Second Forbearance Agreement - Red Brook Developments Ltd., Visual Bible International Inc. and Visual Bible International (Canada) Inc. and The Book of John Inc.
EXECUTION COPY
SECOND FORBEARANCE AGREEMENT
THIS AGREEMENT made as of the 1ST day of April, 2004.
A M O N G:
RED BROOK DEVELOPMENTS LIMITED, on its own behalf and on behalf of
certain debentureholders
"Red Brook")
- and -
VISUAL BIBLE INTERNATIONAL, INC.
("Visual Bible")
- and -
VISUAL BIBLE INTERNATIONAL (CANADA) INC.
THE BOOK OF JOHN, INC.
(collectively, the "Guarantors")
WHEREAS:
1. Visual Bible is indebted to the Debentureholders pursuant to the
Debentures;
2. to secure the indebtedness, liabilities and obligations owing to
the Debentureholders under the Debentures, Visual Bible granted a
security interest in its assets to Red Brook and to the
Debentureholders pursuant to the Debenture Security;
3. the Guarantors have executed and delivered to and in favour of
the Debentureholders the Guarantees listed in Schedule 1.1(q)
hereto;
4. to secure the indebtedness, liabilities and obligations owing to
the Debentureholders under the Guarantees, each of the Guarantors
granted a security interest in their respective assets to the
Debentureholders pursuant to the Guarantor Security;
5. Red Brook, on its own behalf and on behalf of the
Debentureholders, expressed concern to Visual Bible and as a result,
on January 23, 2004 and January 28, 2004 made demand for repayment
of a portion of the indebtedness, liabilities and obligations owing
to Debentureholders;
6. Red Brook, on its own behalf and on behalf of the
Debentureholders, by a letter dated February 4, 2004 agreed to defer
certain payments owing to them under the Debentures until February
15, 2004 (the "Deferred Payments");
7. As a result of Visual Bible's defaults under the Debentures and
the Debenture Security, Red Brook, on its own behalf and on behalf
of the Debentureholders, agreed to forbear from enforcing their
rights pursuant to a forbearance agreement among Red Brook, on its
own behalf and on behalf of the Debentureholders, Visual Bible and
the Guarantors made as of February 19, 2004 (the "First Forbearance
Agreement");
8. Visual Bible and the Guarantors are in default of their
obligations under the Documents, as a result of which, Red Brook, on
its own behalf and on behalf of the Debentureholders, have a right
to enforce their remedies under the Documents, including those
granted under the First Forbearance Agreement;
9. Visual Bible has requested that the Debentureholders forbear
further from exercising their rights and remedies under the
Documents so as to permit Visual Bible an opportunity to restructure
its business and affairs in accordance with the terms and provisions
set forth in this Agreement; and
10. as an inducement to Red Brook and the Debentureholders to so
forebear, Visual Bible and the Guarantors have agreed to enter into
this Agreement, which shall be in addition to and shall not replace
the terms and conditions of the First Forbearance Agreement.
NOW THEREFORE in consideration of the acknowledgements,
confirmations, covenants and agreements contained herein, and other
good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each of the Parties hereto), each
of the Parties hereto hereby agrees as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions: Unless otherwise specifically defined in this
Agreement, all capitalized terms used in this Agreement shall have
the meanings ascribed to them in the Debentures. The following terms
shall have the following meanings:
(a) "Additional Security" has the meaning set out in the First
Forbearance Agreement;
(b) "Applicable Shareholders" has the meaning set out in Section
7.1(k) hereof;
(c) "Budget" has the meaning set out in Section 7.1(b) hereof;
(d) "Business Day" means any day, other than a Saturday or Sunday,
which chartered banks in Canada are open for commercial banking
during normal banking hours;
(e) "Deferred Payments" has the meaning set out in the recitals
hereto;
(f) "Debentures" means, collectively, those agreements executed by
Visual Bible listed in Schedule 1.1(f) hereto;
(g) "Debentureholders" means, collectively, those entities listed on
Schedule 1.1(g) hereto, each of which has been issued one more
Debentures by Visual Bible;
(h) "Debenture Security" means, collectively, those security
agreements executed by Visual Bible listed in Schedule 1.1(h) hereto;
(i) "Deluxe" means, collectively, Deluxe Media Services, Inc.,
Deluxe Media Laboratories, Inc., and Deluxe Toronto Ltd.;
(j) "Direct Response Sales" means sales of Units by Visual Bible
pursuant to television or radio infomercial advertising or pursuant
to print or web advertising which calls for a telephone, mail or web
response by the consumer and shall include all sales of Units to the
Canadian Bible Society;
(k) "Disbursement Agreement" means the agreement made as of April 1,
2004 among Red Brook, on its own behalf and on behalf of the
Debentureholders, Visual Bible, Visual Bible International (Canada)
Inc., Deluxe and the Disbursing Agent, regarding the collection and
distribution of Visual Bible's accounts receivable/receipts from all
sources;
(l) "Disbursing Agent" means Shiner Zweig Inc. or any replacement
agent that is appointed in accordance with the terms of the
Disbursement Agreement;
(m) "Documents" means, collectively, the First Forbearance
Agreement, the Debentures, the Debenture Security, the Guarantees
and the Guarantor Security;
(n) "Event of Default" means any of the events set forth in Section
8.1 hereof;
(o) "Final Date" has the meaning set out in Section 7.1(m) hereof;
(p) "First Forbearance Agreement" has the meaning set out in the
recitals hereto;
(q) "Forbearance Termination Date" has the meaning set out in
Section 5.1 hereof;
(r) "Guarantees" means, collectively, those guarantees executed by
the Guarantors listed on Schedule 1.1(q) hereto;
(s) "Guarantor Security" means, collectively, the security
agreements executed by the Guarantors listed on Schedule 1.1(r) hereto;
(t) "Indebtedness" means all amounts currently owing or that may in
the future be owing by Visual Bible to the Debentureholders under
the Documents, including the amounts as more particularly set out in
Schedule 2.1 hereto, including any interest accrued or accruing
thereon and all costs, fees and expenses of Red Brook, including,
without limiting the generality of the foregoing, the fees, costs
and disbursements of a receiver or receiver and manager appointed by
Red Brook or a court, the legal and other professional fees of Red
Brook and any such receiver or receiver and manager on a full
indemnity basis;
(u) "Parties" means any one or more of the parties referred to in
this Agreement, as the context may require;
(v) "Registrable Securities" has the meaning set out in Section
7.1(k) hereof;
(w) "Registration Statement" has the meaning set out in Section
7.1(k) hereof;
(x) "Rentail Sales " means sales of Units by Visual Bible to video
rental outlets;
(y) "Retail Sales" means sales of Units by Visual Bible to retail
outlets;
(z) "Securities Act" has the meaning set out in Section 7.1(k) hereof;
(aa) "Security" means, collectively, the Debenture Security, the
Guarantor Security and the Additional Security;
(bb) "Statutory Payments" has the meaning set out in Section 6.1(c)
hereof;
(cc) "Target Date" has the meaning set out in Section 7.1(m) hereof;
(dd) "Unit" means any one of the following:
(i) a set consisting of one or more videocassettes of the film
entitled "The Gospel of John";
(ii) a set consisting of one or more DVD discs of the film entitled
"The Gospel of John";
(iii) a set consisting of one or more other audio visual medium,
whether currently existing or developed in the future of the film
entitled "The Gospel of John"; or
(iv) any combination of the items set out in the immediately
preceding subparagraphs;
(ee) "Warrants" means any warrants issued by Visual Bible to the
Debentureholders.
