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Exhibit
10.7
THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED UNTIL (i) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”) SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER AND THAT SUCH TRANSFER IS NOT IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.
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| November 16,
2001 |
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$308,105.00 |
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Atlanta, Georgia
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CONVERTIBLE PROMISSORY
NOTE
FOR VALUE RECEIVED, TRX, Inc.
(“Borrower”) unconditionally promises to pay to Davis
Family Holdings, LLC (“Davis”) on November 16, 2006
(the “Due Date”) (unless and only to the extent that
this Note shall have been sooner paid off or converted as herein
provided), without setoff, Six West Druid Hills Drive, Atlanta,
Georgia 30329, or at such other place as may be designated by Davis
in writing, the principal amount of Three Hundred Eight Thousand
One Hundred Five Dollars ($308,105.00) together with interest
computed daily on the outstanding principal balance hereunder, at
an annualized interest rate equal to 7% (the
“Note”).
1. Fees and Charges
. Notwithstanding any other provision contained in this Note,
Davis does not intend to charge and Borrower shall not be required
to pay any amount of interest or other fees or charges that are in
excess of the maximum permitted by applicable law. Any payment in
excess of such maximum shall be refunded to Borrower or credited
against principal, at the option of Davis.
2. Conversion
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2.1 Subject to the provisions
of this Section, at the option of Davis, all of the outstanding
principal amount plus any accrued and due but unpaid interest under
this Note may be converted, in whole, at any time on or before the
Maturity Date, into shares of the Company’s common stock,
$.01 par value per share (the “Common Stock”), at the
Conversion Price, determined as provided below, provided,
however, if prior to such conversion the Company shall issue
any other class or series of capital stock (the “Senior
Stock”), Davis, at its option, may elect to convert all of
the outstanding principal amount plus any accrued and due but
unpaid interest under this Note into shares of the Senior Stock on
the terms and conditions as set forth herein.
2.2 Upon conversion of this
Note, Davis shall be entitled to receive one share of Common Stock
for each Eleven Dollars and 03/100 cents ($11.03) of principal and
accrued and due but unpaid interest through the Conversion Date
(“Conversion Price”). As payment of accrued and unpaid
but not yet due interest, at the election of the Company Davis
shall be entitled to receive either (a) a number of shares of
Common Stock equal to such amount of interest divided by the
Conversion Price, or (b) a cash amount equal to such amount of
interest. No fractional shares of Common Stock shall be issued upon
the conversion of this Note. Instead of a fraction of a share of
Common Stock which would otherwise be issuable upon conversion of
this Note, the Company shall pay a cash adjustment in respect of
such fraction of a share of
Common Stock in an amount
equal to the same fractional interest of the Conversion Price. The
Company shall pay all taxes and other charges in respect of the
issuance of shares of Common Stock to Davis upon such
conversion.
2.3 In the case that the
Company shall, after the date hereof, issue or enter into an
agreement to issue additional shares of Common Stock, or securities
convertible into Common Stock (except for (i) shares of capital
stock issued upon conversion of any shares of the Company’s
preferred stock, (ii) shares of capital stock issued or issuable
pursuant to options or purchase agreements, warrants, capital
appreciation rights, calls, convertible shares, convertible debt
securities or other rights to acquire the Company’s
authorized and unissued capital stock which are outstanding on the
date hereof, (iii) shares issued pursuant to options granted under
the Company’s option plan after the date hereof so long as
the exercise price of such options is greater than $5.51, (iv)
shares of Common Stock issued pursuant to a subdivision of the
Common Stock or stock dividend pursuant to which the number of
shares for which this Note is convertible and the purchase price
therefore are adjusted pursuant to Section 2.6 hereof, or (v)
shares of capital stock issued pursuant to the exchange, conversion
or exercise of any securities convertible into Common Stock that
have previously been incorporated into computations hereunder) at a
purchase price per share for which Common Stock is issuable is less
than the Conversion Price then in effect (the “ Dilutive
Purchase Price ”), the Conversion Price then in effect
shall become the Dilutive Purchase Price. Promptly after any
adjustment in the Conversion Price pursuant to this Section 2.3,
the Company shall give written notice to Davis of the Conversion
Price following such adjustment, together with a schedule of
computations of such adjustment and confirmation from the
Company’s auditors of such adjustment.
2.4 In order to exercise the
right of conversion pursuant to Section 2.1 above, Davis shall give
written notice to the Company that Davis has elected to convert
this Note. Following receipt of such conversion notice, Davis shall
surrender this Note to the Company at its principal office. Upon
receipt of the Note so surrendered by Davis, the Company shall
issue and deliver to Davis the certificate or certificates or other
document evidencing the shares of Common Stock issuable on such
conversion. Such conversion shall be deemed to have been effected
at the close of business on the date of surrender of the Note to
the Company (the “Conversion Date”) and at such time
all rights of Davis under this Note shall cease and Davis shall be
deemed to have become a holder of record of the shares of Common
Stock of the Company into which this Note was converted.
2.5 In the event of any
taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to
receive any other right, the Company shall mail to Davis, at least
twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount
and character of such dividend, distribution or rights.
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2.6 Anti-Dilution
Adjustments .
(a) If the Company shall at
any time subdivide the outstanding shares of Common Stock or effect
a forward stock split by issuing stock dividends, then the number
of shares of Common Stock for which this Note is convertible
immediately prior to that subdivision (the “Number of Note
Shares”) shall be proportionately increased and the purchase
price therefor proportionately decreased, and if the Company shall
at any time combine the outstanding shares of Common Stock, then
the Number of Note Shares shall be proportionately decreased and
the purchase price therefor proportionately increased. Any
adjustment under this Section 2 shall become effective at the close
of business on the date the subdivision or combination becomes
effective.
(b) If the Common Stock
issuable on conversion of this Note shall be changed into the same
or a different number of shares of any other class or classes of
stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares
provided for above), then Davis of this Note shall, upon its
conversion, be entitled to receive, in lieu of the Common Stock
which Davis would have become entitled to receive but for such
change, that number of shares of such other class or classes of
stock which is equivalent to the number of shares of Common Stock
that would have been subject to receipt by Davis on conversion of
this Note immediately prior to that change.
(c) If at any time there
shall be a capital reorganization of the Company’s Common
Stock
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