EXHIBIT 4.3
VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT
THIS VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT (this "AGREEMENT") is
made and entered into as of the 12th day of December 2007 (the "EFFECTIVE
DATE"), by and among the persons listed on Exhibit A (each individually a
"STOCKHOLDER" and collectively, the "STOCKHOLDERS"), Pala Investments Holdings
Limited ("PALA"), and Reclamation Consulting And Applications, Inc. (the
"COMPANY"). Each of the Company, Stockholder and Pala, are individually each
referred to herein as a "PARTY" and are collectively referred to herein as the
"PARTIES." The Board of Directors of the Company is referred to herein as the
"BOARD."
RECITALS
WHEREAS, concurrently with the execution of this Agreement, the Company
and Pala have entered into a Secured Convertible Debenture Agreement dated
December 12, 2007 (the "DEBENTURE AGREEMENT"), pursuant to which Pala has agreed
to lend to the Company up to $5,000,000, on the terms and subject to the
conditions set forth in the Debenture Agreement; and
WHEREAS, the Parties desire to provide Pala with the right, among other
rights, to designate the election of a certain member of the board of directors
of the Company (the "BOARD") in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and certain other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
1. ELECTION OF DIRECTOR.
---------------------
Each Party agrees to vote, or cause to be voted, all Shares (as defined
below) owned by such Party, or over which such Party has voting control, from
time to time and at all times, in whatever manner as shall be necessary to
ensure that at each annual or special meeting of stockholders at which an
election of directors is held or pursuant to any written consent of the
stockholders, one person designated by Pala (the "PALA DESIGNEE") is elected to
the Board. For purposes of this Agreement, the term "SHARES" shall mean and
include any securities by whatever name called of the Company the holders of
which are entitled to vote for members of the Board, now owned or subsequently
acquired by a Party, however acquired, whether through stock splits, stock
dividends, reclassifications, recapitalizations, similar events or otherwise.
All Parties agree that any Pala Designee, or any replacement thereto, serving as
a director on the Company's board is expected and required to act in the best
interests of Company and all of its shareholders, in accordance with his or her
fiduciary duties under applicable law.
2. REMOVAL.
--------
Each Party also agrees to vote, or cause to be voted, all Shares owned
by such Party, or over which such Party has voting control, from time to time
and at all times, in whatever manner as shall be necessary to ensure that:
(i) no director elected pursuant to Section 1 of this
Agreement may be removed from office unless such
removal is directed or approved by the affirmative
vote of Pala or such director violates his or her
fiduciary duties to the Company;
(ii) any vacancies created by the resignation, removal or
death of a director elected pursuant to Section 1
shall be filled pursuant to the provisions of this
Section 2; and
(iii) upon the request of Pala to remove such director,
such director shall be removed and replaced in
accordance with Section 1 of this Agreement.
All Stockholders agree to execute any written consents required to perform the
obligations of this Agreement, and the Company agrees at the request of any
party entitled to designate directors to call a special meeting of stockholders
for the purpose of electing directors.
3. AMENDMENT TO ARTICLES
---------------------
Each Party agrees to vote or cause to be voted all Shares owned by such
Party, or over which such Party has voting control, in whatever manner as shall
be necessary to effect a reverse split and/or increase the number of authorized
shares of Common Stock to ensure that there will be sufficient authorized but
unissued shares of Common Stock available for conversion of indebtedness under
the Debenture Agreement outstanding at any given time and to maintain the
provisions in the Company's Articles of Incorporation set forth in Schedule K to
the Debenture Agreement, and to ensure that at all times during the term of this
Agreement the Bylaws of the Company permit telephonic meetings of the Board in
the manner permitted by applicable law.
4. LEGEND ON SHARE CERTIFICATES.
-----------------------------
Each certificate representing any Shares shall be endorsed by the
Company with a legend reading substantially as follows:
"The securities evidenced hereby are subject to a Voting and
Right of First Refusal Agreement, a copy of which has been
filed with the Secretary of the Company and is available upon
request. By accepting any interest in the securities evidenced
by this Certificate, the person accepting such interest shall
be deemed to agree to and shall become bound by all the
provisions of the Voting and Right of First Refusal
Agreement."
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5. IRREVOCABLE PROXY
-----------------
Each Party to this Agreement hereby constitutes and appoints Pala, with
full power of substitution, as the proxy of the Party with respect to the
matters set forth herein, including without limitation, election of persons as
members of the Board in accordance with Section 1 hereto, a vote to effect a
reverse split and/or increase the number of authorized shares of Common Stock
pursuant to Section 3 hereof, and hereby authorizes Pala to represent and to
vote, if and only if the Party (i) fails to vote or (ii) attempts to vote
(whether by proxy, in person or by written consent), in a manner which is
inconsistent with the terms of this Agreement, all of such Party's Shares in
favor of the election of a person as a member of the Board determined pursuant
to and in accordance with the terms and provisions of this Agreement or for a
reverse split and/or the increase of authorized shares pursuant to and in
accordance with the terms and provisions of Sections 1 and 3, respectively, of
this Agreement. The proxy granted pursuant to the immediately preceding sentence
is given in consideration of the agreements and covenants of the Company and the
Parties in connection with the transactions contemplated by this Agreement and,
as such, is coupled with an interest and shall be irrevocable unless and until
this Agreement terminates or expires pursuant to Section 13 hereof. Each Party
hereto hereby revokes any and all previous proxies with respect to the Shares
and shall not hereafter, unless and until this Agreement terminates or expires
pursuant to Section 13 hereof, purport to grant any other proxy or power of
attorney with respect to any of the Shares, deposit any of the Shares into a
voting trust or enter into any agreement (other than this Agreement),
arrangement or understanding with any person, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of any of the
Shares, in each case, with respect to any of the matters set forth herein.
6. SPECIFIC ENFORCEMENT.
---------------------
It is agreed and understood that monetary damages would not adequately
compensate an injured Party for the breach of this Agreement by any Party, that
this Agreement shall be specifically enforceable, and that any breach or
threatened breach of this Agreement shall be the proper subject of a temporary
or permanent injunction or restraining order. Further, each Party hereto waives
any claim or defense that there is an adequate remedy at law for such breach or
threatened breach.
7. RESTRICTIONS ON THE TRANSFER OF SHARES.
---------------------------------------
Except as expressly permitted by this Agreement, other than in
connection with a Permitted Distribution, no Stockholder shall make, or directly
or indirectly permit to be made, a sale, transfer, conveyance, assignment or
other disposition (a "DISPOSITION") of any Shares held by such Stockholder. For
purposes of this Agreement, a "PERMITTED DISPOSITION" means the Disposition of
Shares by a Stockholder through any of the following mechanisms:
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(i) any Disposition of the Stockholder to any of such
Stockholder's spouse, brothers, sisters, ancestors,
descendants, or other relatives, or to any company or
trust affiliated with any such person, provided that
any such recipient agrees to be bound by the terms
and conditions of this Agreement relating to
Stockholders,
(ii) any Disposition by the Stockholder of the Shares to a
company, trust or other entity affiliated with the
Stockholder or any of such Stockholder's spouse,
brothers, sisters, ancestors, descendants, or other
relatives, or to any company or trust affiliated with
any such person, provided that any such recipient
agrees to be bound by the terms and conditions of
this Agreement relating to Stockholders
(iii) any Disposition pursuant to a bona fide pledge of all
or any portion of Shares by the Stockholder as
security for any loan to the Company or any
subsidiary or affiliate thereof, or any other bona
fide pledge of such Shares, if made in accordance
with the terms, provisions, and conditions of this
Agreement.
8. RIGHTS OF FIRST REFUSAL - TRANSFER OF SHARES
--------------------------------------------
(a) In the event that any Stockholder desires or is required to sell or
otherwise transfer all or any portion of his or her Shares, other than pursuant
to a Permitted Disposition (such Stockholder being hereinafter referred to as a
"SELLING STOCKHOLDER"), such Selling Stockholder shall promptly deliver notice
(a "SELLING STOCKHOLDER NOTICE") of such fact to Pala, which Selling Stockholder
Notice shall state the terms of sale, including the desired purchase price,
relating to the sale of such Pala. Within fifteen (15) business days after
receipt of the Selling Stockholder Notice by the other Party, Pala may offer to
purchase all or any portion of such Selling Stockholder's Shares in accordance
with the provisions of this Agreement. For the purposes of this Agreement, a
"business day" shall be any day that is not a Saturday or Sunday or a U.S.
