Exhibit 10.
7
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 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 $5,000,000
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As of March 25, 2004
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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 Friedli
Corporate Finance, Inc. and /or InVenture Inc. (the
“Holder”), at the offices of Holder at c/o Friedli
Corporate Finance AG, Friegutstrasse 5, Zurich, Switzerland 8002,
or such other place as may be designated by Holder to the Company
in writing, as directed by Friedli Corporate Finance, the aggregate
amount of up to Five Million Dollars ( $5,000,0000 ),
together with interest on the unpaid principal amount hereof, upon
the terms and conditions hereinafter set forth.
1. Draw Down . The Company may, in its
sole discretion, draw upon up to Five Million Dollars (
$5,000,0000 ), which shall be made available by the Holder
for a period of 24 months, for use as operating capital and for
general corporate purposes (the drawn down portion referred herein
as “Principal”). The terms and conditions set forth
herein shall only apply to the Principal.
2. Payment Terms . The Company promises
to pay to Holder the balance of Principal, together with accrued
and unpaid interest, on March 25, 2007, unless this Note is earlier
prepaid as herein provided or earlier converted into Common Stock
(as hereinafter defined) of the Company 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.
3. Interest . Interest on the outstanding
portion of Principal of this Note shall accrue at a rate of eight
percent (8%) 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.
4. Conversion of this Note .
(a) Automatic Conversion .
This Note shall automatically be converted into shares of the
Company’s common stock (“Common Stock”) at the
Note Conversion Rate (hereinafter defined) as hereinafter provided
on the date when the average trading price on the SWX New Market of
the SWX Swiss Exchange of the Common Stock for 30 consecutive
trading days has been equal to or greater than CHF 2.75
(“Conversion Date”). The conversion price will be 2
CHF, (as converted to U. S. dollars pursuant to a then recent
exchange rate, as calculated by the Company) (“Note
Conversion Rate”).
(b) Note Conversion Rate;
Conversion Price . The number of shares of Common Stock to
which Holder shall be entitled upon such conversion specified in
Section 3(a) above shall be equal to the product of:
the
1
Principal amount outstanding under this Note on
the Conversion Date, divided by the average trading price on
the SWX New Market of the SWX Swiss Exchange of the Common Stock
for the 5 previous trading days, but in no event higher than CHF 2,
(as converted to U. S. dollars pursuant to a then recent exchange
rate, as calculated by the Company) (“Note Conversion
Rate”). The conversion price payable by Holder upon any such
conversion hereunder shall be zero (0).
(c) Mechanics of Automatic
Conversion . Upon the occurrence of the event specified in
Section 3(a) above, this Note shall be converted into Common
Stock automatically without any further action by Holder; provided,
however, that the Company shall not be obligated to issue a
certificate or certificates evidencing the shares of Common Stock
issuable upon such conversion of this Note (“Conversion
Shares”) unless the original of this Note is delivered to the
Company, or Holder notifies the Company in writing that such
original of this Note has been lost, stolen or destroyed, and
Holder executes an agreement satisfactory to the Company to, among
other things, indemnify the Company from any loss incurred by the
Company in connection with such original of this Note. Upon
surrender by Holder to the Company of the original of this Note at
the office of the Company, there shall be issued and delivered to
Holder promptly at such office and in Holder’s name as shown
on the original of this Note, a certificate or certificates for the
applicable number of Conversion Shares on the
