THISNOTEANDTHECOMMONSTOCK ISSUABLEUPONCONVERSIONOFTHISNOTE HAVENOTBEENANDWILLNOTBE REGISTEREDWITHTHEUNITEDSTATES SECURITIESANDEXCHANGECOMMISSIONOR THESECURITIESCOMMISSIONOFANYSTATE PURSUANTTOANEXEMPTIONFROM REGISTRATIONPROVIDEDUNDERTHE SECURITIESACTOF1933,ASAMENDED,AND THE RULES AND REGULATIONS PROMULGATEDTHEREUNDER(THE"1933 ACT”)
US$54,600.00
MAXSOUND CORPORATION.
8%CONVERTIBLEREDEEMABLENOTEDUEAPRIL21,2016
BACKEND
FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofLGCAPITALFUNDING,LLCanditsauthorizedsuccessorsandpermittedas-signs("Holder"),theaggregateprincipalfaceamountofFiftyFourThousandSixHundredDol- larsexactly(U.S.$54,600.00)onApril21,2016("MaturityDate")andtopayinterestontheprincipalamountoutstandinghereunderattherateof8%perannumcommencingonApril21, 2015.TheinterestwillbepaidtotheHolderinwhose namethisNoteisregisteredontherecords oftheCompanyregardingregistrationandtransfersofthisNote. Theprincipalof,andinterest on,thisNote arepayable at1218 UnionStreet, Suite#2, Brooklyn,NY 11225,initially, andif changed,lastappearingontherecordsoftheCompanyasdesignatedinwritingbytheHolder 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 bedeductedorwithheld, totheHolderof thisNotebycheck orwiretransfer addressedtosuch Holder at the last address appearing on the records of the Company. The forwarding ofsuch check or wire transfer shall constitute a payment of outstanding principal hereunder and shallsat- isfyanddischargetheliabilityforprincipalonthisNotetotheextentofthesumrepresentedby such check or wire transfer.Interest shall be payable in Common Stock (as defined below) pur- suant to paragraph 4(b) herein.
ThisNoteissubjecttothefollowingadditionalprovisions:
GH
Initials
1. ThisNoteisexchangeableforanequalaggregateprincipalamountof Notesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame. Noservicechargewillbemadeforsuchregistrationortransferorexchange,exceptthatHolder shallpayanytaxorothergovernmentalchargespayableinconnectiontherewith.
2. TheCompanyshallbeentitledtowithholdfromallpaymentsanyamounts requiredtobewithheldunderapplicablelaws.
3. ThisNotemaybetransferredorexchangedonlyincompliancewiththe SecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattempted transfertoanon-qualifyingpartyshallbetreatedbytheCompanyasvoid.Priortoduepresent- mentfortransferofthisNote,theCompanyandanyagentoftheCompanymaytreattheperson inwhosenamethisNoteisdulyregisteredontheCompany'srecordsastheownerhereofforall otherpurposes,whetherornotthis Notebeoverdue,andneithertheCompanynoranysuch agentshallbeaffectedorboundbynoticetothecontrary.AnyHolderofthisNoteelectingto exercisetherightofconversionsetforthinSection4(a)hereof,inadditiontotherequirements setforthinSection4(a),andanyprospectivetransfereeofthisNote,alsoisrequiredtogivethe CompanywrittenconfirmationthatthisNoteisbeingconverted("NoticeofConversion")inthe formannexedheretoasExhibitA.Thedateofreceipt(includingreceipt bytelecopy)ofsuch Notice of Conversion shall be the Conversion Date.