ARTICLE 2
INDEBTEDNESS
2.1 Acknowledgement of Indebtedness: Visual Bible acknowledges that
as at March 22, 2004, Visual Bible is indebted to the
Debentureholders in the amounts set forth in Schedule 2.1 hereto.
ARTICLE 3
ACKNOWLEDGEMENTS
3.1 Acknowledgements by Visual Bible: Visual Bible confirms and
acknowledges to Red Brook, on its own behalf and on behalf of the
Debentureholders, that:
(a) the recitals set out herein are true and correct in every
respect and shall form part of this Agreement;
(b) Visual Bible is in default of its obligations to the
Debentureholders under the terms of the Debentures, the Debenture
Security and the First Forbearance Agreement, as the case may be;
(c) Red Brook, on its own behalf and on behalf of the
Debentureholders, has no obligation to grant the indulgence and
forbearance provided for herein;
(d) the Indebtedness owing to the Debentureholders;
(e) Visual Bible has no right or claim of setoff or any similar
right or claim against the Debentureholders in connection with the
Indebtedness; and
(f) all of the terms of the Debenture Security, the First
Forbearance Agreement and the Additional Security are, and any other
security delivered by Visual Bible and/or the Guarantors or any
other person or entity to the Debentureholders to secure the
Indebtedness, and any other liabilities and obligations owing to the
Debentureholders after the date hereof will be, in full force and
effect, constitute legal, valid and binding obligations of Visual
Bible or such other person or entity, as applicable, enforceable
against such person or Visual Bible, as applicable.
3.2 Acknowledgements by the Guarantors: The Guarantors hereby
confirm and acknowledge to Red Brook, on its own behalf and on
behalf of the Debentureholders, that:
(a) the recitals set out herein are true and correct in every
respect and shall form part of this Agreement;
(b) the Indebtedness is owing to the Debentureholders by Visual Bible;
(c) the Guarantors have no right or claim of setoff or any similar
right or claim against the Debentureholders in connection with the
amounts that may be owing by them under the Guarantees;
(d) all of the terms of the Guarantor Security, the Additional
Security and the First Forbearance Agreement constitute legal, valid
and binding obligations of the Guarantors and/or such other person
or entity, as applicable, enforceable against each of them;
(e) there is no dispute respecting the liability of the Guarantors
in connection with the Indebtedness and the obligations of the
Guarantors to repay the Indebtedness according to the provisions of
the Guarantees;
(f) the Guarantees delivered by the Guarantors are in full force and
effect, constitute legal, valid and binding obligations of the
Guarantors, enforceable against the Guarantors; and
(g) the Guarantors consent to Visual Bible entering into this
Agreement and acknowledge the terms and conditions relating to the
repayment of the Indebtedness as set forth herein and in the
Disbursement Agreement and nothing herein shall limit the Guarantors
obligations to Red Brook and the Debentureholders.
ARTICLE 4
WAIVER
4.1 No Challenge. Visual Bible and the Guarantors hereby
acknowledge and agree:
(a) not to challenge, attack or contest the legal, valid, binding
and enforceable nature of this Agreement or any of the Documents or
the security interests and the liens granted thereunder; and
(b) that nothing contained herein in any way will impair or limit
the validity, priority or extent of the Security.
ARTICLE 5
FORBEARANCE
5.1 Forbearance. Subject to the terms and conditions of this
Agreement and the Disbursement Agreement and/or except as otherwise
provided for herein or under the Disbursement Agreement, until the
earlier of July 31, 2004 or the occurrence of an Event of Default
(the "Forbearance Termination Date"), Red Brook, on its own behalf
and on behalf of the Debentureholders, agrees to forbear from taking
any steps to enforce the Security.
5.2 Termination and Survival.
(a) Notwithstanding Section 5.1 hereof and subject to Section 5.2(b)
hereof, this Agreement shall terminate on July 31, 2004 if:
(i) there are no Events of Default; and
(ii) all amounts payable by Visual Bible or the Guarantors as at
July 31, 2004 to the Debentureholders under the Documents or under
this Agreement are paid in full, including without limiting the
generality of the foregoing, all amounts which the Debentureholders
agreed to forbear upon hereunder or under the First Forbearance
Agreement.
(b) Notwithstanding any termination of this Agreement the Parties
acknowledge and agree that Sections:
(i) 7.1(d), 7.1(e)(ii), 7.1(f), 7.1(i), 7.1(o) and 7.1(p) of this
Agreement shall only survive the termination of this Agreement until:
(A) all principal, interest, fees and expenses owing or payable at
any time by Visual Bible or the Guarantors to the Debentureholders
under the Documents or under this Agreement have been paid in full;
and
(B) all royalty payments required to be made by Visual Bible to the
Debentureholders under the Debentures are current; and
(ii) 7.1(a), 7.1(e)(i), 7.1(j)(iii), 7.1.(m) 7.1(q), 8.4, and the
last paragraph of Section 7.1(g), of this Agreement shall survive
the termination of this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties: Each of Visual Bible and the
Guarantors represent and warrant to and in favour of Red Brook, on
its own behalf and on behalf of the Debentureholders, and
acknowledge that Red Brook, on its own behalf and on behalf of the
Debentureholders, is relying upon such representations and
warranties in entering into this Agreement as follows:
(a) Visual Bible and the Guarantors are each duly incorporated,
organized and subsisting under the laws of their respective
jurisdictions of incorporation;
(b) the execution, delivery and performance of this Agreement by
Visual Bible and the Guarantors and the performance of their
obligations hereunder:
(i) have been duly authorized by all necessary corporate actions;
(ii) do not conflict with or result in a breach or violation of or
constitute a default under;
(A) the constating documents or by-laws of Visual Bible and the
Guarantors;
(B) any law, rule, regulation, order, judgment, writ, injunction or
decree applicable to Visual Bible and the Guarantors; and
(C) any commitment, agreement or other instrument to which Visual
Bible and the Guarantors is now a party or otherwise bound; and
(c) all remittances owing by Visual Bible and the Guarantors to the
federal and provincial governments and agencies, including, without
limitation, in respect of provincial sales tax, goods and services
tax and source deductions and like amounts (collectively, the
"Statutory Payments") are current and in good standing.
