<PAGE>
EXHIBIT 10.30
RECLAMATION CONSULTING AND APPLICATIONS, INC.
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT (the "AGREEMENT"), is
entered into as
of the 17th day of October, 2006 (the "EFFECTIVE DATE"), by and
between
RECLAMATION CONSULTING AND APPLICATIONS, INC., a corporation duly
organized and
validly existing under the laws of the State of Colorado (the
"COMPANY") and
CANVASBACK COMPANY LIMITED, a company organized and validly
existing under the
laws of Anguilla ("CANVASBACK"). The Company and Canvasback are
sometimes
referenced herein individually as a "PARTY", and collectively as
the "PARTIES").
WHEREAS,
the Company is a party to certain convertible promissory note
agreements (the "CONVERTIBLE NOTE AGREEMENTS") as to which the
Company has
registered the underlying stock for public trading in accordance
with its
agreements with the holders thereof (the "EXISTING NOTEHOLDERS"),
and which
Convertible Note Agreements place substantial restrictions on the
ability of the
Company to issue certain types of securities and take certain other
types of
corporate action while the Convertible Note Agreements are in
force;
WHEREAS,
since the beginning of this year, the Company has been in need
of
a substantial amount of cash financing to support its operations,
and such cash
financing has been difficult to raise due to the various
restrictions imposed by
the Convertible Note Agreements;
WHEREAS,
notwithstanding the restrictions imposed upon the Company,
since
January 2006 Canvasback has been willing to provide, and has
provided, the
Company with cash financing in the form of unsecured loans in order
to help the
Company sustain its operations, and the Parties have been operating
since that
time under an oral agreement for Canvasback to provide those funds
as necessary
on a case-by-case basis;
WHEREAS,
as of September 7, 2006, the Company had received the sum of
One
Million, Six Hundred and Sixteen Thousand, Three Hundred Forty
Eight Dollars
($1,616,348) of unsecured debt from Canvasback, and as partial
consideration for
the right to convert all Unsecured Loans (as defined hereafter),
Canvasback had
agreed to provide the Company with additional unsecured debt to
permit the
Company to meet its current obligations; and
WHEREAS,
as of the date hereof, Canvasback has provided the Company with
an additional Three Hundred Eighty Seven Thousand, Four Hundred
Twenty Eight
Dollars ($387,428) of unsecured debt bringing the balance of all
prior unsecured
loans, including accrued interest of Seventy Five Thousand, Two
Hundred Ninety
One ($75,291) to Two Million, Seventy-Nine Thousand, Sixty-Seven
Dollars
($2,079,067) (the "PRIOR LOANS"),
WHEREAS,
Canvasback has indicated that it is willing to provide the
Company with additional unsecured debt in the principal amount of
One Hundred
Twenty Thousand Dollars ($120,000) (the "SUBSEQUENT LOANS", and
together with
the Prior Loans, the "UNSECURED DEBT"), provided that the Company
delivers to
Canvasback the right to convert the Unsecured Debt into equity in
accordance
with this Agreement, and the Parties desire to memorialize their
arrangement
through entry into this Agreement as of the date hereof.
- 1 -
<PAGE>
NOW,
THEREFORE, in consideration of the foregoing premises, and the
covenants and agreements set forth herein, and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
Parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
UNSECURED NOTE FINANCING
1.1 Upon
execution of this Agreement, the Parties hereby agree that
SCHEDULE
A,
attached hereto and made an integral part hereof, constitutes a
true
and
complete list of all amounts loaned by Canvasback to the Company
as
Prior
Loans through and including the date of this Agreement. The terms
of
the Prior
Loans shall be as described in Section 2.2 below, and as set
forth in
the Convertible Note (as defined below), issuable pursuant to
Article II
of this Agreement.
1.2 Canvasback
agrees, subject to the entry of the Parties into this
Agreement,
to provide the Subsequent Loans, which Subsequent Loans shall
be
evidenced by the issuance of Convertible Notes having the terms
and
conditions
set forth in Section 2.2 below.
ARTICLE II
CONVERTIBLE NOTES
2.1 ISSUANCE OF
THE CONVERTIBLE NOTES. Subject to the terms and conditions set
forth in
this Agreement, the Company will duly authorize the issuance of
its 10%
Convertible Note in substantially the form of EXHIBIT A hereto
as
consideration for all Prior Loans (such note(s), together with any
and all
notes that
may be issued hereafter in substitution or exchange therefore,
and issued
in consideration for Subsequent Loans, are collectively
referred
to herein as the "CONVERTIBLE NOTES" and each such note is
individually referred to herein as a "CONVERTIBLE NOTE"). The terms
and
conditions
of the Convertible Notes are incorporated herein by reference.
2.2 DESCRIPTION
OF THE CONVERTIBLE NOTES. The Convertible Notes shall have the
following
terms and conditions:
(A)
MATURITY DATES.
All principal, plus all accrued but unpaid interest
on the Prior Loans, shall be due and payable on the date that is
one
(1) year from the date of this Agreement. All principal, plus
all
accrued but unpaid interest on the Subsequent Loans shall be due
and
payable on the date that is one (1) year from the date of the
Convertible Note(s) evidencing such Subsequent Loans. Each date
referenced in this Section 2.2(a) is hereby a "MATURITY DATE".
- 2 -
<PAGE>
(B)
INTEREST RATE.
The Convertible Notes will accrue simple interest at
the rate of ten percent (10%) per annum, calculated on the basis
of
a 365-day year from the date of this Agreement.
(C)
PREPAYMENT. The
Company shall have the right to prepay the Unsecured
Debt, in whole or in part, at any time and from time to time,
prior
to the Maturity Date, without penalty, during the term of the
applicable Convertible Note, provided that at the time of such
prepayment the Company shall also pay to Canvasback all unpaid
interest accrued on the Unsecured Debt through the date of
prepayment.
(D)
CONVERSION. As
provided for and on the terms and conditions set
forth in the Convertible Notes, the Convertible Notes may be
converted at any time after the Conversion Event (as hereafter
defined) and prior to the Maturity Date (the "CONVERSION PERIOD")
at
the option of the holder, unless previously fully-paid, into
shares
(the "CONVERSION SHARES") of the Company's common stock, par
value
$0.01 per share (the "COMMON STOCK") at a per Conversion Share
price
of Two and One-half Cents ($0.025) (the "CONVERSION PRICE"). As
used
in this Agreement, the term "CONVERSION EVENT" shall mean either
(i)
the delivery to the Company and Canvasback of a written consent
of
the Existing Noteholders to permit the Conversion of the
Unsecured
Debt, or any portion thereof, into Conversion Shares pursuant to
the
terms of this Agreement; or (ii) the termination of the
Convertible
Note Agreement pursuant to the terms thereof and full
satisfaction
by the Company of all obligations pursuant thereto.
2.3 DELIVERY OF
THE CONVERTIBLE NOTES. Subject to the terms and conditions set
forth
herein, the Company hereby agrees to issue to Canvasback as
consideration for the Prior Loans, and Canvasback hereby agrees to
accept
from the
Company, a Convertible Note in the principal face amount of Two
Million,
Seventy-Nine Thousand, Sixty-Seven Dollars ($2,079,067) (the
"PRINCIPAL
AMOUNT"). The Convertible Note delivered to Canvasback on the
Closing
Date will be delivered in the form of a single Convertible Note
registered
on the books and records of the Company in the name of
Canvasback
(or in the name of such nominee as Canvasback may specify no
later than
two business days prior to the Closing Date) and in
substantially the form attached hereto as EXHIBIT A.
ARTICLE III
CLOSING
3.1 CLOSING. The
closing of the transactions contemplated by this Agreement
shall take
place on October 17, 2006 at 10:00 a.m., P.D.T. at the offices
of the
August Law Group, P.C., The Atrium Building, 19200 Von Karman
Avenue,
Suite 19200, Irvine, California 92612, or at such other
location,
date and
time as may be agreed upon between Canvasback and the Company
(such
closing being called the "CLOSING" and such date and time being
called the
"CLOSING DATE"). At the Closing, the Company shall issue and
deliver to
the Purchaser the Convertible Notes as consideration for the
Unsecured
Debt.
- 3 -
<PAGE>
ARTICLE IV
REGISTRATION RIGHTS
4.1 The Company
hereby agrees that, within sixty (60) days after the issuance
of any
Conversion Shares, or as soon thereafter as the Company may
determine
in good faith to be commercially reasonable, but in no event
later than
one hundred eighty (180) days the Company shall file a
registration statement with the United States Securities and
Exchange
Commission
(the "SEC") seeking to have such Conversion Shares registered
for public
sale on Form SB-2 or other applicable form of registration
statement,
and naming the holders therein (the "HOLDERS") as selling
stockholders (unless any Holder shall notify the Company in advance
that
it does
not desire to be included in any such registration statement).
The
Company
shall pay for all registration expenses incurred in connection
with any
registration, qualification or compliance pursuant to this
Article
IV. All individual selling expenses incurred in connection with
any such
registration, qualification or compliance, including without
limitation
any separate counsel which any Holder may desire to engage in
connection
with the filing of such registration statement apart from the
Company's
counsel, will be borne by the Holders of the Conversion Shares
participating in such registration, pro rata on the basis of the
number of
their
shares so registered.
4.2 In its
efforts to register securities on behalf of Holders of
Conversion
Shares
desiring to participate as a selling stockholder in such
registration (the "PARTICIPATING HOLDERS"), the Company shall use
its
commercially reasonable efforts to:
(A)
prepare and file
the registration statement with the SEC within the
stated time period, and use its best efforts to cause such
registration statement to become effective within ninety (90)
days
after filing with the SEC and to remain effective for such period
as
may be reasonably necessary to effect the sale of the
securities
covered thereby, not to exceed six (6) months;
(B)
prepare and file
with the SEC such amendments to such registration
statement and supplements to the prospectus contained therein as
may
be necessary to keep such registration statement effective until
the
earlier of (i) the date on which all securities covered by such
registration statement have been sold and (ii) 180 days after
the
effective date of such registration statement;
(C)
register or
qualify the securities for sale under such other
securities or blue sky laws of such jurisdictions as the
Participating Holders may reasonably request, up to a maximum
of
five (5) such jurisdictions unless the securities can be
qualified
for sale under a nationally-recognized method of state
qualification, provided that the Company will not for any such
purpose be required to qualify generally to do business as a
foreign
corporation in any jurisdiction where, but for the requirements
of
this subsection (c), it would not be obligated to be so
qualified,
to subject itself to taxation in any jurisdiction, or to consent
to
general service of process in any such jurisdiction;
- 4 -
<PAGE>
(D)
furnish to the
Participating Holders a reasonable number of copies
of the registration statement, preliminary prospectus, final
prospectus and such other documents as the Participating Holders
may
reasonably request in order to facilitate the public offering
of
such securities;
(E)
notify the
Participating Holders, promptly after it receives notice
thereof, of the time when such registration statement has
become
effective or a supplement to any prospectus forming a part of
such
registration statement has been filed;
(F)
notify the
Participating Holders promptly of any request by the SEC
for the amending or supplementing of such registration statement
or
prospectus or for additional information;
(G)
prepare and
promptly file with the SEC, and promptly notify the
Participating Holders of the filing of, any amendment or
supplement
to such registration statement or prospectus as may be necessary
to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered
under the Securities Act of 1933 (the "1933 ACT"), any event
has
occurred as the result of which any such prospectus as then in
effect would include an untrue statement of a material fact or
omit
to state any material fact necessary to make the statements
therein,
in the light of the circumstances in which they were made, not
misleading;
(H)
advise the
Participating Holders, promptly after it receives notice
or obtains knowledge thereof, of the issuance of any stop order
by
the SEC suspending the effectiveness of such registration
statement
or the initiation or threatening of any proceeding for that
purpose
and promptly use its best efforts to prevent the issuance of
any
stop order or to obtain its withdrawal if such stop order should
be
issued; and
(I)
at least three
(3) days prior to the filing of any amendment or
supplement to such registration statement or prospectus,
furnish
copies thereof to the Participating Holders and refrain from
filing
any such amendment or supplement until the Participating
Holders
give their written consent to the filing, such consent not to
be
unreasonably withheld or delayed and in no event later than five
(5)
days after the Participating Holders receive copies of the
proposed
amendment and supplement.
4.3 Each
Participating Holder shall furnish to the Company such
information
regarding
such Participating Holder and the distribution proposed by such
Participating Holder as the Company may reasonably request in
writing and
as
reasonably required in connection with any registration,
qualification
or
compliance referred to herein or otherwise required by applicable
state
or federal
securities laws.
- 5 -
<PAGE>
4.4
INDEMNIFICATION.
(A)
The Company
shall, and hereby does, indemnify each Participating
Holder, each of its officers, directors and partners, and each
Person controlling such Participating Holder within the meaning
of
the 1933 Act and each underwriter, if any, and each Person who
controls such underwriter within the meaning of the 1933 Act,
against all claims, losses, damages and liabilities (or actions
in
respect thereon)
arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like)
incident
to any such registration, qualification or compliance, or based
on
any omission (or alleged omission) to state therein a material
fact
required to be stated therein or necessary to make the
statements
therein not misleading, or any violation by the Company of the
1933
Act, the Securities Exchange Act, the securities act of any
state,
or any rule or regulation thereunder applicable to the Company
in
connection with any such registration, qualification or
compliance,
and shall reimburse each Participating Holder, each of its
officers,
directors and partners, and each person controlling such
Participating Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other
expenses
reasonably incurred in connection with investigating and
defending
any such claim, loss, damage, liability or action, whether or
not
resulting in any liability, provided that the Company will not
be
liable in any such case to the extent that any such claim,
loss,
damage, liability or expense arises out of or is based on any
untrue
statement (or alleged untrue statement) or omission (or alleged
omission) based upon written information furnished to the Company
by
any Holde
