NOTE |
THIS NOTEANDTHECOMMONSTOCKISSUABLEUPONCONVERSIONOFTHIS
REGISTEREDWITH THEUNITED STATES |
HAVE NOTBEEN ANDWILL NOTBE
THESECURITIESC |
SECURITIESANDEXCHANGECOMMISSIONOR
NEXEMPTIONFROM |
OMMISSIONOFANYSTATEPURSUANTTO A
REG |
ISTRATIONPROVIDEDUNDERTHESECURITIESACTOF1933,ASAMENDED,ANDTHERULES AND REGULATIONSPROMULGATEDTHEREUNDER(THE "1933ACT”)
US $30,975.00
MAX SOUND CORPORATION.
8% CONVERTIBLEREDEEMABLENOTEDUE SEPTEMBER 11, 2016
FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofF&SCAPITALPARTNERSUSA,LLCanditsauthorizedsuccessorsandper-mittedassigns("Holder"), theaggregateprincipalfaceamount ofThirtyThousand Nine HundredSeventyFiveDollarsexactly(U.S.$30,975.00)onSeptember11,2016("MaturityDate")andtopayinterestontheprincipalamountoutstandinghereunderattherateof8%perannumcom-mencing onSeptember11,2015.ThisNotecontainsa5%OIDsuchthatthepurchase priceshallbe$29,500.TheinterestwillbepaidtotheHolderinwhosenamethisNoteisregisteredontherecordsoftheCompanyregardingregistrationandtransfersofthisNote.Theprincipalof,andintereston,thisNotearepayableat16192CoastalHighway,Lewes,Delaware19958,initially,andifchanged,lastappearingontherecordsoftheCompanyasdesignatedinwritingbytheHolderhereoffromtimetotime.The Companywillpayeachinterestpaymentandtheoutstand-ingprincipaldueuponthisNotebeforeorontheMaturityDate,lessanyamountsrequiredbylawtobedeductedorwithheld,totheHolderofthisNotebycheckorwiretransferaddressedtosuchHolderatthelastaddressappearingontherecordsoftheCompany.TheforwardingofsuchcheckorwiretransfershallconstituteapaymentofoutstandingprincipalhereunderandshallsatisfyanddischargetheliabilityforprincipalonthisNotetotheextentofthesumrepre-sentedbysuchcheckorwiretransfer.InterestshallbepayableinCommonStock(asdefinedbelow) pursuant toparagraph4(b) herein.
This Note issubject to thefollowing additional provisions:
GH
Initials
1. ThisNoteisexchangeableforanequalaggregateprincipalamountof
Notesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame.
rgewillbemadeforsuchregistrationortransferorexchange,exceptthatHolder |
Noservicecha
shall payanytaxorothergovernmentalchargespayable inconnectiontherewith.
2. TheCompanyshallbe entitled to withholdfrom allpaymentsanyamountsrequired to bewithheldunderapplicable laws.
3. ThisNotemaybetransferredorexchangedonlyincompliancewiththeSecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattemptedtransfertoanon-qualifyingpartyshallbetreatedbytheCompanyasvoid.Priortoduepresent-mentfortransferofthisNote,theCompanyandanyagentoftheCompanymaytreatthepersoninwhosenamethisNoteisdulyregisteredontheCompany'srecordsastheownerhereofforallotherpurposes,whetherornotthisNotebeoverdue,andneithertheCompanynoranysuchagentshallbeaffectedorboundbynoticetothecontrary.AnyHolderofthisNoteelectingtoexercisetherightofconversionsetforthinSection4(a)hereof,inadditiontotherequirementssetforthinSection4(a),andanyprospectivetransfereeofthisNote,alsoisrequiredtogivetheCompanywrittenconfirmationthatthisNoteisbeingconverted("NoticeofConversion")intheformannexedheretoasExhibitA.Thedateofreceipt(includingreceiptbytelecopy)ofsuchNoticeofConversion shall betheConversionDate.
