WARRANT CANCELLATION AGREEMENT
Exhibit
10.1
This
WARRANT CANCELLATION AGREEMENT, dated as of February 11, 2010 (this
“Agreement”), by and
among PERVASIP COPORATION (f/k/a eLEC Communications Corp.), a New York
corporation (the “Company”), VALENS OFFSHORE SPV
I, LTD, a Cayman Islands company (“Valens Offshore I”), VALENS
OFFSHORE SPV II., CORP., a Delaware corporation (“Valens Offshore II”), and
Valens U.S. SPV I, LLC, a Delaware limited liability company (“Valens US” and together with
Valens Offshore I and Valens Offshore II, collectively, the “Holders” and each a “Holder”).
RECITALS
WHEREAS,
each of the Holders currently owns warrants to purchase that number of shares of
Common Stock, par value $.10 per share, of the Company, as more fully set forth
on Annex I hereto (the “Existing
Warrants”);
WHEREAS,
the Holders have entered into two Warrant Transfer Agreements, each dated as of
the date hereof, pursuant to which each of Laurus Master Fund, Ltd. (In
Liquidation) (“Laurus”)
and PSource Structured Debt Limited, a Guernsey company (“PSource”), have, subject to
the terms set forth therein, agreed to assign certain Common Stock Purchase
Warrants issued by the Company (the “Assigned Warrants” and
together with the Existing Warrants, the “Warrants”) to the
Holders;
WHEREAS,
the Company has advised the Holders that, subject to the terms of a Term Sheet
dated as of February 2, 2010, by and between the Company and Xxxxx Xxxxxx, the
Company will obtain equity financing from an investor group led by Xxxxx Xxxxxx
(the “Investor Group”)
in incremental amounts of $50,000 (each an “Incremental Investment”) and
up to an aggregate amount of $300,000 (the “Equity Financing”);
and
WHEREAS,
it is a condition to the Equity Financing that the Holders and the Company
execute this Agreement.
NOW,
THEREFORE, in consideration of the above and the additional liquidity to be
provided to the Company pursuant to the Equity Financing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE
1
Cancellation
of Warrants
Each
Holder hereby agrees to execute and deliver a Cancellation of Warrant to the
Company substantially in the form attached hereto as Annex II upon receipt of
satisfactory evidence of each Incremental Equity Investment, in each case with
respect to the portion of the Warrants for each such Holder set forth on Annex
III hereto.
1
ARTICLE
2
Representations
and Warranties of Holders
Each
Holder severally and not jointly represents and warrants to the Company as of
the date hereof that:
Authority. This Agreement has
been validly authorized, executed and delivered by such Holder and, assuming the
due authorization, execution and delivery thereof by the Company, is a valid and
binding agreement enforceable in accordance with its terms, subject to the
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors’ rights generally.
Section
2.01. Ownership of
Warrants. Each Holder is the legal and beneficial owner of the
applicable Warrants, free and clear of any liens, claims, security interests,
options, charges or any other encumbrance, limitation or restriction
whatsoever.
ARTICLE
3
Representations
and Warranties of The Company
The
Company represents and warrants to the Holders as of the date hereof that this
Agreement has been validly authorized, executed and delivered by the Company and
assuming the due authorization, execution and delivery thereof by the Holders,
is a valid and binding agreement enforceable in accordance with its terms,
subject to the general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors’ rights generally.
ARTICLE
4
Miscellaneous
Section
4.01. Further
Assurances. The Holders and the Company, will each execute and
deliver, or cause to be executed and delivered, all further documents and
instruments and use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable law, to consummate and make effective the
transactions contemplated by this Agreement.
Section
4.02. Amendments. Subject
to Section 4.06, any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed, in the case
of an amendment, by each party to this Agreement or in the case of a waiver, by
the party against whom the waiver is to be effective.
Section
4.03. Successors and
Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto.
2
Section
4.04. Governing
Law, Jurisdiction and
Waiver of Jury Trial.
(a) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND/OR OF ARBITRATION, THE PARTIES HERETO WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY
OF THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR
THE TRANSACTIONS RELATED HERETO.
