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EXHIBIT 10.6
RECLAMATION CONSULTING AND APPLICATIONS, INC.
AMENDMENT NO. 2 TO
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 ("AMENDMENT NO. 2") is entered into as of
the 18th
day of July, 2007 (the "AMENDMENT NO. 2 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") and amends the Convertible Note
Purchase
Agreement entered into between the Company and Canvasback as of
October 17, 2006
and subsequently amended on December 15, 2006 (the "AGREEMENT").
Unless
otherwise expressly defined herein, all capitalized terms and
Section references
used herein shall have the meanings set forth in the
Agreement.
WHEREAS, as of the Amendment 2 Effective Date, the Company
and
Canvasback desire to amend the terms of the Convertible Notes
issued pursuant to
the Agreement;
Whereas, a Conversion Event has occurred under the Agreement
and
Canvasback wishes to convert debt payable pursuant to the
Convertible Notes into
shares of Company common stock pursuant to the terms hereof;
NOW THEREFORE, in consideration of the mutual promises contained
in
this Amendment and the Agreement, the Company and Canvasback
hereby agree to
amend the Agreement as follows:
1. OUTSTANDING BALANCE OF LOANS. The parties agree that the
outstanding
balance of all principal and unpaid accrued interest under the
Convertible Notes
issued or issuable under the Agreement is Three Million Two
Hundred and Three
Thousand, Eight Hundred Eighty-Nine Dollars and Ninety-Seven
Cents,
($3,203,889.97) (the "CURRENT OUTSTANDING BALANCE") as of the
Amendment 2
Effective Date, consisting of Two Million Nine Hundred
Thirty-Three Thousand,
Eight Hundred Ninety-Six Dollars ($2,933,896) in principal and
Two Hundred
Sixty-Nine Thousand, Nine Hundred Eighty-Five Dollars and
Ninety-Seven Cents
($269,985.97) of accrued unpaid interest
2. REPRESENTATIONS OF CANVASBACK. Canvasback represents and
warrants
that (i) as of the Amendment 2 Effective Date, Canvasback is an
"accredited
investor" as defined by Rule 502 of Regulation D promulgated
under the
Securities Act of 1933, as amended, (ii) Canvasback has not
sold, transferred,
assigned, pledged or otherwise hypothecated any of the
Convertible Notes or any
rights pursuant to the Convertible Notes or the Agreement, and
(iii) that it
will deliver to the Company all Convertible Notes within five
business days
following the Amendment 2 Effective Date for conversion or
reissuance pursuant
to Section 3 of this Amendment No. 2.
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3. INITIAL CONVERSION OF SHARES AND ISSUANCE OF NEW CONVERTIBLE
NOTE.
(a) The Parties agree that Canvasback is hereby converting
One
Million, Seven Hundred Eighty-Seven Thousand Eight Hundred
Dollars ($1,787,800)
of the Current Outstanding Balance into Sixty-Five Million
(65,000,000) shares
of Company Common Stock (the "INITIAL CONVERSION SHARES") and
that the remaining
balance of One Million Four Hundred Sixteen Thousand and
Eighty-Nine Dollars and
Ninety-Seven Cents ($1,416,089.97) shall be consolidated into a
single
convertible note in the form attached hereto as Exhibit B (the
"NEW CONVERTIBLE
NOTE") with a maturity date of July 18, 2009.
(b) Within five business days following the Amendment No. 2
Effective Date, the Company shall issue the Sixty-Five Million
(65,000,000)
Initial Conversion Shares.
4. SUBSEQUENT CONVERSION SHARES.
(a) Within five business days following any conversion
pursuant to Section 6 of this Amendment No. 2 of the outstanding
balance of
principal and unpaid accrued interest of the New Convertible
Note, the Company
shall issue such shares ("SUBSEQUENT CONVERSION SHARES") to
Canvasback.
5. REGISTRATION RIGHTS. Article IV of the Agreement, pertaining
to
Registration Rights, is hereby deleted in its entirety. Holders
of the Initial
Conversion Shares or Subsequent Conversion Shares shall not be
entitled to any
rights to have such shares registered on any registration
statements filed by
the Company with the Securities and Exchange Commission or any
equivalent
filings in any state for foreign jurisdiction.
6. CONVERSION RIGHTS.
(a) Section 2.2(d) of Article II, pertaining to Conversion
Rights is hereby deleted in its entirety and the outstanding
balance of the New
Convertible Note shall have the conversion rights only as
provided in this
Section 6 of Amendment No. 2. From the Subsequent Conversion
Commencement Date
(as defined below) until the Maturity Date (the "CONVERSION
PERIOD"), the
outstanding balance of the New Convertible Note may be converted
at the option
of Canvasback in whole or in part, at once or from time to time,
into shares
(the "SUBSEQUENT CONVERSION SHARES") of the Company's common
stock, par value
$0.01 per share. The number of Conversion Shares to be issued
upon such
conversion shall be equal to the quotient obtained by dividing
(a) the aggregate
amount of principal and accrued but unpaid interest on this Note
as of the date
of conversion, by (b) the Conversion Price (as defined below).
The "CONVERSION
PRICE" is Two and One-half Cents ($0.025), subject to adjustment
pursuant to
Section 6(b) of this Amendment No. 2. The "SUBSEQUENT CONVERSION
COMMENCEMENT
DATE" shall be such date following the Amendment No. 2 Effective
Date on which
the Company effects an increase in its authorized common stock
and/or a reverse
split of its common stock, such that the Company has sufficient
authorized
unissued shares of Common Stock to effect the conversion of the
balance of the
New Convertible Note. Canvasback acknowledges that the Company
can provide no
guaranty that the Subsequent Conversion Commencement Date will
occur commencing
the Conversion Period. To exercise the conversion rights
provided by this
2
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Section 6 of Amendment No. 2, Canvasback must provide written
notice requesting
such conversion to the Company during the Conversion Period. The
Initial
Conversion Shares and the Subsequent Conversion Shares are
collectively referred
to as the "CONVERSION SHARES."
(b) If the Company, at any time while the New Convertible
Note
is outstanding, (i) pays a stock dividend on its Common Stock,
(ii) subdivides
outstanding shares of Common Stock into a larger number of
shares, or (iii)
combines outstanding shares of Common Stock into a smaller
number of shares,
then in each such case the Conversion Price shall be adjusted to
be equal to Two
and One-half Cents ($0.025) multiplied by a fraction of which
the numerator
shall be the number of shares of Common Stock outstanding
immediately before
such event and of which the denominator shall be the number of
shares of Common
Stock outstanding immediately after such event.
7. RESTRICTIONS ON TRANSFER,.
(a) Canvasback shall not sell, contr
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