DISBURSEMENT AGREEMENT
This Disbursement Agreement is made as of the 1st day of April,
2004,
Among:
VISUAL BIBLE INTERNATIONAL, INC.
(the "Company")
- and -
VISUAL BIBLE INTERNATIONAL (CANADA) INC. ("Visual Canada")
- and -
RED BROOK DEVELOPMENTS LIMITED ("Red Brook"),
in its capacity as a holder of A Units of the Company and on
behalf of the parties listed on Schedule "A", (the "A Unit
Debentureholders"), and in its capacity as a holder of B Units
and on behalf of the parties listed on Schedule "B", (the "B Unit
Debentureholders"), and not in any other capacity (the A Unit
Debentureholders and B Unit Debentureholders, collectively, the
"Debentureholders")
- and -
DELUXE TORONTO LTD. ("Toronto"),
DELUXE MEDIA SERVICES, INC.
(formerly Deluxe Video Services, Inc.) ("Media"),
DELUXE LABORATORIES, INC. ("Labs")
(Labs, Media and Toronto, collectively, "Deluxe")
- and -
SHINER XXXXX INC.
("Shiner")
Whereas:
A. the Company is a party to a second forbearance agreement
dated as of April 1, 2004 among the Red Brook, the Company, The
Book of Xxxx, Inc., and Visual Canada (the "Second Forbearance
Agreement");
B. the Company has entered into:
(i) a fulfillment services agreement dated as of January 9, 2004
with Labs (the "Fulfillment Agreement");
(ii) an inducement agreement dated as of August, 2002 with Labs
and Media (the "Inducement Agreement");
(iii) a certain video duplication, DVD replication and
distribution services agreement dated as of August, 2002 with
Media (the "Video Agreement"); and
(iv) a film processing agreement dated August 27, 2002 with Labs
(the "Deluxe Labs Agreement" and collectively with the Inducement
Agreement, the Fulfillment Agreement and the Video Agreement, as
each such agreement may be modified, supplemented or amended from
time to time, the "Deluxe Agreements").
C. the Company has granted a security interest in, to and over
the property described therein to and in favour of the A Unit
Debentureholders pursuant to general security agreements each
dated as of December 24, 2002, as may be amended, replaced or
supplemented from time to time, and security agreements each
dated as of December 24, 2002, as may be amended, replaced or
supplemented from time to time, and has granted a security
interest in, to and over the property described therein to and in
favour of the B Unit Debentureholders pursuant to general
security agreements each dated as of August 28, 2003, as may be
amended, replaced or supplemented from time to time, and security
agreements each dated as of August 28, 2003, as may be amended,
replaced or supplemented from time to time (the "Debentureholders
Security");
D. the Company has granted a security interest in, to and over
the property described therein to and in favour of Deluxe
pursuant to an inventory security agreement dated as of March 1,
2004 and a security agreement dated as of March 26, 2004, each as
may be amended, replaced or supplemented from time to time (the
"Deluxe Security") which are in addition to the liens granted
under the Deluxe Agreements;
E. the Company is a party to that certain agreement with Fifth
Third Bank (the "Merchant Bank") dated August 29, 2003 (the
"Merchant Account Agreement") whereby the Company has an account
with the Merchant Bank (the "Merchant Account") into which the
Merchant Bank will deposit the proceeds of credit card sales in
respect of Direct Response Sales (as defined below);
F. the Company will cause all funds received from Direct
Response Sales (as defined below) and Non Direct Response Sales
(as defined below) to be deposited into the Disbursement Accounts
(as defined below) for distribution to the Distributees (as
defined below) and the Company; and
G. the Agent has agreed to act as the disbursing agent of the
Company for the distribution of amounts deposited into the
Disbursement Accounts in the manner provided herein.
Now, therefore, in consideration of the covenants and
agreements of the parties and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions.
"A Unit Payment Amount" has the meaning set out in Schedule "A".
"Agent" means Shiner or any replacement.
"B Unit Payment Amount" has the meaning set out in Schedule "B".
"Business Day" means any day, other than a Saturday and Sunday,
which chartered banks in Canada are open for commercial banking
during normal banking hours.
"Debentureholders Security" has the meaning set out in preamble
C.
"Deluxe Agreements" has the meaning set out in preamble B.
"Deluxe Labs Agreements" has the meaning set out in preamble B.
"Deluxe Obligations" means amounts owing to Deluxe by the Company
for:
(i) the Duplication Services, the Packaging Services, the
Distribution Services and the Replication Services (as each term
is defined in the Video Agreement) in accordance with the terms
of the Video Agreement;
(ii) the processing and furnishing of Release Prints in
accordance with the terms of the Deluxe Labs Agreement; and
(iii) the Fulfillment Services (as defined in the Fulfillment
Agreement) in accordance with the terms of the Fulfillment
Agreement;
only in respect of such services that were provided by Deluxe to
the Company in respect of Units produced or manufactured by
Deluxe on or after March 1, 2004 for shipment on or after March
7, 2004.
"Deluxe Security" has the meaning set out in preamble D.
"Direct Response Sales" means sales of Units by the Company: (i)
which result from television, radio, infomercial advertising,
print or web advertising and which call for a telephone, mail or
web response by the consumer; (ii) pursuant to any agreements
between the Canadian Bible Society and the Company; (iii) of
sermon packages pursuant to an agreement between Xxxxx Xxxxx and
the Company; and, (iv) pursuant to the Company's direct
initiatives with individual church congregations in both Canada
and the United States.
"Disbursement Accounts" means both the DR Account and the Non DR
Account; "Disbursement Account" means either the DR Account or
the Non DR Account.
"Disbursement Fees" has the meaning set out in section 4.4.
"Dispute Notice" has the meaning set out in section 4.5(b).
"Distributees" has the meaning set out in section 2.4.
"DR Account" has the meaning set out in section 2.1.
"Inducement Agreement" has the meaning set out in preamble B.
"Fulfillment Agreement" has the meaning set out in preamble B.
"Merchant Account" has the meaning set out in preamble E.
"Merchant Account Agreement" has the meaning set out in preamble
E.
"Merchant Bank" has the meaning set out in preamble E.
"Merchandise Sales" means all sales of merchandise by the Company
aside from the sale of Units which sales include t-shirts and the
sound track to the movie.
"Non Direct Response Sales" means Retail and Rentail Sales, Other
DVD Unit Sales and Other Sales.
"Non DR Account" has the meaning set out in section 3.1.
"Other DVD Unit Sales" means sales of Units by the Company: (i)
to the American Bible Society; and, (ii) any other sales of or
receipts in respect of Units other than Direct Response Sales or,
Retail and Rentail Sales.
"Other Sales" all revenue and/or receipts including from
theatrical releases in the continental United States and Canada
by ThinkFilm LLC, or from any other theatrical releases or
licenses or distribution rights granted worldwide, other than
Direct Response Sales, Other DVD Unit Sales or Retail and Rentail
Sales.
"Parties" means the Agent, the Company, Red Brook and Deluxe.
"PPSA" has the meaning set out in section 2.7.
"Retail and Rentail Sales" means sales of Units by the Company to
retail outlets or to video rental outlets.
"Second Forbearance Agreement" has the meaning set out in
preamble A.
