Exhibit 4.1
THIS CONVERTIBLE PROMISSORY NOTE AND THE
SECURITIES THAT MAY BE ACQUIRED PURSUANT TO THIS CONVERTIBLE
PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS
CONVERTIBLE PROMISSORY NOTE AND SUCH OTHER SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF A REGISTRATION STATEMENT AND LISTING
APPLICATION IN EFFECT WITH RESPECT TO THIS CONVERTIBLE PROMISSORY
NOTE OR SUCH OTHER SECURITIES UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE SECURITIES LAW, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND LISTING ARE
NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE
SECURITIES ACT AND THE APPLICABLE SECURITIES LAW OF ANY STATE OR
OTHER JURISDICTION.
CONVERTIBLE PROMISSORY
NOTE
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US
$500,000
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As of July 25,
2005
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FOR VALUE RECEIVED, E-centives,
Inc. , a Delaware corporation (the “Company”),
having an address of 6901 Rockledge Drive, 6
th
Floor, Bethesda,
Maryland 20817, hereby promises to pay to the order of
Venturetec, Inc. (the “Holder”), at the offices
of Holder at c/o Friedli Corporate Finance, Freigutstrasse 5,
8002 Zürich , or such other place as may be designated by
Holder to the Company in writing, the aggregate principal amount of
Five Hundred Thousand U.S. Dollars (US $500,000) together
with accrued unpaid interest on the unpaid principal amount hereof,
upon the terms and conditions hereinafter set forth.
1.
Payment Terms . The Company promises to pay to Holder the
balance of Principal, together with accrued unpaid interest, on
October 31, 2005 , unless this Note is earlier prepaid
as herein provided or earlier converted into Series C preferred
stock, par value US $0.01 per share, of the Company (the “
Series C Preferred Stock ”) pursuant to
Section 3 hereof. All payments hereunder shall be made
in lawful money of the United States of America. Payment shall be
credited first to the accrued interest then due and payable and the
remainder to Principal.
2.
Interest . Interest on the outstanding portion of Principal
of this Note shall accrue at a rate of ten percent
(10%) per annum . All computations of interest shall be
made on the basis of a 365-day year for actual days elapsed. Such
interest shall be paid in arrears on the last business day of each
successive one year anniversary of the date of this
Note.
3.
Conversion of this Note .
(a)
Conversion . This Note shall be convertible into shares of
Series C Preferred Stock at any time by the Holder at the Note
Conversion Rate (hereinafter defined) as hereinafter provided. The
conversion price will be US $4.00 per share of Series C Preferred
Stock (the “Note Conversion Rate”). The number of
shares of Series C Preferred Stock to which the Holder shall be
entitled upon such conversion shall be equal to the product of: the
aggregate principal amount outstanding under this Note at the time
of such conversion, together with accrued unpaid interest,
divided by the Note Conversion Rate.
(b)
Conversion Calculations: No Fractional Shares . Conversion
calculations pursuant to this Section 3 shall be
rounded to the nearest whole share of Series C Preferred Stock, and
no fractional shares
1
shall be issuable by the Company upon conversion
of this Note. Conversion of this Note shall be deemed payment in
full of this Note and this Note shall thereupon be
cancelled.
4.
Subordination . The indebtedness evidenced hereby is
subordinate in right of payment to all existing and future bank
indebtedness, including lease and equipment finance obligations, as
well as all other indebtedness designated as superior to that
contemplated herein. The indebtedness represented hereby is senior
in right of payment to all classes and series of the
Company’s capital stock. The indebtedness represented hereby
is pari passu with any and all convertible debt securities issued
by the Company.
5.
Redemption . This Note may be redeemed by the Company at any
time by payment of the entire principal and interest outstanding
under this Note in cash to Holder.
6.
Representations and Warranties of the Company . The Company
represents and warrants to Holder as follows:
(a) The
execution and delivery by the Company of this Note (i) are
within the Company’s corporate power and authority, and
(ii) have been duly authorized by all necessary corporate
action.
(b) This Note
is a legally binding obligation of the Company, enforceable against
the Company in accordance with the terms hereof, except to the
extent that (i) such enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and
(ii) the availability of the remedy of specific performance or
in injunctive or other equitable relief is subject to the
discretion of the court before which any proceeding therefore may
be brought.
7.
Representations, Warranties and Covenants of Holder . Holder
represents and warrants to the Company, and agrees, as
follows:
(a) This Note
and any Series C Preferred Stock issuable upon conversion of this
Note and any shares of Common Stock, par value $0.01 per share, of
the Company issued upon conversion of the Series C Preferred Stock
(the “Common Stock” and, together with this Note and
the Series C Preferred Stock, the “Securities”) are
being acquired by Holder for its own account for investment and not
with a view to, or for sale in connection with, any distribution
thereof.
(b) Holder is
an “accredited investor” within the meaning of Rule 501
under the Securities Act.
(c) Holder
has sufficient knowledge and experie
