SECURITIES REPURCHASE AGREEMENT
THIS
SECURITIES REPURCHASE AGREEMENT (“Agreement”),
dated
as of February 1, 2007 (“Effective
Date”),
is by
and between Reclamation Consulting and Applications, Inc. ("Company"),
and
AJW Partners, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and New
Millennium Partners II, LLC (collectively, the “
Sellers”).
The
Company and the Sellers are sometimes referred to herein individually as a
“Party”
and
collectively as the “Parties”.
W
I T N E S S E T H
WHEREAS,
on June 23, 2005, the Sellers purchased an aggregate of (i) $2,000,000 in
secured convertible notes (the “Notes”)
and
(ii) warrants to purchase 8,000,000 shares of the Company’s common stock (the
“Warrants”),
pursuant to agreements and other documentation listed in Exhibit
A
attached
hereto, and including all amendments thereto (the “Initial
Purchase Documents”).
WHEREAS,
the Sellers desire to sell to the Company and the Company desires to repurchase
from the Sellers, the Note and Warrants (collectively, the “Securities”)
upon
the terms and conditions set forth herein.
NOW
THEREFORE, in consideration of the foregoing premises, and the promises and
respective mutual agreements herein contained, and for 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:
ARTICLE
1
SALE
AND PURCHASE OF THE SECURITIES
1.1
Sale
of the Securities.
The
Parties hereby agree that the Company shall repurchase the Securities as set
forth herein, and the Sellers shall sell them to the Company, subject to and
in
accordance with the terms and conditions contained in this Agreement. Upon
payment of the Note Purchase Prices (as defined herein) by the Company to the
Sellers pursuant to Section 1.3 (the "Note Closing"),
subject to the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, the Sellers shall
sell to the Company, and the Company shall purchase from the Sellers, the Notes.
Upon payment of the Warrant Purchase Prices by the Company to the Sellers
pursuant to Section 1.3 (the "Warrant
Closing"),
subject to the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, the Sellers shall
sell to the Company, and the Company shall purchase from the Sellers, the
Warrants.
1.2
Instruments
of Conveyance and Transfer.
As soon
as practicable after the Note Closing, the Sellers shall deliver the Notes
to
the Company. As soon as practicable after the Warrant Closing, the Sellers
shall
deliver the Warrants to the Company.
1.3
Consideration
and Payment for the Notes and Warrants.
In
consideration for the Notes, the Company shall (i) pay each Seller an amount
equal to the outstanding balance of principal and, accrued interest as of the
Note Closing on such Seller’s respective Note plus a prepayment penalty equal to
thirty percent (30%) of such outstanding balance which the Parties agree shall,
as of March 30, 2007, be in the amounts set forth in Exhibit
B,
attached hereto (the “Note
Cash Prices”),
and
(ii) issue to the Sellers three million, two hundred fifty thousand (3,250,000)
shares of the Company’s restricted common stock as set forth in Exhibit
D,
attached hereto (the “Company
Shares”)
(collectively, the Note Cash Prices and the Company Shares shall constitute
the
“Note
Purchase Prices”).
In
consideration for the Warrants, the Company shall pay to each Seller the
respective amount set forth in Exhibit C attached hereto (the “Warrant
Purchase Prices”).
On or
before March 30, 2007, the Company shall deliver Note Purchase Prices to the
Sellers by payment of the Note Cash Prices and by delivering stock certificates
to the Sellers evidencing their respective ownership of the Company Shares.
On
or before April 30, 2007, the Company shall deliver the Warrant Purchase Prices
to Sellers. In the event the Company fails to deliver the Note Purchase Prices
to the Sellers by March 30, 2007, this Agreement shall be deemed null and void,
with no binding obligation on the part of either Party with respect to the
sale
of the Notes or the Warrants. In the event the Company fails to deliver the
Warrant Purchase Prices to the Sellers by April 30, 2007, the provisions of
this
Agreement relating to the sale of the Warrants shall be deemed null and void,
with no binding obligation on the part of either Party with respect to the
sale
of the Warrants.