"Units" means videocassettes or DVD discs or sets thereof as
packaged for ultimate sale to the public.
"Video Agreement" has the meaning set out in preamble B.
ARTICLE II
DIRECT RESPONSE SALES
2.1 Disbursement Account. Visual Canada has established a
Canadian dollar account and a United States dollar account
(collectively, the "DR Account") with National Bank of Canada
(Account Nos. ___________ and ___________ ___),
which accounts provide that during the term of this Agreement,
any and all withdrawals and disbursements from the DR Account
shall be solely at the written direction of the Agent as
disbursing agent for the Company; the Company and Visual Canada
shall cause all DR Account documents to so provide and to be on
terms reasonably satisfactory to Red Brook and Deluxe. In the
event that any interest is earned on amounts deposited from time
to time in the DR Account, such interest shall be distributed by
the Agent as provided herein. All escrow fees and other costs
and expenses incurred in connection with the DR Account shall be
paid by the Company. For greater certainty, neither the Company,
Visual Canada or their respective successors and assigns shall
have any right to withdraw funds from the DR Account and the
account documents shall so provide. The Company and Visual
Canada covenant that they will cause all funds received from
Direct Response Sales to be deposited into the DR Account.
Visual Canada hereby confirms that all funds held in the DR
Account are held by Visual Canada in trust for the Company,
Deluxe, the Debentureholders and the other Distributees in
accordance with their respective rights to receive payments out
of the DR Account pursuant to section 2.4, such trust arrangement
entered into by Visual Canada for the purpose of expediency in
connection with the execution of this Agreement and that Visual
Canada has no interest whatsoever in any of the said funds. The
Company covenants that it will not incur any financial
obligations to Merchant Bank except in the ordinary course in
connection with the establishment and maintenance of the Merchant
Account and in connection with the activities of Merchant Bank
with respect to the clearing of credit card purchases of Units.
2.2 Transfer from Merchant Account. The Company and Visual
Canada covenant that they will give such irrevocable directions
as are necessary to cause all available funds in the Merchant
Account to be transferred to the DR Account by wire transfer on a
daily basis.
2.3 Company Report. The Company shall provide to the Parties as
long as this Agreement is in effect, on Tuesday in each week, a
report in writing which shall include a list of Units sold and a
reconciliation against cash received, details of Merchandise
Sales, the aggregate price at which such Units and Merchandising
Sales were each sold, the total amount of shipping and handling
charges, and applicable taxes, and the Deluxe Obligations due and
owing in respect of Direct Response Sales, all in respect of
sales that occurred commencing from the time when the last sales
were made on the report last submitted by the Company to the
Parties pursuant to this section to the close of business on the
day immediately preceding the date of the report, except that the
first such report, shall cover the period from the date hereof
until the close of business on the day immediately preceding the
date of the report. Such report shall also include the
cumulative total of Units sold. All reports shall be sent by the
Company to the Agent by facsimile transmission or by electronic
mail. In the event that a Tuesday is not a Business Day, then
such report shall be forwarded to the Agent on the next Business
Day.
2.4 Disbursements from the DR Account. From the total amount
transferred from time to time into the DR Account, the Agent
shall cause payments to be made in the following order of payment
to the extent that there are funds available for distribution:
(a) to the Agent, the Disbursement Fees, if any, pursuant to
section 4.4 hereof;
(b) to Deluxe, the Deluxe Obligations due and owing in respect
of Direct Response Sales;
(c) to the Company, all amounts on account of shipping and
handling, applicable taxes and Merchandise Sales;
(d) to the Debentureholders, the amount with regard to the A
Unit Debentureholders as set out in Schedule "A" and with regard
to the B Unit Debentureholders as set out in Schedule "B";
(e) to Deluxe and Film Finances, Inc., the respective amounts
set out in Schedule "C"; and
(f) to the Company, the balance remaining in the DR Account
after the payment of the amounts above described.
2.5 Agent Reports. The Agent shall furnish to the Parties, on a
weekly basis, a report indicating: (i) all amounts received in
the DR Account during the previous week; (ii) the total amount of
the funds held in the DR Account at the end of the previous week;
(iii) the amounts disbursed to those parties listed in Schedule
"A", Schedule "B" and Schedule "C" (the "Distributees") and to
the Company; and, (iv) the cumulative total of all amounts
disbursed by the Agent to each of the Distributees.
2.6 Payment Terms. All distributions made from the DR Account
shall be paid to such Distributee via cheque or wire transfer
sent to the addresses listed on the appropriate Schedule to the
attention of the person noted on such Schedule. All
distributions made from the DR Account to the Company shall be
made by wire transfer in accordance with the Company's
instructions. Disbursements to the Distributees and the Company
on account of section 2.3 shall be on Wednesday in each week.
In the event that a Wednesday is not a Business Day, then such
funds shall be forwarded to the Distributees and the Company on
the next Business Day. At the Company's option, if the Company
provides a report as contemplated in section 2.3 on a Friday in a
week in respect of sales that accrued from the date of the last
report to the close of business immediately proceeding the date
of the report referred to herein, the Agent shall effect a
further distribution on the Monday of the week in which such
additional report was submitted in the manner contemplated in
this Agreement.
2.7 Treatment of Funds.
(a) All amounts which from time to time are on deposit in the DR
Account and the Company's interest in the DR Account:
(i) constitute "proceeds" within the meaning of the Personal
Property Security Act (Ontario) (the "PPSA") of collateral
subject to the Deluxe Security and Debentureholders Security and
Visual Canada shall hold such amounts in the DR Account in trust
for the Company, Deluxe, the Debentureholders and the other
Distributees in accordance with their respective rights to
receive payments out of the DR Account pursuant to section 2.4;
and
(ii) shall be kept separate and apart from all other funds and
assets of the Company or Visual Canada. For greater certainty,
each of the Company and Visual Canada agree not to deposit or
cause to be deposited any funds into the DR Account other than
funds it is required to deposit or cause to be deposited therein
pursuant to this Agreement.
(b) If any amounts on account of Direct Response Sales are paid
to the Company or Visual Canada directly, other than by the Agent
in accordance with the terms hereof, the Company or Visual
Canada, as the case may be, shall:
(i) keep such amounts separate and apart from all other funds in
its possession;
(ii) deposit such amounts into a segregated account;
(iii) hold such amounts in trust for the benefit of the Agent
and the Distributees in accordance with the terms of this
Agreement; and
(iv) forthwith deliver such amounts to the Agent to be deposited
into the DR Account to be distributed in accordance with this
Agreement.
(c) Notwithstanding anything herein to the contrary, if:
(i) a receiver, interim receiver, receiver and manager, trustee
in bankruptcy, liquidator or similar entity is appointed over all
or any part of the Company's assets;
(ii) this Agreement is otherwise terminated; or
(iii) there is no Agent;
then this Agreement will continue to apply only to amounts
received from Direct Response Sales where orders from customers
for such Direct Response Sales were made before the date of such
appointment or such termination and the Units in respect of such
orders:
(aa) have been delivered by Deluxe;
(bb) have been manufactured and completed for shipment by Deluxe
but have not yet been delivered, to the extent such Units are
delivered; or
(cc) are in the process of being manufactured by Deluxe but have
not yet been completed or delivered, to the extent such Units are
completed and delivered.
