Replies to post #5709 on Pervasip Corp (PVSP)

[Arthur]

Pervasip cannot be purchased without the consent of its lenders.

That's in the loan covenants.

http://www.sec.gov/Archives/edgar/data/90721/000101376209000320/ex103.htm

SECURED TERM NOTE

FOR VALUE RECEIVED, PERVASIP CORP. (f/k/a eLEC Communications Corp.), a New York corporation (the “Company”), hereby promises to pay to VALENS U.S. SPV I, LLC (the “Holder”) or its registered assigns or successors in interest, the sum of THREE HUNDRED FORTY-EIGHT THOUSAND DOLLARS ($348,000), together with any accrued and unpaid interest hereon, on September 28, 2010 (the “Maturity Date”) if not sooner paid.

ARTICLE II

EVENTS OF DEFAULT

2.1 Events of Default. The occurrence of any of the following events set forth in this Section 2.1 shall constitute an event of default (“Event of Default”) hereunder:
(a) Failure to Pay. The Company fails to pay when due any installment of principal, interest or other fees hereon in accordance herewith, or the Company fails to pay any of the other Obligations (under and as defined in the Master Security Agreement) when due, and, in any such case, such failure shall continue for a period of three (3) days following the date upon which any such payment was due;
(b) Breach of Covenant. The Company or any of its Subsidiaries breaches any covenant or any other term or condition of this Note in any material respect and such breach, if subject to cure, continues for a period of fifteen (15) days after the occurrence thereof.

(h) Change of Control. A Change of Control (as defined below) shall occur with respect to the Company, unless Holder shall have expressly consented to such Change of Control in writing. A “Change of Control” shall mean any event or circumstance as a result of which (i) any “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the date hereof), other than the Holder, is or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a fully diluted basis of the then outstanding voting equity interest of any Company (other than a “Person” or “group” that beneficially owns 35% or more of such outstanding voting equity interests of the Company on the date hereof), (ii) the Board of Directors of the Company shall cease to consist of a majority of the Company’s board of directors on the date hereof (or directors appointed by a majority of the board of directors in effect immediately prior to such appointment) or (iii) the Company or any of its Subsidiaries merges or consolidates with, or sells all or substantially all of its assets to, any other person or entity;

Pervasip acknowleges this in its financial reports.
http://www.sec.gov/Archives/edgar/data/90721/000143774911001580/pvsp_10k-113010.htm

In connection with the financings, the Company has agreed, so long as 25% of the principal amount of the financings are outstanding, to certain restrictive covenants, including, among others, that the Company will not declare or pay any dividends, issue any preferred stock that is subject to mandatory redemption prior to the one year anniversary of the maturity date as defined in the agreement, redeem any of its preferred stock or other equity interests, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, materially alter or change the scope of the Company’s business incur any indebtedness except as defined in the agreement, or assume, guarantee, endorse or otherwise become directly or contingently liable in connection with any other party’s obligations.

To secure the payment of all obligations to the lender, the Company entered into a Master Security Agreement that assigns and grants to the lender a continuing security interest and first lien on all of the assets of the Company and its subsidiaries.

So, if someone wants to buy Pervasip, it only has to purchase its debt from Valens LLC.
That's what NetCapital is doing.
They don't have to bother with purchasing shares on the open market, because, since Pervasip is in beach of its loan covenants, they can either compell the company to issue them a controling equity interest against its debt, or force the company into backrupty, where as main creditor, they will gain control of the company anyways.

So, no, PVSP is not a "buyout target", PVSP is already in the process of being sold out.
Didn't you notice ?