DEMAND NOTE
Exhibit
4.1
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U.S.
$300,000.00
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December
1, 2008
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FOR
VALUE
RECEIVED, the undersigned, RUBBER RESEARCH ELASTOMERICS, INC., a Minnesota
corporation, (the “Borrower”) promises to pay to the order of RIVIERA
INVESTMENTS, INC., a
California corporation (the “Lender”), the principal sum of THREE
HUNDRED THOUSAND AND NO/100THS DOLLARS
($300,000.00) ON DEMAND, or if no earlier demand has been made, on November
15,
2009 (the earlier of such dates being the “Termination Date”).
The
Borrower promises to pay interest (computed on the basis of the number of days
elapsed in a year of 360 days) on the unpaid principal amount hereof from the
date hereof until such principal amount is paid in full at a fluctuating annual
rate equal to 10% per annum above the Prime Rate of Interest; provided,
however,
that
notwithstanding anything to the contrary contained herein, upon the occurrence
and during the continuance of any Default or Event of Default, the rate of
interest hereunder shall be 12% per annum above the Prime Rate of Interest.
The
term "Prime Rate of Interest" shall mean the prime rate of interest published
from time to time in the Wall Street Journal as the prime rate; provided,
however that: (a) if a range of rates is published, then the Prime Rate of
Interest means the highest rate within the range; and (b) if the Wall Street
Journal does not publish the Prime Rate of Interest, then the term "Prime Rate
of Interest" shall mean the rate of interest publicly announced by U.S. Bank,
National Association, Minneapolis Office, as its Prime Rate, Base Rate,
Reference Rate or the equivalent of such rate, whether or not such bank makes
loans to customers at, above, or below said rate. Interest shall be due and
payable on the first day of each month (each such date being an “Interest
Payment Date”), commencing December 1, 2008, and at the maturity hereof.
Interest accruing after the maturity hereof shall be due and payable upon
demand. Each change in the fluctuating interest rate shall take effect
simultaneously with the corresponding change in the Prime Rate of
Interest.
At
the
written request of the Borrower, accrued interest hereunder shall be added
to
the principal balance of the Loan on each Interest Payment Date rather than
being payable in cash (interest that is added to the principal balance shall
be
referred to herein as “PIK Interest”). Unless prohibited under applicable law,
PIK Interest shall itself shall bear interest from and after the related
Interest Payment Date at the interest rate set forth in the immediately
preceding paragraph and shall be payable at maturity. All amounts of accrued
PIK
Interest as of each Interest Payment Date shall no longer be deemed to be
accrued and unpaid interest on the outstanding principal of the Loan, but shall
be considered principal until paid. Any accrued interest which for any reason
has not theretofore been paid shall be due and payable in full on the
Termination Date.
Both
principal and interest are payable in lawful money of the United States of
America to the Lender at 0000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxx, XX 00000
(or
other location specified by the Lender) in immediately available
funds.
This
Note
is the Demand Note referred to in, and is entitled to the benefits of, the
letter loan agreement dated as of November 13, 2008 (letter loan agreement
as it
may be amended, modified, supplemented or restated from time to time being
the
“Loan Agreement”) between the Borrower and the Lender. The Loan Agreement, among
other things, (i) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events prior to the maturity hereof upon
the terms and conditions therein specified; (ii) contains provisions for the
mandatory prepayment hereof, upon certain conditions; and (iii) permits the
voluntary prepayment hereof, without premium or penalty, upon certain
conditions.
It
is
expressly stipulated and agreed to be the intent of the Borrower and the Lender
at all times to comply with applicable state law or applicable United States
federal law (to the extent that it permits the Lender to contract for, charge,
take, reserve, or receive a greater amount of interest than permitted under
state law) and that this section shall control every other covenant and
agreement in this Note and any other Loan Document. If the applicable law is
ever judicially interpreted so as to render usurious any sums paid or agreed
to
be paid to Lender for the use, forbearance or detention of money called for
under this Note or under any other Loan Documents, or contracted for, charged,
taken, reserved, or received with respect to the indebtedness evidenced by
this
Note (“Indebtedness”), or if the Lender’s exercise of the option to demand
payment or to accelerate the maturity of this Note, or if any prepayment by
the
Borrower results in the Borrower having paid any sums paid or agreed to be
paid
to Beneficiary for the use, forbearance or detention of money in excess of
that
permitted by applicable law, then it is the Borrower’s and the Lender’s express
intent that all excess amounts theretofore collected by the Lender shall be
credited on the principal balance of this Note and all other Indebtedness (or,
if this Note and all other Indebtedness have been or would thereby be paid
in
full, refunded to Borrower), and the provisions of this Note and the other
Loan
Documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new documents, so as to comply with the applicable law, but
so
as to permit the recovery of the fullest amount otherwise called for hereunder
or thereunder. All sums paid or agreed to be paid to the Lender for the use,
forbearance, or detention of the Indebtedness shall, to the extent permitted
by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Indebtedness until payment in full so that the rate
or
amount of interest on account of the Indebtedness does not exceed the maximum
lawful rate from time to time in effect and applicable to the Indebtedness
for
so long as the Indebtedness is outstanding.
Presentment
and demand for payment, notice of dishonor, protest and notice of protest are
hereby waived. In the event of default, the Borrower agrees to pay costs of
collection and reasonable attorneys’ fees (whether or not suit is commenced),
including, without limitation, attorneys’ fees and legal expenses incurred in
connection with any appeal of a lower court’s judgment or order.
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RUBBER
RESEARCH ELASTOMERICS, INC.
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By:
/s/ Xxxxxxx X.
Xxxxxx
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Its: Chairman
of the Board of Directors
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Subscribed
and sworn to before me
this
1st
day of
December, 2008.
/s/
Xxxxxxxxx X.
Xxxxxxx
Notary
Public
