AGREEMENT
EXHIBIT
10.5
AGREEMENT
THIS
AGREEMENT
is made
as of December 31, 2005 between Cancable Inc., an Ontario corporation
(“Cancable
Canada”),
Cancable Holding Corp., a Delaware Corporation (“Cancable
Parent”),
and
Cancable, Inc., a Nevada corporation, (“Cancable
Subsidiary”)
Creative Vistas, Inc., an Arizona corporation (“CVAS”)
and
Laurus Master Fund, Ltd., (“Laurus”).
WHEREAS,
Cancable Parent has issued an Option (as amended, modified or supplemented
from
time to time, the “Option”)
to
Laurus to purchase up to 49% of the common stock of Cancable Parent (subject
to
adjustment as set forth therein).
NOW
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
| 1. |
Unanimous
Shareholders Agreement.
Forthwith following the exercise of the Option in whole or in part
pursuant to Section 1.1 of the Option, each of Cancable Parent, Creative
Vistas, Inc. and Laurus agree to negotiate in good faith the terms
of a
unanimous shareholder agreement mutually agreeable to each of them,
which
unanimous shareholder agreement shall at a minimum set forth the
requirement for Laurus to consent to those matters described in Section
3
hereof and addressing other matters typical of a unanimous shareholder
agreement such as governance and transfer
restrictions.
|
| 2. |
Dividend.
Within 30 days of the end of each fiscal quarter following the later
of
(i) the exercise of the Option in whole or in part and (ii) payment
in full to Laurus of all amounts (including interest) owing and
outstanding under the Secured Term Note executed by Cancable Inc. in
the
aggregate principal amount of USD6,865,000 dated the date hereof (the
“Secured
Term Note”)
(it being acknowledged and agreed that failure to pay any amount owing
and
outstanding under the Secured Term Note when due will not operate or
otherwise serve to delay payment of the dividend contemplated hereby),
Cancable Parent (to the extent permitted by applicable law) shall,
and
shall cause each of Cancable Canada and Cancable Subsidiary, to declare
and pay a dividend to each of its common stockholders, equal to 50%
of (A)
the net operating cashflow generated by the respective company for
such
fiscal quarter (calculated (1) in accordance with US GAAP, (2) in a
manner
consistent with prior fiscal periods, (3) in a manner reasonably
acceptable to Laurus and, for greater certainty, (4) without deduction
for
capital expenditures) less (B) capital expenditures made by the respective
company in such fiscal quarter (to a maximum of 25% of the net operating
cash flow calculated in accordance with clause (A)). In the event that
Cancable Parent establishes or acquires any direct or indirect subsidiary
after the date hereof, Cancable Parent shall also cause such subsidiary
to
declare and pay a dividend to each of its common stockholders, equal
to
50% (A) the net operating cashflow generated by such subsidiary for
such
fiscal quarter (calculated (1) in accordance with US GAAP, (2) in a
manner
consistent with prior fiscal periods, (3) in a manner reasonably
acceptable to Laurus and, for greater certainty, (4) without deduction
for
capital expenditures) less (B) capital expenditures made by such
subsidiary in such fiscal quarter (to a maximum of 25% of the net
operating cash flow calculated in accordance with clause
(A)).
|
| 3. |
Material
Decisions.
Until such time as Laurus and its affiliates no longer hold common
shares
representing 5% or more of the outstanding common shares of Cancable
Parent (or securities representing the right to acquire 5% or more
of the
outstanding common shares of Cancable Parent), each of Cancable Parent,
Cancable Canada and Cancable Subsidiary shall neither implement or
effect
(or otherwise resolve or agree to implement or effect), nor in any
manner
cause or permit any of their respective subsidiaries to implement or
effect (or otherwise resolve or agree to implement or effect) any of
the
following actions without the prior approval of Laurus (which approval
shall not be unreasonably withheld)
and CVAS shall neither implement or effect (or otherwise resolve or
agree
to implement or effect) the action set forth in paragraph (j) below,
nor
cause or permit Cancable Parent, Cancable Canada, Cancable Subsidiary
or
any of their respective subsidiaries to implement or effect (or otherwise
resolve to implement or effect) any of the following actions without
the
prior approval of Laurus (which shall not be unreasonably
withheld):
|
| (a) |
except
as contemplated by this Agreement, (i) declare or pay any dividends
or
make any other distribution in respect of any securities of each of
Cancable Parent, Cancable Canada and Cancable Subsidiary, and (ii)
make
any distribution of any nature (including repayment of loans) to any
person not acting at arm’s length with Cancable Parent, Cancable Canada
and/or Cancable Subsidiary or any of their respective shareholders
other
than, in each case, contributions to the corporate expenses and overhead
of CVAS not to exceed, when aggregated with all distributions made
to CVAS
contemplated by this paragraph (a) and all management services and
analogous fees paid to CVAS, Cdn.$350,000 per
annum;
|
| (b) |
sell
or dispose of any assets or property by Cancable Parent, Cancable Canada
and/or Cancable Subsidiary during any fiscal year in which any amount
remains outstanding under the Secured Term Note (whether in one or
