) five million (5,000,000) shares of preferred stock, par value $.0001 per share. Classes and series of the Preferred Stock may be created and issued from time to time, with such designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, including voting rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the creation and issuance of such classes of Common Stock as adopted by the Board of Directors. SECOND: The foregoing amendment was adopted by written consent by the Board of Directors on February 7, 2002, pursuant to Section 607.0821 of the Florida Business Corporation Act. An annual meeting of shareholders of the Corporation was held on April 11, 2002 at which time the foregoing amendment was submitted to the Corporation's shareholders and adopted by the holders of a majority of the outstanding voting power of the Corporation pursuant to Section 607.0701 of the Florida Business Corporation Act. Therefore, the number of votes cast for the amendment to the Corporation's Articles of Incorporation was sufficient for approval. 1 IN WITNESS WHEREOF, the undersigned, being the President of this Corporation, has executed these Articles of Amendment as of April 11, 2002. VISUAL DATA CORPORATION By: /s/ Randy S. Selman ------------------------------------- Randy S. Selman, President 2 EX-5 4 g75693ex5.txt OPINION OF ATLAS PEARLMAN, P.A. EXHIBIT 5 ATLAS PEARLMAN, P.A. 350 East Las Olas Boulevard, Suite 1700 Fort Lauderdale, Florida 33301 May __, 2002 Visual Data corporation 1291 SW 29 Avenue Pompano Beach, Florida 33069 Re: Registration Statement on Form S-3; Visual Data Corporation (the "Company") Ladies and Gentlemen: This opinion is submitted pursuant to the applicable rules of the Securities and Exchange Commission with respect to the registration for public sale of 7,773,898 shares of common stock, $.0001 par value ("Common Stock"), including up to 1,003,758 shares of Common Stock (the "Reserved Shares") reserved for issuance upon the exercise of outstanding common stock purchase warrants and options to purchase common shares. The Common Stock and the Reserved Shares are hereinafter collectively referred to as the "Registrable Shares". In connection therewith, we have examined and relied upon original, certified, conformed, photostat or other copies of (a) the Articles of Incorporation, as amended, and Bylaws of the Company; (b) resolutions of the Board of Directors of the Company authorizing the issuance of the Registrable Shares and related matters; (c) the Registration Statement and the exhibits thereto; (d) the instruments defining the terms and conditions of the Reserved Shares; and (e) such other matters of law as we have deemed necessary for the expression of the opinion herein contained. In all such examinations, we have assumed the genuineness of all signatures on original documents, and the conformity to originals or certified documents of all copies submitted to us as conformed, photostat or other copies. In passing upon certain corporate records and documents of the Company, we have necessarily assumed the correctness and completeness of the statements made or included therein by the Company, and we express no opinion thereon. As to the various questions of fact material to this opinion, we have relied, to the extent we deemed reasonably appropriate, upon representations or certificates of officers or directors of the Company and upon documents, records and instruments furnished to us by the Company, without independently checking or verifying the accuracy of such documents, records and instruments. 1 Based upon and subject to the foregoing, we are of the opinion that (1) the currently outstanding Registrable Shares have been legally issued and are fully paid and non-assessable, and (2) the Reserved Shares, when issued and upon payment of the agreed upon consideration therefore, will be legally issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to use our name under the caption "Legal Matters" in the prospectus comprising part of the Registration Statement. Sincerely, /s/ Atlas Pearlman, P.a. --------------------------------------- ATLAS PEARLMAN, P.A. 2 EX-10.2 5 g75693ex10-2.txt AGREEMENT OF MODIFICATION WITH MR. DELUCA EXHIBIT 10.2 AGREEMENT OF MODIFICATION WITH MR. DELUCA AGREEMENT OF MODIFICATION The Parties, executing this Agreement of Modification as of this __ day of February, 2002, agree as follows: WHEREAS, Visual Data Corporation ("VDAT") and Frederick A. Deluca ("Deluca") (collectively the "Parties") entered into that certain Loan Agreement (the "Loan Agreement") dated as of December 5, 2001, and that certain Secured Promissory Note (the "Note") dated as of December 4, 2001, (both Loan Agreement and Note attached hereto). WHEREAS, Deluca agreed to advance to VDAT up to an additional $1,500,000 for a total advance of $3,000,000. WHEREAS, pursuant to Section 9.04 of the Loan Agreement and Paragraph 7 of the Note, the Parties may modify the provisions therein and agree to do so as follows: 1. The parties agree that as of the date this Agreement of Modification, VDAT has made total principal payments to DeLuca under the Note in the amount of $293,760.96 against the initial $1,500,000 of principal DeLuca advanced to VDAT under the Loan Agreement. Notwithstanding terms of the Loan Agreement to the contrary, DeLuca hereby agrees to advance to VDAT the sum of $793,760.90 (the "Second Advance") as of the date of this Agreement of Modification is executed, which sum represents the entire second $1,500,000 installment of the total $3,000,000 loan amount reduced by the amount of $706,239.10, which the parties agree to treat as principal repaid by VDAT on the initial $1,500,000 advance. The parties agree that after the Second Advance, the total outstanding principal amount owed to DeLuca shall be $2,000,000.00. 2. As a result of the aforementioned acknowledgments, VDAT hereby unconditionally promises to pay to the order of DeLuca $2,000,000 (the total outstanding principal balance due as of the date this Agreement of Modification is executed), to be payable according to the Schedule attached hereto. 