LETTER AGREEMENT
 
December 12, 2008
 
Pervasip Corp.
75 South Broadway, Suite 302
White Plains, NY 10601
Attention:  CEO
 
 
Re:
Amendment to Loan Documents

 
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”) (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 Amended and Restated Secured Term Note effective as of October 15, 2008 made
by the Company in favor of Valens Offshore (as amended, restated, modified
and/or supplemented from time to time, the “Second Term Note”), (iii) the
Amended and Restated Master Security Agreement dated as of November 1, 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”), (iv) 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”),(v) 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 (vi) the Amended
and Restated Restricted Account Side Letter dated as of October 27, 2008 between
the Agent, Valens Offshore and the Company (as amended, restated, modified
and/or supplemented from time to time, the “Restricted Account Side Letter” and
together with the Purchase Agreement, the Second Term Note, the Master Security
Agreement, the Stock Pledge Agreement, the Restricted Account Side Letter and
the 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(b) of the Purchase Agreement is hereby amended by deleting the
phrase “FIVE HUNDRED THOUSAND DOLLARS ($500,000)” and inserting “ONE MILLION ONE
HUNDRED THOUSAND DOLLARS ($1,100,000)” in lieu thereof.
 
(ii)    All references to the term “Second Term Note” as set forth in the
Purchase Agreement shall hereafter be deemed to refer to the Second Amended and
Restated Secured Term Note (as defined below).
 
 
 

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(b)    The Second Term Note is hereby amended and restated in the form attached
hereto as Exhibit A (the “Second Amended and Restated Secured Term Note”).  For
the avoidance of doubt, the amendment and restatement of the Second Term Note as
set forth in this clause (b) shall be in substitution for and not in
satisfaction of the Second Term Note.
 
(c)    The Restricted Account Side Letter is hereby amended and restated in the
form attached hereto as Exhibit B (the “Second Amended and Restated Side
Letter”).
 
(d)    To induce the Creditor Parties to, among other things, agree to the
amendments set forth above and for Valens Offshore I to provide additional
financial accommodations to the Company as evidenced by the Second Amended and
Restated Secured Term Note, each of the undersigned (other than the Creditor
Parties):
 
(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 Second Amended and Restated Secured
Term Note, the Second Amended and Restated 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 Second 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)    In consideration of the above, the Company shall pay to Valens Capital
Management, LLC, the investment manager of Valens Offshore I (“VCM”), a
non-refundable payment in an amount equal to $9,000.00 (the “VCM Payment”).  The
VCM Payment shall be deemed fully earned on the date hereof and shall not be
subject to rebate or proration for any reason.
 
(g)    The Company further agrees to pay an amount equal to $12,000 to Valens
Offshore I (the “Valens Offshore I Payment”).  The parties hereto agree that the
fair market value of the Valens Offshore I Payment (as reasonably determined by
the parties) is hereby designated as additional interest.  The parties agree to
file all applicable tax returns in accordance with such characterization and
shall not take a position on any tax return or in any judicial or administrative
proceeding that is inconsistent with such characterization.  Notwithstanding the
foregoing, nothing contained in this paragraph shall or shall be deemed to
impair in any manner whatsoever the Company’s obligations from time to time
owing to Valens Offshore I under the New Agreements.
 
The payments set forth in sections (f) and (g) above shall be paid at closing
out of funds held pursuant to a funds escrow agreement for the purchase of the
Second Term Note and a disbursement letter executed in connection herewith.
 
(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.
 
(l)    This letter agreement is consented and agreed to by Valens Offshore SPV
II, Corp. the Company and certain Subsidiaries of the Company.
 

 
Very truly yours,
     
VALENS OFFSHORE SPV I, LTD.
 
By: Valens Capital Management, LLC, its investment manager
     
By: /s/ Pat
Regan                                                                              
 
Name: Pat
Regan                                                                               
 
Title: Authorized Signatory
     
LV ADMINISTRATIVE SERVICES, INC.
 
as Agent
 
By: /s/ Pat
Regan                                                                              
 
Name: Pat
Regan                                                                               
 
Title: Authorized Signatory

 
 
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CONSENTED AND AGREED TO:
 
PERVASIP CORP.
(f/k/a eLEC Communications Corp.)
 
By:  /s/ Paul H Riss

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Name: Paul H. Riss
Title: CEO
 
VOX COMMUNICATIONS CORP.
 
By:  /s/ Paul H Riss

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Name: Paul H. Riss
Title: CEO
 
AVI HOLDING CORP.
 
By:  /s/ Paul H Riss

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Name: Paul H. Riss
Title: CEO
 
TELCOSOFTWARE.COM CORP.
 
By:  /s/ Paul H Riss

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Name: Paul H. Riss
Title: CEO
 
LINE ONE, INC.
 
By:  /s/ Paul H Riss

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Name: Paul H. Riss
Title: CEO
 
 
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