Exhibit 10.6

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)

 

US $105,000.00

 

MAX SOUND CORPORATION.
8% CONVERTIBLE REDEEMABLE NOTE
DUE MAY 12, 2015
BACK END

 

FOR VALUE RECEIVED, Max Sound Corporation. (the “Company”) promises to pay to
the order of ADAR BAYS, LLC and its authorized successors and permitted assigns
("Holder"), the aggregate principal face amount of One Hundred Five Thousand
Dollars exactly (U.S. $105,000.00) on May 12, 2015 ("Maturity Date") and to pay
interest on the principal amount outstanding hereunder at the rate of 8% per
annum commencing on May 12, 2014. The Company acknowledges this Note was issued
with a 5% original issue discount (OID) and as such the issuance price was
$100,000.00. The interest will be paid to the Holder in whose name this Note is
registered on the records of the Company regarding registration and transfers of
this Note. The principal of, and interest on, this Note are payable at 3411
Indian Creek Drive, Suite 403, Miami Beach, FL 33140, initially, and if changed,
last appearing on the records of the Company as designated in writing by the
Holder hereof from time to time. The Company will pay each interest payment and
the outstanding principal due upon this Note before or on the Maturity Date,
less any amounts required by law to be deducted or withheld, to the Holder of
this Note by check or wire transfer addressed to such Holder at the last address
appearing on the records of the Company. The forwarding of such check or wire
transfer shall constitute a payment of outstanding principal hereunder and shall
satisfy and discharge the liability for principal on this Note to the extent of
the sum represented by such check or wire transfer. Interest shall be payable in
Common Stock (as defined below) pursuant to paragraph 4(b) herein.

  This Note is subject to the following additional provisions: 

 

1.          This Note is exchangeable for an equal aggregate principal amount of
Notes of different authorized denominations, as requested by the Holder
surrendering the same. No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.

 

 

2.          The Company shall be entitled to withhold from all payments any
amounts required to be withheld under applicable laws.

3.          This Note may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("Act") and applicable state securities
laws. Any attempted transfer to a non-qualifying party shall be treated by the
Company as void. Prior to due presentment for transfer of this Note, the Company
and any agent of the Company may treat the person in whose name this Note is
duly registered on the Company's records as the owner hereof for all other
purposes, whether or not this Note be overdue, and neither the Company nor any
such agent shall be affected or bound by notice to the contrary. Any Holder of
this Note electing to exercise the right of conversion set forth in Section 4(a)
hereof, in addition to the requirements set forth in Section 4(a), and any
prospective transferee of this Note, also is required to give the Company
written confirmation that this Note is being converted ("Notice of Conversion")
in the form annexed hereto as Exhibit A. The date of receipt (including receipt
by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.         (a)       The Holder of this Note is entitled, at its option, to
convert all or any amount of the principal face amount of this Note then
outstanding into shares of the Company's common stock (the "Common Stock")
without restrictive legend of any nature, at a price ("Conversion Price") for
each share of Common Stock equal to 65% of the lowest daily VWAP of the Common
Stock as reported on the National Quotations Bureau OTCQB exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be
traded in the future ("Exchange"), for the ten prior trading days including the
day upon which a Notice of Conversion is received by the Company (provided such
Notice of Conversion is delivered by fax or other electronic method of
communication to the Company after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price). If the shares
have not been delivered within 3 business days, the Notice of Conversion may be
rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the
Company of the Notice of Conversion. Once the Holder has received such shares of
Common Stock, the Holder shall surrender this Note to the Company, executed by
the Holder evidencing such Holder's intention to convert this Note or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued, but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
In the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to 55% instead of 65% while that “Chill” is in effect.

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           (b)        Interest on any unpaid principal balance of this Note
shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice
of Conversion to the Company for Interest Shares based on the formula provided
in Section 4(a) above. The dollar amount converted into Interest Shares shall be
all or a portion of the accrued interest calculated on the unpaid principal
balance of this Note to the date of such notice.

