-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DP2QMxf5LcX1/y4XL1JawqYhShSZEApw10Iqo64QUe9W9Lgm/GoBLSklwcG6Cwlt CYmSHuafFKYqDXyBFg2JpQ== 0001013176-98-000017.txt : 19980504 0001013176-98-000017.hdr.sgml : 19980504 ACCESSION NUMBER: 0001013176-98-000017 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980416 ITEM INFORMATION: FILED AS OF DATE: 19980430 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PURUS INC CENTRAL INDEX KEY: 0000912156 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 770234694 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22408 FILM NUMBER: 98604841 BUSINESS ADDRESS: STREET 1: 605 TENNANT AVE STREET 2: STE B CITY: MORGAN HILL STATE: CA ZIP: 95037 BUSINESS PHONE: 4087881903 MAIL ADDRESS: STREET 1: 600 CALIFORNIA ST STREET 2: STE 1300 CITY: SAN FRANCISCO STATE: CA ZIP: 94108 8-K 1 FORM 8-K, DATE OF REPORT 04/16/98 3 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): April 16, 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) ITEM 5. OTHER EVENTS On April 16, 1998, Purus, Inc. (the "Company"), entered into a Commitment Letter with Casa Solaz, Inc. ("CSI"), a private Nevada corporation which recently commenced the business of manufacturing, marketing, and installing prefabricated housing units in South America. Under the terms of the Commitment Letter, the Company will acquire all of the capital stock of CSI in exchange for that number of shares of Purus common stock equal to 75% of the outstanding shares after giving effect to the transaction (subject to adjustment on the basis of the net asset value of the Company). The closing of the acquisition is subject to a number of conditions, including but not limited to: (i) the completion of all due diligence with respect to the parties; (ii) completion of all definitive documentation; (iii) obtaining all consents and approvals of the board of directors and shareholders and other applicable third parties necessary or desirable in connection with the acquisition; and (iv) resolution or other disposition to the satisfaction of CSI of all pending legal proceedings against the Company described in its 1997 annual report on Form 10-KSB. Due to the uncertainty associated with the pending litigation involving the Company, there is significant uncertainty with respect to the transaction and whether it will be consummated. In connection with the acquisition commitment between the Company and CSI, the Company made an additional loan to CSI of $2,200,000, thereby increasing total loans to CSI to $4,000,000. The loans bear interest at the rate of 6% per annum, and all principal and interest is due December 31, 1999. The loans are secured by all assets of CSI, including all of the capital stock of its Venezuelan subsidiaries conducting operations in South America. When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and other matters that may affect the Company's future plans of operations, business strategy, operating results, and financial position. Investors are cautioned that any forward-looking statements are not guaranties of future events or performance and are subject to risks and uncertainties, and that actual events may differ materially from those included within the forward-looking statements as a result of various factors, including, but not limited to, the conditions to completion of the proposed acquisition of CSI by the Company described above. 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) Commitment Letter dated April 16, 1998 E-1 2 (10) 6 % Convertible Promissory Note dated E-9 April 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: April 29, 1998 By /s/Peter Friedli Chief Executive Officer EX-10 2 Exhibit No. 1 Form 8-K Dated April 16, 1998 Purus, Inc. File No. 0-22408 PURUS, INC. 605 Tennant Ave., Suite B Morgan Hill, CA 95037 April 16, 1998 VIA FACSIMILE Mr. Donald Winstead, President Casa Solaz, Inc. 17246 Quail Court Morgan Hill, CA 95037 Dear Mr. Winstead: Purus, Inc. ("Purus") is pleased to confirm its commitment to make funds available to provide additional debt financing to Casa Solaz, Inc., a Nevada corporation (the "Company"), in the amount of $2,200,000 on the same terms as the existing loan between the parties. Purus is prepared to make this commitment in reliance on the agreement of the Company's holders of capital stock to exchange their shares for Purus common stock (the "Acquisition") subject to the terms and conditions contained herein and in the attached Summary of Proposed Terms and Conditions (the "Term Sheet"). (This letter and the Term Sheet are sometimes collectively referred to herein as the "Letter"). Any capitalized term used and not otherwise defined herein shall have the meaning ascribed to such term in the Term Sheet. The commitment of Purus hereunder is based upon the financial and other information regarding the Company and its subsidiaries provided to Purus and is subject to the various conditions precedent