more
transactions) in contravention of the provisions of the Secured Term
Note
and in any fiscal year thereafter (whether in one or more transactions)
with an aggregate book value in excess of $
Cdn.250,000;
|
| (c) |
make
or commit to make during any fiscal quarter, capital expenditures
exceeding, in the aggregate, 25% of the net operating cash flow of
the
company for such fiscal quarter (calculated in accordance with section
2
of this Agreement);
|
| (d) |
establish,
acquire or otherwise become an equity holder (including, for greater
certainty, a holder of securities convertible into equity) in any
corporate entity or any partnership, equity joint venture or similar
arrangements;
|
| (e) |
hire
any employee whose annual remuneration exceeds Cdn.$300,000 per annum
(inclusive of all benefits), or amend, terminate or otherwise alter
or
waive the terms of any employment, consulting or management contract
with
respect to an individual whose annual remuneration exceeds that
amount;
|
| (f) |
enter
into any transactions outside the ordinary course with officers, directors
or employees or members of their families or other persons with whom
they
do not act at arm’s length;
|
| (g) |
enter
into (other than in the ordinary course to fund working capital needs)
or
materially modify any credit facility;
|
| (h) |
create
any mortgage, lien, charge or other form of encumbrance with respect
to
any of the assets of Cancable Parent, Cancable Canada and/or Cancable
Subsidiary or their respective subsidiaries other than for the benefit
of
Laurus and other than Permitted Liens within the meaning ascribed thereto
in Schedule A hereto;
|
-2-
| (i) |
materially
alter the fundamental nature of the business of Cancable Parent, Cancable
Canada and/or Cancable Subsidiary (other than in a manner consistent
with
the fundamental business presently undertaken by CVAS) or otherwise
engage
in other businesses or activities that are not incidental to the
businesses or activities presently undertaken by Cancable Parent, Cancable
Canada and/or Cancable Subsidiary;
|
| (j) |
enter
into any agreement with a term in excess of one year which contemplates
the payment by Cancable Parent, Cancable Canada and/or Cancable Subsidiary
of more than Cdn.$750,000 in the aggregate during its
term;
|
| (k) |
issue
or sell any of the share in the capital of, or any rights, warrants
or
securities convertible into or exercisable or exchangeable for any
share
in the capital of, Cancable Parent, Cancable Canada and/or Cancable
Subsidiary, including by way of initial public
offering;
|
| (l) |
purchase
any of the shares in the capital of Cancable Parent, Cancable Canada
and/or Cancable Subsidiary, except pursuant to the exercise of any
retraction or redemption right which attached to such shares in the
capital of Cancable Parent, Cancable Canada and/or Cancable
Subsidiary;
|
| (m) |
wind
up, dissolve or liquidate Cancable Parent, Cancable Canada and/or Cancable
Subsidiary;
|
| (n) |
continue
under the laws of another jurisdiction of Cancable Parent, Cancable
Canada
and/or Cancable Subsidiary;
|
| (o) |
change
the fiscal year of Cancable Parent, Cancable Canada and/or Cancable
Subsidiary (other than the change in fiscal year to December 31 currently
contemplated); or
|
| (p) |
amend
the articles or by-laws of Cancable Parent, Cancable Canada and/or
Cancable Subsidiary in such a manner as to adversely affect the interests
of Laurus.
|
| 4. |
Term
of Agreement.
This Agreement shall be effective for so long as Laurus holds the Option
or any portion thereof or any shares of the common stock of Cancable
Parent acquired upon the exercise of the Option in whole or in
part.
|
| 5. |
Governing
Law.
This Agreement shall be governed by and construed and enforced in all
respects in accordance with the laws of the Province of Ontario and
the
Federal laws of Canada.
|
***
THE BALANCE OF THIS PAGE INTENTIONALLY BLANK.
SIGNATURE
PAGES TO FOLLOW ***
-3-
| 6. |
Counterparts.
This Agreement may be executed in one or more counterparts, each of
which
shall be deemed an original and all of which when taken together shall
constitute one and the same agreement. Any signature delivered by a
party
by facsimile transmission or by sending a scanned copy by electronic
mail
shall be deemed an original signature
hereto.
|
CANCABLE
HOLDING CORP.
Per:
/s/
Xxxxx
Xxxxxxxxxx
Name:
Xxxxx
Xxxxxxxxxx
Title:
Chairman
and CEO
Per:
Name:
Title:
CANCABLE
INC.
Per:
/s/
Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
President
Per:
Name:
Title:
CANCABLE,
INC.
Per:
/s/
Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
President and Secretary
Per:
Name:
Title:
-4-
CREATIVE
VISTAS, INC.
Per:
/s/
Xxxxx
Xxxxxxxxxx
Name:
Xxxxx
Xxxxxxxxxx
Title:
Per:
Name:
Title:
LAURUS
MASTER FUND, LTD.
Per:
/s/
Xxxxx
Grin
Name:
Xxxxx Grin
Title:
Director
Per:
Name:
Title:
-5-
DEFINITIONS
“Permitted
Liens”
means
(a) liens for taxes not yet due and payable; (b) mechanics’,
materialmans’, suppliers’, vendors’ or similar liens arising in the ordinary
course of business securing amounts which are not delinquent and for which
adequate reserves are kept on the financial statements and books and records
of
the appropriate person; and (c) liens created pursuant to equipment leases
entered into in the ordinary course of business which encumber the property
which is the subject of the lease.
