SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 6, 2013
(Exact name of registrant as specified in its charter)
(State or other
jurisdiction of incorporation)
(Commission File No.)
(I.R.S. Employer Identification No.)
75 South Broadway, Suite 400
White Plains, NY 10601
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
? Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13-4(e) under the Exchange Act (17 CFR 240.13e-4(c))21723200
Item 1.01 Entry into a Material Definitive Agreement.
On February 8, 2013, LV Administrative Services, Ltd. (“LV”), as agent acting on behalf of certain holders of debt (the “Holders”), entered into an assignment and assumption agreement (the “Assignment Agreement”), as assignor, with NetCapital.com LLC (“NCC”), as assignee, pursuant to which LV assigned the Notes (as hereinafter defined), and all rights owing thereunder, to NCC for a total purchase price of $350,000, payable over eight weeks beginning on February 15, 2013. The “Notes” as defined herein means those certain outstanding promissory notes previously issued by Pervasip Corp. (the “Company”) to the Holders, in the approximate principal aggregate amount of $7,044,000.
Effective February 6, 2013, the Company entered into a securities settlement agreement (the “Settlement Agreement”) with NCC, pursuant to which the Company shall pay $450,000 to NCC and, upon such payment in full, the outstanding aggregate principal amount shall be satisfied in full and the Notes shall be cancelled. Alternatively, NCC may convert the $450,000 due under the Settlement Agreement into shares of the Company’s common stock, par value $0.001 (the “Common Stock”), at a conversion price equal to $0.02 per share.
Under the Assignment Agreement, the interest rate on the Notes is reset to zero percent per annum beginning on January 31, 2012, and LV shall not be permitted to, among other things, attempt to collect payments on the Notes from the Company, pledge the Notes to third parties, or foreclose on the Notes.
As further consideration, the Company issued to the Holders a series of three-year warrants to purchase an aggregate of 10 million shares of Common Stock at a price of $0.01.
The description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 10.1 and 10.2 to this Current Report on Form 8-K.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The shares of Common Stock to be issued pursuant to the Settlement Agreement shall not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws due to exemptions from registration under the Securities Act pursuant to Section 4(2) and Rule 506 of Regulation D promulgated thereunder.
Item 9.01 Financial Statements and Exhibits.
Securities Settlement Agreement by and between Pervasip Corp. and NetCapital.com LLC
Assignment and Assumption Agreement by and between LV Administrative Services, Inc., as agent, Pervasip Corp. and NetCapital.com LLC
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 19, 2013
/s/ Paul H. Riss
Name: Paul H. Riss
Title: Chief Executive Officer
SECURITIES SETTLEMENT AGREEMENT
This securities settlement agreement (the “Agreement”) is by and between NetCapital.com LLC (“Claimant”) and the undersigned ("Company" or "Debtor") and is entered into as of the effective date below, all with reference to the following facts, which the parties agree are true and correct:
Claimant acquired, on or about this date, certain debt rights, noted below, along with the rights to common stock and conversion of a prior debt holder of the Company;
Claimant is, therefore, both an investor and a creditor of the Company entitled to payment and conversion of outstanding debt securities, including common stock conversion of such debt securities, as referenced in agreement(s) and document(s), including between the parties hereto, such as listed below;
Debtor seeks to avoid dispute, retire debt from its books and records, make effort to improve its financial picture for potential acquisition and future fundings by eliminating or limiting the extent of debt the Debtor faces, and honor such conversion and related rights acquired by the Claimant;
THEREFORE, THE PARTIES AGREE TO SETTLE, AND THE PURPOSE OF THIS AGREEMENT IS TO REFLECT SUCH SETTLEMENT;
NOW THEREFORE, the parties hereto hereby represent, warrant, and covenant with and to each other and confirm all of the above and following to the transfer agent of Company and others to whom it may concern, as follows:
Obligations Owing. Reference is made to the debt securities identified on the signature page hereof (the "Debt"). As to the Debt, any past or current dispute, potential defenses and disputed considerations, are waived by the Company, and the debt obligation is hereby confirmed as owed.
Exchange. Claimant and the Company hereby agree to confirm the exchange of the Debt for securities of the Company as follows: based upon the provisions of this Agreement, the Company is to repay the principal amount of the Debt ("Principal") with interest at a rate set below per annum ("Interest") by the "Maturity Date" (below) in accordance with conversion rights to the Claimant so that, at the election of the Claimant, it may convert the Principal in whole into shares of common stock in the Company (the "Shares"). This obligation of the Company is in the nature of a debenture but in lieu of issuing a debenture form, the Company shall honor the exchange, payment obligation and conversion rights pursuant to this Agreement. Thus, concurrently with the execution of this Agreement, Claimant surrenders hereby the Debt and its interest in the Debt strictly for the payment, conversion, Shares and related rights under this Agreement. (Claimant will endeavor to use best efforts, for non-material file recording, to deliver to the Company any promissory notes, commercial paper, or other evidences of the Debt, but such ministerial obligation shall not be a condition to the conversion, Shares, and enforcement rights of this Agreement by Claimant.) With reference to Rule 144 promulgated under the Securities Act of 1933, as amended, the exchange hereby is made without any additional consideration applicable.
Payment of Principal and Interest. The Company promises to pay to Claimant the Principal and Interest on the Maturity Date, or sooner if required hereby, unless to the extent of any completed conversion of Principal and or Interest as stated herein.
THE COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT DUE HEREUNDER BY MAKING A PAYMENT EQUAL TO 110% OF THE PURCHASE PRICE OF SUCH PRINCIPAL AMOUNT ALONG WITH ANY ACCRUED INTEREST AT ANY TIME UPON THREE DAYS WRITTEN NOTICE TO THE CLAIMANT.
Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
Any default in the payment of the Principal of, Interest on, or liquidated damages in respect to this Agreement, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise); and or
The Company shall fail to file all reports required to be filed by it with the SEC pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise required by the Exchange Act or as required to be deemed a current public company as to disclosure including on any exchange or over the counter trading medium and or the Company is in, or accused of, being in violation of any law or regulation by written demand, court proceeding or similarly; and or
The material breach of any promise or representation in this Agreement and or related representation or agreement made by the Company and or any of its officers, which shall include, without limitation, the failure to deliver shares of common stock due Claimant on a conversion within four Business Days from the date of conversion or sooner, which delivery must be otherwise made per reasonable specifications of the Claimant (e.g. to brokerage firm account).
If any Event of Default occurs and is continuing, the full Principal amount of this Agreement, together with Interest and other amounts owing in respect thereof, shall become immediately due and payable in cash except the Claimant may elect any part thereof to be paid in Shares as part of any conversion hereunder in which case such Shares shall be due.
5. Conversion of Debt into Common Stock.
At any time until both the Principal and Interest is paid in full by the Company and this Agreement is no longer outstanding, the Principal shall be convertible into shares of common stock of the Company at a price of at a conversion price of $0.02 per share. The Claimant shall effect conversion by delivering to the Company the form of Notice of Conversion attached hereto as Exhibit A (a "Notice of Conversion"), specifying the date on which such conversion is to be effected (a "Conversion Date") and Shares shall then be delivered by the Company within four Business Days.
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Agreement. Claimant agrees to not engage in any activities or strategies that would depress the trading price of the Company’s Common Stock, such as short selling, hedging, or selling more than (i) $15,000 in Common Stock in one day, or (ii) 30% of the trading volume in shares of Common Stock in one day, whichever limit is higher.
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile, (iii) the first Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
Notwithstanding anything to the contrary herein contained, the Claimant may not convert this Agreement to the extent such conversion would result in the Claimant, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules promulgated thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock.
In conjunction with the granting of conversion rights to the Claimant, Claimant shall cancel debt assigned to it from LV Administrative Services, Ltd. (“LV”) in accordance with the following schedule:
With the first assignment of debt to Claimant from LV, Claimant shall immediately cancel all debt assigned to it, except for $100,000. Of the $100,000 balance owed by Company to Claimant, the full amount or any portion thereof shall be convertible into Shares at a conversion rate of $0.02 per share.
For each additional assignment of debt from LV to Claimant, the entire amount of debt assigned to Claimant, less the actual cash payment sent to LV shall be cancelled, and the portion of debt not cancelled shall be convertible in accordance with the provisions of paragraph 5 (A) of this Agreement.
Any remaining balance of debt assigned from LV to Claimant shall be adjusted or canceled so that principal amounts due by the Company to the Claimant, and paid via conversions into stock, prepayments or other methods, shall not exceed $450,000 in the aggregate, for the assignment to the Claimant of all of the debt owed to LV by the Company.
6. Herein meanings are, unless otherwise defined herein:
"Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
"Common Stock" means the common stock of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed.
"Person" means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
7. Claimant Status Claimant represents and the Company confirms such representation, as follows:
Claimant believes it is not an affiliate, now or by way of this Agreement; and
Claimant is (i) an "accredited investor" as that term is defined in Rule 501 of the General Rules and Regulations under the Securities Act of 1933, as amended, the "Act" by reason of Rule 501 and (ii) able, by reason of the business and financial experience, a sophisticated investor.
Gender. Wherever the context shall require, all words herein in the masculine gender shall be deemed to include the feminine or neuter gender, all singular words shall include the plural, and all plural shall include the singular.
Severability. If any provision hereof is deemed unenforceable by a court of competent jurisdiction, the remainder of this Agreement, and the application of such provision in other circumstances shall not be affected thereby.
Waiver. No waiver of any provision of this Agreement shall be valid unless in writing and signed by the waiving party. The failure of any party at any time to insist upon strict performance of any condition, promise, agreement or understanding set forth herein, shall not be construed as a waiver or relinquishment of any other condition, promise, agreement or understanding set forth herein or of the right to insist upon strict performance of such waived condition, promise, agreement or understanding at any other time.
Expenses. Except as otherwise provided herein, or agreed in writing, each party hereto shall bear all expenses incurred by each such party in connection with this Agreement and in the consummation of the transactions contemplated hereby and in preparation thereof.
Amendment. This Agreement may only be amended or modified at any time, and from time to time, in writing, executed by the parties hereto.
Notices. Any notice, communication, request, reply or advice (hereinafter severally and collectively called "Notice”) in this Agreement provided or permitted to be given, may be made or be served by delivering same by overnight mail or by delivering the same by a hand-delivery service, such Notice shall be deemed given when so delivered or sooner as stated within this Agreement.
Captions. Captions herein are for the convenience of the parties and shall not affect the interpretation of this Agreement.
Counterpart Execution. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument and this Agreement may be executed by fax or email.
Assignment. This Agreement is not assignable without the written consent of the parties except Claimant has the right to assign the obligations and Shares owed to it hereunder as it may determine.
Parties in Interest and Affiliates. Provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties, their heirs, executors, administrators, other permitted successors and assigns, if any. Nothing contained in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns. For this Agreement, affiliated or affiliate, either word being capitalized or not herein, shall mean controlling, controlled by or under direct or indirect common control with such person and includes shareholders, officers, directors, advisors, employees, attorneys, accountants, auditors, subsidiaries, parent companies, related companies and founders, to broadly defined, to be interpreted to protect the Claimant, beyond just persons and firms customarily considered affiliated under federal securities laws and regulations.
Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties on the subject matter hereof and supersedes all prior recent settlement discussions and verbal agreements.
Construction and Misc. This Agreement shall be governed exclusively by the laws of the State of New York without reference to conflict of laws and the exclusive venue for any action, claim or dispute in respect of this Agreement shall be such court of competent jurisdiction as is located in New York County New York as the sole venue. The parties agree and acknowledge that each has reviewed this Agreement and the normal rule of construction that agreements are to be construed against the drafting party shall not apply in respect of this Agreement given the parties have mutually negotiated and drafted this Agreement. The Company irrevocably submits to the exclusive jurisdiction stated herein and the parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the said place.
Effective Date: February 6, 2013
Principal Amount due hereunder: $450,000.
Purchase Price: $350,000
Interest due hereunder: 0% per annum
Maturity Date: Date that is 18 months from this Effective Date
Description of Debt: Purchase of debt
Assignor: LV Administrative Services, Ltd.
Name of Company: Pervasip Corp
State of Incorporation of Company: New York
Address of Company: 75 South Broadway #400,White Plains, NY 10601
Name of Claimant: NetCapital.com, LLC
The undersigned hereby execute this document, which shall be deemed effective on the Effective Date noted:
/s/ Paul H. Riss
Name: Paul H. Riss
Title: Chief Executive Officer
/s/ John Fanning
Name: John Fanning
Title: Authorized Signatory
FORM NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Securities Settlement Agreement of the "Company" noted below, dated February 6, 2013 into shares of common stock (the "Common Stock") of the Company according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay a reasonable transfer expense payable with respect thereto.
Company Name: Pervasip Corp.
Date to Effect Conversion: _____________
Conversion Price: $0.02 per Share:
Principal Amount of Agreement to be converted: ___________________
Number of shares of Common Stock to be issued: ___________________
Title: Authorized Signatory
Send Shares Via Federal Express to:
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is made as of the Effective Date below by and between the undersigned assignor on behalf of the Holders (as hereafter defined) (“Assignor”) and the undersigned assignee (“Assignee” and with Assignor, the “Parties”) and is joined in by the subject debtor “Trading Company” or “Borrower,” identified on the signature page hereof, for the express purpose stated.
WHEREAS, the Holders hold debt securities in at least the aggregate principal amount stated on the signature page hereto (the “Debt”) in the Borrower; and
WHEREAS, the Holders have designated Assignor as their agent for purposes of assigning and transferring the Debt including their rights in the Debt to the Assignee and the Assignee wishes to accept such assignment, purchase and transfer, all subject to the terms and conditions herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, and for other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
The Assignor represents that no Holder is or has been an affiliate, meaning an officer, director or 5% or more shareholder, of the Trading Company and no Holder is restricted from assigning the Debt to Assignee; and
Assignee acknowledges that no Holder has any conversion rights into common stock of the Trading Company with respect to and to the extent of the Debt.
Subject to the terms and conditions set forth herein (including without limitation Section 10(d)), Assignor, on behalf of Holders, hereby assigns and transfers to Assignee, and Assignee hereby purchases and acquires from Assignor, the Debt (which includes, without limitation, all accrued interest thereon). As consideration for such Assignment, Assignee shall pay the Assignor, for the ratable benefit of the Holders, the amount on the signature page hereof being the “Assignment Payment,” which may be further detailed herein or in an Exhibit hereto between the parties. Notwithstanding anything contained herein to the contrary, Assignor makes no representations or warranties of any nature whatsoever with respect to the security interests of the Holders in and to the assets of the Borrower and Assignee acknowledges that it is not relying on any such security interests of Holders. In addition, Assignee acknowledges that the assignment hereunder does not include any closing fees, diligence fees or any other fees which Holders have heretofore received in connection with the transactions related to the Debt.
2 Payment; Benefit and Assignment.
In the event Assignee fails to make any payment hereunder to Assignor within fifteen (15) days of the applicable due date, this Agreement shall, at Assignor’s option, upon written notice from Assignor to Assignee, terminate.
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 shall assign or transfer all or any portion of this Agreement without the prior written consent of the other party, which such consent shall not be unreasonably withheld; provided further that if Assignee shall be in breach of this Agreement Assignor shall be permitted to assign and/or transfer this Agreement to any third party without restriction or consent of Assignee.
Waiver. Any party hereto shall have the right to waive compliance by the other of any term, condition or covenant contained herein. Such waiver shall not constitute a waiver of any subsequent failure to comply with the same or any different term, condition or covenant. No waiver, however, is valid unless in writing and the other Party is notified of same.
Applicable Law and Venue. THE PARTIES HERETO HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. ASSIGNEE HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO ASSIGNEE AT THE ADDRESS FOR ASSIGNEE SET FORTH ON THE SIGNATURE PAGE HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. THE FOREGOING SHALL ALSO APPLY TO THE ASSIGNOR AND HOLDERS (FOR THE BENEFIT OF THE ASSIGNEE), INCLUDING SERVICE BY MAIL.
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.
.Miscellaneous. The Assignee and Assignor represent they are each: (1) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated in relation to the Securities Act of 1933, as amended, and (2) sophisticated and experienced in making investments, and (3) capable, by reason of their business and financial experience, of evaluating the relative merits and risks of an investment in the securities. Wherever the context shall require, all words herein in the masculine gender shall be deemed to include the feminine or neuter gender, all singular words shall include the plural, and all plural shall include the singular. From and after the date of this Agreement, each of Assignor and Assignee agrees to execute whatever additional reasonable documentation or instruments required by the other which are necessary to carry out the intent and purposes of this Agreement or to comply with any law. The failure of any party at any time to insist upon strict performance of any condition, promise, agreement or understanding set forth herein, shall not be construed as a waiver or relinquishment of any other condition, promise, agreement or understanding set forth herein or of the right to insist upon strict performance of such waived condition, promise, agreement or understanding at any other time. Except as otherwise provided herein, each party hereto shall bear all expenses incurred by each such party in connection with this Agreement and in the consummation of the transactions contemplated hereby and in preparation thereof. Any notice, communication, request, reply or advice (hereinafter severally and collectively called “Notice”) in this Agreement provided or permitted to be given, shall be made or be served by delivering same by overnight mail or by delivering the same by a hand-delivery service, such Notice shall be deemed given when so delivered. For all purposes of Notice, the addresses of the parties shall be the address for such party set forth on the signature page hereto or as may hereafter be specified in a Notice to the other party designated as a change of address. Assignor and Assignee also specifically agree to promptly cooperate with the other in respect of the transactions contemplated by this Agreement.
Headings. The paragraph headings of this Agreement are for convenience of reference only and do not form a part of the terms and conditions of this Agreement or give full notice thereof.
Severability. Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Entire Agreement. This Agreement contains the entire understanding between the parties, no other representations, warranties or covenants having induced either party to execute this Agreement, and supersedes all prior or contemporaneous agreements with respect to the subject matter hereof. This Agreement may not be amended or modified in any manner except by a written agreement duly executed by the party to be charged, and any attempted amendment or modification to the contrary shall be null and void and of no force or effect.
Joint Drafting and Execution. The parties agree that this Agreement shall be deemed to have been drafted jointly by all parties hereto, and no construction shall be made other than with the presumption of such joint drafting. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and which together shall constitute one and the same instrument. In lieu of the original documents, a facsimile transmission or copy of the original documents shall also be as effective and enforceable as the original.
Additional Provisions. The following additional terms and provisions are hereby added to and are part of this Agreement. In the event of any inconsistency between the terms and provisions of this Section 10 and any other term or provision set forth in this Agreement, the terms and provisions of this Section 10 shall control.
The parties acknowledge that the holders of the Debt (not including the Previously Assigned Debt) are Valens Offshore SPV I, Ltd., Valens Offshore SPV II, Corp. and Valens U.S. SPV I, LLC (the “Holders”).
The Assignor has been designated by the Holders to act as their agent and is authorized to bind and contract for the assignment hereunder by the Holders.
By the Assignor and Assignee signing this Agreement, the Holders, the Assignor and the Assignee will act in conformance with this Agreement and will not independently act in any manner that conflicts with this Agreement.
The Debt purchased hereby constitutes all of the debt owed to the Holders by the Borrower; provided, however, that the Assignee hereby acknowledges and agrees that a portion of the undiscounted principal indebtedness arising under the notes referenced on Exhibit A hereto (not including the Debt) in the aggregate amount of $5,608,926.05 (the “Previously Assigned Debt”) has previously been assigned by Assignor to JDM Group, LLC and neither the Assignor nor any Holder makes any representation or warranty of any nature whatsoever with respect to such Previously Assigned Debt . Notwithstanding anything contained to the contrary in this Agreement, Assignee’s interest in the Debt (and the amount of Debt deemed purchased by the Assignee hereunder and with respect to which Assignee has any rights, claims and/or interests) shall at no time exceed Assignee’s Assignment Percentage of the Debt. For purposes hereof, (a) the term “Assignment Percentage” means a percentage equal to a fraction the numerator of which is the cash payment of the Purchase Price actually received by Assignor and the denominator of which is the then unpaid portion of the Purchase Price and (b) the term “Purchase Price” means $350,000. Accordingly, as and when Assignor receives additional installments of the Purchase Price in cash in accordance with the payment schedule set forth below, Assignee’s Assignment Percentage of the Debt shall increase. So long as the Assignee has not materially breached the terms of this Agreement (it being acknowledged that a payment default, for example, shall be deemed a material breach hereof), the Holders are bound (subject to receipt in cash of the applicable Purchase Price Payments) to assign the full Debt to Assignee so that the Holders cannot attempt to collect the Debt from the Borrower, pledge the Debt to others, foreclose on the Debt or act in any way contrary to this Agreement, while this Agreement remains in effect.
This Agreement shall be deemed effective on the date signed by all parties hereto (the “Effective Date”); provided however, in the event Assignor shall not have received on or prior to February 15, 2013 (without any further cure or grace period) (i) the initial portion of the purchase price in the amount of $50,000 and (ii) the original duly authorized and executed Warrants (as defined in Section 10(l) below), then Assignor may, at its option, terminate this Agreement by written notice thereof to Assignee.
The total Debt to be assigned hereunder is the amount of $7,043,849.96.
The total purchase price for the Debt is $350,000 reflecting a discount.
The remaining portion of the Purchase Price, reflecting the discount, shall be paid in cash in full on or prior to the eight week anniversary of the Effective Date. Assignee may pay the remaining portion of the Purchase Price in a single payment or in multiple payments of no less than $25,000 each. Each such payment received by Assignor will result in a prorata reduction of the undiscounted Debt.
No breach of this Agreement shall apply unless the non-breaching party notifies the breaching party in writing of such breach at least 20 days prior to the breach being deemed to be applicable, and the breach is not cured within said 20 day notice period; provided that this provision shall not be applicable to Assignee’s failure to make any Purchase Price payment, all of which payments are to be made in accordance with the terms of Section 2A and the immediately preceding paragraph. In the case of termination of this Agreement, the Assignee shall be released from the obligation of Assignee to make any further payments hereunder to Assignor. Should Assignee be in breach of this Agreement due to non-payment (a “Missed Payment”), then Assignor and Assignee agree that Borrower may make payment(s) directly to Assignor in respect of the Debt not yet assigned to Assignee hereunder (the “Unassigned Debt”) and receive a corresponding reduction in the outstanding balance of the Unassigned Debt in an amount equal to the undiscounted amount of Debt that would have been assignable to Assignee had Assignee made such payment(s) to Assignor in a timely manner. Any such payments by Borrower to Assignor must be made not later than one (1) business day following Assignor’s notice to Borrower of a Missed Payment.
Assignee hereby acknowledges that: (a) the following subsidiaries and/or affiliates of Borrower are inactive: Avi Holding Corp., Line-One, Inc. and Pervasip Canada, Corp., (b) the relationship between Assignor and Assignee shall be independent, that of a purchaser and seller of a property interest, and (except for the Purchase Price installment payments to be made by Assignee to Assignor) not a debtor and creditor relationship, (c) nothing herein and/or by the conduct of the Parties hereto or otherwise shall be construed to be or to create any partnership, joint venture, other joint enterprise or fiduciary relationship between Assignor and the Holders on the one hand and the Assignee on the other, (d) it shall not enforce or take any action to enforce any lien or security interest in the assets of the Borrower, (e) all cash payments received by Assignee in respect of the Debt shall be subordinated in favor of Assignor and the Holders and until such time as Assignor on behalf of the Holders shall have received payment on the debt owing by Borrower to Assignor and the Holders of at least $350,000 (inclusive of purchase price payments hereunder) Assignee shall not be entitled to retain any such proceeds, all of which if received by Assignee shall be held by Assignee in trust for Assignor and turned over to Assignor immediately following Assignee’s receipt thereof, (f) neither Assignor nor any Holder shall be responsible to Assignee for any statements, warranties or representations made by Borrower or any other party in or in connection with the loan documents relating to the underlying Debt, the perfection of any lien on the collateral granted under any of such loan documents, or for the due execution, legality, validity, enforceability, legal sufficiency or value of such loan documents, or for Borrower’s financial condition or for Borrower’s ability to repay the Debt or otherwise perform under the terms of such loan documents, (g) it has made and shall continue to make independently and without reliance upon Assignor and/or any Holder its own investigation and evaluation of Borrower’s business, property and financial condition and the collateral, and (h) it has evaluated such loan documents as it has deemed necessary and its decision to acquire its interest hereunder was based on such investigation and evaluation, in addition to the representations and agreements herein.
The parties acknowledge that notwithstanding anything contained in any document, instrument or agreement evidencing the Debt, the interest rate payable by Borrower in respect of the Debt is hereby reset at zero percent (0%), effective as of January 31, 2013; provided that in the event that Assignee shall at any time be in breach of this Agreement or the Warrants, the interest rate on that portion of the Debt not deemed purchased by Assignee under Section 10(d) shall be reinstated to the interest rate which was applicable to such Debt immediately prior to entering into of this Agreement (assuming that JDM Group, LLC was in breach of its assignment and assumption agreement with Assignor).
As further consideration for Assignors agreements herein, the Trading Company hereby agrees to issue to the Holders on the Effective Date a series of three-year warrants to purchase an aggregate of 10 million shares of common stock of the Trading Company at a price of $0.01, in the form attached hereto as Exhibit B (the “Warrants” and each, a “Warrant”). For further clarification, on the Effective Date, the Trading Company shall issue (i) to Valens Offshore SPV I, Ltd. a Warrant exercisable into 7,240,000 shares of common stock of the Trading Company, (ii) to Valens Offshore SPV II, Corp. a Warrant exercisable into 2,329,000 shares of common stock of the Trading Company; and (iii) to Valens U.S. SPV I, LLC a Warrant exercisable into 431,000 shares of common stock of the Trading Company..
See Section 10(e)
Principal Amount of Debt to be Assigned:
Description of Debt to be Assigned:
Above and as described under Exhibit A (subject to the Previously Assigned Debt)
The Purchase Price $350,000
Name of Trading Company (Borrower):
Pervasip Corp. (f/k/a eLEC Communications Corp.)
Name of Assignor:
LV Administrative Services, Inc., as Agent
Address of Assignor:
420 Lexington Avenue, Suite 2840, New York, NY 10170
Name of Assignee:
Address of Assignee:
PO Box 277 Hingham, MA 02043
The undersigned hereby execute this document, which shall be deemed effective on the Effective Date noted:
LV ADMINISTRATIVE SERVICES, INC., AS AGENT
/s/ Eugene Grin
Name: Eugene Grin
/s/ John Fanning
Name: John Fanning
Title: Authorized Signatory
The undersigned trading company hereby joins in for the following express purposes: it hereby agrees and confirms the statements as to the past and current nature of the Debt and relationship with the Assignor and statements otherwise above are true, correct and complete.
Name of Trading Company: Pervasip Corp. (f/k/a eLEC Communications Corp.) (“Borrower”)
/s/ Paul H. Riss
Name: Paul H. Riss
Title: Chief Executive Officer
Description of Debt and Holders
Secured Term Note dated as of May 28, 2008 made by Borrower in favor of Valens Offshore SPV II, Corp. in the original principal amount of $1,400,000, as amended modified and supplemented from time to time.
Second Amended and Restated Secured Term Note dated as of May 28, 2008 made by Borrower in favor of Valens Offshore SPV I, Ltd. (as assignee of Laurus Master Fund, Ltd.) in the original principal amount of $1,428,000, as amended modified and supplemented from time to time.
Amended and Restated Secured Term Note dated as of May 28, 2008 made by Borrower in favor of Valens Offshore SPV II, Corp. in the original principal amount of $600,000, as amended modified and supplemented from time to time.
Amended and Restated Secured Term Note dated as of May 28, 2008 made by Borrower in favor of Valens Offshore SPV I, Ltd. in the original principal amount of $3,400,000, as amended modified and supplemented from time to time.
Fourth Amended and Restated Secured Term Note dated as of September 28, 2008 made by Borrower in favor of Valens Offshore SPV I, Ltd. (as assignee of Laurus Master Fund, Ltd.) in the original principal amount of $1,966,667, as amended modified and supplemented from time to time.
Second Amended and Restated Secured Term Note dated as of December 12, 2008 made by Borrower in favor of Valens Offshore SPV I, Ltd. in the original principal amount of $1,100,000, as amended modified and supplemented from time to time.
Secured Term Note dated as of February 18, 2009 made by Borrower in favor of Valens U.S. SPV I, LLC in the original principal amount of $348,000, as amended modified and supplemented from time to time.
Secured Term Note dated as of February 18, 2009 made by Borrower in favor of Valens Offshore SPV II, Corp. in the original principal amount of $252,000, as amended modified and supplemented from time to time.
Demand Note dated as of October 6, 2009 made by Borrower in favor of Valens U.S. SPV I, LLC in the original principal amount of $10,000, as amended modified and supplemented from time to time.
Demand Note dated as of November 5, 2009 made by Borrower in favor of Valens U.S. SPV I, LLC in the original principal amount of $50,000, as amended, modified and supplemented from time to time.
All loan documents (other than any warrants, options or other equity interests received by any Holder) entered into in connection with the transactions contemplated by the foregoing
FORM OF COMMON STOCK PURCHASE WARRANT