EXHIBIT 4.1
SUBSCRIBER NUMBER: ______________________
SUBSCRIBER NAME: _________________________
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS SET FORTH HEREIN, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SECURITIES THAT ARE THE SUBJECT
OF THIS AGREEMENT HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED
THE ADEQUACY OF THIS AGREEMENT, AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES TO BE PURCHASED
PURSUANT TO THIS AGREEMENT ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THE INVESTMENT
IN THE UNITS THAT ARE THE SUBJECT OF THIS AGREEMENT FOR AN
INDEFINITE PERIOD OF TIME.
SUBSCRIPTION AGREEMENT
VISUAL BIBLE INTERNATIONAL, INC.
Subscription Agreement (the "Subscription Agreement") between Visual
Bible International, Inc., a Florida corporation ("Company") and
____________________________________________________________________________
("Purchaser").
1. Purchase and Sale.
(a) The Company hereby agrees to sell to the Purchaser and the
Purchaser hereby agrees to purchase from the Company _______________________
units (the "Units") at a price of US$1.00 per Unit for an aggregate subscription
price (the "Subscription Price") of US$ _________________, all in accordance
with the terms set forth in this Subscription Agreement. Each Unit consists of
a Fifteen percent (15%) US$1.00 principal amount (the "Principal") debenture
(the "Debenture"), 1.222 shares (the "Subscription Shares") of the $.001 par
value common stock of the Company (the "Common Stock") and .555 warrants (the
"Warrants"). THIS SUBSCRIPTION AGREEMENT ONCE EXECUTED BY THE COMPANY AND THE
PURCHASER IS IRREVOCABLE.
(b) Within fourteen (14) business day of each Advance (as such term
is defined in the Debenture) under the Debenture, the Company shall issue and
deliver to Purchaser (i) that number of Subscription Shares equal to the United
States Dollar amount of such Advance multiplied by 1.222; and (ii) that number
of Warrants equal to the United States Dollar amount of such Advance multiplied
by .555. In the event that the Purchaser does not fund the full amount of the
Initial Production Advance, a Subsequent Advance, the Initial Marketing Advance
or a Subsequent Marketing Advance (each as defined in the Debenture) that
becomes due and payable in accordance with the terms and conditions of
the Debenture, Purchaser shall forfeit the right to receive such portion of the
Subscription Shares and the Warrants represented by such deficiency unless and
until such deficiency is cured. Subject to the foregoing, on August 31, 2003,
the Company shall issue and deliver to Purchaser (i) that number of Subscription
Shares equal to (x) the Maximum Principal Amount (as defined in the Debenture)
multiplied by 1.222 less (y) the number of Subscription Shares previously issued
and delivered to Purchaser and (ii) that number of Warrants equal to (x) the
Maximum Principal Amount (as defined in the Debenture) multiplied by .555 less
(y) that number of Warrants previously issued and delivered to Purchaser.
(c) The Company and the Purchaser have agreed that the value of each
Subscription Share is $.10 (the "Subscription Share Valuation") and that the
value of each Warrant is $.05 (the "Warrant Valuation").
(d) The Company shall, as a condition precedent to the obligation of
the Purchaser to acquire the Units, provide to Purchaser an opinion of counsel
(the "Opinion of Counsel") reasonably acceptable to Purchaser which Opinion of
Counsel shall indicate that, subject to the exceptions, qualifications and
limitations stated therein, in a properly presented case under current Florida
law, brought in regard to the enforcement of paragraphs 8.(f) and 8.(i) hereof
(the "Subject Paragraphs"), a Florida court exercising jurisdiction over such
case would enforce the Subject Paragraphs.
(e) The Company agrees that the "Initial Production Advance" for
each and every Subsequent Funding Debenture (as defined in the Debenture) shall
be an amount equal to (x) the "Maximum Principal Amount" of such Subsequent
Funding Debenture multiplied by (y) the quotient resulting from the division of
(i) the aggregate of the Existing Principal Amounts of all Initial Funding
Debentures (as defined in the Debenture) and all Subsequent Funding Debentures
by (ii) the aggregate of the Maximum Principal Amounts (as defined in the
Debenture) of all Initial Funding Debentures and all Subsequent Funding
Debentures immediately prior to the issuance of the subject Subsequent Funding
Debenture.
2. Representations and Warranties of Purchaser. The Purchaser
acknowledges, represents, warrants and agrees as follows:
(a) The purchase of the Units involves a high degree of risk, in
that:
(1) an investment in the Units is highly speculative, and only
those parties that can afford the loss of the entire investment
should consider investing in the Units;
(2) Purchaser may not be able to liquidate an investment in
the Debenture, the Subscription Shares, the Warrants or the Common
Stock that underlies the Warrants; and
(3) Purchaser could sustain the loss of Purchaser's entire
investment in the Units.
(b) This Subscription Agreement has not been reviewed by the
Securities and Exchange Commission (the "SEC") or any state securities agency.
The Debenture, the Subscription Shares, the Warrants and the Common Stock that
underlies the Warrants have not be registered under the Securities Act of 1933
(the "Act") and/or applicable state securities laws (collectively, the
"Securities Laws") and are "Restricted Securities" as such term is defined by
Rule 144 under the Securities Act.
(c) Neither the SEC nor any state securities agency has made any
finding or determination of the fairness or suitability for investment in or
any endorsement of Company or of the Units.
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(d) The price of the Units should not be considered as an indication
of any price at which the Debenture may be subsequently sold or the price at
which any of the Subscription Shares, the Warrants or the shares of Common
Stock underlying the Warrants may trade in the future.
(e) In addition to the other acknowledgments, representations,
warranties and agreements contained herein, in the event Purchaser is other
than a nature person, Purchaser represents and warrants that:
(1) The Purchaser is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization, and has all requisite power and authority to purchase
and hold the Debenture, the Subscription Shares and the Warrants
that form the Units.
(2) The decision to invest by the Purchaser, the execution and
delivery of this Agreement by the Purchaser, the performance by the
Purchaser of its obligations hereunder and the consummation by the
Purchaser of the transaction contemplated hereby have been duly
authorized and no other proceedings on the part of the Purchaser is
necessary.
(3) The person executing this Agreement on behalf of the
Purchaser has all right, power and authority to execute and deliver
this Subscription Agreement on behalf of the Purchaser. This
Subscription Agreement has been duly executed and delivered by the
Purchaser and, assuming the due authorization, execution and
delivery hereof by the Company, will constitute the legal, valid
and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally and the availability of equitable remedies.
(f) In addition to the other acknowledgments, representations,
warranties and agreements contained herein, in the event Purchaser is a natural
person, Purchaser represents and warrants that he or she has reached the age of
majority in the jurisdiction in which he or she resides and has the legal
capacity to purchase and hold the Debenture, the Subscription Shares and the
Warrants that form the Units.
(g) Purchaser is an accredited investor (an "Accredited Investor")
as such term is defined in Rule 501 of Regulation D promulgated under the Act
in that, among other things, the personal net worth or past and anticipated
income of Purchaser are in excess of the amounts required pursuant to such
rule.
(h) The Purchaser is able to bear the economic risks of the
investment in the Units and, consequently, without limiting the generality of
the foregoing, is able to hold the Debenture, the Subscription Shares and the
Warrants which form the Units for an indefinite period of time and has a
sufficient net worth to sustain a loss of the entire investment in the
Debenture, the Subscription Shares and the Warrants in the event such loss
should occur.
(i) The Units are being acquired by the Purchaser for the
Purchaser's own account with no intention of selling, assigning or otherwise
disposing of any participation or interest therein, and not with a view toward
the distribution thereof.
(j) The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Units and of protecting
3
the Purchaser's interests in connection with this transaction, or Purchaser has
employed the services of an investment advisor, attorney or accountant to review
any documents furnished or made available by Company to Purchaser in connection
with the purchase of the Units by Purchaser in order to evaluate, on behalf of
Purchaser, the merits and risks of an investment in the Units. The Purchaser
recognizes that an investment in the Units involves a high degree of risk and
that the Purchaser may lose the entire investment in the Units.
(k) The terms upon which ▇▇▇▇▇▇▇▇▇ has agreed to acquire the Units
is set forth in this Subscription Agreement and the documents and instruments
executed by and between Purchaser and the Company in connection therewith.
Purchaser has been encouraged to review all filings of the Company with the SEC
which are available at an internet site maintained by the SEC at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. THE PURCHASER ACKNOWLEDGES THAT PURCHASER HAS OBTAINED
SUCH INFORMATION OR DATA AS PURCHASER MAY DEEM APPROPRIATE IN ORDER TO PROVIDE
THE PURCHASER WITH THE BASIS OF MAKING AN INFORMED INVESTMENT DECISION WITH
RESPECT TO THE PURCHASE OF UNITS. Except as may be set forth herein, no
representations or warranties have been made to Purchaser by Company or any
agent, employee or affiliate of Company, as a condition to executing this
Subscription Agreement, and Purchaser is not relying on any information other
than that which results from the independent investigation of Purchaser.