described in the Term Sheet and to the usual reservations, among others, that there shall not have occurred after the date of such information, in the sole opinion of Purus, either any material adverse change in the business, assets, liabilities (actual or contingent), operations, conditions (financial or otherwise) or prospects of the Company and its subsidiaries taken as a whole, or any changes in governmental regulations, monetary policy or market conditions. If the continuing review by Purus of the Company discloses information relating to conditions or events not previously disclosed to Purus or relating to new information or additional developments concerning conditions or events previously disclosed to Purus that Purus in its sole discretion believes may have a material adverse effect on the condition (financial or otherwise), assets, properties, business operations or prospects of the Company and its subsidiaries taken as a whole, Purus, may, in its sole discretion, decline to provide the Financing or complete the Acquisition. The Company hereby represents, warrants and covenants to Purus that (i) all information, which has been, or is hereafter, made available to Purus by the Company or any of its representatives in connection with the transactions contemplated hereby ("Information"), is, and will be, complete and correct in all material respects and does not, and will not, contain any untrue statement of a material fact or omit to state a fact necessary to make the statements contained therein not misleading and (ii) all financial projections concerning the Company that have been, or are hereafter, made available to Purus by the Company or any of its representatives (the "Projections") have been, or will be, prepared in good faith based upon reasonable assumptions. The Company also agrees to furnish Purus with such information and Projections as it may reasonably request and to supplement the Information and the Projections from time to time, through and including the closing date of the Acquisition (the "Closing Date"), so that the representation and warranty set forth in the preceding sentence is correct on the Closing Date. Each of the parties hereto agree that the other party shall (i) have no liability (whether direct or indirect, in contract or tort or otherwise) to security holders or creditors arising out of, related to, or resulting from, the transactions contemplated herein, except to the extent that such liability is found by a judgment of a court of competent jurisdiction to have resulted from gross negligence or willful misconduct or (ii) be responsible or liable for any consequential damages that may be alleged as a result of this Letter. The provisions of the immediately preceding paragraph shall remain in full force and effect regardless of whether definitive documentation for the Financing and Acquisition shall be completed, executed and delivered, and notwithstanding the termination of this Letter or the commitment of Purus hereunder. Please note that, except with respect to the provisions of the preceding two paragraphs, the commitment proposed herein does not constitute a binding obligation of either the Company or Purus, nor does it define all of the terms and conditions of the Financing and Acquisition, but is a framework upon which the documentation for the proposed transactions would be structured, and is a basis for further discussion and negotiation of the terms as may be appropriate. Among other things, the Acquisition would be subject to all of the Conditions Precedent to Closing set forth in the Term Sheet, and those matters which are not covered by or made clear in this Letter are subject to the mutual agreement of the parties. This Letter (i) shall be governed by, and construed in accordance with, the laws of the State of California, without regard to any choice-of-law principles thereof, (ii) may be executed in counterparts, which, taken together, shall constitute an original, (iii) shall be amended or modified only in a writing executed by the parties hereto, (iv) shall not be assigned or transferred by the Company (whether by operation of law or otherwise) without the prior written consent of Purus, and (v) supersedes and replaces any and all proposals or commitment letters previously delivered by Purus to the Company. In addition, no party has been authorized by Purus to make any oral or written statements inconsistent with this Letter. The commitment proposed herein will be available for acceptance until 5:00 p.m. (Pacific Daylight Savings time) on April 17, 1998, unless further extended in writing by Purus. We are delighted to have this opportunity to work with you. If the terms of the Letter meet with your approval, please indicate your acceptance by signing and dating the enclosed copy of this Letter, and then returning the same to the undersigned. Very truly your, PURUS, INC. By: /s/ Peter Friedli Name: Peter