6.2 Non-Merger: The representations and warranties set forth herein
shall survive the execution and delivery of this Agreement, and
shall continue in full force and effect until the repayment of the
Indebtedness in full.
ARTICLE 7
COVENANTS
7.1 Visual Bible and each of the Guarantors hereby covenant and
agree with Red Brook, on its own behalf and on behalf of the
Debentureholders, that:
(a) the Warrants are hereby amended as follows:
(i) the existing term to exercise the Warrants is hereby extend by
two (2) additional years from the current date of expiration
contained in the Warrants; and
(ii) the exercise price in the Warrants is hereby fixed at US$1.00
per warrant;
(b) Visual Bible's monthly overhead shall not exceed the aggregate
monthly amounts set out in the budget attached hereto as Schedule
7.1(b) for the period from March 1, 2004 to July 31, 2004 (the
"Budget");
(c) Visual Bible or the Guarantors, as the case may be, shall pay on
a current basis, consistent with contractual trade terms, all debts
and liabilities incurred by them from the date hereof forward,
including without limiting the generality of the foregoing, the
Statutory Payments and amounts due for all goods and services
purchased or received after the date hereof by Visual Bible or the
Guarantors, except as modified by the terms of the Disbursement
Agreement or by any payment terms that have been agreed to by trade
creditors before the date hereof and set out in the Budget;
(d) Visual Bible shall forthwith irrevocably direct all of its
customers to remit all proceeds of sale or lease or other
exploitation of the assets of Visual Bible or the Guarantors to one
or more bank accounts to be administered by the Disbursing Agent
pursuant to the Disbursement Agreement and all such funds shall be
deposited in such bank accounts. In the event that any customer
remits any amounts to Visual Bible or the Guarantors they shall hold
them in trust in accordance with the terms of the Disbursement
Agreement and remit them forthwith to the Disbursing Agent for
deposit in such account;
(e) except as modified hereunder or under the Disbursement Agreement:
(i) for all sales of Units the Debentureholders shall receive in
accordance with terms of the Debentures the amounts required to be
paid to them under the Debentures; and
(ii) Visual Bible shall not sell Units for less than US$39.95 per
such Unit;
(f) notwithstanding the terms of the Debentures, but subject to the
terms hereof and the terms of the Disbursement Agreement:
(i) in respect of any Retail Sales and Rentail sales of Units,
Visual Bible shall be entitled to sell Units at not less than
US$35.00 per Unit, in respect of which the Debentureholders shall
receive the amounts required to be paid to them under the Debentures
and in respect any Retail Sales or Rentail Sales of Units below
US$35.00 per Unit, the Debentureholders shall receive fifty percent
(50%) of the revenue and/or receipts of such sale;
(ii) in respect of sales of Units to Canadian Bible Society, Visual
Bible shall be entitled to sell Units at not less than US$27.00 per
Unit, in respect of which the Debentureholders shall receive the
amounts required to be paid to them under the Debentures;
(iii) in respect of all other sales of Units, including, without
limitation to Trinity Broadcasting Network, Visual Bible shall be
entitled to sell Units at less than US$39.95 per Unit, in respect of
which the Debentureholders shall receive fifty percent (50%) of the
revenue/receipts of such sale;
(iv) in respect of all revenue and/or receipts from:
(A) sales of Units sold outside the continental United States and
Canada; and
(B) licenses or distribution rights granted worldwide;
the Debentureholders shall be entitled to receive to fifty percent
(50%) of all such funds; and
(v) in respect of all revenue/and or receipts from theatrical
releases in the continental United States and Canada by Thinkfilm
LLC, or any other theatrical releases, the Debentureholders shall be
entitled to receive fifty percent (50%) of all such funds that
Visual Bible is entitled to receive;
(g) notwithstanding the terms of the Debentures and except as
modified by the terms of the Disbursement Agreement, from the date
hereof until July 31, 2004, in respect of revenue and/or receipts
from Direct Response Sales, the Debentureholders shall be entitled
to the following:
(i) if 25,000 Units or less are sold by Visual Bible in any calendar
month, the Debentureholders shall receive fifty percent (50%) of the
amounts required to be paid to them under the Debentures;
(ii) if more than 25,000 Units but less than 35,000 Units are sold
by Visual Bible in any calendar month, the Debentureholders will
receive:
(A) fifty percent (50%) of the amounts required to be paid to them
under the Debentures for the first 25,000 Units; and
(B) seventy five (75%) of the amounts required to be paid to them
under the Debentures for the next 10,000 Units;
(iii) if more than 35,000 Units but less than 45,000 Units are sold
by Visual Bible in any calendar month, the Debentureholders will
receive:
(A) fifty percent (50%) of the amounts required to be paid to them
under the Debentures for the first 25,000 Units;
(B) seventy five (75%) of the amounts required to be paid to them
under the Debentures for the next 10,000 Units; and
(C) one hundred percent (100%) of the amounts required to be paid to
them under the Debentures for all Units sold that exceed 35,000
Units; and
(iv) if more than 45,000 Units are sold by Visual Bible in any
calendar month, the terms of the Debentures will apply unamended;
Notwithstanding the foregoing and for greater certainty, upon the
earlier of July 31, 2004 or the occurrence of an Event of Default,
the Debentureholders will be entitled to receive one hundred percent
(100%) of the amounts that are required to be paid to them in
accordance with the terms of the Debentures for all Direct Response
Sales, including, without limiting the generality of the foregoing,
all amounts that would have been required to be paid to them under
the Debentures for Direct Response Sales but for this Subsection
7.1(g) of this Agreement.
(h) Visual Bible or the Disbursing Agent, as the case may be, shall
pay to Red Brook, on its own behalf and on behalf of the
Debentureholders, or as Red Brook may direct in writing, US$50,000
on or before March 29, 2004 and US$50,000 on or before April 14,
2004. These amounts shall be applied by Red Brook on account of the
arrears owing to the Debentureholders for by Visual Bible for Direct
Response Sales for the month of March, 2004 and shall reduce the
amounts owing by Visual Bible to the Debentureholders for such
period accordingly;
(i) Visual Bible shall pay to Red Brook US$10,000 per month, plus
goods and services or other applicable taxes and its reasonable out
of pocket expenses, on account of the consulting fees incurred by
Red Brook as follows:
(i) US$10,000 per month, plus goods and services or other applicable
taxes and its reasonable out of pocket expenses, on or before April
14, 2004 for the consulting fees owing to Red Brook for the month of
March 2004; and
(ii) starting on April 30, 2004, US$10,000 per month, plus goods and
services or other applicable taxes and its reasonable out of pocket
expenses, on the last Business Day of each month on account of the
consulting fees owing to Red Brook for such month;
(j) Visual Bible shall:
(i) on or before April 23, 2004 have received not less than
US$400,000 and not more than US$1,500,000 in common share equity for
newly issued common shares at a share price of not less than US$0.50
per common share.
