EXHIBIT 10.32
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.
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CONVERTIBLE PROMISSORY NOTE
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$108,000 November 7, 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 One Hundred Eight Thousand
Dollars ($108,000). 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.
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.
[SIGNATURES APPEAR ON THE IMMEDIATLEY FOLLOWING PAGE]
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THE BORROWER:
RECLAMATION CONSULTING ATTEST:
AND APPLICATIONS, INC.
By: /s/ Gordon Davies By: /s/ Mike Davies
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Gordon Davies Mr. Mike Davies
President Secretary
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