Exhibit 10.3
REAFFIRMATION AND RATIFICATION AGREEMENT
May 31, 2006
Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
825 Third Avenue
New York, New York 10022
Ladies and Gentlemen:
Reference is made to the (a) Securities Purchase Agreement, dated as of February
8, 2005 between eLEC Communications Corp., a New York corporation (the
"Company") in favor of Laurus Master Fund, Ltd., a Cayman Islands company
("Laurus") (as amended, modified or supplemented from time to time, the
"Securities Purchase Agreement"); (b) the Subsidiary Guaranty, dated as of
February 8, 2005 made by Telecarrier Services, Inc., a Delaware corporation
("Telecarrier"), Vox Communications Corp., a Delaware corporation ("Vox"), New
Rochelle Telephone Corp, a New York corporation ("New Rochelle"), AVI Holding
Corp, a Texas corporation ("AVI") TelcoSoftware.com Corp., a Delaware
corporation ("Telco") and Line One, Inc. a New York corporation ("Line One") in
favor of Laurus (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), (c) Master Security Agreement dated as of February 8,
2005 made by the Company, Telecarrier, Vox, New Rochelle, AVI, Telco, and Line
One in favor of Laurus (as amended, modified or supplemented from time to time,
the "Master Security Agreement") and (d) Stock Pledge Agreement dated as of
February 8, 2005 made by the Company, in favor of Laurus (as amended, modified
or supplemented from time to time, the "Stock Pledge Agreement") (the Securities
Purchase Agreement, the Subsidiary Guaranty, the Master Security Agreement and
the Stock Pledge Agreement, collectively, the "Existing Security and Guaranty
Agreements").
To induce Laurus to provide additional financial accommodations to the
Company evidenced by (i) that certain Secured Term Note, dated the date hereof,
made by the Company in favor of Laurus (as amended, modified or supplemented
from time to time, the "New Laurus Term Note"), (ii) the Purchase Agreement
referred to in the New Laurus Term Note (as amended, modified or supplemented
from time to time, the "New Laurus Purchase Agreement"), (iii) the Related
Agreements referred to in, and defined in, the New Laurus Purchase Agreement;
(iv) that certain Amended and Restated Secured Term Note with a scheduled
maturity date of February 8, 2008 (as amended, modified or supplemented from
time to time, the "February Note"); (v) that certain Amended and Restated
Secured Term Note with a scheduled maturity date of November 30, 2008 (as
amended, modified or supplemented from time to time, the "November Note") (the
agreements set forth in the preceding clauses (i) through (v), inclusive,
collectively, the "New Laurus Agreements"), each of the Company, Telecarrier,
Vox, New Rochelle, AVI, Telco, and Line One hereby:
(a) represents and warrants to Laurus that it has reviewed and approved
the terms and provisions of each of the New Laurus Agreements and the documents,
instruments and agreements entered into in connection therewith;
(b) acknowledges, ratifies and confirms that all indebtedness incurred
by, and all other obligations and liabilities of, each of the Company,
Telecarrier, Vox, New Rochelle, AVI, Telco, and Line One under each of the New
Laurus Agreements are (i) "Obligations" under, and as defined in the Subsidiary
Guaranty, (ii) "Obligations" under, and as defined in, the Master Security
Agreement and (iii) "Indebtedness" under, and as defined in, the Stock Pledge
Agreement;
(c) acknowledges, ratifies and confirms that each of the New Laurus
Agreements are "Documents" under, and as defined in, each of the Subsidiary
Guaranty, the Master Security Agreement and the Stock Pledge Agreement;
(d) acknowledges, ratifies and confirms that all of the terms,
conditions, representations and covenants contained in the Existing Security and
Guaranty Agreements are in full force and effect and shall remain in full force
and effect after giving effect to the execution and effectiveness of each of the
New Laurus Agreements (provided that the representations and warranties made by
the Company in the existing Security and Guarantee Agreements shall be true and
correct only as of the date of such agreements);
(e) represents and warrants that no offsets, counterclaims or defenses
exist as of the date hereof with respect to any of the undersigned's obligations
under any Existing Security and Guaranty Agreements; and
(f) acknowledges, ratifies and confirms the grant by each of the
Company, Telecarrier, Vox, New Rochelle, AVI, Telco, and Line One to Laurus of a
security interest in the assets of (including the equity interests owned by)
each of the Company, Telecarrier, Vox, New Rochelle, AVI, Telco, and Line One ,
respectively, as more specifically set forth in the Existing Security and
Guaranty Agreements.
(g) This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of law provisions thereof.
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In Witness Whereof, the undersigned have executed this Reaffirmation
and Ratification Agreement this 31st day of May, 2006.
eLEC COMMUNICATIONS CORP.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
NEW ROCHELLE TELEPHONE CORP.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
TELECARRIER SERVICES, INC.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
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VOX COMMUNICATIONS CORP.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
AVI HOLDING CORP.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
TELCOSOFTWARE.COM CORP.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
LINE ONE, INC.
By: /s/ Paul H. Riss
--------------------
Name: Paul H. Riss
Title: Chief Executive Officer
Address: 75 South Broadway, Suite 302,
White Plains, NY 10602
Facsimile: 914-682-0820
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Acknowledged and Agreed to by:
LAURUS MASTER FUND, LTD.
By: /s/ Eugene Grin
-------------------
Name: Eugene Grin
Title: Director
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