(ii) pay to Red Brook, on its own behalf and on behalf of the
Debentureholders, or as Red Brook may direct in writing, a lump sum
payment of:
(A) US$200,000 on or before April 23, 2004; and
(B) US$200,000 on or before May 23, 2004;
on account of their arrears in addition to the other payments
required to be made to the Debentureholders under the terms of this
Agreement, the Disbursement Agreement or the Documents; and
(iii) on or before April 23, 2004, in partial consideration for the
forbearance and other benefits contained herein, issue 15,033,645
common shares in Visual Bible, to the Debentureholders (or a lesser
number of shares as may be determined by the Debentureholders in
their sole and unfettered discretion) in accordance with the
Debentureholders pro rata share of the Indebtedness. These shares
and all other shares in Visual Bible that are or may in the future
be issued to the Debentureholders will be subject to any and all
investor rights agreements entered into by Visual Bible and any of
the Debentureholders;
(k) on or before June 4, 2004, Visual Bible shall file with the U.S.
Securities and Exchange Commission a registration statement (the
"Registration Statement") on the appropriate form pursuant to the
U.S. Securities Act of 1933, as amended (the "Securities Act"),
covering:
(i) the common shares of Visual Bible currently issued to the
Debentureholders and the shares of Visual Bible either issued or to
be issued to the other entities or persons listed on Schedule 7.1(k)
(such entities and persons referred to collectively as the
"Applicable Shareholders"); and
(ii) the common shares of Visual Bible to be issued to the
Debentureholders pursuant to Section 7.1(j)(iii) of this Agreement,
(such shares in the immediately preceding clauses (i) and (ii) of
this subparagraph being referred to collectively as the "Registrable
Securities").
(l) the Registration Statement shall not include certain of the
Registrable Securities held by an Applicable Shareholder if:
(i) such Applicable Shareholder has received from Visual Bible or
its legal counsel the initial questionnaire form required to
complete the Registration Statement on or before May 10, 2004 and
has not provided Visual Bible or its legal counsel within ten (10)
calendar days after receipt by such Applicable Shareholder, the
information requested by Visual Bible or its legal counsel as part
of the initial questionnaire to enable the Registration Statement as
to such Applicable Shareholder's Registrable Securities to be
completed and filed;
(ii) such Applicable Shareholder does not respond within (10)
calendar days to all other requests for information regarding such
Applicable Shareholder, the distribution of such Applicable
Shareholder's Registrable Securities or any other matter deemed
reasonably necessary or appropriate by Visual Bible or its legal
counsel in connection with the preparation and filing of the
Registration Statement as to such Applicable Shareholder's
Registrable Securities; and
(iii) the absence of the information withheld under the immediately
preceding clauses (i) and (ii) of this subparagraph materially and
adversely, in the good faith reasonable opinion of Visual Bible or
its legal counsel, affects Visual Bible's ability to file the
Registration Statement with the U.S. Securities and Exchange
Commission or to cause the Registration Statement to be declared
effective by the Target Date.
(m) after filing the Registration Statement, Visual Bible shall use
its best efforts to:
(i) cause the Registration Statement to be declared effective within
ninety (90) days after its filing date (the "Target Date"); provided
that so long as Visual Bible has used its best efforts throughout
such 90-day period to so cause the Registration Statement to be
declared effective during such 90-day period, the failure of the
Registration Statement to be declared effective on the Target Date
shall not be a default hereunder. In the event that the
Registration Statement has not been declared effective by the Target
Date and Visual Bible has used its best efforts to cause it to be so
declared effective no later than the Target Date, then Visual Bible
shall have an additional ninety (90) days from the Target Date to
use its best efforts to cause the Registration Statement to be
declared effective (the "Final Date"), it being expressly understood
and agreed that if the Registration Statement has not been declared
effective by the Final Date (regardless of whether Visual Bible has
used its best efforts to cause the Registration Statement to be
declared effective by such date), then this shall be deemed a
default under the Documents and an Event of Default under this
Agreement; and
(ii) keep such Registration Statement continuously effective under
the Securities Act until the date when all Registrable Securities
covered by such Registration Statement have been sold or become
eligible for sale pursuant to Rule 144(k) under the Securities Act;
(n) on or before April 14, 2004 the creditors listed on Schedule
7.1(n)
hereto shall have irrevocably agreed in writing to;
(A) convert not less than US$1,471,107 owing to such creditors by
Visual Bible to common shares in the capital of Visual Bible at a
share price equal to US$1.00 per common share; and
(B) not take any action against Visual Bible or the Guarantors for
the collection or enforcement of their debt;
(ii) on or before May 14, 2004 Visual Bible shall have issued the
common shares referred to in Section 7.1(n)(i)(A) to the appropriate
creditors;
(o) Visual Bible shall use its best efforts to cause US$238,000 owed
to the creditors of Visual Bible listed on Schedule 7.1(o) hereto to
be converted, on or before April 14, 2004, to common shares in the
capital of Visual Bible at a share price equal to US$1.00 per common
share;
(p) Visual Bible shall pay all of Red Brook's outstanding
professional fees, costs and expenses in an amount not to exceed
US$350,000 on or before July 31, 2004 in accordance with the terms
of the Disbursement Agreement, and shall on or before September 30,
2004 pay the remaining outstanding professional fees, costs and
expenses of Red Brook; and
(q) Notwithstanding any provision to the contrary, the Debentures
are hereby amended as follows:
(i) for administrative purposes only (i.e. as among the
Debentureholders and not as between the Debentureholders and Visual
Bible) to assist Visual Bible or the Disbursing Agent in determining
the Debentureholders pro rata share of the Indebtedness, all amounts
paid or to be paid to the Debentureholders on account of the
Indebtedness shall be applied from and after the Effective Date of
the Debentures:
(A) first, to the repayment of the original principal amounts of the
Debentures;
(B) second, to accrued but unpaid interest owing to the
Debetureholders under the Debentures; and
(C) third, to any accrued and unpaid royalty payments owing by
Visual Bible to the Debentureholders under the Debentures;
(ii) notwithstanding the immediately preceding paragraph, for all
other purposes, including without limiting the generality of the
foregoing, to calculate the arrears owing from time to time on the
outstanding Indebtedness, all amounts paid or to be paid to the
Debentureholders on account of the Indebtedness shall be applied
from and after the Effective Date of the Debentures:
(A) first, to accrued but unpaid interest owing to the
Debetureholders under the Debentures; and
(B) second, to the repayment of the original principal amounts of
the Debentures.
