SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement, (the “Agreement”)
is made and entered into as of December ___, 2006, by and between Pure Capital
Incorporated, a Canadian Federal corporation (the “Company”) and
____________________________________________ (the “Purchaser”).
RECITALS
Whereas,
the
Company has authorized the sale of a Convertible Note (the “Note”) in an
aggregate principal amount of ________________________________________________
($_____________) dollars, convertible into shares of the Company’s common stock,
no par value per share (the “Common Stock”);
Whereas,
Purchaser
desires to purchase the Note on the terms and conditions set forth
herein;
Whereas,
the
Company desires to issue and sell the Note to Purchaser on the terms and
conditions set forth herein;
Whereas,
the
Company and the Purchaser are executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by §4(2) of
the Securities Act of 1933, as amended (the “Securities Act”).
AGREEMENT
Now
therefore,
in
consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereafter set forth and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
ARTICLE
I
GENERAL
1.1 Agreement
to Sell and Purchase. Pursuant
to the terms and conditions set forth in this Agreement, the Company agrees
to
sell to the Purchaser, and the Purchaser hereby agrees to purchase from the
Company a Note in the amount of $___________________ convertible in accordance
with the terms thereof into shares of the Common Stock. The Note purchased
shall
be known as the “Offering”. The Note will have a maturity date (as defined in
the Note) twenty four months from the day of issuance. Collectively, the Note
and Common Stock issuable in payment of the Note upon conversion of the Note
are
referred to as the “Securities”.
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES
OF THE PURCHASER
2.1
Investment
Representations. Purchaser
understands that the Securities are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
the Purchasers representations contained in this Agreement, including, without
limitation, that the Purchaser is an “Accredited Investor” within the meaning of
Regulation D under the Securities Act.
2.2 Purchaser
Bears Economic Risk. Purchaser
has substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that he is
capable of evaluating the merits and risks of his investment in the Company,
and
has the capacity to protect his own interests. Purchaser must bear the economic
risk of this investment until the Securities are sold pursuant to (i) an
effective registration statement under the Securities Act, or (ii) an exemption
from registration is available.
2.3 Acquisition
for Own Account.
Purchaser is acquiring the Note and the shares of Common Stock issuable upon
conversion of the Note (the “Note Shares”) for Purchasers own account for
investment only, and not with a view towards distribution.
2.4 Purchaser
Can Protect His Interests.
Purchaser
represents that by reason of his business and financial experience, Purchaser
has the capacity to protect his own interests in connection with the
transactions contemplated in this Agreement.
2.5 Accredited
Investor. Purchaser
represents that he is an Accredited Investor within the meaning of Regulation
D
under the Securities Act.
2.6 |
Legends.
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(a) The
Note
shall bear substantially the following legend until the Note and Note Shares
are
covered by an effective registration statement filed with the Securities and
Exchange Commission (“SEC”):
“THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR, IF APPLICABLE,
STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PURE CAPITAL INCORPORATED THAT SUCH REGISTRATION
IS
NOT REQUIRED.”
(b) The
Note
Shares shall bear a legend which shall be in substantially the following form
until such shares are covered by an effective registration statement filed
with
the SEC:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR IF APPLICABLE, STATE SECURITIES LAWS.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PURE
CAPITAL INCORPORATED THAT SUCH REGISTRATION IS NOT REQUIRED.”
ARTICLE
III
REPRESENTATIONS
AND
WARRANTIES
OF THE COMPANY
3.1 Representations
and Warranties.
The
Company represents to the Purchaser that:
(a) Organization
and Qualifications. The Company is duly organized and existing in good standing
under the law of the jurisdiction in which it was incorporated, and has the
requisite corporate power to own their properties and to carry on their business
as now being conducted.
(b) Authorization
Enforcement. (i) The Company has the requisite corporate power and authority
to
perform the Agreement, and to issue the Securities in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby
and
thereby have been duly authorized by the Company’s Board of Directors and no
further consent or authorization of the Company, or its Board of Directors
or
stockholders is required, (iii) this Agreement has been duly executed and
delivered, and (iv) the Agreement constitutes a valid and binding obligation
of
the Company enforceable against the Company in accordance with its
terms.
(c) Issuance
of Note. The Note is duly authorized and is validly issued, fully paid and
non-assessable, free of any encumbrances, and are not subject to preemptive
rights of stockholders of the Company.
(d) No
Conflicts. The execution, delivery and performance of this Agreement and the
Note by the Company and the consummation by the Company of the transactions
contemplated hereby will not, (i) result in a violation of the Certificate
of
Incorporation or By-laws of the Company or its subsidiaries or (ii) conflict
with, or constitute a default, (or an event which with notice or lapse of time
or both could become a default) or to give others any rights of termination,
amendment or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation
of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of
its
subsidiaries or by which any material property or asset of the Company or any
of
its subsidiaries is bound or affected.
(e) Third
Party Consents. Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws,
the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement in accordance with the
terms
hereof and thereof.
(f) Information
Disclosure. All information related to the Company disclosed to the Purchaser,
whether orally or in writing, does not contain any false or misleading statement
of material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein not
misleading. Except as otherwise disclosed to the Purchaser, neither the Company
nor its subsidiaries has undertaken any liability or obligation, direct or
contingent, except for liabilities or obligations undertaken in the ordinary
course of business.
(g)
Absence
of Litigation. There is no action, suit, proceeding, inquiry, or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or any of
its
subsidiaries, threatened against or affecting the Company or any of its
subsidiaries that is reasonably likely to have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business,
properties, operations, assets, financial condition or results of operations
of
the Company taken as a whole, or on the transactions contemplated hereby or
by
the agreements or instruments to be entered into in connection
herewith.
(h) Patents,
Copyrights, etc. The Company: (i) owns or has the right to use, free and clear
of all liens, claims, encumbrances, pledges, security interests, and other
adverse interests of any kind whatsoever, all patents, inventions, know-how,
trade secrets, trademarks, service marks, trade names, copyrights, technology,
and all other licenses and rights with respect to the foregoing, used in the
conduct of its business as now conducted or proposed to be conducted without,
to
the best knowledge of the Company and its subsidiaries, infringing upon or
otherwise acting adversely to the right or claimed right of any person, company
or other entity; (ii) is not obligated or under any liability whatsoever to
make
any payment by way of royalties, fees or otherwise to any owner or licensee
of,
or other claimant to, any patent, trademark, service xxxx, trade name,
copyright, know-how, technology or other intangible asset, with respect to
the
use thereof or in connection with the conduct of its business or otherwise;
and
(iii) has not received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or in the
aggregate, are the subject of an unfavorable decision, ruling or finding, that
might have a Material Adverse Effect.
(h) Taxes.
The Company and it subsidiaries have filed or caused to be filed all income
tax
returns which are required to be filed and have paid or have caused to be paid
all taxes and all assessments received by them to the extent that such taxes
and
assessments have become due, except taxes and assessments the validity or amount
of which is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside, and except for such
returns for which the failure to file would not have a Material Adverse Effect
upon the Company and its subsidiaries taken as a whole. The Company and its
subsidiaries have paid or caused to be paid, or has established reserves that
the Company reasonably believes to be adequate in all material respects, for
all
federal income tax liabilities and state income tax liabilities applicable
to
the Company and its subsidiaries for all fiscal years which have not been
examined and reported on by the taxing authorities (or closed by applicable
statutes).
ARTICLE
IV
CONVERSION
OF CONVERTIBLE NOTE
4.1 Mechanics
of Conversion.
(a) Provided
the Purchaser has notified the Company of the Purchaser’s intention to sell the
Note Shares and the Note Shares are included in an effective registration
statement or are otherwise exempt from registration when sold: (i) Upon the
conversion of the Note or part thereof, the Company shall, at its own cost
and
expense, take all necessary action (including the issuance of an opinion of
counsel) to assure that the Company’s transfer agent shall issue stock
certificates in the name of the Purchaser (or its nominee) or such other persons
as designated by the Purchaser and in such denominations to be specified
representing the number of Note Shares issuable upon such conversion; and (ii)
The Company warrants that no instructions other than these instructions have
been or will be given to the transfer agent of the Common Stock and that the
Note Shares issued will be un-legended, free-trading, and freely transferable,
and will not contain a legend restricting the resale or transferability of
the
Note Shares.
(b) Purchaser
will give notice of his decision to exercise his right to convert the Note
or
part thereof, which is within his sole discretion at his opinion, by telecopying
or otherwise delivering an executed and complete written notice of the number
of
shares to be converted to the Company (the “Notice of Conversion”). The
Purchaser will not be required to surrender the Note until the Purchaser
receives a certificate or certificates, as the case may be, representing the
Note Shares or until the Note has been fully satisfied. Each date on which
a
Note of Conversion is telecopied or delivered to the Company in accordance
with
the provisions hereof shall be deemed a “Conversion Date”. The Company will or
will cause the transfer agent to transmit the Common Stock certificates
representing the shares issuable upon conversion of the Note (and a certificate
representing the balance of the Note not so converted, if requested by
Purchaser) to the Purchaser via express courier for receipt by such Purchaser
within three business days after receipt by the Company of the Notice of
Conversion (the “Delivery Date”).
ARTICLE
V
REGISTRATION
RIGHTS
5.1 Piggyback
Registration Rights. If
at any
time the Company shall determine to file with the SEC a registration statement
relating to an offering for its own account or the account of others under
the
Security Act of any of its equity securities (other than on Form S-4 or Form
S-8
or their then equivalents relating to equity securities to be issued solely
in
connection with any acquisition of an entity or business or equity securities
issuable in connection with stock option or other bona fide, employee benefit
plans), the Company shall send each Purchaser who is entitled to registration
rights under this Section 5, written notice of such determination and, if within
fifteen days after the effective date of such notice, such Purchasers shall
so
request in writing, the Company shall include in such registration statement
all
or any part of the Securities such Purchaser requests to be registered, except
that if, in connection with any underwritten public offering for the account
of
the Company the managing underwriter(s) thereof shall impose a limitation on
the
number of shares of Common Stock which may be included in the registration
statement because, in such underwriter(s) judgment marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then
the
Company shall be obligated to include in such registration statement only such
limited portion of the Securities with respect to which such Purchaser has
requested inclusion hereunder as the underwriter shall permit. An exclusion
of
Securities shall be made pro rata among the Purchasers seeking to include
Securities in proportion to the number of Securities sought to be included
by
such Purchaser; provided
however,
that
the Company shall not exclude any Securities unless the Company has first
excluded all outstanding securities, the holders of which are not entitled
to
inclusion of such securities in such registration statement or are not entitled
to pro rata inclusion with the Securities; provided,
further, however,
that,
after giving affect to the immediately preceding proviso, any exclusion of
the
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the registration statement other than
holders of securities entitled to inclusion of their securities in such
registration statement by reason of demand registration rights. If an offering
in connection with a Purchaser is entitled to registration under this Section
5
is an underwritten offering, then each Purchaser whose Securities are included
in such registration statement shall, unless otherwise agreed by the Company,
offer and sell such Securities in an underwritten offering using the same
underwriter or under writers on the same terms and conditions that other shares
of common stock included in such underwritten offering. Any costs associated
with this piggy back registration shall be paid by the Company.
ARTICLE
VI
MISCELLANEOUS
6.1 Entire
Agreement. This
Agreement, the exhibits and schedules hereto, the related agreements and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any
representations, warranties, covenants and agreements except as specifically
set
forth herein and therein.
6.2 Notices. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified;
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (d) one day after deposit with a nationally recognized
over
night courier, specifying next day delivery, with written verification off
receipt. All communications shall be sent to the Company at the address as
set
forth on the signature page hereof and to the Purchaser at the address set
forth
on the signature page hereto for such Purchaser, or at such other addresses
as
the Company or the Purchaser may designate by ten days advance written notice
to
other parties hereto.
6.3 Titles
and Subtitles. The
titles of the sections and subsections
of
the
Agreement are for the convenience of reference only and are not to be considered
in construing this agreement.
6.4 Facsimile
Signatures; Counterparts. This
Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be original, but all of which together shall
constitute one instrument.
6.5 Brokers
Fees.
Each
party hereto represents and warrants that no agent, investment banker, broker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transaction contemplated herein,
except as specified herein with respect to the Company. Each party hereto
further agrees to indemnify each other party for any, claims losses or expenses
inured by such other party as a result of the representation in this section
6.5
being untrue, other than for a breach of representation or warranty made by
the
Company herein.
6.6 Construction. Each
party acknowledges that its legal counsel participated in the preparation of
this Agreement and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this agreement to favor any party against the
other.
6.7 Governing
Law.
THIS
AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE UNITED STATES FEDERAL COURTS LOCATED IN SAN DIEGO COUNTY, CALIFORNIA
WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED
INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BOTH
PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE
OF PROCESS UPON A PARTY MAILED BY REGISTERED FIRST CLASS MAIL SHALL BE DEEMED
IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT
OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
REASONABLE ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH
SUCH DISPUTE.
IN
WITNESS WHEREOF, the
parties hereto have executed this SECURITIES PURCHASE AGREEMENT as of the date
set forth in the first paragraph hereof.
PURE
CAPITAL INCORPORATED _______________________
(“Purchaser”)
By:_________________________________ By:__________________________________
Name:
Title:
The
Purchaser is an Accredited Investor because the Purchaser is (check appropriate
item):
_____
a
bank, insurance company, registered investment company, business development
company, or small business investment company;
_____
a
charitable organization, corporation, or partnership with assets exceeding
$5
million;
_____
a
director, executive officer, or general partner of the company selling the
securities;
_____
a
business in which all the equity owners are accredited investors;
_____
a
natural person who has individual net worth, or joint net worth with the
person’s spouse, that exceeds $1 million at the time of the purchase;
_____
a
natural person with income exceeding $200,000 in each of the two most recent
years or joint income with a spouse exceeding $300,000 for those years and
a
reasonable expectation of the same income level in the current year; or
_____
a
trust with assets in excess of $5 million, not formed to acquire the securities
offered, whose purchases a sophisticated person makes.
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PURE CAPITAL INCORPORATED THAT SUCH REGISTRATION IS NOT
REQUIRED. CERTIFICATES REPRESENTING ANY SECURITIES ISSUABLE UPON CONVERSION
OF
THIS NOTE SHALL INCLUDE A LEGEND TO SIMILAR EFFECT AS THE
FOREGOING.
CONVERTIBLE
NOTE
FOR
VALUE RECEIVED,
Pure
Capital Incorporated, a Canadian Federal corporation (the “Company”) hereby
promises to pay _________________, (the “Holder”) on order, without demand, the
sum of ____________________________ ($_________________) dollars, (the
“Principal Amount”) within twenty-four months from the date of this Note (the
“Maturity Date”).
The
following terms apply to this Note (“Note”):
ARTICLE
I
GENERAL
1.1 |
Conversion
Privileges.
The Conversion Privileges set forth in Article II shall remain in
full
force and effect immediately from the date hereof and until the Note
is
paid in full.
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1.2 |
Interest
Rate.
There shall be no interest payable due on this
Note.
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ARTICLE
II
CONVERSION
RIGHTS
The
Holder, within his own discretion and at his option, shall have the right to
convert the Principal Amount into shares of the Company’s common stock as set
forth below. If the Holder does not elect to convert the Principal Amount due
under this Note, then the Principal Amount must be paid on or before the
Maturity Date.
2.1 |
Conversion
of the Company’s Common Stock.
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(a) The
Holder shall have the option, within his sole discretion, from and after the
issuance of this Note, and then at any time until this Note is paid, to convert
any outstanding and unpaid Principal portion of this Note, (the date of giving
such notice of conversion being the “Conversion Date”) into fully paid,
non-assessable shares of common stock of the Company as such stock exists on
the
date of issuance of this Note, or any shares of capital stock of the Company
into which such stock shall hereafter be changed or reclassified, (the “Common
Stock”) at the conversion price as defined in section 2.1(b) hereof, (the
“Conversion Price”) determined as provided herein. Upon delivery to the Company
of a Notice of Conversion, as described in Section 4 of the Purchase Agreement
entered into between the Company and Holder relating to this Note, (the
“Purchase Agreement”) of the Holders written request for conversion, the Company
shall issue and deliver to the Holder within three business days from the
Conversion Date that number of shares of Common Stock for the portion of the
Note converted in accordance with the foregoing. The number of shares of Common
Stock to be issued upon each conversion of this Note shall be determined by
dividing that portion of the Principal of the Note to be converted by the
Conversion Price.
(b) The
Conversion Price per share shall be $0.10 per shares of the Company’s Common
Stock or the equivalent of ___________________________________________
(______________) shares of Common Stock.
(c) The
Conversion Price described in Section 2.1(b) above and the number and kind
of
shares or other securities to be issued upon conversion determined pursuant
to
Section 2.1(a) and 2.1(b), shall be subject to adjustment from time to time
upon
the happening of certain events while this conversion right remains outstanding
as follows:
(i) Merger,
Sale of Assets, etc. If the Company at any time shall consolidate with, merge
into, sell or convey all or substantially all its assets to any other
corporation, this Note, as to the unpaid Principal portion thereof, shall
thereafter be deemed to evidence the right to purchase such number and kind
of
shares or other securities and property as would have been issuable or
distributable on account of such consolidation, merger, sale, or conveyance,
upon or with respect to the securities subject to the conversion or purchase
right immediately prior to such consolidation, merger, sale, or conveyance.
The
foregoing provision shall similarly apply to successive transactions of similar
nature by any such successor or purchaser. Without limiting the generality
of
the foregoing, the provisions of Section 2.1(c)(iii) shall apply to such
securities of such successor or purchaser after any such consolidation, merger,
sale, or conveyance.
(ii) Reclassification,
etc. If the Company at any time shall, by reclassification or otherwise
change
the Common Stock into the same or different number of securities of any class
or
classes, this Note, as
to the
unpaid Principal portion thereof shall thereafter be deemed to evidence the
right to purchase an adjusted
number of such securities and kind of securities as would have been issuable
as
the result of such change
with respect to the Common Stock immediately prior to such reclassification
or
other change.
(iii) Stock
Splits, Combinations and Dividends. If the shares of Common Stock are
subdivided
or combined into greater or smaller number of shares of Common Stock, or if
a
dividend is paid on
the
Common Stock in shares of Common Stock, the Conversion Price shall be
proportionately reduced in
the
case of a subdivision of shares or stock dividend or proportionately increased
in the case of a combination
of shares, in each such case by the ratio which the total number of shares
of
Common Stock outstanding
immediately after such event bears to the total number of shares of Common
Stock
outstanding immediately
prior to such event.
(iv) During
the period the conversion right exists, the Company will reserve from its
authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of Common
Stock upon
the
full conversion of this Note. The Company represents that upon issuance, such
shares
will be duly and validly issued, fully paid and non-assessable. The Company
agrees that its issuance of
this
Note shall constitute full authority to its, officers, agents, and transfer
agents who are charged with the
duty
of executing and issuing stock certificates to execute and issue the necessary
certificates for shares of
Common
Stock upon the conversion of this Note.
2.2 Method
of Conversion.
This
Note may be converted by the Holder in whole or in part as described in section
2.1(a) hereof and the Purchase Agreement. Upon partial conversion of this Note,
a new Note containing the same date and provisions as this Note shall, at the
request of the Holder, be issued by the Company to the Holder for the Principal
balance of this Note which shall not have been converted or paid.
ARTICLE
III
MISCELLANEOUS
3.1 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified;
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to the Company at the address as
set
forth on the signature page to the Purchase Agreement executed in connection
herewith and to the Holder at the address set forth on the signature page to
the
Purchase Agreement for such Holder, or at such other address as the Company
or
the Holder may designate by ten days advance written notice to the other parties
hereto. A Notice of Conversion shall be deemed given when made to the Company
pursuant to the Purchase Agreement.
IN
WITNESS WHEREOF, the
Company has caused this Note to be signed in its name effective as of
__________________________________, 2006.
PURE
CAPITAL INCORPORATED ________________________
(“Holder”)
By:_________________________________ By:__________________________________
Name:
Title:
NOTICE
OF CONVERSION
(To
be
executed by the Holder in order to convert the Note)
The
undersigned hereby elects to convert $__________________, the principal due
on
the Note issued by PURE CAPITAL INCORPORATED (the “Company”) on
_________________________________, 2006 into Shares of Common Stock of the
Company according to the conditions set forth in such Note & the related
Securities Purchase Agreement, as of the date written below.
Date
of Conversion:
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Conversion
Price:
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$0.10
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Shares
To Be Delivered:
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Signature:
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Print
Name:
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Address:
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