Friedli Title: Chief Executive Officer Dated: April 16, 1998, 1998 ACCEPTED: CASA SOLAZ, INC. By: Donald Winstead Name: Donald Winstead Title: President Dated: April 16, 1998 SUMMARY OF PROPOSED TERMS AND CONDITIONS PURUS/CASA SOLAZ I. SENIOR SECURED NOTE OFFERING Issuer: Purus, Inc. (the "Company"). Issue: Amendment and increase of existing $1,800,000 note to $4,000,000 (the "Note"). Closing: Closing of the increase in the Note is expected to occur on or before April 21, 1998. Security: The Note will be secured by the same assets as the existing $1,800,000 Note. Use of Proceeds: To finance new facilities and provide for working capital and general corporate purposes. TERMS OF THE NOTES Ranking: The Note shall be the senior secured obligations of the Company, ranking senior in right of payment to all existing and future subordinated indebtedness of the Company. Interest: The Note will bear interest at a fixed rate of 6% per annum. Maturity: December 31, 1999. II. ACQUISITION OFFERING Issuer: Purus, Inc. ("Purus"). Issue: Common Stock (the "Common Stock"). Aggregate Amount: After giving effect to the transaction, that number of shares of Purus common stock equal to 75% of the outstanding shares (subject to adjustment as provided below) will be issued in exchange for all of the capital stock of the Company held by Company stockholders as of the date of this Letter and their successors or or assigns ("Acquisition"). Closing: Closing of the Acquisition is expected to occur on or before December 31, 1999 (the "Closing Date"). Adjustment: If, as of the end of the most recent fiscal quarter of Purus prior to the Closing Date and provided there is no material change from the end of such quarter to the Closing Date, the net asset value of Purus in greater than $4,000,000, the number of Purus shares issued for the capital stock of the Company shall be adjusted by mututal agreement of the parties. ADDITIONAL CLOSING CONDITIONS Stock Exchange Agreement: The Acquisition shall be made pursuant to a definitive exchange agreement (the "Stock Exchange Agreement"), which shall contain representations and warranties, covenants and indemnification provisions in form and substance satisfactory to the parties. No Change of Control If there shall occur a Change of Control of Purus, the Company shall have no further obligation to consummate the Acquisition. As used herein, a "Change of Control" means a change of control of Purus of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (as in effect on the Closing Date), whether or not Purus is then subject to such reporting requirement; provided, that, without limitation, such a Change of Control shall be deemed to have occurred if: (i) any "person" (ad defined in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Purus representing thirty percent (30%) or more of the combined voting power of Purus's then outstanding securities; provided, however, that no Change of Control shall be deemed to have occurred if prior to the acquisition of such thirty percent (30%) of the combined voting power of Purus's then outstanding securities, a majority of the Continuing Directors (as defined below) approves such acquisition; or (ii) if there shall cease to be a majority of the Board of Directors of Purus (the "Board") comprised of Continuing Directors; or (iii) the stockholders of Purus approve a merger of consolidation of Purus with any other corporation, other than a merger or consolidation which would result in the voting securities of Purus outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least eighty percent (80%) of the combined voting power of the voting securities of Purus or such surviving entity outstanding immediately after such merger or consolidation; or (iv) if any recapitalization event occurs as a result of which the holders of voting securities of Purus outstanding immediately prior thereto do not continue to hold at least eighty percent (80%) of the combined voting power of the voting securities of Purus immediately after such recapitalization event; or (v) the stockholders of Purus approve a plan of complete liquidation of Purus or an agreement for the sale or disposition by Purus of all or substantially all of Purus's assets; or (vi) a majority of the "named executive officers" set forth in Purus's most recent Proxy Statement or Annual Report on Form 10-K or Form 10-KSB, as the case may be, cease to occupy such positions within a period of 365 consecutive days. As used herein, "Continuing Directors" means individuals who constitute the Board as of the date of the Letter and any new director(s) whose election by the Board or nomination for election by Purus's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors as of the date hereof or whose election or nomination for election was previously so approved. Conditions Precedent to Closing: The closing of the Acquisition (the "Closing") is subject to the completion, execution