pv105.htm


    
      

      

    

    Exhibit
10.5

     

    FUNDS
ESCROW AGREEMENT

     

    This
Funds Escrow Agreement (this “Agreement”) is dated
as of May 28, 2008 among Pervasip Corp., a New York corporation (the “Company”), LV
Administrative Services, Inc., as administrative and collateral agent for the
Purchasers (as defined in the Purchase Agreement referred to below) (the “Agent”), and Loeb
& Loeb LLP (the “Escrow
Agent”).

     

    W I T N E S S E T H:

     

    WHEREAS,
the Agent has advised the Escrow Agent that the Company, the Agent and the
Purchasers have entered into a Securities Purchase Agreement (the “Purchase Agreement”)
for the sale by the Company to the Purchasers of secured term notes (the “Term
Notes”);

     

    WHEREAS,
the Company and the Agent wish to deliver to the Escrow Agent copies of the
Documents (as hereafter defined) and, following the satisfaction of all closing
conditions relating to the Documents, the Purchasers delivery of the Escrowed
Payment (as hereafter defined), in each case, to be held and released by Escrow
Agent in accordance with the terms and conditions of this Agreement;
and

     

    WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms and
conditions of this Agreement;

     

    NOW
THEREFORE, the parties agree as follows:

     

    ARTICLE
I

     

    INTERPRETATION

     

    1.1. Definitions.  Whenever
used in this Agreement, the following terms shall have the meanings set forth
below.

     

    (a) “Agreement” means this
Agreement, as amended, modified and/or supplemented from time to time by written
agreement among the parties hereto.

     

    (b) “Closing Payments”
means, collectively, (i) the closing payment to be paid to Valens Capital
Management, LLC, an investment manager of the Creditor Parties, in the amount of
$21,000 and (ii) certain Purchasers in the aggregate amount of
$28,000.

     

    (c) “Creditor Parties”
means collectively, the Agent and the Purchasers.

     

    (d) “Disbursement Letter”
means that certain letter delivered to the Escrow Agent by the Company,
acceptable in form and substance to the Agent, setting forth wire instructions
and amounts to be funded at the Closing.

     

    (e) “Documents” means
copies of the Disbursement Letter, the Purchase Agreement and the Term
Notes.

     

    (f) “Escrowed Payment”
means $300,000.

     

    1.2. Entire
Agreement.  This Agreement constitutes the entire agreement
among the parties hereto with respect to the arrangement with the Escrow Agent
and supersedes all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written with respect to the
arrangement with the Escrow Agent.  There are no warranties,
representations and other agreements made by the parties in connection with the
arrangement with the Escrow Agent except as specifically set forth in this
Agreement.

     

    1.3. Extended
Meanings.  In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.  The word “person” includes
an individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.

     

    1.4. Waivers and
Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving
compliance.  Except as expressly stated herein, no delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder preclude any other or future exercise of any other
right, power or privilege hereunder.

     

    1.5. Headings.  The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

    

    1.6. Law Governing this
Agreement; Consent to Jurisdiction.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  With respect to
any suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby (“Proceedings”), each
party hereto irrevocably submits to the exclusive jurisdiction of the courts of
the County of New York, State of New York and the United States District court
located in the county of New York in the State of New York.  Each
party hereto hereby irrevocably and unconditionally (a) waives trial by jury in
any Proceeding relating to this Agreement and for any related counterclaim and
(b) waives any objection which it may have at any time to the laying of venue of
any Proceeding brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have
jurisdiction over such party.  As between the Company and the Agent,
the prevailing party shall be entitled to recover from the other party its
reasonable attorneys’ fees and costs.  In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.

     

    1.7. Construction.  Each
party acknowledges that its legal counsel participated in the preparation of
this Agreement and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the
other.

     

    ARTICLE
II

     

    APPOINTMENT
OF AND DELIVERIES TO THE ESCROW AGENT

     

    2.1. Appointment.  The
Company and the Agent hereby irrevocably designate and appoint the Escrow Agent
as their escrow agent for the purposes set forth herein, and the Escrow Agent by
its execution and delivery of this Agreement hereby accepts such appointment
under the terms and conditions set forth herein.

