EXHIBIT 10.7
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO RIVIERA TOOL COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED REVOLVING NOTE
FOR VALUE RECEIVED, each of RIVIERA TOOL COMPANY, a Michigan
corporation (the "COMPANY") promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "HOLDER") or
its registered assigns or successors in interest, the sum of Eight Million
($8,000,000), without duplication of any amounts owing by the Company to the
Holder under the Minimum Borrowing Notes (as defined in the Security Agreement
referred to below), or, if different, the aggregate principal amount of all
outstanding Loans (as defined in the Security Agreement referred to below),
together with any accrued and unpaid interest hereon, on May 17, 2008 (the
"MATURITY DATE") if not sooner paid.
Capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Security Agreement among the Company
and the Holder dated as of the date hereof (as amended, modified and
supplemented from time to time, the "SECURITY AGREEMENT").
The following terms shall apply to this Secured Revolving Note
(this "NOTE"):
ARTICLE I
CONTRACT RATE AND MINIMUM BORROWING NOTE
1.1 Contract Rate. Subject to Sections 3.2 and 4.10,
interest payable on the outstanding principal amount of this Note (the
"PRINCIPAL AMOUNT") shall accrue at a rate per annum equal to the "prime rate"
published in The Wall Street Journal from time to time (the "PRIME RATE"), plus
one and one quarter percent (1.25%) (the "CONTRACT RATE"). The Contract Rate
shall be increased or decreased as the case may be for each increase or decrease
in the Prime Rate in an amount equal to such increase or decrease in the Prime
Rate; each change to be effective as of the day of the change in the Prime Rate.
Subject to Section 1.2, the Contract Rate shall not be less than six and one
half percent (6.50%).
1.2 Contract Rate Adjustments and Payments. The Contract
Rate shall be calculated on the last business day of each calendar month
hereafter (other than for increases or decreases in the Prime Rate which shall
be calculated and become effective in accordance with the terms of Section 1.1)
until the Maturity Date (each a "DETERMINATION DATE") and shall be subject to
adjustment as set forth herein. If (i) the Company shall have registered the
shares of the Common Stock underlying the conversion of each Minimum Borrowing
Note and the Option
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on a registration statement declared effective by the Securities and Exchange
Commission (the "SEC"), and (ii) the market price (the "MARKET PRICE") of the
Common Stock as reported by Bloomberg, L.P. on the Principal Market for the five
(5) trading days immediately preceding a Determination Date exceeds the then
applicable Fixed Conversion Price by at least twenty-five percent (25%), the
Contract Rate for the succeeding calendar month shall automatically be reduced
by 200 basis points (200 b.p.) (2%) for each incremental twenty-five percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed Conversion Price. Notwithstanding the foregoing (and anything to the
contrary contained herein), in no event shall the Contract Rate be less than
zero percent (0%). Interest shall be (i) calculated on the basis of a 360 day
year, and (ii) payable monthly, in arrears, commencing on June 1, 2005 and on
the first business day of each consecutive calendar month thereafter until the
Maturity Date (and on the Maturity Date), whether by acceleration or otherwise.
For the avoidance of doubt, all determinations with respect to market price and
trading volume of the Common Stock shall be made based upon information reported
by Bloomberg, L.P. on the relevant date(s).
1.3 Allocation of Principal to Minimum Borrowing Note. In
the event that the amount due and payable hereunder should equal or exceed
$2,000,000, to the extent that the outstanding balance on any Minimum Borrowing
Note shall be less than or equal $1,000,000 (the difference of $2,000,000 less
the actual balance of such Minimum Borrowing Note, the "AVAILABLE MINIMUM
BORROWING"), such portion of the balance hereof as shall equal the Available
Minimum Borrowing shall be deemed to be simultaneously extinguished on this Note
and transferred to, and evidenced by, such Minimum Borrowing Note.
ARTICLE II
CONVERSION RIGHTS AND FIXED CONVERSION PRICE
2.1 Optional Conversion. Subject to the terms of this
Article II, the Holder shall have the right, but not the obligation, at any time
until the Maturity Date, or during an Event of Default (as defined in Article
III), and, subject to the limitations set forth in Section 2.2 hereof, to
convert all or any portion of the outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable restricted
shares of the Common Stock at the Fixed Conversion Price (defined below). For
purposes hereof, subject to Section 3.6 hereof, the initial "FIXED CONVERSION
PRICE" means $1.66. The shares of Common Stock to be issued upon such conversion
are herein referred to as the "CONVERSION SHARES."
