SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of event reported): February 17, 1998.
PURUS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-22408
DELAWARE 77-0234694
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
605 Tennant Avenue, Suite B
Morgan Hill, CA 95037
(Address of principal executive (Zip Code)
offices)
Registrant's Telephone Number: (408) 778-3465
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
On February 17, 1998, Purus, Inc. (the "Company"), made a
loan of $1,800,000 to Casa Solaz, Inc. ("CSI"), a private Nevada
corporation which recently commenced the business of
manufacturing, marketing, and installing prefabricated housing
units in South America. The loan bears interest at the rate of
6% per annum, and all principal and interest is due December 31,
1999. The loan is secured by all of the assets of CSI, including
all of the capital stock of its Venezuelan subsidiaries
conducting operations in South America. The loan is convertible
at the option of the Company at any time prior to maturity into
450,000 shares of the Series Convertible Preferred Stock of CSI.
As a negotiated element of the transaction, CSI granted to Purus
a warrant to purchase 550,000 additional shares of Series A
Convertible Preferred Stock at a price of $4.00 per share
exerciseable on or before December 31, 1998. The Series A
Convertible Preferred Stock provides for a cumulative dividend at
the rate of 8% per annum and is convertible to common stock of
CSI at the rate of one share of common for one share of
preferred.
Donald Winstead, a former officer and director of the
Company, is an officer and director of CSI. Mr. Winstead
resigned his offices with the Company in January 1998, and did
not participate as a director or officer in the deliberations on,
or approval of, the loan transaction with CSI. Peter Friedli was
appointed by the board of directors to fill the vacancy on the
board left by Mr. Winstead's resignation, and was appointed chief
executive officer of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. None.
(b) Pro Forma Financial Information. None.
(c) Exhibits. Included in this report are the following
exhibits.
Exhibit SEC Ref. Title of Document Page
No. No.
1 (10) 6% Convertible Promissory Note dated
February 17, 1998 E-1
2 (10) Security Agreement dated February 17, 1998 E-8
3 (10) Stock Pledge Agreement of CSI dated E-19
February 17, 1998
4 (10) Stock Pledge Agreement of Subsidiary E-27
dated February 17, 1998
5 (10) Warrant for CSI Preferred Stock E-35
dated February 17, 1998
SIGNATURES
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.
Purus, Inc.
DATED: February 23, 1998 By /s/ Peter Friedli
Chief Executive Officer
Form 8-K Dated February 17, 1998
Purus, Inc.
File no. 0-22408
Exhibit No. 1
US$1,800,000.00 February 17, 1998
CASA SOLAZ, INC.
6% Convertible Promissory Note
CASA SOLAZ, INC., a corporation duly organized and existing
under the laws of the state of Nevada (hereinafter referred to as
the "Company"), for value received, hereby promises to pay to
PURUS, INC., a Delaware corporation, or its order, the principal
sum of ONE MILLION EIGHT HUNDRED THOUSAND US DOLLARS
($1,800,000.00), on December 31, 1999 (the "Maturity Date"), upon
presentation and surrender of this promissory note ("Note") at
the offices of the Company at 17246 Quail Court, Morgan Hill, CA
95037, in such lawful money of the United States of America as at
the time of payment shall be legal tender for the payment of
public and private debt, and to pay at that time in like lawful
tender interest on the unpaid principal at a rate per annum
(calculated on the basis of the actual number of days elapsed in
a 365-day year) equal to 6%, from and after the date of issuance
or from the most recent date on which interest has been paid or
duly provided for, as the case may be.
This Note is subject to the following further terms and
material provisions:
1. Prepayment. The Note is subject to prepayment at any
time after the issue date, upon not less than 30 nor more than 50
days' notice by mail, in whole or in part, at the election of the
Company. For a period of 15 days following the date of written
notice of prepayment, the holder may convert the outstanding
amount of the Note, or any portion thereof, to Series A
Convertible Preferred Stock of the Company as provided in
paragraph 7, below. On the date fixed for repayment, the Note
shall cease to bear interest. Upon surrender of the Note for
repayment in accordance with said notice of prepayment by the
Company, the amount of principal and interest due shall be paid
in cash or certified funds. If the Note is prepaid only in part,
the holder shall present the Note to the Company for notation
thereon of such partial repayment. The obligation of the Company
to prepay the Note shall be evidenced by a resolution of the
board of directors of the Company.
2. Satisfaction and Discharge of Note. This Note shall
cease to be of further effect (except as to any surviving rights
of conversion, transfer or exchange herein expressly provided
for) when,
(a) The Company has paid or caused to be paid all sums
payable hereunder by the Company, including all
principal amounts and interest accrued under the Note;
and
(b) All the conditions precedent herein provided for
relating to the satisfaction and discharge of this Note
have been complied with.
3. Security. This Note and the obligations represented
hereby shall be secured by all of the assets of the Company
pursuant to a security agreement of even date herewith ("Security
Agreement"), and by all of the capital stock of all subsidiary
corporations of the Company pursuant to one or more pledge
agreements (collectively "Pledge Agreement") of even date
herewith. The Security Agreement and Pledge Agreement are
collectively referred to herein as the "Security Documents".
4. Events of Default. "Event of Default" when used
herein, whatever the reason for such event of default and whether
it shall be voluntary or involuntary or be effected by operation
of law pursuant to any judgment, decree or other order of any
court or any order, rule or regulation of any administrative or
governmental body, or be caused by the provisions of any
paragraph herein means any one of the following events:
(a) Default in the payment of interest on the Note
when it becomes due and payable, whether at maturity,
upon prepayment by declaration, or otherwise;
(b) Default in the payment of the principal on the
Note when due, whether at maturity, upon prepayment by
declaration, or otherwise;
(c) Default in the performance or breach of any
covenant or warranty of the Company or any of its
subsidiaries under this Note or the Security Documents
(other than a covenant or warranty the default or
breach of which is elsewhere in this section
specifically dealt with), and continuation of such
default or breach for a period of 60 days after there
has been given to the Company by the holder a written
notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a
notice of default hereunder;
(d) The entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or
any subsidiary of the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition
of or in respect of the Company or any subsidiary of
the Company under the Federal Bankruptcy Act or any
other applicable federal, state, or foreign law, or
appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of any of the
Company or its subsidiaries or of any substantial part
of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any
such decree or order not stayed and in effect for a
period of 60 consecutive days; or
(e) The institution by any of the Company or its
subsidiaries of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings
against it, or a filing by it of a petition or answer
or consent seeking reorganization or relief under the
Federal Bankruptcy Act or any other applicable federal,
state or foreign law; or the consent by it to the
filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee, sequestrator,
or other similar official of any of the Company or its
subsidiaries or of any substantial part of its
property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they
become due, or the taking of corporate action by any of
the Company or its subsidiaries in furtherance of any
such actions.
5. Acceleration of Maturity. If an event of default
occurs and is continuing then, in every such case, the holder may
declare the principal and all accrued interest of the Note to be
due and payable immediately, by a notice in writing to the
Company of such default, and upon any such declaration, such
principal and accrued interest shall become immediately due and
payable. At any time after such declaration of acceleration has
been made and before a judgment or decree for payment of money
due has been obtained by the holder, the holder, by written
notice to the Company, may rescind and annul such declaration and
its consequences if all events of default, other than the non-
payment of the principal or interest on the Note which have
become due solely by such acceleration, have been cured or waived
as provided below. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
6. Suits for Enforcement. If an event of default occurs
and is continuing, the holder may, in its discretion, proceed to
protect and enforce its rights by such appropriate judicial
proceedings as the holder shall deem most effectual to protect
and enforce any such rights, whether for the specific enforcement
of any covenant or agreement under this Note or in aid of the
exercise of any power granted herein, or to enforce any other
proper remedy.
(a) THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
(b) THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY CALIFORNIA STATE OR FEDERAL COURT
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS NOTE AND THE COMPANY HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR
FEDERAL COURT. THE COMPANY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING.
(c) The Company irrevocably consents to the service of
process out of any of the aforementioned courts in any
such action or proceeding by the mailing of the copies
thereof by certified mail, return receipt requested,
postage prepaid, to it at its address set forth herein,
such service to become effective upon the earlier of
(i) the date 10 calendar days after such mailing or
(ii) any earlier date permitted by applicable law.
Nothing in this paragraph shall affect the right of the
holder to bring proceedings against the Company in the
courts of any other jurisdiction or to serve process in
any other manner permitted by applicable law.
(d) THE COMPANY AND HOLDER HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF THE COMPANY OR HOLDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE HOLDER ENTERING INTO THIS
NOTE AND MAKING THE LOAN TO THE COMPANY EVIDENCED
HEREBY.
(e) The Company agrees to pay and hold the holder harmless
from any stamp, documentary, intangibles, transfer or
similar taxes or charges, and all recording or filing
fees with respect to this Note or any payments to be
made thereunder, and to reimburse the holder upon
demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and expenses)
incurred by the holder in enforcing the obligations of
the Company under this Note or in connection with any
restructuring or "work-out" of any such obligations.
7. Conversion. Subject to, and in compliance with, the
provisions contained herein, the holder of the Note is entitled,
at holder's option, at any time on or before the Maturity Date
(or in case this Note or some portion hereof shall be called for
repayment prior to such date or there shall be a declaration of
acceleration of maturity under paragraph 5, above, then until and
including, but not after, the close of business within 15 days of
the date of notice of repayment or the date of declaration, as
the case may be), to convert all or any portion of the principal
amount of this Note into fully paid and non-assessable shares of
the Series A Convertible Preferred Stock of the Company ("Series
A Stock"), at a conversion value of $4.00 of principal amount for
one share of Series A Stock. Conversion shall be effected by
surrender of this Note, duly endorsed (if so required by the
Company), to the Company at its offices set forth herein
accompanied by written notice of conversion specifying the amount
of the principal of the Note to be converted. On conversion, the
holder of the Note when surrendered for conversion shall be
entitled to payment in cash of the interest accrued to the date
of conversion. No fractional shares will be issued upon
conversion, but if the conversion results in a fractional
interest, the number of shares of Series A Stock issued shall be
rounded to the nearest whole share. So long as this Note remains
undischarged, the Company shall not, without the prior written
consent of the holder: pay any dividend payable in shares upon
its preferred stock or common stock, or make any distribution,
including a cash or property dividend, out of earnings or earned
surplus, to the holders of its shares; enter into any plan of
capital reorganization or of reclassification of the preferred
stock or common stock of the Company; or merge, consolidate or
encumber or sell all or substantially all of its assets other
than in the ordinary course of business.
8. Notices; Waiver. All notices hereunder shall be in
writing or by telecopy and shall be sufficiently given to the
Company or holder if addressed or delivered to them at the
following addresses:
If to the Company: Casa Solaz, Inc.
Attn: Donald Winstead
17246 Quail Court
Morgan Hill, CA 95037
Telecopy (408) 782-2198
If to holder: Purus, Inc.
Attn: President
605 Tennant Avenue, Suite B
Morgan Hill, CA 95037-5529
Telecopy (408) 778-3466
or at such other address as any party may designate to any other
party by written notice. All such notices and communications
shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; when received, if deposited in
the mail, postage prepaid; when transmission is verified, if
telecopied; and on the next business day, if timely delivered to
an air courier guaranteeing overnight delivery. Where this Note
provides for notice, such notice may be waived in writing by the
person entitled to receive such notice, either before or after
the date on which the person entitled to receive such notice and
either before or after the event, and such waiver shall be the
equivalent of such notice.
