LETTER AGREEMENT
Exhibit 10.1
February
18, 2009
00 Xxxxx
Xxxxxxxx, Xxxxx 000
Xxxxx
Xxxxxx, XX 00000
Attention: CEO
Ladies
and Gentlemen:
Reference
is made to (i) the Securities Purchase Agreement dated as of May 28, 2008
between Pervasip Corp. (the “Company”), LV Administrative
Services, Inc. (the “Agent”), and the Purchasers
from time to time party thereto, including Valens Offshore SPV I, Ltd. (“Valens Offshore I”), Valens
Offshore SPV II, Corp. (“Valens
Offshore II”) and Valens U.S. SPV I, LLC (“Valens US”) (collectively, the
“Purchasers” and
together with the Agent, the “Creditor Parties”) (as
amended, restated, modified and/or supplemented from time to time, the “Purchase Agreement”), (ii) the
Master Security Agreement dated as of May 28, 2008 from the Company, certain
Subsidiaries of the Company in favor of the Agent (as amended, restated,
modified and/or supplemented from time to time, the “Master Security Agreement”),
(iii) the Stock Pledge Agreement dated May 28, 2008 by and among the Company,
certain Subsidiaries of the Company and Agent (as amended, restated, modified
and/or supplemented from time to time, the “Stock Pledge Agreement”), and
(iv) the Subsidiary Guaranty dated May 28, 2008 by certain Subsidiaries in favor
of the Company (as amended, restated, modified and/or supplemented from time to
time, the “Subsidiary
Guaranty” and together with the Purchase Agreement, the Master Security
Agreement, the Stock Pledge Agreement, and the Notes and Related Agreements
referred to in the Purchase Agreement, the “Existing
Agreements”). Capitalized terms used herein that are not
defined shall have the meanings given to them in the Existing Agreements, as
applicable.
The
Company and the Creditor Parties have agreed to make certain changes to the
Purchase Agreement.
In
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
(a) Subject
to satisfaction of the conditions precedent set forth below, the Purchase
Agreement is hereby amended as follows:
(i) Section
1 of the Purchase Agreement is hereby deleted and replaced in its entirety with
the following:
“1. Agreement to Sell and
Purchase.
(a) Pursuant
to the terms and conditions set forth in this Agreement, on the Closing Date (as
defined in Section 3), the Company shall sell to each Purchaser, and each
Purchaser shall Purchase from the Company, the Closing Date Term Note in the
principal amount set forth opposite such Purchaser’s name on Schedule 1
hereto. The sale of the Closing Date Term Note on the Closing
Date shall be known as the “Closing Date Offering.” The Closing Date
Term Note will mature on the Maturity Date (as defined in the Closing Date Term
Note).
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(b) Pursuant
to the terms and conditions set forth in this Agreement and the Related
Agreements, on October 15, 2008, the Company shall sell to Valens Offshore SPV
I, Ltd. (“Valens Offshore I”), and Valens Offshore I shall purchase from the
Company, a Secured Term Note in the aggregate principal amount of ONE MILLION
ONE HUNDRED THOUSAND DOLLARS ($1,100,000) (as amended, modified and/or
supplemented from time to time, the “Second Term Note”). The sale of
the Second Term Note shall be known as the “Second Offering”. The
Second Term Note will mature on the Maturity Date (as defined in the Second Term
Note).
(c) Pursuant
to the terms and conditions set forth in this Agreement and the Related
Agreements, on February 18, 2009, the Company shall sell to Valens Offshore SPV
II, Corp. (“Valens Offshore II”), and Valens Offshore II shall purchase from the
Company, a Secured Term Note in the aggregate principal amount of TWO HUNDRED
FIFTY-TWO THOUSAND DOLLARS ($252,000) (as amended, modified and/or supplemented
from time to time, the “Third Term Note”). The sale of the Third Term
Note shall be known as the “Third Offering”. The Third Term Note will
mature on the Maturity Date (as defined in the Third Term Note).
(d) Pursuant
to the terms and conditions set forth in this Agreement and the Related
Agreements, on February 18, 2009, the Company shall sell to Valens U.S. SPV I,
LLC (“Valens US”), and Valens US shall purchase from the Company, a Secured Term
Note in the aggregate principal amount of THREE HUNDRED FORTY-EIGHT THOUSAND
DOLLARS ($348,000) (as amended, modified and/or supplemented from time to time,
the “Fourth Term Note”). The sale of the Fourth Term Note shall be
known as the “Fourth Offering”. The Closing Date Offering, together
with the Second Offering, Third Offering and Fourth Offering shall be known
collectively as the “Offering”. The Fourth Term Note will mature on the Maturity
Date (as defined in the Fourth Term Note). The Closing Date Term
Note, together with the Second Term Note, Third Term Note and Fourth Term Note
(as amended, restated, modified and/or supplemented from time to time) are
referred to collectively herein as the “Notes”.
