EXHIBIT 10.1
SECURED REVOLVING LINE OF CREDIT AGREEMENT
This Revolving Line of Credit Agreement (the "AGREEMENT") is made and
entered into on this 18th day of July 2007, by and between CANVASBACK COMPANY
LIMITED, a company organized and validly existing under the laws of Anguilla
("LENDER"), and RECLAMATION CONSULTING AND APPLICATIONS, INC., a corporation
duly organized and validly existing under the laws of the State of Colorado
("BORROWER").
In consideration of the mutual covenants and agreements contained
herein, the parties agree as follows:
ARTICLE I
REVOLVING LINE OF CREDIT
1.1 LINE OF CREDIT. Lender hereby establishes for a period extending from
the date hereof to July 18, 2009 (the "MATURITY DATE") a revolving line
of credit (the "CREDIT LINE") for Borrower in the principal amount of
Three Million Dollars ($3,000,000) (the "CREDIT LIMIT"). In connection
herewith the Parties have executed a Security Agreement of even date
hereof (the "SECURITY AGREEMENT") and Borrower has executed and
delivered to Lender a Promissory Note of even date herewith (the
"PROMISSORY NOTE"). (This Agreement, the Security Agreement and the
Promissory Note shall collectively be referred to as the "LOAN
DOCUMENTS.") All sums advanced on the Credit Line or pursuant to the
terms of this Agreement (each an "ADVANCE") shall become part of the
principal under the Promissory Note.
1.2 ADVANCES. Any request for an Advance may be made from time to time and
in such amounts as Borrower may choose; provided, however, any
requested Advance will not, when added to the outstanding principal
balance of all previous Advances, exceed the Credit Limit. Requests for
Advances may be made orally or in writing by such officer of Borrower
authorized by it to request such Advances. Until such time as Lender
may be notified otherwise, Borrower hereby authorizes its President,
Chief Executive Officer, Chief Financial Officer or any Vice President
to request Advances. Lender has no obligation to make any requested
Advance and the decision to lend such money lies in the sole and
complete discretion of Lender. Should Lender approve any such requested
Advance, Lender shall deposit or credit the amount of such requested
Advance to Borrower's checking account with Lender. The funds from the
Advances may be used by Borrower for the satisfaction of Borrower's
debts and obligations, for the Borrower's operating expenses, and for
other business purposes.
1.3 INTEREST. All sums advanced pursuant to this Agreement shall bear
simple interest from the date each Advance is made until paid in full
at the rate of twelve percent (12%) per annum, simple interest,
calculated using a 365-day year (the "EFFECTIVE RATE").
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1.4 CONVERSION OF CERTAIN LOANS. The Parties agree that in April, June and
June 2007, Lender loaned Borrower an aggregate principal amount of Five
Hundred Ninety Thousand Dollars ($590,000) which together with accrued
interest in the amount of Eight Thousand One Hundred Ninety-Two Dollars
and Eighty-Eight Cents ($8,192.88.88) on the date hereof has an
outstanding balance of Five Hundred Ninety Eight Thousand One Hundred
Ninety Two Dollars and Eighty-Eight Cents ($598,192.88) as described in
Schedule A attached hereto (the "INTERIM LOANS"), which Lender is a
true and complete list of all amounts loaned by Lender to the Company
from April 4, 2007 through and including the date of this Agreement.
Upon execution of this Agreement, the Parties hereby agree the
outstanding balance of Five Hundred Ninety-Eight Thousand One Hundred
Ninety-Two Dollars and Eighty-Eight Cents ($598,192.88) owed by
Borrower on the Interim Loans to Lenders of the date hereof shall, as
of the date hereof, be deemed an Advance under the Credit Line and
shall henceforth governed by the Loan Documents. Any oral or written
agreements regarding the Interim Loans entered into by the Parties
prior to the execution of this Agreement shall be null and void.
1.5 REPAYMENT. All accrued unpaid interest outstanding under the Credit
Line as of July 18, 2008 shall be paid by Borrower to Lender no later
then July 31, 2008. The entire unpaid principal balance, together with
any accrued interest and other unpaid charges or fees hereunder, shall
be due and payable on the Maturity Date. All payments shall be made to
Lender at such place as Lender may, from time to time, designate. All
payments received hereunder shall be applied, first to accrued
interest; and second, to principal. Borrower may prepay principal at
any time without penalty.
