Document:

ex10-1.htm

    Exhibit
10.1

    

    
WARRANT CANCELLATION
AGREEMENT

     

    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 James Dougan, the
Company will obtain equity financing from an investor group led by James Dougan
(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 James Dougan, 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
James Dougan  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/ Scott Bluestein

              	 	 	
                 

              	 
	
                Name:
      

                  Title:

                

              	 	 	
                 

              	 

      

    

     

     

    VALENS
OFFSHORE SPV I, LTD

     

    By:  Valens
Capital Management, LLC

        its
investment manager

    
      
        
          	 	 	 	 	 
	
                  By: /s/ Scott Bluestein

                	 	 	
                   

                	 
	
                  Name:
      

                    Title:

                  

                	 	 	
                   

                	 

        

         

         

      

    

    VALENS
OFFSHORE SPV II, CORP.

    

    By:  Valens
Capital Management, LLC

        its
investment manager

    
      
        
          
            	 	 	 	 	 
	
                    By: /s/ Scott Bluestein

                  	 	 	
                     

                  	 
	
                    Name:
      

                      Title:

                    

                  	 	 	
                     

                  	 

          

      

    

    THE
COMPANY:

    

    PERVASIP
CORPORATION

    
      
        
          
            	 	 	 	 	 
	
                    By:
      /s/ Paul H. Riss

                  	 	 	
                     

                  	 
	
                    

                      Name:  Paul
      H. Riss

                      Title:  CEO

                    

                  	 	 	
                     

                  	 

          

           

          
            
              
              

            

            
              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

            	
              159,052,573ex101_2010rsugrants.htm

    Exhibit
10.1

      
        2010
Equity Grant

        Terms,
Conditions & FAQs

        February
2010

      

      

      This
is a summary of the material terms and conditions of the 2010 Equity Grant. The
DIRECTV Stock Plan (the “Plan”) and Prospectus govern the awards, receipt of
which is hereby acknowledged, and is incorporated herein by this
reference.

      

      
        	
                TERM/CONCEPT

              	
                EXPLANATION

              
	
                Company

              	
                DIRECTV
      and its Subsidiaries

              
	
                Eligibility

              	
                Full-time
      exempt employees at the level of Director and above; new employees must be
      hired and actively working before the grant date to receive an RSU grant.
      Promotions that would result in an increase in target RSUs must be
      approved by January 19, 2010 for employees to be eligible for the
      increased target grant.

              
	
                Awards

              	
                DIRECTV
      Restricted Stock Units (RSUs or Units); distributed in DIRECTV (DTV) Class
      A common stock

              
	
                Performance
      Period

              	
                3-year
      Performance Period (Jan. 1, 2010 – Dec. 31, 2012)

              
	
                Adjustment
      Factor

              	
                This
      factor is the percentage (0% to 125%) used at the end of the 3-year
      performance period to determine your shares earned based on the Company’s
      performance to the Performance Measures listed below.

              
	
                Performance
      Measures (weighting)

                     · Each
      performance measure is determined as the percentage growth from the prior
      year-end DIRECTV consolidated results.

              
	
                Performance
      Measure

              	
                 

                Weight

              	
                Annual
      Performance Target

              	
                Performance
      Range

              	
                Performance
      Factor Range

              
	
                Annual
      growth in Cash Flow Before Interest & Taxes

              	
                331/3%

              	
                15%

              	
                0
      to 20%

              	
                0
      to 1.5

              
	
                Annual
      growth in Earnings

                Per
      Share (EPS)

              	
                331/3%

              	
                35%

              	
                0
      to 50%

              	
                0
      to 1.5

              
	
                Annual
      growth in Revenue

              	
                331/3%

              	
                7%

              	
                0
      to 9%

              	
                0
      to 1.5

              
	
                Performance
      Determination

              	
                 

                • At
      the end of each year, the Company assesses DIRECTV performance for each
      Performance Measure, resulting in an annual Performance Factor per
      the chart above.

                 

                 

                • At
      the end of the three years, the average of the three annual Performance Factors
      creates the Adjustment
      Factor (the percentage used to determine the final shares
      earned).  The final Adjustment Factor is
      capped at 125%.

                 

              

      

      
         

         

         

      

      

      
        	
                TERM/CONCEPT

              	
                EXPLANATION

              
	
                Distribute
      Shares at the End of Three Years

              	
                 

                · Within
      60 days after the end of the Performance Period, the Company determines
      the Adjustment
      Factor. The Company will multiply the total number of RSUs granted
      by this factor to determine the number of shares to
      distribute.

                 

                · After
      the Adjustment
      Factor is determined, the shares will be distributed to you (minus
      applicable tax withholding) and then are yours to sell or hold as you
      wish.

                 

                · Upon
      distribution, the shares will be directly deposited into an account in
      your name with the Company's stock plan administrator (currently Morgan
      Stanley Smith Barney). Account and tax information will be distributed
      shortly thereafter.

              
	
                Taxes

              	
                 

                · Your
      award is taxable at the time of distribution in the year in which you
      receive your shares of DTV common stock if the performance goals are
      met.

                 

                · The
      applicable withholding taxes are due upon distribution, whether or not you
      sell your shares. The Company will withhold shares of stock to satisfy the
      applicable tax withholdings, so you will receive shares net of tax
      withholdings.

                 

                · Please
      consult with your personal tax or financial advisor for more information
      regarding the tax consequences of your award.

                 

              
	
                Continued
      Employment

              	
                Continued
      employment or service through the end of the Performance Period is
      required as a condition of receiving your award and the rights and
      benefits under the plan. Partial employment or service, even if
      substantial, during the Performance Period will not entitle you to any
      proportionate award, or avoid or mitigate a termination of rights and
      benefits upon or following a termination of employment or services except
      as otherwise provided in the “Impact of Termination” section
      below.

              
	
                Impact
      of Termination

              	
                If
      you leave the company for any reason within the first calendar year of the
      Performance Period, your award is forfeited.

              
	
                Resignation
      or Term for Cause

              	
                If
      you resign from the Company or are terminated for cause at any time, you
      forfeit all awards.

              
	
                 

                · Term
      Without Cause (e.g., Layoff)

                 

                 

                · Retirement
      *

                 

                 

                · Long-Term
      Disability or Death

                 

              	
                 

                · You
      are eligible for a pro-rated award based on the number of full calendar
      years of service (January through December) completed during the
      Performance Period and on plan performance assessed at the end of the
      Performance Period.

                 

                 

                · Any
      shares earned will be distributed as soon as practicable in the year
      following the end of the Performance Period.

                 

              
	
                Impact
      of Leave of Absence

              	
                Absence
      from work caused by military service, authorized sick leave, or other
      leave approved by the Company will not be considered a termination of
      employment by the Company if reemployment upon the expiration of the leave
      is required by contract or law, or if the leave is for a period of not
      more than 90 days. The Company reserves the right to adjust grants for
      employees on leave in excess of 90 days.

              
	
                Recovery
      of Stock Awards

              	
                If
      the financial or operating results used to determine the payout of shares
      are subsequently restated or revised such that fewer shares would have
      been awarded using such restated or revised results, the Company will be
      entitled to recover those shares that should not have been awarded. See
      the policy statement in the 2010 Proxy Statement section “Compensation
      Discussion and Analysis.”

              

      

      

      
        	
                 
      

              	
                *
      Retirement means termination of employment at age 55 or older, with 5 or
      more years of Continuous Service as defined by the Pension Plan, and
      immediate commencement of Pension Plan
benefits.

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