Section
4.05. Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts and delivered by facsimile or other electronic transmission, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of
the other parties hereto. Until and unless each party has received a
counterpart hereof signed by the other party hereto, this Agreement shall have
no effect and no party shall have any right or obligation hereunder (whether by
virtue of any other oral or written agreement or other communication).
Section
4.05. Third Party
Beneficiary. The parties hereto agree that Xxxxx Xxxxxx, on
behalf of himself and on behalf of the Investor Group, is an express third party
beneficiary of this Agreement. Accordingly, the parties hereto shall
not amend the provisions of Article I without the prior written consent of the
Xxxxx Xxxxxx on behalf of himself and on behalf of the Investor
Group.
[Signature
page follows]
3
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
HOLDERS:
VALENS
U.S. SPV I, LLC
By: Valens
Capital Management, LLC
its
investment manager
|
By: /s/ Xxxxx Xxxxxxxxx
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|
|||
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Name:
Title:
|
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VALENS
OFFSHORE SPV I, LTD
By: Valens
Capital Management, LLC
its
investment manager
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By: /s/ Xxxxx Xxxxxxxxx
|
|
|||
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Name:
Title:
|
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VALENS
OFFSHORE SPV II, CORP.
By: Valens
Capital Management, LLC
its
investment manager
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By: /s/ Xxxxx Xxxxxxxxx
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|||
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Name:
Title:
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THE
COMPANY:
PERVASIP
CORPORATION
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By:
/s/ Xxxx X. Xxxx
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|||
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Name: Xxxx
X. Xxxx
Title: CEO
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|
4
ANNEX
I
EXISTING
WARRANTS
|
Exercise $
|
Expiration Date
|
#
of Warrants held by
Valens Offshore I
|
#
of Warrants held by
Valens Offshore II
|
#
of Warrants
held
by
Valens US
|
|
0.10
|
11/30/2020
|
1,202,976
|
--
|
--
|
|
0.10
|
5/31/2020
|
835,455
|
--
|
--
|
|
0.10
|
9/28/2022
|
--
|
48,674,157
|
8,711,343
|
|
0.10
|
9/28/2022
|
--
|
1,184,026
|
--
|
|
0.10
|
9/28/2022
|
--
|
3,552,078
|
--
|
|
0.10
|
2/18/2019
|
--
|
11,130,000
|
15,370,000
|
|
TOTAL:
|
2,038,431
|
64,540,261
|
24,081,343
|
5
ANNEX
II
FORM
OF CANCELLATION OF WARRANT
The
undersigned, _________________________________, the owner of a warrant to
purchase ________________ shares of common stock of Pervasip Corporation at $___
per share (“Common
Stock”), issued to the undersigned on __________ __, 20__, do hereby
agree to and acknowledge the irrevocable cancellation of [a portion of] such
warrant [with respect to ____________ shares of Common Stock], and the
irrevocable waiver of all unexercised rights the undersigned may have had to
acquire such shares of Common Stock as a result thereof.
6
INCREMENTAL
CANCELLATION TABLE
|
Incremental
Investment
|
#
of warrants
owned
by
Valens Offshore I
|
#
of warrants
owned
by
Valens Offshore II
|
#
of warrants
owned
by
Valens US
|
Total
# of Warrants
to
be cancelled
|
|
First
|
18,392,500
|
5,792,500
|
815,000
|
25,000,000
|
|
Second
|
18,392,500
|
5,792,500
|
815,000
|
25,000,000
|
|
Third
|
18,392,500
|
5,792,500
|
815,000
|
25,000,000
|
|
Fourth
|
18,392,500
|
5,792,500
|
815,000
|
25,000,000
|
|
Fifth
|
18,392,500
|
5,792,500
|
815,000
|
25,000,000
|
|
Sixth
|
25,052,478
|
7,889,981
|
1,110,114
|
34,052,573
|
|
TOTAL:
|
117,014,978
|
36,852,481
|
5,185,114
|
159,052,573
|
