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.

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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) Gordon Davies 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 Gordon Davies, individually, pursuant to the Initial
Purchase Documents.
 
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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.

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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.

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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
   
1044 Northern Boulevard, Suite 302
   
Roslyn, New York 11576
   
Fax: (516) 739-7115
   
Attn: Corey S. Ribotsky, Manager
       
If to the Company:
Reclamation Consulting and Applications, Inc.
   
940 Calle Amanecer, Suite E
   
San Clemente, CA 92673
   
Fax: (949) 542-7444
   
Attn: Gordon Davies, 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.

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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
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
date first written hereinabove.

THE COMPANY:

RECLAMATION CONSULTING AND APPLICATIONS, INC.

By: /S/ GORDON DAVIES                                                    
       Gordon Davies
       President

THE SELLERS:

AJW PARTNERS, LLC

By: SMS Group, LLC
       Manager

  
By:  /S/ COREY S. RIBOTSKY                            
        Corey S. Ribotsky
        Manager

AJW OFFSHORE, LTD.
 
By: First Street Manager II, LLC
Manager
  

By:  /S/ COREY S. RIBOTSKY                            
        Corey S. Ribotsky
        Manager
 
 
AJW QUALIFIED PARTNERS, LLC

By: AJW Manager, LLC
Manager

  
By:  /S/ COREY S. RIBOTSKY                            
        Corey S. Ribotsky
        Manager

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NEW MILLENNIUM CAPITAL PARTNERS II, LLC

By:  First Street Manager II, LLC
        Manager
  
By:  /S/ COREY S. RIBOTSKY                           
        Corey S. Ribotsky
        Manager
 
 
 
 

 
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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., Gordon Davies, AJW Offshore, Ltd., AJW
Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
II, LLC.

 
 

 
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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

 
 

 
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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

 

 
 

 
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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

 

 
 
 
 
 
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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

 

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