3. Pursuant to Section 2.03 of the Loan Agreement, all Interest to date has been prepaid to DeLuca in the form of restricted common stock of the VDAT. DeLuca hereby agrees that any Interest due on the total outstanding principal balance due as of the date this Agreement of Modification is executed will be prepaid in the form of 500,000 shares of restricted common stock of VDAT. 4. All terms and conditions contained in the Loan Agreement and Note not otherwise modified hereby shall remain in full force and effect. Notwithstanding the aforementioned sentence, to the extent any terms herein conflict with the Loan Agreement or the Note, this Agreement of Modification shall control. VISUAL DATA CORPORATION By: /s/ Randy S. Selman ------------------------------------- Randy S. Selman ------------------------------------- Frederick A. Deluca EX-10.3 6 g75693ex10-3.txt FINANCIAL ADVISORY AND CONSULTING AGREEMENT EXHIBIT 10.3 FINANCIAL ADVISORY AND CONSULTING AGREEMENT WITH NATIONAL SECURITIES CORPORATION NATIONAL SECURITIES CORPORATION 875 N. Michigan Ave, Suite 1560 Chicago, IL 60611 Telephone: (312) 751-8833 Fax: (312) 751-0760 Member Chicago Stock Exchange - Member National Association of Securities Dealers, Inc. FINANCIAL ADVISORY AND CONSULTING AGREEMENT This agreement ("Agreement") is made and entered into this 18th day of April, 2002 between Visual Data Corporation, a Florida corporation (the "Company"), and National Securities Corporation (the "Consultant"). For good and valuable consideration (the sufficiency and receipt of which is hereby acknowledged) the Company and National hereto mutually agree and intend to be legally bound for themselves and their respective heirs, legal representatives, successors and assigns to the terms of this Agreement. 1. PURPOSE. The Company hereby retains the Consultant on a non-exclusive basis during the term specified to render consulting advice to the Company relating to financial and similar matters, upon the terms and conditions as set forth herein. 2. TERMS AND CONSIDERATION. This Agreement shall be effective for a period of twelve months commencing on the date first written above (the "Engagement Period"). The Company shall issue to Consultant 100,000 shares of common stock of the Company (the "Common Stock"). The Common Stock shall be issued as follows: 50,000 shares upon the execution of this agreement; 25,000 shares 90 days from this agreement; 12,500 shares 180 days from this agreement, and 12,500 shares 270 days from this agreement. The Company shall issue to Consultant 200,000 common stock purchase warrants (the "Warrants") exercisable for a period of five (5) years exercisable at 120% of the market price of the common stock at the execution of this agreement. The Warrants shall be issued in four tranches of 50,000 warrants per tranch, as follows: the first tranche shall be issued upon execution of this agreement, the second tranche shall be issued 90 days from the execution of this agreement, the third tranche shall be issued 180 days from the execution of this agreement, and the final tranche shall be issued 270 days from the execution of this agreement. The market price will be determined by the average last five trading days closing price prior to the execution of this agreement. The Company has the right to terminate this Agreement at any time. If the agreement is terminated the 1 unissued Common Stock and Warrants shall not be issued to Consultant. The Company will file a registration statement for the Common Stock and the common stock underlying the Warrants within 120 days from the execution of this agreement and the Company will use its best efforts to have the registration declared effective 180 days from the execution of this agreement. The Warrants shall provide piggyback registration rights. 3. DUTIES OF CONSULTANT. During the term of this Agreement, the Consultant will provide the Company with such regular and customary consulting advice as is reasonably requested by the Company, provided that the Consultant shall not be required to undertake duties not reasonably within the scope of the consulting advisory services contemplated by this Agreement. In performance of these duties, the Consultant shall provide the Company with the benefits of its best judgment and efforts. lt is understood and acknowledged by the parties that the value of the Consultant's advice is not measurable in any quantitative manner, and that the Consultant shall not be obligated to spend any specific amount of time doing so. The Consultant's duties may include, but not be limited to: A. Providing sponsorship and exposure in connection with the dissemination of corporate information regarding the Company to the investment community at large. B. Assisting in the Company's financial public relations, including discussions between the Company and the financial community. C. Advice regarding the financial structure of the Company and its divisions or subsidiaries or any programs and projects, as such issues relate to the public market for the Company's equity securities. D. Rendering advice with respect to any acquisition program of the Company, as such program relates to the public market for the Company's equity securities. E. Rendering advice regarding the public market for the Company's securities and the timing and structure of any future public offering or private placement of the Company's equity securities. 4. OPTIONAL SERVICES. At the request of the Company, Consultant shall provide a Valuation Analysis of the Company for a fee of $25,000. At the request of the Company, Consultant shall provide an Industry White Paper for a fee of $15,000. The fee for the Valuation Analysis or Industry White Paper is payable in cash or at the Company's sole discretion in the Company's common stock. The use of these services shall be subject to an additional engagement letter to be executed by the parties hereto at such time as is appropriate. 5. RELATIONSHIPS WITH OTHERS. The Company acknowledges that the Consultant or its affiliates is in the business of providing financial service and consulting advice (of all types contemplated by this Agreement) to others. Nothing contained herein 2 shall be construed to limit or restrict the Consultant in conducting such business with respect to others, or in rendering such advise to others. In connection with the rendering of services hereunder, Consultant has been or will be furnished with confidential information concerning the Company including, but not limited to, financial statements and information, cost and expense data, production data, trade secrets, marketing and customer data, and such other information not generally obtained from public or published information or trade sources. Such information shall he deemed "Confidential Material" and, except as specifically provided herein, shall not be disclosed by Consultant without prior written consent of the Company. In the event Consultant is required by applicable law or legal process to disclose any of the Confidential Material, it is agreed that Consultant will deliver to the Company prompt notice of such requirement prior to disclosure of same to permit the Company to seek an appropriate protective order and/or waive compliance of this provision. If, in the absence of a protective order or receipt of written waiver, Consultant is nonetheless, in the written opinion of counsel, compelled to disclose any Confidential Material, Consultant may do so without liability hereunder provided that notice of such prospective disclosure is delivered to the Company prior to actual disclosure. Following the termination of this Agreement, Consultant shall deliver to the Company all Confidential Material. 