(ii) All
references to the term “Note” set forth in Section 3.2 and 3.3 of the Purchase
Agreement shall hereafter be deemed to refer to the Closing Date Term
Note.
(b) The
Company hereby agrees to enter into a Restricted Account Side Letter in the form
attached hereto as Exhibit A (the “February 2009 Side
Letter”).
(c) To
induce the Creditor Parties to, among other things, agree to the amendments set
forth above and for Valens Offshore II and Valens US to provide additional
financial accommodations to the Company as evidenced by the Third Term Note and
the Fourth Term Note (collectively, the “New Notes”), each of the
undersigned (other than the Creditor Parties):
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(i)
acknowledges, ratifies and confirms that all of the terms, conditions,
representations and covenants contained in the Existing Agreements to which it
is a party are in full force and effect and shall remain in full force and
effect after giving effect to the execution and effectiveness of this letter
agreement and all of the instruments, documents and agreements contemplated
hereby, including without limitation, the Third Term Note, the Fourth Term Note,
and the February 2009 Side Letter and the documents, instruments and agreements
entered into in connection therewith (collectively, the “New Agreements”);
(ii)
acknowledges, ratifies and confirms that the defined term “Obligations” under
(i) the Master Security Agreement, (ii) the Stock Pledge Agreement and (iii) the
Subsidiary Guaranty, include, without limitation, all obligations and
liabilities of the Company and the Subsidiaries under the New
Agreements;
(iii) acknowledges,
ratifies and confirms that the defined term “Documents” under, and as defined
in, each of the Master Security Agreement, the Stock Pledge Agreement and the
Subsidiary Guaranty, include, without limitation, all obligations and
liabilities of the Company and the Subsidiaries under the New
Agreements.
(iv) acknowledges
and confirms that (A) the occurrence of a breach and/or an Event of Default
under any of the New Agreements shall constitute a breach and/or an Event of
Default under each of the Existing Agreements and (B) the occurrence of a breach
and/or an Event of Default under any of the Existing Agreements shall constitute
a breach and/or an Event of Default under the New Agreements;
(v)
represents and warrants that no offsets, counterclaims or defenses exist as of
the date hereof with respect to the undersigned’s obligations under the Existing
Agreements to which they are a party;
(vi) acknowledges,
ratifies and confirms the grant by the Company and the Subsidiaries to the
Creditor Parties of a security interest in the assets of (including the equity
interest owned by) each of the Company and the Subsidiaries, as more
specifically set forth in the Existing Agreements.
(vii) represents
and warrants that (A) all of the representations made by or on behalf of the
undersigned in the Existing Agreements to which it is a party are true and
correct in all material respects on and as of the date hereof; (B) each of the
undersigned has the corporate power and authority to execute and deliver the New
Agreements to which it is a party; (iii) all corporate action on the part of
each of the undersigned (including their respective officers and directors)
necessary for the authorization of the New Agreements, the performance of all
obligations of the undersigned hereunder and thereunder and, the authorization,
sale, issuance and delivery of the Third Term Note and the Fourth Term Note has
been taken; and (iv) the New Agreements, when executed and delivered and, to the
extent it is a party thereto, will be valid and binding obligations of the
undersigned; and
(viii) releases,
remises, acquits and forever discharges each Creditor Party and their respective
employees, agents, representatives, consultants, attorneys, fiduciaries,
officers, directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations, and related corporate divisions (all of the
foregoing hereinafter called the “Released Parties”),
from any and all actions and causes of action, judgments, executions, suits,
debts, claims, demands, liabilities, obligations, damages and expenses of any
and every character, known or unknown, direct and/or indirect, at law or in
equity, of whatsoever kind or nature, for or because of any matter or things
done, omitted or suffered to be done by any of the Released Parties prior to and
including the date of execution hereof, and in any way directly or indirectly
arising out of or in any way connected to this letter agreement, the Existing
Agreements, the New Agreements and any other document, instrument or agreement
made by the undersigned in favor of the Creditor Parties.
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(e) This
letter agreement shall become effective upon satisfaction of the following
conditions precedent: (i) such certificates, instruments, documents,
agreements and opinions of counsel as may be required by the Creditor Parties,
each of which shall be in form and substance satisfactory to the Creditor
Parties, (ii) the Company shall have reimbursed the Creditor Parties for the
full amount of all of the Creditor Parties attorneys’ fees and costs incurred in
connection with the preparation and negotiation of the letter agreement and each
of the other New Agreements and in connection with the closing of the
transactions described herein and therein.
(f) This
letter agreement shall become effective upon satisfaction of the following
conditions precedent: (i) such certificates, instruments, documents,
agreements and opinions of counsel as may be required by the Creditor Parties,
each of which shall be in form and substance satisfactory to the Creditor
Parties, (ii) the Company shall have reimbursed the the Creditor Parties for the
full amount of all of the Creditor Parties attorneys’ fees and costs incurred in
connection with the preparation and negotiation of the letter agreement and each
of the other New Agreements and in connection with the closing of the
transactions described herein and therein and (ii) the Company shall have paid
(A) to Valens Capital Management, LLC, the investment manager of the Purchasers
(“VCM”), a
non-refundable payment in an amount equal to $6,900; (B) to the Purchasers, a
non-refundable payment in an amount equal to one percent (1.00%) of the
aggregate principal amount of the New Notes; and (iii) to the Purchasers, an
advance prepayment discount deposit equal to one percent (1.00%) of the
aggregate principal amount of the New Notes. The payments set forth
in clauses (iv)(A) and (B) above shall be deemed fully earned on the date hereof
and shall not be subject to rebate or proration for any reason. The
payments set forth in clauses (ii) and (ii) above shall be paid at closing out
of funds held pursuant to a funds escrow agreement for the purchase of the New
Notes and a disbursement letter executed in connection herewith.
(g) In
further consideration of the above, the Company hereby agrees that it shall, by
no later than March 20, 2009, issue a warrant to each of Valens US and Valens
Offshore II (each an “Additional Warrant”)
to purchase (i) in respect of Valens US, 15,370,000 shares of the Common Stock
of the Company, and (ii) in respect of Valens Offshore II, 11,130,000 shares of
the Common Stock of the Company. Each Additional Warrant shall have
an exercise price of $0.10 and otherwise be in the form and substance acceptable
to Valens US and Valens Offshore II in their sole discretion. The
Company further agrees (i) that by no later than April 15, 2009, it shall file a
proxy to increase the authorized shares of Common Stock of the Company from
150,000,000 to 250,000,000 and (ii) that by no later than May 15th 2009 it
shall to increase the authorized shares of Common Stock of the Company from
150,000,000 to 250,000,000 and provide evidence of the same to the
Agent.
(h) Nothing
contained herein shall (i) limit in any manner whatsoever the Company’s, each
Subsidiary and each other Person’s obligation to comply with, and the Creditor
Parties right to insist on the Company’s, the Subsidiaries and such other
Person’s compliance with, each and every term of the Existing Agreements, or
(ii) constitute a waiver of any Event of Default or any right or remedy
available to any of the Creditor Parties, or of the Company’s, the Subsidiaries
or any other Person’s obligation to pay and perform all of its obligations, in
each case whether arising under the Existing Agreements, applicable law and/or
in equity, all of which rights and remedies howsoever arising are hereby
expressly reserved, are not waived and may be exercised by any of the Creditor
Parties at any time.
(i) The
Company acknowledges that it has an affirmative obligation to make prompt public
disclosure of material agreements and material amendments to the Existing
Agreements. The Company intends to file a Form 8-K with respect to
the transactions contemplated by this letter agreement no later than four (4)
Business Days following the date hereof, a copy of which shall be delivered to
the Creditor Parties.
(j) Except
as specifically amended herein, the Existing Agreements shall remain in full
force and effect, and are hereby ratified and confirmed. The
execution, delivery and effectiveness of this letter agreement shall not operate
as a waiver of any right, power or remedy of any of the Creditor Parties, nor
constitute a waiver of any provision of any of the Existing
Agreements. This letter agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
(k) This
letter agreement may be executed by the parties hereto 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 shall be deemed to be
an original signature hereto.
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| Very truly yours, | |||
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VALENS
OFFSHORE SPV II, CORP.
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Valens
Capital Management, LLC, its investment manager
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By:
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/s/ Xxxxxxx Xxxxx | |
| Xxxxxxx Xxxxx | |||
| Authorized Signatory | |||
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VALENS
U.S. SPV I, LLC
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Valens
Capital Management, LLC, its investment manager
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By:
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/s/ Xxxxxxx Xxxxx | |
| Xxxxxxx Xxxxx | |||
| Authorized Signatory | |||
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LV
ADMINISTRATIVE SERVICES, INC.
as
Agent
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By:
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/s/ Xxxxxxx Xxxxx | |
| Xxxxxxx Xxxxx | |||
| Authorized Signatory | |||
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CONSENTED
AND AGREED TO:
(f/k/a
eLEC Communications Corp.)
|
By:
|
/s/ Xxxx X. Xxxx | |
| Xxxx X. Xxxx | ||
| CEO |
|
VOX COMMUNICATIONS CORP.
|
|
By:
|
/s/ Xxxx X. Xxxx | |
| Xxxx X. Xxxx | ||
| CEO |
| AVI HOLDING CORP. |
|
By:
|
/s/ Xxxx X. Xxxx | |
| Xxxx X. Xxxx | ||
| CEO |
| XXXXXXXXXXXXX.XXX CORP. |
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By:
|
/s/ Xxxx X. Xxxx | |
| Xxxx X. Xxxx | ||
| CEO |
| LINE ONE, INC. |
|
By:
|
/s/ Xxxx X. Xxxx | |
| Xxxx X. Xxxx | ||
| CEO |
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EXHIBIT
A
Restricted Account Side
Letter
Attached
hereto.
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