Exhibit 10.5

 

SENIOR PROMISSORY NOTE

 

$242,498 December 31, 2014   Los Angeles, CA

 

FOR VALUE RECEIVED, Loton, Corp., a Nevada corporation (“Borrower”), promises to
pay to the order of (“Lender”), the principal sum of Two Hundred and Forty-Two
Thousand, Four Hundred and Ninety-Eight Dollars ($242,498), pursuant to the
terms of this Senior Promissory Note (this “Note”), plus interest at the
applicable Note Rate (as defined in paragraph 2) from the date hereof until the
date such amounts are repaid by Borrower in full.

 

Prior to and through the date hereof, Lender has rendered professional services
to Borrower, and Lender and Borrower agree that the balance of professional fees
payable to the Lender from the Borrower through December 31, 2014 is equal to
the principal sum of the Note. Trinad Capital Master Fund (“Trinad”), as a
signatory hereto, consents to the terms of this Note, and the parties agree
that, subject to any other term of this Note, all outstanding unpaid principal
and accrued but unpaid interest (the “Loan Balance”) shall be repaid to Lender
pari passu with amounts payable under that certain Senior Convertible Promissory
Note, between Borrower and Trinad dated December 31, 2014 (the “Trinad Loan”).

 

1.          Maturity. The Loan Balance shall be due and payable on June 30, 2016
or such later date as Lender may agree to in writing (the “Maturity Date”)
unless, prior to such date, this Note shall have been prepaid in full pursuant
to paragraph 4.

 

2.          Interest.

 

(a)          The principal sum outstanding at any time during the period from
the date hereof until the Maturity Date (the “Term”) shall bear interest at the
rate of six percent (6%) per annum (the “Note Rate”), but in no event more than
the maximum interest rate permitted by applicable law. Interest shall be
calculated daily on the basis of a 365-day year at the rate equal to the Note
Rate, and shall be payable on the last business day of each calendar quarter
commencing on March 31, 2015 (each, an “Interest Payment Date”).

 

(b)          Prior to the Maturity Date, Borrower may from time to time in lieu
of making a payment to Lender pursuant to paragraph 3 of the interest due and
payable under this Note on any applicable Interest Payment Date, elect that the
amount of such interest be added to the principal sum outstanding under this
Note (such election, a “PIK Election”). Borrower shall provide written notice of
the PIK Election to Lender at least five (5) days before such applicable
Interest Payment Date, which notice shall state (i) the amount of interest due
and payable under this Note to be added to the principal sum outstanding and
(ii) the date on which such interest would otherwise be due and payable to
Lender. For the avoidance of doubt, immediately after each PIK Election, the
principal sum outstanding under this Note shall equal the sum of (x) the
outstanding unpaid principal immediately before the PIK Election, plus (y) the
amount of interest otherwise due and payable on the applicable Interest Payment
Date, and interest shall accrue on such aggregate principal sum.

 

3.          Manner of Payment. All payments under this Note shall be made by
wire transfer of immediately available funds to an account designated by Lender
in writing. Any payment shall be applied when received, first, to the payment of
any accrued but unpaid interest and, thereafter, to reduce the principal balance
of this Note. If any payment of principal or interest on this Note is due on a
day which is not a Business Day, such payment shall be due on the next
succeeding Business Day. As used herein, “Business Day” means a day other than
Saturday on which banks are generally open for business in the State of
California.

 

 

 

  

4.          Prepayment.

 

(a)          In the event that, at any time following the date of this Note,
Borrower raises equity capital from any third party other than Trinad (an
“Equity Financing”), then ten percent (10%) of the capital raised in the Equity
Financing shall be used to prepay amounts outstanding under this Note (a
“Capital Raise Prepayment”). Each Capital Raise Prepayment shall be paid to
Lender within five (5) business days of the closing of the applicable Equity
Financing.

 

(b)          In addition to the foregoing, Borrower may, without premium or
penalty, at any time and from time to time, prepay all or a part of the Loan
Balance computed to the date of prepayment.

 

(c)          All prepayments apply first to accrued unpaid interest and then to
principal.

 

5.          Representations and Warranties. Borrower makes the following
representations and warranties in favor of Lender, which representations and
warranties shall survive the execution of this Note and shall remain true,
accurate and in full force and effect until all obligations of Borrower under
this Note have been satisfied and paid in full:

 

(a)          Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, and has the power and
authority to enter into and perform its obligations under this Note; and

 

(b)          Borrower has duly executed and delivered this Note, and this Note
is a legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with their terms.

 

6.          Covenants. Borrower covenants and agrees that, on and after the date
hereof, and until the Loan and any other obligations of Borrower hereunder are
paid and performed in full and satisfied, Borrower shall comply with each of the
following covenants, unless compliance therewith shall have been waived in
writing by Lender:

 

(a)          Borrower will pay when due all its payment obligations hereunder,
in the manner and at the time and place specified in this Note or otherwise by
Lender in writing;

 

(b)          Borrower will not without the prior written consent of Lender
guarantee any obligations other than in the ordinary course of business.

 

7.          Events of Default. Upon 5 days’ prior written notice by the Lender
and failure to cure by the Borrow in an additional 10 days, the occurrence or
existence of any one or more of the following shall constitute an “Event of
Default” hereunder:

 

(a)          Borrower fails to make any payment when due or otherwise to perform
any of the material terms, covenants or provisions of any loan agreement,
promissory note or other contract to which Borrower is a party;

 

(b)          Borrower fails to observe or perform any covenant, obligation,
condition or agreement set forth herein;

 

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8.          Remedies Upon an Event of Default. Upon the occurrence and during
the continuance of an Event of Default, Lender may, by notice to Borrower,
declare the entire outstanding principal balance of this Note, together with all
accrued interest thereon, immediately due and payable, without presentment,
demand, protest or notice of protest of any kind, all of which are hereby
expressly waived. To the extent permitted by law, Borrower shall pay Lender all
out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred
by Lender in the collection of this Note upon any Event of Default.

 

9.          Obligation for Fees and Expenses. Borrower agrees to pay immediately
upon demand all costs and expenses of Lender, including reasonable attorneys’
fees, (a) if after default this Note be placed in the hands of an attorney or
attorneys, or other appropriate agent(s) for collection; (b) if after an Event
of Default hereunder, Lender finds it necessary or desirable to secure the
services or advice of one or more attorneys with regard to collection of this
Note against Borrower, any guarantor or any other party liable therefor or for
the protection of its rights under this Note.

 

10.         No Waiver. The acceptance by Lender of any payments under this Note
after the date that such payment is due shall not constitute a waiver of the
right to require prompt payment when due of future or succeeding payments or to
declare a default as herein provided for any failure to so pay. The acceptance
by Lender of the payment of a portion of any installment at any time that such
installment is in its entirety due and payable shall not cure such default and
shall not constitute a waiver of Lender’s rights to require full payment when
due of all future or succeeding installments.

 

11.         Governing Law. This Note is governed by the laws of the State of
California, without regard to conflict or choice of law principles that would
result in the application of any law other than the laws of the State of
California.

 

12.         Assignment and Delegation. Borrower shall have no right to assign
its rights hereunder, to delegate any of its obligations hereunder. Lender shall
be entitled to delegate its obligations hereunder and to assign this Note and/or
any and all security therefor in whole or in part to any person or entity
without the consent of Borrower.

 

13.         Remedies Cumulative. If Lender delays in exercising or fails to
exercise any of its rights under this Note, that delay or failure will not
constitute a waiver of any of Lender’s rights or of any breach, default, or
failure of condition under this Note. No waiver by Lender of any of its rights
or of any breach, default or failure of a condition under this Note shall be
effective unless it is stated in writing signed by Lender. All of Lender’s
remedies in connection with this Note or under applicable law shall be
cumulative, and Lender’s exercise of any one or more of those remedies will not
constitute an election of remedies. Time is expressly made of the essence with
respect to every provision this Note.

 

14.         Participation. Borrower understands that Lender may transfer this
Note in whole or in part, or sell or grant participation in some or all of
Borrower’s indebtedness outstanding under this Note. In connection with any such
transaction, Lender may disclose to each prospective and actual transferee,
purchaser or participant all documents and information relating to this Note and
the indebtedness represented hereby. Lender shall give Borrower notice of any
such transfer, sale or grant.

 

15.         Notices. Any notice, demand, consent, approval, direction, agreement
or other communication (any “Notice”) required or permitted hereunder shall be
in writing and shall be validly given and effectively served if mailed by United
States mail, first class or certified mail, return receipt requested, postage
prepaid, sent by or if sent by verifiable facsimile or e-mail to the Borrower at
its address most recently provided to the Lender. Any Notice shall be deemed to
have been validly given and effectively served hereunder three (3) days after so
mailed or on the business day on which the facsimile or e-mail was sent if
delivered during normal business hours, or else on the next succeeding business
day. Any person shall have the right to specify, from time to time, as its
address or addresses for purposes of this Note, any other address or addresses
upon giving three (3) days’ notice thereof to each other person then entitled to
receive notices or other instruments hereunder.

 

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16.         Counterparts. This Note may be executed in one or more counterparts,
each of which shall be deemed to be an original, and all of which together
comprise but a single instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Senior Secured
Convertible Promissory Note as of the date first written above.

 

  BORROWER       Loton, Corp.         By:     Name: Robert S. Ellin   Its:
Executive Chairman         LENDER         By:     Name:     Its:  

 

[SIGNATURE PAGE FOR Senior PROMISSORY NOTE]

 

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