and delivery of acceptable documentation with respect to the Acquisition and other conditions precedent deemed appropriate by the parties for transactions similar to the Acquisition in general and for the transaction in particular, including, but not limited to, each of the following: (i) The completion of all due diligence with respect to the Company and its subsidiaries in scope and determination satisfactory to Purus in its sole discretion; (ii) All definitive documentation (including, but not limited to, the Stock Exchange Agreement and associated documentation with respect thereto) shall have been completed, executed and delivered in form and substance satisfactory to the parties; (iii) All consents and approvals of the board of directors and shareholders, governmental and regulatory bodies, and other applicable third parties necessary or desirable in connection with the Acquisition shall have been obtained and remain in effect; (iv) no material adverse change shall have occurred, or shall be reasonably expected to occur, in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Company and its subsidiaries taken as a whole; (v) The absence of any claim, action, suit, order, injunction, investigation or proceeding (including, without limitation, any of the foregoing that relate to bankruptcy or insolvency) pending or threatened in any court or before any arbitrator or governmental authority that purports to affect the Company or its subsidiaries or any transaction contemplated hereby, or that could have a material adverse effect on the Company or its subsidiaries or any transaction contemplated hereby or on the ability of the Company and its subsidiaries to perform its and their respective obligations under any documents to be executed in connection with the Acquisition; (vi) Receipt and review, with results satisfactory to Purus and its counsel of information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership and contingent liabilities of the Company and it subsidiaries; (vii) Purus and its counsel shall be satisfied with the legal structure of the Company and its subsidiaries (including, without limitation, its or their respective Certificates of Incorporation (including any Certificate of Rights and Designations of any currently outstanding series or class of preferred stock), Bylaws, and any regulatory matters affecting the proposed Acquisition and the terms and conditions of the transaction proposed herein; and (viii) Resolution or other disposition to the satisfaction of the Company of all pending legal proceedings against Purus described in the 1997 annual report of Purus on Form 10-KSB. EX-10 3 Exhibit No. 2 Form 8-K Dated April 16, 1998 Purus, Inc. File No. 0-22408 US$2,200,000.00 April 17, 1998 CASA SOLAZ, INC. 6% 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 TWO MILLION TWO HUNDRED THOUSAND US DOLLARS ($2,200,000.00), 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 apply any amount then owing on this Note to exercise of the Series A Preferred Stock Warrant issued by the Company to Purus, Inc., dated February 17, 1998 ("Warrant"), 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: (a) all of the assets of the Company pursuant to the Security Agreement dated February 17, 1998, given by the Company to Purus, Inc., and this Note and all obligations arising hereunder shall be deemed a "Secured Obligation" as that term is defined in the Security Agreement; (b) by all of the capital stock of all subsidiary corporations of the Company pursuant to the Pledge Agreement dated February 17, 1998, given by the Company to Purus, Inc., and this Note and all obligations arising hereunder shall be deemed an "Obligation" as that term is defined in said Pledge Agreement; and (c) by all of the capital stock of all subsidiary corporations of the Company pursuant to the Pledge Agreement dated February 17, 1998, given by the Company and Housekit Construcciones, S.A., to Purus, Inc., and this Note and all obligations arising hereunder shall be deemed an "Obligation" as that term is defined in said Pledge Agreement. The Security Agreement and Pledge Agreements referenced herein are collectively referred to 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. Warrant Exercise. 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 apply all amounts then owing under this Note to exercise of the Warrant and purchase in accordance with the terms of the Warrant of fully paid and non- assessable shares of the Series A Convertible Preferred Stock of the Company. Exercise of the Warrant 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 exercise in the manner required by the Warrant. 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, 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. 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 April, 1998. CASA SOLAZ, INC. By /s/ Donald Winstead, President -----END PRIVACY-ENHANCED MESSAGE-----