EXHIBIT 4.3
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.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.
CONVERTIBLE DEBENTURE
THIS CONVERTIBLE DEBENTURE (the "Agreement"), dated as of October 22, 2007 (the
"Effective Date" is made
BETWEEN:
NAME: NORMAN GISH
ADDRESS: 8405-400 Eau Claire Avenue S.W
Calgary, Alberta, Canada
T2P4X2
(the "Lender");
AND:
RECLAMATION CONSULTING AND APPLICATIONS, INC., a company organized
under the laws of the State of Colorado, of 940 Calle Amanecer,
Suite E, San Clemente, CA 92673 (the "Borrower").
WHEREAS, on or about May 22, 2007, the Lender and the Borrower entered into an
oral agreement pursuant to which the Lender lent to the Borrower One Hundred
Thousand Dollars ($100,000) (the "Initial Oral Loan") carrying interest at 12%
per annum and pursuant to the understanding that the parties would provide for
the Lender to receive terms similar to those being offered to purchasers of the
Company's secured convertible debentures then being sold; and
Whereas, as of the Effective Date, the Initial Loan together with all accrued
interest had an outstanding balance, rounded to the nearest dollar of One
Hundred Thousand Five Thousand Thirty Dollars ($105,030), which both Lender and
Borrower desire to convert on the Effective Date to "Principal" pursuant to the
terms of this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
1. DEFINITIONS
Where used in this Agreement, the following words and phrases shall have the
following meaning:
1.1 "Accredited Investor" has the meaning assigned in subsection
5.2.6;
1.2 "Act" as the meaning assigned in subsection 5.2.4;
1.3 "Agreement" means this Convertible Debenture and the schedules
hereto, as at any time amended or modified and in effect;
1.4 "Conversion Amount" has the meaning assigned in subsection 4.1;
1.5 "Conversion Date" has the meaning assigned in subsection 4.1;
1.6 "Conversion Notice" has the meaning assigned in subsection 4.1;
1.7 "Conversion Price" means $0.20 per share;
1.8 "Conversion Shares" means shares of Borrower's common stock to be
received by Lender pursuant to a conversion under Section 4 of the
outstanding balance of Principal and unpaid accrued interest due
under this Agreement;
1.9 "Event of Default" means any event specified in subsection 7.1;
1.10 "Initial Oral Loan" has the meaning assigned in the Preamble:
1.11 "Loan" means the loan by the Lender to the Borrower established
pursuant to subsection 3.1;
1.12 "Maturity Date" means April 21, 2009;
1.13 "Note" means a promissory note to be made by the Borrower to the
Lender as evidence of the Loan which shall substantially be in the
form set out in Schedule A and "Notes" means the plural thereof;
1.14 "Principal" means the principal amount of the loan set forth in
the Preamble;
1.15 "Securities" has the meaning assigned in subsection 4.3;
1.16 "U.S. Person" has the meaning assigned in subsection 5.2.7; and
1.17 "Warrants" has the meaning assigned in subsection 4.7.
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2. INTERPRETATION
2.1 GOVERNING LAW AND 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.
2.2 SEVERABILITY
If any one or more of the provisions contained in this Agreement is found to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.
2.3 PARTIES IN INTEREST
This Agreement enures to the benefit of and is binding on the parties hereto and
their respective successors and permitted assigns.
2.4 HEADINGS AND MARGINAL REFERENCES
The division of this Agreement into sections, subsections, paragraphs and
subparagraphs and the insertion of headings are for convenience of reference
only and do not affect the construction or interpretation of this Agreement.
2.5 CURRENCY
All statements of, or references to, dollar amounts in this Agreement means
lawful currency of the United States.
3. THE LOAN
3.1 ESTABLISHMENT OF THE LOAN
As of the Effective Date the Lender agrees, to lend to the Borrower the
Principal of One Hundred Thousand Five Thousand Thirty Dollars ($105,030) as the
"Loan" on the terms and conditions set forth in this Agreement and in full
satisfaction of all amounts and obligations owed to the Lender pursuant to the
Initial Oral Loan. The Initial Oral Loan is hereby extinguished.
3.2 EVIDENCE OF INDEBTEDNESS
Indebtedness of the Borrower to the Lender in respect of the Loan will be
evidenced by one or more Notes, which will be provided by the Borrower to the
Lender upon the Lender's execution of this Agreement.
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3.3 INTEREST
The Borrower will pay simple interest to the Lender on the unpaid Principal from
the Effective Date at a rate of 12% per annum until the Loan is repaid in full.
Interest will be calculated and accrued monthly in arrears and will be payable
to the Lender monthly (except as to such amounts as were converted by Lender as
future interest under Section 4 and is therefore deemed already paid), within 15
days following the end of each calendar month until the earlier of (i) the
Maturity Date, (ii) the date the Loan is repaid in full, or (iii) the Principal
and interest are converted to Borrower's common stock pursuant to section 4.
3.4 REPAYMENT OF THE LOAN
Subject to conversion pursuant to section 4, the Borrower will repay the
Principal and any accrued but unpaid interest to the Borrower on or before the
Maturity Date.
3.5 PREPAYMENT OF LOAN
The Borrower may prepay the Principal and interest outstanding under the Loan
without penalty, bonus or charges.
4. CONVERSION OF THE LOAN
4.1 CONVERSION
At any time, and from time to time, prior to the Maturity Date, the Lender may
elect, by providing to Borrower a written notice in the form of Schedule C,
attached hereto (the "Conversion Notice"), to convert all or any portion of the
then-outstanding Principal, accrued but unpaid interest, and/or up to six months
future interest (the aggregate amount thereof being the "Conversion Amount") as
of the date of such Conversion Notice (the "Conversion Date").
4.2 ISSUANCE OF CONVERSION SHARES
Within 15 days of receipt of a properly completed Conversion Notice, the
Borrower will issue Conversion Shares to the Lender in an amount equal to a
fraction, the numerator of which is the Conversion Amount to be converted and
the denominator of which is the Conversion Price. All Conversion Shares so
issued shall be deemed to have been issued as fully paid and non-assessable at a
price equal to the Conversion Price.
4.3 LEGEND
This Agreement, and any Conversion Shares, Warrants and shares received on the
exercise of Warrants (collectively, the "Securities") shall bear such form of
restrictive legends as may be necessary, as determined by Borrower in Borrower's
reasonable discretion, to comply with applicable laws or regulations of any
stock exchange or other applicable authority, including but not limited to the
following legend:
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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. DELIVERY OF THIS
CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL
NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION
WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT.
4.4 CONVERSION DISCHARGES THE BORROWER
Conversion of Principal and interest in accordance herewith shall operate to
discharge the Borrower's obligations with respect to repayment of the Principal
amount and interest so converted, provided that delivery of the appropriate
number of Conversion Shares issued upon such conversion is made by the Borrower.
The Borrower shall not be bound to enquire into the title of the Lender, save as
ordered by a court of competent jurisdiction or as required by statute. The
Borrower shall not be bound to see to the execution of any trust affecting the
ownership of the Note(s) surrendered in connection with any conversion of
Principal and interest nor be charged with notice of any equity that may be
subsisting in respect thereof, unless the Borrower has actual notice thereof.
4.5 NO REQUIREMENT TO ISSUE FRACTIONAL SECURITIES
The Borrower shall not be required to issue fractions of securities upon any
conversion of Principal and interest pursuant to this section 4. If any
fractional interest in securities would be issuable upon the conversion of
Principal and interest, the Borrower shall not be required to make any payment
in lieu of delivering any certificates representing such fractional interest.
4.6 CANCELLATION OF NOTES
Upon conversion of the Principal amount of the Loan in whole or in part pursuant
to the provisions of this section 4, each Note representing the Principal
converted shall be forthwith delivered to and cancelled by the Borrower.
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4.7 WARRANTS
Upon the Lender's execution of this Agreement, the Borrower shall issue to the
Lender warrants for the purchase of an aggregate of one hundred thousand
(100,000) shares of the Borrower's common stock (the "Warrants"). The Warrants
shall be exercisable until 5:00 PM Pacific Time May 22, 2010. The Warrants for
the purchase of fifty thousand (50,000) shares of the Borrower's common stock
shall be evidenced by one or more warrant certificates substantially in the form
of Schedule B-1 attached hereto, with an exercise price of $0.22 per share. The
Warrants for the purchase of fifty thousand (50,000) shares of the Borrower's
common stock shall be evidenced by one or more warrant certificates
substantially in the form of Schedule B-2 attached hereto, with an exercise
price of $0.24 per share.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Borrower represents and warrants to the Lender as of the date
hereof that:
5.1.1 the Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Colorado;
5.1.2 the Borrower has all requisite corporate power and
authority to enter into this Agreement and to carry out the
obligations contemplated herein and therein;
5.1.3 this Agreement has been duly and validly authorized,
executed and delivered by the Borrower and are valid
obligations of it; and
5.1.4 no Event of Default and no event which, with the giving of
notice or lapse of time would become an Event of Default,
has occurred or is continuing.
5.2 The Lender hereby represents and warrants to the Borrower, as of the
date hereof, the following:
5.2.1 the Lender has full power and capacity to enter into,
execute and perform this Agreement, which Agreement, once
executed by the Lender, shall be the valid and binding
obligation of such party, enforceable against such party by
any court of competent jurisdiction in accordance with its
terms;
5.2.2 the Lender is not bound by or subject to any contract,
agreement, law, court order or judgment, administrative
ruling, 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 such party;
5.2.3 the Lender acknowledges that it is acquiring the Securities
its own account, and not with a view toward the
subdivision, resale, distribution, or fractionalization
thereof; the Lender 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;
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5.2.4 the execution of this Agreement by the Lender is not the
result of any form of General Solicitation or General
Advertising (as used under Rule 502(c) promulgated under
the Securities Act of 1933, as amended (the "Act"));
5.2.5 the Lender hereby acknowledges that: (A) the offering of
the Securities was made only through direct, personal
communication between the Lender and the Borrower; (B) the
Lender has had full access to material concerning the
Borrower's planned business and operations, which material
was furnished or made available to the Lender by officers
or representatives of the Borrower, including the
Borrower's SEC filings available on the SEC web site at
www.sec.gov; (C) the Borrower has given the Lender the
opportunity to ask any questions and obtain all additional
information desired in order to verify or supplement the
material so furnished; and (D) the Lender understands and
acknowledges that purchasers 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 Borrower
due to its status as a development stage company; (II)
illiquidity of the Securities due to the fact that (1) the
Securities have not been registered under the 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 the Lender 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 may set forth by legend
on the face or reverse side of every certificate evidencing
the ownership of the Securities;
5.2.6 the Lender 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 and as
such term is defined under Canadian securities laws;
5.2.7 the Lender is not a "U.S. Person" as such term is defined
in Rule 902 of Regulation S promulgated by the SEC.
("Regulation S");
5.2.8 the Lender understands that the Borrower is the seller of
the Securities and that, for purposes of Regulation S, a
"distributor" is any underwriter, dealer or other person
who participates, pursuant to a contractual arrangement in
the distribution of securities sold in reliance on
Regulation S and that an "affiliate" is any partner,
officer, director or any person directly or indirectly
controlling, controlled by or under common control with any
persons in question;
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5.2.9 the Lender agrees that it will not, during the one-year
distribution compliance period for the Securities, act as a
distributor, either directly or through any affiliate, or
sell, transfer, hypothecate or otherwise convey the
Securities other than to a non-U.S. Person;
5.2.10 the Lender acknowledges and understands that in the event
the Securities are offered, sold or otherwise transferred
by the Lender to a non-U.S. Person prior to the expiration
of the applicable distribution compliance period, the
purchaser or transferee must agree not to resell such
securities except in accordance with the provisions of
Regulation S, pursuant to registration under the Act, or
pursuant to an available exemption from registration; and
must further agree not to engage in hedging transactions
with regard to such securities unless in compliance with
the Act;
5.2.11 the Lender shall not offer, sell or otherwise dispose of
the Securities in the United States or to a U.S. Person
unless (A) the Borrower has consented to such offer, sale
or disposition and such offer, sale or disposition is made
in accordance with an exemption from the registration
requirements under the Act and the securities laws of all
applicable states of the United States or (B) such
securities have been registered with the SEC; and
5.2.12 the Lender has been advised to consult with an attorney
regarding legal matters concerning the purchase and
ownership of the Conversion Shares, and with a tax advisor
regarding the tax consequences of purchasing such
Conversion Shares; and
5.2.13 the Lender understands that this is a separately negotiated
Agreement and that other investors have purchased
convertible debentures on terms different from the Lender,
as disclosed by the Borrower's Current Report filed with
the SEC on June 5, 2007 and as amended on July 17, 2007,
and as disclosed by the Borrower's Annual Report on Form
10-KSB filed with the SEC on October 15, 2007.
6. COVENANTS OF THE BORROWER
6.1 POSITIVE COVENANTS
The Borrower covenants and agrees with the Lender that, at all times during the
currency of this Agreement, it will:
6.1.1 pay the principal sum, interest and all other monies
required to be paid to the Lender pursuant to this
Agreement in the manner set forth herein;
6.1.2 duly observe and perform each and every of its covenants
and agreements set forth in this Agreement; and
6.1.3 provide the Lender with immediate notice of any Event of
Default.
7. EVENT OF DEFAULT
7.1 DEFINITION OF EVENT OF DEFAULT
The principal balance of the Loan, costs and any other money owing to the Lender
under this Agreement will immediately become payable upon written demand by the
Lender in any of the following events, unless otherwise waived in writing by the
Lender:
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7.1.1 if the Borrower defaults in any payment when due under this
Agreement;
7.1.2 if the Borrower becomes insolvent or makes a general
assignment for the benefit of its creditors, or if any
order is made or an effective resolution is passed for the
winding-up of the Borrower or if the Borrower is declared
bankrupt or if a custodian or receiver is appointed for the
Borrower under the applicable bankruptcy or insolvency
legislation, or if a compromise or arrangement is proposed
by the Borrower to its creditors or any class of its
creditors, or if a receiver or other officer with like
powers is appointed for the Borrower; or
7.1.3 if the Borrower defaults in observing or performing any
other covenant or agreement of this Agreement on its part
to be observed or performed and such default has continued
for a period of 14 days after notice in writing has been
given by the Lender to the Borrower specifying the default.
7.2 RIGHTS AND REMEDIES OF THE LENDER
Upon the occurrence of an Event of Default and at any time thereafter:
7.2.1 the Lender may exercise any or all rights and remedies
available to the Lender whether available under this
Agreement or available at law or in equity, provided always
that the Lender acts in a commercially reasonable manner in
exercising such rights; and
7.2.2 the Lender will have the right, but not the obligation, to
inform any creditor of the Borrower of any Event of Default
by the Borrower.
8. GENERAL
8.1 WAIVER OR MODIFICATION
No failure on the part of the Lender in exercising any power or right hereunder
will operate as a waiver of the power or right nor will any single or partial
exercise of such right or power preclude exercise of any other right or power
hereunder. No amendment, modification or waiver of any condition of this
Agreement or consent to any departure by the Borrower therefrom will be
effective unless it is in writing signed by the Lender. No notice to or demand
on the Borrower will entitle the Borrower to any other further notice or demand
in similar or other circumstances unless specifically provided for in this
Agreement.