1.6 SECURITY AGREEMENT. The Line of Credit is secured by a security
interest in all the assets of the Company pursuant to the terms of the
Security Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce Lender
to enter into this Agreement and to make the advances provided for
herein, Borrower represents and warrants to Lender as follows:
(a) Borrower is a duly organized, validly existing, and in good
standing under the laws of the State of Colorado with the
power to own its assets and to transact business in
California, and in such other states where its business is
conducted.
(b) Borrower has the authority and power to execute and deliver
any document required hereunder and to perform any condition
or obligation imposed under the terms of such documents.
(c) The execution, delivery and performance of this Agreement and
each document incident hereto will not violate any provision
of any applicable law, regulation, order, judgment, decree,
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article of incorporation, by-law, indenture, contract,
agreement, or other undertaking to which Borrower is a party,
or which purports to be binding on Borrower or its assets and
will not result in the creation or imposition of a lien on
any of its assets.
(d) There is no action, suit, investigation, or proceeding
pending or, to the knowledge of Borrower, threatened, against
or affecting Borrower or any of its assets which, if
adversely determined, would have a material adverse affect on
the financial condition of Borrower or the operation of its
business
2.2 REPRESENTATIONS AND WARRANTIES OF LENDER. Lender hereby represents and
warrants to Borrower, as of the date hereof, the following:
(a) Lender is a limited liability company duly organized and
validly existing under the laws of the Anguilla, and has full
power and authority to enter into, execute and perform this
Agreement, which Agreement, once executed by Lender, shall be
the valid and binding obligation of Lender, enforceable
against it by any court of competent jurisdiction in
accordance with its terms;
(b) the individuals signing this Agreement on behalf of Lender are
the duly elected executive officers of Lender so indicated,
and have full power and authority to enter into, execute,
deliver and perform this Agreement for and on behalf of
Lender;
(c) Lender is not bound by or subject to any contract, agreement,
court order or judgment, administrative ruling, law,
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 Lender.
(d) with respect to the Note (the "SECURITIES") being acquired (or
which may be acquired) by Lender:
(i) Lender is and will be acquiring the Securities for
its own account, and not with a view toward the
subdivision, resale, distribution, or
fractionalization thereof; 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;
(ii) this subscription for Securities by Lender is not
the result of any form of general solicitation or
general advertising;
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(iii) Lender hereby acknowledges that: (A) the offering of
the Securities was made only through direct, personal
communication between Lender and Borrower; (B) Lender
has had full access to material concerning Borrower's
planned business and operations, which material was
furnished or made available to Lender by officers or
representatives of Borrower; (C) Borrower has given
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) Lender understands and acknowledges that a
purchaser 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
Borrower due to its status as an early-stage company,
including without limitation the risk of loss of the
entire amount of their investment; and (II)
illiquidity of the Securities due to the fact that
(1) the Securities have not been registered under the
1933 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 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 set
forth by legend on the face or reverse side of every
certificate evidencing the ownership of the
Securities;
(e) 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, or, if Lender is
non-accredited, then he and/or she has sufficient business
expertise and sophistication so as to be able to make a
determination concerning the relative risks and merits of an
investment in the securities, and has a pre-existing business
or personal relationship with at least one of the
shareholders, directors or executive officers of Borrower; and
(f) Lender has been advised to consult with an attorney regarding
all legal matters concerning the purchase and ownership of the
Securities, and with a tax advisor regarding the tax
consequences of purchasing such Securities
ARTICLE III
CLOSING
3.1 CLOSING. The closing of the transactions contemplated by this Agreement
shall take place on July 18, 2007 at 10:00 a.m., P.D.T. at the offices
of the August Law Group, P.C., The Atrium Building, 00000 Xxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, or at such other location,
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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 Notes as consideration for the Secured
Debt.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
4.1 EVENTS OF DEFAULT. Debtor shall be in default under this Agreement on
the occurrence of any of the following events or conditions and the
failure of Borrower to cure such events or conditions within ten (10)
business days following written notice from Lender describing with
particularity the event or condition giving rise to an event of
default:
(a) Failure to pay any principal or interest hereunder after the
same becomes due.
(b) Any representation or warranty made by Borrower in this
Agreement or in connection with any borrowing or request for
an Advance hereunder, or in any certificate, financial
statement, or other statement furnished by Borrower to Lender
is untrue in any material respect at the time when made.
(c) Filing by Borrower of a voluntary petition in bankruptcy
seeking reorganization, arrangement or readjustment of debts,
or any other relief under the Bankruptcy Code as amended or
under any other insolvency act or law, state or federal, now
or hereafter existing.
(d) Filing of an involuntary petition against Borrower in
bankruptcy seeking reorganization, arrangement or readjustment
of debts, or any other relief under the Bankruptcy Code as
amended, or under any other insolvency act or law, state or
federal, now or hereafter existing, and the continuance
thereof for sixty (60) days undismissed, unbonded, or
undischarged.
(e) Any material default by Borrower under the Security Agreement.
4.2 REMEDIES. Upon the occurrence of an event of default as defined above,
Lender may declare the entire unpaid principal balance, together with
accrued interest thereon, to be immediately due and payable without
presentment, demand, protest, or other notice of any kind, and Lender
may suspend or terminate any obligation it may have hereunder to make
additional Advances. To the extent permitted by law, Borrower waives
any rights to presentment, demand, protest, or notice of any kind in
connection with this Agreement. No failure or delay on the part of
Lender in exercising any right, power, or privilege hereunder will
preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies provided
herein are cumulative and not exclusive of any other rights or remedies
provided at law or in equity.
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ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 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 5.1:
If to Borrower: Reclamation Consulting &
Applications, Inc.
000 Xxxxx Xxxxxxxx, Xxxxx X
Xxx Xxxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxx
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. August, Esquire
President
If to Lender: Canvasback Company Limited
Hannah Waiver House
The Valley, Anguilla,
British West Indies
Attn: Xx. Xxxxxxxxx Xxxxxx
Authorized Signatory
With a copy (which shall
not constitute notice) to: ________________________________
________________________________
________________________________
Attn: _______________________
________________________________
5.2 ENTIRE AGREEMENT. This Agreement constitutes the entire and final
agreement and understanding between the parties with respect to the
subject matter hereof and the transactions contemplated hereby, and
supersedes any and all prior oral or written agreements, statements,
representations, warranties or understandings between the parties, all
of which are merged herein and superseded hereby.
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5.3 BINDING AGREEMENT; ASSIGNMENT. This Agreement shall constitute the
binding agreement of the parties hereto, enforceable against each of
them in accordance with its terms. The Loan Documents shall inure to
the benefit of each of the parties hereto, and their respective
successors and permitted assigns; provided, however, that the Loan
Documents may not be assigned (whether by contract or by operation of
law) by Lender without the prior written consent of Borrower, which
consent may be given or withheld in the sole discretion of Borrower,
PROVIDED HOWEVER, that any such permitted assignee of any of the Loan
Documents, executes an assignment agreement or such other document as
Borrower may reasonably request containing all the representations,
warranties and covenants contained in this Agreement and certifying to
Borrower that such permitted assignee 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,.
5.4 WAIVER. No waiver of any provision of this Agreement shall be deemed to
be or shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the
waiver.
5.5 HEADINGS. The headings provided herein are for convenience only and
shall have no force or effect upon the construction or interpretation
of any provision hereof.
5.6 COUNTERPARTS; FACSIMILES. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimiles
containing original signatures shall be deemed for all purposes to be
originally-signed copies of the documents which are the subject of such
facsimiles.
5.7 FURTHER DOCUMENTS AND ACTS. Each party agrees to execute such other and
further documents and to perform such other and further acts as may be
reasonably necessary to carry out the purposes and provisions of this
Agreement.
5.8 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. In
the event either 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.