6. CONSULTANT'S LIABILITY. In the absence of gross negligence or willful misconduct on the part of National or National's material breach of this Agreement, National shall not be liable to the Company or to any officer, director, employee, agent, representative, stockholder or creditor of the Company for any action or omission of National or any of its officers, directors, employees, agents, representatives or stockholders in the course of, or in connection with, rendering or performing any services hereunder. The liability of National pursuant to this Engagement Letter shall be limited to the aggregate fees received by National hereunder, which shall not include any liability for incidental, consequential or punitive damages. The Company agrees to indemnify National in accordance with the provisions of Annex A hereto, which is incorporated by reference and made a part hereof. 7. TERMINATION. This Engagement Letter may be terminated at any time during the Engagement Period by National upon five (5) days prior written notice to the Company, in the event that National becomes aware of (i) any change in the business or operations of the Company which National reasonably believes may adversely affect National's ability to render the services contemplated hereunder, (ii) any misrepresentation by the Company with respect to the business operations, assets, condition (financial or otherwise), results of operations or prospects of the Company, or (iii) any breach by the Company of its obligations under this Engagement Letter. In the event of termination (i) this Engagement Letter shall become void, without liability on the part of National or its affiliates, directors, officers or stockholders, and (ii) National shall be entitled to retain or receive compensation for services it has rendered, including payment for expenses it has incurred up to the date of such termination. The Company has the right to terminate this Agreement at any time. If the agreement is terminated the unissued Common Stock and Warrants shall not be issued to Consultant. 3 8. EXPENSES. The Company, upon receipt of appropriate supporting documentation, shall reimburse the Consultant for any and all reasonable out-of- pocket expenses incurred in connection with services provided to the Company, subject to prior approval of the Company. All expenses must comply with the policies of the Company. 9. SALES OR DISTRIBUTIONS OF SECURITIES. If the Consultant assists the Company in the sale or distribution of securities, the Consultant shall receive fees and other forms of compensation as are customarily received by investment bankers in similar transactions. Such public offering or private placement, undertaken by the Consultant on behalf of the Company, shall be subject to an additional engagement letter to be executed by the parties hereto at such time as is appropriate. 10. LIMITATION UPON THE USE OF ADVICE AND SERVICES. (a) No person or entity, other than the Company or any of its subsidiaries or directors or officers of each of the foregoing, shall be entitled to make use of or rely upon the advice of the Consultant to be given hereunder, and the Company shall not transmit such advice to, or encourage or facilitate the use or reliance upon such advice by others without the prior consent of the Consultant. (b) The Company hereby acknowledges that the Consultant, for services rendered under this Agreement, makes no commitment whatsoever as to recommend or advise its clients to purchase the securities of the Company. Research reports that may be prepared by the Consultant will, when and if prepared, be based solely on the merits, and independent judgment of analysts of the Consultant. (c) The Company hereby acknowledges that the Consultant, for services rendered under this Agreement, makes no commitment whatsoever to make a market in any of the Company's securities, on any stock exchange or in any electronic marketplace. Any decision by Consultant to make a market in any of the Company's securities shall be based solely on the independent judgment of Consultant's traders and related supervisory personnel. (d) Use of the Consultant's name in annual reports or any other report of the Company or releases by the Company must have the prior approval of the Consultant unless the Company is required by law to include Consultant's name in such annual reports, other report or release of the Company, in which event Consultant will be furnished with copies of such annual reports or other reports or releases using Consultant's name in advance of publication by the Company. 11. SEVERABILITY. Every provision of this Agreement is intended to be severable. If any term or provision hereof is deemed unlawful or invalid for any reason whatsoever, such unlawfulness or invalidity shall not affect the validity of this Agreement. 4 12. MISCELLANEOUS. (a) Any notice or other communication between parties hereto shall be sufficiently given if sent by certified or registered mail, postage prepaid, or faxed and confirmed if to the Company, addressed to it at Visual Data Corporation, 1291 SW 29th Avenue, Pompano Beach, FL 33069, or if to the Consultant, addressed to it at National Securities Corporation, 875 N. Michigan Ave, Suite 1560, Chicago, IL 60611. Such notice or other communication shall be deemed to be given on the date of receipt. (b) If the Consultant shall cease to do business, the provisions hereof relating to duties of the Consultant and compensation by the Company as it applies to the Consultant shall thereupon cease to be in effect, except for the Company's obligation of payment for services rendered prior thereto. This Agreement shall survive any merger of, acquisition of, or acquisition by the Consultant and after any such merger or acquisition shall be binding upon the Company and the corporation surviving such merger or acquisition. (c) This Agreement embodies the entire Agreement and understanding between the Company and the Consultant and supersedes any and all negotiations, prior discussions and preliminary and prior agreements and understandings related to the central subject matter hereof. (d) This agreement has been duly authorized, executed and delivered by and on behalf of the Company and the Consultant. (e) This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington, without giving effect to conflicts of laws. (f) There is no relationship of partnership, agency, employment, franchise or joint venture between the parties. Neither party has the authority to bind the other or incur any obligation on its behalf. (g) This Agreement and the rights hereunder may not be assigned by either party (except by operation of law) and shall be binding upon and inure to the benefit of the parties and their respective successors, assigns and legal representatives. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof. Visual Data Corporation By: /s/ Randy Selman ------------------------------------- Name: Randy Selman Title: Chairman and CEO National Securities Corporation By: /s/ Michael Bresner ------------------------------------- Name: Michael Bresner Title: President 5 EX-10.4 7 g75693ex10-4.txt BUSINESS ADVISORY AGREEMENT EXHIBIT 10.4 BUSINESS ADVISORY AGREEMENT WITH NEWBRIDGE SECURITIES COPRORAITON BUSINESS ADVISORY AGREEMENT This Agreement is made and entered into as of this 2nd day of December, 2001, between Visual Data Corporation, a Florida corporation with its principal offices in Pompano Beach, Florida (the "Company") and Newbridge Securities Corporation, a Virginia corporation with its principal offices in Ft. Lauderdale, Florida (the "Advisor"). WHEREAS, the Company is seeking certain services and advice regarding the Company's business and financing activities; and WHEREAS, the Advisor is willing to furnish certain business and financial related advice and services to the Company on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. PURPOSE. The Company hereby engages the Advisor on a non-exclusive basis for the term specified in this agreement to render financial and business advisory consulting advice to the Company as a financial advisor relating to financial and similar matters upon the terms and conditions set forth herein. 2. REPRESENTATIONS OF THE ADVISOR. The Advisor represents and warrants to the Company that (i) it is a member in good standing of the National Association of Securities Dealers, Inc. ("NASD") and that it is engaged in the securities brokerage business; (ii) in addition to its securities brokerage business, the Advisor provides consulting advisory services; and (iii) it is free to enter into this Agreement and the services to be provided pursuant to this Agreement are not in conflict with any other contractual or other obligation to which the Advisor is bound. The Company acknowledges that the Advisor is in the securities business and may provide financial and business consulting services and advice of the type contemplated by this Agreement to others, and that nothing contained herein shall be construed to limit or restrict the Advisor in providing such services or advice to others. 3. DUTIES OF THE ADVISOR. During the term of this Agreement, the Advisor will provide the Company with consulting advice as specified below at the request of the Company, provided that the Advisor shall not be required to undertake duties not 1 reasonably within the scope of the consulting advisory service in which the Advisor is engaged generally. In the performance of these duties, the Advisor shall provide the Company with the benefits of its best judgment and efforts, and the Advisor cannot and does not guarantee or promise that its efforts will have any impact on the business or the Company or that any subsequent improvement will result from the efforts of the Advisor. It is understood and acknowledged by the parties that the value of the Advisor's advice is not measurable in any quantitative manner, and that the amount of time spent rendering such consulting advice shall be determined according to die Advisor's discretion. The Advisor's duties may include, but will not necessarily be limited to, rendering the following services to the Company: a. Study and review the business, operations, historical financial performance of the Company (based upon information provided to the Advisor by management) so as to enable the Advisor to provide advice to the Company; b. Assist the Company in attempting to formulate the optimum strategy to meet the Company's working capital and capital resource needs during the term of this Agreement; c. Assist the Company in seeking to identify and evaluate potential merger and acquisition candidates for the Company and, in appropriate instances, negotiate on the Company's behalf, d. Assist in the introduction of the Company to institutional or other capital financing sources; e. Assist in the formulation of the terms and structure of any reasonable proposed equity or debt financing or business transaction involving the Company; f. Assist in any presentation to the Board of Directors of the Company, as requested, in connection with a proposed transaction; and g. Advise the Company as to the expected reaction of the financial community to any transaction and assist in determining optimum means of communicating the pertinent aspects, such as strategic considerations, benefits to the Company and financial impact, to the financial community. 4. TERM. Subject to the termination provisions set forth in paragraph 15 hereof, the term of this Agreement shall be for one (1) year commencing from the date of this Agreement ("Commencement Date"); provided, however, that this 2 Agreement may be renewed or extended upon such terms and conditions as may be mutually agreed upon by the parties hereto. This Agreement shall terminate, however, in the event that the Advisor is no longer a member in good standing of the NASD. 5. ADVISORY FEE. As compensation for the services to be rendered by Advisor hereunder, Company will pay to Advisor an advisory fee for as long as the Advisory Agreement is in effect, as follows: (a) a cash fee of $60,000, payable (i) a $5,000 non-refundable retainer due upon the Commencement Date; and (ii) eleven consecutive monthly payments of $5,000, the first such payment to be due no later than thirty (30) days from the Commencement Date and thereafter, on the same date for each month in which such a payment is due; (b) the Company will issue to the Advisor up to 250,000 shares of the Company's common stock (the "Shares") in four tranches, with the first tranche of 50,000 available upon the Commencement Date, the second tranche of 100,000 shares available upon the ninety day anniversary of the Commencement Date, the third tranche of 50,000 shares available upon the six month anniversary of the Commencement Date and the fourth tranche of 50,000 shares available upon the (1) year anniversary of the Commencement Date; and (c) the Company will issue to Advisor a warrant (the "Warrant"), substantially in the form attached hereto as Exhibit A (the "Warrant Agreement"), to acquire up to 500,000 shares of common stock in four (4) tranches of 125,000 shares (the "Warrant Shares") with vesting dates and exercise prices as follows: First Tranche: Vested upon o 25,000 shares at $1.00 Commencement Date o 25,000 shares at $1.50 o 25,000 shares at $2.00 o 25,000 shares at $2.50 o 25,000 shares at $3.00 Second Tranche: Vested 90 days o 25,000 shares at $1.00 after Commencement Date o 25,000 shares at $1.50 o 25,000 shares at $2.00 o 25,000 shares at $2.50 o 25,000 shares at $3.00 Third Tranche: Vested 180 days o 25,000 shares at $1.00 after Commencement Date o 25,000 shares at $1.50 o 25,000 shares at $2.00 o 25,000 shares at $2.50 o 25,000 shares at $3.00 Fourth Tranche: Vested 270 days o 25,000 shares at $1.00 after Commencement Date o 25,000 shares at $1.50 o 25,000 shares at $2.00 o 25,000 shares at $2.50 o 25,000 shares at $3.00 3 The Warrant will have a four (4) year term from the date of grant (i.e., the Commencement Date). All of the common stock to be sold by the Company to Advisor, as well as the Warrant Shares, will carry piggyback registration rights and one-time demand registration rights, as more fully described in the registration rights agreement (the "Registration Rights Agreement") attached to the Warrant as Exhibit 3. 