1.4
Initial
Purchase Documents.
As of
the Effective Date, provided that the Company makes the payments detailed in
Exhibit
E
attached
hereto (the “Monthly
Note Payments”)
and
does not otherwise breach any material terms of this Agreement, (i) the Sellers
shall have no further rights under the Initial Purchase Documents, (ii) the
Company shall have no further obligations under the Initial Purchase Documents,
and (iii) Xxxxxx Xxxxxx shall have no further obligations or responsibilities
under the Guaranty and Pledge Agreement dated June 23, 2005 and any amendments
thereto. In the event, the Company fails to make the Monthly Note Payments
or
breaches any material terms of this Agreement (including any failure to pay
the
Note Purchase Prices by March 30, 2007 as required hereby, or failure to pay
the
Warrant Purchase Prices by April 30, 2007), the Initial Purchase Documents
shall
continue in full force and effect.
1.5
Release
of Security Instruments.
Within
five (5) business days following the Note Closing, the Sellers shall execute
and
deliver to the Company any and all documents requested by the Company to
evidence the release of security interests created by the Initial Purchase
Documents in favor of the Sellers, or any of them, and to terminate all security
instruments filed by them against any assets of the Company and Xxxxxx Xxxxxx,
individually, pursuant to the Initial Purchase Documents.
-2-
ARTICLE
2
REPRESENTATIONS
AND COVENANTS OF SELLERS AND COMPANY
2.1
The
Sellers hereby represent and warrant that:
(a)
Immediately
upon Note Closing, and subject to the payment of the Note Purchase Prices to
the
Sellers, the Sellers shall deliver to the Company the Notes. Upon
their transfer to the Company at the Note Closing, the Notes shall be free
and
clear of all liens, charges, security interests, pledges, encumbrances, charges,
restrictions, liabilities, demands and claims, of any kind and nature
whatsoever, whether direct or indirect or contingent (collectively,
“Liens”).
Immediately upon Warrant Closing, and subject to the payment of the Warrant
Purchase Prices to the Sellers, the Sellers shall deliver to the Company the
certificates evidencing the Warrants. Upon
their transfer to the Company at the Warrant Closing, the Warrants shall be
free
and clear of all Liens.
(b)
Each
Seller has adequate means of providing for its current needs and contingencies,
has no need for liquidity in the investment, and is able to bear the economic
risk of an investment in the Company Shares offered by the Company of the size
contemplated. Each Seller represents that it is able to bear the economic risk
of receiving the Company Shares pursuant to this Agreement. Each Seller has
had
a full opportunity to inspect the books and records of the Company and to make
any and all inquiries of the Company officers and directors regarding the
Company and its business as such Seller has deemed appropriate.
(c)
Each
Seller is an “Accredited
Investor”
as
defined in Regulation D of the Securities Act of 1933 (the “Act”).
(d)
Each
Seller is acquiring the Company Shares solely for such Seller’s own account as a
principal, for investment purposes only and not with a view to the resale or
distribution thereof, in whole or in part, and no other person or entity has
a
direct or indirect beneficial interest in such Company Shares.
(e)
The
Sellers will not sell or otherwise transfer the Company Shares without
registration under the Act or an exemption therefrom and fully understand and
agrees that the Sellers must bear the economic risk of investing in the Company
Shares for an indefinite period of time because, among other reasons, the
Company Shares have not been registered under the Act or under the securities
laws of any state and, therefore, cannot be resold, pledged, assigned or
otherwise disposed of unless they are subsequently registered under the Act
and
under the applicable securities laws of such states or unless an exemption
from
such registration is available.
(f)
Each
Seller has had an opportunity (i) to discuss the Company's business, management
and financial affairs with management of the Company and (ii) to review the
Company's operations and facilities.
(g)
From
the
date hereof through April 30, 2007, no Seller shall assign, transfer or
otherwise convey to any other person, whether by contract or by operation of
law, any of such Seller’s right, title or interest in and to this Agreement and
any Initial Purchase Document.
-3-
2.2
The
Company represents and warrants to the Sellers as follows:
(a)
The
Company is acquiring the Securities solely for the Company’s own account as
principal, and not with a view to the resale or distribution thereof, in whole
or in part, and no other person or entity has a direct or indirect beneficial
interest in such Securities.
(b)
At
and as
of the Note Closing, the purchase of the Notes shall have been duly authorized
by the appropriate corporate action of the Company. At and as of the Warrant
Closing, the purchase of the Warrants shall have been duly authorized by the
appropriate corporate action of the Company.
(c)
At
the
Note Closing, the Company shall deliver to the Sellers certificates representing
the Company Shares subject to no Liens and no restriction on transfer other
than
as set forth in the legend on the certificate, which legend shall provide
substantially as follows:
THE
SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL THAT
AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
(d)
The
Company represents that the Company Shares will initially be “restricted
securities” (as such term is defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (“Rule
144"),
that
the Company Shares will include the foregoing restrictive legend, and, except
as
otherwise set forth in this Agreement, that the Company Shares cannot be sold
unless registered with the United States Securities and Exchange Commission
(“SEC”)
and
qualified by appropriate state securities regulators, or unless Sellers comply
with an exemption from such registration and qualification (including, without
limitation, compliance with Rule 144).
(e)
The
Company is obligated to register the Company Shares in any qualifying
registration statement filed by the Company with the Securities and Exchange
Commission after the Note Closing (excluding any registration statements filed
on Forms S-4 or S-8 or post-effective amendments to existing registration
statements), so that holders of the Company Shares shall be entitled to sell
the
same simultaneously with and upon the terms and conditions as the securities
sold for the account of the Company or other shareholders are being sold
pursuant to any such registration statement, subject to such reasonable lockup
provisions as may be proposed by the underwriter of said registration statement.
(f)
The
Company makes no other representations or warranties with respect to the Company
Shares or the Company.
-4-
ARTICLE
3
MISCELLANEOUS
3.1
Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding of the parties
hereto with respect to the transactions contemplated hereby, and supersedes
all
prior agreements, arrangements and understandings related to the subject matter
hereof. No agreement, understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto which is not embodied in this Agreement or the written statements,
certificates, or other documents delivered pursuant hereto or in connection
with
the transactions contemplated hereby, and no party hereto shall be bound by
or
liable for any alleged understanding, promise, inducement, statement,
representation, warranty, covenant or condition not so set forth.
3.2
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:
|
If
to the Sellers:
|
AJW
Partners, LLC,
|
|
|
AJW
Qualified Partners, LLC,
|
||
|
AJW
Offshore, Ltd.
|
||
|
New
Millennium Partners II, LLC
|
||
|
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
|
||
|
Xxxxxx,
Xxx Xxxx 00000
|
||
|
Fax:
(000) 000-0000
|
||
|
Attn:
Xxxxx X. Xxxxxxxx, Manager
|
||
|
If
to the Company:
|
Reclamation
Consulting and Applications, Inc.
|
|
|
000
Xxxxx Xxxxxxxx, Xxxxx X
|
||
|
Xxx
Xxxxxxxx, XX 00000
|
||
|
Fax:
(000) 000-0000
|
||
|
Attn:
Xxxxxx Xxxxxx, CEO
|
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 days after deposit thereof
in
the United States mail.
3.3
Waiver
and Amendment.
Any
term, provision, covenant, representation, warranty or condition of this
Agreement may be waived, but only by a written instrument signed by the party
entitled to the benefits thereof. The failure or delay of any party at any
time
or times to require performance of any provision hereof or to exercise its
rights with respect to any provision hereof shall in no manner operate as a
waiver of or affect such party's right at a later time to enforce the same.
No
waiver by any party of any condition, or of the breach of any term, provision,
covenant, representation or warranty contained in this Agreement, in any one
or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach or waiver of any other condition or
of
the breach of any other term, provision, covenant, representation or warranty.
No modification or amendment of this Agreement shall be valid and binding unless
it be in writing and signed by all parties hereto.
-5-
3.4
Choice
of Law.
This
Agreement and the rights of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of New York including all
matters of construction, validity, performance, and enforcement and without
giving effect to the principles of conflict of laws.
3.5
Counterparts;
Facsimiles.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which shall together constitute one and the
same
instrument. Any original signature of one party delivered by facsimile to any
other party shall be deemed an original signature for all purposes.
3.6
Attorneys'
Fees.
Except
as otherwise provided herein, if a dispute should arise between the parties
including, but not limited to arbitration, the prevailing party shall be
reimbursed by the non-prevailing party for all reasonable expenses incurred
in
resolving such dispute, including reasonable attorneys' fees exclusive of such
amount of attorneys' fees as shall be a premium for result or for risk of loss
under a contingency fee arrangement.
3.7
Taxes.
Any
income taxes required to be paid in connection with the payments due hereunder,
shall be borne by the party required to make such payment. Any withholding
taxes
in the nature of a tax on income shall be deducted from payments due, and the
party required to withhold such tax shall furnish to the party receiving such
payment all documentation necessary to prove the proper amount to withhold
of
such taxes and to prove payment to the tax authority of such required
withholding.
SIGNATURES
ON NEXT PAGE
-6-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
date
first written hereinabove.
RECLAMATION
CONSULTING AND APPLICATIONS, INC.
By: /S/
XXXXXX
XXXXXX
Xxxxxx
Xxxxxx
President
THE
SELLERS:
AJW
PARTNERS, LLC
By:
SMS
Group, LLC
Manager
By: /S/
XXXXX X.
XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW
OFFSHORE, LTD.
By: First
Street Manager II, LLC
Manager
By: /S/
XXXXX X.
XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
AJW
QUALIFIED PARTNERS, LLC
By: AJW
Manager, LLC
Manager
By:
/S/
XXXXX X.
XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
-7-
NEW
MILLENNIUM CAPITAL PARTNERS II, LLC
By:
First
Street Manager II, LLC
Manager
By:
/S/
XXXXX X.
XXXXXXXX
Xxxxx X. Xxxxxxxx
Manager
-8-
EXHIBIT
A
INITIAL
PURCHASE DOCUMENTS
|
1.
|
Securities
Purchase Agreement, dated June 23, 2005, by and among Reclamation
Consulting and Applications, Inc. and AJW Offshore, Ltd., AJW Qualified
Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
II,
LLC.
|
|
2.
|
Callable
Secured Convertible Note issued to AJW Offshore, Ltd., dated June
23,
2005.
|
|
3.
|
Callable
Secured Convertible Note issued to AJW Qualified Partners, LLC, dated
June
23, 2005.
|
|
4.
|
Callable
Secured Convertible Note issued to AJW Partners, LLC, dated June
23,
2005.
|
|
5.
|
Callable
Secured Convertible Note issued to New Millennium Capital Partners
II,
LLC, dated June 23, 2005.
|
|
6.
|
Stock
Purchase Warrant issued to AJW Offshore, Ltd., dated June 23,
2005.
|
|
7.
|
Stock
Purchase Warrant issued to AJW Qualified Partners, LLC, dated June
23,
2005.
|
| 8. | Stock Purchase Warrant issued to AJW Partners, LLC, dated June 23, 2005. |
|
9.
|
Stock
Purchase Warrant issued to New Millennium Capital Partners II, LLC,
dated
June 23, 2005.
|
|
10.
|
Registration
Rights Agreement, dated as of June 23, 2005, by and among Reclamation
Consulting and Applications, Inc., AJW Offshore, Ltd., AJW Qualified
Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
II,
LLC.
|
|
11.
|
Security
Agreement, dated as of June 23, 2005, by and among Reclamation Consulting
and Applications, Inc., AJW Offshore, Ltd., AJW Qualified Partners,
LLC,
AJW Partners, LLC and New Millennium Capital Partners II,
LLC.
|
|
12.
|
Intellectual
Property Security Agreement, dated June 23, 2005, by and among Reclamation
Consulting and Applications, Inc., AJW Offshore, Ltd., AJW Qualified
Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
II,
LLC.
|
|
13.
|
Guaranty
and Pledge Agreement, dated June 23, 2005, by and among Reclamation
Consulting and Applications, Inc., Xxxxxx Xxxxxx, AJW Offshore, Ltd.,
AJW
Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital
Partners II, LLC.
|
-9-
EXHIBIT
B
NOTE
CASH PRICES AS OF MARCH 30, 2007
|
|
Outstanding
Balance of
Accrued
Interest and
Principal
on Notes
calculated
as of
March
30, 2007
|
Prepayment
Penalties
calculated
as of
March
30, 2007
|
Note
Purchase
Prices
as
of
March
30, 2007
|
|
|
AJW
Partners LLC
|
$115,998
|
$34,799
|
$150,797
|
|
|
AJW
Offshore, Ltd.
|
$403,576
|
$121,073
|
$524,649
|
|
|
AJW
Qualified Partners, LLC
|
$272,273
|
$81,682
|
$353,955
|
|
|
New
Millennium Capital Partners II, LLC
|
$13,694
|
$4,108
|
$17,802
|
|
|
Total
|
$805,541
|
$241,662
|
$1,047,203
|
-10-
EXHIBIT
C
WARRANT
PRICES
|
|
No.
of Warrants
|
|
Price
|
|
AJW
Partners LLC
|
1,152,000
|
$37,201
|
|
|
AJW
Offshore, Ltd.
|
4,008,000
|
$129,427
|
|
|
AJW
Qualified Partners, LLC
|
2,704,001
|
$87,318
|
|
|
New
Millennium Capital Partners II, LLC
|
135,999
|
$4,392
|
|
|
Total
|
8,000,000
|
$258,338
|
-11-
EXHIBIT
D
COMPANY
SHARES
The
Company shall issue the Company Shares to the Sellers as follows:
|
|
No.
of Shares
|
|
AJW
Partners LLC
|
324,000
|
|
AJW
Offshore, Ltd.
|
1,127,250
|
|
AJW
Qualified Partners, LLC
|
760,500
|
|
New
Millennium Capital Partners II, LLC
|
38,250
|
|
Total
|
3,250,000
|
-12-
EXHIBIT
E
MONTHLY
NOTE PAYMENTS
Following
the execution of this Agreement, the Company shall pay each Seller the
respective amounts set forth in the table below, provided that the obligation
to
make such payments shall terminate on delivery of the Purchase Price to Sellers
pursuant to Section 1.4 of the Agreement:
|
Due
February 1, 2007
|
Principal
|
Interest
|
Penalty
|
Total
per
Seller
|
|
AJW
Partners
|
$8,000
|
$1,121.08
|
$146.66
|
$9,267.74
|
|
AJW
Offshore
|
$27,833.33
|
$3,900.42
|
$510.27
|
$32,244.02
|
|
AJW
Qualified
|
$18,777.78
|
$2,631.42
|
$344.25
|
$21,753.45
|
|
New
Millennium
|
$944.44
|
$132.35
|
$17.31
|
$1,094.10
|
|
Total
|
$55,555.55
|
$7,785.27
|
$1,018.49
|
$64,359.31
|
|
Due
February 28, 2007
|
Principal
|
Interest
|
Penalty
|
Total
per
Seller
|
|
AJW
Partners
|
$8,000
|
$951.22
|
$137.78
|
$9,089
|
|
AJW
Offshore
|
$27,833.33
|
$3,309.44
|
$479.34
|
$3,162.11
|
|
AJW
Qualified
|
$18,777.78
|
$2,232.72
|
$323.39
|
$21,333.89
|
|
New
Millennium
|
$944.44
|
$112.30
|
$16.27
|
$1,073.01
|
|
Total
|
$55,555.55
|
$6,605.68
|
$956.78
|
$63,118.01
|
-13-
