LAURUS MASTER FUND, LTD.
c/o M&C Corporate Services Limited
P.O. Box 309 GT
Ugland House
South Church Street
George Town
Grand Cayman, Cayman Islands
May 31, 2006
eLEC Communications Corp.
75 South Broadway Suite 302
White Plains, New York 10601
Attn: Paul Riss
Re: Restricted Account: Account Number 2704057914,
Account Name: eLEC Communications Corp - Restricted Account, maintained
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at North Fork Bank (the "Restricted Account").
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Reference is made to (i) that certain Securities Purchase Agreement,
dated as of May 31, 2006 (as amended, modified or supplemented from time to
time, the "Purchase Agreement"), by and between eLEC Communications Corporation,
a New York corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser") and (ii) that certain Restricted Account Agreement, dated as of May
31, 2006 (as amended, modified or supplemented from time to time, the
"Restricted Account Agreement"), by and among the Company, Laurus and North Fork
Bank (the "Bank"). Capitalized terms used but not defined herein shall have the
meanings ascribed them in the Purchase Agreement or the Restricted Account
Agreement, as applicable. Pursuant to the Section 3.2 of the Purchase Agreement,
the Company is required to place $1,050,000 in the Restricted Account, and,
subject to the provisions of this letter, the Purchase Agreement and any Related
Agreement, maintain such amount in the Restricted Account for as long as the
Purchaser shall have any obligations outstanding under the Note and to assign
the Restricted Account for the benefit of the Purchaser as security for the
performance of the Company's obligations to the Purchaser.
The Purchaser and the Company desire to clarify certain
aspects regarding the use of funds contained in the Restricted Account. The
Company and/or a Subsidiary of the Company intends to acquire (the
"Acquisition") equity interests of Liberty Bell Telecom, LLC (the "Acquired
Entity"). In connection with the Acquisition, for good consideration, the
receipt and sufficiency of which is here acknowledged, the Company and the
Purchaser agree that, so long as (i) no Event of Default (as defined in the
Notes) then exists or results from any such release, and (ii) the Company has
provided the Purchaser with (a) calculations satisfactory evidencing the cash
component of the purchase price of no more than $1,050,000 and (b) unaudited
financial statements of the Acquired Entity for the most recent quarter and
fiscal year-end, the Purchaser shall direct the Bank, pursuant to a Release
Notice (as defined in the Restricted Account Agreement), to wire an amount of
funds determined in the Purchaser's sole discretion from the Restricted Account
to such bank account as the Company may direct the Purchaser in writing. The
Purchaser shall not be under
any obligation to release any amounts pursuant to this paragraph and the release
of such amounts shall be in the Purchaser's sole and absolute discretion.
This letter may not be amended or waived except by an
instrument in writing signed by the Company and the Purchaser. This letter may
be executed in any number of counterparts, each of which shall be an original
and all of which, when taken together, shall constitute one agreement. Delivery
of an executed signature page of this letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof or thereof, as
the case may be. This letter shall be governed by, and construed in accordance
with, the laws of the State of New York. This letter sets forth the entire
agreement between the parties hereto as to the matters set forth herein and
supersede all prior communications, written or oral, with respect to the matters
herein.
If the foregoing meets with your approval please signify your
acceptance of the terms hereof by signing below.
Signed,
Laurus Master Fund, Ltd.
By: /s/ Eugene Grin
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Name: Eugene Grin
Title: Director
Agreed and Accepted this 31st day of May 2006.
ELEC COMMUNICATIONS CORP.
By: /s/ Paul H. Riss
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Name: Paul H. Riss
Title: Chief Executive Officer