EXHIBIT 10.30
RECLAMATION CONSULTING AND APPLICATIONS, INC.
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT (the "AGREEMENT"), is entered into as
of the 17th day of October, 2006 (the "EFFECTIVE DATE"), by and between
RECLAMATION CONSULTING AND APPLICATIONS, INC., a corporation duly organized and
validly existing under the laws of the State of Colorado (the "COMPANY") and
CANVASBACK COMPANY LIMITED, a company organized and validly existing under the
laws of Anguilla ("CANVASBACK"). The Company and Canvasback are sometimes
referenced herein individually as a "PARTY", and collectively as the "PARTIES").
WHEREAS, the Company is a party to certain convertible promissory note
agreements (the "CONVERTIBLE NOTE AGREEMENTS") as to which the Company has
registered the underlying stock for public trading in accordance with its
agreements with the holders thereof (the "EXISTING NOTEHOLDERS"), and which
Convertible Note Agreements place substantial restrictions on the ability of the
Company to issue certain types of securities and take certain other types of
corporate action while the Convertible Note Agreements are in force;
WHEREAS, since the beginning of this year, the Company has been in need of
a substantial amount of cash financing to support its operations, and such cash
financing has been difficult to raise due to the various restrictions imposed by
the Convertible Note Agreements;
WHEREAS, notwithstanding the restrictions imposed upon the Company, since
January 2006 Canvasback has been willing to provide, and has provided, the
Company with cash financing in the form of unsecured loans in order to help the
Company sustain its operations, and the Parties have been operating since that
time under an oral agreement for Canvasback to provide those funds as necessary
on a case-by-case basis;
WHEREAS, as of September 7, 2006, the Company had received the sum of One
Million, Six Hundred and Sixteen Thousand, Three Hundred Forty Eight Dollars
($1,616,348) of unsecured debt from Canvasback, and as partial consideration for
the right to convert all Unsecured Loans (as defined hereafter), Canvasback had
agreed to provide the Company with additional unsecured debt to permit the
Company to meet its current obligations; and
WHEREAS, as of the date hereof, Canvasback has provided the Company with
an additional Three Hundred Eighty Seven Thousand, Four Hundred Twenty Eight
Dollars ($387,428) of unsecured debt bringing the balance of all prior unsecured
loans, including accrued interest of Seventy Five Thousand, Two Hundred Ninety
One ($75,291) to Two Million, Seventy-Nine Thousand, Sixty-Seven Dollars
($2,079,067) (the "PRIOR LOANS"),
WHEREAS, Canvasback has indicated that it is willing to provide the
Company with additional unsecured debt in the principal amount of One Hundred
Twenty Thousand Dollars ($120,000) (the "SUBSEQUENT LOANS", and together with
the Prior Loans, the "UNSECURED DEBT"), provided that the Company delivers to
Canvasback the right to convert the Unsecured Debt into equity in accordance
with this Agreement, and the Parties desire to memorialize their arrangement
through entry into this Agreement as of the date hereof.
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NOW, THEREFORE, in consideration of the foregoing premises, and the
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
UNSECURED NOTE FINANCING
1.1 Upon execution of this Agreement, the Parties hereby agree that SCHEDULE
A, attached hereto and made an integral part hereof, constitutes a true
and complete list of all amounts loaned by Canvasback to the Company as
Prior Loans through and including the date of this Agreement. The terms of
the Prior Loans shall be as described in Section 2.2 below, and as set
forth in the Convertible Note (as defined below), issuable pursuant to
Article II of this Agreement.
1.2 Canvasback agrees, subject to the entry of the Parties into this
Agreement, to provide the Subsequent Loans, which Subsequent Loans shall
be evidenced by the issuance of Convertible Notes having the terms and
conditions set forth in Section 2.2 below.
ARTICLE II
CONVERTIBLE NOTES
2.1 ISSUANCE OF THE CONVERTIBLE NOTES. Subject to the terms and conditions set
forth in this Agreement, the Company will duly authorize the issuance of
its 10% Convertible Note in substantially the form of EXHIBIT A hereto as
consideration for all Prior Loans (such note(s), together with any and all
notes that may be issued hereafter in substitution or exchange therefore,
and issued in consideration for Subsequent Loans, are collectively
referred to herein as the "CONVERTIBLE NOTES" and each such note is
individually referred to herein as a "CONVERTIBLE NOTE"). The terms and
conditions of the Convertible Notes are incorporated herein by reference.
2.2 DESCRIPTION OF THE CONVERTIBLE NOTES. The Convertible Notes shall have the
following terms and conditions:
(A) MATURITY DATES. All principal, plus all accrued but unpaid interest
on the Prior Loans, shall be due and payable on the date that is one
(1) year from the date of this Agreement. All principal, plus all
accrued but unpaid interest on the Subsequent Loans shall be due and
payable on the date that is one (1) year from the date of the
Convertible Note(s) evidencing such Subsequent Loans. Each date
referenced in this Section 2.2(a) is hereby a "MATURITY DATE".
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(B) INTEREST RATE. The Convertible Notes will accrue simple interest at
the rate of ten percent (10%) per annum, calculated on the basis of
a 365-day year from the date of this Agreement.
(C) PREPAYMENT. The Company shall have the right to prepay the Unsecured
Debt, in whole or in part, at any time and from time to time, prior
to the Maturity Date, without penalty, during the term of the
applicable Convertible Note, provided that at the time of such
prepayment the Company shall also pay to Canvasback all unpaid
interest accrued on the Unsecured Debt through the date of
prepayment.
(D) CONVERSION. As provided for and on the terms and conditions set
forth in the Convertible Notes, the Convertible Notes may be
converted at any time after the Conversion Event (as hereafter
defined) and prior to the Maturity Date (the "CONVERSION PERIOD") at
the option of the holder, unless previously fully-paid, into shares
(the "CONVERSION SHARES") of the Company's common stock, par value
$0.01 per share (the "COMMON STOCK") at a per Conversion Share price
of Two and One-half Cents ($0.025) (the "CONVERSION PRICE"). As used
in this Agreement, the term "CONVERSION EVENT" shall mean either (i)
the delivery to the Company and Canvasback of a written consent of
the Existing Noteholders to permit the Conversion of the Unsecured
Debt, or any portion thereof, into Conversion Shares pursuant to the
terms of this Agreement; or (ii) the termination of the Convertible
Note Agreement pursuant to the terms thereof and full satisfaction
by the Company of all obligations pursuant thereto.
2.3 DELIVERY OF THE CONVERTIBLE NOTES. Subject to the terms and conditions set
forth herein, the Company hereby agrees to issue to Canvasback as
consideration for the Prior Loans, and Canvasback hereby agrees to accept
from the Company, a Convertible Note in the principal face amount of Two
Million, Seventy-Nine Thousand, Sixty-Seven Dollars ($2,079,067) (the
"PRINCIPAL AMOUNT"). The Convertible Note delivered to Canvasback on the
Closing Date will be delivered in the form of a single Convertible Note
registered on the books and records of the Company in the name of
Canvasback (or in the name of such nominee as Canvasback may specify no
later than two business days prior to the Closing Date) and in
substantially the form attached hereto as EXHIBIT A.
ARTICLE III
CLOSING
3.1 CLOSING. The closing of the transactions contemplated by this Agreement
shall take place on October 17, 2006 at 10:00 a.m., P.D.T. at the offices
of the August Law Group, P.C., The Atrium Building, 19200 ▇▇▇ ▇▇▇▇▇▇
Avenue, Suite 19200, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location,
date and time as may be agreed upon between Canvasback and the Company
(such closing being called the "CLOSING" and such date and time being
called the "CLOSING DATE"). At the Closing, the Company shall issue and
deliver to the Purchaser the Convertible Notes as consideration for the
Unsecured Debt.
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ARTICLE IV
REGISTRATION RIGHTS
4.1 The Company hereby agrees that, within sixty (60) days after the issuance
of any Conversion Shares, or as soon thereafter as the Company may
determine in good faith to be commercially reasonable, but in no event
later than one hundred eighty (180) days the Company shall file a
registration statement with the United States Securities and Exchange
Commission (the "SEC") seeking to have such Conversion Shares registered
for public sale on Form SB-2 or other applicable form of registration
statement, and naming the holders therein (the "HOLDERS") as selling
stockholders (unless any Holder shall notify the Company in advance that
it does not desire to be included in any such registration statement). The
Company shall pay for all registration expenses incurred in connection
with any registration, qualification or compliance pursuant to this
Article IV. All individual selling expenses incurred in connection with
any such registration, qualification or compliance, including without
limitation any separate counsel which any Holder may desire to engage in
connection with the filing of such registration statement apart from the
Company's counsel, will be borne by the Holders of the Conversion Shares
participating in such registration, pro rata on the basis of the number of
their shares so registered.
4.2 In its efforts to register securities on behalf of Holders of Conversion
Shares desiring to participate as a selling stockholder in such
registration (the "PARTICIPATING HOLDERS"), the Company shall use its
commercially reasonable efforts to:
(A) prepare and file the registration statement with the SEC within the
stated time period, and use its best efforts to cause such
registration statement to become effective within ninety (90) days
after filing with the SEC and to remain effective for such period as
may be reasonably necessary to effect the sale of the securities
covered thereby, not to exceed six (6) months;
(B) prepare and file with the SEC such amendments to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective until the
earlier of (i) the date on which all securities covered by such
registration statement have been sold and (ii) 180 days after the
effective date of such registration statement;
(C) register or qualify the securities for sale under such other
securities or blue sky laws of such jurisdictions as the
Participating Holders may reasonably request, up to a maximum of
five (5) such jurisdictions unless the securities can be qualified
for sale under a nationally-recognized method of state
qualification, provided that the Company will not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of
this subsection (c), it would not be obligated to be so qualified,
to subject itself to taxation in any jurisdiction, or to consent to
general service of process in any such jurisdiction;
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(D) furnish to the Participating Holders a reasonable number of copies
of the registration statement, preliminary prospectus, final
prospectus and such other documents as the Participating Holders may
reasonably request in order to facilitate the public offering of
such securities;
(E) notify the Participating Holders, promptly after it receives notice
thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(F) notify the Participating Holders promptly of any request by the SEC
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(G) prepare and promptly file with the SEC, and promptly notify the
Participating Holders of the filing of, any amendment or supplement
to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered
under the Securities Act of 1933 (the "1933 ACT"), any event has
occurred as the result of which any such prospectus as then in
effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading;
(H) advise the Participating Holders, promptly after it receives notice
or obtains knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement
or the initiation or threatening of any proceeding for that purpose
and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be
issued; and
(I) at least three (3) days prior to the filing of any amendment or
supplement to such registration statement or prospectus, furnish
copies thereof to the Participating Holders and refrain from filing
any such amendment or supplement until the Participating Holders
give their written consent to the filing, such consent not to be
unreasonably withheld or delayed and in no event later than five (5)
days after the Participating Holders receive copies of the proposed
amendment and supplement.
4.3 Each Participating Holder shall furnish to the Company such information
regarding such Participating Holder and the distribution proposed by such
Participating Holder as the Company may reasonably request in writing and
as reasonably required in connection with any registration, qualification
or compliance referred to herein or otherwise required by applicable state
or federal securities laws.
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4.4 INDEMNIFICATION.
(A) The Company shall, and hereby does, indemnify each Participating
Holder, each of its officers, directors and partners, and each
Person controlling such Participating Holder within the meaning of
the 1933 Act and each underwriter, if any, and each Person who
controls such underwriter within the meaning of the 1933 Act,
against all claims, losses, damages and liabilities (or actions in
respect thereon) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident
to any such registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the 1933
Act, the Securities Exchange Act, the securities act of any state,
or any rule or regulation thereunder applicable to the Company in
connection with any such registration, qualification or compliance,
and shall reimburse each Participating Holder, each of its officers,
directors and partners, and each person controlling such
Participating Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending
any such claim, loss, damage, liability or action, whether or not
resulting in any liability, provided that the Company will not be
liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged
omission) based upon written information furnished to the Company by
any Holder or underwriter and stated to be specifically for use
therein.
(B) Each Participating Holder shall indemnify the Company, each of its
directors and officers, each other Participating Holder, each Person
who controls the Company within the meaning of the 1933 Act and the
rules and regulations thereunder, and each of their officers,
directors and partners, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse the Company and such Participating Holder's
directors, officers, partners, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage,
liability or action, whether or not resulting in liability, in each
case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such
Participating Holder and stated to be specifically for use therein.
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(C) Each party entitled to indemnification under this Section 4.4(c)
(the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, but the failure of any Indemnified Party to
give such notice does not relieve the Indemnifying Party of its
obligations under this Section 4.4(c) (except and to the extent the
Indemnifying Party has been materially prejudiced as a consequence
thereof). The Indemnifying Party will be entitled to participate in,
and to the extent that it may elect by written notice delivered to
the Indemnified Party promptly after receiving the aforesaid notice
from such Indemnified Party, at its expense to assume, the defense
of any such claim or any litigation resulting therefrom, with
counsel reasonably satisfactory to such Indemnified Party, provided
that the Indemnified Party may participate in such defense at its
expense, notwithstanding the assumption of such defense by the
Indemnifying Party, and provided, further, that if the defendants in
any such action shall include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it and/or
other Indemnified Parties which are different from or additional to
those available to the Indemnifying Party or that the interests of
the Indemnified Party reasonably may be deemed to conflict with the
interests of the Indemnifying Party, the Indemnified Party or
Parties shall have the right to select one separate counsel to
assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Party or
Parties and the reasonable fees and expenses of such counsel shall
be paid by the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall (A)
furnish such information regarding itself or the claim in question
as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom and (B) shall use its best
efforts to assist the Indemnifying Party in any such defense,
provided that the Indemnified Party shall be entitled to be
reimbursed by the Indemnifying Party for its out-of-pocket expenses
paid in connection with such assistance.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Canvasback, as of the date hereof, the
following:
(A) the Company is a corporation duly organized and validly existing
under the laws of the State of Colorado, and has full power and
authority to enter into, execute and perform this Agreement, which
Agreement, once executed by the Company, shall be the valid and
binding obligation of the Company, enforceable against it by any
court of competent jurisdiction in accordance with its terms;
(B) the individuals signing this Agreement on behalf of the Company are
the duly elected executive officers of the Company so indicated, and
have full power and authority to enter into, execute, deliver and
perform this Agreement for and on behalf of the Company;
(C) other than the Convertible Note Agreements, the Company is not bound
by or subject to any contract, agreement, court order or judgment,
administrative ruling, law, regulation or any other item which
prohibits or restricts such party from entering into and performing
this Agreement in accordance with its terms, or requiring the
consent of any third party prior to the entry into or performance of
this Agreement in accordance with its terms by the Company.
5.2 REPRESENTATIONS AND WARRANTIES OF CANVASBACK. Canvasback hereby represents
and warrants to the Company, as of the date hereof, the following:
(A) Canvasback is a limited liability company duly organized and validly
existing under the laws of the Anguilla, and has full power and
authority to enter into, execute and perform this Agreement, which
Agreement, once executed by Canvasback, shall be the valid and
binding obligation of Canvasback, enforceable against it by any
court of competent jurisdiction in accordance with its terms;
(B) the individuals signing this Agreement on behalf of Canvasback are
the duly elected executive officers of Canvasback so indicated, and
have full power and authority to enter into, execute, deliver and
perform this Agreement for and on behalf of Canvasback;
(C) Canvasback is not bound by or subject to any contract, agreement,
court order or judgment, administrative ruling, law, regulation or
any other item which prohibits or restricts such party from entering
into and performing this Agreement in accordance with its terms, or
requiring the consent of any third party prior to the entry into or
performance of this Agreement in accordance with its terms by
Canvasback.
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(D) with respect to the Unsecured Debt and the Conversion Shares
(collectively, the "SECURITIES") being acquired (or which may be
acquired) by Canvasback:
(I) Canvasback is and will be acquiring the Securities for its own
account, and not with a view toward the subdivision, resale,
distribution, or fractionalization thereof; Canvasback has no
contract, undertaking, or arrangement with any person to sell,
transfer, or otherwise dispose of the Securities (or any
portion thereof hereby subscribed for), and has no present
intention to enter into any such contract, undertaking,
agreement or arrangement;
(II) this subscription for Securities by Canvasback is not the
result of any form of general solicitation or general
advertising;
(III) Canvasback hereby acknowledges that: (A) the offering of the
Securities was made only through direct, personal
communication between Canvasback and the Company; (B)
Canvasback has had full access to material concerning the
Company's planned business and operations, which material was
furnished or made available to Canvasback by officers or
representatives of the Company; (C) the Company has given
Canvasback the opportunity to ask any questions and obtain all
additional information desired in order to verify or
supplement the material so furnished; and (D) Canvasback
understands and acknowledges that a purchaser of the
Securities must be prepared to bear the economic risk of such
investment for an indefinite period because of: (I) the
heightened nature of the risks associated with an investment
in the Company due to its status as an early-stage company,
including without limitation the risk of loss of the entire
amount of their investment; and (II) illiquidity of the
Securities due to the fact that (1) the Securities have not
been registered under the 1933 Act or any state securities act
(nor passed upon by the SEC or any state securities
commission), and (2) the Securities may not be registered or
qualified by Canvasback under federal or state securities laws
solely in reliance upon an available exemption from such
registration or qualification, and hence such Securities
cannot be sold unless they are subsequently so registered or
qualified, or are otherwise subject to any applicable
exemption from such registration requirements; and (3)
substantial restrictions on transfer of the Securities, as set
forth by legend on the face or reverse side of every
certificate evidencing the ownership of the Securities;
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(E) Canvasback is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Act, or, if Canvasback is non-accredited, then
he and/or she has sufficient business expertise and sophistication
so as to be able to make a determination concerning the relative
risks and merits of an investment in the securities, and has a
pre-existing business or personal relationship with at least one of
the shareholders, directors or executive officers of the Company;
and
(F) Canvasback has been advised to consult with an attorney regarding
all legal matters concerning the purchase and ownership of the
Securities, and with a tax advisor regarding the tax consequences of
purchasing such Securities.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 NOTICES. All notices, requests, demands and other communications to be
given hereunder shall be in writing and shall be deemed to have been duly
given on the date of personal service or transmission by fax if such
transmission is received during the normal business hours of the
addressee, or on the first business day after sending the same by
overnight courier service or by telegram, or on the third business day
after mailing the same by first class mail, or on the day of receipt if
sent by certified or registered mail, addressed as set forth below, or at
such other address as any party may hereafter indicate by notice delivered
as set forth in this Section 6.1:
If to the Company: Reclamation Consulting &
Applications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. August, Esquire
President
If to Canvasback: Canvasback Company Limited
Hannah ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ Indies
Attn: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory
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With a copy (which shall
not constitute notice) to: _____________________________
_____________________________
_____________________________
Attn: ____________________
____________________
6.2 BINDING AGREEMENT; ASSIGNMENT. This Agreement shall constitute the binding
agreement of the parties hereto, enforceable against each of them in
accordance with its terms. This Agreement shall inure to the benefit of
each of the parties hereto, and their respective successors and permitted
assigns; provided, however, that this Agreement may not be assigned
(whether by contract or by operation of law) by Canvasback without the
prior written consent of the Company, which consent may be given or
withheld in the sole discretion of the Company, PROVIDED HOWEVER, that any
such permitted assignee of this Agreement, the Convertible Notes, or the
Conversion Shares executes an assignment agreement or such other document
as the Company may reasonably request containing all the representations,
warranties and covenants contained in this Agreement and certifying to the
Company that such permitted assignee is an "Accredited Investor" as such
term is defined in Rule 501 of Regulation D promulgated by the Securities
and Exchange Commission under the Act,.
6.3 ENTIRE AGREEMENT. This Agreement constitutes the entire and final
agreement and understanding between the parties with respect to the
subject matter hereof and the transactions contemplated hereby, and
supersedes any and all prior oral or written agreements, statements,
representations, warranties or understandings between the parties, all of
which are merged herein and superseded hereby.
6.4 WAIVER. No waiver of any provision of this Agreement shall be deemed to be
or shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the
waiver.
6.5 HEADINGS. The headings provided herein are for convenience only and shall
have no force or effect upon the construction or interpretation of any
provision hereof.
6.6 COUNTERPARTS; FACSIMILES. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimiles
containing original signatures shall be deemed for all purposes to be
originally-signed copies of the documents which are the subject of such
facsimiles.
6.7 FURTHER DOCUMENTS AND ACTS. Each party agrees to execute such other and
further documents and to perform such other and further acts as may be
reasonably necessary to carry out the purposes and provisions of this
Agreement.
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6.8 GOVERNING LAW; VENUE. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California applicable to
the performance and enforcement of contracts made within such state,
without giving effect to the law of conflicts of laws applied thereby. In
the event that any dispute shall occur between the parties arising out of
or resulting from the construction, interpretation, enforcement or any
other aspect of this Agreement, the parties hereby agree to accept the
exclusive jurisdiction of the Courts of the State of California sitting in
and for the County of Orange. In the event either party shall be forced to
bring any legal action to protect or defend its rights hereunder, then the
prevailing party in such proceeding shall be entitled to reimbursement
from the non-prevailing party of all fees, costs and other expenses
(including, without limitation, the reasonable expenses of its attorneys)
in bringing or defending against such action.
6.9 SEVERABLE PROVISIONS. The provisions of this Agreement are severable, and
if any one or more provisions is determined to be illegal, indefinite,
invalid or otherwise unenforceable, in whole or in part, by any court of
competent jurisdiction, then the remaining provisions of this Agreement
and any partially unenforceable provisions to the extent enforceable in
the pertinent jurisdiction, shall continue in full force and effect and
shall be binding and enforceable on the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
RECLAMATION CONSULTING
AND APPLICATIONS, INC.: ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President Secretary
CANVASBACK COMPANY LIMITED: ATTEST:
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Authorized Signatory Authorized Signatory
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SCHEDULE A
TO
CONVERTIBLE NOTE PURCHASE AGREEMENT
DATED OCTOBER 17, 2006
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Date Original Amount Loan Balance
06-Apr-06 $2,000 $2,000
10-Apr-06 $40,000 $42,000
10-May-06 $6,000 $48,000
14-May-06 $100,000 $148,000
01-Jun-06 $822,276 $970,276
06-Jun-06 $10,000 $980,276
07-Jun-06 $55,000 $1,035,276
08-Jun-06 $5,000 $1,040,276
09-Jun-06 $21,000 $1,061,276
13-Jun-06 $27,000 $1,088,276
14-Jun-06 $23,000 $1,111,276
21-Jun-06 $8,000 $1,119,276
22-Jun-06 $6,000 $1,125,276
23-Jun-06 $4,000 $1,129,276
26-Jun-06 $2,500 $1,131,776
27-Jun-06 $15,000 $1,146,776
28-Jun-06 $22,000 $1,168,776
29-Jun-06 $12,500 $1,181,276
01-Jul-06 $40,000 $1,221,276
03-Jul-06 $8,500 $1,229,776
05-Jul-06 $130,000 $1,359,776
17-Jul-06 $10,000 $1,369,776
19-Jul-06 $3,000 $1,372,776
20-Jul-06 $2,000 $1,374,776
25-Jul-06 $50,000 $1,424,776
26-Jul-06 $6,000 $1,430,776
27-Jul-06 $4,000 $1,434,776
28-Jul-06 $5,000 $1,439,776
31-Jul-06 $5,000 $1,444,776
01-Aug-06 $10,000 $1,454,776
04-Aug-06 $5,000 $1,459,776
11-Aug-06 $5,000 $1,464,776
14-Aug-06 $5,000 $1,469,776
16-Aug-06 $5,000 $1,474,776
18-Aug-06 $1,500 $1,476,276
22-Aug-05 $5,000 $1,481,276
23-Aug-06 $15,000 $1,496,276
25-Aug-06 $2,000 $1,498,276
28-Aug-06 $2,000 $1,500,276
29-Aug-06 $15,000 $1,515,276
30-Aug-06 $78,000 $1,593,276
31-Aug-06 $3,000 $1,596,276
01-Sep-06 $3,500 $1,599,776
06-Sep-06 $10,000 $1,609,776
07-Sep-06 $30,000 $1,639,776
08-Sep-06 $41,000 $1,680,776
11-Sep-06 $100,000 $1,780,776
13-Sep-06 $10,000 $1,790,776
18-Sep-06 $44,000 $1,834,776
22-Sep-06 $12,000 $1,846,776
28-Sep-06 $20,000 $1,866,776
02-Oct-06 $20,000 $1,886,776
06-Oct-06 $25,000 $1,911,776
12-Oct-06 $2,000 $1,913,776
13-Oct-06 $55,000 $1,968,776
17-Oct-06 $35,000 $2,003,776
Accrued Interest as Of October 17, 2006 $75,291
Loan Balance as of October 17, 2006 $2,079,067
EXHIBIT A
TO
CONVERTIBLE NOTE PURCHASE AGREEMENT
DATED OCTOBER 17, 2006
CONVERTIBLE PROMISSORY NOTE
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), NOR UNDER THE LAWS OF ANY STATE, AND MAY NOT BE RESOLD,
ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
CONVERTIBLE PROMISSORY NOTE
---------------------------
$2,079,067 October 17, 2006
FOR VALUE RECEIVED, RECLAMATION CONSULTING AND APPLICATIONS, INC., a
corporation organized and existing under the laws of the State of Colorado
(hereinafter referred to as the "BORROWER"), hereby promises to pay to the order
of CANVASBACK COMPANY LIMITED, an Anguilla company, (hereinafter referred to as
the "LENDER"), at his/her/its principal address located at Hannah Waiver House,
The Valley, Anguilla BWI, or such other place or places as the Lender may
hereafter direct from time to time, in lawful money of the United States and in
immediately available funds, the principal sum of Two Million, Seventy-Nine
Thousand, Sixty-Seven Dollars ($2,079,067). This Convertible Promissory Note
(hereinafter referred to as the "NOTE") shall accrue simple interest at the rate
of ten percent (10%) per annum, calculated on the basis of a 365-day year from
the date of this Note. The aggregate amount of all principal and accrued
interest shall be due and payable on the first (1st) anniversary of the date
hereof (hereinafter referred to as the "MATURITY DATE"). This Note shall be
unsecured by the Borrower or any other person, and non-recourse to any
shareholder, officer, director, employee, agent or representative of the
Borrower.
1. PURCHASE AGREEMENT. This Note is issued pursuant to that certain Note
Purchase Agreement, dated as of October 17, 2006, by and between the Borrower
and the Lender (the "Purchase Agreement"), and is subject to the provisions
thereof. If any dispute arises between the terms of the Purchase Agreement and
the terms of this Note, the terms of the Purchase Agreement shall prevail.
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2. CONVERSION. If, during the Conversion Period, in the sole and exclusive
option of the Lender, the Lender should desire to convert the indebtedness
represented hereby, in whole or in part, into Conversion Shares in lieu of the
repayment obligation of such Borrower pursuant to this Note, then Lender shall
give notice to such effect prior to the Maturity Date. The number of Conversion
Shares to be issued upon such conversion shall be equal to the quotient obtained
by dividing (a) the aggregate amount of principal and accrued but unpaid
interest on this Note as of the date of conversion, by the Conversion Price. If
this Note, or any portion of indebtedness represented hereby, is converted into
Conversion Shares as provided herein, then the provisions of this Note relating
to the obligation of the Borrower to pay principal and interest to Lender, set
forth above, shall be null and void and no payment of principal and interest
shall be owed or paid by Borrower thereafter with respect to the amount of
indebtedness converted into Conversion Shares.
3. PREPAYMENT. The Borrower shall have the right to prepay the principal
amount of this Note, in whole or in part, at any time and from time to time,
prior to the Maturity Date, without penalty, during the term of this Note,
provided that at the time of such prepayment, the Borrower shall also pay to
Lender all unpaid interest accrued on the principal amount of this Note through
the date of prepayment.
4. NO VOTING RIGHTS. This Note shall not entitle Lender to any voting rights
or other rights as a stockholder of Borrower.
5. TRANSFERS. This Note may be transferred only in compliance with the Note
Purchase Agreement and with applicable federal and state securities laws, and
only upon surrender of the original Note for registration of transfer, duly
endorsed, or accompanied by a duly executed written instrument of transfer in
form satisfactory to Borrower. Thereupon, a new promissory note for like
principal amount and interest will be issued to, and registered in the name of,
the transferee. Interest and principal are payable only to the registered holder
of this Note. Lender agrees to provide a form W-9 to Borrower on request.
6. WAIVER. No waiver of any provision of this Note shall be deemed to be or
shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver. This Note shall inure
to the benefit of the Lender, his heirs, executors, successors and permitted
assigns, PROVIDED, however, that this Note shall not be assignable to any party
by contract or by operation of law without the prior written consent of the
Borrower. The obligations of the Borrower arising hereunder shall become the
obligations of any successor in interest or assignee thereof, whether by
contract or by operation of law.
7. GOVERNING LAW; VENUE. This Note shall be governed by and construed in
accordance with the internal laws of the State of California applicable to the
performance and enforcement of contracts made within such state, without giving
effect to the law of conflicts of laws applied thereby. In the event that any
dispute shall occur between the parties arising out of or resulting from the
construction, interpretation, enforcement or any other aspect of this Note, the
parties hereby agree to accept the exclusive jurisdiction of the Courts of the
State of California sitting in and for the County of Orange. In the event either
party shall be forced to bring any legal action to protect or defend its rights
hereunder, then the prevailing party in such proceeding shall be entitled to
reimbursement from the non-prevailing party of all fees, costs and other
expenses (including, without limitation, the reasonable expenses of its
attorneys) in bringing or defending against such action.
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THE BORROWER:
RECLAMATION CONSULTING ATTEST:
AND APPLICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President Secretary
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