Federal legal holiday.
(b) If after such fifteen (15) business-day period elapses not all of
the Shares which were offered in the Selling Stockholder Notice are subscribed
for by Pala, then the Selling Stockholder shall be entitled to sell or transfer
his or her Shares to any third party who offers to purchase them for a price
equal to or above the purchase price contained in the Selling Stockholder
Notice, PROVIDED, that such purchase and sale of the Shares shall be in
compliance with all applicable federal and state securities laws and the
purchase and sale takes place within a period of forty five (45) business days
from Pala's receipt of the Selling Stockholder Notice. . If, at any time during
the negotiation of the sale of such Selling Stockholder's Shares with a third
party, the Selling Stockholder offers a purchase price which is less than the
price set forth in the Selling Stockholder Notice or on terms which are more
favorable than those originally proposed, then the Selling Stockholder shall be
obligated to first re-offer the Shares to Pala pursuant to this Section 8, but
at the lower purchase price and/or under such more favorable conditions.
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(c) On the closing date designated in the Selling Stockholder Notice,
such date to be no longer than thirty (30) business days from the Selling
Stockholder Notice, or otherwise agreed upon between the Selling Stockholder and
Pala, the Selling Stockholder shall deliver against receipt of the purchase
price therefor by cash or certified or bank cashier's check or by wire or
interbank transfer of funds, or a note or other means of payment of the purchase
price acceptable to the Selling Stockholder, the certificate or certificates
representing the Shares offered which Pala elected to purchase in accordance
with this Section 8. Such Shares presented shall be free and clear of all liens,
restrictions or encumbrances (other than those restrictions imposed hereby or
those disclosed in the Selling Stockholder Notice) and properly endorsed for
transfer, with any transfer and documentary stamps affixed as required pursuant
to applicable law, and all applicable stock transfer taxes paid, in a form such
that upon presentation to the Company's transfer agent the Shares represented
thereby may be registered in the names of the respective purchasers.
9. PERMITTED PLEDGES OF SHARES.
----------------------------
In the event that any Stockholder desires to pledge or hypothecate his
Shares to any person or entity who or which is not a party to this Agreement (a
"PLEDGEE"), he may do so PROVIDED that any instrument creating such pledge of
Shares shall expressly state that: (i) the rights and obligations which such
Pledgee acquires in and to the Shares shall be subject to all obligations,
limitations and restrictions imposed upon such Stockholder pursuant to this
Agreement.
10. EXECUTION BY THE COMPANY.
-------------------------
The Company, by its execution in the space provided below, agrees that
it will cause the certificates evidencing the Shares to bear the legend required
by Section 3 of this Agreement, and it shall supply, free of charge, a copy of
this Agreement to any holder of a certificate evidencing shares of capital stock
of the Company upon written request from such holder to the Company at its
principal office. The Parties hereto do hereby agree that the failure to cause
the certificates evidencing the shares of Common Stock to bear the legend
required by Section 3 of this Agreement and/or failure of the Company to supply,
free of charge, a copy of this Agreement as provided under this Section 10 shall
not affect the validity or enforcement of this Agreement.
11. CAPTIONS.
---------
The captions, headings and arrangements used in this Agreement are for
convenience only and do not in any way limit or amplify the terms and provisions
hereof.
12. NOTICES.
--------
Any notice, request, instruction, or other document required by the
terms of this Agreement, or deemed by any of the Parties hereto to be desirable,
to be given to any other Party hereto shall be in writing and shall be given by
facsimile, personal delivery, overnight delivery, or mailed by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses:
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IF TO PALA:
-----------
Pala Investments Holdings Limited
00 Xxxxxx Xxxxxx
Xx Xxxxxx
Xxxxxx
XX0 0XX
Channel Islands
Fax: x00 0000 000 000
With a copy (which shall not constitute notice) to:
Pala Investments AG
19 Xxxxxxxxxxx
0000 Xxx, Xxxxxxxxxxx
Fax: x00 00 000 0000
IF TO THE COMPANY OR A STOCKHOLDER:
-----------------------------------
Reclamation Consulting and Applications, Inc.
000 Xxxxx Xxxxxxxx, Xxxxx X
Xxx Xxxxxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxxx, CEO
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
August Law Group, P.C.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. August, Esq.
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by facsimile, personal delivery, or
overnight delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such delivery. If
notice is given by mail in accordance with the provisions of this Section, such
notice shall be conclusively deemed given seven (7) days after deposit thereof
in the United States mail.
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13. TERM.
-----
This Agreement shall be effective only if the Debenture Agreement is
fully executed by both parties thereto. This Agreement shall terminate and be of
no further force or effect upon the later of:
(i) the date on which the Notes issued under the
Debenture Agreement have been paid in full, where
Pala has not elected to convert the Notes into Common
Stock; and
(ii) the date on which the number of Shares beneficially
owned by Pala is less then ten percent (10%) of the
issued and outstanding shares of Common Stock of the
Company, as determined pursuant to Rule 13d-3
promulgated under the Exchange Act of 1934, as
amended, and assuming for the purposes of such
determination only that the Conversion Right
Commencement Date, as such term is defined by the
Debenture Agreement, occurred on the Effective Date
of this Agreement.
Notwithstanding the foregoing, this Agreement shall earlier terminate and be of
no further force or effect in the event of a material breach by Pala of the
terms and conditions of the Debenture Agreement if such breach is not cured by
Pala within fourteen (14) days following delivery of written notice to Pala of
such breach.
14. MANNER OF VOTING.
-----------------
The voting of Shares pursuant to this Agreement may be effected in
person, by proxy, by written consent or in any other manner permitted by the
Bylaws of the Company and applicable law.
15. AMENDMENTS AND WAIVERS.
-----------------------
Any term of this Agreement may be amended and the observance of any
term hereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of each of
the Parties. Any amendment or waiver effected in accordance with this Section 15
shall be binding upon the Parties hereto and their respective heirs, successors
and assigns. If additional parties Shares, then each such purchaser shall become
a party to this Agreement as a "PARTY" hereunder, without the need for any
consent, approval or signature of any Party when such purchaser has both: (a)
purchased Shares and (b) executed one or more counterpart signature pages to
this Agreement or a joinder agreement binding such purchaser to the terms of
this Agreement.
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16. STOCK SPLITS, STOCK DIVIDENDS, ETC.
-----------------------------------
In the event of any issuance of shares of the Company's voting
securities hereafter to any of the Parties hereto (including, without
limitation, in connection with any stock split, stock dividend,
recapitalization, reorganization, or the like), such shares shall become subject
to this Agreement and shall be endorsed with the legend set forth in Section 4.
17. INFORMATION RIGHTS.
-------------------
During the term of this Agreement, the Company shall provide to Pala a
monthly sales reports and financial statements, which shall be delivered to
Pala, in form and substance acceptable to Pala in its reasonable discretion, no
later than fifteen (15) days following the end of each month.
18. RIGHT OF FIRST REFUSAL - FINANCING
----------------------------------
During the term of this Agreement, the Company covenants and agrees to promptly
notify (in no event later than five (5) trading days after making or receiving
an applicable offer) in writing (a "RIGHTS NOTICE") Pala of the terms and
conditions of any proposed Subsequent Financing (as defined below). The Rights
Notice shall describe, in reasonable detail, the proposed Subsequent Financing
and include, the proposed closing date of the Subsequent Financing. The Rights
Notice shall provide Pala an option (the "RIGHTS OPTION") during the fifteen
(15) trading days following delivery of the Rights Notice (the "OPTION PERIOD")
to inform the Company whether Pala will purchase the securities being offered in
such Subsequent Financing on substantially the same terms and conditions as
contemplated by such Subsequent Financing. If the Company does not receive
notice of exercise of the Rights Option from Pala within the Option Period, the
Company shall have the right to proceed with the Subsequent Financing on
substantially the terms described in the Rights Notice. For purposes of this
Agreement, a "SUBSEQUENT FINANCING" shall be defined as any subsequent offer or
sale to, or exchange with (or other type of distribution to), any third party by
the Company of its common stock, preferred stock or any securities convertible,
exercisable or exchangeable into common stock or preferred stock, including
convertible and non-convertible debt securities other than a Permitted Financing
(as defined in Subsection 6.1.9 of the Debenture Agreement) or any Permitted
Indebtedness (as defined in Subsection 6.2.1 of the Debenture Agreement).
19. DISTRIBUTION AGREEMENT
----------------------
During the term of this Agreement, the Company agrees to provide Pala
or one of its subsidiaries with the opportunity to enter into a non-exclusive
distribution agreement with the Company on terms and conditions no less
favorable that the Company provides to any other third party distributor of the
Company's products.
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20. CONFIDENTIALITY
---------------
Pala will hold and will cause its auditors, attorneys, financial
advisors, bankers and other consultants, affiliates and advisors to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the reasonable opinion of its counsel, by other requirements of
law, all documents and information concerning the Company and the Shareholders
furnished it by the Company, the Shareholders or any of their representatives
pursuant to this Agreement (except to the extent that such information can be
shown to have been (i) previously known by Pala, (ii) in the public domain
through no fault of Pala, or (iii) later lawfully acquired from other sources by
Pala), and Pala will not release or disclose such information to any other
person, except its auditors, attorneys, financial advisors, bankers and other
consultants, affiliates and advisors in connection with this Agreement. Pala
acknowledges that it has received and will continue to receive non-public
material information regarding the Company, and Pala shall not, and shall take
reasonable steps to assure that its auditors, attorneys, financial advisors,
bankers and other consultants, affiliates and advisors do not, use any such
non-public material information in contravention of applicable securities laws
or for any other purpose other then protecting the rights of Pala under this
Agreement.
21. SEVERABILITY.
-------------
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
22. BINDING EFFECT.
---------------
In addition to any restriction on transfer that may be imposed by any
other agreement by which any Party hereto may be bound, this Agreement shall be
binding upon the Parties, their respective heirs, successors and assigns, and to
such additional individuals or entities that may become stockholders of the
Company; provided that for any such transfer of the Stockholder Shares to be
deemed effective, the transferee shall have executed and delivered a signature
page to be included as a counterpart to this Agreement, after which execution
and delivery such transferee shall be deemed to be a Party hereto as if such
transferee was an original signatory hereto.
23. 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
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hereby agree to accept the exclusive jurisdiction of the Courts of the State of
California sitting in and for the County of Orange. In the event any Party shall
be forced to bring any legal action to protect or defend its rights hereunder,
then the prevailing Party in such proceeding shall be entitled to reimbursement
from the non-prevailing Party of all fees, costs and other expenses (including,
without limitation, the reasonable expenses of its attorneys) in bringing or
defending against such action.
24. ENTIRE AGREEMENT.
-----------------
This Agreement and the documents referred to herein constitute the
entire agreement of the Parties as it relates to the election of the Nominees
and does hereby supersede all other agreements of the Parties relating to the
subject matter hereof.
25. COUNTERPARTS.
-------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
26. ATTORNEY REPRESENTATION.
------------------------
Each Shareholder understands and agrees that the August Law Group, P.C.
represents the Company and not any Shareholder.
SIGNATURES ON NEXT PAGE
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
PALA:
PALA INVESTMENTS HOLDINGS LIMITED
/s/ Xxxxx Xxxxxx
-------------------------------
By: Xxxxx Xxxxxx
Its: Executive Director
THE COMPANY:
RECLAMATION CONSULTING AND APPLICATIONS, INC.,
Xxxxxxx Xxxxxx
------------------------------
By: /s/ Xxxxxxx Xxxxxx
Its: Chief Executive Officer
THE STOCKHOLDERS:
/s/ Xxxxxxx Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
CANVASBACK COMPANY LIMITED
/s/ Xxxxxxxxx Xxxxxx
------------------------------
By: B Romney
Its: Director
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EXHIBIT A
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LIST OF STOCKHOLDERS SUBJECT TO AGREEMENT
-----------------------------------------
1. Xxxxxxx X. Xxxxx.
2. Xxxxxx X. Xxxxxx
3. Xxxx Xxxxxx
4. Xxxxx Xxxxxx
5. Xxxx Xxxxxx
6. Canvasback Company Limited