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5.9 SEVERABLE PROVISIONS. The provisions of this Agreement are severable,
and if any one or more provisions is determined to be illegal,
indefinite, invalid or otherwise unenforceable, in whole or in part, by
any court of competent jurisdiction, then the remaining provisions of
this Agreement and any partially unenforceable provisions to the extent
enforceable in the pertinent jurisdiction, shall continue in full force
and effect and shall be binding and enforceable on the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
RECLAMATION CONSULTING
AND APPLICATIONS, INC.: ATTEST:
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
President Secretary
CANVASBACK COMPANY LIMITED:
By: /s/ Xxxxxxxxx Xxxxxx
Name: Xxxxxxxxx Xxxxxx
Authorized Signatory
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SCHEDULE A
TO
SECURED REVOLVING LINE OF CREDIT AGREEMENT
DATED JULY 18, 2007
--------------------------------------------------------------------------------
Date Original Amount Loan Balance
26-Apr-07 $50,000 $ 50,000
30-Apr-06 $100,000 $150,000
29-May-07 $100,000 $250,000
07-June-07 $100,000 $350,000
29-June-07 $200,000 $550,000
13-July-07 $30,000 $580,000
16-July-07 $10,000 $590,000
Accrued Interest as Of July 18, 2007 $ 8,192.88
Balance of Interim
Loans as of July 18, 2007 $598,192.88
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), NOR UNDER THE LAWS OF ANY STATE, AND MAY NOT BE RESOLD,
ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
PROMISSORY NOTE
---------------
$3,000,000 July 18, 2007
FOR VALUE RECEIVED, RECLAMATION CONSULTING AND APPLICATIONS, INC., a
corporation organized and existing under the laws of the State of Colorado
(hereinafter referred to as the "BORROWER"), hereby promises to pay to the order
of CANVASBACK COMPANY LIMITED, an Anguilla company, (hereinafter referred to as
the "LENDER"), at his/her/its principal address located at Hannah Waiver House,
The Valley, Anguilla BWI, or such other place or places as the Lender may
hereafter direct from time to time, in lawful money of the United States and in
immediately available funds, the principal sum of Three Million Dollars
($3,000,000), or such other or greater amount as may be outstanding, plus all
accrued unpaid interest. This Promissory Note (hereinafter referred to as the
"NOTE") shall accrue simple interest at the rate of twelve percent (12%) per
annum, calculated on the basis of a 365-day year from the date of this Note. All
accrued unpaid interest outstanding under this Note as of July 18, 2008 shall be
paid by Borrower to Lender no later then July 31, 2008. The aggregate amount of
all principal and all accrued, unpaid interest shall be due and payable on July
17, 2009 (hereinafter referred to as the "MATURITY DATE"). This Note shall be
secured by Borrower but shall be non-recourse as to any shareholder, officer,
director, employee, agent or representative of Borrower.
1. REVOLVING LINE OF CREDIT AGREEMENT. This Note is issued pursuant to that
certain Revolving Line of Credit Agreement, dated as of July 18, 2007, by and
between Borrower and the Lender (the "CREDIT AGREEMENT"), and is subject to the
provisions thereof. If any dispute arises between the terms of the Credit
Agreement and the terms of this Note, the terms of the Credit Agreement shall
prevail. The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note, by a Schedule attached to this Note, or
by the Lender's internal records, including computer printouts.
2. PREPAYMENT. Borrower shall have the right to prepay the principal amount of
this Note, in whole or in part, at any time and from time to time, prior to the
Maturity Date, without penalty, during the term of this Note, provided that at
the time of such prepayment, Borrower shall also pay to Lender all unpaid
interest accrued on the principal amount of this Note through the date of
prepayment.
3. SECURITY AGREEMENT. This Note is secured by a security interest in all of
Borrower's assets, which security interest was granted by Borrower to the
original holder of the Note pursuant to the terms of a certain security
agreement of even date hereof (the "SECURITY AGREEMENT").
4. TRANSFERS. This Note may be transferred only in compliance with the Credit
Agreement and with applicable federal and state securities laws, and only upon
surrender of the original Note for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in form
satisfactory to Borrower. Thereupon, a new promissory note for like principal
amount and interest will be issued to, and registered in the name of, the
transferee. Interest and principal are payable only to the registered holder of
this Note. Lender agrees to provide a form W-9 to Borrower on request.
5. WAIVER. No waiver of any provision of this Note shall be deemed to be or
shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver. This Note shall inure
to the benefit of the Lender, his heirs, executors, successors and permitted
assigns, PROVIDED, however, that this Note shall not be assignable to any party
by contract or by operation of law without the prior written consent of
Borrower. The obligations of Borrower arising hereunder shall become the
obligations of any successor in interest or assignee thereof, whether by
contract or by operation of law.
6. GOVERNING LAW; VENUE. This Note 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 Note, 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.
BORROWER:
RECLAMATION CONSULTING ATTEST:
AND APPLICATIONS, INC.
By: ___________________________ By: ___________________________
Xxxxxx Xxxxxx Mr. Xxxx Xxxxxx
President Secretary