4. (a)TheHolderofthisNoteisentitled,atitsoption,toconvertallor anyamountoftheprincipalfaceamountofthisNotethenoutstandingintosharesoftheCompa- ny'scommonstock(the"CommonStock")ataprice("ConversionPrice")foreachshareof CommonStockequalto65%oftheaverageofthetwolowestclosingbidpricesoftheCom- monStockasreportedontheNationalQuotationsBureauOTCQBexchangewhichtheCompa- ny’ssharesaretradedoranyexchangeuponwhichtheCommonStockmaybetradedinthefu- ture ("Exchange"), for thefifteenprior 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 orotherelectronicmethodofcommunicationtotheCompanyafter4P.M.EasternStandardor DaylightSavingsTimeiftheHolderwishestoincludethesamedayclosingprice).Iftheshares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. SuchconversionshallbeeffectuatedbytheCompanydeliveringthesharesofCommonStockto theHolderwithin3businessdaysofreceiptbytheCompanyoftheNoticeofConversion.Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to theCompany,executed bytheHolderevidencingsuchHolder'sintentiontoconvertthisNoteor 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 frac- tions ofshareswillbe issuedonconversion,but thenumberofsharesissuable shallberounded tothenearestwholeshare. Intheevent theCompanyexperiencesaDTC“Chill”onitsshares, theconversionpriceshallbedecreasedto55%insteadof65%whilethat“Chill”isineffect.In the event the Company is not “Current” in its SEC filings at the time this note is cash funded, thediscount shall be decreased to 40%. In no event shall the Holder be allowed to effect a conver- sion if such conversion, along with all other shares of Company Common Stock beneficially ownedbytheHolderanditsaffiliateswouldexceed9.9%oftheoutstandingsharesoftheCom-
monStockoftheCompany.
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidatthe rateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("Interest Shares").TheHoldermay,atanytime,sendinaNoticeofConversiontotheCompanyforIn- terest SharesbasedontheformulaprovidedinSection4(a)above.The dollaramountconverted intoInterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprin- cipalbalanceofthisNotetothe dateofsuchnotice.
(c) ThisNotemaynotbeprepaid,exceptthatifthe$54,600Rule144con- vertible redeemablenoteissuedbytheCompanyofevendateherewithisredeemedby theCom- panywithin6monthsoftheissuancedateofsuchNote,allobligationsoftheCompanyunder thisNoteandallobligationsoftheHolderundertheHolderissuedBackEndNotewillbeauto- maticallybedeemedsatisfiedandthisNoteandtheHolderissuedBackEndNotewillbeauto- maticallybedeemedcancelledandofnofurtherforceoreffect.
(d) Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompany toanypersoninasingletransactionorseriesofrelatedtransactions,(ii)areclassification,capital reorganizationorotherchangeorexchangeofoutstandingsharesoftheCommonStock,other thanaforwardorreversestocksplitorstockdividend,or(iii)anyconsolidationormergerofthe CompanywithorintoanotherpersonorentityinwhichtheCompanyisnotthesurvivingentity (otherthanamergerwhich iseffectedsolelytochangethejurisdictionofincorporationofthe Companyandresultsinareclassification,conversionorexchangeofoutstandingsharesof CommonStocksolelyintosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingre- ferredtoasa"SaleEvent"),then,ineachcase,theCompanyshall,uponrequestoftheHolder, 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 un- paid principalamountofthisNote(togetherwiththe amountofaccruedbutunpaidinterest)into shares ofCommonStockimmediatelypriortosuchSaleEventattheConversionPrice.
(e) In caseofany SaleEvent(not toincludea saleofall orsubstantiallyall of theCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,the CompanyshallcauseeffectiveprovisiontobemadesothattheHolderofthisNoteshallhave therightthereafter,byconvertingthisNote,topurchaseorconvertthisNoteintothekindand numberofsharesofstockorothersecuritiesorproperty(includingcash)receivableuponsuch reclassification,capitalreorganizationorotherchange,consolidationormerger byaholderof thenumberofsharesofCommonStockthatcouldhavebeenpurchaseduponexerciseofthe NoteandatthesameConversionPrice,asdefinedinthisNote,immediatelypriortosuchSale Event.TheforegoingprovisionsshallsimilarlyapplytosuccessiveSaleEvents.Iftheconsidera- tionreceivedbytheholdersofCommonStockisotherthancash,thevalueshallbeasdeter- mined bythe Boardof Directorsof theCompany orsuccessor personor entityacting ingood faith.
5. NoprovisionofthisNoteshallalterorimpairtheobligationoftheCom- pany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteat thetime,place,andrate,andintheform,hereinprescribed.
6. TheCompanyherebyexpresslywaivesdemandandpresentmentforpay- ment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofacceleration orintenttoaccelerate,anddiligenceintakinganyactiontocollectamountscalledforhereunder andshallbedirectlyandprimarilyliableforthepaymentofallsumsowingandtobeowing hereto.
7. TheCompanyagreestopayallcostsandexpenses,includingreasonable attorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdue underthisNote.
| 8. | Ifoneormoreofthefollowingdescribed"EventsofDefault"shalloccur: |
(a) TheCompanyshalldefaultinthepaymentofprincipalorinterestonthis NoteoranyothernoteissuedtotheHolderbytheCompany;or
(b) AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinor inanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyor onbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNote,ortheSe- curitiesPurchaseAgreementunderwhichthisnotewasissuedshallbefalseormisleadinginany respect;or
(c) TheCompanyshallfailtoperformorobserve,inanyrespect,anycove- nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteorany othernoteissuedtotheHolder;or
(d) TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinability topayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsor commenceproceedingsforitsdissolution;(4)applyfororconsenttotheappointmentofatrus- tee,liquidatororreceiverforitsorforasubstantialpartofitspropertyorbusiness;(5)fileapeti- tionforbankruptcyrelief,consenttothefilingofsuchpetitionorhavefiledagainstitaninvol- untary petitionforbankruptcyrelief,allunderfederalorstatelawsasapplicable;or
(e) Atrustee,liquidatororreceivershallbeappointedfortheCompanyorfor a substantialpartofitspropertyorbusinesswithoutits consentandshallnotbedischargedwith- insixty(60)daysaftersuchappointment;or
(f) Any governmentalagencyoranycourtofcompetentjurisdictionatthein- stanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstan- tialportionofthepropertiesorassetsoftheCompany;or
| (g) | Oneor more money judgments, writs or warrants of attachment, or similar |
process,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredorfiledagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated, unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive(5)days priortothedateofanyproposedsalethereunder;or
(h) TheCompanyshallhavedefaultedonorbreachedanytermofanyother noteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde- faultwithintheappropriategraceperiod;or
(i) TheCompanyshallhaveitsCommonStockdelistedfromanexchange (includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentrading intheCommonStockshallbesuspendedformorethan10consecutivedays;
(j) IfamajorityofthemembersoftheBoardofDirectorsoftheCompanyon thedatehereofarenolongerservingasmembersoftheBoard;
(k) TheCompanyshallnotdelivertotheHoldertheCommonStockpursuant toparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNotice ofConversion;or
(l) TheCompanyshallnotreplenishthereservesetforthinSection12,with- in3businessdaysoftherequestoftheHolder.
(m) TheCompany’sCommonStockhasaclosingbidpriceoflessthan$0.04 pershareforatleast5consecutivetradingdays;or
(n) TheaggregatedollartradingvolumeoftheCompany’sCommonStockis lessthanfiftythousanddollars($50,000.00)inany5consecutivetradingdays;or
(o) TheCompanyshallceasetobe“current”initsfilingswiththeSecurities andExchangeCommission.
(p) TheCompanyshalllosethe“bid”priceforitsstockandamarket(including theOTCBBmarketplaceorotherexchange)
Then,oratanytimethereafter,unlesscured(exceptfor8(m)and8(n)whichareincurablede- faults,thesoleremedyofwhichistoallowtheHoldertocancelboththisNoteandtheHolder IssuedNote,andineachandeverysuchcase,unlesssuchEventofDefaultshallhavebeen waivedinwritingbytheHolder(whichwaivershallnotbedeemedtobeawaiverofanysubse- quentdefault)attheoptionoftheHolderandintheHolder'ssolediscretion,theHolder may considerthisNoteimmediatelydueandpayable,withoutpresentment,demand,protestor(fur- ther)noticeofanykind(otherthannoticeofacceleration),allofwhichareherebyexpressly waived,anythinghereinorinanynoteorotherinstrumentscontainedtothecontrarynotwith- standing, andthe Holdermay immediately,and withoutexpiration ofanyperiod ofgrace, en- force any and all of the Holder's rights and remedies provided herein or any other rights or reme-
diesaffordedbylaw.UponanEventofDefault,interestshallbeaccrueatadefaultinterestrateof24%perannumor,ifsuchrateisusuriousornotpermittedbycurrentlaw,thenatthehighest rateofinterestpermittedbylaw.Further,iftheNotebecomesdueandpayable,theHoldermay use the outstanding principal and interest due underthe Note to offset any payment obligations it mayhavetotheCompany.Intheeventofabreachof8(k)thepenaltyshallbe$250perdaythe
sharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewasdeliveredtothe
Company.Thispenaltyshallincreaseto$500perdaybeginningonthe10thday.Oncecash funded,thepenaltyforabreachofSection8(p)shallbeanincreaseoftheoutstandingprincipal
amountsby20%.Oncecashfunded,intheeventofabreachofSection8(i),theoutstanding principaldueunderthisNoteshallincreaseby50%.IfthisNoteisnotpaidatmaturity,theout- standingprincipaldueunderthisNoteshallincreaseby10%.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in- cluding,withoutlimitation,engaginganattorney,then,iftheHolderprevailsinsuchaction,the HoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpenses incurredintheinvestigation,preparationandprosecutionofsuchactionorproceeding.
9. IncaseanyprovisionofthisNoteisheldbyacourtofcompetentjurisdic- tiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbead- justedratherthanvoided,ifpossible,sothatitisenforceabletothemaximumextentpossible, andthevalidityandenforceabilityoftheremainingprovisionsofthisNotewillnotinanyway beaffectedorimpairedthereby.
10. NeitherthisNotenoranytermhereofmaybeamended,waived,dis- chargedorterminatedotherthanbyawritteninstrumentsignedbytheCompanyandtheHolder.
11. TheCompanyrepresentsthatitisnota“shell”issuerandhasneverbeena “shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassed sincetheCompanyhasreportedform10typeinformationindicatingitisnolongera“shellissu- er.Further.TheCompanywillinstructitscounseltoeither(i)writea144opiniontoallowfor salabilityoftheconversionsharesor(ii)acceptsuchopinionfromHolder’scounsel.
12. PriortocashfundingofthisNote,TheCompanywillissueirrevocable transferagentinstructionsreserving3xthenumberofsharesofCommonStocknecessarytoal- lowtheholdertoconvertthisnotebasedonthediscountedconversionpricesetforthinSection 4(a)herewith.ThereserveshallbereplenishedasneededtoallowforconversionsofthisNote usingsaid3xreserve.UponfullconversionofthisNote,thereserverepresentingthisNoteshall becancelled.TheCompanywillpayalltransferagentcostsassociatedwithissuinganddeliver- ingtheshares.IfsuchamountsaretobepaidbytheHolder,itmaydeductsuchamountsfrom the Conversion Price.
13. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions, includingbutnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbe giventotheHolderassoonaspossibleunderlaw.
14. ThisNoteshallbegovernedbyandconstruedinaccordancewiththelaws ofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNewYorkandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderand theCompanyherebymutuallywaivetrialbyjuryandconsenttoexclusivejurisdictionandvenue inthecourtsoftheStateofNewYork.ThisAgreementmaybeexecutedincounterparts,and thefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasan original.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecut- edbyanofficerthereuntodulyauthorized.
Dated:4/21/2015
MAXSOUNDCORPORATION
By:
Title:CFO
EXHIBITA
NOTICEOFCONVERSION
(TobeExecutedbytheRegisteredHolderinordertoConverttheNote)
The undersigned herebyirrevocably electsto convert$oftheabove NoteintoSharesofCommonStockofMaxSoundCorporation.(“Shares”)accord-ingtotheconditionssetforthinsuchNote,asofthedatewrittenbelow.
IfSharesaretobeissuedinthenameofapersonotherthantheundersigned,the undersignedwillpayalltransferandothertaxesandchargespayablewithrespectthereto.
DateofConversion: ApplicableConversionPrice: Signature:
[PrintNameofHolderandTitleofSigner]
Address:
SSNorEIN:
Sharesaretoberegisteredinthefollowingname:
Name:Address: Tel:Fax: SSN or EIN:
Sharesaretobesentordeliveredtothefollowingaccount:
AccountName: Address:
