Document:

Unassociated Document

    
      Exhibit
4.1

      THE
SECURITIES REPRESENTED BY OR ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.  THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR DISTRIBUTION AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR UNLESS, IN THE
OPINION OF COUNSEL SATISFACTORY TO THIS COMPANY, AN EXEMPTION FROM REGISTRATION
IS AVAILABLE UNDER THE SECURITIES LAWS.

      

      

      12%
CONVERTIBLE NOTE

      DUE
ON DEMAND OF HOLDER

      

      
        
          	
                  $
      300,000.00

                	
                  Minneapolis,
      Minnesota

                  October
      1,
      2007

                

        

      

      

      Rubber
Research Elastomerics, Inc., a Minnesota corporation (the “Company”) for value
received, hereby promises to pay to the order of Riviera Investments,
Inc. or any assignee thereof (such payee, or in the event of such
assignment, the last such assignee hereinafter referred to as the “holder”), the
principal sum of $300,000.00, or so
much thereof as the holder demands in writing, immediately upon written demand
of the holder, with interest on the unpaid balance of such principal amount
accrued from October
1, 2007 at an annual rate of twelve (12%),
calculated on the basis of a 365-day year, such interest payable quarterly on
the first day of each calendar quarter, commencing January 1,
2008.  Payments of principal and interest shall be made in lawful
money of the United States of America at the principal office of the Company in
Minneapolis, Minnesota, or at such other place as the Company shall have
designated for such purpose to the holder in writing.

       

      1.           Conversion.

       

      The
unpaid principal amount of this Note and accrued but unpaid interest thereon is
convertible at the option of the holder during the period from the date of issue
hereof through the date of repayment into shares of 8.5% Convertible Preferred
Stock of the Company (“Preferred Stock”) at
a conversion price of forty-two cents
($0.42) per share.  The number of shares into which the Note is
convertible shall be appropriately adjusted to reflect stock dividends, stock
splits and the like.  The conversion price is herein called the “Conversion
Price.”

       

      If the
Company proposes to repay this Note in whole or in part, other than pursuant to
written demand of the holder, it shall give the holder written notice of such
proposed repayment not less than thirty (30) calendar days prior to the intended
date of repayment, and the holder shall have the right to convert the unpaid
principal amount of this Note and accrued but unpaid interest thereon into
Preferred Stock pursuant to this Section 1 at any time on or before the intended
date of repayment.

       

      The
Company shall not be required to issue any fraction of a share of Preferred
Stock or scrip representing a fraction of a share of Preferred Stock on any
conversion pursuant to the terms of this Note.  Upon the surrender to
the Company of the Note for conversion, the holder shall be entitled to receive
the number of full shares of Preferred Stock equal to the quotient (exclusive of
fractions) obtained by dividing the amount due of the Note so surrendered, by
the Conversion Price, and an amount in cash, as an adjustment in lieu of any
fraction of share resulting from such division, equal to such fraction
multiplied by the Conversion Price of one share.

       

      
        
           

        

        
          Page 1 of
5 Pages

          
            

          

        

        
           

        

      

      To
convert the Note into shares of Preferred Stock, the Note shall be surrendered
to the Company at its principal office or at such other office or agency as the
Company may authorize for such purpose, endorsed or accompanied by a written
instrument of surrender in form satisfactory to the Company, duly executed by
the holder or his attorney duly authorized in writing.  Partial
conversion of the Note is authorized.

       

      The
Company shall issue and deliver in exchange for that portion of the Note so
surrendered for conversion, as soon as practicable after such surrender,
certificates representing the number of shares of Preferred Stock into which
such Note shall be convertible, issued in the name of the holder or in such name
or names as the holder may direct.  The conversion right in respect of
the Note shall be deemed to be exercised upon the receipt by the Company of the
Note so surrendered duly endorsed or accompanied by a written instrument as
above provided.  The holder of the Note shall be deemed to have become
a shareholder of record as of the date upon which the Note shall have been so
received, provided the requirements hereof are complied
with.  Thereupon, that portion of the Note with respect to which the
conversion right is exercised shall be deemed to be satisfied and discharged and
no longer outstanding for any purpose.  The receipt of the Note so
surrendered shall constitute full payment for the shares issued in conversion
thereof.

       

      If at
anytime while this Note is outstanding the Company shall consolidate with or
merge into another corporation, the holder hereof shall thereafter be entitled
upon conversion to the issuance of, with respect to each share of Preferred
Stock issuable upon conversion of this Note immediately prior to the date upon
which such consolidation or merger shall become effective, the securities or
property to which a holder of one share of Preferred Stock would have been
entitled upon such consolidation or merger, without any change in, or payment in
addition to, the Conversion Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to assure that all of the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter deliverable upon the
conversion of this Note.  The Company shall not effect any such
consolidation or merger unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written instrument executed and mailed to the holder of this Note at the address
of the holder shown on the books of the Company, the obligation to deliver to
the holder such securities or property as in accordance with the foregoing
provisions the holder shall be entitled to purchase.  A sale of all or
substantially all of the assets of the Company for a consideration (apart from
the assumption of obligations) consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.

       

      
        
           

        

        
          Page 2 of
5 Pages

          
            

          

        

        
           

        

      

      If at
anytime while this Note is outstanding the outstanding shares of Preferred Stock
shall be automatically converted into shares of Common Stock pursuant to Section
5(b) of the Certificate of Designation of the Rights and Preferences of 8.5%
Convertible Preferred Stock, this Note shall thereafter be convertible into
Common Stock, at a conversion price determined in the manner provided in Section
5 of said Certificate of Designation, giving effect to any adjustments thereto
from the date of issuance of this Note until the date this Note is so converted,
and references in this Note to Preferred Stock shall, as the context requires,
mean and apply to the Common Stock.

       

      2.           Authorized
Shares.

       

      The
Company represents, warrants and agrees that (a) it will hereafter at all times
reserve and keep available a sufficient number of authorized but unissued shares
of Preferred Stock to allow full conversion of this Note into Preferred Stock,
and (b) after amendment of its articles of incorporation to adequately increase
the number of its authorized shares, it will thereafter at all times reserve and
keep available a sufficient number of authorized but unissued shares of Common
Stock to allow full conversion of the Preferred Stock into Common
Stock.

       

      3.           Events of
Default.

       

      If any of
the following events (herein called “Events of Default”)
shall occur.

       

      (a)           If
the Company shall default for a period of twenty (20) days in the payment of
interest when due quarterly, or of principal or interest upon maturity;
or

       

      (b)           If
the Company shall default in the performance of or compliance with any term
contained in this Note other than those referred to in the preceding
Subparagraph (a), and such default shall not have been remedied, or affirmative
action acceptable to the holder shall not have been taken to cure the same,
within thirty (30) days, (or, if a cure cannot reasonably be so effected within
thirty (30) days, within such reasonable period as such cure can be effected by
the prompt and diligent action of the Company) after written notice thereof
shall have been given to the Company by the holder of this Note, or

       

      (c)           If
the Company shall make an assignment for the benefit of creditors, or shall file
a voluntary petition in bankruptcy, or shall be adjudicated as bankrupt or
insolvent, or shall file any petition or answer seeking for itself any
reorganization, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of the Company or any
subsidiary or of all or any substantial part of the properties of the
Company;

       

      then, at
the option and in the sole discretion of the holder of this Note, this Note
shall immediately mature and become due and payable together with interest
accrued thereon, without presentment, demand, protest or notice, all which
hereby are waived.

       

      4.           Remedies on
Default.

       

      If an
Event of Default shall have occurred and shall be continuing, the holder of this
Note may proceed to protect and enforce the rights of such holder by a suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or for an injunction against a
violation of any of the terms thereof or in aid of the exercise of any right,
power or remedy granted thereby, or by law, equity, statute, or
otherwise.  The Company shall pay to such holder such amounts as shall
be sufficient to cover the cost and expense of any action taken by such holder
to protect and enforce such rights upon an Event of Default, including (without
limitation) reasonable attorneys’ fees.  No course of dealing and no
delay on the part of the holder of this Note in exercising any right, power or
remedy shall operate as a waiver thereof or otherwise prejudice such holder’s
rights, powers or remedies.  No right, power or remedy conferred
hereby shall be exclusive of any right, power or remedy referred to herein or
now or hereafter available at law, in equity, by statute or
otherwise.

       

      
        
           

        

        
          Page 3 of
5 Pages

          
            

          

        

        
           

        

      

      5.           Replacement.

       

      Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of the Note and, at the option of the Company, in the case of any
such loss, theft or destruction, upon delivery of a bond of indemnity
satisfactory to the Company, or in the case of any such mutilation, upon
surrender and cancellation of such Note, the Company shall issue a New Note of
like tenor in lieu of such lost, stolen, destroyed or mutilated
Note.

       

      6.           Construction of
Agreement.

       

      This Note
shall be construed in accordance with the laws of the State of
Minnesota.  This Note may not be waived, changed, discharged or
terminated orally, nor shall any delay or failure on the part of the holder of
this Note in exercising any right hereunder affect such right or be deemed a
waiver of any default on the part of the Company.

       

      7.           Notices.

       

      All
communications hereunder shall be in writing and, except as otherwise provided,
shall be delivered at, or mailed by United States first class mail, postage
prepaid, return receipt requested, if to the Company at 4500 Main Street N.E.,
Minneapolis, Minnesota, 55421, or if to the holder, at Riviera Investments,
Inc., 1138 Hartzell Street, Pacific Palisades, California, 90272, or to such
other address as either party shall designate to the other.  The
parties shall promptly advise each other of changes in addresses for such
notices.

       

      8.           Investment
Representation.

       

      By
acceptance of this Note, the holder represents to the Company and agrees
that:

       

      (a)           The
Note is being acquired for the account of the holder, and the holder has no
present intention of offering, selling, transferring or otherwise disposing of
the Note or the shares of Preferred Stock issuable upon conversion or exercise
thereof.

       

      (b)           The
holder will not sell, transfer or otherwise dispose of the Note or shares of
Preferred Stock issuable upon conversion or exercise thereof, unless
either:

       

      (i)           a
registration statement under the Securities Act of 1933 (the “Act”), as amended,
covering such portion of the Note or such shares of Preferred Stock issued or
issuable upon conversion or exercise thereof which is to be so offered, sold,
transferred or otherwise disposed of has become effective; or

       

      
        
           

        

        
          Page 4 of
5 Pages

          
            

          

        

        
           

        

      

      (ii)           such
holder has received the opinion of counsel acceptable to the Company, such
opinion to be in writing and addressed to the Company, that the proposed offer,
sale, transfer or other disposition of the Note or the shares of Preferred Stock
issued or issuable upon conversion or exercise thereof are exempt from the
registration provisions of the Act.

       

      IN
WITNESS WHEREOF this Note has been executed as of the date indicated on the
first page hereof.

       

      
        
          
            	 	RUBBER RESEARCH
      ELASTOMERICS, INC.	 
	 	 	 	 
	 	
                    By:
      

                  	/s/ Winston
      Salser	 
	 	 	Winston
      Salser	 
	 	 	 	 
	 	Its	Chief
      Executive Officer	 

          

        

      

       

       
Page 5 of 5 PagesUnassociated Document

    

    Exhibit
4.1

     

     

     

    

    AMENDED AND RESTATED DEMAND
NOTE

    
       

       

      
        
          
            	
                    U.S. $400,000.00 

                  	
                    December 16,
2008

                  

          

        

      

    

    

    

    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
FOUR HUNDRED THOUSAND AND NO/100THS DOLLARS ($400,000.00) ON DEMAND, or if no
earlier demand has been made, on October 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 (such
increased rate of interest being, the “Default Rate”).  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 January 1, 2009, 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.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          
            DEMAND
NOTE

            Page
2

          

          
            
              
                	
                        U.S. $400,000.00 

                      	
                        December 16,
2008

                      

              

            

          

        

      

    

     

     

    Both
principal and interest are payable in lawful money of the United States of
America to the Lender at 1138 Hartzell Street, Pacific Palisades,
CA  90272 (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 December 1, 2008, as amended by a letter
amended dated on or about the date hereof (letter loan agreement as so amended
and as it may be further 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.

    

    This Amended and Restated Demand Note,
is being executed and delivered in replacement of, but not in payment of, that
certain Demand Note dated December 1, 2008, made by the Borrower payable to the
order of the Lender in the original principal amount of $300,000.00; provided, however, that
interest on such replaced note accrued through the date hereof shall be payable
in accordance with the terms thereof.

    
      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
            
              DEMAND
NOTE

              Page
2

            

            
              
                
                  	
                          U.S. $400,000.00 

                        	
                          December 16,
2008

                        

                

              

            

          

        

      

       

    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.

     

    
      
        	 	RUBBER RESEARCH ELASTOMERICS,
      INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ D. Michael
      Wells                                                      	 
	 	Its:	
                CFO
      and Secretary

              	 
	 	 	 	 
	 	 	 	 

      

    

     

    

    Subscribed
and sworn to before me

    this 16
day of December, 2008.

    

    
      
        
          	 	 	 	 	 
	
                  /s/
      Gail Thomas   

                	 	 	
                   

                	 
	
                  Notary
      Public

                	 	 	
                   

                	 
	
                  Gail
      Thomas #8846

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