|
Exhibit
4.1
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (AS AMENDED, RESTATED, SUPPLEMENTED, OR
OTHERWISE MODIFIED FROM TIME TO TIME, THE “SUBORDINATION
AGREEMENT”) DATED AS OF JULY 10, 2008 AMONG MRU HOLDINGS,
INC., A DELAWARE CORPORATION, MERRILL LYNCH MORTGAGE CAPITAL INC.
AND VIKING ASSET MANAGEMENT L.L.C., A CALIFORNIA LIMITED LIABILITY
COMPANY, TO THE SENIOR INDEBTEDNESS (AS DEFINED IN THE
SUBORDINATION AGREEMENT); AND EACH HOLDER OF THIS NOTE, BY ITS
ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE ON THE
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED (I) IN THE ABSENCE OF: (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SUCH ACT
OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED WITH RESPECT TO
SUCH OFFER, SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION; OR (II)
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
MRU HOLDINGS, INC.
CONVERTIBLE PROMISSORY NOTE
Subject to the terms and
conditions of this Convertible Promissory Note (this “
Note
”), for value received, the undersigned, MRU Holdings,
Inc., a Delaware corporation (the “ Company ”),
whose address is 590 Madison Avenue, 13 th
Floor, New York 10022, hereby promises to pay to Merrill
Lynch Mortgage Capital Inc. or permitted assigns (the “
Holder ”)
the principal amount of Seven Million Seven
Hundred Fifty Thousand Dollars ( $7,750,000 ),
together with interest thereon at the rate(s) set forth
below. Principal of, and accrued interest on, this
Note shall be due
and
payable as hereinafter provided on the Maturity Date (as
defined below) or such other dates as provided
herein.
The following is a
statement of the rights of the Holder of this Note and the
terms and conditions to which this Note is subject, and to
which the Holder, by acceptance of this Note,
agrees:
1.
Interest
. Interest shall accrue on the unpaid principal
amount of this Note from the date hereof until such principal
amount is repaid in full, at a simple annual interest rate
equal to nine percent (9%) per annum; provided,
however , that, if the Note is not repaid in full by
5:30 p.m. on September 26, 2008 (the “ Alternate Interest Rate
Date ”), then the interest rate on the Note
shall increase to a simple annual interest rate equal to
twelve percent (12%) per annum beginning September 27,
2008. All computations of the interest rate
hereunder shall be made on the basis of a year of 365 days
based on the actual number of days (including the first day
but excluding the last day) any such principal amount is
outstanding. No interest hereunder shall be due
prior to the Maturity Date (as defined below); provided,
however, that after the Senior Indebtedness (as
defined in the Subordination Agreement) has been paid in
full, interest on the Note shall be payable on the 15th day
of each January, April, July and October (or if any such day
is not a business day, the next business day).
2.
Maturity
Date . Unless earlier converted as provided
in Section 4 below or repaid, the principal amount of this
Note and interest accrued thereon shall be due and payable on
October 31, 2010 (the “ Maturity Date
”), subject to any limitation contained in the
Subordination Agreement.
3.
Mandatory
Prepayment Under Certain Circumstances . If
the Company issues and sells equity securities (the “
Equity
Securities ”) pursuant to an equity financing
(including the issuance of Equity Securities upon the
conversion or exchange of debt securities (the “
Automatically Converting
Debt Securities ”) issued after the date hereof
in connection with such equity financing) in which the
Company closes a total commitment of at least Seventy Five
Million Dollars ($75,000,000) (inclusive of the consideration
received for the issuance and sale of the Company’s
Series B-2 Convertible Preferred Stock and any other security
that is converted into Equity Securities) in gross proceeds
and 60% of such gross proceeds (at least $45,000,000) is
attributable to one investor or a group of related investors,
then:
(a) upon
the issuance of the Automatically Converting Debt Securities,
if any, the Company shall, exclusively with net proceeds
received from the sale of the Automatically Converting Debt
Securities (“ Debt Proceeds
”),
(i)
first ,
redeem Five Million Six Hundred Thousand Dollars ($5,600,000)
in principal amount of the Note (as defined in the
Subordination Agreement) pursuant to the terms of the Note
(as defined in the Subordination Agreement) (the “
Required
Redemption ”), and
(ii)
second ,
to the extent there remain Debt Proceeds therefor, pay the
Holder and any other holders of promissory notes of the
Company issued on even date herewith (the “ Other Promissory
Notes ”) the outstanding principal amount of
this Note and the Other Promissory Notes together with
accrued but unpaid interest thereon, pro rata based on the
outstanding principal amount of each such note;
(b) upon
the issuance of the Equity Securities and after consummation
of the Required Redemption (to the extent the Required
Redemption was not consummated pursuant to Section 3(a)
hereof), the outstanding principal amount of this Note,
together with accrued but unpaid interest thereon, shall, to
the extent not paid pursuant to Section 3(a) hereof, be repaid
in full.
4. Conversion.
4.1
Optional
Conversion . Subject to Section 4.2, if
this Note is not repaid in full by the Alternate Interest
Rate Date, the Holder may elect, at any time after the
Alternate Interest Rate Date, to convert all or a portion of
this Note into shares of the Company’s common stock,
par value $0.001 per share (the “ Common Stock
”) by dividing (A) aggregate principal and accrued and
unpaid interest to be so converted by (B) $2.25; provided,
however, that, unless the Company’s stockholders
approve any change in control (as defined in NASDAQ Rule
4350(i)(1)(B)) that would result from the conversion of the
Note into Common Stock, this Note may not be converted into
Common Stock to the extent the issuance of such Common Stock
would result in the Holder and its affiliates beneficially
owning more than 19.99% of the voting power of the Company
(the “ Issuance
Limitation ”). For purposes of the
foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the Holder and its affiliates
shall include the shares of Common Stock issuable upon
conversion of this Note, subject in all cases to the Issuance
Limitation. Upon the written request of the
Holder, the Company shall promptly, but in no event later
than two (2) business days following the delivery of such
request, confirm in writing to the Holder the number of
shares of Common Stock then outstanding.
4.2
Mechanics of
Conversion . Before any Holder shall be
entitled to convert this Note into full shares of Common
Stock and to receive certificates (or a direct registration
statement) therefor pursuant to Section 4.1 hereof, such
Holder shall surrender the original copy of this Note at the
Company’s principal executive offices and give written
notice substantially in the form attached hereto as Exhibit A
(the “ Conversion Notice
”) specifying the portion of this Note to be converted
into Common Stock (the “ Converting
Portion ”). The Company shall, as
soon as practicable thereafter, issue and deliver a
certificate or certificates (or make a book entry if the
Common Stock is to be issued through a direct registration
system) for the number of shares of Common Stock to which the
Holder shall be entitled as aforesaid and a check payable to
the Holder in the amount of any cash amounts payable as a
result of a conversion into fractional shares of Common
Stock. Such conversion shall be deemed to have
been made immediately prior to the close of business on the
date of such surrender of this Note to be converted with a
properly completed Conversion Notice (the “ Surrender Date
”), and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of
such shares of Common Stock on the Surrender
Date. Interest on the Converting Portion of this
Note shall cease to accrue on the
Surrender
Date and all rights with respect to such Converting Portion
shall forthwith after the Surrender Date
terminate. To the extent the Holder only converts a
portion of this Note pursuant to this Section 4, the Company
will issue the Holder a new note for the unconverted portion
of this Note on the same terms as this Note.
4.2
Cash in Lieu of
Fractional Shares . No fractional shares of
the Company’s Common Stock shall be issued upon
conversion of this Note.
|