     

    2.2. Copies of Documents to
Escrow Agent.  On or about the date hereof, the Agent and the
Company shall deliver to the Escrow Agent copies of the Documents executed by
such parties.

     

    2.3. Delivery of Escrowed Payment
to Escrow Agent.  Following the satisfaction of all closing
conditions relating to the Documents (other than the funding of the Escrowed
Payment), the Purchasers shall deliver to the Escrow Agent the Escrowed
Payment.  At such time, the Escrow Agent shall hold the Escrowed
Payment as agent for the Company, subject to the terms and conditions of this
Agreement.

     

    2.4. Intention to Create Escrow
Over the Escrowed Payment.  The Agent and the Company intend
that the Escrowed Payment shall be held in escrow by the Escrow Agent and
released from escrow by the Escrow Agent only in accordance with the terms and
conditions of this Agreement.

     

    ARTICLE
III

     

    RELEASE
OF ESCROW

     

    3.1. Release of
Escrow.  Subject to the provisions of Section 4.2, the Escrow
Agent shall release the Escrowed Payment from escrow as follows:

     

    (a) Upon
receipt by the Escrow Agent of (i) oral instructions from David Grin and/or
Eugene Grin (each of whom is an officer of the Agent) consenting to the release
of the Escrowed Payment from escrow in accordance with the Disbursement Letter
following the Escrow Agent’s receipt of the Escrowed Payment, (ii) the
Disbursement Letter, and (iii) the Escrowed Payment, the Escrowed Payment shall
promptly be disbursed in accordance with the Disbursement Letter.  The
Disbursement Letter shall include, without limitation, Escrow Agent’s
authorization to retain from the Escrowed Payment Escrow Agent’s fee for acting
as Escrow Agent hereunder and the Closing Payments for delivery to Valens
Capital Management, LLC in accordance with the Disbursement Letter.

     

    (b) Upon
receipt by the Escrow Agent of a final and non-appealable judgment, order,
decree or award of a court of competent jurisdiction (a “Court Order”)
relating to the Escrowed Payment, the Escrow Agent shall remit the Escrowed
Payment in accordance with the Court Order.  Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to
the effect that the court issuing the Court Order is a court of competent
jurisdiction and that the Court Order is final and non-appealable.

     

    3.2. Acknowledgement of Company
and Agent; Disputes.  The Company and the Agent acknowledge
that the only terms and conditions upon which the Escrowed Payment are to be
released from escrow are as set forth in Sections 3 and 4 of this
Agreement.  The Company and the Agent reaffirm their agreement to
abide by the terms and conditions of this Agreement with respect to the release
of the Escrowed Payment.  Any dispute with respect to the release of
the Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
agreement between the Company and Agent.

     

    
      
        
        

      

      
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    ARTICLE
IV

     

    CONCERNING
THE ESCROW AGENT

     

    4.1. Duties and Responsibilities
of the Escrow Agent.  The Escrow Agent’s duties and
responsibilities shall be subject to the following terms and
conditions:

     

    (a) The Agent
and the Company acknowledge and agree that the Escrow Agent (i) shall not be
required to inquire into whether the Agent, the Company or any other party is
entitled to receipt of any Document or all or any portion of the Escrowed
Payment; (ii) shall not be called upon to construe or review any Document or any
other document, instrument or agreement entered into in connection therewith;
(iii) shall be obligated only for the performance of such duties as are
specifically assumed by the Escrow Agent pursuant to this Agreement; (iv) may
rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (v) may
assume that any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so; (vi) shall not be responsible for the identity, authority
or rights of any person, firm or company executing or delivering or purporting
to execute or deliver this Agreement or any Document or any funds deposited
hereunder or any endorsement thereon or assignment thereof; (vii) shall not be
under any duty to give the property held by Escrow Agent hereunder any greater
degree of care than Escrow Agent gives its own similar property; and (viii) may
consult counsel satisfactory to Escrow Agent (including, without limitation,
Loeb & Loeb LLP or such other counsel of Escrow Agent’s choosing), the
opinion of such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.