ARTICLE III
NON DIRECT RESPONSE SALES
3.1 Disbursement Account. Visual Canada has established a
Canadian dollar account and a United States dollar account
(collectively, the "Non DR Account") with National Bank of Canada
(Account Nos. ___________ and ___________ ___),
which accounts provide that during the term of this Agreement,
any and all withdrawals and disbursements from the Non DR Account
shall be solely at the written direction of the Agent as
disbursing agent for the Company; the Company and Visual Canada
shall cause all Non DR Account documents to so provide and to be
on terms reasonably satisfactory to Red Brook and Deluxe. In the
event that any interest is earned on amounts deposited from time
to time in the Non DR Account, such interest shall be distributed
by the Agent as provided herein. All escrow fees and other costs
and expenses incurred in connection with the Non DR Account shall
be paid by the Company. For greater certainty, neither the
Company, Visual Canada or their respective successors and assigns
shall have any right to withdraw funds from the Non DR Account
and the account documents shall so provide. The Company and
Visual Canada covenant that they will cause all funds received
from Non Direct Response Sales to be deposited into the Non DR
Account. Visual Canada hereby confirms that all funds held in the
DR Account are held by Visual Canada in trust for the Company,
Deluxe, the Debentureholders and the other Distributees in
accordance with their respective rights to receive payments out
of the Non DR Account pursuant to section 3.3, such trust
arrangement entered into by Visual Canada for the purpose of
expediency in connection with the execution of this Agreement and
that Visual Canada has no interest whatsoever in any of the said
funds.
3.2 Company Report. The Company shall provide to the Parties on
Monday in each week, a report in writing which shall include a
reconciliation of the amounts which were deposited into the Non
DR Account in respect of Non Direct Response Sales that occurred
commencing from the time when the last sales were made or revenue
and/or receipts received on the report last submitted by the
Company to the Agent pursuant to this section to the close of
business on the day immediately preceding the date of the report,
except that the first such report, shall cover the period from
the date hereof until the close of business on the day
immediately preceding the date of the report. Such report shall
include the Deluxe Obligations due and owing in respect of Non
Direct Response Sales and a list of revenue and/or receipts from
Retail and Rentail Sales, Other DVD Unit Sales, and Other Sales,
to whom such sales were made and the price for which Units were
sold in respect of each purchaser of such Units. Such report
shall also include the cumulative total of Units sold. All
reports shall be sent by the Company to the Parties by facsimile
transmission or by electronic mail. In the event that a Monday
is not a Business Day, then such report shall be forwarded to the
Agent on the next Business Day.
3.3 Disbursements from the Non DR Account. From the total
amount deposited from time to time into the Non DR Account, the
Agent shall cause payments to be made in the following order to
the extent that there are funds available for distribution:
(a) to the Agent, the Disbursement Fees, if any, pursuant to
section 4.4 hereof;
(b) to Deluxe, the Deluxe Obligations due and owing in respect
of Non Direct Response Sales, and professional fees incurred by
Deluxe to a maximum aggregate amount of $50,000;
(c) to the Debentureholders, the amount set out in Schedule "D";
(d) to the Debentureholders, Film Finances, Inc., Deluxe and
ThinkFilm LLC, the respective amounts in the order of priority as
set out in Schedule "E"; and,
(e) to the Company, the balance remaining in the Non DR Account
after the payment of the amounts above described.
3.4 Agent Reports. The Agent shall furnish to the Parties, on a
weekly basis, a report indicating: (i) all amounts received in
the Non DR Account during the previous week; (ii) the total
amount of the funds held in the DR Account at the end of the
previous week; (iii) the amounts disbursed to the Distributees
and the Company in respect of such calendar week pursuant to
section 3.3; and (iv) the cumulative total of all amounts
disbursed by the Agent to each of the Distributees and the
Company.
3.5 Payment Terms. All distributions made from the Non DR
Account shall be paid to such Distributee via cheque or wire
transfer sent to the address listed on the appropriate Schedule
to the attention of the person noted on such Schedule. All
distributions made from the Non DR Account to the Company shall
be made by wire transfer in accordance with the Company's
instructions. Disbursements to Distributees and the Company
pursuant to section 3.3 shall be made on Tuesday in each week.
In the event that a Tuesday is not a Business Day, then such
funds shall be forwarded to the Distributees and the Company on
the next Business Day. At the Company's option, if the Company
provides a report as contemplated in section 3.2 on Thursday in a
week in respect of sales that accrued from the date of the last
report to the close of business immediately proceeding the date
of the report referred to herein, the Agent shall effect a
further distribution on the Friday of the week in which such
additional report was submitted in the manner contemplated in
this Agreement.
3.6 Treatment of Funds.
(a) All amounts which from time to time are on deposit in the
Non DR Account and the Company's interest in the Non DR Account:
(i) constitute "proceeds" within the meaning of the PPSA of
collateral subject to the Deluxe Security and Debentureholders
Security and Visual Canada shall hold such amounts in the Non DR
Account in trust for the Company, Deluxe, the Debentureholders
and the other Distributees in accordance with their respective
rights to receive payments out of the Non DR Account pursuant to
section 3.3; and
(ii) shall be kept separate and apart from all other funds and
assets of the Company and Visual Canada. For greater certainty,
each of the Company and Visual Canada agree not to deposit or
cause to be deposited any funds into the Non DR Account other
than funds it is required to deposit or cause to be deposited
therein pursuant to this Agreement.
(b) If any amounts on account of Non Direct Response Sales are
paid to the Company or Visual Canada directly, other than by the
Agent in accordance with the terms hereof, the Company or Visual
Canada, as the case may be, shall:
(i) keep such amounts separate and apart from all other funds in
its possession;
(ii) deposit such amounts into a segregated account;
(iii) hold such amounts in trust for the benefit of the Agent
and the Distributees in accordance with the terms of this
Agreement; and
(iv) forthwith deliver such amounts to the Agent to be deposited
into the Non DR Account to be distributed in accordance with this
Agreement.
(c) Notwithstanding anything herein to the contrary, if:
(i) a receiver, interim receiver, receiver and manager, trustee
in bankruptcy, liquidator or similar entity is appointed over all
or any part of the Company's assets;
(ii) this Agreement is otherwise terminated; or
(iii) there is no Agent;
then this Agreement will continue to apply only to amounts
received from Non Direct Response Sales where orders from
customers for such Non Direct Response Sales were made before the
date of such appointment or such termination and the Units in
respect of such orders:
(aa) have been delivered by Deluxe;
(bb) have been manufactured and completed for shipment by Deluxe
but have not yet been delivered, to the extent such Units are
delivered; or
(cc) are in the process of being manufactured by Deluxe but have
not yet been completed or delivered, to the extent such Units are
completed and delivered.
ARTICLE IV
AGENT OBLIGATIONS
4.1 Limitation on the Agent's Obligation to Make Payment. The
Agent shall be obligated to disburse such amounts described in
section 2.4 and section 3.3 to the Distributees and the Company
only to the extent that the funds are actually and indefeasibly
received in a Disbursement Account.