           (c)        During the first six months this Note is in effect, the
Company may redeem this Note by paying to the Holder an amount as follows: (i)
if the redemption is within the first 90 days this Note is in effect, then for
an amount equal to 130% of the unpaid principal amount of this Note along with
any interest that has accrued during that period, (ii) if the redemption is
after the 90th day this Note is in effect, but less than the 181st day this Note
is in effect, then for an amount equal to 140% of the unpaid principal amount of
this Note along with any accrued interest. This Note may not be redeemed after
180 days. The redemption must be closed and paid for within 3 business days of
the Company sending the redemption demand or the redemption will be invalid and
the Company may not redeem this Note.

           (d)        Upon (i) a transfer of all or substantially all of the
assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or
exchange of outstanding shares of the Common Stock, other than a forward or
reverse stock split or stock dividend, or (iii) any consolidation or merger of
the Company with or into another person or entity in which the Company is not
the surviving entity (other than a merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale
Event"), then, in each case, the Company shall, upon request of the Holder,
redeem this Note in cash for 150% of the principal amount, plus accrued but
unpaid interest through the date of redemption, or at the election of the
Holder, such Holder may convert the unpaid principal amount of this Note
(together with the amount of accrued but unpaid interest) into shares of Common
Stock immediately prior to such Sale Event at the Conversion Price.

           (e)       In case of any Sale Event (not to include a sale of all or
substantially all of the Company’s assets) in connection with which this Note is
not redeemed or converted, the Company shall cause effective provision to be
made so that the Holder of this Note shall have the right thereafter, by
converting this Note, to purchase or convert this Note into the kind and number
of shares of stock or other securities or property (including cash) receivable
upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Note and at the same Conversion
Price, as defined in this Note, immediately prior to such Sale Event. The
foregoing provisions shall similarly apply to successive Sale Events. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company or
successor person or entity acting in good faith.

 

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5.         No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Note at the time, place, and rate, and in the form, herein
prescribed.

6.         The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.

7.         The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees and expenses, which may be incurred by the Holder in
collecting any amount due under this Note.

8.         If one or more of the following described "Events of Default" shall
occur:

           (a)       The Company shall default in the payment of principal or
interest on this Note or any other note issued to the Holder by the Company; or

           (b)       Any of the representations or warranties made by the
Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection
with the execution and delivery of this Note, or the Securities Purchase
Agreement under which this note was issued shall be false or misleading in any
respect; or

           (c)       The Company shall fail to perform or observe, in any
respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or

           (d)       The Company shall (1) become insolvent; (2) admit in
writing its inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for its
dissolution; (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its property or
business; (5) file a petition for bankruptcy relief, consent to the filing of
such petition or have filed against it an involuntary petition for bankruptcy
relief, all under federal or state laws as applicable; or

           (e)       A trustee, liquidator or receiver shall be appointed for
the Company or for a substantial part of its property or business without its
consent and shall not be discharged within sixty (60) days after such
appointment; or

           (f)        Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of
the Company; or

           (g)       One or more money judgments, writs or warrants of
attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its
properties or other assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any event later than five (5)
days prior to the date of any proposed sale thereunder; or

 

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           (h)       The Company shall have defaulted on or breached any term of
any other note of similar debt instrument into which the Company has entered and
failed to cure such default within the appropriate grace period; or

           (i)        The Company shall have its Common Stock delisted from an
exchange (including the OTCBB exchange) or, if the Common Stock trades on an
exchange, then trading in the Common Stock shall be suspended for more than 10
consecutive days;

           (j)        If a majority of the members of the Board of Directors of
the Company on the date hereof are no longer serving as members of the Board;

           (k)       The Company shall not deliver to the Holder the Common
Stock pursuant to paragraph 4 herein without restrictive legend within 3
business days of its receipt of a Notice of Conversion; or

           (l)         The Company shall not replenish the reserve set forth in
Section 12, within 3 business days of the request of the Holder.

           (m)       The Company’s Common Stock has a closing bid price of less
than $0.10 per share for at least 5 consecutive trading days; or

           (n)       The aggregate dollar trading volume of the Company’s Common
Stock is less than fifty thousand dollars ($50,000.00) in any 5 consecutive
trading days; or

           (o)       The Company shall cease to be “current” in its filings with
the Securities and Exchange Commission.

Then, or at any time thereafter, unless cured (except for 8(m) and 8(n) which
are incurable defaults, the sole remedy of which is to allow the Holder to
cancel both this Note and the Holder Issued Note, and in each and every such
case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder's sole discretion, the
Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary not with standing, and
the Holder may immediately, and without expiration of any period of grace,
enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest
shall be accrue at a default interest rate of 16% per annum or, if such rate is
usurious or not permitted by current law, then at the highest rate of interest
permitted by law. Further, if the Note becomes due and payable, the Holder may
use the outstanding principal and interest due under the Note to offset any
payment obligations it may have to the Company. In the event of a breach of 8(k)
the penalty shall be $250 per day the shares are not issued beginning on the 4th
day after the conversion notice was delivered to the Company. This penalty shall
increase to $500 per day beginning on the 10th day.

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If the Holder shall commence an action or proceeding to enforce any provisions
of this Note, including, without limitation, engaging an attorney, then, if the
Holder prevails in such action, the Holder shall be reimbursed by the Company
for its attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.

9.         In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Note will not in any way be affected or
impaired thereby.

10.       Neither this Note nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.

11.       The Company represents that it is not a “shell” issuer and has never
been a “shell” issuer or that if it previously has been a “shell” issuer that at
least 12 months have passed since the Company has reported form 10 type
information indicating it is no longer a “shell issuer. Further. The Company
will instruct its counsel to either (i) write a 144- 3(a(9) opinion to allow for
salability of the conversion shares or (ii) accept such opinion from Holder’s
counsel.

12.       Prior to cash funding of this Note, The Company will issue irrevocable
transfer agent instructions reserving 3x the number of shares of Common Stock
necessary to allow the holder to convert this note based on the discounted
conversion price set forth in Section 4(a) herewith and in accordance with
Section 12 of the $105,000 144 note of even date herewith. The reserve shall be
replenished as needed to allow for conversions of this Note. Upon full
conversion of this Note, the reserve representing this Note shall be cancelled.
The Company will pay all transfer agent costs associated with issuing and
delivering the shares.

13.       The Company will give the Holder direct notice of any corporate
actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as
possible under law.

14.       This Note shall be governed by and construed in accordance with the
laws of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto. The Holder and the Company hereby mutually waive trial by
jury and consent to exclusive jurisdiction and venue in the courts of the State
of New York. This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as
an original.

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an
officer thereunto duly authorized.

 

Dated: May 12, 2014

      MAX SOUND CORPORATION       By:   /s/ Greg Halpern   Title: Chairman & CFO

 

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EXHIBIT A

 

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note) 

The undersigned hereby irrevocably elects to convert $_______________________ of
the above Note into_________________________ Shares of Common Stock of Max Sound
Corporation. (“Shares”) according to the conditions set forth in such Note, as
of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.

 

Date of Conversion: ____________________________________________________________

Applicable Conversion Price:
____________________________________________________

Signature:_________________________________________________________________

[Print Name of Holder and Title of Signer]

 

Address: __________________________________________________________________

                
__________________________________________________________________ 

 

SSN or EIN: ____________________________________ 

Shares are to be registered in the following name:
________________________________

Name:  ___________________________________________________

Address:  ___________________________________________________

Tel:  _________________________________________

Fax:   _________________________________________

SSN or EIN: _________________________________________

 

 

Shares are to be sent or delivered to the following account:

 

Account Name:

Address: