THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER
EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE
HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT.
$5,000,000 December 12, 2007
This Promissory Note is being issued pursuant to a Secured Convertible Debenture
dated for reference as of December 12, 2007 between Pala Investments Holdings
Limited and Reclamation Consulting and Applications, Inc. (the "Convertible
Debenture"). Capitalized terms used in this Promissory Note are defined in the
Convertible Debenture shall have the same meanings as defined therein, unless
otherwise defined herein.
FOR VALUE RECEIVED, Reclamation Consulting and Applications, Inc. (the
"Borrower"), of 940 Calle Amanecer, Suite E, San Clemente, CA 92673, PROMISES TO
PAY on December 11, 2010 or on demand in accordance with the terms of the
Convertible Debenture, to the order of Pala Investments Holdings Limited (the
"Lender"), at 22 Colomberie, St. Helier, Jersey, JE1 4XA, Channel Islands, the
sum of Five Million Dollars ($5,000,000) or the aggregate unpaid principal
amount of the First Tranche and the Second Tranche, if any, together with any
accrued unpaid interest and costs and expenses outstanding as of such date (the
"Indebtedness"). Interest on the Indebtedness at the rate of Twelve Percent
(12%) per annum (or the highest interest rate permissible by applicable law,
whichever is lower) (the "Interest Rate"), compounded on the last day of each
fiscal quarter of the Borrower, will accrue until the earlier of (i) the
Maturity Date, (ii) the date the Loan is repaid in full, or (iii) the date that
the Indebtedness is converted to Borrower's common stock pursuant to the terms
of the Convertible Debenture. Notwithstanding the foregoing, following the
occurrence of an Event of Default and pursuant to Subsection 7.2.3 of the
Convertible Debenture, the Interest Rate shall be Sixteen Percent (16%) per
annum (or the highest interest rate permissible by applicable law, whichever is
lower), until the earlier of (i) the date such Event of Default is cured, (ii)
the date the Indebtedness is repaid in full, or (iii) the date that the
Indebtedness is converted to Borrower's common stock pursuant to the terms of
the Convertible Debenture.
The obligations of the Borrower to pay the Indebtedness to the Lender will
terminate if and to the extent that the Indebtedness is converted in accordance
with Section 4 of the Convertible Debenture.
The Borrower waives presentment or other demand for payment, notice of dishonor,
protest and non-payment.
The Borrower may prepay all or any portion of the Indebtedness at any time or
from time to time without penalty, bonus or charges.
The Borrower shall pay all costs of collection, including reasonable attorneys'
fees and legal expenses if this Promissory Note is not paid when due, whether or
not legal proceedings are commenced.
Reclamation Consulting and Applications, Inc.,
/S/ MICHAEL DAVIES
By: Michael C. Davies
Its: Chief Executive Officer