4. (a)TheHolderofthisNoteisentitled,atitsoption, toconvertalloranyamountoftheprincipalfaceamountofthisNotethenoutstandingintosharesoftheCompa-ny'scommonstock(the"CommonStock")ataprice("ConversionPrice")foreachshareofCommonStockequalto65%ofthelowestdailyVWAPoftheCommonStockasreportedontheNationalQuotationsBureauOTCQBexchangewhichtheCompany’ssharesaretradedoranyexchangeuponwhichtheCommonStockmaybetradedinthefuture("Exchange"),forthetenpriortradingdaysincludingthedayuponwhichaNoticeofConversionisreceivedbytheCompanyoritstransferagent(providedsuchNoticeofConversionisdeliveredbyfaxorotherelectronicmethodofcommunicationtotheCompanyoritstransferagentafter4P.M.EasternStandardorDaylightSavingsTimeiftheHolderwishestoincludethesamedayclosingprice).Iftheshareshavenotbeendeliveredwithin3businessdays,theNoticeofConversionmayberescinded.SuchconversionshallbeeffectuatedbytheCompanydeliveringthesharesofCom-monStocktotheHolderwithin3businessdaysofreceipt bytheCompanyoftheNotice of Con-version.Accruedbutunpaidinterestshallbesubjecttoconversion.Nofractionalsharesorscriprepresentingfractionsofshareswillbeissuedonconversion,butthenumberofsharesissuableshallberoundedtothenearestwholeshare.TotheextenttheConversionPriceoftheCompa-ny’sCommonStockclosesbelowtheparvaluepershare,theCompanywilltakeallstepsneces-sarytosolicittheconsentofthestockholderstoreducetheparvaluetothelowestvaluepossibleunderlaw.TheCompanyagreestohonorallconversionssubmittedpendingthisincrease.IntheeventtheCompanyexperiencesaDTC“Chill”onitsshares,theconversionpriceshallbede-creasedto55%insteadof65%whilethat“Chill”isineffect.InnoeventshalltheHolderbeal-lowedtoeffectaconversionifsuchconversion,alongwithallothersharesofCompanyCom-monStockbeneficiallyownedbytheHolderanditsaffiliateswouldexceed9.9%oftheout-standingshares of theCommon Stock oftheCompany
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidattherateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("InterestShares").Holdermay,atanytime,sendinaNoticeofConversiontotheCompanyforInterestSharesbasedontheformulaprovidedinSection4(a)above.ThedollaramountconvertedintoInterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipalbalanceofthis Note to thedate ofsuchnotice.
(c) DuringthefirstsixmonthsthisNoteisineffect,theCompanymayre-deemthisNoteby payingtotheHolderanamountasfollows:(i)iftheredemptioniswithinthefirst90daysthisNoteisineffect,thenforanamountequalto130%oftheunpaidprincipalamountofthisNotealongwithanyinterestthathasaccruedduringthatperiod,(ii)ifthere-demptionisafterthe91stdaythisNoteisineffect,butlessthanthe180thdaythisNoteisinef-fect,thenforanamountequalto135%oftheunpaidprincipalamountofthisNotealongwith
anyaccruedinterest.ThisNotemaynotberedeemedafter180days.Theredemptionmustbeclosedandpaidforwithin3businessdaysoftheCompanysendingtheredemptiondemandortheredemption will beinvalidand the Companymaynotredeem this Note.
(d) Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompanyto anypersonin asingletransaction orseriesofrelatedtransactions, (ii) areclassification,capitalreorganizationorotherchangeorexchangeofoutstandingsharesoftheCommonStock,otherthanaforwardorreversestocksplitorstockdividend,or(iii)anyconsolidationormergeroftheCompanywithorintoanotherpersonorentityinwhichtheCompanyisnotthesurvivingentity(otherthanamergerwhichiseffectedsolelytochangethejurisdictionofincorporationoftheCompanyandresultsinareclassification,conversionorexchangeofoutstandingsharesofCommonStocksolelyintosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingre-ferredtoasa"SaleEvent"),then,ineachcase,theCompanyshall,uponrequestoftheHolder,redeemthisNoteincashfor150%oftheprincipalamount,plusaccruedbutunpaidinterestthroughthedateofredemption,orattheelectionoftheHolder,suchHolder may converttheun-paidprincipalamountofthisNote(togetherwiththeamountofaccruedbutunpaidinterest)intoshares of Common Stock immediatelypriorto suchSaleEvent at the Conversion Price.
(e) Incase of any SaleEvent(nottoincludeasaleofallorsubstantially alloftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,theCompanyshallcauseeffectiveprovisiontobemadesothattheHolderofthisNoteshallhavetherightthereafter,byconvertingthisNote,topurchaseorconvertthisNoteintothekindandnumberofsharesofstockorothersecuritiesorproperty(includingcash)receivableuponsuchreclassification,capitalreorganizationorotherchange,consolidationormergerbyaholderofthenumberofsharesofCommonStockthatcouldhavebeenpurchaseduponexerciseoftheNoteandatthesameConversionPrice,asdefinedinthisNote,immediatelypriortosuchSaleEvent.The foregoingprovisionsshallsimilarlyapplytosuccessiveSaleEvents.Iftheconsidera-tionreceivedbytheholdersofCommonStockisotherthancash,thevalueshallbeasdeter-minedbytheBoardofDirectorsoftheCompanyorsuccessorpersonorentityactingingoodfaith.
5. NoprovisionofthisNoteshallalterorimpairtheobligationoftheCom-pany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteat
thetime,place,andrate,and in the form, hereinprescribed.
6. TheCompanyherebyexpresslywaivesdemandandpresentmentforpay-ment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofaccelerationorintenttoaccelerate,anddiligenceintakinganyactiontocollectamountscalledforhereunderandshallbedirectlyandprimarilyliableforthepaymentofallsumsowingandtobeowinghereto.
7. TheCompanyagreestopayallcostsandexpenses,includingreasonableattorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdueunder this Note.
| 8. | Ifoneor moreof the followingdescribed"Events ofDefault"shalloccur: |
(a) TheCompanyshalldefaultinthepaymentofprincipalorinterestonthisNoteor anyother noteissued to the HolderbytheCompany; or
(b) AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinorinanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyoronbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNote,ortheSe-curitiesPurchaseAgreementunderwhichthisnotewasissuedshallbefalseormisleading inanyrespect; or
(c) TheCompanyshallfailtoperformorobserve,inanyrespect,anycove-nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteoranyothernote issued to theHolder; or
(d) TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinabilitytopayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsorcommenceproceedingsforitsdissolution;(4)applyfororconsenttotheappointmentofatrus-tee, liquidatororreceiverforits orforasubstantialpart ofits propertyorbusiness;(5) fileapeti-tionforbankruptcyrelief,consenttothefilingofsuchpetitionorhavefiledagainstitaninvol-untarypetitionfor bankruptcyrelief,allunderfederal or statelawsas applicable; or
(e) Atrustee,liquidatororreceivershallbeappointedfortheCompanyorforasubstantialpartofitspropertyorbusinesswithoutitsconsentandshallnotbedischargedwith-in sixty(60) daysafter suchappointment; or
(f) Anygovernmentalagencyoranycourtofcompetentjurisdictionatthein-stanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstan-tial portion oftheproperties or assets of the Company; or
(g) Oneormoremoneyjudgments,writsorwarrantsofattachment,orsimilarprocess,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredorfiledagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated,unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive(5)days
prior to the date ofanyproposed salethereunder; or
(h) TheCompanyshallhavedefaultedonorbreachedanytermofanyothernoteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde-fault within theappropriategraceperiod; or
(i) TheCompanyshallhaveitsCommonStockdelistedfromanexchange(includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentradingin theCommon Stockshall be suspended for morethan 10consecutive days;
(j) IfamajorityofthemembersoftheBoardofDirectorsoftheCompanyonthedatehereofareno longerservingasmembersof theBoard;
(k) TheCompanyshallnotdelivertotheHoldertheCommonStockpursuanttoparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNoticeof Conversion; or
(l) TheCompanyshallnotreplenishthereservesetforthinSection12,with-in 3 businessdays of therequest of theHolder.
(m) TheCompanyshallnotbe“current”initsfilingswiththeSecuritiesandExchangeCommission; or
(n) TheCompanyshalllosethe“bid”priceforitsstockandamarket(includ-ingtheOTCBBmarketplaceor otherexchange)
Then,oratanytimethereafter,unlesscuredwithin5days,andineachandeverysuchcase,un-lesssuchEventofDefaultshallhavebeenwaivedinwritingbytheHolder(whichwaivershallnotbedeemedtobeawaiverofanysubsequentdefault)attheoptionoftheHolderandintheHolder'ssolediscretion,theHoldermayconsiderthisNoteimmediatelydueandpayable,with-outpresentment,demand,protestor(further)noticeofanykind(otherthannoticeofaccelera-tion),allofwhichareherebyexpresslywaived,anythinghereinorinanynoteorotherinstru-mentscontainedtothecontrarynotwithstanding,andtheHoldermayimmediately,andwithoutexpirationofanyperiodofgrace,enforceany andalloftheHolder'srightsandremediesprovid-edhereinoranyotherrightsorremediesaffordedbylaw.UponanEventofDefault,interestshallaccrueatadefaultinterestrateof24%perannumor,ifsuchrateisusuriousornotpermit-tedbycurrentlaw,thenatthehighestrateofinterestpermittedbylaw.Intheeventofabreach
ofSection8(k)thepenaltyshallbe$250perdaythesharesarenotissuedbeginningonthe4th
dayaftertheconversionnoticewasdeliveredtotheCompany.Thispenaltyshallincreaseto
$500perdaybeginningonthe10thday.ThepenaltyforabreachofSection8(n)shallbeanin-creaseoftheoutstandingprincipalamountsby20%.IncaseofabreachofSection8(i),theout-standingprincipal due under this Noteshall increaseby50%.Further, ifa breachofSection 8(m)occursoriscontinuingafterthe6monthanniversaryoftheNote,thentheHoldershallbeenti-tledtousethelowestclosingbidpriceduringthedelinquencyperiodasabasepriceforthecon-version.Forexample,ifthelowestclosingbidpriceduringthedelinquencyperiodis$0.01pershareandtheconversiondiscountis50%theHoldermayelecttoconvertfutureconversionsat
$0.005pershare.IfthisNoteisnotpaidatmaturity,theoutstandingprincipaldueunderthisNoteshallincreaseby10%.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in-cluding,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,theHoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpensesincurred in theinvestigation,preparationandprosecution ofsuchaction orproceeding.
Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,iftheCompanyfailsforanyreasontodelivertotheHoldertheconversionsharesbythebythe3rdbusinessdayfollowingthedeliveryofaNoticeofConversiontotheCompanyandiftheHolderincursaFailuretoDeliverLoss,thenatanytimetheHoldermayprovidetheCompanywrittennoticeindicatingtheamountspayabletotheHolderinrespectoftheFailuretoDeliverLossandthe Companymust make theHolderwholeas follows:
FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num-ber ofconversion shares)]
TheCompanymustpaythe Failureto DeliverLossbycash payment,andanysuch cashpaymentmustbemadebythethirdbusinessdayfromthetimeoftheHolder’swrittennoticetotheCom-pany.
9. Incaseany provisionofthisNoteisheldbyacourtofcompetentjurisdic-tiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbead-justedratherthanvoided,ifpossible,sothatitisenforceabletothemaximumextentpossible,andthevalidityandenforceabilityoftheremainingprovisionsofthisNotewillnotinanywaybe affected orimpairedthereby.
10. NeitherthisNotenoranytermhereofmaybeamended,waived,dis-chargedorterminated otherthanbyawritteninstrumentsignedbytheCompanyand theHolder.
11. The Companyrepresentsthatitisnota“shell”issuerandhasneverbeena“shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassedsincetheCompany hasreportedform10typeinformationindicatingitisnolongera“shellissu-er.Further.TheCompanywillinstructitscounseltoeither(i)writea144opiniontoallowforsalabilityof the conversionshares or(ii)accept such opinionfrom Holder’s counsel.
12. TheCompanyshallissueirrevocabletransferagentinstructionsreserving6,000,000sharesofitsCommonStockforconversionsunderthisNote(the“ShareReserve”).UponfullconversionofthisNote,anysharesremainingintheShareReserveshallbecancelled.TheCompanyshallpayallcostsassociatedwithissuinganddeliveringtheshares.IfsuchamountsaretobepaidbytheHolder,itmaydeductsuchamountsfromtheConversionPrice.ConversionNoticesmaybesenttotheCompanyoritstransferagentviaelectricmail.Thecom-panyshouldatalltimesreserveaminimumoffourtimestheamountofsharesrequiredifthenotewouldbefullyconverted.TheHoldermayreasonablyrequestincreasesfromtimetotimetoreservesuchamounts.
13. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions,including butnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbegiven to the Holderas soonas possible underlaw.
14. ThisNoteshallbegovernedbyandconstruedinaccordancewiththelawsofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNewYorkandshallbebindinguponthesuccessorsandassignsofeachparty hereto.TheHolderandthe Companyherebymutuallywaivetrialbyjuryand consent to exclusivejurisdictionand venueinthecourtsoftheStateofNewYork.ThisAgreementmaybeexecutedincounterparts,andthefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasanoriginal.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecut-edbyanofficer thereunto dulyauthorized.
Dated:9/11/2015
MAX SOUND CORPORATION
By:_
Title:
CFO
EXHIBIT A
NOTICE OFCONVERSION
(To be ExecutedbytheRegisteredHolder in order toConvert theNote)
Theundersignedherebyirrevocablyelectstoconvert$oftheaboveNoteintoSharesofCommonStockofMaxSoundCorporation.(“Shares”)accord-ingto the conditionsset forth insuchNote,as of the datewritten below.
IfSharesaretobeissuedinthenameofapersonotherthantheundersigned,theundersigned willpayall transferand othertaxes and chargespayablewithrespectthereto.
Dateof Conversion:ApplicableConversionPrice:Signature:
[PrintName ofHolder and TitleofSigner]
Address:
SSN or EIN:
Shares areto beregistered in the followingname:
Name:Address:Tel:Fax:SSN orEIN:
Shares areto besent ordelivered to thefollowing account:
Account Name:Address:
