Exhibit 10.13
LAURUS MASTER FUND, LTD.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 30, 2004
Creative Vistas, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx-0-00
Xxxxxx, Xxxxxxx, X0X 0X0
Xxxxxx
Attn: Chief Financial Officer
Re: Restricted Account Release Provision: Restricted Account: Account
Number 2704053277, Account Name: Creative Vistas, Inc., maintained
at North Fork Bank (the "Restricted Account").
Reference is made to (i) that certain Securities Purchase Agreement, dated
as of September 30, 2004 (as amended, modified or supplemented from time to
time, the "Purchase Agreement"), by and between Creative Vistas, Inc., an
Arizona corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser") and (ii) that certain Restricted Account Agreement, dated as of
September 30, 2004 (as amended, modified or supplemented from time to time, the
"Restricted Account Agreement"), by and among the Company, Laurus and North Fork
Bank (the "Bank"). Capitalized terms used but not defined herein shall have the
meanings ascribed them in the Purchase Agreement or the Restricted Account
Agreement, as applicable. Pursuant to the Section 3.2 of the Purchase Agreement,
the Company is required to place $1,250,000 in the Restricted Account, and,
subject to the provisions of this letter, the Purchase Agreement and any Related
Agreement, maintain such amount in the Restricted Account for as long as the
Purchaser shall have any obligations outstanding under the Note and to assign
the Restricted Account for the benefit of the Purchaser as security for the
performance of the Company's obligations to the Purchaser.
The Purchaser and the Company desire to clarify certain aspects
regarding the use of funds contained in the Restricted Account, and for good
consideration, the receipt and sufficiency of which is here acknowledged, the
Company and the Purchaser agree that, so long as (i) no Event of Default then
exists or results from any such release, (ii) the initial Registration Statement
referred to, and defined, in the Registration Rights Agreement has become
effective and (iii) the provision by the Company to the Purchaser of evidence
reasonably satisfactory to the Purchaser (including financial statements and
calculations, if requested by the Purchaser) that either the 100% Milestone
Achievement Date (as defined below) has occurred or the 75% Milestone
Achievement Date has occurred, the Purchaser shall direct the Bank, pursuant to
a Release Notice (as defined in the Restricted Account Agreement), to wire an
amount of funds equal to the appropriate Milestone Release Amount (as defined
below) from the Restricted Account to such bank account as the Company may
direct the Purchaser in writing. For the purpose of this letter, (A) the "100%
Milestone Achievement Date" means that (I) the consolidated revenues for the
last twelve completed calendar months of the Company and its Subsidiaries equals
or exceeds CAD $16,000,000 and (II) the consolidated cash flow of the Company
and its Subsidiaries for the last twelve completed calendar months (prior to
giving effect to (the following clauses (x) through (z) inclusive, collectively,
the "Transaction Expenses") (x) up to $75,000 of costs and expenses associated
with the acquisition transaction among the Company, its stockholders, Creative
Vistas, Inc. and certain of its stockholders, (y) the payment of the closing
payments referred to in each of Section 2(b) of the Purchase Agreement and
Section 5(b)(i) of the Security Agreement and (z) interest expense incurred by
the Company under the Note, any Minimum Borrowing Note (as defined in the
Security Agreement) and the Revolving Note (as defined in the Security
Agreement), solely to the extent that such interest is paid by the Company in
shares of Common Stock of the Company in accordance with the terms of the
respective note), is greater than $0, (II) the "75% Milestone Achievement Date"
means the date on which (A) the consolidated revenues for the last twelve
completed calendar months of the Company and its Subsidiaries equals or exceeds
CAD $14,400,000 and (B) the consolidated cash flow of the Company and its
Subsidiaries (prior to giving effect to the Transaction Expenses) for the last
twelve completed calendar months, is greater than $0 and (III) the "Milestone
Release Amount" shall mean (A) in the case of the 100% Milestone Achievement
Date, the entire amount of the funds contained in the Restricted Account on such
date and (B) in the case of the 75% Milestone Achievement Date, seventy five
percent (75%) of the funds contained in the Restricted Account on such date.
Upon repayment or conversion of any funds held in the Restricted Account in
accordance with the terms of the Purchase Agreement and the Related Agreements,
the Company shall be released from its obligations to maintain such funds in the
Restricted Account. For purposes of this letter agreement, consolidated cash
flow of the Company and its Subsidiaries (prior to giving effect to the
Transaction Expenses) shall mean cash flow from operations (without giving
effect to Transaction Expenses) as reported on the Statement of Cash Flows of
the Company (the form and substance of which shall be satisfactory to the
Purchaser). In the event the 75% Milestone Achievement Date occurs and 75% of
the funds contained in the Restricted Account on such date are paid to the
Company, unless earlier paid or converted, the remaining funds in the Restricted
Account shall be paid to the Company in the event that the 100% Milestone
Achievement Date subsequently occurs. .
Furthermore, so long as the Amortizing Principal Amount (as defined in the
Note) at such time has been reduced (through conversions or otherwise) to $0,
promptly following any conversion of a Monthly Principal Amount (as defined in
the Note) or such other Principal Amounts into Common Stock of the Company (such
event, a "Conversion"), the Purchaser shall direct the Bank, pursuant to a
Release Notice (as defined in the Restricted Account Agreement), to wire an
amount of funds equal to the corresponding dollar amount by which the aggregate
Principal Amount of the Note has been reduced pursuant to such a Conversion from
the Restricted Account to such bank account as the Company may direct the
Purchaser in writing.
This letter may not be amended or waived except by an instrument in
writing signed by the Company and the Purchaser. This letter may be executed in
any number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
signature page of this letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof or thereof, as the case may
be. This letter shall be governed by, and construed in accordance with, the laws
of the State of New York. This letter sets forth the entire agreement between
the parties hereto as to the matters set forth herein and supersede all prior
communications, written or oral, with respect to the matters herein.
* * * *
If the foregoing meets with your approval please signify your acceptance of the
terms hereof by signing below. Signed,
LAURUS MASTER FUND, LTD.
By:/s/ Xxxxx Grin
---------------------------------
Name: Xxxxx Grin
Title:
Agreed and Accepted this 30th day of September, 2004.
CREATIVE VISTAS, INC.
By:/s/ Xxxxx Xxxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: CEO