     

    (b) The Agent
and the Company acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and that the Escrow Agent shall not be liable for
any action taken by Escrow Agent in good faith and believed by Escrow Agent to
be authorized or within the rights or powers conferred upon Escrow Agent by this
Agreement.  The Agent and the Company hereby, jointly and severally,
indemnify and hold harmless the Escrow Agent and any of Escrow Agent’s partners,
employees, agents and representatives from and against any and all actions taken
or omitted to be taken by Escrow Agent or any of them hereunder and any and all
claims, losses, liabilities, costs, damages and expenses suffered and/or
incurred by the Escrow Agent arising in any manner whatsoever out of the
transactions contemplated by this Agreement and/or any transaction related in
any way hereto, including the fees of outside counsel and other costs and
expenses of defending itself against any claims, losses, liabilities, costs,
damages and expenses arising in any manner whatsoever out the transactions
contemplated by this Agreement and/or any transaction related in any way hereto,
except for such claims, losses, liabilities, costs, damages and expenses
incurred by reason of the Escrow Agent’s gross negligence or willful
misconduct.  The Escrow Agent shall owe a duty only to the Agent and
the Company under this Agreement and to no other person.

     

    (c) The Agent
and the Company shall jointly and severally reimburse the Escrow Agent for its
reasonable out-of-pocket expenses (including counsel fees (which counsel may be
Loeb & Loeb LLP or such other counsel of the Escrow Agent’s choosing)
incurred in connection with the performance of its duties and responsibilities
hereunder, which shall not (subject to Section 4.1(b)) exceed
$1,500.

     

    (d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5)
business days prior written notice of resignation to the Agent and the
Company.  Prior to the effective date of resignation as specified in
such notice, the Agent and Company will issue to the Escrow Agent a joint
instruction authorizing delivery of the Documents and the Escrowed Payment to a
substitute Escrow Agent selected by the Agent and the Company.  If no
successor Escrow Agent is named by the Agent and the Company, the Escrow Agent
may apply to a court of competent jurisdiction in the State of New York for
appointment of a successor Escrow Agent, and deposit the Documents and the
Escrowed Payment with the clerk of any such court, and/or otherwise commence an
interpleader or similar action for a determination of where to deposit the
same.

     

    (e) The
Escrow Agent does not have and will not have any interest in the Documents and
the Escrowed Payment, but is serving only as escrow agent, having only
possession thereof.

     

    (f) The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and reasonably believed by it to be authorized hereby or within the rights
or powers conferred upon it hereunder, nor for action taken or omitted by it in
good faith, and in accordance with advice of counsel (which counsel may be Loeb
& Loeb LLP or such other counsel of the Escrow Agent’s choosing), and shall
not be liable for any mistake of fact or error of judgment or for any acts or
omissions of any kind except to the extent any such liability arose from its own
willful misconduct or gross negligence.

     

    (g) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect to
any and all matters pertinent thereto and no implied duties or obligations shall
be read into this Agreement.

     

    (h) The
Escrow Agent shall be permitted to act as counsel for the Creditor Parties or
the Company, as the case may be, in any dispute as to the disposition of the
Documents and the Escrowed Payment, in any other dispute between the Creditor
Parties and the Company, whether or not the Escrow Agent is then holding the
Documents and/or the Escrowed Payment and continues to act as the Escrow Agent
hereunder.

     

    (i) The
provisions of this Section 4.1 shall survive the resignation of the Escrow Agent
or the termination of this Agreement.

     

    
      
        
        

      

      
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    4.2. Dispute Resolution;
Judgments.  Resolution of disputes arising under this Agreement
shall be subject to the following terms and conditions:

     

    (a) If any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Documents and/or the Escrowed Payment, or if the Escrow
Agent shall in good faith be uncertain as to its duties or rights hereunder, the
Escrow Agent shall be authorized, without liability to anyone, to (i) refrain
from taking any action other than to continue to hold the Documents and the
Escrowed Payment pending receipt of a joint instruction from the Agent and the
Company, (ii) commence an interpleader or similar action, suit or proceeding for
the resolution of any such dispute; and/or (iii) deposit the Documents and the
Escrowed Payment with any court of competent jurisdiction in the State of New
York, in which event the Escrow Agent shall give written notice thereof to the
Agent and the Company and shall thereupon be relieved and discharged from all
further obligations pursuant to this Agreement.  The Escrow Agent may,
but shall be under no duty to, institute or defend any legal proceedings which
relate to the Documents and the Escrowed Payment.  The Escrow Agent
shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel which such counsel may be
Loeb & Loeb LLP or
such other counsel of the Escrow Agent’s choosing.

     

    (b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order.  In case the Escrow Agent obeys or complies with a Court Order,
the Escrow Agent shall not be liable to the Creditor Parties, the Company or any
other person, firm, company or entity by reason of such compliance.

     

    ARTICLE
V

     

    GENERAL
MATTERS

     

    5.1. Termination.  This
escrow shall terminate upon disbursement of the Escrowed Payment in accordance
with the terms of this Agreement or earlier upon the agreement in writing of the
Agent and the Company or resignation of the Escrow Agent in accordance with the
terms hereof.

     

    5.2. Notices.  All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given one
(1) day after being sent by telecopy (with copy delivered by overnight courier,
regular or certified mail):

     

    5.3. 

    
      	
              If
      to the Company, to:

            	
              Pervasip
      Corp.

              75
      South Broadway, Suite 302

              White
      Plains, NY 10601

              Attention:  Chief
      Financial Officer

              Facsimile:  914-682-0820

            
	
              With
      a copy to:

            	
              Pryor
      Cashman LLP

              410
      Park Avenue

              New
      York, NY  10022

              Attention:  Eric
      M. Hellige, Esq.

              Facsimile:  212-798-6380

            
	
              If
      to the Agent, to:

            	
              LV
      Administrative Services Corp.

              335
      Madison Avenue, 10th Floor

              New
      York, New York 10017

              Attention:  Portfolio
      Services

              Fax:  212-581-5037

            
	
              If
      to the Escrow Agent, to:

            	
              Loeb
      & Loeb LLP

              345
      Park Avenue

              New
      York, New York 10154

              Attention:  Scott
      J. Giordano, Esq.

              Fax:  (212)
      407-4990

            


    

     

    or to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.

     

    5.4. Interest.  The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith.

     

    5.5. Assignment; Binding
Agreement.  Neither this Agreement nor any right or obligation
hereunder shall be assignable by any party without the prior written consent of
the other parties hereto.  This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.

     

    
      
        
        

      

      
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    5.6. Invalidity.  In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

     

    5.7. Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same agreement.  This Agreement may be executed by facsimile
or electronic transmission.

     

    [Signature
Page to Follow]

     

     


    
      
         


      

      
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    IN
WITNESS WHEREOF, the parties hereto have executed this Funds Escrow Agreement as
of the date and year first above written.

     

    COMPANY:

     

    PERVASIP
CORP.

     

    
      	
               
      

            	
              By:
      /s/ Paul H.
      Riss

            


    

    
      	
               
      

            	
              Name:
      Paul H. Riss

            


    

    
      	
               
      

            	
              Title:
      Chief Executive Officer

            


    

     

     

    AGENT:

     

    LV
ADMINISTRATIVE SERVICES CORP.,

     

    as
Agent

     

    
      	 	By:
      /s/ Patrick
      Regan
	
               
      

            	
              Name:
      Patrick Regan

            


    

    
      	
               
      

            	
              Title:
      Authorized Signatory

            


    

     

     

    ESCROW
AGENT:

     

    LOEB
& LOEB LLP

     

    
      	 	
              By:
      /s/ Loeb &
      Loeb

            
	
               
      

            	
              Name:

            


    

    
      	
               
      

            	
              Title:

            


    

     

     

    
      
         


      

      
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