ARTICLE 8
DEFAULT
8.1 Events of Default: The occurrence of any one or more of the
following events (each, an "Event of Default") shall constitute a
default under this Agreement:
(a) the Disbursement Agreement is not executed and delivered by all
the parties thereto, other than Red Brook, on its own behalf and on
behalf of the Debentureholders, on or before April 1, 2004;
(b) Visual Bible is in default of any of its covenant and
obligations under the Disbursement Agreement;
(c) the Disbursing Agent has not received sufficient funds to enable
it to make the payments to the Debentureholders under the terms of
the Disbursement Agreement and/or the terms hereof;
(d) the Disbursement Agreement is terminated for any reason;
(e) if, on or before April 6, 2004:
(i) Visual Bible does not receive orders for at least 130,000 Units
for Retail Sales and Rentail Sales; or
(ii) Deluxe fails to manufacture and deliver at least 130,000 Units
for Retail Sales and Rentail Sales to the appropriate retail and
rentail outlets and fails to confirm in writing to Visual Bible
delivery of such Units;
(f) Deluxe fails to manufacture and deliver all other Units ordered
by Visual Bible or otherwise within five (5) Business Days of
receipt by Deluxe of such order;
(g) fifty percent (50%) or more of all Units manufactured and
delivered by Deluxe or otherwise are returned;
(h) if Visual Bible exceeds in any month the amounts set out in the
Budget for overhead by five percent (5%) or more;
(i) if all amounts owing by Visual Bible or the Guarantors as of
July 31, 2004 to the Debentureholders under the Documents or under
this Agreement, including amounts which the Debentureholders agreed
to forbear upon hereunder or under the First Forbearance Agreement,
are not received by the Debentureholders on or before July 31, 2004;
(j) any other default or failure in the observance or performance of
any other payment or other covenant, obligation or agreement by
Visual Bible or the Guarantors contained herein, under the
Disbursement Agreement or under any of the Documents, unless such
default has occurred before the date hereof and is not continuing,
or is specifically authorized herein;
(k) any material representation, warranty or statement contained
herein which is or proves to be untrue or incorrect;
(l) Visual Bible or any of the Guarantors commits or threatens to
commit any act of bankruptcy or any action is taken by Visual Bible
or any of the Guarantors to institute proceedings to be adjudicated
a bankrupt or insolvent or Visual Bible or any of the Guarantors
consents to the institution of bankruptcy or insolvency proceedings
(unless such proceedings are instituted by or at the request of Red
Brook or the Debentureholders) or Visual Bible or any of the
Guarantors makes any assignment or proposal in bankruptcy or gives
notice of an intention to do so or a bankruptcy petition is filed or
presented against Visual Bible or any of the Guarantors under the
Bankruptcy and Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada) or under any other bankruptcy, insolvency
or analogous statute or law;
(m) the holder of any security interest, lien, charge or other
encumbrance on all or any part of Visual Bible's or any of the
Guarantors property, assets or undertaking, delivers a notice of
intention to enforce its security or takes possession of all or any
substantial part of such property, assets and undertaking;
(n) an execution, seizure, distress or any other process becomes
enforceable against Visual Bible or any of the Guarantors or upon
any or all of the property and assets of Visual Bible or any of the
Guarantors, provided however that:
(i) if such process is either in respect of a debt of less than
US$10,000 or against a single piece of machinery or equipment not
essential for the operation of Visual Bible's or the Guarantors'
businesses, then Visual Bible or either of the Guarantors, as the
case may be, shall have five (5) Business Days to cure this default; or
(ii) with respect to any arbitration award in favour of Dr. S.
Small, it will not be an Event of Default until the earlier of: (a)
five (5) days after the service of an application or motion to
enforce such award; or (b) such award becomes enforceable against
Visual Bible or any of its assets;
(o) Visual Bible or any of the Guarantors grants to or for the
benefit of any present or future creditor any form of security in
order to secure any obligations or liabilities owing or that may be
owing to such creditor, without the prior written consent of Red
Brook or the Debentureholders, save and except for the purchase
money security interest in favour of Deluxe that was granted by
Visual Bible to Deluxe in the Inventory Security Agreement dated as
of March 1, 2004 and other purchase money security interests granted
by Visual Bible or the Guarantors to purchase, lease or replace a
particular piece of office equipment;
(p) Visual Bible or any of the Guarantors sells, assigns, transfers,
gifts, mortgages, disposes of or otherwise alienates any of their
respective property or assets at any time from the date hereof to or
for the benefit of any person, without the prior written consent of
Red Brook or the Debentureholders, other than:
(i) in the ordinary course of business; or
(ii) the transfer of all Visual Bible's interest relating to the
Mathew and Acts films as full and final settlement of all amounts
owing by Visual Bible to the International Bible Society;
(q) Visual Bible or the Guarantors cease to carry on business or
threatens to cease carrying on business;
(r) any event, events or circumstance that have occurred since the
date of this Agreement, which independently or together with any
other event, events or circumstance that have occurred or are
reasonably likely to occur, have or are reasonably likely to have a
material adverse change on the business of Visual Bible or the
Guarantors, the results of their respective operations, the
condition, financial or otherwise, of such business (whether or not
covered by insurance), the property, assets and undertaking of
Visual Bible or the Guarantors, the transactions contemplated by
this Agreement, the legality, validity or enforceability of this
Agreement or the Documents or the ability of Visual Bible or the
Guarantors to perform their respective obligations under this
Agreement or the Documents, in each case in the opinion of the Red
Brook acting reasonably; or
(s) a receiver, receiver and manager, agent, liquidator or other
similar administrator be appointed in respect of the property,
assets and undertaking of Visual Bible or any of the Guarantors, or
any material part thereof, or the taking by a secured party, lien
claimant, other encumbrancer, judgment creditor or a person
asserting similar rights of possession of the any of the property,
assets and undertaking of Visual Bible or any of the Guarantors, or
any part thereof.
8.2 Notice of Event of Default: Notwithstanding anything herein
to the contrary, if an Event of Default occurs hereunder, other than
an Event of Default under Sections 8.1(l), 8.1(m), 8.1(n), 8.1(p),
8.1(q) and 8.1(s) or any similar provision in any of the Documents,
Red Brook on its own behalf and on behalf of the Debentureholders,
hereby agrees to provide Visual Bible and the Guarantors, as the
case may be, with twenty four (24) hours written notice to cure such
Event of Default, before it exercises any of its or the
Debentureholders remedies hereunder or under any of the Documents.