9. Restrictions. The holder of this Note, by acceptance
hereof, both with respect to the Note and the Series A Stock
issuable upon conversion of the Note, agrees and acknowledges
that:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND ITS
COUNSEL, TO THE EFFECT THAT THE SALE OR TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE
STATUTES.
10. Warrant. For and in consideration of the agreement of
the holder to make the loan to the Company contemplated by this
Note, the Company shall issue to the holder concurrently with the
execution of this Note a warrant to purchase 550,000 shares of
Series A Stock at a price of $4.00 per share exerciseable on or
before December 31, 1998.
11. Miscellaneous
(a) The provisions of this Note and the Security Documents
may from time to time be amended, modified or waived,
if such amendment, modification or waiver is in writing
and, (i) in the case of an amendment or modification,
is consented to by the Company and holder and (ii) in
the case of a waiver of obligation of the Company or
compliance with any prohibition contained in this Note
or Security Documents, is consented to by the holder.
(b) No failure or delay on the part of the holder in
exercising any power or right under this Note or the
Security Documents shall operate as a wavier thereof,
nor shall any single or partial exercise of any such
power or right preclude any other or further exercise
thereof or the exercise of any other power or right.
No notice to or demand on the Company in any case shall
entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by the holder
shall, except as may be otherwise stated in such waiver
or approval, be applicable to subsequent transactions.
No waiver or approval hereunder shall require any
similar or dissimilar waiver or regulatory approval
thereafter to be granted hereunder.
(c) Any provision of this Note or the Security Documents
which 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 of this Note or the Security Documents or
affecting the validity or enforceability of such
provision in any other jurisdiction.
(d) The various headings of this Note and the Security
Documents are inserted for convenience only and shall
not affect the meaning or interpretation of the Note or
the Security Documents or any provisions hereof or
thereof.
(e) This Note shall be binding upon and shall inure to the
benefit of the parties hereto and their respective
successors and assigns; provided, however, that the
Company may not assign or transfer its rights or
obligations hereunder without the prior written consent
of the holder.
(f) The Company hereby waives all requirements as to
diligence, presentment, demand of payment, protest and
notice of any kind with respect to this Note. All
amounts owing hereunder are payable by the Company
without relief from any valuation or appraisal laws.
DATED this 17th day of February, 1998.
CASA SOLAZ, INC.
By /s/ Donald Winstead, President
Form 8-K Dated February 17, 1998
Purus, Inc.
File no. 0-22408
Exhibit No. 2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of
February 17, 1998, is by and among CASA SOLAZ, INC., a Nevada
corporation with an office at 17246 Quail Court, Morgan Hill, CA
95037 ("Borrower"), and PURUS, INC., a Delaware Corporation with
an office at 605 Tennant Avenue, Suite B, Morgan Hill, CA 95037-
5529 ("Lender").
WITNESSETH:
RECITALS
A. Borrower and Lender are entering into a 6% Convertible
Promissory Note dated the date hereof (the "Note"), pursuant to
which, among other things, Lender will lend $1,800,000 to
Borrower (the "Term Loan") on the terms and conditions set forth
in the Note; and
B. It is a condition precedent to Lender's obligation to
make the Term Loan that Borrower grant a continuing security
interest in and to the "Collateral" (as hereinafter defined) to
secure the "Secured Obligations" (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions. The following terms (whether or
not underscored), when used in this Agreement, shall have the
following meanings:
"Accounts" means all "accounts" (as defined in the UCC), now
or hereafter owned or acquired by a person or in which a person
now or hereafter has or acquires any rights, and, in any event,
shall mean and include, without limitations, (a) all accounts
receivable, contract rights, book debts, notes, drafts, and other
obligations or indebtedness owing to such person arising from the
sale or lease of goods or other property by it or the performance
of services by it (including, without limitation, any such
obligation which might be characterized as an account, contract
right or general intangible under the Uniform Commercial Code in
effect in any jurisdiction), (b) all of such Person's rights in,
to and under all purchase and sales orders for goods, services or
other property, and all of such Person's rights to any goods,
services or other property represented by any of the foregoing
(including rights to any goods, services or other property
represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit), (c) all
monies due to or to become due to such person under all contracts
for the sale, lease or exchange of goods or other property or the
performance of services by it (whether or not yet earned by
performance on the part of such Person) and (d) all collateral
security and guarantees of any kind given by such person with
respect to any of the foregoing, in each case whether now in
existence or hereafter arising or acquired.
"Chattel Paper" means any "chattel paper" (as defined in the
UCC) now or hereafter owned or acquired by a person or in which a
person now or hereafter has or acquires any rights.
"Collateral" means, collectively, all of the Borrower's:
(i) Accounts;
(ii) Chattel Paper;
(iii) Documents;
(iv) Instruments;
(v) Investment Property
(vi) All books and records pertaining to any of this
Collateral (including, without limitation, credit files,
printouts and other computer materials and records); and
(vii) All products and Proceeds of all or any of the
Collateral described in clauses (i) through (vi) hereof.
"Documents" means all "documents" (as defined in the UCC)
or other receipts covering, evidencing or representing goods, now
or hereafter owned or acquired by a person or in which a person
now or hereafter has or acquires rights.
"Instruments" means all "instruments" or "letters of
credit" (each defined in the UCC), including, without limitation,
instruments and letters of credit evidencing , representing,
arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptance, now or hereafter owned or acquired
by a person or in which a person now or hereafter has or acquires
any rights.
"Investment Property" means all "investment property" (as
defined in the UCC), including, without limitation, a security
(whether certificated or uncertificated), a security entitlement,
a securities account, a commodity contract, or a commodity
account, now or hereafter owned or acquired by a person or in
which a person now or hereafter has or acquires any rights.
"Perfection Certificate" means a certificate dated as of
even date herewith, setting forth the corporate names, chief
executive office or principal places of business in each state
and other current locations of the Borrower and such other
information as the Lender deems pertinent to the perfection of
security interests, completed and supplemented with the schedules
and attachments contemplated thereby to the satisfaction of the
Lender, and duly executed by the chief executive officer of the
Borrower.
"Pledge Agreement" means the Pledge Agreement of even date
herewith between Borrower as Borrower and Lender as Lender, as
the same may be amended, modified, renewed, extended or
superseded from time to time.
"Proceeds" means all proceeds of, and all other profits,
rentals or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or realization upon, Collateral, including,
without limitations all claims of a person against third parties
for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or
requisition payments with respect to any Collateral and the
following types of property acquired with cash proceeds:
Accounts, Chattel Paper, Documents, Instruments, and Investment
Property.
"Secured Obligations" means all obligations, including,
without limitation, (a) with respect to the Borrower, (i) all
principal and interest (including, without limitation, any
interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Borrower) on the Term Loan and any other
amount due from the Borrower under, the Note, and (ii) all other
obligations (monetary or otherwise) to be performed by the
Borrower under the Note, Security Agreement or Pledge Agreement;
and (b) all renewals or extensions of any of the foregoing.
"Security Interests" means the security interests granted
pursuant to Section 3, as well as all other security interests
created or assigned as additional security for the Secured
Obligations pursuant to the provisions of this Agreement and the
Pledge Agreement.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the state of California, provided that if by
reason of mandatory provision of law, the perfection or the
effect of perfection or non-perfection of the Security Interest
in any Collateral is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than California, "UCC" means
the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to
such perfection or effect of perfection or non-perfection.
SECTION 2. Representation and Warranties. The Borrower
represents and warrants as follows:
(a) The Borrower has good and marketable title to all of
its interest in the Collateral, free and clear of any Liens.
(b) The Borrower has not performed any act or acts that
could prevent or hinder the Lender from enforcing any of the
terms of this Agreement. No financing statement, mortgage,
security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file
or of record in any jurisdiction. No Collateral is in the
possession of a person (other than the Borrower) asserting any
claim thereto or security interest therein, except that the
Lender or its designee may have possession of Collateral as
contemplated hereby.
(c) All of the information set forth in the Perfection
Certificate is true and correct as of the date hereof.
(d) When the UCC financing statements in appropriate form
are filed in the offices specified in the Perfection Certificate,
the Security Interests shall constitute valid and perfected
security interests in the Collateral, prior to all other Liens
and rights of others therein.
SECTION 3. The Security Interests.
(a) In order to secure the full and punctual payment and
performance of this Secured Obligations in accordance with the
terms thereof, the Borrower hereby grants, pledges, assigns,
hypothecates, sets over and conveys to the Lender a continuing
Security Interest in and to all of the Collateral now or
hereafter owned or acquired by the Borrower or in which the
Borrower has or hereafter has or acquires any rights, and
wherever located.
(b) The Security Interests are granted as a security only
and shall not subject the Lender to, or transfer to the Lender,
or in any way affect or modify, any obligation or liability of
the Borrower with respect to any of the Collateral or any
transaction in connection therewith.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) The Borrower will not change the location, or
establish a new location, of its chief executive office or
principal place of business in any state unless it shall have (A)
given the Lender thirty (30) days prior notice thereof, (B)
executed and delivered to the Lender all financing statements and
financing statement amendments which the Lender may request in
connection therewith. The Borrower shall not change the
locations, or establish new locations, where it keeps or holds
any Collateral or any records relating thereto from the
applicable locations described in the Perfection Certificate,
unless the Borrower shall have (A) given the Lender fifteen (15)
days prior notice of such change of location, (B) executed and
delivered to the Lender all financing statements and financing
statement amendments which the Lender may request in connection
therewith and (C) complied with any other requirements in this
Agreement or any other Loan Documents relating to the location of
any Collateral. The Borrower shall not in any event change the
location, or establish a new location, of any Collateral if such
change would cause the Security Interest in such Collateral to
lapse or cease to be perfected first priority Security Interests.
(ii) The Borrower will not change its name, identify or
corporate structure in any manner unless it shall have (A) given
the Lender thirty (30) days prior notice thereof, and (B)
executed and delivered to the Lender all financing statements and
financing statement amendments which the Lender may request in
connection therewith.
(iii) The Borrower will, form time to time, at its
expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement, or other paper and
take any other action (including, without limitations, any
filings of financing or continuation statements under the UCC)
that from time to time may be necessary, or that the Lender may
request, in order to create, preserve, upgrade in rank (to the
extent required hereby), perfect, confirm or validate the
Security Interests or to enable the Lender to obtain the full
benefits of this Agreement, or to enable the Lender to exercise
and enforce any of its rights, powers and remedies hereunder with
respect to any of the Collateral. To the extent permitted by
law, the Borrower hereby authorizes the Lender to execute and
file financing statements, financing statement amendments or
continuation statements without the Borrower's signature
appearing thereon. The Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing
statement. The Borrower shall pay all costs of, or incidental
to, any recording or filing of any financing statements,
financing statement amendments or continuation statements
concerning the Collateral.
(iv) The Borrower will immediately deliver and pledge
each Instrument to the Lender, appropriately endorsed to the
Lender.
(v) The Borrower will not (A) sell, transfer, lease,
exchange, assign or otherwise dispose of, or grant any option,
warrant or other right with respect to, any Collateral except
that, subject to the rights of the Lender hereunder, if an Event
of Default shall not have occurred and be continuing, the
Borrower may dispose of assets if such disposition is permitted
by Note and Pledge Agreement, whereupon, in the case of such a
disposition, sale or exchange, the Security Interests created
hereby in such item (but not in any Proceeds arising from such
disposition, sale or exchange) shall cease immediately without
any further action on the part of the Lender; or (B) create,
incur or suffer to exist any lien with respect to any Collateral.
(vi) The Borrower will, promptly upon request, provide
to the Lender all information and evidence it may reasonably
request concerning the Collateral, and in particular the
Instruments and Investment Property, to enable the Lender to
enforce the provisions of this Agreement.
(b) Accounts, Etc.
(i) The Borrower shall use all reasonable efforts
consistent with prudent business practice to cause to be
collected from its Account debtors, as and when due, any and all
amounts owing under or on account of each Account (including,
without limitation, Accounts which are delinquent, such Accounts
to be collected in accordance with lawful collection procedures)
and apply forthwith upon receipt thereof all such amounts as are
so collected to the outstanding balance of such Account. The
costs and expenses (including, without limitation, attorney's
fees) of collection of Accounts incurred by the Borrower or the
Lender shall be borne by the Borrower.
(ii) Upon the occurrence and during the continuance of
any Even of Default, upon request of the Lender, the Borrower
will promptly notify (and the Borrower hereby authorizes the
Lender so to notify) each Account debtor in respect of any
Account or Instrument that such Collateral has been assigned to
the Lender hereunder, and that any payments due or to become due
in respect of such Collateral are to be made directly to the
Lender or its designee.
(iii) The Borrower will perform and comply with all
of its material obligations in respect of Accounts and
Instruments.
SECTION 5. Reporting and Record keeping. The Borrower
covenants and agrees with the Lender that from and after the date
of this Agreement and until the Secured Obligations have been
fully satisfied:
(a) Maintenance of Records Generally. The Borrower will
keep and maintain at its own cost and expense records of the
Collateral, complete in all material respects, including, without
limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings
with the Collateral. The Borrower will mark its books and
records pertaining to the Collateral to evidence this Agreement
and the Security Interests. All Chattel Paper will be marked
with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest
of Purus, Inc." For the Lender's further security, the Borrower
agrees that the Lender shall have a security interest in all of
the Borrower's books and records pertaining to the Collateral and
upon the occurrence and during the continuation of any Default or
Event of Default, the Borrower shall deliver and turn over full
and complete copies of any such books and records to the Lender
or to its representatives at any time on demand of the Lender or
to its representatives at any time on demand of the Lender.
Subject to any government security limitations, the Borrower
shall permit the Lender or any of its representatives, during
normal business hours, to visit all of its offices, to discuss
its financial matters with its officers and independent public
accounts and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate
records.
(b) Special Provisions Regarding Maintenance of Records and
Reportings.
(i) The Borrower shall keep complete and accurate
records of its Accounts. At the request of the Lender the
Borrower shall deliver to the Lender a true copy of all
documents, including, without limitation, repayment histories,
present status reports relating to the Accounts and such other
matters and information relating to the status of the existing
Accounts as the Lender shall reasonably request.
(ii) The Borrower will promptly upon, but in no event
later than five (5) Business Days after:
(A) The Borrower's learning thereof, inform the
Lender, in writing, of any material delay in the Borrower's
performance of any of its material obligations to any Account
debtor and of any assertion of any material claims, offsets or
counterclaims by any Account debtor and of any allowances,
credits and/or other monies granted by the Borrower to any
Account debtor, in each case involving amounts in excess of
$5,000 for any single Account or Account debtor or in excess of
$25,000 in the aggregate for all Accounts and Account debtors;
and
(B) The Borrower's receipt or learning thereof,
furnish to an inform the Lender of all material adverse
information relating to the financial condition of any Account
debtor with respect to Accounts exceeding $5,000 individually or
$25,000 in the aggregate.
(iii) The Borrower will promptly notify the Lender
in writing if any Account, the face value of which exceeds
$5,000, arises out of a contract with the United States of
America, or any department, agency, subdivision or
instrumentality thereof, or of any state (or department, agency,
subdivision or instrumentality thereof) where such state has a
state assignment of claims act or other law comparable to the
Federal Assignment of Claims Act, and will take any action
required or requested by the Lender upon the occurrences of an
Event of Default to give notice of the Lender's security interest
in such Accounts under the provisions of the Federal Assignment
of Claims Act or any comparable law or act enacted by any state
or local governmental authority.
(c) Further Identification of Collateral. The Borrower
will furnish to the Lender, as often as the Lender reasonably
requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as the Lender may reasonably request, all in
reasonable detail.
(d) Notices. In addition to the notices required by
Section 5(b) hereof, the Borrower will notify the Lender
promptly, in writing and in reasonable detail, (i) of any
material lien or claim made or asserted against any of the
Collateral, (ii) of any material adverse change in the
composition of the Collateral, and (iii) of the occurrence of any
other event which would have a material adverse effect on the
aggregate value of the Collateral or on the validity, perfection
or priority of the Security Interests.
SECTION 6. General Authority. The Borrower hereby
irrevocably appoints the Lender its true and lawful attorney,
with full power of substitution, in the name of the Borrower, the
Lender or otherwise, for the sole use and benefit of Lender, but
at the Borrower's expense, to exercise, at any time from time to
time all or any of the following powers:
(i) to file financing statements, financing statement
amendments and continuation statements referred to in Section
4(a)(iii),
(ii) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due with
respect to any Collateral or by virtue thereof,
(iii) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect to any Collateral,
(iv) to sell, transfer, assign or otherwise deal in or
with the Collateral or the proceeds or avails thereof, as fully
and effectually as if the Lender were the absolute owner thereof,
and;
(v) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with
reference to the Collateral;
provided that the Lender shall not take any of the actions
described in this Section 6 except those described in clause (i)
above unless an Event of Default shall have occurred and be
continuing.
SECTION 7. Remedies upon Event of Default.
(a) If any Event of Default has occurred and is continuing,
the Lender may exercise without further notice, all rights and
remedies under this Agreement, the Note, or the Pledge Agreement,
all rights and remedies that are available to a secured creditor
under the UCC, and all rights and remedies that are otherwise
available at law or in equity, at any time, in any order and in
any combination, including without limitation, the collection of
any and all Secured Obligations, and, in addition, the Lender may
sell the Collateral or any part thereof at public or private
sale, for cash, upon credit or for future delivery, and upon such
terms as the Lender shall deem commercially reasonably. The
Lender shall give the Borrower not less than (10) days' prior
written notice of the time and Collateral which is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Borrower agrees
that any such notice constitutes "reasonable notification" within
the meaning of Section 9-504(3) of the UCC (to extent such
Section is applicable).
The Lender may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is
of a type customarily sold in a recognized market or is of a type
customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations or if
otherwise permitted under applicable law, at any private sale)
and thereafter hold the same, absolutely, free from any right or
claim whatsoever kind. The Borrower will execute and deliver
such documents and take such other action as the Lender deems
necessary or advisable in order that any such sale may be made in
compliance with the law. Upon any such sale the Lender shall
have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale
shall hold the Collateral so sold to it absolutely, free from any
claim or right of any kind, including any equity or right of
redemption of the Borrower. To the extent permitted by law, the
Borrower hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale
shall (1) in case of a public sale, state the time and place
fixed for such sale, and (2) in the case of a private sale, state
the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Lender may fix
in the notice of such sale. At any such sale the Collateral may
be sold in one lot as an entirety or in separate parcels, as the
Lender may determine. The Lender shall not be obligated to make
any such sale pursuant to any such notice. The Lender may,
without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale
may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Lender until the selling price is
paid by the purchaser thereof, but the Lender shall not incur any
liability in case of the failure of such purchaser to take up and
pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice. The Lender,
instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose
the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of
competent jurisdiction. The Borrower shall remain liable, for
any deficiency.
(b) For the purpose of enforcing any and all rights and
remedies under this Agreement, the Lender may (i) require the
Borrower to, and the Borrower agrees that it will, at its expense
and upon the request of the Lender, forthwith assemble all or any
part of the Collateral as directed by the Lender and make it
available at a place designated by the Lender which is, in the
Lender's opinion, convenient to the Lender and the Borrower
whether at the premises of the Borrower or otherwise, (ii) to the
extent permitted by applicable law, enter, with or without
process of law and without breach of the peace, any premise where
any of the Collateral is or may be located and, without charge or
liability to the Lender, seize and remove such Collateral from
such premises, (iii) have access to and use the Borrower's books
and records, computers and software relating the Collateral and
(iv) prior to the disposition of the Collateral, store or
transfer such Collateral without charge in or by means of any
storage or transportation facility owned or leased by the
Borrower, process, repair or recondition such Collateral or
otherwise prepare it for disposition in any manner and to the
extent the Lender deems appropriate, and in connection with such
preparation and disposition, use without charge any trademark,
trade name, and copyright by the Borrower.
SECTION 8. Limitation of Duty of Lender in Respect of
Collateral. Beyond reasonable care in custody thereof, the
Lender shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee
or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Lender
shall be deemed to have exercised reasonable care in the custody
of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that loss or damage to any of
the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by
the Lender in good faith.
SECTION 9. Application of Proceeds. Upon the occurrence
and during the continuance of an Event of Default, the proceeds
of any sale of, or other realization upon, all or any part of
Collateral shall be applied by the Lender in the following order
of priorities:
first, to payment of the out-of-pocket expenses of such sale
or other realization, including compensation to agents and
counsel for the Lender, and all out-of-pocket expenses,
liabilities and advances incurred or made by the Lender in
connection therewith, and any other unreimbursed expenses for
which the Lender is to be reimbursed pursuant to the Note or
Pledge Agreement.
second, to the payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Secured
Obligations of the Borrower;
third, to the payment of unpaid principal of the Secured
Obligations of the Borrower;
fourth, to the payment of all other Secured Obligations of
the Borrower, until all such Secured Obligations shall have been
paid in full; and
finally, to the Borrower or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
The Lender may make distributions hereunder in cash or in kind
or, on a ratable basis, in any combination thereof.
SECTION 10. Expenses. In the event that the Borrower
fails to comply with the provisions of the Note, this Agreement
or the Pledge Agreement, such that the value of any Collateral or
the validity, perfection, rank or value of the Security Interests
are thereby diminished or potentially diminished or put at risk,
the Lender may, but shall not be required to, effect such
compliance on behalf of the Borrower, and the Borrower shall
reimburse the Lender for the costs thereof on demand. All
insurance expenses and all expenses of protecting, storing,
warehousing, appraising, insuring, handling, maintaining and
shipping the Collateral, any and all excise, stamp, intangibles,
transfer, property, sales, and use taxes imposed by any state,
federal, or local authority or any other governmental authority
on any of the Collateral, or in respect of periodic appraisals
and inspections of the Collateral to the extent the same may be
reasonably requested by the Lender from time to time, or in
respect of the sale or other disposition thereof, shall be borne
and paid by the Borrower; and if the Borrower fails promptly to
pay any portion thereof when due, the Lender may, at its option,
but shall not be required to, pay the same and charge the
Borrower's accounts therefor, and the Borrower agree to reimburse
the Lender therefor on demand. All sums so paid or incurred by
the Lender for any of the foregoing and any and all other sums
for which the Borrower may become liable hereunder and all costs
and expenses (including attorneys' fees, legal expenses and court
costs) incurred by the Lender in enforcing or protecting the
Security Interests or any of its rights or remedies thereon shall
be payable by the Borrower on demand and shall bear interest
(after as well as before judgment) until paid at the highest rate
then in effect under the Note.
SECTION 11. Termination of Security Interests; Release of
Collateral. Upon the performance of and repayment in full of all
Secured Obligations, the Security Interests shall terminate and
all rights to the Collateral shall revert to the Borrower. At
any time and form time to time prior to such termination of the
Security Interests, the Lender may release any of the Collateral
with the prior written consent of the Lender. Upon any such
termination of the Security Interests or release of Collateral,
the Lender will, at the expense of the Borrower, promptly execute
and deliver to the Borrower such documents as the Borrower shall
reasonably request, including but not limited to UCC-3
termination statements, to evidence the termination of the
Security Interests or the release of such Collateral, as the case
may be.
SECTION 12. Notices. Any notice required hereunder shall
be in writing and addressed to Borrower and to Lender at their
addresses set forth at the beginning of this Agreement. All such
notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered;
when received, if deposited in the mail, postage prepaid; when
transmission is verified, if telecopied; and on the next business
day, if timely delivered to an air courier guaranteeing overnight
delivery. Where this Agreement provides for notice, such notice
may be waived in writing by the person entitled to receive such
notice, either before or after the date on which the person
entitled to receive such notice and either before or after the
event, and such waiver shall be the equivalent of such notice.
SECTION 13. Waivers, Non-Exclusive Remedies. No failure
on the part of the Lender to exercise, and no delay in exercising
and no course of dealing with respect to, any right under the
Note, this Agreement or the Pledge Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise by the
Lender of any right under the Note, this Agreement or the Pledge
Agreement preclude any other or further exercise thereof or the
exercise of any right. The rights in this Agreement, the Note
and the Pledge Agreement are cumulative and are not exclusive of
any other remedies provide by law.
SECTION 14. Successors and Assigns. This Agreement is
for the benefit of the Lender and its permitted successors and
assigns, and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred
with such indebtedness. This Agreement shall be binding on the
Borrower and its successors and assigns; provided, however that
the Borrower may not assign any of its rights or obligations
hereunder without the prior written consent of the Lender.
SECTION 15. Changes in Writing. Neither this Agreement
nor any provision hereof may be changed, waived, discharged or
terminated orally, but only in writing signed by the party
affected.
SECTION 16. Governing Law. THIS AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA, EXCEPT TO THE EXTENT THAT PERFECTION
(AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND CERTAIN
REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER
THAN CALIFORNIA.
SECTION 17. Severability. If any provision hereof is
invalid and unenforceable in any jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Lender in order to
carry out the intentions of the parties hereto as nearly as
possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction
SECTION 18. Jurisdiction. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CALIFORNIA STATE
OR FEDERAL COURT IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE BORROWER HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR FEDERAL
COURT. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 19. Service. The Borrower irrevocably consents
to the service of process out of any of the courts referenced in
Section 18, in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested,
postage prepaid, to it at its address set forth herein, such
service to become effective upon the earlier of (i) the date 10
calendar days after such mailing or (ii) any earlier date
permitted by applicable law. Nothing in this Agreement shall
affect the right of the Lender to bring proceedings against the
Borrower in the courts of any other jurisdiction or to serve
process in any other manner permitted by applicable law.
SECTION 20 Waiver of Jury Trial. THE BORROWER AND
LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF
THE BORROWER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE LENDER ENTERING INTO THIS AGREEMENT AND MAKING THE TERM
LOAN TO THE BORROWER EVIDENCED BY THE NOTE.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
CASA SOLAZ, INC.
By: /s/ Donald Winstead, President
PURUS, INC.
By: /s/ Peter Friedli, Chief Executive Officer
Form 8-K Dated February 17, 1998
Purus, Inc.
File no. 0-22408
Exhibit No. 3
STOCK PLEDGE AGREEMENT
(Housekit and Hi-Tech)
STOCK PLEDGE AGREEMENT (SECURITY AGREEMENT), dated February
17, 1998, between PURUS, INC., a Delaware corporation, with an
office at 605 Tennant Avenue, Suite B, Morgan Hill, CA 95037-
5529 ("Pledgee"), and CASA SOLAZ, INC., a Nevada corporation,
with an office at 17246 Quail Court, Morgan Hill, CA 95037
("Pledgor").
Pledgor and Pledgee are entering into a 6% Convertible
Promissory Note dated the date hereof (the "Note"), pursuant to
which, among other things, Pledgee will lend $1,800,000 to
Pledgor (the "Term Loan") on the terms and conditions set forth
in the Note. Pledgor owns, directly or indirectly, all of the
outstanding capital stock of each of Housekit Construcciones,
S.A., a Venezuelan corporation ("HKC"), Hi-Tech Houses de
Venezuela, C.A., a Venezuelan corporation ("HTH"), and
Suministros Yare Suyaca, C.A., a Venezuelan corporation ("SYS"),
(HKC and HTH are referred to collectively herein as the
"Subsidiaries"). It is a condition precedent to Pledgee's
obligation to make the Term Loan that Pledgor pledge to Pledgee
and grant Pledgee a security interest in all of the outstanding
capital stock of the Subsidiaries and SYS, and certain related
rights and property, as more fully described below.
Accordingly, Pledgor hereby agrees with Pledgee as follows:
1. Security Interest. In consideration of any loan,
advance, or other extension of credit heretofore or hereafter
made by Pledgee under the Note or otherwise to, or for the
account or benefit of Pledgor, and as security for the
Obligations (as hereinafter defined), Pledgor hereby pledges,
transfers and assigns to Pledgee and grants to Pledgee a security
interest (the "Security Interest") in the following:
(a) One Hundred (100) shares of the capital stock of HKC
with a capital value of One Hundred Thousand Bolivares (Bs.
100,000), (the "HKC Stock"), as evidenced by the Record Ownership
Book delivered by Pledgor to Pledgee concurrently with the
execution of this Agreement;
(b) Two Hundred Fifty (250) shares of the capital stock of
HTH with a capital value of Two Hundred Fifty Thousand Bolivares
(Bs. 250,000), (the "HTH Stock"), as evidenced by the Record
Ownership Book delivered by Pledgor to Pledgee concurrently with
the execution of this Agreement;
(c) all additional shares of capital stock of the
Subsidiaries hereafter issued to or acquired by Pledgor in any
manner;
(d) all shares of capital stock of the Subsidiaries which
Pledgor receives by reason of any stock split, bonus, dividend,
distribution, or other form of issue, with respect to or arising
from any of the stock described in subsections (a) through (c)
above;
(e) all warrants, rights, or options to acquire, or
securities convertible into, any capital stock of the
Subsidiaries, now or hereafter issued to or acquired by Pledgor;
(f) all dividends declared or paid upon the Pledged Stock
(as defined below) or any other stock or securities described
above;
(g) all increases and profits from the foregoing and all
replacements and substitutions for the foregoing; and
(h) all proceeds of the foregoing including, without
limitation, all securities or other property acquired with any
proceeds.
For purposes of this Agreement the term "Pledged Stock"
means all shares or securities issued or issuable as described in
subsections (a) through (e) above. The property described in
subsections (a) through (h) above is referred to hereinafter
collectively as the "Collateral". Pledgor is delivering herewith
physical possession of the Record Ownership Books pertaining to
the Pledged Stock to Pledgee, accompanied by appropriate
instruments of transfer executed in blank, and Pledgee herewith
acknowledges receipt of the Pledged Stock. Concurrently with the
execution of this Agreement, Pledgor is causing HKC to execute
and deliver to Pledgee a pledge agreement pertaining to the
capital stock of SYS.
2. Obligations Secured. The Collateral secures all
present and future loans, advances, liabilities, obligations,
covenants, duties and indebtedness at any time owing by Pledgor
to Pledgee, whether evidenced by this Agreement, the Note, any
other note, any other instrument or document, whether arising
from an extension of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, including, without
limitation all interest, charges, expenses, fees, attorney's fees
and any other sum chargeable to the Pledgor hereunder or under
any other agreement with Pledgee (the "Obligations").
3. Representations and Warranties of Pledgor. Pledgor
represents and warrants that: (a) each instrument and document
constituting Collateral is genuine and in all respects what it
purports to be; (b) Pledgor is the legal and beneficial owner of
the Collateral free of all pledges, security interests, charges,
liens, or other encumbrances, except under this Agreement, and
has the power and authority to convey any or all of its rights
and interests in the Collateral; (c) the Pledged Stock
constitutes all of the issued and outstanding capital stock of
the Subsidiaries owned by Pledgor; (d) there are no options,
warrants, calls, or other rights or commitments of any character
giving any person the right to purchase any of the Pledged Stock
or other Collateral from Pledgor; (e) to the best of Pledgor's
knowledge, the Pledged Stock has been duly authorized and validly
issued, is fully paid and non-assessable, and was not issued in
violation of the preemptive or other rights of any person; (f)
there are no restrictions on the voting rights or upon the
transfer of any of the Collateral other than those contained in
this Agreement or appearing on the records evidencing the
Collateral; (g) the instruments of transfer delivered with the
Pledged Stock herewith are duly executed and give Pledgee the
power they purport to confer; and (h) the execution, delivery and
performance by Pledgor of this Agreement does not and will not
result in any violation of or conflict with the terms of
Pledgor's articles of incorporation, bylaws, or other
organizational documentation, or any agreement, indenture,
instrument, license, judgment, decree, order, law, statute,
ordinance or other governmental rule or regulation applicable to
or binding upon Pledgor.
4. Covenants of Pledgor. So long as this Agreement is in
effect, Pledgor: (a) will defend the Collateral against the
claims and demands of all other parties; will keep the Collateral
free from all security interests or other encumbrances, except
under this Agreement; and will not sell, transfer, assign,
deliver or otherwise dispose of any Collateral or any interest
therein or right thereunder or grant to any person any option,
warrant, or other rights to acquire any of the Collateral or any
interest therein or right thereunder, without the prior written
consent of Pledgee; (b) in connection herewith, will execute and
deliver to Pledgee such financing statements, assignments,
registrations, and other documents and do such other things
relating to the Collateral and the Security Interest as Pledgee
may reasonably request, and pay all costs of lien searches and
filing financing statements, assignments and other documents in
all public offices reasonably requested by Pledgee; (c) will
notify Pledgee promptly in writing of any change in Pledgor's
address; (d) will not, except upon Pledgee's request or with
Pledgee's prior written consent, seek or take delivery of any
additional instrument or other written document constituting or
evidencing any Collateral, and if Pledgor receives any such
additional instrument or document (whether or not at Pledgee's
request or with its consent), Pledgor will immediately notify
Pledgee thereof and immediately deliver such instrument or
document to Pledgee, duly endorsed as Pledgee requests or
accompanied by an appropriate instrument of transfer executed in
blank; and (e) will pay or reimburse Pledgee for all taxes,
assessments and other charges of every nature which may be
imposed, levied or assessed on Pledgee in respect of the
Collateral.
5. Voting Rights; Irrevocable Proxy. So long as no Event
of Default (as hereinafter defined) has occurred and is
continuing, Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral
or any part thereof for any purpose not inconsistent with the
terms of this Agreement and the Note; provided, that Pledgor
shall not exercise or refrain from exercising any such right if
such action would have a material adverse effect on the value of
the Collateral or any part thereof. Pledgee shall execute and
deliver (or cause to be executed and delivered) to Pledgor all
such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise its
voting and other rights as provided in the preceding sentence.
If an Event of Default occurs, and so long as it continues, then,
at Pledgee's election in its sole discretion indicated by written
notice to Pledgor, all of Pledgor's rights to exercise any voting
or other consensual rights pertaining to the Collateral or any
part thereof shall cease, and all such rights shall thereupon
become vested in Pledgee, which shall thereupon have the sole
right to exercise such voting and other consensual rights. In
furtherance of the immediately preceding sentence, Pledgor
irrevocably constitutes and appoints Pledgee, effective upon
Pledgee's giving of the foregoing notice after the occurrence and
during the continuance of any Event of Default, as Pledgor's
proxy with full power, in the same manner, to the same extent and
with the same effect as if Pledgor were to do the same, and
whether or not the Collateral has been transferred into the name
of Pledgee or its nominee: (a) to attend all meetings of
stockholders of the Subsidiary and to vote the Collateral at such
meetings in such manner as Pledgee shall, in its sole discretion,
deem appropriate, including, without limitation, in favor of the
liquidation of the Subsidiary; (b) to consent, in the sole
discretion of Pledgee, to any and all action by or with respect
to the Subsidiary for which the consent of the stockholders of
the Subsidiary is or may be necessary or appropriate; and (c)
without limitation, to do all things which Pledgor can or could
do as a stockholder of the Subsidiary, giving to Pledgee full
power of substitution and revocation. The foregoing proxy shall
terminate when this Agreement is no longer in full force and
effect as hereinafter provided. Pledgor hereby revokes any proxy
or proxies heretofore given by Pledgor to any person or persons
whatsoever and agrees not to give any other proxies in derogation
hereof until this Agreement is no longer in full force and effect
as hereinafter provided.
6. Registered Holder of Collateral. At any time, either
before or after an Event of Default has occurred and is
continuing, Pledgee is authorized to transfer the Collateral or
any part thereof into its own name or that of its nominee so that
Pledgee or its nominee may appear of record as the sole owner
thereof.
7. Dividends and Other Income from Collateral; Additional
Shares.
(a) So long as no Event of Default hereunder has occurred
and is continuing, Pledgor shall be entitled to receive any and
all dividends or other income paid in respect of the Collateral.
If an Event of Default has occurred and is continuing, then
Pledgor's entitlement to receive dividends or other income in
respect of the Collateral shall cease, and, until such Event of
Default has been cured or the Obligations are fully and finally
paid, any and all such dividends and other income shall be paid
directly to Pledgee without deduction, credit, or setoff for any
reason; Pledgee shall, at its sole election, either hold them as
Collateral or apply the same to the Obligations in such order and
manner as Pledgee determines.
(b) Any and all dividends paid or payable other than in
cash in respect of, and instruments, stock and other property
received, receivable or otherwise distributed in respect of, upon
the subdivision or combination of, or in exchange for, any
Collateral, shall constitute Collateral, and shall forthwith be
paid or delivered directly to Pledgee to hold as Collateral.
(c) Any and all dividends and other distributions paid or
payable in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution, and any and all cash
paid, payable or otherwise distributed in respect to redemption
of, or in exchange for, any Collateral, shall be paid or
delivered directly to Pledgee, which, at Pledgee's sole election,
shall be held as Collateral or applied to the Obligations in such
order and manner as Pledgee determines.
(d) If Pledgor receives, or becomes entitled to receive,
any additional shares of any Subsidiary's capital stock or any
other property, other than as contemplated in subsections (a),
(b), and (c) of this Section 7 (whether by reclassification,
readjustment, stock split or other change in the capital
structure of such Subsidiary, or in any other manner), such
shares or other property shall constitute Collateral, and Pledgor
shall direct such Subsidiary to deliver certificates representing
such shares and all such other property directly to Pledgee to be
held as Collateral, and Pledgor shall deliver to Pledgee
appropriate instruments of transfer executed in blank with
respect thereto.
(e) If, notwithstanding the foregoing, Pledgor receives any
dividend or other property payable or deliverable directly to
Pledgee in accordance with the foregoing subsections, Pledgor
shall receive it in trust for the benefit of Pledgee, segregate
it from the other property or funds of Pledgor, and deliver it
immediately to Pledgee in the form received (with any necessary
endorsement).
8. Increases, Profits, Payments or Distributions.
(a) Whether or not an Event of Default has occurred,
Pledgor authorizes Pledgee: (i) to receive any increase in or
profits on the Collateral (which, for the purposes hereof, shall
not include cash dividends) and to hold the same as part of the
Collateral; and (ii) to receive any payment or distribution on
the Collateral upon redemption by, or dissolution and liquidation
of, any Subsidiary, to surrender the Collateral or any part
thereof in exchange therefor, and, at Pledgee's sole election, to
hold the net cash receipts from any such payment or distribution
as part of the Collateral, or to apply them to the Obligations in
such order and manner as Pledgee determines.
(b) If Pledgor receives any such increase, profits,
payments or distributions, Pledgor will receive and deliver the
same promptly to Pledgee on the same terms and conditions set
forth in Section 7(e).
9. Events of Default. It shall be an Event of Default
hereunder if any Event of Default under the Note occurs.
10. Remedies.
(a) Whenever an Event of Default occurs and so long as it
continues, Pledgee shall have, and may exercise with respect to
the Collateral, in such order and manner as it determines, all
rights and remedies of a secured party under the Uniform
Commercial Code and under any other applicable law, as the same
may from time to time be in effect, as well as those rights
granted herein, under the Note, and in any other agreement now or
hereafter in effect between Pledgor and Pledgee. Without
limiting the generality of the foregoing, whenever an Event of
Default exists, Pledgee may sell or otherwise dispose of all or
any part of the Collateral by public or private sale, in one or
more transactions, and in such order as Pledgee determines.
Pledgor agrees and acknowledges that Pledgee may be a purchaser
of the Collateral in any such public or private sale. Proceeds
realized from such sales and dispositions shall be applied first
to Pledgee's costs and expenses in connection therewith and then
to the Obligations in such order as Pledgee determines. Pledgor
recognizes that Pledgee may be unable to effect a public sale of
all or a part of the Collateral by reason of certain provisions
contained in laws and regulations of the United States, various
states within the United States, and/or the laws of Venezuela,
and may be compelled to resort to one or more private sales of
limited amounts of the Collateral to a restricted group of
purchasers who will be obliged to agree, among other things, to
acquire the Collateral for their own account, for investment and
without a view to the distribution or resale thereof. Pledgor
understands that private sales so made may be at prices and other
terms less favorable than if the Collateral were sold at public
sales, and agrees that Pledgee has no obligation to delay the
sale of the Collateral for the period of time necessary to permit
Pledgee to register or qualify the Collateral for sale or
register a public sale transaction under the laws and regulations
of the United States, various states within the United States,
and/or the laws of Venezuela. Pledgor agrees that private sales
under the foregoing circumstances shall be deemed to have been
made in a commercially reasonable manner.
(b) Pledgor agrees that it will provide notice to Pledgee
of a sale stating the time and place of sale, disposition or
other intended action hereunder or in connection herewith,
whether required by the Uniform Commercial Code or otherwise, and
it shall constitute reasonable notice to Pledgor if such notice
is mailed by registered or certified mail, return receipt
requested, postage prepaid, or delivered personally against
receipt, or sent by a recognized overnight delivery service, at
least thirty (30) days prior to such action, to Pledgor's address
set forth in the caption of this Agreement or to such other
address as is specified in writing to Pledgee as the address to
which notices shall be given to Pledgor.
(c) Pledgor shall pay on demand all costs and expenses
incurred by Pledgee in enforcing this Agreement, in realizing
upon or protecting any Collateral and in enforcing and collecting
any Obligations or any guaranty thereof, including, without
limitation, if Pledgee retains counsel for advice, suit, appeal,
insolvency or other proceedings under the federal Bankruptcy Code
or otherwise, or for any of the above purposes, the actual
attorneys' and paralegals' fees incurred by Pledgee, and all such
costs and expenses are secured by the Collateral, as well as by
all other property serving as security for the Obligations.
11. Miscellaneous.
(a) Pledgor authorizes Pledgee, without notice or demand
and without affecting any obligations hereunder, from time to
time: (i) to take from any party and hold collateral (other than
the Collateral) for the payment of the Obligations or any part
thereof, and to exchange, enforce or release such collateral or
any part thereof; (ii) to accept and hold any endorsement or
guaranty of payment of the Obligations or any part thereof and to
release or substitute any such endorser or guarantor, or any
party who has given any security interest in any other collateral
as security for the payment of the Obligations or any part
thereof, or any other party in any way obligated to pay the
Obligations or any part thereof; and (iii) to direct the order or
manner of the disposition of the Collateral and any and all other
collateral and the enforcement of any and all endorsements and
guaranties relating to the Obligations or any part thereof as
Pledgee, in its sole discretion, may determine.
(b) Pledgor hereby appoints Pledgee as Pledgor's attorney-
in-fact (without requiring Pledgee) to perform all acts which
Pledgee deems appropriate in accordance with this Agreement to
perfect and continue its interests hereunder in the Collateral
and to protect, preserve and realize upon the Collateral.
Pledgor further appoints Pledgee as its attorney-in-fact to
execute such orders and receipts for payment of the Collateral in
accordance with this Agreement as Pledgee deems appropriate in
its sole discretion. These powers of attorney are coupled with
an interest and shall be irrevocable and are given to secure
performance by Pledgor of the Obligations and are irrevocable.
Pledgor ratifies and approves all acts of such attorney, and
Pledgee shall not be liable for any acts or omissions or any
error of judgment or mistake of fact or law other than resulting
from Pledgee's bad faith or willful misconduct. Subject to the
terms of this Agreement, Pledgee may demand, collect, and sue on
the Collateral (in either its or Pledgor's name, at Pledgee's
sole option), and enforce, compromise, settle, or discharge the
Collateral, without discharging the Obligations or any part
thereof and whether or not any such action results in the
imposition of any penalty. Pledgor authorizes and directs each
Subsidiary to make any payments in respect of the Collateral as
Pledgee may direct and hereby releases each Subsidiary from any
liability to Pledgor for making such payments.
(c) Upon Pledgor's failure to perform any of its duties
hereunder, Pledgee may, but shall not be obligated to, perform
any or all such duties, and Pledgor shall pay an amount equal to
the cost thereof to Pledgee on demand. Payment of such amount
shall be secured by the Collateral, as well as by all other
property serving as security for the Obligations.
(d) Pledgee's failure to exercise any right, remedy or
option under this Agreement or any supplement or other agreement
between Pledgee and Pledgor or delay by Pledgee in exercising the
same will not operate as a waiver. No waiver by Pledgee shall
affect its right to require strict performance of this Agreement.
Pledgee's rights and remedies will be cumulative and not
exclusive.
(e) Pledgee shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its
possession if such Collateral is accorded treatment substantially
equal to that which Pledgee accords its own property, it being
understood that Pledgee shall not have responsibility for (i)
acting g or taking action with respect to any matters relative to
any Collateral, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any
Collateral. Pledgor shall have the sole responsibility for
taking any and all steps to preserve rights against any and all
parties to any Collateral, whether or not in Pledgee's
possession. Pledgee shall not be responsible for loss or damage
resulting from Pledgee's failure to enforce or collect any
Collateral or to collect any moneys due or to become due
thereunder. Pledgor waives protest of any Instrument
constituting Collateral at any time held by Pledgee on which such
Pledgor is in any way liable and waives notice of any other
action taken by Pledgee.
(f) If any provision of this Agreement shall be prohibited
or invalid under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this
Agreement.
(g) Upon any assignment by Pledgee of its rights and
obligations, or any part thereof, in accordance with the Note,
such assignee shall become vested with Pledgee's rights and
benefits hereunder to the extent of such assignment.
(h) If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations,
Pledgee is required to surrender or return such payment or
proceeds to any person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full
force and effect as if such payment or proceeds had not been
received by Pledgee. Pledgor shall be liable to pay to Pledgee,
and does indemnify and hold Pledgee harmless for the amount of
any payments or proceeds surrendered or returned. This
subsection shall remain effective notwithstanding any contrary
action which may be taken by Pledgee in reliance upon such
payment or proceeds. This subsection shall survive the
termination or revocation of this Agreement.