8.2 TIME
Time is of the essence of this Agreement.
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8.3 FURTHER ASSURANCES
The parties to this Agreement will do, execute and deliver or will cause to be
done, executed and delivered all such further acts, documents and things as may
be reasonably required for the purpose of giving effect to this Agreement.
8.4 ASSIGNMENT
The Borrower may not assign this Agreement or its interest herein or any part
hereof except with the prior written consent of the Lender. The Lender may
assign the Loan or this Agreement, or its interest in the Loan or this Agreement
or any part thereof upon ten days' written notice to the Borrower and provided
that the assignee agrees to be bound by the terms of this Agreement to the
extent of such assignment.
9. 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 9:
If to Borrower: Reclamation Consulting &
Applications, Inc.
940 Calle Amanecer, Suite E
San Clemente, CA 92673
Attn: Mr. Gordon W. Davies
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
19200 Von Karman, Suite 900
Irvine, California 92614
Attn: Kenneth S. August, Esquire
President
If to Lender: Norman Gish
8405-400 Eau Claire Avenue S.W
Calgary, Alberta, Canada
T2P4X2
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10. AMENDMENTS
This Agreement may be amended, waived, discharged or terminated only with the
agreement of the party against whom enforcement of the amendment, waiver,
discharge or termination is sought and only in writing signed by both parties to
this agreement.
11. COUNTERPART AND FAX EXECUTION
This Agreement may be executed in two or more counterparts and by fax
transmission, each of which will be deemed to be an original and all of which
will constitute one agreement, effective as of the date given above.
12. ENTIRE AGREEMENT
This Agreement, together with the Schedules and Exhibits referred to herein
which are incorporated herein by this reference, and the agreements referred to
herein, supersedes all prior agreements and understandings and shall constitute
the entire agreement between the parties hereto with respect to the transactions
contemplated hereby.
SIGNATURES ON NEXT PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Debenture
as of the date first written above.
LENDER
NORMAN GISH
/s/ Norman Gish
- ------------------------
BORROWER
RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation
/s/ Gordon Davies
- ------------------------
By: Gordon W. Davies
Its: President
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SCHEDULE A
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to Convertible Debenture.
- --------------------------------------------------------------------------------
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.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.
PROMISSORY NOTE
$105,030 OCTOBER 22, 2007
This Promissory Note is being issued pursuant to a Convertible Debenture dated
for reference October 22, 2007 between Norman Gish and Reclamation Consulting
and Applications, Inc. (the "Convertible Debenture")
FOR VALUE RECEIVED, Reclamation Consulting and Applications, Inc. (the
"Borrower"), of 940 Calle Amanecer, Suite E, San Clemente, CA 92673, PROMISES TO
PAY on April 21, 2009, or on demand in accordance with the terms of the
Convertible Debenture, to the order of Norman Gish (the "Lender") residing at
8405-400 Eau Claire Avenue S.W, Calgary, Alberta, Canada T2P4X2, the sum of
$105,030 (the "Principal") with simple interest at the rate of 12% per annum,
calculated and accrued monthly in arrears, both before and after the time
payment is due and until actual payment, and payable in accordance with the
Convertible Debenture.
The obligations of the Borrower to pay the Principal to the Lender will
terminate if and to the extent that the Principal and interest are converted in
accordance with section 4 of the Convertible Debenture.
The Borrower waives presentment for payment, notice of protest and notice of
non-payment.
The Borrower may prepay the Principal and interest outstanding under the
Convertible Debenture without penalty, bonus or charges.
Reclamation Consulting and Applications, Inc
a Colorado corporation
--------------------------------------------
By: Gordon W. Davies
Its: President
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SCHEDULE B-1
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to Convertible Debenture
- --------------------------------------------------------------------------------
WARRANT CERTIFICATE
-------------------
No. _____________ 50,000 Warrants
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.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.
WARRANTS FOR THE
PURCHASE OF COMMON STOCK
THIS CERTIFIES THAT, FOR VALUE RECEIVED, NORMAN GISH, (the "Holder"), is the
owner of warrants (the "Warrants") for the purchase of up to an aggregate of
50,000 shares of validly-issued, fully-paid and non-assessable common stock of
RECLAMATION CONSULTING AND APPLICATIONS, INC., a corporation organized and
existing under the laws of the State of Colorado (the "Corporation"). Such
purchase may be made at any time, and from time to time, prior to 5:00 p.m.
Pacific Time on the Expiration Date (as hereinafter defined) upon the
presentation and surrender of this Warrant Certificate with a written notice in
the form of Attachment 1, attached hereto, signed by the Holder stating the
number of shares of Common Stock with respect to which such exercise is being
made, at the principal corporate address of the Corporation, accompanied by
payment of the Exercise Price (as hereinafter defined) for each Warrant
exercised (the "Purchase Price") in lawful money of the United States of America
in cash or by official bank or certified check made payable to RECLAMATION
CONSULTING AND APPLICATIONS, INC. The Purchase Price and the number of shares of
Common Stock subject to purchase upon the exercise of the Warrants are subject
to modification or adjustment as set forth herein. The Warrants represented by
this Warrant Certificate have been issued by the Corporation in connection with
the Convertible Debenture, dated October 22, 2007, by and between the
Corporation and the Holder.
13
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "ADJUSTED PURCHASE PRICE" shall have the meaning given to
it in Section 5 of this Certificate.
(b) "CHANGE OF SHARES" shall have the meaning given to it in
Section 5 of this Certificate.
(c) "CORPORATE OFFICE" shall mean the office of the Corporation
at which, at any particular time, its principal business
shall be administered, which office is currently located at
940 Calle Amanecer, Suite E, San Clemente, CA 92673.
(d) "EXERCISE DATE" shall mean, as to any Warrant, the date on
which the Corporation shall have received both (i) this
Warrant Certificate, together with a written notice of
exercise in accordance herewith, duly executed by the
Holder hereof, or his attorney duly authorized in writing,
and indicating that the Holder is thereby exercising such
Warrant(s), and (ii) payment by wire transfer, or by
official bank or certified check made payable to the
Corporation, of an amount in lawful money of the United
States of America equal to the applicable Purchase Price
for such Warrant(s).
(e) "EXERCISE PERIOD" shall mean the period commencing on
October 22, 2007, and shall expire at 5:00 P.M. (Pacific
Time), on October 21, 2010.
(f) "EXERCISE PRICE" shall mean, as to any Warrant, the price
at which a Warrant may be exercised for the purchase of
Warrant Shares, which shall be $0.22.
(g) "EXPIRATION DATE" shall mean 5:00 P.M. (Pacific Time) on
last day of the Exercise Period. If such date shall be a
holiday or a day on which banks are authorized to be closed
in the State of California, then the Expiration Date shall
mean 5:00 P.M. (Pacific Time) of the next consecutive day
which does not fall on a holiday or a day on which banks
are authorized to be closed in the State of California.
(h) "HOLDER" shall mean, as to any Warrant and as of any
particular date, the person in whose name the Warrant
Certificate representing such Warrant is registered as of
that date on the Warrant Register maintained by the
Corporation.
14
(i) "COMMON STOCK" shall mean the common stock of the
Corporation, which has the right to participate in the
distribution of earnings and assets of the Corporation
without limit as to amount or percentage.
(j) "PURCHASE PRICE" shall mean the purchase price to be paid
upon exercise of each Warrant hereunder in accordance with
the terms hereof, which price shall be the Exercise Price,
subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof.
(k) "SECURITIES ACT" shall mean the Securities Act of 1933, and
any amendments or modifications, or successor legislation,
thereto adopted, and all regulations, rules or other laws
enacted or adopted pursuant thereto.
(l) "WARRANTS" shall mean the Warrants represented by this
Warrant Certificate.
(m) "WARRANT CERTIFICATE" shall mean any certificate
representing Warrants, and "THIS CERTIFICATE" shall mean
they warrant Certificate issued to the Holder
identification on the first page hereof.
(n) "WARRANT REGISTRY" means the official record maintained by
the Corporation in which are recorded, with respect to each
Warrant Certificate issued by the Corporation: the date of
issuance, the name and address of the original Holder, the
name and address of each subsequent transferee of such
original Holder, and the number identifying, such Warrant
Certificate.
(o) "WARRANT SHARES" shall have the meaning given to it in
Section 2 of this Certificate.
SECTION 2. EXERCISE OF WARRANTS.
(a) Each Warrant evidenced hereby may be exercised by the
Holder upon the terms and subject to the conditions set
forth herein prior to 5:00 p.m. Pacific Time on the
Expiration Date. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive shares of
restricted common stock of the Corporation deliverable upon
such exercise shall be treated for all purposes as the
Holder of a Warrant Share upon the exercise of the
applicable Warrant as of the close of business on the
Exercise Date. Promptly following, and in any event within
ten (10) business days after, the date on which the
Corporation first receives clearance of all funds received
in payment of the Purchase Price pursuant to this Warrant
Certificate, the Corporation shall cause to be issued and
delivered to the person or persons entitled to receive the
same, a certificate or certificates evidencing the issuance
to such Holder of the applicable number of Warrant Shares
(plus a Warrant Certificate for any remaining issued but
unexercised Warrants of the Holder). Notwithstanding the
foregoing sentence, in the event that any registration or
qualification (or filing for exemption from any such
requirements) is required prior to the issuance of such
Warrant Shares by the Corporation in accordance with
Section 3(b) below, then the obligation to deliver any such
certificates shall arise only upon completion of such
requirements and at such time as the Corporation may
lawfully do so.
15
(b) Upon the exercise of the Warrants represented hereby, if
the Corporation so requests, the Holder shall certify to
the Corporation that it is not exercising such Warrants
with a view to distribute the Warrant Shares in violation
of the Securities Act, and shall provide such other
investor representations as the Corporation may require to
confirm the ability of the Corporation to rely upon the
exemption from registration under the Securities Act which
applies to the distribution of Warrant Shares at the time
of such distribution.
SECTION 3. RESERVATION OF SHARES; TAXES; ETC.
(a) The Corporation covenants that it will at all times reserve
and keep available out of its authorized Common Stock,
solely for the purpose of issue upon the valid exercise of
Warrants, such number of Warrant Shares as shall then be
issuable upon the exercise of all Warrants then
outstanding. The Corporation covenants that all shares of
Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery, be duly and
validly issued, fully-paid, non-assessable and free from
all taxes, liens and charges with respect to the issuance
thereof (other than those which the Corporation shall
promptly pay or discharge, or any liens created thereon by
the Holder thereof and/or any predecessor of such Holder).
(b) The Corporation shall not be obligated to deliver any
Warrant Shares pursuant to the exercise of the Warrants
represented hereby unless and until a registration
statement under the Securities Act and/or under any
applicable state securities laws and regulations, with
respect to such securities is effective, or an exemption
from such registration is available to the Corporation at
the time of such exercise. The Corporation covenants that
if any Warrant Shares reserved for the purpose of exercise
of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal
or state securities law before such securities may be
validly issued or delivered upon such exercise, then the
Corporation will in good faith and as expeditiously as
reasonably possible, endeavor to secure such registration
or approval. However, in the event that this Warrant
Certificate represents Warrants which have been transferred
by an initial holder thereof, the Warrants represented
hereby may not be exercised by, nor shares of Common Stock
issued to, the Holder hereof in any state in which such
exercise and issuance would be unlawful.
(c) The Corporation shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed
with respect to the issuance of the Warrants, or the
issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if the
shares of Common Stock are to be delivered in a name other
than the name of the Holder hereof, then no such delivery
shall be made unless the person requesting the same has
paid to the Corporation the amount of transfer taxes or
charges incident thereto, if any.
16
SECTION 4. LOSS OR MUTILATION. Upon receipt by the Corporation of evidence
satisfactory to it of the ownership of, and loss, theft,
destruction or mutilation of, this Warrant Certificate and (in
case of loss, theft or destruction) of indemnity satisfactory to
the Corporation, and (in the case of mutilation) upon surrender
and cancellation thereof, the Corporation shall execute and
deliver to the Holder in lieu thereof a new Warrant Certificate of
like tenor representing an equal aggregate number of Warrants as
was indicated to be outstanding on the prior lost or mutilated
Warrant Certificate (provided, however, that to the extent that
any discrepancy may exist between the number of Warrants purported
to be outstanding in respect of any Holder as evidenced by a
Warrant Certificate that has been lost or mutilated and the number
attributable to such Holder in the Warrant Registry, then the
Warrant Registry shall control for all purposes, absent a showing
of manifest error. Each Holder requesting a substitute Warrant
Certificate due to loss, theft or destruction shall, prior to
receiving such substitute certificate, provide an affidavit to the
Corporation in the form prescribed thereby and signed by (and
notarized on behalf of) such Holder. Applicants for a substitute
Warrant Certificate shall comply with such other reasonable
regulations and pay such other reasonable charges as the
Corporation may prescribe.
SECTION 5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF WARRANT SHARES OR
WARRANTS.
(a) Subject to the provisions of this Warrant Certificate and
applicable law, in the event the Corporation shall, at any
time or from time to time after the date hereof, issue any
shares of Common Stock as a stock dividend to the holders
of Common Stock, or subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number of
shares (any such sale, issuance, subdivision or combination
being herein called a "CHANGE OF Shares"), then, and
thereafter upon each further Change of Shares, the Purchase
Price in effect immediately prior to such Change of Shares
shall be reduced, but in no event increased, to a price
(the "ADJUSTED PURCHASE PRICE") determined by multiplying
the Purchase Price in effect immediately prior to such
Change of Shares by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such
additional shares plus the number of shares of Common Stock
which the aggregate consideration received by the
Corporation would purchase at such Purchase Price, and the
denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment to the
Purchase Price shall be made successively whenever an
issuance is made after a Change of Shares has occurred.
17
Upon each adjustment of the Purchase Price pursuant to this
Section 5(a), the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall become
(subject to the provisions contained in Section 5(b)
hereof) such number of shares (calculated to the nearest
tenth) purchasable at the Purchase Price in effect
immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Purchase
Price in effect immediately prior to such adjustment and
the denominator of which shall be the applicable Adjusted
Purchase Price (rounded to the nearest whole number of
shares). No fractional shares shall be issued or called for
as a result of any adjustment made hereunder.
(b) The Corporation may elect, at its sole discretion, upon any
adjustment of the Purchase Price hereunder, to adjust the
number of Warrants outstanding, in lieu of adjustment of
the number of Warrant Shares purchasable upon the exercise
of each Warrant as hereinabove provided, so that each
Warrant outstanding after such adjustment shall represent
the right to purchase one Warrant Share. Each Warrant held
of record prior to such adjustment of the number of
Warrants shall become that number of Warrants (calculated
to the nearest tenth) determined by multiplying the number
one by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the
Adjusted Purchase Price. Upon each adjustment of the number
of Warrants pursuant to this Section 5(b), the Corporation
shall, as promptly as practicable, cause to be distributed
to each Holder of Warrant Certificates, on the date of such
adjustment, Warrant Certificates evidencing the adjusted
number of Warrants to which such Holder shall be entitled
as a result of such adjustment or, at the sole option of
the Corporation, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates
held by him prior to the date of adjustment, and upon
surrender thereof, (if required by the Corporation) new
Warrant Certificates evidencing the aggregate number of
Warrants to which such Holder shall be entitled after such
adjustment.
(c) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in
case of any consolidation or merger of the Corporation with
or into another corporation (other than a consolidation or
merger in which the Corporation is the continuing
corporation and which does not result in any
reclassification, capital reorganization or other change of
outstanding shares of Common Stock), or in case of any sale
or conveyance to another corporation of all, or
substantially all, of the property of the Corporation
(other than a sale/leaseback, mortgage or other financing
transaction), the Corporation shall cause effective
provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising
such Warrant, to purchase the kind and number of shares of
stock or other securities or property (including cash)
receivable upon such reclassification, capital
reorganization or other change, consolidation, merger, sale
or conveyance by a holder of the number of Warrant Shares
that might have been purchased upon exercise of such
Warrant immediately prior to such reclassification, capital
18
reorganization or other change, consolidation, merger, sale
or conveyance. Any such provision shall include provision
for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section 5 upon a Change of Shares. The Corporation shall
not effect any such consolidation, merger or sale without
the written consent of Holders of a majority of the
Warrants then outstanding, unless prior to or
simultaneously with the consummation thereof the successor
(if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing
assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the
Corporation, the obligation to deliver to the holder of
each Warrant such substitute warrants, shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such Holders may be entitled to purchase, and
the other obligations of the Corporation set out in this
Certificate. The foregoing provisions shall similarly apply
to successive reclassifications, capital reorganizations
and other changes of outstanding shares of Common Stock and
to successive consolidations, mergers, sales or
conveyances.
(d) Irrespective of any adjustments or changes in the Purchase
Price or the number of Warrant Shares purchasable upon
exercise of the Warrants, all Warrant Certificates issued
(whether prior to or subsequent to any event causing an
adjustment thereof) shall continue to express the Purchase
Price per share, and the number of shares purchasable
thereunder as originally expressed in the Warrant
Certificate initially issued to any Holder.
(e) After each adjustment of the Purchase Price pursuant to
this Section 5, the Corporation will promptly prepare a
certificate signed by the Chairman or Chief Executive
Officer, and attested by the Secretary or an Assistant
Secretary, of the Corporation setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant
after such adjustment or, if the Corporation shall have
elected to adjust the number of Warrants, the number of
Warrants to which the Holder of each Warrant shall then be
entitled, and (iii) a brief statement of the facts
accounting for such adjustment. The Corporation will
promptly cause a brief summary thereof to be sent by
ordinary first class mail to each Holder of Warrants at his
or her last address as it shall appear on the registry
books of the Corporation. No failure to mail such notice
nor any defect therein nor in the mailing thereof shall
affect the validity thereof. The affidavit of the Secretary
or an Assistant Secretary of the Corporation that such
notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(f) As used in this Section 5, references to "Common Stock"
shall mean and include all of the Corporation's Common
Stock authorized on the date hereof and shall also include
any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders
thereof to participate in dividends and in the distribution
of assets upon the voluntary liquidation, dissolution or
winding up of the Corporation; provided, however, that
"Warrant Shares" shall include only shares of such class
designated in the Corporation's Certificate of
19
Incorporation as Common Stock on the date hereof or (i) in
the case of any reclassification, change, consolidation,
merger, sale or conveyance of the character referred to in
Section 5(c) hereof, the stock, securities or property
provided for in such section, or (ii) in the case of any
reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a
result of a subdivision or combination or consisting of a
change in par value, or from par value to no par value, or
from no par value to par value, such shares of Common Stock
as so reclassified or changed.
(g) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to
this Section 5, or as to the amount of any such adjustment,
if required, shall be binding upon all holders of Warrants
and the Corporation if made in good faith by the Board of
Directors of the Corporation. For purposes of this Section
5(g), the Corporation's Board of Directors shall be deemed
to have acted in good faith if it makes any such decision
in reliance upon advice of its legal counsel and/or another
independent professional hired to advise the Board on such
matters.
SECTION 6. RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this Section 6, each
Warrant Certificate and each certificate evidencing the
issuance of Warrant Shares (whether issued in the name of
the original Holder of this Certificate or of any
subsequent transferee thereof), shall be stamped or
otherwise imprinted with a legend in substantially the
following form:
"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. DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS
PERMITTED BY THE ACT. "
20
(b) Each certificate evidencing the issuance of Warrant Shares
and each Warrant Certificate, Warrant Shares may also bear
such other restrictive legends as may be necessary to apply
with applicable law in the Corporation's reasonable
discretion. The legend requirements of Sections 6(a) above
shall terminate as to any particular Warrant or Warrant
Share: (i) when and so long as such security shall have
been effectively registered under the Securities Act and is
disposed of pursuant thereto; or (ii) when the Company
shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be sold to the
public without registration thereof under the Securities
Act. Whenever the legend requirements imposed by this
Section 6 shall terminate as to any Warrant Share, as
hereinabove provided, the Holder hereof shall be entitled
to receive from the Corporation, at the Corporation's
expense, a new certificate representing such Warrant Shares
and not bearing the restrictive legend set forth in Section
6(a).
SECTION 7. RIGHTS OF ACTION. All rights of action with respect to the
Warrants are vested in the Holders of the Warrants, and any Holder
of a Warrant, without consent of the holder of any other Warrant,
may, in such Holder's own behalf and for his own benefit, enforce
against the Company his right to exercise his Warrants for the
purchase of Warrant Shares in the manner provided in this Warrant
Certificate.
SECTION 8. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his
or her acceptance thereof, consents and agrees with the
Corporation and every other holder of a Warrant that:
(a) The Warrant Registry shall be maintained by the
Corporation's Secretary, and shall be the official register
of all Warrants issued to any person in the Offering. The
Warrant Registry shall be dispositive as to the issuance,
ownership, transfer and other aspects of each Warrant
issued by the Corporation which are recorded therein and,
absent manifest error, such records shall control for all
purposes.
(b) The Warrants are transferable only on the Warrant Registry
by the Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the Corporate
Office of the Corporation, duly endorsed or accompanied by
a proper instrument of transfer satisfactory to the
Corporation in its sole discretion, together with payment
of the amount of any applicable transfer taxes; and
(c) The Corporation may deem and treat the person in whose name
the Warrant Certificate is registered on the Warrant
Registry as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes,
and the Corporation shall not be affected by any notice or
knowledge to the contrary, except as otherwise expressly
provided in this Certificate.
21
SECTION 9. MODIFICATION OF WARRANTS. Other than with respect to any
adjustment made by the Corporation in accordance with the
provisions of Section 5 hereof, this Certificate may only be
modified, supplemented or altered by the Corporation, and only
with the consent in writing of the Holders of Warrants
representing greater than fifty percent (50%) of the total
Warrants then outstanding as may have been issued by the
Corporation pursuant to the Convertible Debenture dated October
22, 2007; provided, that no change in the number or nature of the
securities purchasable upon the exercise of any Warrant, or the
acceleration of the Exercise Date, shall be made without the
consent in writing of the Holder of the Warrant Certificate
representing such Warrant, other than such changes as are
specifically prescribed by this Certificate as originally executed
or are made in compliance with applicable law.
SECTION 10. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified
mail, postage prepaid as follows: if to the Holder of a Warrant
Certificate, at the address of such Holder as shown on the Warrant
Registry maintained by the Corporation; and if to the Corporation,
addressed as set forth below, or at such other address as may be
designated by the Corporation from time to time in accordance with
this Section 10.
If to the Corporation: Reclamation Consulting &
Applications, Inc.
940 Calle Amanecer, Suite E
San Clemente, CA 92673
Attn: Mr. Gordon W. Davies
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
19200 Von Karman, Suite 900
Irvine, California 92614
Attn: Kenneth S. August, Esquire
President
SECTION 11. 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.
SECTION 12. ENTIRE UNDERSTANDING. This Certificate contains the entire
understanding among the Corporation and the Holder relating to the
subject matter covered herein, and merges all prior discussions,
negotiations and agreements, if any between them. Neither of the
parties to this agreement shall be bound by any representations,
warranties, covenants, or other understandings relating to such
subject matter, other than as expressly provided for or referred
to herein.
IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate
to be duly executed, manually or in facsimile, by two of its officers thereunto
duly authorized, as of the date set forth below.
Date: October 22, 2007
RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation
- ---------------------------
By: Gordon W. Davies
Its: President
23
ATTACHMENT 1
------------
TO WARRANTS FOR THE
PURCHASE OF COMMON STOCK
NOTICE OF EXERCISE
TO: RECLAMATION CONSULTING AND APPLICATIONS, INC. (the "Company")
1. The undersigned hereby elects to purchase ____________ shares of
Company common stock, pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price in full, together with all applicable
transfer taxes, if any.
2. The undersigned hereby certifies that it is not a U.S. Person (as
defined by Rule 902 of the Securities Act of 1933, as amended) and that the
warrant is not being exercised for the account or benefit of or on behalf of a
U.S. Person.
3. Please issue a certificate or certificates representing said shares of
Company common stock in the name of the undersigned or in such other name as is
specified below:
----------------------------------
(Name)
----------------------------------
(Address)
- ----------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
-------------------------------
Title:
----------------------------
(Name of purchaser, and title and
signature of authorized person)
SCHEDULE B-2
------------
to Convertible Debenture
- --------------------------------------------------------------------------------
WARRANT CERTIFICATE
No. ________ 50,000 Warrants
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.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER HEREOF WILL NOT, DIRECTLY
OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY,
EXCEPT AS PERMITTED BY THE ACT.
WARRANTS FOR THE
PURCHASE OF COMMON STOCK
THIS CERTIFIES THAT, FOR VALUE RECEIVED, NORMAN GISH, (the "Holder"), is the
owner of warrants (the "Warrants") for the purchase of up to an aggregate of
50,000 shares of validly-issued, fully-paid and non-assessable common stock of
RECLAMATION CONSULTING AND APPLICATIONS, INC., a corporation organized and
existing under the laws of the State of Colorado (the "Corporation"). Such
purchase may be made at any time, and from time to time, prior to 5:00 p.m.
Pacific Time on the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with a written notice in
the form of Attachment 1, attached hereto, signed by the Holder stating the
number of shares of Common Stock with respect to which such exercise is being
made, at the principal corporate address of the Corporation, accompanied by
payment of the Exercise Price (as hereinafter defined) for each Warrant
exercised (the "Purchase Price") in lawful money of the United States of America
in cash or by official bank or certified check made payable to RECLAMATION
CONSULTING AND APPLICATIONS, INC. The Purchase Price and the number of shares of
Common Stock subject to purchase upon the exercise of the Warrants are subject
to modification or adjustment as set forth herein. The Warrants represented by
this Warrant Certificate have been issued by the Corporation in connection with
the Convertible Debenture, dated October 22, 2007, by and between the
Corporation and the Holder.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Adjusted Purchase Price" shall have the meaning given to
it in Section 5 of this Certificate.
(b) "Change of Shares" shall have the meaning given to it in
Section 5 of this Certificate.
(c) "Corporate Office" shall mean the office of the Corporation
at which, at any particular time, its principal business
shall be administered, which office is currently located at
940 Calle Amanecer, Suite E, San Clemente, CA 92673.
(d) "Exercise Date" shall mean, as to any Warrant, the date on
which the Corporation shall have received both (i) this
Warrant Certificate, together with a written notice of
exercise in accordance herewith, duly executed by the
Holder hereof, or his attorney duly authorized in writing,
and indicating that the Holder is thereby exercising such
Warrant(s), and (ii) payment by wire transfer, or by
official bank or certified check made payable to the
Corporation, of an amount in lawful money of the United
States of America equal to the applicable Purchase Price
for such Warrant(s).
(e) "Exercise Period" shall mean the period commencing on
October 22, 2007, and shall expire at 5:00 P.M. (Pacific
Time), on October 21, 2010.
(f) "Exercise Price" shall mean, as to any Warrant, the price
at which a Warrant may be exercised for the purchase of
Warrant Shares, which shall be $0.24.
(g) "Expiration Date" shall mean 5:00 P.M. (Pacific Time) on
last day of the Exercise Period. If such date shall be a
holiday or a day on which banks are authorized to be closed
in the State of California, then the Expiration Date shall
mean 5:00 P.M. (Pacific Time) of the next consecutive day
which does not fall on a holiday or a day on which banks
are authorized to be closed in the State of California.
(h) "Holder" shall mean, as to any Warrant and as of any
particular date, the person in whose name the Warrant
Certificate representing such Warrant is registered as of
that date on the Warrant Register maintained by the
Corporation.
(i) "Common Stock" shall mean the common stock of the
Corporation, which has the right to participate in the
distribution of earnings and assets of the Corporation
without limit as to amount or percentage.
(j) "Purchase Price" shall mean the purchase price to be paid
upon exercise of each Warrant hereunder in accordance with
the terms hereof, which price shall be the Exercise Price,
subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof.
(k) "Securities Act" shall mean the Securities Act of 1933, and
any amendments or modifications, or successor legislation,
thereto adopted, and all regulations, rules or other laws
enacted or adopted pursuant thereto.
(l) "Warrants" shall mean the Warrants represented by this
Warrant Certificate.
(m) "Warrant Certificate" shall mean any certificate
representing Warrants, and "this Certificate" shall mean
they warrant Certificate issued to the Holder
identification on the first page hereof.
(n) "Warrant Registry" means the official record maintained by
the Corporation in which are recorded, with respect to each
Warrant Certificate issued by the Corporation: the date of
issuance, the name and address of the original Holder, the
name and address of each subsequent transferee of such
original Holder, and the number identifying, such Warrant
Certificate.
(o) "Warrant Shares" shall have the meaning given to it in
Section 2 of this Certificate.
SECTION 2. EXERCISE OF WARRANTS.
(a) Each Warrant evidenced hereby may be exercised by the
Holder upon the terms and subject to the conditions set
forth herein prior to 5:00 p.m. Pacific Time on the
Expiration Date. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive shares of
restricted common stock of the Corporation deliverable upon
such exercise shall be treated for all purposes as the
Holder of a Warrant Share upon the exercise of the
applicable Warrant as of the close of business on the
Exercise Date. Promptly following, and in any event within
ten (10) business days after, the date on which the
Corporation first receives clearance of all funds received
in payment of the Purchase Price pursuant to this Warrant
Certificate, the Corporation shall cause to be issued and
delivered to the person or persons entitled to receive the
same, a certificate or certificates evidencing the issuance
to such Holder of the applicable number of Warrant Shares
(plus a Warrant Certificate for any remaining issued but
unexercised Warrants of the Holder). Notwithstanding the
foregoing sentence, in the event that any registration or
qualification (or filing for exemption from any such
requirements) is required prior to the issuance of such
Warrant Shares by the Corporation in accordance with
Section 3(b) below, then the obligation to deliver any such
certificates shall arise only upon completion of such
requirements and at such time as the Corporation may
lawfully do so.
(b) Upon the exercise of the Warrants represented hereby, if
the Corporation so requests, the Holder shall certify to
the Corporation that it is not exercising such Warrants
with a view to distribute the Warrant Shares in violation
of the Securities Act, and shall provide such other
investor representations as the Corporation may require to
confirm the ability of the Corporation to rely upon the
exemption from registration under the Securities Act which
applies to the distribution of Warrant Shares at the time
of such distribution.
SECTION 3. RESERVATION OF SHARES; TAXES; ETC.
(a) The Corporation covenants that it will at all times reserve
and keep available out of its authorized Common Stock,
solely for the purpose of issue upon the valid exercise of
Warrants, such number of Warrant Shares as shall then be
issuable upon the exercise of all Warrants then
outstanding. The Corporation covenants that all shares of
Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery, be duly and
validly issued, fully-paid, non-assessable and free from
all taxes, liens and charges with respect to the issuance
thereof (other than those which the Corporation shall
promptly pay or discharge, or any liens created thereon by
the Holder thereof and/or any predecessor of such Holder).
(b) The Corporation shall not be obligated to deliver any
Warrant Shares pursuant to the exercise of the Warrants
represented hereby unless and until a registration
statement under the Securities Act and/or under any
applicable state securities laws and regulations, with
respect to such securities is effective, or an exemption
from such registration is available to the Corporation at
the time of such exercise. The Corporation covenants that
if any Warrant Shares reserved for the purpose of exercise
of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal
or state securities law before such securities may be
validly issued or delivered upon such exercise, then the
Corporation will in good faith and as expeditiously as
reasonably possible, endeavor to secure such registration
or approval. However, in the event that this Warrant
Certificate represents Warrants which have been transferred
by an initial holder thereof, the Warrants represented
hereby may not be exercised by, nor shares of Common Stock
issued to, the Holder hereof in any state in which such
exercise and issuance would be unlawful.
(c) The Corporation shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed
with respect to the issuance of the Warrants, or the
issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if the
shares of Common Stock are to be delivered in a name other
than the name of the Holder hereof, then no such delivery
shall be made unless the person requesting the same has
paid to the Corporation the amount of transfer taxes or
charges incident thereto, if any.
SECTION 4. LOSS OR MUTILATION. Upon receipt by the Corporation of evidence
satisfactory to it of the ownership of, and loss, theft,
destruction or mutilation of, this Warrant Certificate and (in
case of loss, theft or destruction) of indemnity satisfactory to
the Corporation, and (in the case of mutilation) upon surrender
and cancellation thereof, the Corporation shall execute and
deliver to the Holder in lieu thereof a new Warrant Certificate of
like tenor representing an equal aggregate number of Warrants as
was indicated to be outstanding on the prior lost or mutilated
Warrant Certificate (provided, however, that to the extent that
any discrepancy may exist between the number of Warrants purported
to be outstanding in respect of any Holder as evidenced by a
Warrant Certificate that has been lost or mutilated and the number
attributable to such Holder in the Warrant Registry, then the
Warrant Registry shall control for all purposes, absent a showing
of manifest error. Each Holder requesting a substitute Warrant
Certificate due to loss, theft or destruction shall, prior to
receiving such substitute certificate, provide an affidavit to the
Corporation in the form prescribed thereby and signed by (and
notarized on behalf of) such Holder. Applicants for a substitute
Warrant Certificate shall comply with such other reasonable
regulations and pay such other reasonable charges as the
Corporation may prescribe.
SECTION 5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF WARRANT SHARES OR
WARRANTS.
(a) Subject to the provisions of this Warrant Certificate and
applicable law, in the event the Corporation shall, at any
time or from time to time after the date hereof, issue any
shares of Common Stock as a stock dividend to the holders
of Common Stock, or subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number of
shares (any such sale, issuance, subdivision or combination
being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase
Price in effect immediately prior to such Change of Shares
shall be reduced, but in no event increased, to a price
(the "Adjusted Purchase Price") determined by multiplying
the Purchase Price in effect immediately prior to such
Change of Shares by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such
additional shares plus the number of shares of Common Stock
which the aggregate consideration received by the
Corporation would purchase at such Purchase Price, and the
denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment to the
Purchase Price shall be made successively whenever an
issuance is made after a Change of Shares has occurred.
Upon each adjustment of the Purchase Price pursuant to this
Section 5(a), the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall become
(subject to the provisions contained in Section 5(b)
hereof) such number of shares (calculated to the nearest
tenth) purchasable at the Purchase Price in effect
immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Purchase
Price in effect immediately prior to such adjustment and
the denominator of which shall be the applicable Adjusted
Purchase Price (rounded to the nearest whole number of
shares). No fractional shares shall be issued or called for
as a result of any adjustment made hereunder.
(b) The Corporation may elect, at its sole discretion, upon any
adjustment of the Purchase Price hereunder, to adjust the
number of Warrants outstanding, in lieu of adjustment of
the number of Warrant Shares purchasable upon the exercise
of each Warrant as hereinabove provided, so that each
Warrant outstanding after such adjustment shall represent
the right to purchase one Warrant Share. Each Warrant held
of record prior to such adjustment of the number of
Warrants shall become that number of Warrants (calculated
to the nearest tenth) determined by multiplying the number
one by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the
Adjusted Purchase Price. Upon each adjustment of the number
of Warrants pursuant to this Section 5(b), the Corporation
shall, as promptly as practicable, cause to be distributed
to each Holder of Warrant Certificates, on the date of such
adjustment, Warrant Certificates evidencing the adjusted
number of Warrants to which such Holder shall be entitled
as a result of such adjustment or, at the sole option of
the Corporation, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates
held by him prior to the date of adjustment, and upon
surrender thereof, (if required by the Corporation) new
Warrant Certificates evidencing the aggregate number of
Warrants to which such Holder shall be entitled after such
adjustment.
(c) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in
case of any consolidation or merger of the Corporation with
or into another corporation (other than a consolidation or
merger in which the Corporation is the continuing
corporation and which does not result in any
reclassification, capital reorganization or other change of
outstanding shares of Common Stock), or in case of any sale
or conveyance to another corporation of all, or
substantially all, of the property of the Corporation
(other than a sale/leaseback, mortgage or other financing
transaction), the Corporation shall cause effective
provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising
such Warrant, to purchase the kind and number of shares of
stock or other securities or property (including cash)
receivable upon such reclassification, capital
reorganization or other change, consolidation, merger, sale
or conveyance by a holder of the number of Warrant Shares
that might have been purchased upon exercise of such
Warrant immediately prior to such reclassification, capital
reorganization or other change, consolidation, merger, sale
or conveyance. Any such provision shall include provision
for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section 5 upon a Change of Shares. The Corporation shall
not effect any such consolidation, merger or sale without
the written consent of Holders of a majority of the
Warrants then outstanding, unless prior to or
simultaneously with the consummation thereof the successor
(if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing
assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the
Corporation, the obligation to deliver to the holder of
each Warrant such substitute warrants, shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such Holders may be entitled to purchase, and
the other obligations of the Corporation set out in this
Certificate. The foregoing provisions shall similarly apply
to successive reclassifications, capital reorganizations
and other changes of outstanding shares of Common Stock and
to successive consolidations, mergers, sales or
conveyances.
(d) Irrespective of any adjustments or changes in the Purchase
Price or the number of Warrant Shares purchasable upon
exercise of the Warrants, all Warrant Certificates issued
(whether prior to or subsequent to any event causing an
adjustment thereof) shall continue to express the Purchase
Price per share, and the number of shares purchasable
thereunder as originally expressed in the Warrant
Certificate initially issued to any Holder.
(e) After each adjustment of the Purchase Price pursuant to
this Section 5, the Corporation will promptly prepare a
certificate signed by the Chairman or Chief Executive
Officer, and attested by the Secretary or an Assistant
Secretary, of the Corporation setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant
after such adjustment or, if the Corporation shall have
elected to adjust the number of Warrants, the number of
Warrants to which the Holder of each Warrant shall then be
entitled, and (iii) a brief statement of the facts
accounting for such adjustment. The Corporation will
promptly cause a brief summary thereof to be sent by
ordinary first class mail to each Holder of Warrants at his
or her last address as it shall appear on the registry
books of the Corporation. No failure to mail such notice
nor any defect therein nor in the mailing thereof shall
affect the validity thereof. The affidavit of the Secretary
or an Assistant Secretary of the Corporation that such
notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(f) As used in this Section 5, references to "Common Stock"
shall mean and include all of the Corporation's Common
Stock authorized on the date hereof and shall also include
any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders
thereof to participate in dividends and in the distribution
of assets upon the voluntary liquidation, dissolution or
winding up of the Corporation; provided, however, that
"Warrant Shares" shall include only shares of such class
designated in the Corporation's Certificate of
Incorporation as Common Stock on the date hereof or (i) in
the case of any reclassification, change, consolidation,
merger, sale or conveyance of the character referred to in
Section 5(c) hereof, the stock, securities or property
provided for in such section, or (ii) in the case of any
reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a
result of a subdivision or combination or consisting of a
change in par value, or from par value to no par value, or
from no par value to par value, such shares of Common Stock
as so reclassified or changed.
(g) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to
this Section 5, or as to the amount of any such adjustment,
if required, shall be binding upon all holders of Warrants
and the Corporation if made in good faith by the Board of
Directors of the Corporation. For purposes of this Section
5(g), the Corporation's Board of Directors shall be deemed
to have acted in good faith if it makes any such decision
in reliance upon advice of its legal counsel and/or another
independent professional hired to advise the Board on such
matters.
SECTION 6. RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this Section 6, each
Warrant Certificate and each certificate evidencing the
issuance of Warrant Shares (whether issued in the name of
the original Holder of this Certificate or of any
subsequent transferee thereof), shall be stamped or
otherwise imprinted with a legend in substantially the
following form:
"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. DELIVERY OF THIS CERTIFICATE
MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS
PERMITTED BY THE ACT. "
(b) Each certificate evidencing the issuance of Warrant Shares
and each Warrant Certificate, Warrant Shares may also bear
such other restrictive legends as may be necessary to apply
with applicable law in the Corporation's reasonable
discretion. The legend requirements of Sections 6(a) above
shall terminate as to any particular Warrant or Warrant
Share: (i) when and so long as such security shall have
been effectively registered under the Securities Act and is
disposed of pursuant thereto; or (ii) when the Company
shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be sold to the
public without registration thereof under the Securities
Act. Whenever the legend requirements imposed by this
Section 6 shall terminate as to any Warrant Share, as
hereinabove provided, the Holder hereof shall be entitled
to receive from the Corporation, at the Corporation's
expense, a new certificate representing such Warrant Shares
and not bearing the restrictive legend set forth in Section
6(a).
SECTION 7. RIGHTS OF ACTION. All rights of action with respect to the
Warrants are vested in the Holders of the Warrants, and any Holder
of a Warrant, without consent of the holder of any other Warrant,
may, in such Holder's own behalf and for his own benefit, enforce
against the Company his right to exercise his Warrants for the
purchase of Warrant Shares in the manner provided in this Warrant
Certificate.
SECTION 8. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his or
her acceptance thereof, consents and agrees with the Corporation
and every other holder of a Warrant that:
(a) The Warrant Registry shall be maintained by the
Corporation's Secretary, and shall be the official register
of all Warrants issued to any person in the Offering. The
Warrant Registry shall be dispositive as to the issuance,
ownership, transfer and other aspects of each Warrant
issued by the Corporation which are recorded therein and,
absent manifest error, such records shall control for all
purposes.
(b) The Warrants are transferable only on the Warrant Registry
by the Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the Corporate
Office of the Corporation, duly endorsed or accompanied by
a proper instrument of transfer satisfactory to the
Corporation in its sole discretion, together with payment
of the amount of any applicable transfer taxes; and
(c) The Corporation may deem and treat the person in whose name
the Warrant Certificate is registered on the Warrant
Registry as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes,
and the Corporation shall not be affected by any notice or
knowledge to the contrary, except as otherwise expressly
provided in this Certificate.
SECTION 9. MODIFICATION OF WARRANTS. Other than with respect to any
adjustment made by the Corporation in accordance with the
provisions of Section 5 hereof, this Certificate may only be
modified, supplemented or altered by the Corporation, and only
with the consent in writing of the Holder.
SECTION 10. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified
mail, postage prepaid as follows: if to the Holder of a Warrant
Certificate, at the address of such Holder as shown on the Warrant
Registry maintained by the Corporation; and if to the Corporation,
addressed as set forth below, or at such other address as may be
designated by the Corporation from time to time in accordance with
this Section 10.
If to the Corporation: Reclamation Consulting &
Applications, Inc.
940 Calle Amanecer, Suite E
San Clemente, CA 92673
Attn: Mr. Gordon W. Davies
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
19200 Von Karman, Suite 900
Irvine, California 92614
Attn: Kenneth S. August, Esquire
President
SECTION 11. 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.
SECTION 12. ENTIRE UNDERSTANDING. This Certificate contains the entire
understanding among the Corporation and the Holder relating to the
subject matter covered herein, and merges all prior discussions,
negotiations and agreements, if any between them. Neither of the
parties to this agreement shall be bound by any representations,
warranties, covenants, or other understandings relating to such
subject matter, other than as expressly provided for or referred
to herein.
IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate
to be duly executed, manually or in facsimile, by two of its officers thereunto
duly authorized, as of the date set forth below.
Date: October 22, 2007
RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation
- ---------------------------
By: Gordon W. Davies
Its: President
ATTACHMENT 1
------------
TO WARRANTS FOR THE
PURCHASE OF COMMON STOCK
NOTICE OF EXERCISE
TO: Reclamation Consulting and Applications, Inc. (the "Company")
1. The undersigned hereby elects to purchase ____________ shares of Company
common stock, pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price in full, together with all applicable
transfer taxes, if any.
2. The undersigned hereby certifies that it is not a U.S. Person (as defined by
Rule 902 of the Securities Act of 1933, as amended) and that the warrant is not
being exercised for the account or benefit of or on behalf of a U.S. Person.
3. Please issue a certificate or certificates representing said shares of
Company common stock in the name of the undersigned or in such other name as is
specified below:
----------------------------------
(Name)
----------------------------------
(Address)
- ----------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
-------------------------------
Title:
----------------------------
(Name of purchaser, and title and
signature of authorized person)
SCHEDULE C
----------
to Convertible Debenture
NOTICE OF CONVERSION
TO: Reclamation Consulting and Applications, Inc. (the "Company")
1. The undersigned hereby elects to convert to Company common stock the amounts
of outstanding Principal, unpaid accrued interest and/or future interest under
the attached Convertible Debenture and the attached Promissory Note(s), all
pursuant to the terms of the Convertible Debenture, in the amounts designated
below:
Principal: $_____________
Accrued Interest: $_____________
Future Interest: $_____________
2. The undersigned hereby certifies that it is not a U.S. Person (as defined by
Rule 902 of the Securities Act of 1933, as amended) and that this conversion is
not being effected for the account or benefit of or on behalf of a U.S. Person.
3. Please issue a certificate or certificates representing said shares of
Company common stock in the name of the undersigned or in such other name as is
specified below:
----------------------------------
(Name)
----------------------------------
(Address)
- ----------------------------------- -----------------------------------
(Date) (Name of Lender)
By:
-------------------------------
Title:
----------------------------
(Name of Lender, and title and
signature of authorized person)