8.3 Cure Period: Visual Bible shall have:
(a) upon a breach of the covenants set out in Section 7.1(j)(i) and
Section 7.1(j)(ii) hereof, ten (10) Business Days to cure such Event
of Default; and
(b) the five (5) Business Day cure period as provided for and set
out in Section 8.1(n)(i);
and Red Brook, on its own behalf and on behalf of the
Debentureholders, hereby agrees not to exercise any of its remedies
hereunder or under any of the Documents until the expiration of such
cure periods. For greater certainty, the application of such cure
periods shall not apply to any other Event of Default hereunder or
any other default of Visual Bible or the Guarantors under any of the
Documents or this Agreement.
8.4 Acceleration. Notwithstanding any provision in the Documents
to the contrary, all of the Indebtedness shall immediately become
due and payable upon the occurrence of an Event of Default or any
other default under any of the Documents.
ARTICLE 9
REMEDIES ON DEFAULT
9.1 Remedies. Notwithstanding any provision in the Documents to the
contrary, on the Forbearance Termination Date, Visual Bible and each
of the Guarantors hereby acknowledge, consent and agree that Red
Brook, on its own behalf and on behalf of the Debentureholders,
shall have the immediate right, without further notice or demand, to
enforce all its rights and remedies under any of the Documents, this
Agreement at law or in equity, without restriction or hindrance.
9.2 Consents. Subject to Section 9.3 and without limiting the
generality of Section 9.1, for greater certainty, upon the
occurrence of an Event of Default, each of Visual Bible and the
Guarantors shall be deemed to have irrevocably consented to the
immediate enforcement of Red Brook's rights under this Agreement or
the Documents (notwithstanding any provision in the Documents to the
contrary), including, without limitation, the immediate appointment
of a receiver or receiver and manager of the property, assets and
undertaking of Visual Bible or the Guarantors pursuant to the
Security, any instrument or by order of any Court.
9.3 Consent to Form of Order. Visual Bible and each of the
Guarantors hereby consent to an order appointing an interim receiver
substantially in the form attached as Schedule 9.3 hereto, which
consent shall be effective upon the occurrence of Event of Default.
Notwithstanding the foregoing, but subject to any provisions herein
to the contrary, Visual Bible and the Guarantors expressly reserve
their right to make submissions to the Court that an Event of
Default has not occurred hereunder should an application be made by
Red Brook and/or the Debentureholders to appoint an interim
receiver.
ARTICLE 10
GENERAL
10.1 Schedules. All Schedules attached hereto form an integral part
of this Agreement.
10.2 Severability. If any provision of this Agreement is found by a
court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions of this Agreement shall not be affected thereby
and shall remain valid and enforceable.
10.3 Paramountcy. In the event of any conflict, inconsistency,
ambiguity or difference between the provisions of this Agreement and
of the First Forbearance Agreement, the provisions of this Agreement
shall govern and be paramount, and any such provision in the First
Forbearance Agreement shall be deemed to be amended to the extent
necessary to eliminate any such conflict, inconsistency, ambiguity
or difference.
10.4 Successors and Assigns. This Agreement shall enure to the
benefit of and be binding upon and enforceable by the Parties and
their respective successors, assigns, and other legal
representatives; provided, however, that Visual Bible and the
Guarantors may not assign this Agreement or any benefit hereunder
without the prior written consent of Red Brook, which may be
unreasonably or arbitrarily withheld. For greater certainty, Red
Brook may assign this Agreement or any of its rights hereunder at
any time or times to any person or persons without notice to or the
consent of Visual Bible or any of the Guarantors.
10.5 Notices. All notices between the Parties shall be in writing.
Notices delivered personally or by telecopier shall be deemed
received on the same Business Day if delivered personally or by
telecopier before 3:00 p.m. on such day, and otherwise on the next
Business Day. Notices deposited with an overnight courier service
prior to its deadline on any Business Day shall be deemed received
on the following business day.
All notices to the Visual Bible and the Guarantors shall be
given to:
Visual Bible International, Inc.
1235 Bay Street
Suite 300
Toronto, ON
M5R 3K4
Attention: Maurice Colson
Fax Number: (416) 921-9951
All notices to Red Brook shall be given to:
Red Brook Developments Limited
3751 Victoria Park Avenue
Toronto, Ontario
M1W 3Z4
Attention: Elly Reisman
Fax Number: (416) 449-6438
with a copy to:
Soho Financial, a division of 1061269 Ontario Limited
3751 Victoria Park Avenue
Toronto, Ontario
M1W 3Z4
Attention: Ed Rosenblat
Fax Number: (416) 449-6438
10.6 Further Assurances. Each of the Parties hereto agrees to
execute and deliver or cause to be executed and delivered all such
instruments and to take all such action as the other party may
reasonably request in order to effectuate the intent and purposes of
and to carry out the terms of this Agreement.
10.7 Financing Statements. Visual Bible hereby specifically
authorizes and directs Red Brook, on its own behalf and on behalf of
the Debetureholders, to file any financing statements, financing
change statements or amendments thereto naming Visual Bible, as the
debtor, and describing the collateral as "all personal property of
Visual Bible" or "all assets of Visual Bible" or words of similar
effect in such jurisdictions and in such filing offices as Red Brook
may deem necessary or desirable to perfect the security interest
granted to it hereunder or under the Documents.
10.8 Voluntary. Visual Bible and the Guarantors hereby warrant
that the terms of this Agreement are fully understood by them and
that this Agreement is made voluntarily, for the purpose of making
compromise and adjustment of the amounts forbeared hereunder.
10.9 Amendments. No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by Visual
Bible and each of the Guarantors and Red Brook, and no waiver of any
provision of this Agreement nor consent to any departure by Visual
Bible and the Guarantors therefrom shall be effective unless it is
in writing and signed by Red Brook, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and
the federal laws of Canada applicable therein.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original and such counterparts together shall constitute one and
the same agreement. Counterparts may be executed in original or
facsimile form and the Parties may adopt any signatures received by
a facsimile machine as original signatures of the Parties.
10.12 Captions and Headings. The captions and headings preceding
the text of the sections or subsections of this Agreement are
inserted for convenience only and shall not constitute a part of
this Agreement, nor shall they in any way affect its meaning,
construction or effect.
10.13 Time of the Essence. Time shall be of the essence of this
Agreement in all respects.
10.14 Gender, Number etc.: In this Agreement, words importing the
singular number only shall include the plural and vice versa, words
importing gender shall include all genders and words importing
persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities.
[signatures follow on the next page]
IN WITNESS WHEREOF the Parties hereto have duly executed this
Agreement as the date first set out above.
RED BROOK DEVELOPMENTS LIMITED, on its own behalf and on behalf of
the Debentureholders
By:
Name: Elly Reisman
Title: President
By:
Name:
Title:
VISUAL BIBLE INTERNATIONAL, INC.
By:
Name: Maurice Colson
Title: Chief Executive Officer
By:
Name:
Title:
VISUAL BIBLE INTERNATIONAL (CANADA) INC.
By:
Name: Maurice Colson
Title: Chief Executive Officer
By:
Name:
Title:
THE BOOK OF JOHN, INC.
By:
Name: Maurice Colson
Title: Chief Executive Officer
By:
Name:
Title:
<PAGE>
SCHEDULE 1.1(f)
DEBENTURES AND ADDENDA THERETO
1. Visual Bible International, Inc. Debentures to Red Brook
Developments Limited, Ruth Reisman Limited, Augusta Holding Inc.,
Art Kleinstein, Beverly Reisman, Zivojin Maznic, Ronald Prosserman
and George Steels each dated December 24, 2002 as amended.
2. Visual Bible International, Inc. Subsequent Funding Debentures to
AGF Growth Equity Fund, GWL Growth Equity Fund, London Life Growth
Equity Fund, IG AGF Diversified Growth Fund and IG AG Diversified
Growth Class each dated December 24, 2002; Visual Bible
International, Inc. Subsequent Funding Debenture to Stanley Nashen,
dated January 23, 2003; and Visual Bible International, Inc.
Subsequent Funding Debenture to Patrick McDougal, dated February 6,
2003 as amended.
3. Addendum to the Debentures among Visual Bible International,
Inc., Red Brook Developments Limited, Ruth Reisman Limited, Augusta
Holding Inc., Art Kleinstein, Beverly Reisman, Zivojin Maznic,
Ronald Prosserman, George Steels, Stan Nashen, AGF Growth Equity
Fund, GWL Growth Equity Fund, London Life Growth Equity Fund, IG AGF
Diversified Growth Class, IG AGF Diversified Growth Fund and Patrick
McDougall, acknowledged and agreed to by The Book of John, Inc.,
dated as of February 17, 2003 as amended.
4. Second Addendum to the Debentures among Visual Bible
International, Inc., Red Brook Developments Limited, Ruth Reisman
Limited, Augusta Holding Inc., Art Kleinstein, Beverly Reisman,
Zivojin Maznic, Ronald Prosserman, George Steels, Stan Nashen, AGF
Growth Equity Fund, GWL Growth Equity Fund, London Life Growth
Equity Fund, IG AGF Diversified Growth Class, IG AGF Diversified
Growth Fund and Patrick McDougall, acknowledged and agreed to by The
Book of John, Inc., dated as of March 4, 2003 as amended.
5. Third Addendum to the Debentures among Visual Bible
International, Inc., Red Brook Developments Limited, Ruth Reisman
Limited, Augusta Holding Inc., Art Kleinstein, Beverly Reisman,
Zivojin Maznic, Ronald Prosserman, George Steels, Stan Nashen, AGF
Growth Equity Fund, GWL Growth Equity Fund, London Life Growth
Equity Fund, IG AGF Diversified Growth Class, IG AGF Diversified
Growth Fund and Patrick McDougall, acknowledged and agreed to by The
Book of John, Inc., dated as of March 6, 2003 as amended.
6. Fourth Addendum to the Debentures between Visual Bible
International, Inc. and Red Brook Developments Limited, acknowledged
and agreed to by The Book of John, Inc., dated as of March 20, 2003
as amended.
7. Fifth Addendum to the Debentures and First Amendment to
Subscription Agreements among Visual Bible International, Inc., Red
Brook Developments Limited, Ruth Reisman Limited, Augusta Holding
Inc., Arthur Kleinstein, Beverly Reisman, Ronald Prosserman, George
N. Steels and S. Nashen, dated as of August 28, 2003 as amended.
8. Visual Bible International, Inc. Debenture to Red Brook
Developments Limited, dated March 4, 2003 as amended.
9. Visual Bible International, Inc. Debenture to Red Brook
Developments Limited, dated March 6, 2003 as amended.
10. Visual Bible International, Inc. Debenture to Red Brook
Developments Limited, dated March 20, 2003 as amended.
11. Visual Bible International, Inc. B Unit Debentures to Red Brook
Developments Limited, Art Kleinstein, Herman Grad, Inglewood
Holdings Inc, Maurice Colson, Sheldon Glow, Stan Nashen, Erin Mills
Investment Corporation, Westdale Construction Co. Limited and Tom
Krobot each dated August 28, 2003 as amended.
12. All other Debentures issued by Visual Bible International, Inc.
to the Debentureholders.
<PAGE>
SCHEDULE 1.1(g)
DEBENTUREHOLDERS
A Unit Debenture Holders
B Unit Debenture Holders
Red Brook Developments Limited
Red Brook Developments Limited
Augusta Holding Inc.
The Erin Mills Investment Corp.
Ruth Reisman Limited
Westdale Construction Co. Limited
AGF Growth Equity Fund
Inglewood Holdings Inc.
GWL Growth Equity Fund
Herman Grad
London Life Growth Equity Fund
Arthur Kleinstein
IG AGF Diversified Growth Fund
Thomas Krobot
IG AGF Diversified Growth Class
Maurice Colson
New Century Investment Holdings Ltd.
Dr. Sheldon Glow
Arthur Kleinstein
Stanley Nashen
Zivojin Maznic
Ronald Prosserman
Beverly Reisman
Stanley Nashen
George N. Steels
<PAGE>
SCHEDULE 1.1(h)
SECURITY AGREEMENTS GRANTED
IN CONNECTION WITH THE DEBENTURES
1. General Security Agreement among Visual Bible International, Inc.
and Red Brook Developments Limited, Augusta Holding Inc., Beverly
Reisman c/o Soho Financial, George Steels, Art Kleinstein, Ron
Prosserman, Ruth Reisman Limited, Zivojin Maznic, AGF Growth Equity
Fund, GWL Growth Equity Fund, London Life Growth Equity Fund, IG AGF
Diversified Growth Fund, IG AGF Diversified Growth Class and Patrick
McDougal, dated December 24, 2002 (the "Canadian Unit A Debenture
Security") as amended.
2. Security Agreement by and among Visual Bible International, Inc.
and Red Brook Developments Limited, Ruth Reisman Limited, Augusta
Holding Inc., Art Kleinstein, Beverly Reisman, Zivojin Maznic,
Ronald Prosserman and George Steels, dated December 24, 2002 (the
"US Unit A Group A Debenture Security") as amended.
3. Security Agreement by and among Visual Bible International, Inc.
and AGF Growth Equity Fund, GWL Growth Equity Fund, London Life
Growth Equity Fund, IG AGF Growth Equity Fund, IG AGF Diversified
Growth Class, Stan Nashen and Patrick McDougall, dated December 24,
2002 (the "US Unit A Group B Debenture Security" and together with
the US Unit A Group A Debenture Security, the "US Unit A Debenture
Security") as amended.
4. General Security Agreement among Visual Bible International, Inc.
and Red Brook Developments Limited, Westdale Construction Co.
Limited, Erin Mills Investment Corp., Herman Grad, Art Kleinstein,
Tom Krobot, Maurice Colson, Sheldon Glow, Stan Nashen and Inglewood
Holdings Inc., dated August 28, 2003. (the "Canadian Unit B
Debenture Security") as amended.
5. Security Agreement by and among Visual Bible International, Inc.
and Red Brook Developments Limited, the Erin Mills Investment
Corporation, Herman Grad, Art Kleinstein, Thomas C. Krobot, Maurice
J. Colson, Sheldon Glow, S. Nashen, Inglewood Holdings Inc. and one
other party, dated August 28, 2003 (the "US Unit B Debenture
Security") as amended.
6. The Additional Security as granted in the First Forbearance
Agreement.
<PAGE>
SCHEDULE 1.1(q)
GUARANTEES
1. Guarantee and Postponement of Claim by Visual Bible International
(Canada), Inc. in favour of Red Brook Developments Limited, Ruth
Reisman Limited, Augusta Holding Inc., Art Kleinstein, Beverly
Reisman c/o Soho Financial, Zivojin Maznic, Ron Prosserman, George
Steels, Stan Nashen, Patrick McDougall, Jayvee & Co. c/o AGF
Management Limited and Royal Trust Corp. of Canada c/o AGF
Management Limited, dated as of February 14, 2003, as amended.
2. Guarantee and Postponement of Claim by The Book of John, Inc. in
favour of Red Brook Developments Limited, Ruth Reisman Limited,
Augusta Holding Inc., Art Kleinstein, Beverly Reisman c/o Soho
Financial, Zivojin Maznic, Ron Prosserman, George Steels, Stan
Nashen, Patrick McDougall, Jayvee & Co. c/o AGF Management Limited
and Royal Trust Corp. of Canada c/o AGF Management Limited, dated as
of February 14, 2003 as amended.
3. Guarantee and Postponement of Claim by Visual Bible International
(Canada), Inc. in favour of Red Brook Developments Limited, Westdale
Construction Co. Limited, Erin Mills Investment Corp., Herman Grad,
Art Kleinstein, Tom Krobot, Maurice Colson, Sheldon Glow, Stan
Nashen and Inglewood Holdings Inc., dated as of August 28, 2003 as
amended.
4. Guarantee and Postponement of Claim by The Book of John, Inc. in
favour of Red Brook Developments Limited, Westdale Construction Co.
Limited, Erin Mills Investment Corp., Herman Grad, Art Kleinstein,
Tom Krobot, Maurice Colson, Sheldon Glow, Stan Nashen and Inglewood
Holdings Inc., dated as of August 28, 2003 as amended.
<PAGE>
SCHEDULE 1.1(r)
SECURITY AGREEMENTS GRANTED
IN CONNECTION WITH THE GUARANTEES
1. General Security Agreement by Visual Bible International
(Canada), Inc. in favour of Red Brook Developments Limited, Ruth
Reisman Limited, Augusta Holding Inc., Art Kleinstein, Beverly
Reisman c/o Soho Financial, Zivojin Maznic, Ron Prosserman, George
Steels, Stan Nashen, Patrick McDougall, Jayvee & Co. c/o AGF
Management Limited and Royal Trust Corp. of Canada c/o AGF
Management Limited, dated as of February 14, 2003 as amended.
2. General Security Agreement by The Book of John, Inc. in favour of
Red Brook Developments Limited, Ruth Reisman Limited, Augusta
Holding Inc., Art Kleinstein, Beverly Reisman c/o Soho Financial,
Zivojin Maznic, Ron Prosserman, George Steels, Stan Nashen, Patrick
McDougall, Jayvee & Co. c/o AGF Management Limited and Royal Trust
Corp. of Canada c/o AGF Management Limited, dated as of February 14,
2003 as amended.
3. General Security Agreement by Visual Bible International
(Canada), Inc. in favour of Red Brook Developments Limited, Westdale
Construction Co. Limited, Erin Mills Investment Corp., Herman Grad,
Art Kleinstein, Tom Krobot, Maurice Colson, Sheldon Glow, Stan
Nashen and Inglewood Holdings Inc., dated as of August 28, 2003 as
amended.
4. General Security Agreement by The Book of John, Inc. in favour of
Red Brook Developments Limited, Westdale Construction Co. Limited,
Erin Mills Investment Corp., Herman Grad, Art Kleinstein, Tom
Krobot, Maurice Colson, Sheldon Glow, Stan Nashen and Inglewood
Holdings Inc., dated as of August 28, 2003 as amended.
5. "The Book of John" f/k/a "The Gospel of John" Copyright Mortgage
and Assignment; Power of Attorney by the Book of John, Inc. to and
in favour of Red Brook Developments Limited, Ruth Reisman Limited,
Augusta Holding Inc., Art Kleinstein, Beverly Reisman c/o Soho
Financial, Zivojin Maznic, Ron Prosserman, George Steels, Stan
Nashen, Patrick McDougall, Jayvee & Co. c/o AGF Management Limited,
Royal Trust Corp. of Canada ITF Acct: 99480027 and Royal Trust Corp.
of Canada ITF Acct: 99480072, dated as of February 14, 2003 as amended.
6. "The Book of John" f/k/a "The Gospel of John" Copyright Mortgage
and Assignment; Power of Attorney by The Book of John, Inc. to and
in favour of Red Brook Developments Limited, Westdale Construction
Co. Limited, Erin Mills Investment Corp., Herman Grad, Art
Kleinstein, Tom Krobot, Maurice Colson, Sheldon Glow, Stan Nashen
and Inglewood Holdings Inc., dated as of August 28, 2003 as amended.
<PAGE>
SCHEDULE 2.1
INDEBTEDNESS
Indebtedness
1. US$627,081 on account of all arrears due by Visual Bible to the
Debentureholders under the Documents.
2. US$16,552,685 on account of the total indebtedness owing by
Visual Bible to the Debentureholders under the Documents.
2. All royalties, professional fees incurred by Red Brook to date
that are secured under the Documents or required to be paid by
Visual Bible or either of the Guarantors under the Documents, under
this Agreement or under the Disbursement Agreement.
<PAGE>
SCHEDULE 7.1(b)
BUDGET
<PAGE>
SCHEDULE 7.1(k)
REGISTRABLE SECURITIES
<PAGE>
SCHEDULE 7.1(n)
AGREED TO DEBT TO EQUITY CONVERSIONS
<PAGE>
SCHEDULE 7.1(o)
BEST EFFORTS DEBT TO EQUITY CONVERSIONS
<PAGE>
SCHEDULE 9.3
FORM OF ORDER