4.2 Accuracy of Schedules. Notwithstanding anything to the
contrary contained in this Agreement, the Agent shall have no
duty or obligation:
(i) to verify the accuracy of Schedules "A", "B", "C", "D" or
"E", or any amendments to such schedules received by the Agent
from the Company from and after the date hereof, (which shall not
be effective unless approved in writing by Deluxe and Red Brook
on behalf of the Debentureholders);
(ii) to verify that the proper amounts are or have been
transferred from the Company or others; or
(iii) to seek or request the transfer of additional funds
from the Company or from any other person, regardless of whether
such additional transfers are due and payable to a Disbursement
Account, and whether the amounts held from time to time in a
Disbursement Account are inadequate to make the payments to be
made by the Agent pursuant to this Agreement from the
Disbursement Account.
All amounts payable by the Company, including without limiting
the generality of the foregoing, shipping and handling, sales,
GST and other taxes, costs, expenses and overhead of the Company
or in respect of the Company's property, shall be payable by and
be the sole responsibility by the Company and the Company hereby
indemnifies and holds harmless the Agent, Deluxe and the
Debentureholders against any claims in respect of such amounts.
4.3 Changes to Schedules. The Company hereby confirms to the
Agent that Schedules "A", "B", "C", "D" and "E" accurately
reflect amounts payable to the respective Distributees as of the
date of this Agreement and that the respective Distributees have
been advised of their respective distribution amounts as set
forth on such schedules. Nothing in this Agreement or otherwise
shall require the Agent to make distributions or other payments
from the Disbursement Accounts on behalf of the Company to any
other persons (other than in accordance with Schedules "A", "B",
"C", "D" or "E") or as such schedules may be amended by all of
the Parties in writing.
4.4 Disbursement Fees. The Company shall pay to the Agent,
within five (5) Business Days following the execution of this
Agreement, a retainer of five thousand dollars ($5000.00). The
Agent shall be paid its customary hourly rate for services
rendered pursuant to this Agreement and reasonable charges for
disbursements and expenses incurred in connection with such
services (collectively, the "Disbursement Fees"). In the event
that the Disbursement Fees have not been paid to the Agent out of
the Disbursement Accounts, the Company shall pay forthwith such
Disbursement Fees to the Agent after receipt by the Company of
written request therefor from the Agent. The Parties covenant to
use reasonable best efforts to negotiate a flat fee, in lieu of
the hourly rate described above, payable weekly by the Company on
the week following.
4.5 The Agent's Obligations.
(a) The parties agree that all distributions and payments from
the Disbursement Account will be made by the Agent in accordance
with articles 2 and 3 of this Agreement. For purposes of the
instructions hereunder, the Agent may consider Schedule "A", "B",
"C", "D" or "E" to be correct and valid unless amended by written
notice to the Agent and in accordance with this Agreement. The
Agent may act in reliance upon any instruction, instrument, or
signature of any official or director of a party in this
Agreement which is provided in accordance with this Agreement and
in compliance with section 6.6, reasonably believed by the Agent
to be genuine. The Agent may assume that any director or officer
of a party to this Agreement who gives any written notice,
request, or instruction has the authority to do so. The Agent
will not be required to inquire into the truth or evaluate the
merit of any statement or representation contained in any notice
or document. The Agent shall not be responsible for failure to
act as a result of causes beyond the reasonable control of the
Agent.
(b) If a Distributee disputes a past or proposed distribution of
funds by the Agent pursuant to this Agreement, the Distributee
shall send notice in writing to the Agent detailing the nature of
its dispute and to extent possible including particulars thereof
(the "Dispute Notice"). If the Agent is unable to resolve the
subject matter of the Dispute Notice within seven (7) Business
days the Agent shall forward the Dispute Notice to the Parties
and the Agent may thereafter, in its sole discretion, if the
dispute is for a specified monetary amount, withhold and not
distribute any disputed distribution amounts. If such dispute
has not been resolved within seven (7) Business Days of the date
the Agent has provided the Dispute Notice to the Parties, the
Agent shall commence interpleader proceedings in respect of the
withheld amounts pursuant to the Rules of Civil Procedure
(Ontario). Nothing in this Agreement shall constitute an
agreement or admission by the Agent or Company that any
Distributee has the right to make any such claims or disputes
against the Agent or the Disbursement Account. For greater
certainty, all amounts not in dispute shall be paid by the Agent
in the ordinary course.
4.6 Indemnification. The Company hereby indemnifies, defends
and holds harmless the Agent from any and all claims, actions,
damages, arbitration fees and expenses, costs, and attorney's
fees on a solicitor and client basis incurred by the Agent and
other liabilities incurred by the Agent relating in any way to
this Agreement or any claims made against the Agent or the
Disbursement Accounts except where it is adjudged in a final,
nonappealable order from a court of competent jurisdiction that
the Agent acted with gross negligence or wilful misconduct.
4.7 Limitation of Liability. In no event will the Agent be
liable for any incidental, indirect, special, exemplary, punitive
or consequential damages, including, but not limited to, damages,
lost profits, lost opportunities, costs or expenses (including
legal fees and expenses), whether foreseeable or unforeseeable,
that may arise out of or in connection with this Agreement. The
Agent shall not be liable for any non-performance or delays
caused by strikes, lockouts, fire, flood, terrorism, war, riots,
government, acts of God or other means beyond its control.
ARTICLE V
TERM
5.1 Term. This Agreement shall expire when all principal,
interest, fees and expenses owing by the Company or the
Guarantors (as such term is defined in the Second Forbearance
Agreement) to the Debentureholders under the Documents (as such
term is defined under the Second Forbearance Agreement) and the
Second Forbearance Agreement have been paid in full and all
royalty payments required to be made by the Company to the
Debentureholders under the Debentures (as such term is defined
under the Second Forbearance Agreement) are current.
5.2 Termination. Notwithstanding section 5.1, this Agreement
shall terminate if:
(i) any action is taken by the Company to institute proceedings
to be adjudicated a bankrupt or the Company consents to the
institution of bankruptcy proceedings or the Company makes any
assignment or proposal in bankruptcy or gives notice of an
intention to do so under the Bankruptcy and Insolvency Act
(Canada) or under any other analogous statute in any
jurisdiction;
(ii) a receiver, interim receiver, receiver and manager, agent,
liquidator or other similar administrator is appointed in respect
of the property, assets and undertaking of the Company, 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 property, assets
and undertaking of the Company, or any part thereof; or
(iii) there is no agent or replacement agent appointed to
carry out the duties of the Agent hereunder.
The Company shall have the right to terminate this Agreement with
the written consent of both Deluxe and Red Brook for any reason,
or on the written direction of both Deluxe and Red Brook for any
reason, each upon thirty (30) days prior written notice to the
Agent.
Notwithstanding the termination of this Agreement, this Agreement
will continue to the extent provided for in section 2.7
(excluding section 2.7(b)(iv)) and 3.6 (excluding section
3.6(b)(iv)).
5.3 Effect of Termination on Agent. No termination of this
Agreement shall affect any of the protections afforded to the
Agent in Article IV. Upon the effective date of such
termination, the Agent shall have no further obligations under
this Agreement.
5.4 Resignation of Agent. The Agent may resign as Agent under
this Agreement on thirty (30) days written notice to the Company,
Red Brook and Deluxe. Within fifteen (15) Business Days of such
notice, if the Company, Red Brook and Deluxe are unable to
mutually agree upon a replacement agent, then each of the
Company, Red Brook and Deluxe shall nominate a person who shall
be a chartered accountant duly licensed to practice in the
province of Ontario and those nominees shall, by majority vote,
select a replacement agent, provided that such replacement agent
shall be:
(a) an arm's length third party to each of the Parties and each
of the Distributees;
(b) not be providing services to any of the Parties or any of
the Distributees; and
(c) a chartered accountant duly licensed to practice in the
province of Ontario.
If any of the Company, Red Brook or Deluxe should fail to
nominate a person to select a replacement agent, the persons
nominated by the other such parties shall be entitled to select a
replacement agent otherwise in accordance with this section 5.4.
Failing the selection of a replacement agent in accordance
with this section 5.4, this Agreement shall terminate.
ARTICLE VI
OTHER MATTERS
6.1 Governing Law. This Agreement shall be governed by the laws
of the province of Ontario and the laws of Canada applicable
therein. The parties hereby agree that any judicial proceeding
arising out of or relating to this Agreement shall be brought
exclusively in the Ontario Superior Court of Justice, and the
parties hereby irrevocably submit to the exclusive jurisdiction
of such courts and waive any objection they may have to the venue
of such courts.
6.2 Application to Court. The Agent may apply to a court at any
time and from time to time for advice and direction with any
aspect of this Agreement and the performance of any of its duties
and responsibilities hereunder.
6.3 No Third Party Rights. This Agreement is made solely for
the benefit of the parties to this Agreement and their respective
permitted successors and assigns, and no other person or entity
shall have or acquire any right by virtue of this Agreement
unless otherwise agreed to by all the parties hereto.
6.4 Authority to Sign. Each of the parties herein represents
and warrants that the execution, delivery, and performance of
this Agreement has been duly authorized and signed by a person
who meets statutory or other binding approval to sign on behalf
of its business organization as named in this Agreement. Red
Brook further represents and warrants that it is duly authorized
to enter into this Agreement, and all documents entered into
pursuant thereto, on behalf of itself and all other
Debentureholders. The Agent will be able to perform its
obligations under this Agreement once the Agent has received a
fully executed agreement.
6.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument. Counterparts may
be executed in original or facsimile form and the parties may
adopt any signature received by a facsimile name as original
signatures of the parties.
6.6 Notices. All notices between the parties shall be in
writing. Notices delivered personally 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 Company or Visual Canada shall be given to:
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Executive Officer
Fax Number: 000-000-0000
All notices to the Agent shall be given to:
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Fax Number: 000-000-0000
E-Mail Address: xxxxxxx@xxx.xx
All notices to Red Brook shall be given to:
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention : Xxxx Xxxxxxx
Fax Number : 000-000-0000
E-Mail Address: xxxxxxx@xxxxxxxxxxxxxx.xxx
with a copy to:
Soho Financial, a division of 1061569 Ontario Limited
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx Xxxxxxxxx
Fax Number: 000-000-0000
E-Mail Address: xx@xxxxxxxxxxxxxx.xxx
All notices to Deluxe shall be given to:
Deluxe Laboratories
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Fax Number: 000-000-0000
and to:
Deluxe Media Services
000 Xxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxxx
00000
Attention: President
Fax Number: 000-000-0000
6.7 Independent Contractor. The Agent is an independent
contractor. The Company has no authority to bind the Agent to
any agreement or obligation.
6.8 Authority of Company. This Agreement relates only to the DR
Account and the Non DR Account and the distribution of the
amounts therein, and nothing in this Agreement provides any party
thereto other than the Company with the authority to make any
decisions respecting the conduct of the Company's business,
affairs and operations.
6.9 No Assignment. No party shall assign any part or all of
this Agreement and any attempt to assign, in violation of this
section is void in each instance; provided, however, that the
Agent may assign its obligations under this Agreement to an
affiliate that controls, is controlled, or is under common
control with the Agent.
6.10 Currency. All dollar amounts set out herein shall be in
United States Dollars (US$) unless otherwise stated.
6.11 Fees. The Company will pay the Agent's attorneys' fees and
costs in connection with this Agreement and any claims, suits,
costs or otherwise related hereto.
[SIGNATURE PAGE FOLLOWS]
In witness whereof, the parties hereto have executed this
Agreement as of the day and year first above written.
VISUAL BIBLE INTERNATIONAL, INC.
By:
(Authorized Signing Officer)
VISUAL BIBLE INTERNATIONAL(CANADA) INC.
By:
(Authorized Signing Officer)
RED BROOK DEVELOPMENTS LIMITED in its capacity as a holder of A
Units of the Company and on behalf of the A Unit
Debentureholders, and in its capacity as a holder of B Units and
on behalf of the B Unit Debentureholders, and not in any other
capacity
Per: ______________________________
(Authorized Signing Officer)
DELUXE MEDIA SERVICES, INC.
Per: ______________________________
(Authorized Signing Officer)
DELUXE LABORATORIES, INC.
Per: ______________________________
(Authorized Signing Officer)
DELUXE TORONTO LTD.
Per: ______________________________
(Authorized Signing Officer)
SHINER XXXXX INC.
Per: ______________________________
(Authorized Signing Officer)
SCHEDULE "A"
"A" Unit Debenture Distributees Names and Description of
Distributable Amounts
"A" Unit Debenture $6,533,645
Subject to the paragraph immediately following this paragraph,
for Direct Response Sales, the Agent shall calculate the weekly
distribution to the A Unit Debentureholders by taking the
aggregate number of Units sold in respect of which payment has
been received times the aggregate sale price for each Unit, less
applicable taxes, shipping and handling, and returns, times the
applicable A Unit Proceed Percentage (the "A Unit Payment
Amount") and pro rate such amount among the A Unit
Debentureholders in the manner set out in this Schedule A.
Notwithstanding the foregoing or anything in the Debentures to
the contrary, if the price per Unit on any Direct Response Sales
is less than US$39.95 per Unit (unless such sale is in respect of
the sale of more than 1 Unit to the same purchaser and at least 1
Unit is sold for $39.95), and except if the Unit sales were made
to the Canadian Bible Society at $27.00 per Unit or more, the A
Unit Payment Amount shall be calculated by taking the number of
Units sold in respect of which payment has been received times
the sale price for each Unit, less applicable taxes, shipping and
handling, and returns, times fifty percent (50%) times: (i)
seventy-five percent (75%) until receipt by the Agent of the A
Unit Principal Repayment Notice (as such term is hereinafter
defined); (ii) twenty-five percent (25%) until receipt by the
Agent of the B Unit Principal Repayment Notice (as such term is
hereinafter defined); and, (iii) seventy-five percent (75%) until
receipt by the Agent of the A Unit Repayment Notice (as such term
is hereinafter defined) (collectively the "A Unit Flip").
The "A Unit Proceed Percentage" shall be calculated as follows:
(i) twenty-six percent (26%) for sales of Units for which
payment has been received by the Company up to the sale of
120,000 of such Units;
(ii) thirty-six percent (36%) for sales of Units for which
payment has been received by the Company from the sale of 120,001
to 200,000 of such Units;
(iii) twenty-eight percent (28%) for sales of Units for which
payment has been received by the Company from the sale of 200,001
to 250,000 of such Units;
(iv) twenty-seven percent (27%) for sales of Units for which
payment has been received by the Company from the sale of 250,001
of such Units until receipt by the Agent of a certificate from
the Company and Red Brook that each A Unit Debentureholder has
received an aggregate amount equal to the Maximum Principal
Amount (as defined in the A Unit Debentures) of such A Unit
Debentureholder's debenture (the "A Unit Principal Repayment
Notice");
(v) zero percent (0%) for sales of Units for which payment has
been received by the Company from receipt by the Agent of the A
Unit Principal Repayment Notice until receipt by the Agent of a
certificate from the Company and Red Brook that each B Unit
Debentureholder has received an aggregate amount equal to the
original principal amount of such B Unit Debentureholder's
debenture (the "B Unit Principal Repayment Notice"); and
(vi) thirty percent (30%) for sales of Units for which payment
has been received by the Company from receipt by the Agent of the
B Unit Principal Repayment Notice until receipt by the Agent of a
certificate from the Company and Red Brook that any and all
amounts due under the A Unit Debentures have been paid in full
including any accrued but unpaid Royalty (as such term is defined
in the A Unit Debentures) (the "A Unit Repayment Notice").
As of and including March 31, 2004, 102,404 Units have been sold
for which payment has been
received by the Company.
Notwithstanding the above, that during the period from the date
of this Agreement to March 31, 2004 and for the months of April,
May, June and July 2004, the A Unit Debentureholders shall only
be entitled to receive the following:
(i) if 25,000 Units or less are sold by the Company in any
calendar month, the A Unit Debentureholders shall receive fifty
percent (50%) of the A Unit Payment Amount;
(ii) if more than 25,000 Units but less than 35,000 Units are
sold by the Company in any calendar month, the A Unit
Debentureholders shall receive:
(A) fifty percent (50%) of the A Unit Payment Amount for the
first 25,000 Units; and
(B) seventy-five percent (75%) of the A Unit Payment Amount for
the next 10,000 Units;
(iii) if more than 35,000 Units but less than 45,000 Units
are sold by the Company in any calendar month, the A Unit
Debentureholders shall receive:
(A) fifty percent (50%) of the A Unit Payment Amount for the
first 25,000 Units;
(B) seventy-five percent (75%) of the A Unit Payment Amount for
the next 10,000 Units; and
(C) one hundred percent (100%) of the A Unit Payment Amount for
all Units sold that exceed 35,000 Units; and
(iv) if more than 45,000 Units are sold by the Company in any
calendar month, the A Unit Debentureholders shall receive the
full A Unit Payment Amount;
There shall be added to the A Unit Payment Amount:
(i) any amounts which are payable on account of the A Unit
Payment Amount in any prior period;
(ii) any amounts which are required to be paid under Schedule D
hereunder;
(iii) seventy-five percent (75%) of the two payments of
$50,000 required to be paid to the Debentureholders under Section
7.1(h) of the Second Forbearance Agreement; and,
(iv) seventy-five percent (75%) of the amount of $400,000
required to be paid to the Debentureholders under Section
7.1(j)(ii) of the Second Forbearance Agreement;
only to the extent such amounts are not paid on the dates and in
the amounts required to be paid as provided for under this
Agreement and under Section 7.1(h), section 7.1(j) and Section
7.1(p) of the Second Forbearance Agreement.
For greater certainty, from and after July 31, 2004, the A Unit
Debentureholders shall be entitled to receive the full A Unit
Payment Amount.
Nothing herein shall be construed as a waiver of a default or
Event of Default (as defined in the Second Forbearance Agreement)
arising from such non-payment under the Second Forbearance
Agreement.
Initial
Pro-rata
Capital
Share
1
Red Brook Developments Limited
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxx Xxxxxxx
$5,151,937.00
78.852%
AGF Group
2
AGF Growth Equity Fund
c/o AGF Management Limited
31st and 32nd Floor, TD Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
$354,800.00
5.430%
3
GWL Growth Equity Fund
c/o AGF Management Limited
31st and 32nd Floor, TD Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
$29,600.00
0.453%
4
London Life Growth Equity Fund
c/o AGF Management Limited
31st and 32nd Floor, TD Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
$45,000.00
0.689%
5
IG AGF Diversified Growth Fund
c/o AGF Management Limited
31st and 32nd Floor, TD Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
$65,200.00
0.998%
6
IG AGF Diversified Growth Class
c/o AGF Management Limited
31st and 32nd Floor, TD Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxx
$400.00
0.006%
7
Augusta Holding Inc.
00 Xx. Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx Xxxxxxxxxx
$250,000.00
3.826%
8
Xxxx Xxxxxxx Limited
000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx. Xxxx Xxxxxxx
$250,000.00
3.826%
9
Mr. Art Kleinstein
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
00000
$50,000.00
0.765%
10
Xx. Xxxx Xxxxxx
00 Xxxxxxxxx
Xxxxxxx Xxx Xxxxxxx, Xxxxxx
X0X 0X0
$50,000.00
0.765%
11
Xxx. Xxxxxxx Xxxxxxx
c/o Soho Financial
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
$50,000.00
0.765%
12
Xx. Xxxxxxx Maznic
Zivojin Maznic
0000-000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
$50,000.00
0.765%
13
Xx. Xxxxxx Steels
00 Xxxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxx
X0X 0X0
$5,000.00
0.077%
14
Xx. Xxxxxx Xxxxxxxxxx
00 Xx. Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
$5,000.00
0.077%
15
New Century Investment Holdings Ltd.
c/o Longbar Nominees Limited
4th Floor, Jardine House
00 Xxxx Xxxxxx
Xxxxxxxx, XX00
Xxxxxxx
Xxxxxxxxx: Xx. Xxxxx Xxxxxxx
$176,708.00
2.705%
Total A's (pre-interest and royalties)
$6,533,645.00
100.000%
The first $250,000 of all amounts due to Debentureholders
pursuant to sections 2.4 and 3.3 of this Agreement shall be paid
by the Agent to Osler, Xxxxxx & Harcourt LLP, in trust for the
Debentureholders.
SCHEDULE "X"
"X" Unit Debenture Distributees Names and Description of
Distributable Amounts
"B" Unit Debenture $8,500,000
Subject to the paragraph immediately following this paragraph,
for Direct Response Sales, the Agent shall calculate the weekly
distribution to the B Unit Debentureholders by taking the
aggregate number of Units sold in respect of which payment has
been received times the aggregate sale price for each Unit, less
applicable taxes, shipping and handling, and returns, times the
applicable B Unit Proceed Percentage (the "B Unit Payment
Amount") and pro rate such amount among the B Unit
Debentureholders in the manner set out in this Schedule B.
Notwithstanding the foregoing or anything in the Debentures to
the contrary, if the price per Unit on any Direct Response Sale
is less than US$39.95 per Unit (unless such sale is in respect of
the sale of more than 1 Unit to the same purchaser and at least 1
Unit is sold for $39.95), and except if the Unit sales were made
to the Canadian Bible Society at $27.00 per Unit or more, the B
Unit Payment Amount shall be calculated by taking the number of
Units sold in respect of which payment has been received times
the sale price for each Unit, less applicable taxes, shipping and
handling, and returns, times fifty percent (50%) times: (i)
twenty-five percent (25%) until receipt by the Agent of the A
Unit Principal Repayment Notice; (ii) seventy-five percent (75%)
until receipt by the Agent of the B Unit Principal Repayment
Notice; (iii) twenty-five percent (25%) until receipt by the
Agent of the A Unit Repayment Notice; and, (iv) one hundred
percent (100%) until receipt by the Agent of the B Unit Repayment
Notice (as such term is hereinafter defined) (collectively the "B
Unit Flip").
The "B Unit Proceed Percentage" shall be calculated as follows:
(i) six percent (6%) for sales of Units for which payment has
been received by the Company up to the sale of 120,000 of such
Units;
(ii) nine percent (9%) for sales of Units for which payment has
been received by the Company from the sale of 120,001 to 250,000
of such Units;
(iii) fifteen percent (15%) for sales of Units for which payment
has been received by the Company from the sale of 250,001 of such
Units until receipt by the Agent of a certificate from the
Company and Red Brook that an amount equal to the aggregate of
the Maximum Principal Amounts (as defined in the A Unit
Debentures) has been paid to the A Unit Debentureholders (the "A
Unit Recoupment Notice");
(iv) thirty-five percent (35%) for sales of Units for which
payment has been received by the Company from receipt by the
Agent of the A Unit Recoupment Notice until receipt by the Agent
of a certificate from the Company and Red Brook that the B Unit
Debentureholders have been paid an aggregate amount equal to the
aggregate of the Principal Amounts (as defined in the B Unit
Debentures) under the B Unit Debentures (the "B Unit Recoupment
Notice");
(v) zero percent (0%) for sales of Units for which payment has
been received by the Company from receipt by the Agent of the B
Unit Recoupment Notice until receipt by the Agent of the A Unit
Repayment Notice (the "Trigger Date"); and
(vi) twenty-five percent (25%) for sales of Units for which
payment has been received by the Company from the Trigger Date
until such time as any and all amounts of accrued but unpaid
Interest and the B Unit Accrued Royalties due under the B Unit
Debentures have been paid in full (the "B Unit Repayment
Notice").
As of and including March 31, 2004, 102,404 Units have been sold
for which payment has been received by the Company.
Notwithstanding the above, that during the period from the date
of this Agreement to March 31, 2004 and for the months of April,
May, June and July 2004, the B Unit Debentureholders shall only
be entitled to receive the following:
(i) if 25,000 Units or less are sold by the Company in any
calendar month, the B Unit Debentureholders shall receive fifty
percent (50%) of the B Unit Payment Amount;
(ii) if more than 25,000 Units but less than 35,000 Units are
sold by the Company in any calendar month, the B Unit
Debentureholders shall receive:
(A) fifty percent (50%) of the B Unit Payment Amount for the
first 25,000 Units; and
(B) seventy-five percent (75%) of the B Unit Payment Amount for
the next 10,000 Units;
(iii) if more than 35,000 Units but less than 45,000 Units
are sold by the Company in any calendar month, the B Unit
Debentureholders shall receive:
(A) fifty percent (50%) of the B Unit Payment Amount for the
first 25,000 Units;
(B) seventy-five percent (75%) of the B Unit Payment Amount for
the next 10,000 Units; and
(C) one hundred percent (100%) of the B Unit Payment Amount for
all Units sold that exceed 35,000 Units; and
(iv) if more than 45,000 Units are sold by the Company in any
calendar month, the B Unit Debentureholders shall receive the
full B Unit Payment Amount;
There shall be added to the B Unit Payment Amount:
(i) any amounts which are payable on account of the B Unit
Payment Amount in any prior period; and
(ii) any amounts which are required to be paid under Schedule D
hereunder;
(iii) twenty-five percent (25%) of the two payments of
$50,000 required to be paid to the Debentureholders under Section
7.1(h) of the Second Forbearance Agreement; and,
(iv) twenty-five percent (25%) of the amount of $400,000 required
to be paid to the Debentureholders under Section 7.1(j)(ii) of
the Second Forbearance Agreement;
only to the extent such amounts are not paid on the dates and in
the amounts required to be paid as provided for under this
Agreement and under Section 7.1(h), section 7.1(j) and Section
7.1(p) of the Second Forbearance Agreement.
Nothing herein shall be construed as a waiver of a default or
Event of Default (as defined in the Second Forbearance Agreement)
arising from such non-payment under the Second Forbearance
Agreement.
For greater certainty, from and after July 31, 2004, the B Unit
Debentureholders shall be entitled to receive the full B Unit
Payment Amount.
Initial
Pro-rata
Capital
Share
1
Red Brook Developments Limited
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxx Xxxxxxx
$2,000,000.00
23.529%
2
Westdale Construction Co. Limited
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxx or Xx. Xxx Xxxx
$1,500,000.00
17.647%
3
The Xxxx Xxxxx Investment Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention : Mr. Xxxxx Xxxxx
$4,400,000.00
51.765%
4
Xx. Xxxxxx Grad
c/o Leisure World, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
$100,000.00
1.176%
5
Mr. Art Kleinstein
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
00000
$50,000.00
0.588%
6
Xx. Xxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx
00000
$100,000.00
1.176%
7
Xx. Xxxxxxx Xxxxxx
00 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
$100,000.00
1.176%
8
Xx. Xxxxxxx Glow
c/o 000-000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx
X0X 0X0
$100,000.00
1.176%
9
Xx. Xxxx Xxxxxx
00 Xxxxxxxxx
Xxxxxxx Xxx Xxxxxxx, Xxxxxx
X0X 0X0
$50,000.00
0.588%
10
Inglewood Holdings Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxxx
$100,000.00
1.176%
Total B's (pre-interest and royalties)
$8,500,000.00
100.000%
The first $250,000 of all amounts due to Debentureholders
pursuant to sections 2.4 and 3.3 of this Agreement shall be paid
by the Agent to Osler, Xxxxxx & Harcourt LLP, in trust for the
Debentureholders.
SCHEDULE "C"
The Agent shall calculate the weekly distribution to each of the
Distributees listed below by taking the number of Units sold (or,
in respect of Film Finances, Inc. only, the number of Units sold
in North America) in respect of which payment has been received
times the respective Unit royalty rate set out below. The
Distributees listed below shall not receive more than the
respective amount which is owing as of and including March 28,
2004 as listed below ("Maximum Cumulative Amount").
Amount
Unit Royalty
Owing Rate
Media
000 Xxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxxx
00000
Attention: President
$171,137.00
$0.501
Labs
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
$199,637.00
$0.501
Film Finances, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx
00000
Attention: Xx. Xxxxx Xxxxxxxxx
$366,550.00 plus interest
$1.001
1 The total amount to be paid in each month to each of Media,
Labs and Film Finances, Inc. including amounts contemplated on
this Schedule and under (b)(i), (ii) and (iii) on Schedule E,
shall not exceed the sum of $50,000 in any month.
