-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BLmgUIdnz+apVfDv5ZUuZ8U6T+Jk77G8guC0YiKTQYuwGtvCjNBva5L99h8V37RY a8CxkRr5xijbxlMQbfIreQ== 0001144204-06-004107.txt : 20060203 0001144204-06-004107.hdr.sgml : 20060203 20060203172346 ACCESSION NUMBER: 0001144204-06-004107 CONFORMED SUBMISSION TYPE: SC 13G/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20060203 DATE AS OF CHANGE: 20060203 GROUP MEMBERS: DAVID GRIN GROUP MEMBERS: EUGENE GRIN GROUP MEMBERS: LAURUS CAPITAL MANAGEMENT, LLC FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LAURUS MASTER FUND LTD CENTRAL INDEX KEY: 0001189294 IRS NUMBER: 980337673 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13G/A BUSINESS ADDRESS: STREET 1: 152 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125415800 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RIVIERA TOOL CO CENTRAL INDEX KEY: 0001018349 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 382828870 STATE OF INCORPORATION: MI FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13G/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52347 FILM NUMBER: 06578984 BUSINESS ADDRESS: STREET 1: 5460 EXECUTIVE PARKWAY CITY: GRAND RAPIDS STATE: MI ZIP: 49512 BUSINESS PHONE: 6166982100 MAIL ADDRESS: STREET 1: 5460 EXECUTIVE PKWY CITY: GRAND RAPIDS STATE: MI ZIP: 49512 FORMER COMPANY: FORMER CONFORMED NAME: RIVIERA DIE & TOOL INC DATE OF NAME CHANGE: 19960708 SC 13G/A 1 v034476_sc13g.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (Amendment No. 1)* RIVIERA TOOL COMPANY - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, no par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 769648106 - -------------------------------------------------------------------------------- (CUSIP Number) December 31, 2005 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule 13G is filed: |_| Rule 13d-1(b) |X| Rule 13d-1(c) |_| Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - -------------------------------------------------------------------------------- CUSIP No. 769648106 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Master Fund, Ltd. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0337673 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- NUMBER OF SHARES 5 SOLE VOTING POWER: 851,094 shares of Common Stock.* BENEFICIALLY -------------------------------------------------------------- OWNED BY EACH 6 SHARED VOTING POWER: 851,094 shares of Common Stock.* REPORTING -------------------------------------------------------------- PERSON 7 SOLE DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 851,094 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 19.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- - ---------- * As of December 31, 2005, Laurus Master Fund, Ltd. held (i) a Secured Convertible Term Note, as amended, in the aggregate initial principal amount of $3,200,000, which is convertible into shares of common stock, no par value per share (the "Shares"), of Riviera Tool Company, a Michigan corporation (the "Company"), at a conversion rate of $1.66 per share, subject to certain adjustments (the "Term Note"), (ii) a Secured Convertible Minimum Borrowing Note, in the aggregate initial principal amount of $2,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Borrowing Note"), (iii) an Amended and Restated Secured Revolving Note, in the aggregate initial principal amount of $9,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Revolving Note"), (iv) options to acquire 650,000 Shares at an exercise price of $0.01 per share, subject to certain adjustments (the "Options"), and (v) 271,227 Shares. Principal and interest payable under each of the Term Note, the Borrowing Note and the Revolving Note may be payable in either cash or Shares, pursuant to the terms of the applicable instrument. On December 12, 2005, Laurus Master Fund, Ltd. converted an aggregate of $150,000 principal amount of the Term Note into 272,727 Shares. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 4.99% Issuance Limitation may be waived by Laurus Master Fund, Ltd. upon 65 days prior notice to the Company and shall automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares exceeded the 4.99% Issuance limitation. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an additional issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 19.99% of the Shares then issued and outstanding (the "19.99% Issuance Limitation"). The 19.99% Issuance Limitation may not be waived by Laurus Master Fund, Ltd. The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares did not exceed the 19.99% Issuance Limitation. Laurus Master Fund, Ltd. is managed by Laurus Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the securities owned by Laurus Master Fund, Ltd. - -------------------------------------------------------------------------------- CUSIP No. 769648106 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-4150669 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF SHARES 5 SOLE VOTING POWER: 851,094 shares of Common Stock.* BENEFICIALLY -------------------------------------------------------------- OWNED BY EACH 6 SHARED VOTING POWER: 851,094 shares of Common Stock.* REPORTING -------------------------------------------------------------- PERSON 7 SOLE DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 851,094 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 19.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - ---------- * As of December 31, 2005, Laurus Master Fund, Ltd. held (i) a Secured Convertible Term Note, as amended, in the aggregate initial principal amount of $3,200,000, which is convertible into shares of common stock, no par value per share (the "Shares"), of Riviera Tool Company, a Michigan corporation (the "Company"), at a conversion rate of $1.66 per share, subject to certain adjustments (the "Term Note"), (ii) a Secured Convertible Minimum Borrowing Note, in the aggregate initial principal amount of $2,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Borrowing Note"), (iii) an Amended and Restated Secured Revolving Note, in the aggregate initial principal amount of $9,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Revolving Note"), (iv) options to acquire 650,000 Shares at an exercise price of $0.01 per share, subject to certain adjustments (the "Options"), and (v) 271,227 Shares. Principal and interest payable under each of the Term Note, the Borrowing Note and the Revolving Note may be payable in either cash or Shares, pursuant to the terms of the applicable instrument. On December 12, 2005, Laurus Master Fund, Ltd. converted an aggregate of $150,000 principal amount of the Term Note into 272,727 Shares. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 4.99% Issuance Limitation may be waived by Laurus Master Fund, Ltd. upon 65 days prior notice to the Company and shall automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares exceeded the 4.99% Issuance limitation. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an additional issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 19.99% of the Shares then issued and outstanding (the "19.99% Issuance Limitation"). The 19.99% Issuance Limitation may not be waived by Laurus Master Fund, Ltd. The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares did not exceed the 19.99% Issuance Limitation. Laurus Master Fund, Ltd. is managed by Laurus Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the securities owned by Laurus Master Fund, Ltd. - -------------------------------------------------------------------------------- CUSIP No. 769648106 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: David Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Israel - -------------------------------------------------------------------------------- NUMBER OF SHARES 5 SOLE VOTING POWER: 851,094 shares of Common Stock.* BENEFICIALLY -------------------------------------------------------------- OWNED BY EACH 6 SHARED VOTING POWER: 851,094 shares of Common Stock.* REPORTING -------------------------------------------------------------- PERSON 7 SOLE DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 851,094 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 19.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - ---------- * As of December 31, 2005, Laurus Master Fund, Ltd. held (i) a Secured Convertible Term Note, as amended, in the aggregate initial principal amount of $3,200,000, which is convertible into shares of common stock, no par value per share (the "Shares"), of Riviera Tool Company, a Michigan corporation (the "Company"), at a conversion rate of $1.66 per share, subject to certain adjustments (the "Term Note"), (ii) a Secured Convertible Minimum Borrowing Note, in the aggregate initial principal amount of $2,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Borrowing Note"), (iii) an Amended and Restated Secured Revolving Note, in the aggregate initial principal amount of $9,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Revolving Note"), (iv) options to acquire 650,000 Shares at an exercise price of $0.01 per share, subject to certain adjustments (the "Options"), and (v) 271,227 Shares. Principal and interest payable under each of the Term Note, the Borrowing Note and the Revolving Note may be payable in either cash or Shares, pursuant to the terms of the applicable instrument. On December 12, 2005, Laurus Master Fund, Ltd. converted an aggregate of $150,000 principal amount of the Term Note into 272,727 Shares. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 4.99% Issuance Limitation may be waived by Laurus Master Fund, Ltd. upon 65 days prior notice to the Company and shall automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares exceeded the 4.99% Issuance limitation. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an additional issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 19.99% of the Shares then issued and outstanding (the "19.99% Issuance Limitation"). The 19.99% Issuance Limitation may not be waived by Laurus Master Fund, Ltd. The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares did not exceed the 19.99% Issuance Limitation. Laurus Master Fund, Ltd. is managed by Laurus Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the securities owned by Laurus Master Fund, Ltd. - -------------------------------------------------------------------------------- CUSIP No. 769648106 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Eugene Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER: 851,094 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER: 851,094 shares of SHARES Common Stock.* BENEFICIALLY ----------------------------------------------------------------- OWNED BY EACH 7 SOLE DISPOSITIVE POWER: 851,094 shares of REPORTING Common Stock.* PERSON ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER: 851,094 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 851,094 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 19.99% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - ---------- * As of December 31, 2005, Laurus Master Fund, Ltd. held (i) a Secured Convertible Term Note, as amended, in the aggregate initial principal amount of $3,200,000, which is convertible into shares of common stock, no par value per share (the "Shares"), of Riviera Tool Company, a Michigan corporation (the "Company"), at a conversion rate of $1.66 per share, subject to certain adjustments (the "Term Note"), (ii) a Secured Convertible Minimum Borrowing Note, in the aggregate initial principal amount of $2,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Borrowing Note"), (iii) an Amended and Restated Secured Revolving Note, in the aggregate initial principal amount of $9,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Revolving Note"), (iv) options to acquire 650,000 Shares at an exercise price of $0.01 per share, subject to certain adjustments (the "Options"), and (v) 271,227 Shares. Principal and interest payable under each of the Term Note, the Borrowing Note and the Revolving Note may be payable in either cash or Shares, pursuant to the terms of the applicable instrument. On December 12, 2005, Laurus Master Fund, Ltd. converted an aggregate of $150,000 principal amount of the Term Note into 272,727 Shares. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 4.99% Issuance Limitation may be waived by Laurus Master Fund, Ltd. upon 65 days prior notice to the Company and shall automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares exceeded the 4.99% Issuance limitation. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an additional issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 19.99% of the Shares then issued and outstanding (the "19.99% Issuance Limitation"). The 19.99% Issuance Limitation may not be waived by Laurus Master Fund, Ltd. The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares did not exceed the 19.99% Issuance Limitation. Laurus Master Fund, Ltd. is managed by Laurus Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the securities owned by Laurus Master Fund, Ltd. Item 1(a). Name of Issuer: Riviera Tool Company Item 1(b). Address of Issuer's Principal Executive Offices: 5460 Executive Parkway S.E. Grand Rapids, Michigan 49512 Item 2(a). Name of Person Filing: Laurus Master Fund, Ltd. This Schedule 13G, as amended, is also filed on behalf of Laurus Capital Management, LLC, a Delaware limited liability company, Eugene Grin and David Grin. Laurus Capital Management, LLC manages Laurus Master Fund, Ltd. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the shares owned by Laurus Master Fund, Ltd. Information related to each of Laurus Capital Management, LLC, Eugene Grin and David Grin is set forth on Appendix A hereto. Item 2(b). Address of Principal Business Office or if none, Residence: c/o Laurus Capital Management, LLC, 825 Third Avenue, 14th Floor, New York, NY 10022 Item 2(c). Citizenship: Cayman Islands Item 2(d). Title of Class of Securities: Common Stock Item 2(e). CUSIP Number: 769648106 Item 3. Not Applicable Item 4. Ownership: (a) Amount Beneficially Owned: 851,094 shares of Common Stock* (b) Percent of Class: 19.99%* (c) Number of shares as to which such person has: (i) sole power to vote or to direct the vote: 851,094 shares of Common Stock* (ii) shared power to vote or to direct the vote: 851,094 shares of Common Stock* (iii) sole power to dispose or to direct the disposition of: 851,094 shares of Common Stock* iv) shared power to dispose or to direct the disposition of: 851,094 shares of Common Stock* Item 5. Ownership of Five Percent or Less of a Class: Not applicable Item 6. Ownership of More than Five Percent on Behalf of Another Person: Not applicable Item 7. Identification and Classification of Subsidiary Which Acquired the Securities: Not applicable Item 8. Identification and Classification of Members of the Group: Not applicable Item 9. Notice of Dissolution of Group: Not applicable Item 10. Certification: By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. - ---------- * As of December 31, 2005, Laurus Master Fund, Ltd. held (i) a Secured Convertible Term Note, as amended, in the aggregate initial principal amount of $3,200,000, which is convertible into shares of common stock, no par value per share (the "Shares"), of Riviera Tool Company, a Michigan corporation (the "Company"), at a conversion rate of $1.66 per share, subject to certain adjustments (the "Term Note"), (ii) a Secured Convertible Minimum Borrowing Note, in the aggregate initial principal amount of $2,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Borrowing Note"), (iii) an Amended and Restated Secured Revolving Note, in the aggregate initial principal amount of $9,000,000, which is convertible into Shares at a conversion rate of $1.66 per share, subject to certain adjustments (the "Revolving Note"), (iv) options to acquire 650,000 Shares at an exercise price of $0.01 per share, subject to certain adjustments (the "Options"), and (v) 271,227 Shares. Principal and interest payable under each of the Term Note, the Borrowing Note and the Revolving Note may be payable in either cash or Shares, pursuant to the terms of the applicable instrument. On December 12, 2005, Laurus Master Fund, Ltd. converted an aggregate of $150,000 principal amount of the Term Note into 272,727 Shares. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 4.99% of the Shares then issued and outstanding (the "4.99% Issuance Limitation"). The 4.99% Issuance Limitation may be waived by Laurus Master Fund, Ltd. upon 65 days prior notice to the Company and shall automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares exceeded the 4.99% Issuance limitation. Each of the Term Note, the Borrowing Note, the Revolving Note and the Options contains an additional issuance limitation prohibiting Laurus Master Fund, Ltd. from converting or exercising those securities to the extent that such conversion or exercise would result in beneficial ownership by Laurus Master Fund, Ltd. of more than 19.99% of the Shares then issued and outstanding (the "19.99% Issuance Limitation"). The 19.99% Issuance Limitation may not be waived by Laurus Master Fund, Ltd. The partial conversion of the Term Note on December 12, 2005 into 272,727 Shares did not exceed the 19.99% Issuance Limitation. Laurus Master Fund, Ltd. is managed by Laurus Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share sole voting and investment power over the securities owned by Laurus Master Fund, Ltd. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 2, 2006 --------------------------- Date /s/ Eugene Grin --------------------------- Eugene Grin Director APPENDIX A A. Name: Laurus Capital Management, LLC, a Delaware limited liability company Business 825 Third Avenue, 14th Floor Address: New York, New York 10022 Place of Organization: Delaware B. Name: Eugene Grin Business 825 Third Avenue, 14th Floor Address: New York, New York 10022 Principal Director of Laurus Master Fund, Ltd. Occupation: Principal of Laurus Capital Management, LLC Citizenship: United States C. Name: David Grin Business 825 Third Avenue, 14th Floor Address: New York, New York 10022 Principal Director of Laurus Master Fund, Ltd. Occupation: Principal of Laurus Capital Management, LLC Citizenship: Israel Each of Laurus Capital Management, LLC, Eugene Grin and David Grin hereby agrees, by their execution below, that the Schedule 13G, as amended, to which this Appendix A is attached is filed on behalf of each of them, respectively. Laurus Capital Management, LLC /s/ Eugene Grin - ------------------------------------------ Eugene Grin Principal February 2, 2006 /s/ Eugene Grin - ------------------------------------------ Eugene Grin, on his individual behalf February 2, 2006 /s/ David Grin - ------------------------------------------ David Grin, on his individual behalf February 2, 2006 -----END PRIVACY-ENHANCED MESSAGE-----