2.2 Conversion Limitation. Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to exercise
pursuant to the terms of this Note an amount that would be convertible into that
number of shares of Common Stock which would exceed the difference between the
number of shares of Common Stock beneficially owned by such Holder or issuable
upon exercise of any option or warrant held by such Holder and 4.99% of the
outstanding shares of Common Stock of the Company. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The limitation described in this Section 2.2 shall automatically
become null and void without any notice to the Company upon the occurrence and
during the continuance beyond any applicable grace period of an Event of
Default, or upon 65 days prior notice to the Company, except that at no time
shall the beneficial ownership exceed 19.99% of the Common Stock.
Notwithstanding anything contained herein to
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the contrary, the number of shares of Common Stock issuable by the Company and
acquirable by the Holder at a price below $1.10 per share pursuant to the terms
of this Note, the Security Agreement, any Ancillary Agreement, the Secured
Convertible Term Note made by the Company to the Holder dated the date hereof
(as amended, modified and/or supplemented from time to time, the "TERM NOTE"),
the Purchase Agreement (as defined in the Term Note) or any Related Agreement
(as defined in the Term Note) shall not exceed an aggregate of 754,492 shares of
the Company's Common Stock (subject to appropriate adjustment for stock splits,
stock dividends, or other similar recapitalizations affecting the Common Stock)
(the "MAXIMUM COMMON STOCK ISSUANCE"), unless the issuance of shares hereunder
in excess of the Maximum Common Stock Issuance shall first be approved by the
Company's shareholders. If at any point in time and from time to time the number
of shares of Common Stock issued pursuant to the terms of this Note, the
Security Agreement, any Ancillary Agreement, the Term Note, the Purchase
Agreement or any Related Agreement together with the number of shares of Common
Stock that would then be issuable by the Company to the Holder in the event of a
conversion or exercise pursuant to the terms of this Note, the Security
Agreement, any Ancillary Agreement, the Term Note, the Purchase Agreement or any
Related Agreement would exceed the Maximum Common Stock Issuance but for this
paragraph, the Company shall promptly call a shareholders meeting to solicit
shareholder approval for the issuance of the shares of Common Stock hereunder in
excess of the Maximum Common Stock Issuance. Shares of Common Stock which may
not be issued due to the limitations set forth in this Section 2.2 shall not be
deemed to be Conversion Shares under this Note unless and until their issuance
is otherwise permitted as contemplated herein.
2.3 Mechanics of Xxxxxx's Conversion. In the event that the
Holder elects to convert this Note into Common Stock, the Holder shall give
notice of such election by delivering an executed and completed notice of
conversion ("NOTICE OF CONVERSION") to the Company and such Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Company within two (2) Business Days after the Conversion Date. Each date on
which a Notice of Conversion is delivered or telecopied to the Company in
accordance with the provisions hereof shall be deemed a Conversion Date (the
"CONVERSION DATE"). A form of Notice of Conversion is annexed hereto as Exhibit
A. Pursuant to the terms of the Notice of Conversion, the Company will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) Business Day of the date of the delivery to the Company of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
Business Days after receipt by the Company of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Company written instructions to the
contrary.
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2.4 Late Payments. The Company understands that a delay in
the delivery of the Conversion Shares in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company shall pay late payments to
the Holder for any late issuance of Conversion Shares in the form required
pursuant to this Article II upon conversion of this Note, in the amount equal to
$500 per Business Day after the Delivery Date. The Company shall make any
payments incurred under this Section in immediately available funds upon demand.
Notwithstanding the foregoing, the Company will not owe the Holder any late
payments if the delay in the delivery of the Note Shares beyond the Delivery
Date is solely out of the control of the Company and the Company is actively
trying to cure the cause of the delay. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand and, in
the case of actual damages, accompanied by reasonable documentation of the
amount of such damages. Such documentation shall show the number of shares of
Common Stock the Holder is forced to purchase (in an open market transaction)
which the Holder anticipated receiving upon such conversion, and shall be
calculated as the amount by which (A) the Holder's total purchase price
(including customary brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (B) the aggregate principal and/or interest amount of
the Note, for which such Conversion Notice was not timely honored.
2.5 Mechanics of Xxxxxx's Conversion. In the event that the
Holder converts amounts outstanding under this Note into Common Stock, the
Holder shall give notice of such election by delivering (by facsimile or email)
an executed and completed notice of conversion in substantially the form of
Exhibit A hereto (appropriately completed) ("NOTICE OF CONVERSION") to the
Company and such Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and fees that are being
converted. The Company shall have two and one half (2.5) hours from the time
that such Notice of Conversion is delivered to the Company (which Notice of
Conversion shall be delivered via facsimile or email by the Holder to each of
Xxxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxx XxXxxx) to provide the Holder with written
notice (delivered to Holder via facsimile or email) of the Company's decision to
purchase the number of shares of Common Stock otherwise deliverable to the
Holder pursuant to the Notice of Conversion (the "DESIGNATED Shares") for a
purchase price determined by multiplying the Designated Shares by the intraday
high price of the Common Stock on the day the Notice of Conversion was submitted
to the Company (the "DISPOSITION PRICE"). The Disposition Price shall be paid by
the Company to the Holder by wire transfer of immediately available funds within
two (2)Business Days of the date of the Notice of Conversion. On each Conversion
Date (as hereinafter defined) and in accordance with its Notice of Conversion,
the Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records and shall provide written notice
thereof to the Company within two (2) Business Days after the Conversion Date.
Each date on which a Notice of Conversion is delivered or telecopied to the
Company in accordance with the provisions hereof shall be deemed a Conversion
Date (the "CONVERSION DATE"). Pursuant to the terms of the Notice of Conversion,
the Company shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
Business Days after receipt by the Company of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable
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upon such conversion shall be deemed to have been issued upon the date of
receipt by the Company of the Notice of Conversion. The Holder shall be treated
for all purposes as the record holder of the Conversion Shares, unless the
Holder provides the Company written instructions to the contrary.
2.6 Adjustment Provisions. The Fixed Conversion Price and
number and kind of shares or other securities to be issued upon conversion
determined pursuant to Section 2.1 shall be subject to adjustment from time to
time upon the happening of certain events while this conversion right remains
outstanding, as follows:
(a) Reclassification. If the Company at any time
shall, by reclassification or otherwise, change the Common Stock into the same
or a different number of securities of any class or classes, this Note, as to
the unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock (i) immediately prior to, or (ii) immediately
after, such reclassification or other change at the sole election of the Holder.
(b) Stock Splits, Combinations and Dividends. If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common Stock
or any preferred stock issued by the Company in shares of Common Stock, the
Fixed Conversion Price shall be proportionately reduced in case of subdivision
of shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total number of
shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event.
(c) Share Issuances. Subject to the provisions of
this Section 2.6, if the Company shall at any time prior to the conversion or
repayment in full of the Principal Amount issue any shares of Common Stock or
securities convertible into Common Stock to a Person other than the Holder
(except (i) pursuant to Sections 2.6(a) or (b) above; (ii) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date hereof as
disclosed to the Holder in writing; or (iii) pursuant to options that may be
issued under any employee incentive stock option and/or any qualified stock
option plan adopted by the Company) for a consideration per share (the "OFFER
PRICE") less than the Fixed Conversion Price in effect at the time of such
issuance, then the Fixed Conversion Price shall be immediately reset pursuant to
the formula set forth below. For purposes hereof, the issuance of any security
of the Company convertible into or exercisable or exchangeable for Common Stock
shall result in an adjustment to the Fixed Conversion Price upon the issuance of
such securities pursuant to the formula below.
If the Company issues any additional shares of Common Stock
for a consideration per share less than the then-applicable Fixed Conversion
Price pursuant to this Section 3.6 then, and thereafter successively upon each
such issue, the Fixed Conversion Price shall be adjusted by multiplying the then
applicable Fixed Conversion Price by the following fraction:
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-----------------------------
A + B
` -----------------------------
(A + B) + [((C - D) x B) / C]
-----------------------------
A = Total amount of shares convertible pursuant to the
Notes
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offer Price
(d) Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to Section 2.6(c) above,
the following shall apply:
(i) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Company for
any underwriting of the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares
of Common Stock for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Company (irrespective of the accounting treatment
thereof); and
(iii) upon any such exercise, the aggregate
consideration received for such securities shall be deemed to be the
consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as
provided in subsections (i) and (ii) of this Section 2.6(d)).
2.7 Reservation of Shares. During the period the conversion
right exists, the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Conversion
Shares upon the full conversion of this Note. The Company represents that upon
issuance, the Conversion Shares will be duly and validly issued, fully paid and
non-assessable. The Company agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for the Conversion Shares upon the conversion
of this Note.
ARTICLE III
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
3.1 Events of Default. The occurrence of an Event of Default
under the Security Agreement shall constitute an event of default ("EVENT OF
DEFAULT") hereunder.
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3.2 Default Interest. Following the occurrence and during
the continuance of an Event of Default, the Company shall pay additional
interest on the outstanding principal balance of this Note in an amount equal to
one and one half percent (1.5%) per month, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest at such additional
interest rate from the date of such Event of Default until the date such Event
of Default is cured or waived.
3.3 Default Payment. Following the occurrence and during the
continuance of an Event of Default, the Holder, at its option, may elect, in
addition to all rights and remedies of the Holder under the Security Agreement
and the Ancillary Agreements and all obligations of the Company under the
Security Agreement and the Ancillary Agreements, to require the Company to make
a Default Payment ("DEFAULT Payment"). The Default Payment shall be one hundred
twenty percent (120%) of the outstanding principal amount of the Note, plus
accrued but unpaid interest, all other fees then remaining unpaid, and all other
amounts payable hereunder. The Default Payment shall be applied first to any
fees due and payable to the Holder pursuant to the Notes and/or the Ancillary
Agreements, then to accrued and unpaid interest due on the Notes and then to the
outstanding principal balance of the Notes. The Default Payment shall be due and
payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 3.3.
ARTICLE IV
MISCELLANEOUS
4.1 Conversion Privileges. The conversion privileges set
forth in Article II shall remain in full force and effect immediately from the
date hereof until the date this Note is indefeasibly paid in full and
irrevocably terminated.
4.2 Cumulative Remedies. The remedies under this Note shall
be cumulative.
4.3 Failure or Indulgence Not Waiver. No failure or delay on
the part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
4.4 Notices. Any notice herein required or permitted to be
given shall be in writing and provided in accordance with the terms of the
Security Agreement.
4.5 Amendment Provision. The term "Note" and all references
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
4.6 Assignability. This Note shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of the
Holder and its successors and assigns, and may be assigned by the Holder in
accordance with the requirements of the Security Agreement. No Company may
assign any of its obligations under this Note without the prior
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written consent of the Holder, any such purported assignment without such
consent being null and void.
4.7 Cost of Collection. In case of any Event of Default
under this Note, the Company shall pay the Holder the Holder's reasonable costs
of collection, including reasonable attorneys' fees.
4.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS; PROVIDED, THAT THE COMPANY
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED
BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS NOTE, THE SECURITY AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
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4.9 Severability. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Note.
4.10 Maximum Payments. Nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum rate permitted by such law, any payments in excess of such maximum rate
shall be credited against amounts owed by the Company to the Holder and thus
refunded to the Company.
4.11 Security Interest and Guarantee. The Holder has been
granted a security interest (i) in certain assets of the Company as more fully
described in the Security Agreement, and (ii) pursuant to the Master Security
Agreement and the Stock Pledge Agreement, each dated as of the date hereof. The
obligations of the Company under this Note shall be guaranteed by each
Subsidiary of the Company pursuant to a Subsidiary Guaranty.
4.12 Construction. Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.
[Balance of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Secured
Revolving Note to be signed in its name effective as of this 17th day of May
2005.
RIVIERA TOOL COMPANY
By: /s/
------------------------------------
Name:
Title:
WITNESS:
-----------------------------------
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EXHIBIT A
---------
NOTICE OF CONVERSION
--------------------
(To be executed by the Holder in order to convert the Secured
Revolving Note)
The undersigned hereby elects to convert $_________ of the
principal and $_________ of the interest due on the Secured Revolving Note dated
as of May 17, 2005 (the "NOTE") issued by Riviera Tool Company (the "COMPANY")
into shares of Common Stock of the Company in accordance with the terms and
conditions set forth in the Note, as of the date written below.
Date of Conversion: _____________________________________________________
Conversion Price: _____________________________________________________
Shares To Be Delivered: _____________________________________________________
Signature: _____________________________________________________
Print Name: _____________________________________________________
Address: _____________________________________________________
Holder DWAC instructions _____________________________________________________
