10% CONVERTIBLE NOTE DUE JUNE 1, 2011Convertible Promissory Note |
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Exhibit 4.1
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IF THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (IV) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR (V) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.
SIRVA,
INC.
10%
CONVERTIBLE NOTE DUE JUNE 1, 2011
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$____________ |
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September 29, 2006 |
SIRVA, Inc., a Delaware Corporation (the “Company” which term includes any successor Company or other successor business entity), for value received, hereby promises to pay to _____________ (or its successors and permitted assigns)(“Holder”), the principal sum of _________ Dollars ($___________) (the “Principal Amount”) on the Maturity Date (as defined below), together with accrued interest on the unpaid balance of the principal amount of this Note
at the rate of ten percent (10%) per annum. The maturity date under this Note shall be June 1, 2011 (the “Maturity Date”). Certain defined terms used in this Note have the meanings assigned to them in Section 21.
1. Interest.
(a) Cash Interest. Interest (“Interest”) on this Note shall accrue on the unpaid principal at a per annum rate of 10% beginning on the Issuance Date. Interest shall be payable in cash quarterly in arrears on the Quarterly Interest Payment Date and on the Maturity Date or any other Date this Note is paid in full, commencing on the first Quarterly Interest Payment Date following the Issuance Date. Any Interest accrued and not paid on any Quarterly Interest Payment date shall be added to the principal sum outstanding and thereafter accrue additional interest in respect thereof at the per annum rate set forth above, notwithstanding that the failure to pay Interest on any Quarterly Interest Payment Date also may be considered an Event of Default under Section 5. Interest will be computed on the basis of a 365-day year and actual days elapsed.
(b) Common Stock Interest. If a Conversion Event has not occurred by May 31, 2007, the Company shall pay interest in addition to all other interest payable under this Note in the form of Common Stock on each Quarterly Interest Payment Date thereafter (“Common Stock Interest”). The Common Stock Interest shall be equal to 2% per annum of the outstanding principal amount hereof, with one quarter of such amount to be issued as Common Stock on each Quarterly Interest Payment Date at a conversion value of $3.00 per share, rounding down to the next whole share amount. All such shares shall be issued in the name of the Holder or its designee and shall be fully paid and non-assessable and subject only to transfer restrictions which are similar to those set forth in the Securities Purchase Agreement.
2. Payments of Principal. On the Maturity Date or upon redemption in accordance with Section 6, the Company shall pay to the Holder an amount in cash equal to the Principal Amount plus any accrued but unpaid Interest and Common Stock Interest to, but not including, the date of payment.
3. Method of Payment. The Company shall pay the Principal Amount and any accrued Interest in currency of the United States that at the time of payments is legal tender for payment of public and private debts. Payments shall be made to the Holder by wire transfer of immediately available funds to the account designated in writing by the Holder or by such other means designated in writing by the Holder and provided to the Company at least five Business Days before any such payment. If the Principal Amount, accrued Interest and Common Stock Interest on this Note are not paid in accordance with its terms, the Company shall pay to the Holder, in addition to the Principal Amount and accrued Interest and Common Stock
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Interest thereon, all costs of collection of the Principal Amount and accrued Interest and Common Stock Interest, including, but not limited to, reasonable attorneys’ fees, court costs and other costs for the enforcement of payment of this Note.
4. Conversion.
(a) Conversion after Conversion Event. Upon the Conversion Event, each $1,000 of the Original Principal Amount shall automatically convert into one (1) share (“Conversion Shares”) of Convertible Preferred Stock, subject to any applicable laws.
(b) Covenants. The Company covenants and agrees that so long as this Note is outstanding, (i) the Company shall have authorized and reserved a sufficient number of shares of Convertible Preferred Stock to enable the Holder to convert this Note into Convertible Preferred Stock, in addition to any other terms and preferences agreed to by the Holder in writing, and (ii) the Company shall issue the shares of Convertible Preferred Stock upon conversion of this Note in accordance with the terms hereof. The Company further covenants to cause the shares of Convertible Preferred Stock, when issued pursuant to this Section 4, to be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof (other than any liens that may be imposed pursuant to applicable securities laws).
(c) Procedure. The Company shall immediately provide written notice to the Holder after the Conversion Event. Upon prompt surrender of the Note to the Company by the Holder after the Conversion Event, the Company shall issue and deliver the Conversion Shares to the Holder on behalf of the Company and pay any accrued and unpaid Interest and Common Stock Interest owed to the Holder up to and including the Conversion Date. The Holder shall be deemed to have become the holder of record of, and shall be treated for all purposes as the record holder of, the Conversion Shares issuable hereunder (and such Conversion Shares shall be deemed to have been issued) the day following the Conversion Date.
5. Events of Default; Rights Upon Event of Default
(a) Events of Default. Each of the following events shall constitute an “Event of Default”:
(i) the Company’s failure to pay to the Holder any amount of Principal, Interest, Common Stock Interest or other amounts when and as due under this Note (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder), which such failure continues for a period of at least 30 days;
(ii) default in the performance, or breach, of any covenant or warranty of the Company in the Transaction Documents or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by a Holder of at least 20% in principal amount of the then outstanding Notes a written notice specifying such default
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or breach and requiring it to be remedied and stating that such notice is a “notice of default” hereunder;
(iii) a default under any bonds, debentures, notes or other evidences of indebtedness for money borrowed of the Company or under any mortgages, indentures or instruments under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, whether such indebtedness now exists or shall hereafter be created, which indebtedness, individually or in the aggregate, has a principal amount outstanding in excess of $10,000,000, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Holders of at least 20% in principal amount of the then outstanding Notes, a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a “notice of default” hereunder (unless such default has been cured or waived);
(iv) a final judgment or judgments for the payment of money aggregating in excess of $10,000,000 are rendered against the Company or any of its Subsidiaries and which judgments are not, within 30 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $10,000,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment;
(v) the Company or any Subsidiary (as defined in the Securities Purchase Agreement) pursuant to or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case,
(2) consents to the entry of an order for relief against it in an involuntary case,
(3) consents to the appointment of a Custodian of it or for all or substantially all of its property, or
(4) makes a general assignment for the benefit of its creditors; or
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(5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(a) is for relief against the Company or any Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any Subsidiary or for all or substantially all of the property of any of them, or
(c) orders the winding up or liquidation of the Company or any Subsidiary, and the order or decree remains unstayed and in effect for 30 days.
As used in this Section 5(a), the term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law for the relief of debtors and the term “Custodian” means any receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law.
(b) Consequences of Event of Default. Promptly after the Company has knowledge of the occurrence of an Event of Default or any event which with the giving of notice or the passage of time, or both, could become such an Event of Default with respect to this Note or any other Note, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder. At any time after the occurrence and during the continuance of an Event of Default, the Holder may require the Company to redeem this Note. The Holder may effect the redemption by sending written notice (“Redemption Notice”) to the Company stating the Holder has elected to exercise the redemption option, surrendering the Note and providing payment instructions. The Company shall have ten days to pay the Principal Amount plus any accrued but unpaid Interest and Common Stock Interest up to and including the payment date (“Redemption Price”) upon receipt of the Redemption Notice. The Company shall pay the Redemption Price in cash (except for any accrued Common Stock Interest).The Holder shall be entitled to seek any available remedy for the enforcement of this Note, including for the payment of any Redemption Price). Nothing shall preclude the Holder from pursuing or obtaining specific performance or other equitable relief with respect to this Note.
6. Redemption.
(a) Fundamental Change Redemption. The Holder shall have the option to have the Company redeem the Note at the Redemption Price if a Fundamental Change occurs (“Fundamental Change Redemption”). The Holder may effect the Fundamental Change Redemption, by delivering a Redemption Notice to the Company stating the Holder has elected to exercise the Fundamental Change Redemption, surrendering the Note and providing payment instructions. The Company shall have ten days to pay the Redemption Price upon receipt of the Redemption Notice. The Company shall pay the Redemption Price in cash (except for any accrued Common Stock Interest).
(b) Limitation on Fundamental Change Redemption. A Fundamental Change Redemption is subject to the Company’s obligation to repay or repurchase any Indebtedness that