6. FINANCING FEE. In the event the Advisor effects, underwrites or introduces a financing by offering or selling any of the securities of the Company, in a private or public debt and/or equity transaction, pursuant to which the Company obtains financing or other consideration, the Advisor shall receive a Financing Fee in addition to the Advisory Fee and any other fee to be received pursuant to this Agreement, which shall be mutually determined between the Company and the Advisor at the time of any such Financing. 7. TRANSACTION FINDER'S FEE. In connection with any transaction consummated by the Company in which the Advisor introduced the other party (except for any party identified by the Company on a schedule to be provided contemporaneously with the execution of this Agreement) to the Company, during a period ending six (6) months from the termination of this agreement (in each such case, a "Transaction") the Company will pay to the Advisor a Transaction Fee ("Transaction Fee") based on the aggregate consideration received or to be paid by the Company in connection with such Transaction (as further defined below), and computed as follows: 5% of the first million dollars; 4% of the next million dollars; 3% of the next million dollars; 2% of the next million dollars and 1% of the balance of the value of the transaction. The Transaction Fee will be payable in the same forms and proportions as the aggregate consideration disbursed or received by the Company unless otherwise mutually agreed to in writing by the parties. By way of example, if the Company consummates a transaction in which the Company receives aggregate consideration of $2 million, consisting of $1 million insecurities and $1 million in cash, then the Transaction Fee will be payable by the Company one-half in securities and one-half in cash. a. As used herein, the term "aggregate consideration" shall be deemed to be the total amount disbursed or received by the Company (which shall be deemed to include amounts paid into escrow) in connection with a Transaction. 4 b. A Transaction Fee is payable in the event of and upon the closing of a Transaction; provided, however, that if the aggregate consideration consists of or may be increased by future payments or contingent payments related to future earnings or operations, the Company, in its discretion, shall have the choice to either (i) pay that portion of the Transaction Fee at closing based on the present value of any future and/or contingent payments calculated as at closing or (ii) pay that portion of the Transaction Fee calculated and paid when and as such future and/or contingent payments are made to the Company; provided further, however, that even if the Company exercises its discretion under clause (ii) above, the entire Transaction Fee due to the Adviser will be paid within twenty-four (24) months of the date this Agreement is terminated, regardless of whether the Company has then received all payments that are to be made to the Company in connection with the Transaction. 8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Advisor as follows: a. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of its incorporation, with full corporate power and authority to own its properties and conduct its business and is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which the nature of its business or the character or location of its properties requires such qualification, except where the failure to so qualify would not have a material adverse effect on the business, properties or operations of the Company and its subsidiaries as a whole. b. The Company has full legal right, power and authority to enter into this Agreement, and to consummate the transactions provided for herein, and this Agreement, when executed by the Company, will constitute a valid and binding agreement, enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy or other similar laws affecting the rights of creditors generally or by general equitable principles and except as the enforcement of indemnification provisions may be limited by federal or state securities laws). c. Except as disclosed in the Company's public filings or on the Disclosure Schedule attached hereto as Exhibit A ("Disclosure Schedule"), the Company is not in violation of its articles of incorporation or bylaws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint venture, partnership or other agreement or instrument to which the Company is a party or by which it may be bound or is not in material violation of any law, order, rule, regulation, writ, injunction or decree of any governmental instrumentality or court, 5 domestic or foreign; and the execution and delivery of this Agreement and the consummation of the transactions contemplated therein and will not conflict with, or result in a material breach of any of the terms, conditions or provisions of, or constitute a material default under, or result in the imposition of any material lien, charge or encumbrance upon any of the property or assets of the Company pursuant to, any material bond, debenture, note or other evidence of indebtedness or any material contract, indenture, mortgage, loan agreement, lease, joint venture, partnership or other agreement or instrument to which the Company is a party nor will such action result in the material violation by the Company of any of the provisions of its articles of incorporation or bylaws, or any law, order, rule, regulation, writ, injunction, decree of any government, governmental instrumentality or court, domestic or foreign, except where such violation will not have a material adverse effect on the financial condition of the Company. d. The authorized, issued and outstanding capital stock of the Company is as disclosed in writing to the Advisor and all of the shares of issued and outstanding capital stock of the Company set forth therein have been duly authorized, validly issued and are fully paid and nonassessable; the holders thereof do not have any rights or rescission with respect therefor and are not subject to personal liability for any obligations of the Company by reason of being stockholders under the laws of the State in which the Company is incorporated; and none of such outstanding capital stock is subject to or was issued in violation of any preemptive or similar rights of any stockholder of the Company. e. Except as disclosed in the Company's public filings or on the Disclosure Schedule, the Company is not a party to or bound by any instrument, agreement or other arrangement providing for it to issue any capital stock, rights, warrants, options or other securities, except for this Agreement and as disclosed in writing to the Advisor. Upon the issuance and delivery pursuant to the terms hereof of any securities to the Advisor, the Advisor will acquire good and marketable title to such securities free and clear of any lien, charge, claim, encumbrance, pledge, security interest, defect or other restriction of any kind whatsoever other than restrictions as may be imposed under the securities laws. f. Except as disclosed in the Company's public filings or on the Disclosure Schedule, the Company has good and marketable title to all of its properties and assets as owned by it, free and clear of all liens, charges, encumbrances or restrictions, except as disclosed in writing to the Advisor or which are not materially significant or important in relation to its business or which have been incurred in the ordinary course of business. g. The financial information contained in the Company's 10-K for its fiscal year 2000, and its 10-Q's dated as of December 31, 2000, March 31, 2001 and 6 June 30, 2001 fairly presents the financial position and results of operations of the Company at the respective dates and for the respective periods to which they apply. Said information has been prepared in accordance with generally accepted accounting principles applied on a basis which is consistent in all material respects during the periods involved, except in the case of unaudited financial statements' normal recurring adjustments. h. There has been no material adverse change or material development involving a prospective adverse change in the condition, financial or otherwise, or in the prospects, value, operation, properties, business or results of operations of the Company whether or not arising in the ordinary course of business. i. To the knowledge of the Company, except as disclosed in the Company's public filings or on the Disclosure Schedule, there is no pending or threatened, action, suit or proceeding to which the Company is a party before or by any court or governmental agency or body, which might result in any material adverse change in the financial condition or business of the Company as a whole or might materially and adversely affect the properties or assets of the Company as a whole nor are there any actions, suits or proceedings against the Company related to environmental matters or related to discrimination on the basis of age, sex, religion or race which might be expected to materially and adversely affect the conduct of the business, property, operations, financial condition or earnings of the Company as a whole; and no labor disturbance by the employees of the Company exists or is, to the knowledge of the Company, imminent which might be expected to materially and adversely affect the conduct of the business, property, operations, financial condition or earnings of the Company as a whole. j. Except as disclosed in the Company's public filings or on the Disclosure Schedule, the Company has properly prepared and filed all necessary federal, state, local and foreign income and franchise tax returns, has paid all taxes shown as due thereon, has established adequate reserves for such taxes which are not yet due and payable, and does not have any tax deficiency or claims outstanding, proposed or assessed against it. k. The Company has sufficient licenses, permits, right to use trade or service marks and other governmental authorizations currently required for the conduct of its business as now being conducted and the Company is in all material respects complying therewith. To its knowledge, none of the activities or businesses of the Company are in material violation of, or cause the Company to materially violate any law, rule, regulations, or order of the United States, any state, county or locality, or of any agency or body of the United States or of any state, county or locality. l. The Company knows of no outstanding claims for services either in the nature of a finder's fee, brokerage fee or otherwise with respect to this Agreement for which the Company or the Advisor may be responsible. 7 m. The Company has its property adequately insured against loss or damage. n. To the best of the Company's knowledge it has generally enjoyed a satisfactory employer-employee relationship with its employees and, to the best of its knowledge, is in substantial compliance in all material respects with all federal, state, local, and foreign laws and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours. o. Except as disclosed in the Company's public filings or on the Disclosure Schedule, no officer or director of the Company, holder of 5% or more of securities of the Company or any affiliate of any of the foregoing persons or entities has or has had, either directly or indirectly, (i) an interest in any person or entity which (A) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Company, or (B) purchases from or sells or furnishes to the Company any goods or services, or (ii) a beneficiary interest in any contract or agreement to which the Company is a party or by which it may be bound or affected. p. The minute books of the Company have been made available to the Advisor and contain a complete summary of all meetings and actions of the directors and stockholders of the Company, since the time of its incorporation and reflect all transactions referred to in such minutes accurately in all respects. q. Except as disclosed in the Company's public filings or on the Disclosure Schedule, no holders of any securities of the Company or of any options, warrants or other convertible or exchangeable securities of the Company have the right to include any securities issued by the Company in any registration statement to be filed by the Company or to require the Company to file a registration statement under the Act and no person or entity holds any anti-dilution rights with respect to any securities of the Company. 9. COVENANTS OF THE COMPANY. The Company covenants and agrees with Advisor that: a. During the Term of this Agreement, the Company will deliver to the Advisor: i. as soon as they are available, copies of all reports (financial or other) mailed to shareholders; 8 ii. as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, the NASD or any securities exchange; iii. every press release and every material news item or article of interest to the financial community in respect of the Company or its affairs which was prepared and released by or on behalf of the Company; and iv. any additional information of a public nature concerning the Company (and any future subsidiaries) or its businesses which the Advisor may reasonably request. b. During the Term of this Agreement, the Company will provide to a designated representative of Advisor's investment banking team, a quarterly current client list and shareholder list, which will be treated at all times as "Confidential Information" as defined in that certain Confidentiality Agreement between the Company and the Advisor. c. During the Term of this Agreement, the Company will allow the Advisor to nominate an observer to the Board of Directors of the Company. The choice of such person shall be subject to the approval or the Company, which approval shall not unreasonably be withheld. All out-of-pocket expenses incurred by that person shall be reimbursed by the Company who will receive a mutually agreed upon compensation different from the other non-officer directors; provided, however, that any single expense item in excess of $100 shall be pre-approved by the Company. 10. COSTS AND EXPENSES. In addition to the fees payable hereunder, the Company shall reimburse the Advisor, within five (5) business days of its request, for any and all reasonable out-of-pocket expenses incurred in connection with the services performed by the Advisor under this Agreement; provided, however, that any single expense item in excess of $100 or monthly expense in excess of $250 shall be pre-approved by the Company. 11. COMPANY INFORMATION. The Company recognizes and confirms that, in advising the Company and in fulfilling its engagement hereunder, the Advisor will use and rely on data, material and other information furnished to the Advisor by the Company (the "Company Information"). The Company acknowledges and agrees that in performing its services under this engagement, the Advisor may rely upon the Company information without independently verifying the accuracy, completeness or veracity of same. The parties further acknowledge that the Advisor shall have no responsibility for the accuracy of any statements to be made by Company management contained in press releases or other communications, including, but not limited to, filings with the SEC and the NASD. 9 In addition, in the performance of its services, the Advisor may look to such others for factual information, economic advice and/or research upon which to base its advice to the Company hereunder as the Advisor shall in good faith deem appropriate. 12. INDEMNIFICATION. In the performance of its services, the Advisor shall be obligated to act only in good faith, and shall not be liable to the Company for errors in Judgment that are not the result of gross negligence or willful misconduct. a. The Company agrees to indemnify and hold harmless the Adviser, each person who controls the Advisor within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended, and the Advisor's officers, directors, employees, accountants, attorneys and agents (the "Advisor's Indemnitees") against any and all losses, claims, expenses, damages or liabilities, joint or several, to which they or any of them may become subject (including the costs of any investigation and all reasonable attorneys' fees and costs) or incurred by them, to the fullest extent lawful, in connection with any pending or threatened litigation, legal claim or proceeding, whether or not resulting in any liability, arising out of or in connection with the services rendered by the Advisor or any transactions in connection with this Agreement; provided, however, that the indemnity agreement contained in this Section 12(a) shall not apply to any such losses, claims, related expenses, damages or liabilities arising out of gross negligence, willful misconduct or fraud of the Advisor, or a material breach of the Advisor's representations and warranties hereunder. b. The Advisor agrees to indemnify and hold harmless the Company and its officers, directors, employees, accountants, attorneys and agents (the "Company's Indemnitees") against any and all losses, claims, expenses, damages or liabilities, joint or several, to which they or any of them may become subject (including the costs of any investigation and all reasonable attorneys' fees and costs) or incurred by them, to the fullest extent lawful, in connection with any pending or threatened litigation, legal claim or proceeding, whether or not resulting in any liability, arising out of gross negligence, willful misconduct or fraud of the Advisor; provided, however, that the indemnity agreement contained in this Section 12(b) shall not apply to any such losses, claims, related expenses, damages or liabilities arising out of the gross negligence, willful misconduct or fraud or the Company, or a material breach of the Company's representations and warranties hereunder. c. Each Advisor's Indemnitee or Company's Indemnitee, as the case may be (an "Indemnified Person"), shall give prompt written notice to the Company or the Advisor, as appropriate (the "Indemnifying Party"), after the receipt by such Indemnified Person of any written notice of the commencement of any action, suit or proceeding for which such Indemnified Person will claim indemnification or contribution 10 pursuant to this Agreement. The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Person within twenty (20) business days after the receipt of written notice from such Indemnified Person of such commencement, to assume, at its expense, the defense of any such action, suit or proceeding; provided, however, that an Indemnified Person shall have the right to employ counsel in any such action, suit or proceeding, and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Indemnifying Party fails to assume the defense of such action, suit or proceeding or fails to employ separate counsel reasonably satisfactory to such Indemnified Person in any such action, suit or proceeding; or (ii) the Indemnifying Party and such Indemnified Person shall have been advised by counsel that there may be one or more defenses available to such Indemnified Person which are in conflict with, different from or additional to those available to the Indemnifying Party, or another Indemnified Person, as the case may be (in which case, if such Indemnified Person notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the night to assume the defense of such action, suit or proceeding on behalf of such Indemnified Person); it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding of separate but substantially similar or related actions or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time acting for each Indemnified Person in any one jurisdiction. The lndemnifying Party shall not settle or compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action, claim, suit or proceeding in which any Indemnified Person is a party and as to which indemnification or contribution has been sought by such Indemnified Person hereunder, unless such Indemnified Person has given its prior written consent or the settlement, compromise, consent or termination includes an express unconditional release of such Indemnified Person, satisfactory in form and substance to such Indemnified Person, from all losses, claims, damages or liabilities arising out of such action, claim, suit or proceeding. d. If for any reason the indemnity provided for in this Section 12 is unavailable to an Indemnified Person or insufficient to hold an Indemnified Person harmless, then the Indemnifying Party, to the fullest extent permitted by law, shall contribute to the amount paid or payable by such Indemnified Person as a result of such claims, liabilities, losses, damages or expenses in such proportion as its appropriate to reflect (i) the relative benefits received by the Company on one hand and by the Advisor on the other, from the transaction or proposed transaction under this Agreement and (ii) the relative fault of the Company and the Advisor, as well as any relevant equitable considerations. The relative fault of the Company on the one hand and the Advisor on the other shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or 11 alleged omission to state a material fact relates to information supplied by the Company or by the Advisor. The indemnity, contribution and expense reimbursement obligations set forth herein (i) shall be in addition to any liability an Indemnifying Party may have to any Indemnified Person at common law of otherwise, (ii) shall survive the termination of this Agreement, (iii) shall apply to any modification of this Agreement and shall remain in full force and effect following the completion or termination of the Agreement, (iv) shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Advisor or any other Indemnified Person, and (v) shall be binding on any successor or assign of the Company or the Advisor and the respective successors or assigns to all or substantially all of the Company's or the Advisor's business and assets. 13. USE OF ADVICE BY THE COMPANY. The Company acknowledges that all opinions and advice (written or oral) given by the Advisor to the Company in connection with the engagement of the Advisor are intended solely for the benefit and use of the Company in considering the matters, to which they relate, and the Company agrees that no person or entity other than the Company and its Board of Directors shall be entitled to make, use or rely upon the advice of the Advisor to be given hereunder, and no such opinion or advice shall be used for any other purpose, or reproduced, disseminated, quoted or referred to at any time, in any manner or for any purpose, not may the Company make any public references to the Advisor, or use the Advisor's name in any reports or releases of the Company without the Advisor's prior written consent. The Company acknowledges that the Advisor makes no representations or commitment whatsoever as to making a market in the Company's securities or recommending or advising its clients, or any other persons, to purchase the Company's securities. Research reports or corporate business reports that may be prepared by the Advisor will, when and if prepared, be done solely on the merits and the judgment and analysis of the Advisor or any of its senior personnel. 14. THE ADVISOR AS AN INDEPENDENT CONTRACTOR. The Advisor shall perform its services hereunder as an independent contractor and not as an employee of the Company or an affiliate thereof. It is expressly understood and agreed to by the parties hereto that the Advisor shall have no authority to act for, represent or bind the Company or any affiliate thereof, in any manner, except as may be agreed to expressly by the Company in writing from time to time. 15. TERMINATION. This Agreement may be terminated by either party upon thirty (30) days written notice; provided, however, that all compensation (including any amounts to become due on account of a Financing Fee or Transaction Fee) due or to become due after the effective date of such termination shall be unaffected by such termination. In addition, termination of this Agreement shall not affect the Advisor's rights under the Warrant Agreement. 12 16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE. The respective indemnities, agreements, representations, warranties and other statements of the Company and the Advisor set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Advisor, the Company, or any of their respective officers or directors. 17. NOTICES. All communications hereunder will be in writing and, except as otherwise expressly provided herein, sent by overnight mail, to the Company at: Visual Data Corporation, 1291 SW 29th Avenue, Pompano Beach, FL 33069 Attn: Randy Selman, President, and to the Advisor at: Newbridge Securities Corporation, 1451 W. Cypress Creek Road, Suite 204, Ft. Lauderdale, FL 33309, Attn: Guy S. Amico, President. 18. PARTIES IN INTEREST. This Agreement is made solely for the benefit of the Advisor and the Company, and their respective controlling persons, directors and officers, and their respective successors, assigns, executors and administrators. No other person shall acquire or have any right under or by virtue of this Agreement. 19. HEADINGS. The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement. 20. APPLICABLE LAW; VENUE AND JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflict of law principles. Any action arising out of this agreement shall be brought exclusively in a court of competent jurisdiction located in Broward County, Florida, and the parties hereby irrevocably submit to the personal jurisdiction of such courts, and waive any objection they now or hereafter may have to the laying of venue in such courts. 21. INTEGRATION. This Agreement constitutes the entire agreement and understanding of the parties hereto and supersedes any and all previous agreements and understandings, whether oral or written, between the parties with respect to the matters set forth herein. No provision of this Agreement may be amended, modified or waived, except in a writing signed by all of the parties hereto. 22. COUNTERPARTS. This Agreement may be executed any number of counterparts, each of which together shall constitute one and the same instrument. 23. AUTHORITY. This Agreement has been duly authorized, executed and delivered by and on behalf of the Company and the Advisor. 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. THE COMPANY THE ADVISOR Visual Data Corporation Newbridge Securities Corporation By: /s/ Randy Selman By: /s/ Guy S. Amico ------------------------------ ------------------------------------ Randy Selman Guy S. Amico President President 14 EX-23.1 8 g75693ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent certified public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated January 11, 2002 included in Visual Data Corporation's Form 10-KSB for the year ended September 30, 2001, and our report dated February 7, 2002 included in Visual Data Corporation's Form 8-K dated March 28, 2002, and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Fort Lauderdale, Florida, May 24, 2002. -----END PRIVACY-ENHANCED MESSAGE-----