Document:

f8k101013ex10ii_dethrone.htm

Exhibit 10.2

 

MASTER PROMISSORY NOTE

 

	Effective Date: [________]	U.S. $48,000.00

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay to [________], a [________] corporation, or its successors or assigns (“Lender”), $48,000 and any interest, fees, charges and penalties in accordance with the terms herein. This Master Promissory Note (this “Master Note”) is issued and made effective as of [_______] (the “Effective Date”). For purposes hereof, the “Outstanding Balance” of each Note (as defined below) means the Purchase Price (as defined below) of such Note, as reduced or increased, as the case may be, pursuant to the terms hereof for redemption, conversion or otherwise, plus any original issue discount (“OID”), accrued but unpaid interest, collection and enforcements costs, and any other fees or charges (including without limitation late charges) incurred under each such Note.

 

The purchase price for this Master Note is $40,000.00 (the “Purchase Price”) payable by wire transfer. The original principal amount of this Master Note shall include the Purchase Price, a $4,000.00 OID, and $4,000.00 to cover Lender’s legal, due diligence and other transaction expenses.  Borrower agrees that the Master Promissory Note is fully paid for as of the Effective Date.

 

Lender shall have the right, but not the obligation, to lend additional funds to Borrower in up to eight (8) additional tranches, each in the amount of $20,000.00 (each a “Tranche”), at any time or from time to time beginning on the Effective Date and ending one year from the date that the entire Outstanding Balance of the most recently funded Note has been repaid (the “Option Expiration Date”).  On the Effective Date, Borrower will execute and issue each of the eight (8) Subsequent Promissory Notes attached hereto as Exhibit A (each, a “Subsequent Note,” and together with the Master Note, the “Notes,” and each of the Notes individually, a “Note”). Each Subsequent Note shall have an initial Outstanding Balance of $22,000.00, consisting of $20,000.00 payable by wire and a $2,000.00 OID.  Each of the Subsequent Notes shall be deemed issued by Lender on the Effective Date; provided, however, that no Subsequent Note shall be considered a valid, binding or enforceable obligation of Borrower until Lender delivers to Borrower: (i) the Purchase Price for the applicable Subsequent Note, and (ii) a copy of the applicable Subsequent Note (with applicable blanks filled in by Lender) (the “Effective Conditions”).  Borrower agrees in advance that upon Lender’s satisfaction of the Effective Conditions with respect to a Subsequent Note, that such Subsequent Note shall automatically become an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Each Subsequent Note shall be considered a separate instrument from this Master Note and each other Subsequent Note.

 

This Master Note and each Subsequent Note shall have its own separate maturity date, which shall be the date that is one year from the date the Purchase Price is paid (the “Purchase Price Date”) for such Note (the “Maturity Date”).  The Purchase Price Date for the Master Note shall be the Effective Date.  On each separate Maturity Date, the applicable Outstanding Balance shall be due and payable.  Borrower and Lender agree that for Rule 144 purposes each Subsequent Note shall be considered fully paid and the applicable holding period shall begin on the date Lender satisfies the Effective Conditions with respect to such Subsequent Note.  The terms of each Subsequent Note are incorporated by reference and made a part of this Agreement.  In the case of any conflict between this Master Note and any Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by such Subsequent Note.

 

  

  

  

 

Subject to the adjustments described in this paragraph, the conversion price for each Note shall be 60% (the “Conversion Factor”) of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the Conversion (as defined below) (the “Conversion Price”). If at any time after the Effective Date the DWAC Eligible Conditions (defined below) are not satisfied, then the Conversion Factor will automatically be reduced by 5% for all future Conversions under all Notes. If at any time after the Effective Date, the Conversion Shares are chilled for deposit into the DTC system and thus are only eligible for Xclearing deposit, then the Conversion Factor will automatically be reduced by an additional 5% for all future Conversions under all Notes; provided that the maximum reduction of the Conversion Factor may not exceed 10%. For example, the first time one of the DWAC Eligible Conditions is not satisfied, the Conversion Factor for all future Conversions thereafter will be reduced from 60% to 55%. If following such event, the Conversion Shares are chilled for deposit in the DTC system and only eligible for Xclearing deposit, the Conversion Factor for all Conversions thereafter will be reduced from 55% to 50%. “DTC” means the Depository Trust Company. “DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer Program. “DWAC” means Deposit Withdrawal at Custodian as defined by the DTC. “DWAC Eligible Conditions” means that (i) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer through DTC’s DWAC system, (ii) the Borrower has been approved (without revocation) by the DTC’s underwriting department, and (iii) the Borrower’s transfer agent is approved as an agent in the DTC/FAST Program, (iv) the Conversion Shares are otherwise eligible for delivery via DWAC; and (v) the Borrower’s transfer agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.

 

1. Interest.  Borrower may repay any Note at any time on or before 90 days from the Purchase Price Date (the “Prepayment Opportunity Date”). If Borrower repays a Note on or before the Prepayment Opportunity Date, the interest rate shall be ZERO PRECENT (0%).  If Borrower does not repay the entire Outstanding Balance of the applicable Note on or before the applicable Prepayment Opportunity Date, a one-time interest charge of 12% (the “Interest Charge”) shall be applied to the entire Outstanding Balance of such Note. Any interest payable is in addition to any applicable OID and the applicable OID, remains payable regardless of time and manner of payment by Borrower.  Following the Prepayment Opportunity Date of each Note, such Note may only be prepaid by the Borrower with the prior written consent of the Lender.

 

2. Conversion.  Lender has the right at any time after the date that is six (6) months from Purchase Price Date of each Note, at its election, to convert (each instance of conversion is referred to herein as a “Conversion”) all or any part of the Outstanding Balance of such Note into shares (“Conversion Shares”) of fully paid and non-assessable common stock of Borrower (“Common Stock”) as per the following conversion formula: the number of Conversion Shares equals the Conversion amount divided by the Conversion Price.  Conversion notices (each, a “Conversion Notice”) under any of the Notes may be delivered to Borrower by any method of Lender’s choice (including but not limited to facsimile, email, mail, overnight courier, or personal delivery), and all Conversions shall be cashless and not require further payment from Lender.  If no objection is delivered from Borrower to Lender regarding any variable or calculation of the Conversion Notice within 24 hours of delivery of the Conversion Notice, Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such Conversion Notice and waived any objection thereto.  Borrower shall deliver the Conversion Shares from any Conversion to Lender within three (3) business days of Conversion Notice delivery.

 

3. Conversion Delays.  If Borrower fails to deliver Conversion Shares in accordance with the timeframes stated in Section 2, Lender, at any time prior to selling all of those Conversion Shares, may rescind in whole or in part that particular Conversion attributable to the unsold Conversion Shares, with a corresponding increase to the applicable Outstanding Balance (any returned Conversion amount will tack back to the Purchase Price Date of the applicable Note).  In addition, for each Conversion, in the event that Conversion Shares are not delivered by the fourth business day (inclusive of the day of the Conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the Conversion) until Conversion Share delivery is made; and such penalty will be added to the Note being converted (under Lender’s and Borrower’s expectations that any penalty amounts will tack back to the applicable Purchase Price Date).

 

  

  

  

 

4. Default.  The following are events of default under the Notes: (i) Borrower shall fail to pay any principal under any Note when due and payable (or payable by Conversion) hereunder; or (ii) Borrower shall fail to pay any interest or any other amount under any Note when due and payable (or payable by Conversion) hereunder; or (iii) a receiver, trustee or other similar official shall be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) Borrower shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or (v) Borrower shall make a general assignment for the benefit of creditors; or (vi) Borrower shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (vii) an involuntary proceeding shall be commenced or filed against Borrower; or (viii) Borrower shall lose its status as “DTC Eligible” or Borrower’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or (ix) Borrower shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC; or (x) Borrower shall fail to deliver any Conversion Shares in accordance with the terms hereof; or (xi) Borrower shall fail to observe or perform any covenant, obligation, condition or agreement of Borrower contained herein, including without limitation all covenants to timely file all required quarterly and annual reports and any other filings related to Rule 144; or (xii) any representation, warranty or other statement made or furnished by or on behalf of Borrower to Lender herein or in connection with the issuance of the Notes shall be false, incorrect, incomplete or misleading in any material respect when made or furnished or becomes false thereafter.

 

5. Remedies.  In the event of any default under any Note, Lender may at any time thereafter accelerate the Notes by written notice to the Borrower, with the Outstanding Balance of each such Note becoming immediately due and payable in cash at the Mandatory Default Amount (as defined hereafter). Notwithstanding the foregoing, upon the occurrence of any event of default described in clauses (iii), (iv), (v), (vi), or (vii) of Section 4, each Outstanding Balance as of the date of acceleration shall become immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender. The “Mandatory Default Amount” means the greater of (i) the applicable Outstanding Balance divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full whichever has a higher VWAP, or (ii) 125% of the applicable Outstanding Balance.  Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of the Notes, interest shall accrue on the Outstanding Balance of each Note at an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law.  In connection with such acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder of the Note until such time, if any, as Lender receives full payment pursuant to this Section 5.  No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon.  Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver certificates representing Conversion Shares upon Conversion of the Notes as required pursuant to the terms hereof.

 

6. No Offset.  Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or conversions called for herein in accordance with the terms of the Notes.

 

  

  

  

 

7. Ownership Limited to 9.99% of Common Stock Outstanding. Notwithstanding anything to the contrary contained in any of the Notes (except as set forth below in this subsection), the Notes shall not be convertible by Lender, and Borrower shall not effect any conversion of the Notes or otherwise issue any shares of Common Stock pursuant to Section 2 hereof, to the extent (but only to the extent) that Lender together with any of its affiliates would beneficially own in excess of 9.99% (the “Maximum Percentage”) of the Common Stock outstanding. To the extent the foregoing limitation applies, the determination of whether a Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by Lender or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by Lender and its affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to Borrower for conversion, exercise or exchange (as the case may be). No prior inability to convert a Note, or to issue shares of Common Stock, pursuant to this Section shall have any effect on the applicability of the provisions of this Section with respect to any subsequent determination of convertibility. For purposes of this Section, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(e) of the 1934 Act (as defined below) and the rules and regulations promulgated thereunder. The provisions of this Section shall be implemented in a manner otherwise than in strict conformity with the terms of this Section to correct this Section (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section shall apply to a successor holder of this Note and shall be unconditional, irrevocable and non-waivable.  For any reason at any time, upon the written or oral request of Lender, Borrower shall within one (1) business day confirm orally and in writing to Lender the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Note.

 

8. Survival.  This Master Note shall survive until the later of (i) the Option Expiration Date, and (ii) the date the last funded Subsequent Note has been repaid or converted in full.

 

9. Opinion of Counsel.  In the event that an opinion of counsel is needed for any matter related to any Note, Lender has the right to have any such opinion provided by its counsel.  Lender also has the right to have any such opinion provided by Borrower’s counsel.

 

10. Consent Right.  From and after the date hereof and until all of the Borrower’s obligations hereunder and the Note are paid and performed in full, the Borrower shall not enter into any equity line of credit or financing arrangement or other transaction that involves issuing Borrower securities that are convertible into or exercisable for Common Stock (including without limitation selling convertible debt, warrants or convertible preferred stock) without Lender’s consent.

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

 

  

  

  

 

IN WITNESS WHEREOF, Borrower has caused this Master Note to be duly executed as of the Effective Date set out above.

 

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[________]

By: _________________________

       [________]

  

  

  

 

EXHIBIT A

 

SUBSEQUENT PROMISSORY NOTES #1 – #8

 

(See Attached)

 

 

 

 

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 1

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 2

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 3

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 4

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.    Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 5

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 6

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 7

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.    Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]

 

  

  

  

 

SUBSEQUENT PROMISSORY NOTE # 8

 

FOR VALUE RECEIVED, Dethrone Royalty Holdings, Inc., a Nevada corporation (“Borrower”) promises to pay [______], a [____] corporation, or its successors or assigns (“Lender”), $22,000.00 and any other interest and fees according to the terms herein. This Subsequent Promissory Note (this “Subsequent Note”) is made effective as of _________ __, 201_ (the “Purchase Price Date”).  All capitalized terms not defined herein shall have the meanings ascribed to such terms in that certain Master Promissory Note issued by Borrower in favor of Lender on [_________] (the “Master Note”).

 

1.           The Purchase Price for this Subsequent Promissory Note is $20,000.  The initial Outstanding Balance of this Subsequent Note includes the $20,000 Purchase Price and a $2,000.00 OID.  Borrower acknowledges that the full and complete Purchase Price was received on the Purchase Price Date.  Proof of payment of the Purchase Price is attached hereto as Schedule 1.

 

2.           This Subsequent Note shall be considered a separate instrument from the Master Note and from each other Subsequent Note.

 

3.           Borrower acknowledges that this Subsequent Note is an unconditional, valid, binding and enforceable obligation of the Borrower not subject to offset, deduction or counterclaim of any kind. Borrower and Lender agree that the Rule 144 holding period of this Subsequent Note will begin on the Purchase Price Date.

 

4.           This Subsequent Note shall be subject to and governed in accordance with the terms and conditions set forth in the Master Note and the Purchase Agreement.  All the terms and provisions of the Master Note are hereby incorporated by reference and made a part of this Subsequent Note.  In the case of any conflict between the Master Note and this Subsequent Note, the terms of this Master Note shall govern except with respect to any terms expressly supplied by this Subsequent Note.

 

IN WITNESS WHEREOF, Borrower has caused this Subsequent Note to be duly executed as of the Effective Date of the Master Note.

 

	 	BORROWER:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

LENDER:

[______]

By: _________________________

       [_________]f8k101013ex10iii_dethrone.htm

Exhibit 10.3

 

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO DETHRONE ROYALTY HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

DETHRONE ROYALTY HOLDINGS, INC.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

1. Issuance. In consideration of good and valuable consideration as set forth in the Purchase Agreement (defined below), including without limitation the Purchase Price (as defined in the Purchase Agreement), the receipt and sufficiency of which are hereby acknowledged by Dethrone Royalty Holdings, Inc., a Nevada corporation (the “Company”); [_______], a [_______] corporation, its successors and/or registered assigns (the “Holder”), is hereby granted the right to purchase at any time on or after the Issue Date (as defined below) until the date which is the last calendar day of the month in which the fifth anniversary of the Issue Date occurs (the “Expiration Date”), a number of fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), equal to $112,000 divided by the Conversion Price (as defined in the Master Note, as of the Issue Date), as such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant to Purchase Shares of Common Stock (this “Warrant”).  This Warrant is being issued pursuant to the terms of that certain Securities Purchase Agreement dated [_______], to which the Company and the Holder are parties (as the same may be amended from time to time, the “Purchase Agreement”).

 

Unless otherwise indicated herein, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

 

This Warrant was originally issued to the Holder on [_______] (the “Issue Date”).

 

2. Exercise of Warrant.

 

2.1. General.

 

(a) This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date and ending on the Expiration Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by email or facsimile transmission) a completed and duly executed Notice of Exercise substantially in the form attached to this Warrant as Exhibit A (the “Notice of Exercise”). The date such Notice of Exercise is either faxed, emailed or delivered to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder shall tender this Warrant to the Company within five (5) Trading Days thereafter, but only if the Warrant Shares to be delivered pursuant to the Notice of Exercise have been delivered to the Holder as of such date.  The Notice of Exercise shall be executed by the Holder and shall indicate (i) the number of Delivery Shares (as defined below) to be issued pursuant to such exercise, and (ii) if applicable (as provided below), whether the exercise is a cashless exercise.

 

  

  

  

 

For purposes of this Warrant, the term “Trading Day” means any day during which the principal market on which the Common Stock is traded (the “Principal Market”) shall be open for business.

 

(b) Notwithstanding any other provision contained herein or in any other Transaction Document  to the contrary, at any time prior to the Expiration Date, the Holder may elect a “cashless” exercise of this Warrant for any Warrant Shares whereby the Holder shall be entitled to receive a number of shares of Common Stock equal to (i) the excess of the Current Market Value (as defined below) over the aggregate Exercise Price of the Exercise Shares (as defined below), divided by (ii) the Adjusted Price of the Common Stock (as defined below).

 

For the purposes of this Warrant, the following terms shall have the following meanings:

 

“Adjusted Price of the Common Stock” shall mean the lower of (i) any Conversion Price (as defined in the Master Note or each Subsequent Note, as applicable), as such Conversion Price may be adjusted from time to time pursuant to the terms of the Note (solely for the purpose of determining the then-current Conversion Price under this definition of “Adjusted Price of the Common Stock,” each cashless exercise of this Warrant shall be deemed a conversion under the Note), and (ii) the Exercise Price, without regard to whether the Master Note or any Subsequent Note remains outstanding or has been fully repaid, cancelled or otherwise retired, on any relevant Exercise Date.

 

“Current Market Value” shall mean an amount equal to the Market Price of the Common Stock (as defined below), multiplied by the number of Exercise Shares specified in the applicable Notice of Exercise.

 

“Closing Price” shall mean the 4:00 P.M. last sale price of the Common Stock on the Principal Market on the relevant Trading Day(s), as reported by Bloomberg LP (or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service of national reputation selected by the Holder and reasonably acceptable to the Company) (“Bloomberg”) for the relevant date.

 

“Delivery Shares” means those shares of Common Stock issuable and deliverable upon the exercise of this Warrant.

 

“Exercise Price” shall mean $0.025 per share of Common Stock, as the same may be adjusted from time to time pursuant to the terms and conditions of this Warrant.

 

“Exercise Shares” shall mean those Warrant Shares subject to an exercise of the Warrant by the Holder.  By way of illustration only and without limiting the foregoing, if (i) the Warrant is initially exercisable for 4,180,000 Warrant Shares and the Holder has not previously exercised the Warrant, and (ii) the Holder were to make a cashless exercise with respect to 5,000 Warrant Shares pursuant to which 6,000 Delivery Shares would be issuable to the Holder, then (1) the Warrant shall be deemed to have been exercised with respect to 5,000 Exercise Shares, (2) the Warrant would remain exercisable for 4,175,000 Warrant Shares, and (3) the Warrant shall be deemed to have been exercised with respect to 6,000 Delivery Shares.

 

“Market Price of the Common Stock” shall mean the higher of: (i) the Closing Price of the Common Stock on the Issue Date; and (ii) the VWAP (as defined below) of the Common Stock for the Trading Day that is two (2) Trading Days prior to the Exercise Date.

 

  

  

  

 

“Note” or “Notes” shall have the meaning set forth in the Purchase Agreement.

 

“Transaction Documents” or “Transaction Document” shall have the meaning set forth in the Purchase Agreement.

 

“VWAP” shall mean the volume-weighted average price of the Common Stock on the Principal Market for a particular Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.

 

(c) If the Notice of Exercise form elects a “cash” exercise (or if the cashless exercise referred to in the immediately preceding subsection (b) is not available in accordance with the terms hereof), the Exercise Price per share of Common Stock for the Delivery Shares shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder.

 

(d) Upon the appropriate payment to the Company, if any, of the Exercise Price for the Delivery Shares, together with the surrender of this Warrant (if required), the Company shall promptly, but in no case later than the date that is three (3) Trading Days following the date the Exercise Price is paid to the Company (or with respect to a “cashless exercise,” the date that is three (3) Trading Days following the Exercise Date), provided that the Common Stock is then DTC Eligible (as defined in the Note), deliver or cause the Company’s Transfer Agent (as defined in the Note) to deliver to Holder or its broker (as designated in the Notice of Exercise), via reputable overnight courier, a certificate, registered in the name of the Holder or its designee, representing DTC Eligible Common Stock equal to the applicable number of Delivery Shares.  If the Common Stock is not DTC Eligible at such time, such shall constitute a breach of this Warrant (and thus an Event of Default under the Note), and the Company shall instead, on or before the applicable date set forth above in this subsection, issue and deliver to the Holder or its broker (as designated in the Notice of Exercise), via reputable overnight courier, a certificate, registered in the name of the Holder or its designee, representing the applicable number of Delivery Shares. For the avoidance of doubt, the Company has not met its obligation to deliver Delivery Shares within the required timeframe set forth above unless Holder or its broker, as applicable, has actually received the certificate representing the applicable Delivery Shares no later than the close of business on the latest possible delivery date pursuant to the terms set forth above.

 

(e) If Delivery Shares are delivered later than as required under subsection (d) immediately above, the Company agrees to pay, in addition to all other remedies available to the Holder in the Transaction Documents, a late charge equal to the greater of (i) $2,000.00 and (ii) 2% of the product of (1) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (2) the Closing Sale Price (as defined in the Note) of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating this Warrant, per Trading Day until such Delivery Shares are delivered. The Company shall pay any late charges incurred under this subsection in immediately available funds upon demand; provided, however, that, at the option of the Holder (without notice to the Company), such amount owed may be added to the principal amount of the Note.  Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Delivery Shares as required under subsection (d) immediately above, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the late charge described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

  

  

  

 

(f) The Holder shall be deemed to be the holder of the Delivery Shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date.

 

2.2. Ownership Limitation. Notwithstanding anything to the contrary contained in this Warrant or the other Transaction Documents, if at any time the Holder shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause the Holder (together with its Affiliates) to own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company must not issue to the Holder shares of the Common Stock which would exceed the Maximum Percentage. The shares of Common Stock issuable to the Holder that would cause the Maximum Percentage to be exceeded are referred to herein as the "Ownership Limitation Shares". The Company will reserve the Ownership Limitation Shares for the exclusive benefit of the Holder. From time to time, the Holder may notify the Company in writing of the number of the Ownership Limitation Shares that may be issued to the Holder without causing the Holder to exceed the Maximum Percentage. Upon receipt of such notice, the Company shall be unconditionally obligated to immediately issue such designated shares to the Holder, with a corresponding reduction in the number of the Ownership Limitation Shares. Notwithstanding the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization of the Common Stock is less than $5,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such change to “9.99%” shall be permanent. For purposes of this Agreement, the term “Market Capitalization of the Common Stock” shall mean the product equal to (A) the average VWAP (as defined in the Note) of the Common Stock for the immediately preceding fifteen (15) Trading Days, multiplied by (B) the aggregate number of outstanding shares of Common Stock as reported on the Company’s most recently filed Form 10-Q or Form 10-K.  By written notice to the Company, the Holder may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Holder.

 

3. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver to the Holder a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

 

4. Rights of the Holder. The Holder shall not, by virtue of this Warrant alone, be entitled to any rights of a stockholder in the Company, either at law or in equity, and the rights of the Holder with respect to or arising under this Warrant are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

 

5. Protection Against Dilution and Other Adjustments.

 

5.1. Capital Adjustments.  If the Company shall at any time prior to the expiration of this Warrant subdivide the Common Stock, by split-up or stock split, or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend, the number of Warrant Shares issuable upon the exercise of this Warrant shall forthwith be automatically increased proportionately in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the Exercise Price, Conversion Price (in the event of a cashless exercise), and other applicable amounts, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 5.1 shall become effective automatically at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

  

  

  

 

5.2. Reclassification, Reorganization and Consolidation.  In case of any reclassification, capital reorganization, or change in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 5.1 above), then the Company shall make appropriate provision so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Common Stock as were purchasable by the Holder immediately prior to such reclassification, reorganization, or change.  In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per Warrant Share payable hereunder, provided the aggregate purchase price shall remain the same.

 

5.3. Subsequent Equity Sales. If the Company or any subsidiary thereof, as applicable, at any time and from time to time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock (including any Common Stock issued under the Note, whether upon any type of conversion or any Deemed Issuance (as defined in the Note)), preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or securities which are convertible into or exercisable for shares of Common Stock (together herein referred to as “Equity Securities”), at an effective price per share less than the Exercise Price (such lower price, the “Base Share Price” and such issuance collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Equity Securities so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options, or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then (a) the Exercise Price shall be reduced and only reduced to equal the Base Share Price, and (b) the number of Warrant Shares issuable upon the exercise of this Warrant shall be increased to an amount equal to the number of Warrant Shares the Holder could purchase hereunder for an aggregate Exercise Price, as reduced pursuant to subsection (a) above, equal to the aggregate Exercise Price payable immediately prior to such reduction in Exercise Price.  Such adjustments shall be made whenever such Common Stock or Equity Securities are issued. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance of any Common Stock or Equity Securities subject to this Section 5.3, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price, or other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5.3, upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive the increased number of Warrant Shares provided for in subsection (b) above at an Exercise Price equal to the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.  Additionally, following the occurrence of a Dilutive Issuance, all references in this Warrant to “Warrant Shares” shall be a reference to the Warrant Shares as increased pursuant to subsection (b) above, and all references in this Warrant to “Exercise Price” shall be a reference to the Exercise Price as reduced pursuant to subsection (a) above, as the same may occur from time to time hereunder.

 

  

  

  

 

5.4. Notice of Adjustment. Without limiting any other provision contained herein, when any adjustment is required to be made in the number or kind of shares purchasable upon exercise of this Warrant, or in the Exercise Price, pursuant to the terms hereof, the Company shall promptly notify the Holder of such event and of the number of Warrant Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5.5. Exceptions to Adjustment.  Notwithstanding the provisions of Sections 5.3 and 5.4, no adjustment to the Exercise Price shall be effected as a result of an Excepted Issuance.  “Excepted Issuances” shall mean, collectively, (a) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as any such issuances are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration rights, and (b) the Company’s issuance of Common Stock or the issuance or grant of options to purchase Common Stock to employees, directors, officers and consultants, authorized by the Company’s board of directors pursuant to plans or agreements which are authorized, constituted or in effect as of the Issue Date.

 

6. Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder and any Warrant Agent (as defined below) appointed pursuant to Section 8 hereof.  Nothing in this Section 6 shall be deemed to limit any other provision contained herein.

 

7. Transfer to Comply with the Securities Act. This Warrant, and the Warrant Shares, have not been registered under the 1933 Act. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated without (a) an effective registration statement under the 1933 Act relating to such security or (b) an opinion of counsel reasonably satisfactory to the Company that registration is not required under the 1933 Act. Until such time as registration has occurred under the 1933 Act, each certificate for this Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section 7; provided, however, that the Company acknowledges and agrees that any such legend shall be removed from all certificates for DTC Eligible Common Stock delivered hereunder as such Common Stock is cleared and converted into electronic shares by the DTC (as defined in the Note), and nothing contained herein shall be interpreted to the contrary. Any such transfer shall be accompanied by a transferor assignment substantially in the form attached to this Warrant as Exhibit B (the “Transferor Assignment”), executed by the transferor and the transferee and submitted to the Company. Upon receipt of the duly executed Transferor Assignment, the Company shall register the transferee thereon as the new Holder on the books and records of the Company and such transferee shall be deemed a “registered holder” or “registered assign” for all purposes hereunder, and shall have all the rights of the Holder.

 

  

  

  

 

8. Warrant Agent. The Company may, by written notice to the Holder, appoint an agent (a “Warrant Agent”) for the purpose of issuing shares of Common Stock on the exercise of this Warrant pursuant hereto, exchanging this Warrant pursuant hereto, and replacing this Warrant pursuant hereto, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

 

9. Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the Holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

10. Notices.  Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices” in the Purchase Agreement, the terms of which are incorporated herein by reference.

 

11. Supplements and Amendments; Whole Agreement.  This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant, together with the Purchase Agreement and all the other Transaction Documents, taken together, contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings with respect to the subject matter hereof and thereof other than as expressly contained herein and therein.

 

12. Descriptive Headings.  Descriptive headings of the sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

[Remainder of page intentionally left blank]

 

  

  

  

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by an officer thereunto duly authorized as of the Issue Date.

 

 

	 	THE COMPANY:	 
	 	 	 
	 	Dethrone Royalty Holdings, Inc.	 
	 	 	 
	 	 	 	 
	 	
By: 

	 	 

	 	Printed Name:	 	 

	 	Title:	 	 
	 	 	 	 

 

  

  

  

 

EXHIBIT A

NOTICE OF EXERCISE OF WARRANT

TO:           DETHRONE ROYALTY HOLDINGS, INC.

ATTN: _______________

VIA FAX TO: (    )______________

The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant to Purchase Shares of Common Stock dated as of [_______] (the “Warrant”), to purchase   shares of the common stock, $0.001 par value (“Common Stock”), of DETHRONE ROYALTY HOLDINGS, INC., and tenders herewith payment in accordance with Section 2 of the Warrant, as follows:

_______                      CASH: $__________________________ = (Exercise Price x Delivery Shares)

	
_______

	
Payment is being made by:

	
_____

	
enclosed check

	
_____

	
wire transfer

	
_____

	
other

_______                      CASHLESS EXERCISE:

Net number of Delivery Shares to be issued to Holder: ______*

* based on:                      Current Market Value - (Exercise Price x Exercise Shares)

    Adjusted Price of the Common Stock

Where:

Market Price of the Common Stock [“MP”]                               =           $____________

Exercise Shares                                                                               =           _____________

Current Market Value [MP x Exercise Shares]                           =           $____________

Exercise Price                                                                                  =           $____________

Adjusted Price of the Common Stock                                         =           $____________

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Warrant.

It is the intention of the Holder to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on the Holder’s right to receive shares thereunder. The Holder believes this exercise complies with the provisions of such Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby, the Holder would receive more shares of Common Stock than permitted under Section 2.2, the Company shall not be obligated and shall not issue to the Holder such excess shares until such time, if ever, that the Holder could receive such excess shares without violating, and in full compliance with, Section 2.2 of the Warrant.

As contemplated by the Warrant, this Notice of Exercise is being sent by facsimile to the fax number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or email or facsimile transmission of this Notice of Exercise; provided that the Warrant Shares to be delivered pursuant to this Notice of Exercise have been delivered to the Holder as of such date.

 

  

  

  

 

So that DTC processing can begin, please deliver, via reputable overnight courier, a certificate representing DTC Eligible Common Stock equal in number to the Delivery Shares to:

Name: ______________________________________

Address: _____________________________________

               _____________________________________

To the extent the Delivery Shares are not DTC Eligible, please deliver a certificate representing non-DTC Eligible Common Stock equal in number to the Delivery Shares to the party and address set forth immediately above.

 

Dated:           _____________________

___________________________

[Name of Holder]

By:________________________

  

  

  

 

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of the Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the Warrant to Purchase Shares of Common Stock dated as of [_______] (the “Warrant”) to purchase the percentage and number of shares of common stock, $0.001 par value (“Common Stock”), of DETHRONE ROYALTY HOLDINGS, INC. specified under the headings “Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of such person(s), and appoints each such person attorney to transfer the undersigned’s respective right on the books of DETHRONE ROYALTY HOLDINGS, INC. with full power of substitution in the premises.

Transferees                                           Percentage Transferred                                            Number Transferred

Dated:___________, ______

______________________________

[Transferor Name must conform to the name of Holder as specified on the face of the Warrant]

By: ___________________________

Name: _________________________

Signed in the presence of:

_________________________

(Name)

ACCEPTED AND AGREED:

_________________________

[TRANSFEREE]

By: _______________________

Name: _____________________

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