From and after the termination of the Second Forbearance
Agreement, if the Direct Response Sales exceeds 25,000 Units in
any month and Deluxe has not received the amounts to which is it
entitled under (c)(iii) and/or (c)(iv) of Schedule E, then the
Agent shall pay to Deluxe an amount equal to the least of:
(i) the aggregate of the amounts that Media has not received and
to which it was entitled under (c)(iii) of Schedule E and that
Labs has not received and to which it was entitled under (c)(iv)
of Schedule E;
(ii) an amount equal to the number of Units sold by Direct
Response Sales for the month in excess of 25,000 Units times the
sale price for each Unit, less applicable taxes, shipping and
handling, and returns, times twenty-five percent (25%); and
(iii) $50,000.00.
SCHEDULE "D"
The amounts to be paid pursuant to Section 3.3(d) shall be equal
to the aggregate of:
(1) $627,081 (the "Existing Arrears");
(2) any shortfall in any of the payments required to be made to
the Debentureholders under this Agreement;
(3) the aggregate amount that the Debentureholders have forborne
pursuant to Section 2.4(d) of this Agreement;
(4) $250,000 on account of professional fees incurred by Red
Brook on behalf of the Debentureholders in respect of any action
taken by the Debentureholders to recover any arrears or collect
any payments under the A Unit Debentures or the B Unit
Debentures; and
(5) the remaining outstanding professional fees, costs and
expenses of Red Brook which are due on or before September 30,
2004.
Provided however to the extent that:
(i) the two payments of $50,000 required to be paid to the
Debentureholders under Section 7.1(h) of the Second Forbearance
Agreement; and
(ii) the amount of $400,000 required to be paid to the
Debentureholders under Section 7.1(j)(ii) of the Second
Forbearance Agreement
are paid on the dates and in the amounts required to be paid as
provided for in the Second Forbearance Agreement such amounts
shall be deducted from the Existing Arrears.
Nothing herein shall be construed as a waiver of a default or
Event of Default (as defined in the Second Forbearance Agreement)
arising from such non-payment under the Second Forbearance
Agreement.
SCHEDULE "E"
The Agent shall calculate the weekly distribution to each of the
Distributees listed below as follows:
(a) first:
(i) to the A Unit Debentureholders:
(aa) for all Retail and Rentail Sales at $35.00 per Unit or more,
the A Unit Payment Amount;
(bb) for all Retail and Rentail Sales at less than $35.00 per
Unit, the amount obtained by taking the number of Units sold
times the sale price for each Unit times fifty percent (50%)
times the then applicable percentage set out in the A Unit Flip;
(cc) for all Other DVD Unit Sales at $39.95 per Unit or more, the
A Unit Payment Amount;
(dd) for all Other DVD Unit Sales at less than $39.95 per Unit,
the amount obtained by taking the number of Units sold times the
sale price for each Unit times fifty percent (50%) times the then
applicable percentage set out in the A Unit Flip;
(ee) the then applicable percentage set out in the A Unit Flip of
fifty percent (50%) of all Other Sales;
(ff) all amounts owing in respect of the Royalty (as such term is
defined in the A Unit Debentures); and,
(ii) to the B Unit Debentureholders;
(aa) for all Retail and Rentail Sales at $35.00 per Unit or more,
the B Unit Payment Amount;
(bb) for all Retail and Rentail Sales at less than $35.00 per
Unit, the amount obtained by taking the number of Units sold
times the sale price for each Unit times fifty percent (50%)
times the then applicable percentage set out in the B Unit Flip;
(cc) for all Other DVD Unit Sales at $39.95 per Unit or more, the
B Unit Payment Amount;
(dd) for all Other DVD Unit Sales at less than $39.95 per Unit,
the amount obtained by taking the number of Units sold times the
sale price for each Unit times fifty percent (50%) times the then
applicable percentage set out in the B Unit Flip;
(ee) the then applicable percentage set out in the B Unit Flip of
fifty percent (50%) of all Other Sales;
(ff) all amounts owing in respect of the B Unit Royalties (as
such term is defined in the B Unit Debentures); and,
(b) second, to the extent funds remain available for distribution
by the Agent from the Non DR Account after the distributions set
out in paragraph (a) above:
(i) to Film Finances, Inc., Media and Labs any amounts to which
they were previously entitled under clauses (ii) and (iii) of
paragraph (b) of this Schedule E, to the extent that they were
not previously paid;
(ii) to Film Finances, Inc., an amount equal to the number of
Units sold in North America times $1.00 to the Maximum Cumulative
Amount;2
(iii) Media, an amount equal to the number of Units sold
times $0.50 and to Labs, an amount an amount equal to the number
of Units sold times $0.50, in each case to the Maximum Cumulative
Amount;1.2
provided that, where funds available for distribution by the
Agent from the Non DR Account is insufficient to fully satisfy
the amounts set out in (b)(i) to (iii) above, the Agent will
calculate the amount then owed to such creditors and will prorate
the amount available for distribution against such amounts, and
(c) third, to the extent funds remain available for distribution
by the Agent from the Non DR Account after the distributions set
out in paragraphs (a) and (b) above:
(i) to Media the amounts to which it was previously entitled
under clause (iii) of paragraph (c) of this Schedule E, to the
extent they were not previously paid;
(ii) to Labs the amounts to which it was previously entitled
under clause (iv) of paragraph (c) of this Schedule E, to the
extent they were not previously paid;
(iii) to Media the amounts set forth in the cash flow budget
attached hereto for the applicable month to be paid to "Deluxe
Video" for "Manufacturing 2003", "Manufacturing 2004" and
"Deluxe Media Develop"; and
(iv) to Labs the amounts set forth in the cash flow budget
attached hereto for the applicable month to be paid to "Deluxe
Labs" for "Lab Services", "Loan - $125K; CGI - $150K" and "Deluxe
Media Fufilmt";
(d) fourth, to ThinkFilm LLC (0000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx, X0X 0X0, Attention: Xx. Xxxxx Xxxxx) an amount
equal to the number of Units sold in North America times $1.00 to
a maximum cumulative amount equal to $524,910;2.3
1 provided that, with respect to the first two deposits or
instalments to be made by Trinity Broadcasting Network on account
of the future delivery of Units, Deluxe shall be paid $1.25 (for
a total of $2.50) plus applicable taxes per Unit for which a
deposit or instalment has been received which amounts shall be
paid to Lang Xxxxxxxx LLP in trust and Lang Xxxxxxxx LLP shall
forward such amount to Deluxe upon shipment of such Units to
Trinity Broadcasting Network and written confirmation of receipt
of such Units from Trinity Broadcasting Network.
2 The total amount to be paid in each month to each of Media,
Labs, Film Finance, Inc. and ThinkFilm, LLC. including amounts
contemplated under Schedule C and under (b)(i), (ii) and (iii) of
this Schedule E, shall not exceed the sum of $50,000 in any
month.
3 Payments to ThinkFilm LLC to commence only upon the Agent's
receipt of a certificate from the Company that ThinkFilm LLC has
paid $495,000 to Royal Bank of Canada pursuant to an assignment
and direction agreement dated February 21, 2003 among The Book of
Xxxx, Inc., Royal Bank of Canada, ThinkFilm LLC and Film Finances
Canada (1998) Inc. and provided such payment is made before April
30, 2004.
Schedule "A"
Schedule "B"
Schedule "C"
Schedule "D"
Schedule "D"
Schedule "E"
Schedule "E"
