THISNOTEANDTHECOMMONSTOCKISSUABLEUPONCONVERSIONOFTHISNOTEHAVENOTBEENANDWILLNOTBEREGISTEREDWITHTHEUNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONORTHESECURITIESCOMMISSIONOFANYSTATEPURSUANTTOAN EXEMPTION FROMREGISTRATIONPROVIDEDUNDER THESECURITIESACT OF1933,ASAMENDED,ANDTHERULES AND REGULATIONSPROMULGATED THEREUNDER(THE"1933 ACT”)
US $110,250.00
MAXSOUND CORPORATION.
8%CONVERTIBLEREDEEMABLENOTEDUE MARCH 17, 2016
FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofADARBAYS,LLCanditsauthorizedsuccessorsandpermittedassigns("Hold-er"),theaggregateprincipalfaceamountofOneHundredTenThousandTwoHundredFiftyDollarsexactly(U.S.$110,250.00)onMarch17,2016("MaturityDate")andtopayinterestontheprincipalamountoutstandinghereunderattherateof8%perannumcommencingonMarch 17,2015.TheCompanyacknowledgesthisNotewasissuedwitha5%originalissuedis-count (OID) and assuch the issuance pricewas $105,000.00. The interestwill be paid to theHolder inwhose namethisNote isregistered onthe recordsofthe Companyregardingregistra-tionandtransfers of thisNote. The principalof, and interest on, thisNoteare payable at3411 Indian CreekDrive,Suite403,MiamiBeach,FL33140, initially, andifchanged, lastappearing ontherecords of the Company as designated inwriting by theHolder hereof from time to time. The Companywill pay each interest payment and the outstanding principal due upon thisNote before or on theMaturityDate,lessany amounts requiredby law tobe deducted orwithheld,to theHolderofthisNote bycheckorwiretransferaddressedtosuchHolder atthelast addressap- pearing on the records of the Company. The forwarding ofsuch check orwire transfershall con-stitute a payment ofoutstanding principal hereunderandshallsatisfyand discharge the liability for principal on thisNote to the extent of thesum represented bysuch check orwire transfer. In-terestshall be payable in CommonStock (as defined below) pursuant to paragraph 4(b) herein.
ThisNoteissubjecttothefollowingadditionalprovisions:
GH
Initials
1. ThisNoteisexchangeableforanequalaggregateprincipalamountofNotesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame.Noservicechargewillbemadeforsuchregistrationortransferorexchange,exceptthatHoldershallpayanytaxorothergovernmentalchargespayableinconnectiontherewith.
2. TheCompanyshallbeentitledtowithholdfromallpaymentsanyamountsrequiredtobewithheldunderapplicablelaws.
3. ThisNotemaybetransferredorexchangedonlyincompliancewiththeSecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattemptedtransfertoanon-qualifyingpartyshallbetreatedbytheCompanyasvoid.Priortoduepresent-mentfortransferofthisNote,theCompanyandanyagentoftheCompanymaytreatthepersoninwhosenamethisNoteisdulyregisteredontheCompany'srecordsastheownerhereofforallotherpurposes,whetherornotthisNotebeoverdue,and neither the Companynoranysuchagentshall be affected or bound by notice to thecontrary.AnyHolder of thisNote electing toexercise the right of conversionset forth inSection 4(a) hereof, in addition to the requirementssetforth inSection 4(a), and anyprospective transfereeof thisNote, also isrequired to givethe CompanywrittenconfirmationthatthisNoteisbeingconverted("NoticeofConversion")inthe formannexedheretoasExhibitA.Thedateofreceipt(includingreceiptbytelecopy)ofsuchNotice of Conversionshall be the ConversionDate.
4. (a)TheHolderofthisNoteisentitled,atitsoption,toconvertallorany amount oftheprincipalfaceamount ofthisNotethen outstandingintosharesof theCompa-ny'scommonstock(the"CommonStock")ataprice("ConversionPrice")foreachshareofCommonStockequalto65%ofthelowestdailyVWAPoftheCommonStockasreportedontheNationalQuotationsBureauOTCQBexchangewhichtheCompany’ssharesaretradedoranyexchangeuponwhich theCommonStockmaybetradedinthefuture("Exchange"),for thetenprior trading days including the dayuponwhichaNoticeof Conversionis receivedby theCompany (providedsuchNotice of Conversion is delivered by fax or other electronic method ofcommunicationtotheCompanyafter4P.M. EasternStandardorDaylightSavingsTimeif theHolderwishesto include thesameday closing price). If theshareshavenot been deliveredwith- in 3 business days, theNotice of Conversion may be rescinded.Such conversionshall beeffec- tuated by the Company delivering theshares of CommonStock to theHolderwithin 3 businessdays ofreceipt bytheCompany oftheNotice ofConversion.Once the Holderhas received suchsharesofCommonStock,theHoldershallsurrenderthisNotetotheCompany,executed bytheHolder evidencingsuchHolder's intentionto convertthisNote or aspecified portion hereof, andaccompanied by proper assignmenthereofin blank.Accrued butunpaid interestshall be subject toconversion.Nofractionalsharesorscriprepresenting fractionsofshareswill beissued on conversion, but the number ofsharesissuable shallbe rounded to the nearest whole share. In theeventthe Companyexperiences aDTC“Chill” on itsshares, theconversion priceshall bede-creased to55%insteadof65% whilethat “Chill”isineffect.In noevent shallthe Holderbe al- lowed to effect a conversion ifsuch conversion,alongwith all othershares of CompanyCom-monStockbeneficiallyownedbytheHolderanditsaffiliateswouldexceed9.9%oftheout-standingshares of the CommonStock of the Company.
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidattherateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("InterestShares").Holdermay,atanytime,sendinaNoticeofConversiontotheCompanyforInterestSharesbasedontheformulaprovidedinSection4(a)above.ThedollaramountconvertedintoInterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipalbalanceofthisNoteto thedateofsuchnotice.
(c) DuringthefirstsixmonthsthisNoteisineffect,theCompanymayre-deemthisNotebypayingtotheHolderanamountasfollows:(i)iftheredemptionoccurswithinthefirst90daysthenanamountequalto130%oftheunpaidprincipalamountofthisNotealong
withanyprepaidandearnedinterest,(ii)iftheredemptionoccursafterthefirst90daysbutbe-forethe180thdayfollowingtheissuanceofthisNote,thenanamountequalto135%oftheun-paidprincipalamountofthisNotealongwithanyprepaidandearnedinterest.ThisNotemaynotberedeemedafter180days.Theredemptionmustbeclosedandpaidforwithin3businessdays
oftheCompanysendingtheredemptiondemandortheredemptionwillbeinvalidandtheCom-panymaynotredeemthisNote.
(d) Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompanytoanypersoninasingletransactionorseriesofrelatedtransactions,(ii)areclassification,capitalreorganizationorotherchangeorexchangeofoutstandingsharesoftheCommonStock,otherthanaforward orreversestocksplit orstockdividend,or (iii)anyconsolidation or merger of theCompanywithorintoanotherpersonorentityinwhichtheCompanyisnotthesurvivingentity(otherthanamergerwhichiseffectedsolelytochangethejurisdictionofincorporationoftheCompany and results in a reclassification, conversion or exchange of outstandingshares of CommonStocksolelyintosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingre- ferredtoasa"SaleEvent"),then,ineachcase,theCompanyshall,uponrequest oftheHolder, redeem thisNote in cash for 150% of the principal amount, plus accrued but unpaid interest through the dateofredemption,or at theelection of the Holder, such Holdermayconvert theun- paidprincipalamount of thisNote(togetherwiththe amount of accrued butunpaidinterest) intosharesofCommonStockimmediately priortosuchSaleEvent atthe ConversionPrice.
(e) In case of anySale Event (not to include asale of all orsubstantially all oftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,theCompanyshallcauseeffectiveprovisiontobemadesothattheHolderofthisNoteshallhavetherightthereafter,byconvertingthisNote,topurchaseorconvertthisNoteintothekindandnumberofsharesofstockorothersecuritiesorproperty(includingcash)receivableuponsuchreclassification,capitalreorganizationorotherchange,consolidationormergerbyaholderof thenumberofsharesofCommonStockthatcouldhavebeenpurchaseduponexerciseoftheNote and at thesame ConversionPrice, as defined in thisNote, immediately prior tosuchSale Event. The foregoing provisionsshallsimilarly apply tosuccessiveSale Events. If theconsidera-tionreceivedbytheholdersofCommonStockisotherthancash,thevalueshallbeasdeter- minedbytheBoardofDirectorsoftheCompanyorsuccessorpersonorentityactingingoodfaith.
5. NoprovisionofthisNoteshallalterorimpairtheobligationoftheCom-pany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteatthetime,place,andrate,andintheform,hereinprescribed.
6. TheCompanyherebyexpresslywaivesdemandandpresentmentforpay-ment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofacceleration orintenttoaccelerate,anddiligenceintakinganyactiontocollectamountscalledforhereunder andshallbedirectlyandprimarilyliableforthepaymentofallsumsowingandtobeowinghereto.
7. TheCompanyagreestopayallcostsandexpenses,includingreasonable attorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdueunderthisNote.
| 8. | Ifoneormoreofthefollowingdescribed"EventsofDefault"shalloccur: |
(a) TheCompanyshalldefaultinthepaymentofprincipalorinterestonthisNoteoranyothernoteissuedtotheHolderbytheCompany;or
(b) AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinorinanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyoronbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNote,ortheSe-curitiesPurchaseAgreementunderwhichthisnotewasissuedshallbefalseormisleadinginanyrespect;or
(c) TheCompanyshallfailtoperformorobserve,inanyrespect,anycove-nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteoranyothernoteissuedtotheHolder;or
(d) TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinabilitytopayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsor commenceproceedingsforitsdissolution;(4)applyfororconsenttotheappointmentofatrus-tee,liquidatororreceiverforitsorforasubstantialpartofitspropertyorbusiness;(5)fileapeti-tionforbankruptcyrelief,consenttothefilingofsuchpetitionorhavefiledagainstitaninvol- untary petition forbankruptcy relief,all under federalorstatelaws as applicable; or
(e) Atrustee,liquidatororreceivershallbeappointedfortheCompanyorfora substantialpart of its property or business without its consentandshall not be dischargedwith-insixty(60)daysaftersuchappointment;or
(f) Any governmental agencyor anycourt ofcompetent jurisdiction at thein-stanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstan-tialportionofthepropertiesorassetsoftheCompany;or
| (g) | Oneor moremoney judgments, writsorwarrants of attachment,or similar |
process,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredorfiledagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated,unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive(5)days priortothedateofanyproposedsalethereunder;or
(h) TheCompanyshallhavedefaultedonorbreachedanytermofanyothernoteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde-faultwithintheappropriategraceperiod;or
(i) TheCompanyshallhaveitsCommonStockdelistedfromanexchange(includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentradingintheCommonStockshallbesuspendedformorethan10consecutivedays;
(j) If amajority ofthemembers oftheBoard ofDirectorsoftheCompany onthedatehereofarenolongerservingasmembersoftheBoard;
(k) TheCompanyshallnotdelivertotheHoldertheCommonStockpursuanttoparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNoticeofConversion;or
(l) TheCompanyshallnotreplenishthereservesetforthinSection12,with-in3businessdaysoftherequestofthe Holder. IftheCompanydoesnotreplenishthereserve setforthinSection12,within5businessdaysoftherequestoftheHolderthentheconversiondis-countsetforthinSection4(a)shallbeincreasedfroma35%conversiondiscounttoa50%con-versiondiscountandshallbeincreasedfromthe50%conversiondiscounttheninineffecttoan80%conversiondiscount iftheincrease isnot effectivewithin 10 businessdays ofthereplen- ishment request; or
(m) TheCompanyshallnotbe“current”initsfilingswiththeSecuritiesandExchangeCommission;or
(n) TheCompanyshalllosethe“bid”priceforitsstockinamarket(includingtheOTCQBmarketplaceorotherexchange).
Then,oratanytimethereafter,unlesscuredwithin5days,andineachandeverysuchcase,un-lesssuchEventofDefaultshallhavebeenwaivedinwritingbytheHolder(whichwaivershallnotbedeemedtobeawaiverofanysubsequentdefault)attheoptionoftheHolderandintheHolder'ssolediscretion,theHoldermayconsiderthisNoteimmediatelydueandpayable,with-outpresentment,demand,protestor(further)noticeofanykind(otherthannoticeofaccelera-tion),allofwhich are herebyexpresslywaived, anything hereinor inany noteor otherinstru-mentscontainedtothecontrarynotwithstanding,andtheHoldermayimmediately,andwithout expirationof any period of grace,enforce any and allof theHolder's rights andremediesprovid- ed herein or any other rights or remedies afforded by law.Upon an Event ofDefault, interestshall accrueat adefaultinterest rateof24%perannum or,ifsuchrateisusuriousornotpermit- tedbycurrentlaw,thenatthehighestrateofinterest permittedbylaw.Intheeventofabreach
5
ofSection8(k)thepenaltyshallbe$250perdaythesharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewasdeliveredtotheCompany.Thispenaltyshallincreaseto
$500perdaybeginningonthe10thday.ThepenaltyforabreachofSection8(n)shallbeanin-creaseoftheoutstandingprincipalamountsby20%.IncaseofabreachofSection8(i),theout-
standingprincipaldueunderthisNoteshallincreaseby50%.IfthisNoteisnotpaidatmaturity,theoutstandingprincipaldueunderthisNoteshallincreaseby10%.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in-cluding,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,theHoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpensesincurredintheinvestigation,preparationandprosecutionofsuchactionorproceeding.
Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,iftheCompanyfailsforanyreasontodelivertotheHoldertheconversionsharesbythebythe3rdbusinessdayfollowingthedeliveryofaNoticeofConversiontotheCompanyandiftheHolderincursaFailuretoDeliverLoss,thenatanytimetheHoldermayprovidetheCompanywrittennoticeindicatingtheamountspayabletotheHolderinrespectoftheFailuretoDeliverLossand the Company must make theHolderwhole as follows:
FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num-berofconversionshares)]
TheCompanymustpaytheFailuretoDeliverLossbycashpayment,andanysuchcashpaymentmustbemadebythethirdbusinessdayfromthetimeoftheHolder’swrittennoticetotheCom-pany.
9. In case anyprovision ofthisNoteisheld bya courtof competentjurisdic-tiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbead-justedratherthanvoided,ifpossible,sothatitisenforceabletothemaximumextentpossible,andthevalidityandenforceabilityoftheremainingprovisionsofthisNotewillnotinanywaybeaffected or impaired thereby.
10. NeitherthisNotenoranytermhereofmaybeamended,waived,dis-chargedorterminatedotherthanbyawritteninstrumentsignedbytheCompanyandtheHolder.
11. TheCompanyrepresentsthatitisnota“shell”issuerandhasneverbeena “shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassedsince theCompanyhasreportedform10type information indicating itis no longer a“shell issu-er.Further. TheCompany will instructitscounseltoeither(i) write a 144-3(a)(9) opiniontoal-lowforsalabilityoftheconversionsharesor(ii)acceptsuchopinionfromHolder’scounsel.
12. TheCompanyshallissueirrevocabletransferagentinstructionsreserving10,000,000sharesofitsCommonStockforconversionsunderthisNote(the“ShareReserve”).UponfullconversionofthisNote,anysharesremainingintheShareReserveshallbecancelled.The Companyshall payall costs associatedwith issuingand deliveringtheshares.Thecompanyshouldatalltimesreserveaminimumoftwotimestheamountofsharesrequiredifthenote
wouldbefullyconverted.ThereserveshallbereplenishedasneededtoallowforconversionsofthisNoteusingsaid2xreserve,providedanincreasenoticemaynotbedeliveredmorethanonceevery30daysforthefirst5monthstheNoteisineffect,beginningonthe60thday.
13. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions,includingbutnotlimitedtonamechanges,stocksplits,recapitalizationsetc.ThisnoticeshallbegiventotheHolderassoonaspossibleunderlaw.
14. ThisNoteshallbegovernedby andconstruedin accordancewiththe lawsofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNewYorkandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderandtheCompanyherebymutuallywaivetrialbyjuryandconsenttoexclusivejurisdictionandvenueinthecourtsoftheStateofNewYork.ThisAgreementmaybeexecutedincounterparts,andthe facsimiletransmission ofanexecutedcounterpart to thisAgreementshallbeeffectiveasan original.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecutedbyanofficerthereuntodulyauthorized.
Dated:03/17/2015
MAXSOUND CORPORATION
By:
Title:CFO
EXHIBITA
NOTICEOF CONVERSION
(TobeExecutedbytheRegisteredHolderinordertoConverttheNote)
Theundersigned hereby irrevocablyelects toconvert$oftheaboveNoteintoSharesofCommonStockofMaxSoundCorporation.(“Shares”)accord-ingtotheconditionssetforthinsuchNote,asofthedatewrittenbelow.
IfSharesaretobeissuedinthenameofapersonotherthantheundersigned,theundersignedwillpayalltransferandothertaxesandchargespayablewithrespectthereto.
DateofConversion:ApplicableConversionPrice:Signature:
[PrintNameofHolderandTitleofSigner]
Address:
SSNorEIN:
Sharesaretoberegisteredinthefollowingname:
Name:Address:Tel:Fax:SSN orEIN:
Sharesaretobesentordeliveredtothefollowingaccount:
AccountName:Address:
