Exhibit 10.3
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, dated effective as of October 1, 2007 (the
"Agreement") is made
BETWEEN:
NAME: JOAN A. 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 October 1, 2007, the Lender and the Borrower entered into an oral
agreement pursuant to which the Lender lent to the Borrower Fifty Thousand
Dollars ($50,000) (the "Principal") 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 of that certain Secured Convertible Debenture
entered into by the parties dated September 11, 2007; and
Whereas, the parties desire to memorialize their oral agreement by executing
this Agreement, which although executed on March 4, 2008, is dated effective as
of October 1, 2007.
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 "Accredite 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 $0.12 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
8.1;
1.10 "Loan" means the loan by the Lender to the Borrower
established pursuant to subsection 3.1;
1.11 "Maturity Date" means April 1, 2009;
1.12 "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;
1.13 "Principal" means the principal amount of the loan set forth
in the Preamble;
1.14 "Securities" has the meaning assigned in subsection 4.3;
2
1.15 "U.S. Person" has the meaning assigned in subsection 5.2.7;
and
1.16 "Warrants" has the meaning assigned in subsection 4.7.
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
The Lender agrees, on the terms and conditions set forth in this Agreement, to
lend to the Borrower the Principal as the "Loan."
3
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.
3.3 INTEREST
The Borrower will pay simple interest to the Lender on the unpaid Principal from
October 1, 2007 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:
4
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.
5
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.
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 fifty thousand (50,000)
shares of the Borrower's common stock (the "Warrants"). The Warrants shall be
exercisable until the sooner of (i) 5:00 PM Pacific Time October 1, 2010 or (ii)
5:00 PM Pacific Time on the Call Date (as defined in the certificates evidencing
the Warrants. The Warrants shall be evidenced by one or more warrant
certificates substantially in the form of Schedule B attached hereto, with an
exercise price of $0.20 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;
6
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;
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;
7
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;
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.
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;
8
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:
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
9
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.
10
8.2 TIME
Time is of the essence of this Agreement.
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
11
If to Lender: Joan A. Gish
8405-400 Eau Claire Avenue S.W
Calgary, Alberta, Canada
T2P4X2
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.
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Debenture
as of February 20, 2008.
LENDER
JOAN A. GISH
/s/ Joan A. Gish
- ------------------
BORROWER
RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation
/s/ Gordon W. Davies
- ---------------------
By: Gordon W. Davies
Its: President
12
SCHEDULE A
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
$50,000 OCTOBER 1, 2007
This Promissory Note is being issued pursuant to a Convertible Debenture dated
for reference October 1, 2007 between Joan A. 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 1, 2009, or on demand in accordance with the terms of the
Convertible Debenture, to the order of Joan A. Gish (the "Lender"), 8405-400 Eau
Claire Avenue S.W, Calgary, Alberta, Canada, T2P4X2, the sum of $50,000 (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.
13
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
14
SCHEDULE B
to Convertible Debenture
- --------------------------------------------------------------------------------
WARRANT CERTIFICATE
No. _____________ 300,000 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, JOAN A. 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 the sooner of
5:00 p.m. Pacific Time on the Expiration Date (as hereinafter defined) or 5:00
p.m. on any Call 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
15
Warrant Certificate have been issued by the Corporation in connection with the
Convertible Debenture, dated October 1, 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) "CALL NOTICE" shall have the meaning given to it in
Section 9 of this Certificate.
(c) "CALL PRICE" shall have the meaning given to it in Section
9 of this Certificate.
(d) "CHANGE OF SHARES" shall have the meaning given to it in
Section 5 of this Certificate.
(e) "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.
(f) "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).
(g) "EXERCISE PERIOD" shall mean the period commencing on
October 1, 2007, and shall expire at 5:00 P.M. (Pacific
Time), on October 1, 2010.
(h) "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 $0.20.
(i) "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.
(j) "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.
16
(k) "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.
(L) "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.
(m) "SECURITIES ACT" shall mean the Securities Act of 1933,
and an amendments or modifications, or successor
legislation, thereto adopted, and all regulations, rules
or other laws enacted or adopted pursuant thereto.
(n) "WARRANTS" shall mean the Warrants represented by this
Warrant Certificate.
(o) "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.
(p) "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.
(q) "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 the sooner of 5:00 p.m. Pacific Time
on the Expiration Date (as hereinafter defined) or 5:00
p.m. on any Call Date (as hereinafter defined). 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
17
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.
18
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 and the Call 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,
19
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
20
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. "
21
(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.
22
SECTION 9. CALL RIGHT. Subject to the provisions of this Section 9, at any
time following the date on which the closing price of the
Corporation's common stock on the OTC Bulletin Board (or on such
other over-the-counter market or stock exchange on which the
Corporation's stock may then be traded) has equaled or exceeded $0.80
per share (the" CALL PRICE") as such price may be adjusted from time
to time pursuant to Section 5, the Company may call for cancellation
of the portion or all of this Warrant which the Holder has not
exercised prior to 5:00 p.m. Pacific Time on the Call Date (as
defined below). To exercise this right, the Corporation must deliver
to the Holder an irrevocable written notice (a "CALL NOTICE"),
indicating therein that this Warrant shall be cancelled. This Warrant
shall be cancelled at 5:00 p.m. Pacific Time on the 45th day after
the date the Call Notice is sent to Holder.
SECTION 10. 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 11. 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 11.
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 12. 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.
23
SECTION 13. 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.
Dated Effective: October 1, 2007
RECLAMATION CONSULTING AND APPLICATIONS, INC.
A Colorado corporation
- ------------------------------------
By: Gordon W. Davies
Its: President
24
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)
25
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)
26