(l) Purchaser understands that the Company is currently seeking to
raise as much as Five Million Dollars (US$5,000,000.00), and in that regard it
may execute subscription agreements with other parties for the sale of units
substantially the same as the Units purchased by Purchaser pursuant hereto (the
"Other Units"). Likewise, the Company may at anytime and from time to time
offer additional securities of the Company to such parties and in such manner
as may be deemed appropriate by the Company (collectively, the "Subsequent
Issuances"), subject to the rights of the Purchaser in regard thereto as set
forth in that certain Investor Rights Agreement (as hereinafter defined)
executed even date herewith. Purchaser further understands that, subject to
the Investor Rights Agreement, in connection with the Subsequent Issuances, the
Company may offer rights, preferences or privileges which are more or less
favorable to any potential purchaser than those offered by the Company pursuant
to this Subscription Agreement and, except to the extent indicated in the
Investor Rights Agreement, the Company makes no representation or warranty to
the Purchaser in regard to any term or condition that may be offered in
connection with any such Subsequent Issuance. As a result of the sale by the
Company of the Other Units or as a result of the Subsequent Issuances, the
percentage ownership of the then existing stockholders of the Company will be
reduced and such stockholders may experience dilution.
(m) Purchaser understands that NOTWITHSTANDING THE FACT THAT A
LIMITED PUBLIC MARKET MAY PRESENTLY EXIST FOR OTHER SECURITIES OF THE COMPANY,
neither the Debentures, the Subscription Shares, the Warrants nor the Common
Stock that underlie the Warrants can be sold publicly. Furthermore, Purchaser
understands that at such time as any of the foregoing may be sold publicly,
there is no assurance that a public market will then exist.
(n) Purchaser understands that none of the Debentures, the
Subscription Shares, the Warrants, the Common Stock underlying the Warrants or
the offer and sale thereof have been registered under the Act or under the
Securities Laws, that the transfer of any and all of the foregoing is
restricted and that the all of same must be held indefinitely unless any of
same are subsequently registered under the Act or an exemption from
registration is available to Purchaser. Purchaser understands that Company is
the only party that may register any of the foregoing under the Act and that
Company is under no obligation to do so except as specifically set forth in
that certain Registration Rights Agreement (as hereinafter defined) executed
even date herewith.
(o) The Purchaser is not subscribing for the Units as a result of,
nor is the Purchaser aware of any advertisement, article, notice or other
communication published in any newspaper,
4
magazine, or similar media or broadcast over television or radio, or presented
at any seminar or meeting with respect to the Units or the Company.
(p)Purchaser understands that a legend (the "Legend") will be
placed on the Debenture, the certificate representing the Subscription Shares,
the Warrant and the Common Stock underlying the Warrants stating that the each
of same has not been registered under the Act or other applicable Securities
Laws and setting forth or referring to the restrictions on transferability and
sale thereof. The form of the Legend is attached hereto as Exhibit 2.(p).
3. Representations, Warranties and Covenants by Company. Company hereby
represents and warrants to and covenants with Purchaser that as of the date
hereof and the date of issuance by the Company of the Debenture, the
Subscription Shares, the Warrants and the Common Stock underlying the Warrants:
(a) Company is a corporation duly organized, existing and in good
standing under the laws of the State of Florida and has the corporate power to
conduct the business presently conducted by it.
(b) The execution, delivery and performance of this Subscription
Agreement by Company has been duly approved by the board of directors (the
"Board") of Company and all other actions required to authorize and effect the
offer and sale of the Units to Purchaser has been duly taken and approved.
(c) The Debentures, the Subscription Shares, the Warrants and the
Common Stock underlying the Warrants are duly authorized. The Subscription
Shares and the Common Stock underlying the Warrants, when issued in accordance
with the terms hereof or the Warrants, as the case may be, will be fully paid
and non-assessable with no personal liability attaching thereto.
(d) The authorized capital stock of the Company consists of
300,000,000 shares of Common Stock and 200,000,000 shares of preferred stock,
par value $.001 per share (the "Preferred Stock"). Without giving effect to the
issuance of the Units, any Other Units and any Subsequent Issuances, as of the
date hereof, there are approximately 40,000,000 shares of Common Stock issued
and outstanding and 1.55 million shares of Series B Preferred Stock
outstanding. Such Series B Preferred Stock provides, among other things, for
the ability to convert the Series B Preferred Stock into 1.55 million shares of
Common Stock. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell,
or otherwise cause to become outstanding additional shares of its capital
stock. The Company expects to implement an incentive stock option plan as to
2.5 million or less shares of its Common Stock. The holders of outstanding
shares of the Common Stock are entitled to receive dividends out of assets
legally available therefor at such times and in such amounts, if any, as the
Board from time to time may determine. Holders of Common Stock are entitled to
one vote for each share held on all matters submitted to a vote of
stockholders. Holders of the Series B Preferred Stock are entitled to one vote
for each share held on all matters submitted to a vote of stockholders.
Holders of the Common Stock are not entitled to preemptive rights, and the
Common Stock is not subject to conversion or redemption.
(e) The execution and delivery of this Subscription Agreement, the
Debentures, the Warrants, the Registration Rights Agreement (as hereinafter
defined) and the Investor Rights Agreement (as hereinafter defined), the
consummation of the transactions contemplated by this Subscription Agreement,
the Debentures, the Warrants, the Registration Rights Agreement and the
Investor Rights Agreement (hereinafter collectively referred to as the "Related
Agreements") and the issuance of the Units will not conflict with or result in
a violation of the terms or provisions of, or constitute a default
5
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or asset of the Company or its Subsidiaries (as
hereinafter defined) pursuant to:
(1) the articles of incorporation or bylaws of Company;
(2) any bond, debenture, note or other evidence of
indebtedness, any other material agreement or instrument to which
Company or any of its Subsidiaries is a party or by which Company
or any of the property of Company or any of its Subsidiaries may be
bound; or
(3) of any material order, rule, regulation, writ, injunction
or decree of any government, governmental instrumentality or court,
domestic or foreign.
(f) Company shall not pay any commissions or finder or other fees to
any party in connection with the sale of the Units.
(g) Company shall, if Purchaser so requests, permit the transfer of
the Debentures, the Subscription Shares, the Warrants and the Common Stock
underlying the Warrants out of the name of Purchaser when a request therefor is
accompanied by an opinion of counsel reasonably satisfactory to Company to the
effect that neither the sale nor the proposed transfer results in a violation
of the Act or other applicable Securities Laws and/or conformity with any
Legend placed upon any document, instrument or certificate representing the
foregoing.
(h) Company shall not permit and Subsidiary to (i) undertake any
financing (debt, equity or combination thereof); (ii) incur any indebtedness;
(iii) permit any liens or other encumbrances on its assets (tangible or
intangible); or (iv) sell all or all of its assets (tangible or intangible)
other than in the ordinary course of business consistent with past practice.
(i) For the purposes hereof, "Subsidiary" means any corporation with
respect to the Company (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors. The Company presently has three (3)
Subsidiaries. All of the issued and outstanding shares of capital stock of
each Subsidiary of the Company have been duly authorized and are validly
issued, fully paid, and nonassessable. Company holds of record and owns
beneficially all of the outstanding shares of each Subsidiary of Company, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), taxes, security interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. There are no outstanding or authorized options, warrants, purchase
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of Company and its Subsidiaries to sell, transfer, or
otherwise dispose of any capital stock of any of its Subsidiaries or that could
require any Subsidiary of Company to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary of the Company. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary of the Company. None of the Company nor its
Subsidiaries controls directly or indirectly or has any direct or indirect
equity participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of the Company.
(j) No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission ("Governmental Entity") or any
third party is required by or with respect to the Company in connection with the
execution and delivery of this Subscription Agreement or the Related Agreements
(as hereinafter defined) or the
6
consummation of the transactions contemplated hereby or thereby, except for such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as have been obtained.
(k) There is no action, suit or proceeding of any nature pending or,
to the Company's knowledge, threatened against the Company or any Subsidiary,
or their properties or any of their officers, directors or managers, in their
respective capacities as such nor, to the knowledge of the Company, is there
any reasonable basis therefore. To the Company's knowledge, there is no
investigation pending or threatened against the Company or any Subsidiary, or
their properties or any of their officers or directors by or before any
Governmental Entity. No Governmental Entity has at any time challenged or
questioned the legal right of the Company or any Subsidiary to conduct its
operations as presently or previously conducted.
(l) The execution and delivery of this Subscription Agreement and
the Related Agreements by the Company does not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation of acceleration
of any obligation or loss of any benefit under (any such event, a "Conflict"):
(i) any provision of the articles of incorporation or bylaws of the Company or
(ii) any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, the Subsidiaries or
their properties or assets.
(m) The Company and each of its Subsidiaries is not (i) in violation
of its charter or bylaws; (ii) in default, and not event has occurred which
with notice or lapse of time or both, would constitute a default, in the due
performance or observation of any term, covenant or condition contained in any
material indenture, mortgage or deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which its is bound or to
which any of its properties or assets is subject; or (iii) in violation of any
law ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject except in the case of clause (ii) or (iii)
for any default or violation that could not reasonably be expected to result in
a material adverse change in the business, financial condition, operations,
results of operations, or future prospects of Company and its Subsidiaries.
(n) Company and its Subsidiaries posses all material consents,
licenses, permits, grants or other authorization issued by the Governmental
Entity (i) pursuant to which the Company and its Subsidiaries currently operate
or hold any interest in any of their properties or (ii) which is required for
the operation of their businesses or the holding of any such interests (herein
collectively called the "Company Authorizations"). The Company Authorizations
are in full force and effect and constitute all the Company Authorizations
required to permit the Company and its Subsidiaries to operate or conduct their
businesses or hold any interest in their properties.
(o) The Company and its Subsidiaries have filed all tax returns
(federal, state and local) required to be filed by each them. All taxes shown
to be due and payable on such returns, any assessments imposed and all other
taxes due and payable by the Company and its Subsidiaries have been paid or
will be paid prior to the time they become delinquent. Neither the Company nor
any Subsidiary has been advised (a) that any of its returns, federal, state or
other, have been or are being audited as of the date hereof or (b) of any
deficiency in assessment or proposed judgment to its federal, state or other
taxes.
(p) The Company is not an "investment company" or an Affiliate of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act") and the rules and regulations of the
SEC thereunder.
7
(q) The Company is not an "holding company" or a Subsidiary of an
"holding company" within the meaning of the Public Utility Holding Company Act
of 1955, as amended (the "Public Utility Holding Company Act").
(r) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
account principals and to maintain asset accountability; (iii) access to
financial assets is permitted only in accordance with management's general or
specific authorizations; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences to the necessary.
(s) The Company and its Subsidiaries maintain commercial and general
liability insurance policies of a nature and in amounts as is customary and
sufficient for similarly situated businesses.
(t) Except in connection with matters relating to the International
Bible Society, the Company and its Subsidiaries have sufficient legal rights to
all patents, copyrights, trade secrets, trademarks, trade names, service marks,
domain names, information, proprietary rights and processes (collectively
"Proprietary Information") necessary their businesses as conducted, or as
reasonably contemplated to be conducted, by the Company and its Subsidiaries
without any conflict with or infringement upon the rights of others. There are
no outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company or any of its Subsidiaries bound by or a party to
any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
The Company has not received any written communications alleging that the
Company or any of its Subsidiaries has violated or infringed, or that the
Company or any of its Subsidiaries would, by conducting its business as
proposed, violate or infringe any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity.
(u) The Company and its Subsidiaries have never owned any real
property. The Company and its Subsidiaries have valid right to lease or
otherwise use all items of real and personal property which are material to the
businesses of the Company and its Subsidiaries, in each case, such rights are
in full force and effect, are valid and binding in accordance with their
respective terms of use or occupancy, and there is not, under any of the
foregoing, any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default). The Company and its
Subsidiaries have good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of their tangible properties and
assets, real, personal and mixed, used or held for use in their businesses,
free and clear of any liens, except for liens for taxes not yet due and payable
and other statutory liens for amounts not yet due.
(v) Neither the Company nor any of its Subsidiaries is bound by or
subject to (and none of their assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or has sought to
represent any of the employees, representatives or agents of the Company or any
Subsidiary. There is no strike or other labor dispute involving the Company or
any of its Subsidiaries pending, or to the best of the Company's knowledge,
threatened, nor is the Company aware of any labor organization activity
involving its employees or the employees of its Subsidiaries. The Company is
not aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company or any of its
Subsidiaries, nor does the Company have a present intention to terminate the
8
employment of any of the foregoing. The Company and its Subsidiaries have
complied with all applicable state and federal equal employment opportunity and
other laws related to employment.
(w) For the purposes hereof , "Prohibited Transaction" has the
meaning set forth in ERISA Sec. 406 and Code Sec. 4975, "Reportable Event" has
the meaning set forth in ERISA Sec. 4043, "Multiemployer Plan" has the meaning
set forth in ERISA Sec. 3(37), "Fiduciary" has the meaning set forth in ERISA
Sec. 3(21), "PBGC" means the Pension Benefit Guaranty Corporation; "Code" means
the Internal Revenue Code of 1986, as amended; "Employee Pension Benefit Plan"
has the meaning set forth in ERISA Sec. 3(2) and "Employee Welfare Benefit
Plan" has the meaning set forth in ERISA Sec. 3(1). Neither the Company nor
any Subsidiary has never maintained any Employee Benefit Plan and there have
been no Prohibited Transactions with respect to any Employee Benefit Plan. No
Fiduciary has any liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment of the
assets of any Employee Benefit Plan of the Company or any Subsidiary. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any Employee Benefit Plan is
pending or, to the knowledge of the Company, threatened. Neither the Company
nor any Subsidiary has ever incurred, and the Company has no reason to expect
that Company or any Subsidiary will incur, any liability to the PBGC or
otherwise under Title IV of ERISA or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan. Neither the
Company nor any Subsidiary has ever contributed to or ever has been required to
contribute to any Multiemployer Plan or has any liability under any
Multiemployer Plan. Neither the Company nor any Subsidiary has ever maintained
or contributed to, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents.
(x) For the purposes hereof, "Environmental, Health, and Safety
Laws" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, and
the Occupational Safety and Health Act of 1970, each as amended, together with
all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes. The Company, and its predecessors and Affiliates has, to
the best knowledge of the Company, complied with all Environmental, Health, and
Safety Laws, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
it alleging any failure so to comply. Neither the Company nor any Subsidiary
has any liability for and neither it nor its predecessors and Affiliates has
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against the Company
or any Subsidiary for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health, and Safety Law.
(y) To the best knowledge of the Company, neither the Company nor
any director, officer, employee, agent, or other person associated with or
acting on behalf of either the Company or any Subsidiary has (i) used any
corporate funds for any unlawful contribution, gift, entertainment, or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic governmental official or
employee from corporate funds; (iii) violated or is in
9
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribes, rebate, payoff, influence payment,
kickback or other unlawful payment.
(z) The Company does not own any "margin securities" as that term is
defined in Regulation U of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") and none of the proceeds of the Units will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for any
other purpose which might cause the Debenture, the Subscription Shares, the
Warrant or the Common Stock that underlies the Warrants to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the Federal
Reserve Board.
(aa) Neither the Company nor any Affiliate thereof has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act) which is or will be intergrated with the sale of the Units in a
manner that would require registration of the Debenture, the Subscription
Shares, the Warrant or the Common Stock that underlies the Warrants under the
Securities Act.
(bb) None of the Company, any of its Affiliates or any other
person acting on its behalf or their behalf has engaged, in connection with the
offering of the Units in any form of general solicitation or general
advertising within the meaning of Rule 502 (c) under the Securities Act.
(cc) The Company has not taken nor will it take, directly or
indirectly, any action prohibited by Regulation M under the Securities Exchange
Act of 1934 (the "Securities Exchange Act") in connection with the offering of
the Units.
(dd) Neither the Company nor any of its Subsidiaries does business
with the government of Cuba or with any person or Affiliate located in Cuba
within the meaning of Florida Statute Section 517.075.
(ee) Assuming the accuracy of the representations and warranties of
the Purchasers contained herein and compliance by the Purchasers with the
representations, warranties and covenants contained as part of the Related
Agreements, the offer, sale and issuance of the Units and the Debentures, the
Unit Shares, the Warrants and the Common Stock underlying the Warrants will be
exempt from the registration requirements of the Securities Act, and such
offer, sale and issuance complies with the requirements of the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
4. Irrevocable Instruction Letters. The Company undertakes, covenants
and agrees to enter into an irrevocable instruction letter agreement (the
"Irrevocable Instruction") with each Fulfillment Corporation (as such term is
defined in the Debenture) in the form attached hereto as Exhibit 4.
5. Sales of DVD Units Through Fulfillment Corporations. The Company
undertakes, covenants and agrees that sales of DVD Units (as such term is
defined in the Debenture) from United States and Canadian sources undertaken by
the Fulfillment Corporations (as such term is defined in the Debenture) shall
account for ninety five percent (95%) of sales of the DVD Units from United
States and Canadian sources at all times that any Existing Principal Amount (as
such term is defined in the Debenture) remains outstanding under the
Debentures.
6. Registration Rights. Purchasers of the Units shall be entitled to
certain registration rights (the "Registration Rights") as to the Subscription
Shares and as to the Common Stock that underlies the Warrants. Such
Registration Rights are set forth in that certain registration rights agreement
(the "Registration Rights Agreement") executed by Company and Purchaser even
date herewith, the form of
10
which Registration Rights Agreement is attached hereto as Exhibit 6. As part of
the Registration Rights Agreement, Company will be required to include in the
Registration Statement, certain shares of Common Stock currently held by certain
Affiliates (as such term is defined under the Act) of the signatories thereto.
7. Acquisition Rights. Purchasers of the Debentures that form a part of
the Units shall be entitled to certain non-transferable acquisition rights (the
"Acquisition Rights") in connection with certain issuances of Common Stock (the
"Subject Issuances") by the Company for so long as the Debentures remain
unpaid. Likewise, for so long as a Purchasers acquiring the Subscription
Shares that form a part of the Unit are deemed as Affiliates (as such term is
defined under the Act) of the Company, such Purchasers shall be entitled to
certain director nomination rights and/or observer rights (collectively, the
"Nomination Rights"). Such Acquisition Rights and Director Nomination Rights
are set forth in that certain investor rights agreement (the "Investor Rights
Agreement") executed by Company and Purchase even date herewith, the form of
which Investor Rights Agreement is attached hereto as Exhibit 7.
8. Miscellaneous Provisions.
(a) Assignment. The Purchaser agrees not to transfer or assign this
Subscription Agreement, or any of the Purchaser's interest herein, and further
agrees that the transfer or assignment of the Debentures, the Subscription
Shares, the Warrants and the Common Stock underlying the Warrants shall be made
only in accordance with all applicable laws.
(b) Attorney Fees. If Purchaser retains the services of counsel by
reason of default hereunder, all costs of suit and all reasonable attorneys'
fees and such other reasonable expenses so incurred by Purchaser shall be paid
by Company. If Company retains the services of counsel by reason of default by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, all costs of suit and all reasonable attorneys' fees and such
other reasonable expenses so incurred by Company shall be paid by Purchaser and
may be off set by Purchaser against any Principal outstanding under the
Debenture.
(c) Counterparts. This Subscription Agreement may be executed in
counterparts. Upon execution and delivery of this Subscription Agreement by
Purchaser and Company, this Subscription Agreement shall become a binding
obligation of Purchaser and Company with respect to the purchase of the Units
as indicated herein.
(d) Entire Agreement. This Subscription Agreement and the other
documents, instruments and agreements executed in connection herewith
constitutes the entire agreement by, between and among the parties as to the
subject matter hereof and merges and supersedes any prior discussions,
understandings and agreements of any and every nature by, between and among
them as to the subject matter hereof.
(e) Further Documents. The parties agree to execute all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Subscription Agreement.
(f) Governing Law. THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS, RULES OR PRINCIPLES. PURCHASER
HAS CONSULTED WITH COUNSEL AND FULLY UNDERSTANDS THE IMPACT OF THE PROVISION OF
THIS PARAGRAPH.
(g) Headings. The headings contained in this Subscription Agreement
have been inserted for convenience of reference only and do not limit or
otherwise affect construction or interpretation of any term or provision
hereof.
11
(h) Invalidity. Any term or provision of this Subscription
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(i) Jurisdiction and Venue. ANY SUIT, ACTION OR PROCEEDING WITH
RESPECT TO THIS SUBSCRIPTION AGREEMENT AND THE RELATED DOCUMENTS SHALL BE
BROUGHT EXCLUSIVELY IN THE COURTS OF NEW YORK COUNTY IN THE STATE OF NEW YORK
OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.
THE PARTIES HEREBY ACCEPT THE EXCLUSIVE JURISDICTION OF THOSE COURTS FOR THE
PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES HEREBY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING RISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR ANY
JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF BROUGHT IN ANY OF THE ABOVE
DESCRIBED COURTS AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUIT,
ACTION OR PROCEEDING BROUGHT IN NEW YORK COUNTY, NEW YORK, HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. THE PARTIES, FURTHER, CONSENT TO SERVICE OF PROCESS IN
ANY SUCH ACTION OR LEGAL PROCEEDING BY MEANS OF REGISTERED MAIL OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, IN CARE OF THE ADDRESS SET FORTH HEREIN OR SUCH
OTHER ADDRESS AS EITHER PARTY MAY FURNISH IN WRITING TO THE OTHER, PROVIDED
PROCESS IS ACTUALLY RECEIVED. PURCHASER HAS CONSULTED WITH COUNSEL AND FULLY
UNDERSTANDS THE IMPACT OF THE PROVISION OF THIS PARAGRAPH AND PARAGRAPH 8.(f).
(j) Modification. This Subscription Agreement shall not be changed,
modified or amended, except by a writing signed by the parties to be charged,
and this Subscription Agreement may not be discharged, except by performance in
accordance with its terms or by a writing signed by the party to be charged.
NOTWITHSTANDING THE FOREGOING, PURCHASER HEREBY AGREES THAT THIS SUBSCRIPTION
AGREEMENT AND EACH AND EVERY OF THE RIGHTS AND OBLIGATIONS OF THE PURCHASER
HEREUNDER MAY BE CHANGED, MODIFIED OR AMENDED IN SUCH MANNER AS MAY BE
DETERMINED BY THE HOLDERS OF A MAJORITY, BASED UPON THE THEN EXISTING PRINCIPAL
AMOUNT (AS SUCH TERM IS DEFINED IN DEBENTURES) UNDER ALL DEBENTURES WHICH GAVE
RISE TO THE FACILITY PROCEEDS AS SUCH TERM IS DEFINED IN THE DEBENTURE) OF THE
DEBENTURES.
(k) Notices. All notices, consents and other communications under
this Subscription Agreement shall be in writing and in each case addressed, as
applicable, to Company at it business address or to Purchaser at the address
set forth herein, or to such other address as a party may designate as to
itself by notice addressed to the other party, and same shall be deemed to have
been duly given:
(1) when delivered by hand; or
(2) one business day after the business day of transmission
when sent by telex or telecopier (with receipt confirmed), provided
that a copy is mailed by United States mail; or
(3) one business day after the business day of deposit with
the carrier, when sent by Express Mail, FedEx or other recognized
express delivery service for overnight delivery.
12
(l) Transfer Opinion Costs. Should Purchaser so request a transfer
of the Debentures, the Subscription Shares, the Warrants and the Common Stock
that underlying the Warrants out of the name of Purchaser, and in the event
that an opinion of counsel is required by the Company in order to permit any
such transfer, Company shall pay the reasonable costs of any such opinion,
provided that in no event shall Company be required to pay an amount for such
opinion in excess of the amount routinely charged to the Company by its counsel
for substantially similar opinions.
(m) Reimbursement of Purchaser's Attorney Fees. Borrower
acknowledges that Clifford Chance US LLP ("Clifford Chance") has represented
Purchaser in connection with the transactions contemplated under this
Subscription Agreement. Clifford Chance has (a) prepared certain of the
Related Documents; (b) examined such documents as Clifford Chance deemed
necessary in connection with the transactions contemplated by this Subscription
Agreement; and (c) has, otherwise, provided legal services to Purchaser in
connection with the transactions contemplated by this Subscription Agreement.
Company acknowledges and agrees that such legal services have been performed on
behalf of Purchaser and not on behalf of Company, but Company agrees to pay the
reasonable legal fees and disbursements of Clifford Chance incurred by
Purchaser in connection with the transactions contemplated by this Subscription
Agreement, which payment shall be deemed as a reimbursement to the Purchaser.
(n) Subscription Agreement Binding on Heirs and Assigns. This
Subscription Agreement shall be binding upon Purchaser and the heirs,
successors, estate, legal representatives and assigns of Purchaser. This
Subscription Agreement shall be binding upon Company and the successors, legal
representatives and assigns of Company.
(o) Survival of Representations and Warranties. The
representations, warranties and covenants of each of the Purchaser and Company
contained herein shall survive the purchase of the Units.
(p) Waiver. A waiver by either party of a breach of any provision
of this Subscription Agreement shall not operate or be construed as a waiver of
any subsequent breach by the same party.
(Signatures Appear Next Page)
IN WITNESS WHEREOF, Purchaser hereby represents and warrants that
Purchaser has read this entire Subscription Agreement and has executed this
Subscription Agreement this _________ day of _______________, 2002.
13
(PLEASE SIGN AS NAME(S) APPEAR IN THIS SUBSCRIPTION AGREEMENT.
WHEN SIGNING AS ATTORNEY, EXECUTOR, PERSONAL REPRESENTATIVE,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE TITLE AS SUCH. IF
JOINT OWNERSHIP, BOTH PARTIES MUST SIGN.)
PURCHASER SIGNATURE
____________________________________
(Insert Purchaser Name)
____________________________________
(Signature)
____________________________________
(Insert Title, if applicable)
CO-PURCHASER SIGNATURE, if applicable
____________________________________
(Insert Co-Purchaser Name, if applicable)
____________________________________
(Signature)
____________________________________
(Insert Title, if applicable)
NOT FOR PURCHASER USE:
Accepted this _____ day of ________________ 2002.
Visual Bible International, Inc.
By: ________________________________________
Title: ______________________________________
14
PURCHASER INFORMATION AND ISSUANCE INSTRUCTIONS
Purchaser represents and warrants to Company that the following
information is complete, accurate and may be relied upon by Company. In
accordance with the foregoing, the following (PLEASE PROVIDE LEGIBLE RESPONSES)
is hereby provided:
1. Date of Birth of Individual Purchaser or Date of Incorporation of
Organization Purchaser, as applicable.
___________________________________________________________________
2. Date of Birth of Individual Purchaser Spouse (if co-purchaser).
___________________________________________________________________
3. State or Country of Residence of Individual Purchaser or State or
Country of Incorporation of Organization Purchaser, as applicable.
___________________________________________________________________
4. Tax Identification Number of Individual Purchaser and Spouse (if
co-purchaser); or Tax Identification of Number of Organization Purchaser, as
applicable.
___________________________________________________________________
5. If Purchaser is an Organization, provide number of equity owners of
Organization.
___________________________________________________________________
6. Purchaser Address.
___________________________________________________________________
City: ________________ County: _______________ Postal Code: _______
Country: _______________ Telephone Number: (_________________)
7. Occupation of Individual Purchaser.
___________________________________________________________________
8. The Debenture, the certificates representing the Subscription
Shares and the Warrants purchased pursuant hereto shall be issued by the
Company as follows (any issuance in any name other than the name of Purchaser
must be approved by the Company).
___________________________________________________________________
15
Exhibit 2.(p)
The Legend
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FORM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT PRIOR TO THE
DATE (THE "RESALE DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
16
Exhibit 4
The Irrevocable Instruction
17
Exhibit 6
The Registration Rights Agreement
18
Exhibit 7
The Investor Rights Agreement
19