(i) This Agreement may not be modified, altered or amended,
except by an agreement in writing signed by each Pledgor and
Pledgee.
(j) Neither Pledgee nor any Pledgee Affiliate shall be
liable for any indirect, special, incidental or consequential
damages in connection with any breach of contract, tort or other
wrong relating to this Agreement or the Obligations or the
establishment, administration or collection thereof (including
without limitation damages for loss of profits, business
interruption, and the like), whether such damages are foreseeable
or unforeseeable, even if Pledgee has been advised of the
possibility of such damages. Neither Pledgee nor any Pledgee
Affiliate shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or
suffered by Pledgor through the ordinary negligence of Pledgee,
or any Pledgee Affiliate. "Pledgee Affiliate" shall mean
Pledgee's directors, officers, employees, agents, attorneys and
any other person or entity affiliated with or representing
Pledgee.
(k) This Agreement represents the entire agreement and
understanding of the parties concerning the subject matter
hereof, and supersedes all other prior agreements,
understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
(1) All terms, conditions, promises, covenants, provisions
and warranties shall inure to the benefit of and bind Pledgee's
and Pledgor's respective representatives, successors and assigns.
(m) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
(n) THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY CALIFORNIA STATE OR FEDERAL COURT IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE PLEDGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH CALIFORNIA STATE OR FEDERAL COURT. THE PLEDGOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING.
(o) The Pledgor irrevocably consents to the service of
process out of any of the courts referenced in subsection (n) of
Section 11, in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested,
postage prepaid, to it at its address set forth herein, such
service to become effective upon the earlier of (i) the date 10
calendar days after such mailing or (ii) any earlier date
permitted by applicable law. Nothing in this Section 11 shall
affect the right of the Pledgee to bring proceedings against the
Pledgor in the courts of any other jurisdiction or to serve
process in any other manner permitted by applicable law.
(p) THE PLEDGOR AND PLEDGEE HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE PLEDGOR OR PLEDGEE. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PLEDGEE ENTERING INTO THIS
AGREEMENT AND MAKING THE TERM LOAN TO THE PLEDGOR EVIDENCED BY
THE NOTE.
(q) Any notice required hereunder shall be in writing and
addressed to Pledgor and to Pledgee at their addresses set forth
at the beginning of this Agreement. All such notices and
communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; when received,
if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Where this Agreement provides for notice, such notice may be
waived in writing by the person entitled to receive such notice,
either before or after the date on which the person entitled to
receive such notice and either before or after the event, and
such waiver shall be the equivalent of such notice.
(r) This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one
and the same instrument.
(s) This Agreement shall remain in full force and effect
until all of the Obligations have been indefeasibly paid and
performed in full and the Note and all other agreements,
documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related
thereto, including, but not limited to, this Agreement, have been
terminated, at which time Pledgee shall release and return the
Pledged Stock then being held by it to Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
PURUS, INC.
By: /s/ Peter Friedli, Chief Executive officer
CASA SOLAZ, INC.
By: /s/ Donald Winstead, President
Form 8-K Dated February 17, 1998
Purus, Inc.
File no. 0-22408
Exhibit No. 4
STOCK PLEDGE AGREEMENT
(Suministros Yare Suyaca)
STOCK PLEDGE AGREEMENT (SECURITY AGREEMENT), dated February
17, 1998, between PURUS, INC., a Delaware corporation, with an
office at 605 Tennant Avenue, Suite B, Morgan Hill, CA 95037-
5529 ("Pledgee"), and CASA SOLAZ, INC., a Nevada corporation,
with an office at 17246 Quail Court, Morgan Hill, CA 95037
("CSI"), and Housekit Construcciones, S.A., a Venezuelan
corporation and wholly owned subsidiary of CSI ("HKC"), (CSI and
HKC are collectively referred to as the "Pledgor").
CSI and Pledgee are entering into a 6% Convertible
Promissory Note dated the date hereof (the "Note"), pursuant to
which, among other things, Pledgee will lend $1,800,000 to CSI
(the "Term Loan") on the terms and conditions set forth in the
Note, the proceeds of which will be used to directly benefit and
advance the business of HKC. Pledgor owns, directly or
indirectly, all of the outstanding capital stock of Suministros
Yare Suyaca, C.A., a Venezuelan corporation ("SYS" or the
"Subsidiary"). It is a condition precedent to Pledgee's
obligation to make the Term Loan that Pledgor pledge to Pledgee
and grant Pledgee a security interest in all of the outstanding
capital stock of the Subsidiary, and certain related rights and
property, as more fully described below.
Accordingly, Pledgor hereby agrees with Pledgee as follows:
1. Security Interest. In consideration of any loan,
advance, or other extension of credit heretofore or hereafter
made by Pledgee under the Note or otherwise to, or for the
account or benefit of Pledgor, and as security for the
Obligations (as hereinafter defined), Pledgor hereby pledges,
transfers and assigns to Pledgee and grants to Pledgee a security
interest (the "Security Interest") in the following:
(a) Fifty Thousand (50,000) shares of the capital stock of
SYS with a capital value of Fifty Million Bolivares (Bs.
50,000,000), (the "SYS Stock"), as evidenced by the Record
Ownership Book delivered by Pledgor to Pledgee concurrently with
the execution of this Agreement;
(b) all additional shares of capital stock of the
Subsidiary hereafter issued to or acquired by Pledgor in any
manner;
(c) all shares of capital stock of the Subsidiary which
Pledgor receives by reason of any stock split, bonus, dividend,
distribution, or other form of issue, with respect to or arising
from any of the stock described in subsections (a) and (b) above;
(d) all warrants, rights, or options to acquire, or
securities convertible into, any capital stock of the Subsidiary,
now or hereafter issued to or acquired by Pledgor;
(e) all dividends declared or paid upon the Pledged Stock
(as defined below) or any other stock or securities described
above;
(f) all increases and profits from the foregoing and all
replacements and substitutions for the foregoing; and
(g) all proceeds of the foregoing including, without
limitation, all securities or other property acquired with any
proceeds.
For purposes of this Agreement the term "Pledged Stock"
means all shares or securities issued or issuable as described in
subsections (a) through (d) above. The property described in
subsections (a) through (g) above is referred to hereinafter
collectively as the "Collateral". Pledgor is delivering herewith
physical possession of the Record Ownership Books pertaining to
the Pledged Stock to Pledgee, accompanied by appropriate
instruments of transfer executed in blank, and Pledgee herewith
acknowledges receipt of the Pledged Stock.
2. Obligations Secured. The Collateral secures all
present and future loans, advances, liabilities, obligations,
covenants, duties and indebtedness at any time owing by Pledgor
to Pledgee, whether evidenced by this Agreement, the Note, any
other note, any other instrument or document, whether arising
from an extension of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, including, without
limitation all interest, charges, expenses, fees, attorney's fees
and any other sum chargeable to the Pledgor hereunder or under
any other agreement with Pledgee (the "Obligations").
3. Representations and Warranties of Pledgor. Pledgor
represents and warrants that: (a) each instrument and document
constituting Collateral is genuine and in all respects what it
purports to be; (b) Pledgor is the legal and beneficial owner of
the Collateral free of all pledges, security interests, charges,
liens, or other encumbrances, except under this Agreement, and
has the power and authority to convey any or all of its rights
and interests in the Collateral; (c) the Pledged Stock
constitutes all of the issued and outstanding capital stock of
the Subsidiary owned by Pledgor; (d) there are no options,
warrants, calls, or other rights or commitments of any character
giving any person the right to purchase any of the Pledged Stock
or other Collateral from Pledgor; (e) to the best of Pledgor's
knowledge, the Pledged Stock has been duly authorized and validly
issued, is fully paid and non-assessable, and was not issued in
violation of the preemptive or other rights of any person; (f)
there are no restrictions on the voting rights or upon the
transfer of any of the Collateral other than those contained in
this Agreement or appearing on the records evidencing the
Collateral; (g) the instruments of transfer delivered with the
Pledged Stock herewith are duly executed and give Pledgee the
power they purport to confer; and (h) the execution, delivery and
performance by Pledgor of this Agreement does not and will not
result in any violation of or conflict with the terms of
Pledgor's articles of incorporation, bylaws, or other
organizational documentation, or any agreement, indenture,
instrument, license, judgment, decree, order, law, statute,
ordinance or other governmental rule or regulation applicable to
or binding upon Pledgor.
4. Covenants of Pledgor. So long as this Agreement is in
effect, Pledgor: (a) will defend the Collateral against the
claims and demands of all other parties; will keep the Collateral
free from all security interests or other encumbrances, except
under this Agreement; and will not sell, transfer, assign,
deliver or otherwise dispose of any Collateral or any interest
therein or right thereunder or grant to any person any option,
warrant, or other rights to acquire any of the Collateral or any
interest therein or right thereunder, without the prior written
consent of Pledgee; (b) in connection herewith, will execute and
deliver to Pledgee such financing statements, assignments,
registrations, and other documents and do such other things
relating to the Collateral and the Security Interest as Pledgee
may reasonably request, and pay all costs of lien searches and
filing financing statements, assignments and other documents in
all public offices reasonably requested by Pledgee; (c) will
notify Pledgee promptly in writing of any change in Pledgor's
address; (d) will not, except upon Pledgee's request or with
Pledgee's prior written consent, seek or take delivery of any
additional instrument or other written document constituting or
evidencing any Collateral, and if Pledgor receives any such
additional instrument or document (whether or not at Pledgee's
request or with its consent), Pledgor will immediately notify
Pledgee thereof and immediately deliver such instrument or
document to Pledgee, duly endorsed as Pledgee requests or
accompanied by an appropriate instrument of transfer executed in
blank; and (e) will pay or reimburse Pledgee for all taxes,
assessments and other charges of every nature which may be
imposed, levied or assessed on Pledgee in respect of the
Collateral.
5. Voting Rights; Irrevocable Proxy. So long as no Event
of Default (as hereinafter defined) has occurred and is
continuing, Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral
or any part thereof for any purpose not inconsistent with the
terms of this Agreement and the Note; provided, that Pledgor
shall not exercise or refrain from exercising any such right if
such action would have a material adverse effect on the value of
the Collateral or any part thereof. Pledgee shall execute and
deliver (or cause to be executed and delivered) to Pledgor all
such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise its
voting and other rights as provided in the preceding sentence.
If an Event of Default occurs, and so long as it continues, then,
at Pledgee's election in its sole discretion indicated by written
notice to Pledgor, all of Pledgor's rights to exercise any voting
or other consensual rights pertaining to the Collateral or any
part thereof shall cease, and all such rights shall thereupon
become vested in Pledgee, which shall thereupon have the sole
right to exercise such voting and other consensual rights. In
furtherance of the immediately preceding sentence, Pledgor
irrevocably constitutes and appoints Pledgee, effective upon
Pledgee's giving of the foregoing notice after the occurrence and
during the continuance of any Event of Default, as Pledgor's
proxy with full power, in the same manner, to the same extent and
with the same effect as if Pledgor were to do the same, and
whether or not the Collateral has been transferred into the name
of Pledgee or its nominee: (a) to attend all meetings of
stockholders of the Subsidiary and to vote the Collateral at such
meetings in such manner as Pledgee shall, in its sole discretion,
deem appropriate, including, without limitation, in favor of the
liquidation of the Subsidiary; (b) to consent, in the sole
discretion of Pledgee, to any and all action by or with respect
to the Subsidiary for which the consent of the stockholders of
the Subsidiary is or may be necessary or appropriate; and (c)
without limitation, to do all things which Pledgor can or could
do as a stockholder of the Subsidiary, giving to Pledgee full
power of substitution and revocation. The foregoing proxy shall
terminate when this Agreement is no longer in full force and
effect as hereinafter provided. Pledgor hereby revokes any proxy
or proxies heretofore given by Pledgor to any person or persons
whatsoever and agrees not to give any other proxies in derogation
hereof until this Agreement is no longer in full force and effect
as hereinafter provided.
6. Registered Holder of Collateral. At any time, either
before or after an Event of Default has occurred and is
continuing, Pledgee is authorized to transfer the Collateral or
any part thereof into its own name or that of its nominee so that
Pledgee or its nominee may appear of record as the sole owner
thereof.
7. Dividends and Other Income from Collateral; Additional
Shares.
(a) So long as no Event of Default hereunder has occurred
and is continuing, Pledgor shall be entitled to receive any and
all dividends or other income paid in respect of the Collateral.
If an Event of Default has occurred and is continuing, then
Pledgor's entitlement to receive dividends or other income in
respect of the Collateral shall cease, and, until such Event of
Default has been cured or the Obligations are fully and finally
paid, any and all such dividends and other income shall be paid
directly to Pledgee without deduction, credit, or setoff for any
reason; Pledgee shall, at its sole election, either hold them as
Collateral or apply the same to the Obligations in such order and
manner as Pledgee determines.
(b) Any and all dividends paid or payable other than in
cash in respect of, and instruments, stock and other property
received, receivable or otherwise distributed in respect of, upon
the subdivision or combination of, or in exchange for, any
Collateral, shall constitute Collateral, and shall forthwith be
paid or delivered directly to Pledgee to hold as Collateral.
(c) Any and all dividends and other distributions paid or
payable in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution, and any and all cash
paid, payable or otherwise distributed in respect to redemption
of, or in exchange for, any Collateral, shall be paid or
delivered directly to Pledgee, which, at Pledgee's sole election,
shall be held as Collateral or applied to the Obligations in such
order and manner as Pledgee determines.
(d) If Pledgor receives, or becomes entitled to receive,
any additional shares of the Subsidiary's capital stock or any
other property, other than as contemplated in subsections (a),
(b), and (c) of this Section 7 (whether by reclassification,
readjustment, stock split or other change in the capital
structure of such Subsidiary, or in any other manner), such
shares or other property shall constitute Collateral, and Pledgor
shall direct such Subsidiary to deliver certificates representing
such shares and all such other property directly to Pledgee to be
held as Collateral, and Pledgor shall deliver to Pledgee
appropriate instruments of transfer executed in blank with
respect thereto.
(e) If, notwithstanding the foregoing, Pledgor receives any
dividend or other property payable or deliverable directly to
Pledgee in accordance with the foregoing subsections, Pledgor
shall receive it in trust for the benefit of Pledgee, segregate
it from the other property or funds of Pledgor, and deliver it
immediately to Pledgee in the form received (with any necessary
endorsement).
8. Increases, Profits, Payments or Distributions.
(a) Whether or not an Event of Default has occurred,
Pledgor authorizes Pledgee: (i) to receive any increase in or
profits on the Collateral (which, for the purposes hereof, shall
not include cash dividends) and to hold the same as part of the
Collateral; and (ii) to receive any payment or distribution on
the Collateral upon redemption by, or dissolution and liquidation
of, the Subsidiary, to surrender the Collateral or any part
thereof in exchange therefor, and, at Pledgee's sole election, to
hold the net cash receipts from any such payment or distribution
as part of the Collateral, or to apply them to the Obligations in
such order and manner as Pledgee determines.
(b) If Pledgor receives any such increase, profits,
payments or distributions, Pledgor will receive and deliver the
same promptly to Pledgee on the same terms and conditions set
forth in Section 7(e).
9. Events of Default. It shall be an Event of Default
hereunder if any Event of Default under the Note occurs.
10. Remedies.
(a) Whenever an Event of Default occurs and so long as it
continues, Pledgee shall have, and may exercise with respect to
the Collateral, in such order and manner as it determines, all
rights and remedies of a secured party under the Uniform
Commercial Code and under any other applicable law, as the same
may from time to time be in effect, as well as those rights
granted herein, under the Note, and in any other agreement now or
hereafter in effect between Pledgor and Pledgee. Without
limiting the generality of the foregoing, whenever an Event of
Default exists, Pledgee may sell or otherwise dispose of all or
any part of the Collateral by public or private sale, in one or
more transactions, and in such order as Pledgee determines.
Pledgor agrees and acknowledges that Pledgee may be a purchaser
of the Collateral in any such public or private sale. Proceeds
realized from such sales and dispositions shall be applied first
to Pledgee's costs and expenses in connection therewith and then
to the Obligations in such order as Pledgee determines. Pledgor
recognizes that Pledgee may be unable to effect a public sale of
all or a part of the Collateral by reason of certain provisions
contained in laws and regulations of the United States, various
states within the United States, and/or the laws of Venezuela,
and may be compelled to resort to one or more private sales of
limited amounts of the Collateral to a restricted group of
purchasers who will be obliged to agree, among other things, to
acquire the Collateral for their own account, for investment and
without a view to the distribution or resale thereof. Pledgor
understands that private sales so made may be at prices and other
terms less favorable than if the Collateral were sold at public
sales, and agrees that Pledgee has no obligation to delay the
sale of the Collateral for the period of time necessary to permit
Pledgee to register or qualify the Collateral for sale or
register a public sale transaction under the laws and regulations
of the United States, various states within the United States,
and/or the laws of Venezuela. Pledgor agrees that private sales
under the foregoing circumstances shall be deemed to have been
made in a commercially reasonable manner.
(b) Pledgor agrees that it will provide notice to Pledgee
of a sale stating the time and place of sale, disposition or
other intended action hereunder or in connection herewith,
whether required by the Uniform Commercial Code or otherwise, and
it shall constitute reasonable notice to Pledgor if such notice
is mailed by registered or certified mail, return receipt
requested, postage prepaid, or delivered personally against
receipt, or sent by a recognized overnight delivery service, at
least thirty (30) days prior to such action, to Pledgor's address
set forth in the caption of this Agreement or to such other
address as is specified in writing to Pledgee as the address to
which notices shall be given to Pledgor.
(c) Pledgor shall pay on demand all costs and expenses
incurred by Pledgee in enforcing this Agreement, in realizing
upon or protecting any Collateral and in enforcing and collecting
any Obligations or any guaranty thereof, including, without
limitation, if Pledgee retains counsel for advice, suit, appeal,
insolvency or other proceedings under the federal Bankruptcy Code
or otherwise, or for any of the above purposes, the actual
attorneys' and paralegals' fees incurred by Pledgee, and all such
costs and expenses are secured by the Collateral, as well as by
all other property serving as security for the Obligations.
11. Miscellaneous.
(a) Pledgor authorizes Pledgee, without notice or demand
and without affecting any obligations hereunder, from time to
time: (i) to take from any party and hold collateral (other than
the Collateral) for the payment of the Obligations or any part
thereof, and to exchange, enforce or release such collateral or
any part thereof; (ii) to accept and hold any endorsement or
guaranty of payment of the Obligations or any part thereof and to
release or substitute any such endorser or guarantor, or any
party who has given any security interest in any other collateral
as security for the payment of the Obligations or any part
thereof, or any other party in any way obligated to pay the
Obligations or any part thereof; and (iii) to direct the order or
manner of the disposition of the Collateral and any and all other
collateral and the enforcement of any and all endorsements and
guaranties relating to the Obligations or any part thereof as
Pledgee, in its sole discretion, may determine.
(b) Pledgor hereby appoints Pledgee as Pledgor's attorney-
in-fact (without requiring Pledgee) to perform all acts which
Pledgee deems appropriate in accordance with this Agreement to
perfect and continue its interests hereunder in the Collateral
and to protect, preserve and realize upon the Collateral.
Pledgor further appoints Pledgee as its attorney-in-fact to
execute such orders and receipts for payment of the Collateral in
accordance with this Agreement as Pledgee deems appropriate in
its sole discretion. These powers of attorney are coupled with
an interest and shall be irrevocable and are given to secure
performance by Pledgor of the Obligations and are irrevocable.
Pledgor ratifies and approves all acts of such attorney, and
Pledgee shall not be liable for any acts or omissions or any
error of judgment or mistake of fact or law other than resulting
from Pledgee's bad faith or willful misconduct. Subject to the
terms of this Agreement, Pledgee may demand, collect, and sue on
the Collateral (in either its or Pledgor's name, at Pledgee's
sole option), and enforce, compromise, settle, or discharge the
Collateral, without discharging the Obligations or any part
thereof and whether or not any such action results in the
imposition of any penalty. Pledgor authorizes and directs each
Subsidiary to make any payments in respect of the Collateral as
Pledgee may direct and hereby releases each Subsidiary from any
liability to Pledgor for making such payments.
(c) Upon Pledgor's failure to perform any of its duties
hereunder, Pledgee may, but shall not be obligated to, perform
any or all such duties, and Pledgor shall pay an amount equal to
the cost thereof to Pledgee on demand. Payment of such amount
shall be secured by the Collateral, as well as by all other
property serving as security for the Obligations.
(d) Pledgee's failure to exercise any right, remedy or
option under this Agreement or any supplement or other agreement
between Pledgee and Pledgor or delay by Pledgee in exercising the
same will not operate as a waiver. No waiver by Pledgee shall
affect its right to require strict performance of this Agreement.
Pledgee's rights and remedies will be cumulative and not
exclusive.
(e) Pledgee shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its
possession if such Collateral is accorded treatment substantially
equal to that which Pledgee accords its own property, it being
understood that Pledgee shall not have responsibility for (i)
acting g or taking action with respect to any matters relative to
any Collateral, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any
Collateral. Pledgor shall have the sole responsibility for
taking any and all steps to preserve rights against any and all
parties to any Collateral, whether or not in Pledgee's
possession. Pledgee shall not be responsible for loss or damage
resulting from Pledgee's failure to enforce or collect any
Collateral or to collect any moneys due or to become due
thereunder. Pledgor waives protest of any Instrument
constituting Collateral at any time held by Pledgee on which such
Pledgor is in any way liable and waives notice of any other
action taken by Pledgee.
(f) If any provision of this Agreement shall be prohibited
or invalid under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this
Agreement.
(g) Upon any assignment by Pledgee of its rights and
obligations, or any part thereof, in accordance with the Note,
such assignee shall become vested with Pledgee's rights and
benefits hereunder to the extent of such assignment.
(h) If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations,
Pledgee is required to surrender or return such payment or
proceeds to any person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full
force and effect as if such payment or proceeds had not been
received by Pledgee. Pledgor shall be liable to pay to Pledgee,
and does indemnify and hold Pledgee harmless for the amount of
any payments or proceeds surrendered or returned. This
subsection shall remain effective notwithstanding any contrary
action which may be taken by Pledgee in reliance upon such
payment or proceeds. This subsection shall survive the
termination or revocation of this Agreement.
(i) This Agreement may not be modified, altered or amended,
except by an agreement in writing signed by each Pledgor and
Pledgee.
(j) Neither Pledgee nor any Pledgee Affiliate shall be
liable for any indirect, special, incidental or consequential
damages in connection with any breach of contract, tort or other
wrong relating to this Agreement or the Obligations or the
establishment, administration or collection thereof (including
without limitation damages for loss of profits, business
interruption, and the like), whether such damages are foreseeable
or unforeseeable, even if Pledgee has been advised of the
possibility of such damages. Neither Pledgee nor any Pledgee
Affiliate shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or
suffered by Pledgor through the ordinary negligence of Pledgee,
or any Pledgee Affiliate. "Pledgee Affiliate" shall mean
Pledgee's directors, officers, employees, agents, attorneys and
any other person or entity affiliated with or representing
Pledgee.
(k) This Agreement represents the entire agreement and
understanding of the parties concerning the subject matter
hereof, and supersedes all other prior agreements,
understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
(1) All terms, conditions, promises, covenants, provisions
and warranties shall inure to the benefit of and bind Pledgee's
and Pledgor's respective representatives, successors and assigns.
(m) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
(n) THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY CALIFORNIA STATE OR FEDERAL COURT IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE PLEDGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH CALIFORNIA STATE OR FEDERAL COURT. THE PLEDGOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING.
(o) The Pledgor irrevocably consents to the service of
process out of any of the courts referenced in subsection (n) of
Section 11, in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested,
postage prepaid, to it at its address set forth herein, such
service to become effective upon the earlier of (i) the date 10
calendar days after such mailing or (ii) any earlier date
permitted by applicable law. Nothing in this Section 11 shall
affect the right of the Pledgee to bring proceedings against the
Pledgor in the courts of any other jurisdiction or to serve
process in any other manner permitted by applicable law.
(p) THE PLEDGOR AND PLEDGEE HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE PLEDGOR OR PLEDGEE. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PLEDGEE ENTERING INTO THIS
AGREEMENT AND MAKING THE TERM LOAN TO THE PLEDGOR EVIDENCED BY
THE NOTE.
(q) Any notice required hereunder shall be in writing and
addressed to Pledgor and to Pledgee at their addresses set forth
at the beginning of this Agreement. All such notices and
communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; when received,
if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Where this Agreement provides for notice, such notice may be
waived in writing by the person entitled to receive such notice,
either before or after the date on which the person entitled to
receive such notice and either before or after the event, and
such waiver shall be the equivalent of such notice.
(r) This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one
and the same instrument.
(s) This Agreement shall remain in full force and effect
until all of the Obligations have been indefeasibly paid and
performed in full and the Note and all other agreements,
documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related
thereto, including, but not limited to, this Agreement, have been
terminated, at which time Pledgee shall release and return the
Pledged Stock then being held by it to Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
PURUS, INC.
By: /s/ Peter Friedli, Chief Executive officer
CASA SOLAZ, INC.
By: /s/ Donald Winstead, President
HOUSEKIT CONSTRUCCIONES, S.A.
By: /s/ Claudio Osorio Hamel, President
Form 8-K Dated February 17, 1998
Purus, Inc.
File no. 0-22408
Exhibit No. 5
Series A Preferred Warrant 550,000 Shares
CASA SOLAZ, INC.
(a Nevada corporation)
WARRANT FOR THE PURCHASE OF
Series A Convertible Preferred Stock, $0.001 Par Value Per Share
THIS WARRANT WILL BE VOID
AFTER 12:00 MIDNIGHT ON DECEMBER 31, 1998
This certifies that, for value received, PURUS, INC., a
Delaware corporation, or registered assigns ("holder"), is
entitled, at any time prior to 12:00 midnight Pacific Time on
December 31, 1998 (the "Expiration Date"), to purchase from CASA
SOLAZ, INC., a Nevada corporation, hereinafter referred to as the
"Company," the number of shares shown above (the "Warrant
Shares") of Series A Convertible Preferred Stock, par value
$0.001, of the Company (the "Preferred Stock") by surrendering
this warrant with the purchase form attached hereto, duly
executed, at the principal office of the Company in Morgan Hill,
California, and by paying in full and in lawful money of the
United States of America by cash or cashiers' check, the purchase
price of the Warrant Shares as to which this warrant is
exercised, on all the terms and conditions hereinafter set forth.
1. The purchase price at which the Warrant Shares are
purchasable (hereinafter referred to as the "Warrant Price") is
$4.00 per share, subject to adjustment as provided below.
2. On the exercise of all or any portion of this warrant
in the manner provided above, the person exercising the same
shall be deemed to have become a holder of record of Preferred
Stock (or of the other securities or properties to which he or it
is entitled on such exercise) for all purposes, and certificates
for the securities so purchased shall be delivered to the
purchaser within a reasonable time, but in no event longer than
five business days after the warrant shall have been exercised as
set forth above. If this warrant shall be exercised in respect
to only a part of the Warrant Shares covered hereby, the holder
shall be entitled to receive a similar warrant of like tenor and
date covering the number of Warrant Shares with respect to which
this warrant shall not have been exercised.
3. This warrant is exchangeable, on the surrender hereof
by the holder at the office of the Company, for new warrants of
like tenor and date representing in the aggregate the right to
subscribe for and purchase the number of Warrant Shares which may
be subscribed for and purchased hereunder.
4. The Company covenants and agrees that the Warrant
Shares which may be issued on the exercise of the rights
represented by this warrant will, on issuance, be fully paid and
nonassessable, and free from all taxes, liens, pre-emptive
rights, and charges with respect to the issue thereof. The
Company further covenants and agrees that during the period
within which the rights represented by this warrant may be
exercised, the Company will have authorized and reserved a
sufficient number of shares of Preferred Stock to provide for the
exercise of the rights represented by this warrant.
5. The Warrant Price and number of Warrant Shares
purchasable pursuant to this warrant may be subject to adjustment
from time to time as follows:
(a) If the Company shall take a record of the holders of
its Preferred Stock for the purpose of entitling them to receive
a dividend in shares, the number of Warrant Shares purchasable
hereunder immediately prior to such record date shall be
proportionately increased and the Warrant Price in effect
immediately prior to such record date shall be proportionately
decreased, such adjustment to become effective immediately after
the opening of business on the day following such record date.
(b) If the Company shall subdivide the outstanding shares
of Preferred Stock into a greater number of shares, combine the
outstanding shares of Preferred Stock into a smaller number of
shares, or issue by reclassification any of its shares of
Preferred Stock, the number of Warrant Shares purchasable
hereunder immediately prior thereto and the Warrant Price in
effect immediately prior thereto shall be adjusted so that the
holder of the warrant thereafter surrendered for exercise shall
be entitled to receive, after the occurrence of any of the events
described, the number of Warrant Shares to which the holder would
have been entitled had such warrant been exercised immediately
prior to the occurrence of such event. Such adjustment shall
become effective immediately after the opening of business on the
day following the date on which such subdivision, combination, or
reclassification, as the case may be, becomes effective.
(c) If any capital reorganization or reclassification of
the Company's Preferred Stock, or consolidation or merger of the
Company with another corporation or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way that holders of Preferred Stock shall be
entitled to receive stock, securities, or assets with respect to
or in exchange for Preferred Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale,
lawful adequate provisions shall be made whereby the holder of
this warrant shall thereafter have the right to acquire and
receive on exercise hereof such shares of stock, securities, or
assets as would have been issuable or payable (as part of the
reorganization, reclassification, consolidation, merger, or sale)
with respect to or in exchange for such number of outstanding
shares of the Company's Preferred Stock as would have been
received on exercise of this warrant immediately before such
reorganization, reclassification, consolidation, merger, or sale.
In any such case, appropriate provision shall be made with
respect to the rights and interests of the holder of this warrant
to the end that the provisions hereof shall thereafter be
applicable in relation to any shares of stock, securities, or
assets thereafter deliverable on the exercise of this warrant.
In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all
of its assets as a result of which a number of shares of stock of
the surviving or purchasing corporation greater or less than the
number of shares of Preferred Stock of the Company outstanding
immediately prior to such merger, consolidation, or purchase are
issuable to holders of Preferred Stock of the Company, then the
number of Warrant Shares and Warrant Price in effect immediately
prior to such merger, consolidation, or purchase shall be
adjusted in the same manner as through there was a subdivision or
combination of the outstanding shares of Preferred Stock of the
Company. The Company will not effect any such consolidation,
merger, or sale unless prior to the consummation thereof the
successor corporation resulting from such consolidation or merger
or the corporation purchasing such assets shall assume by written
instrument mailed or delivered to the holder hereof at its last
address appearing on the books of the Company, the obligation to
deliver to such holder such shares of stock, securities, or
assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire on exercise of this warrant.
(d) No fraction of a share shall be issued on exercise,
but, in lieu thereof, the Company, notwithstanding any other
provision hereof, may pay therefor in cash at the fair value of
any such fractional share at the time of exercise.
(e) Neither the purchase nor other acquisition by the
Company of any shares of Preferred Stock nor the sale or other
disposition by the Company of any shares of Preferred Stock shall
affect any adjustment of the Warrant Price or be taken into
account in computing any subsequent adjustment of the Warrant
Price.
6. This warrant and the shares issuable on exercise of
this warrant are restricted securities within the meaning of Rule
144 promulgated under the Securities Act of 1933, as amended, and
all certificates therefor shall contain a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (the
"Securities Act"), AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OR OTHER EXEMPTION OR SAFE HARBOR UNDER
THE SECURITIES ACT.
7. Subject to the restrictions set forth in paragraph 6
above, this warrant is transferable at the offices of the
Company. On such transfer, every holder hereof agrees that the
Company may deem and treat the registered holder of this warrant
as the true and lawful owner thereof for all purposes, and the
Company shall not be affected by any notice to the contrary.
8. As used herein, the term "Preferred Stock" shall mean
and include the Company's Series A Convertible Preferred Stock
authorized on the date of the original issue of this warrant, and
shall also include, in the case of any reorganization,
reclassification, consolidation, merger, or sale of assets of the
character referred to in paragraph 5(c) hereof, the stocks,
securities, or assets provided for in such paragraph.
9. This agreement shall be construed under and be governed
by the laws of the state of Nevada, except for those laws
pertaining to choice of law matters.
10. Any notices required or permitted hereunder shall be
sufficiently given if delivered by hand or sent by registered or
certified mail, postage prepaid, addressed as follows:
If to holder, to: PURUS, INC.
605 Tennant Avenue, Suite B
Morgan Hill, CA 95037-5529
If to the Company, to: CASA SOLAZ, INC.
17246 Quail Court
Morgan Hill, CA 95037
or such other address as shall be furnished in writing by any
party to the other, and any such notice or communication shall be
deemed to have been given as of the date so delivered or three
days after being so deposited in the mails.
DATED this 17th day of February, 1998.
CASA SOLAZ, INC.
By /s/ Donald Winstead, President
Form of Purchase
(to be signed only upon exercise of warrant)
TO: CASA SOLAZ, INC.
The undersigned, the owner of the attached warrant, hereby
irrevocable elects to exercise the purchase rights represented by
the warrant for, and to purchase thereunder,
_______________________________________________ shares of
Preferred Stock of Casa Solaz, Inc., and herewith makes payment
of $_________________________ therefor, and requests that the
certificate(s) for such shares be delivered to
____________________________________________________________, at
_________________________________________________________________
__________, and if such shall not be all of the shares
purchasable hereunder, that a new warrant of like tenor for the
balance of the shares purchasable under the attached warrant be
delivered to the undersigned.
DATED this ______ day of _______________________________,
______________.
____________________________________
Signature
Transfer Form
FOR VALUE RECEIVED,
______________________________________________________,
hereby sell, assign, and transfer
unto________________________________________________
_________________________________________________________________
_______________________________ warrants to purchase Preferred
Stock of Casa Solaz, Inc., represented by the attached warrant,
and do hereby irrevocably constitute and appoint
_________________________________________________________________
to transfer the said warrants on the books of Casa Solaz, Inc.,
with full power of substitution in the premises.
DATED this ______ day of _______________________________,
______________.
____________________________________
Signature
In presence of:
