INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT, dated as of December ___, 2002 is by
and between VISUAL BIBLE INTERNATIONAL, INC. (the "Company"), a
corporation existing under the laws of the State of Florida, and the
individuals and entities signatory hereto (each a "Holder" and
together, "Holders"). Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the
Debentures.
WHEREAS, the Company and each Holder has entered into a
Subscription Agreement, dated the date hereof, and pursuant to the
Subscription Agreement, the Company has issued a Debenture in favor
of each Holder (each a "Debenture" and together, the "Debentures"); and
WHEREAS, the Company has agreed to grant the Holders certain
rights with respect to (i) each and every financing ("Subsequent
Financing") undertaken by the Company after the date hereof, whether
in the form of debt or equity (or a combination thereof) (the
"Financing Rights") and (ii) the Board of Directors of the Company
(the "Appointment Rights").
NOW THERFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Subsequent Financing Rights.
(a) Company shall provide each Holder with a written notice of
any intention to undertake a Subsequent Financing as soon a
practicable following any offer received from or given to any
potential investor or investors, but in no event later than two (2)
business days following such offer (an "Offer Notice"). Each Offer
Notice shall describe in reasonable detail the material terms of the
transaction, including but not limited to, the cash purchase price
of the subject securities or amount of the loan. Each Offer Notice
shall constitute an irrevocable offer to allow the recipient Holder
to participate in the subject Subsequent Financing upon the same
terms and conditions as are offered by the Company to the potential
investor or investors in an amount as calculated by Section 1(b).
Each Holder shall have the irrevocable right and option, exercisable
as provided below, but not the obligation to participate in the
Subsequent Financing in an amount up to the amount calculated
pursuant to Section 1(b).
(b) Each Holder shall be entitled to participate in each and
every Subsequent Financing in a U.S. Dollar amount determined by
multiplying (x) the total amount of the Subsequent Financing (in or
converted into U.S. Dollars) by (y) the quotient derived by dividing
(i) the number of equity securities (including the Company's Common
Stock and Series B Preferred Stock) owned by the Holder at the time
of the Subsequent Financing by (ii) the total number of equity
securities of the Company outstanding immediately prior to the
Subsequent Financing.
(c) The option provided for herein with respect to a Holder
shall be exercisable by such Holder giving written notice that such
Holder desires to participate in the Subsequent Financing and the
extent to which the Holder desires to participate in such Subsequent
Financing not later than ten (10) business days after the date of
the Offer Notice.
(d) If a Holder declines to participate (which shall include a
failure to give timely notice of acceptance) in whole or in part in
the Subsequent Financing (the "Declined Portion"), the Holder's
Financing Rights shall terminate with respect to such Declined Portion.
(e) The Holders shall not have Financing Rights with respect
to the issuance of the Company's Common Stock or Series B Preferred
Stock, or securities convertible or exchangeable into the foregoing,
to employees, officers, directors, consultants or in settlement of
any obligations of the Company; provided that, the Company shall not
issue securities representing more than 2,500,000 shares, on a fully
converted or exchanged basis, of the Company's Common Stock or
Series B Preferred Stock in the aggregate to employees, officers,
directors, consultants or in settlement of any obligations of the
Company.
2. Appointment Rights. Holders representing a majority of the
total Existing Principal Amount advanced under the Initial Financing
Debentures and Subsequent Financing Debentures shall have the right
to nominate two (2) individuals to serve on the Board of Directors
of the Company and/or two (2) individuals to serve as observers to
the Board of Directors of the Company. The Company shall use its
best efforts to cause the individuals named in the preceding
sentence to serve in the capacities indicated within two (2) weeks
of such individuals being named.
3. Term. This Agreement shall terminate with respect to a Holder
upon the payment in full and full satisfaction of such Holder's
Debenture in accordance with its terms.
4. Successors and Assigns. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
5. Amendments and Waivers. Any term of this Agreement may be
amended or waived in writing and only with the written consent of
the Company and Holders representing a majority of the Existing
Principal Amount advanced under the Initial Financing Debentures and
Subsequent Financing Debentures. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder.
6. Notices. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight
courier or sent by telegram or fax, or forty-eight (48) hours after
being deposited in the United States mail as certified or registered
mail with postage prepaid, and addressed to the party to be notified
at such party's address as set forth as set forth in the
Subscription Agreement or as subsequently modified by written notice.
7. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall
be automatically reformed so as to be enforceable while as nearly as
possible preserving the original intent of the parties.
8. GOVERNING LAW. THIS 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.
9. JURISDICTION AND VENUE. ANY SUIT, ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT SHALL BE BROUGHT 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.
10. Entire Agreement. This Agreement and the other documents,
instruments and agreements executed in connection herewith
constitute 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.
11. Additional Parties. The parties hereto agree that subsequent
individuals or entities that purchase Units by executing a
Subscription Agreement shall, upon execution of a counterpart
signature page hereto, be added as a party to this Agreement and
have all rights and privileges of a "Holder" and be subject and
bound by all the terms and conditions hereof as if such subsequent
party was one of the Holders on the date hereof.
12. Sections and Headings. The sections and headings used in this
Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Investor Rights Agreement as of the date first written above.
VISUAL BIBLE INTERNATIONAL,
INC.,
By:_________________________
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have duly executed this
Investor Rights Agreement as of the date first written above.
HOLDER:
______________________________________
Name:
