Max Sound (MAXD) 10-Q 2015 Q2 Quarterly report

NEITHERTHEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICHTHESESECURITIESARECONVERTIBLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIESMAYNOT BEOFFEREDFORSALE,SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCE OF(A)ANEFFECTIVEREGISTRATIONSTATEMENTFOR THESECURITIESUNDER THESECURITIES ACT OF1933,ASAMENDED, OR(B)ANOPINION OFCOUNSEL(WHICHCOUNSELSHALLBESELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDERSAIDACT OR(II)UNLESS SOLDPURSUANTTORULE144ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING, THESECURITIESMAY BEPLEDGED INCONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANORFINANCINGARRANGEMENTSECUREDBYTHESECURITIES.

PrincipalAmount:$204,000.00 Issue Date: April 21, 2015PurchasePrice:$204,000.00

CONVERTIBLEPROMISSORYNOTE

FORVALUERECEIVED,MAXSOUNDCORPORATION,aDelawarecorporation(hereinaftercalledthe“Borrower”),herebypromisestopaytotheorderofVISVIRESGROUP,INC.,aNewYorkcorporation,orregisteredassigns(the“Holder”)thesumof

$204,000.00togetherwithanyinterestassetforthherein,onJanuary23,2016(the“MaturityDate”),andtopayinterestontheunpaidprincipalbalancehereofattherateofeightpercent(8%)(the“InterestRate”)perannumfromthedatehereof(the“IssueDate”) untilthesamebecomes dueand payable,whetherat maturity or uponacceleration orbyprepayment orotherwise.ThisNote may not beprepaid in whole or inpartexceptasotherwise explicitly setforthherein.Anyamount ofprincipal orinterest on thisNotewhich is notpaidwhen dueshallbearinterestat therateof twentytwopercent (22%)perannumfrom the duedatethereof until thesame ispaid (“DefaultInterest”).Interest shallcommence accruing on thedatethat theNote is fullypaidandshall becomputed on thebasis of a 365-day yearand theactualnumber ofdayselapsed.Allpayments due hereunder(to theextent notconverted into commonstock, $0.001parvaluepershare(the “CommonStock”)inaccordancewiththetermshereof)shallbemade inlawful money of theUnitedStates ofAmerica.Allpaymentsshallbemadeatsuchaddressas theHolder shall hereaftergive to theBorrowerbywrittennotice made inaccordancewith theprovisions of thisNote.Wheneveranyamount expressed to be dueby theterms of thisNote is dueonanydaywhich is not abusinessday, thesameshallinstead be due on thenextsucceeding day which is abusiness dayand, in thecaseof anyinterestpayment datewhich is not thedateon

whichthisNoteispaidinfull,theextensionoftheduedatethereofshallnotbetakenintoaccountforpurposesofdeterminingtheamountofinterestdueonsuchdate.AsusedinthisNote,theterm“businessday”shallmean anydayotherthan aSaturday, Sundayor adayonwhichcommercialbanks in the city of New York,New York are authorized orrequired by law orexecutiveordertoremainclosed. Eachcapitalizedtermusedherein,andnototherwisedefined,shallhave themeaningascribedtheretointhatcertainSecuritiesPurchaseAgreementdated thedate hereof,pursuant towhich thisNotewas originally issued(the“PurchaseAgreement”).

ThisNoteisfreefromalltaxes,liens,claimsandencumbranceswithrespecttotheissuethereofandshallnotbesubjecttopreemptiverightsorothersimilarrightsofshareholdersoftheBorrowerandwill not impose personal liabilityupon the holder thereof.

The followingterms shall applyto thisNote:

ARTICLEI.CONVERSION RIGHTS

1.1ConversionRight.TheHoldershallhavetherightfromtimetotime,andatanytimeduringtheperiodbeginningonthedatewhichisonehundredeighty(180)daysfollowingthedateofthisNoteandendingonthelaterof:(i)theMaturityDateand(ii)thedate ofpayment of the DefaultAmount(asdefined inArticle III)pursuant toSection1.6(a) orArticle III,each inrespect of theremainingoutstandingprincipalamount of thisNotetoconvertall or any part of theoutstandingand unpaidprincipalamount of thisNoteinto fullypaidand non-assessableshares of CommonStock,assuchCommonStockexists ontheIssueDate, or anysharesofcapitalstockorothersecuritiesoftheBorrowerintowhichsuchCommonStockshallhereafter bechanged orreclassifiedat the conversionprice(the“ConversionPrice”)determinedasprovidedherein(a“Conversion”);provided,however,that in no eventshall theHolder beentitled toconvertany portion of thisNote in excess ofthatportion of thisNote uponconversion ofwhich the sum of (1) the number ofshares of CommonStockbeneficiallyowned by theHolderanditsaffiliates(otherthanshares of CommonStockwhich may bedeemed beneficiallyownedthrough the ownership of the unconvertedportion of theNotes or theunexercised orunconvertedportion of anyother securityof theBorrower subject to alimitation onconversion orexerciseanalogous to thelimitationscontainedherein)and(2)thenumberofshares of CommonStockissuable upon theconversion of theportion of thisNotewithrespect to which thedetermination ofthisproviso isbeing made,wouldresult inbeneficialownership by theHolderand itsaffiliates ofmorethan 9.99% of theoutstandingsharesof CommonStock.Forpurposes of the proviso to theimmediately preceding sentence,beneficialownershipshall bedeterminedinaccordancewithSection13(d) of theSecuritiesExchange Act of 1934,asamended(the“ExchangeAct”),andRegulations13D-Gthereunder,exceptasotherwiseprovided inclause (1) ofsuchproviso,provided,further,however,that thelimitations onconversionmay bewaivedby theHolder upon,attheelectionof theHolder,notlessthan61days’priornotice to theBorrower,and the provisions of theconversionlimitationshallcontinue

toapply untilsuch61stday(orsuchlaterdate,asdeterminedby theHolder,asmay bespecifiedinsuchnoticeofwaiver).ThenumberofsharesofCommonStocktobeissueduponeachconversionofthisNoteshallbedeterminedbydividingtheConversionAmount(asdefinedbelow)by theapplicableConversionPricethenineffect on thedatespecified in thenotice ofconversion,intheformattachedheretoas Exhibit A(the“Notice ofConversion”),deliveredto theBorrowerbythe Holder inaccordancewithSection 1.4below; providedthat theNoticeofConversion issubmittedbyfacsimile ore-mail(orbyothermeans resulting in, or reasonablyexpected toresult in,notice) to theBorrowerbefore 6:00 p.m.,NewYork,NewYork time onsuchconversiondate(the“ConversionDate”).Theterm“ConversionAmount”means,withrespect toanyconversion of thisNote, the sum of(1) theprincipal amount of thisNote to beconvertedinsuch conversionplus(2)attheHolder’soption,accrued andunpaidinterest,ifany, onsuchprincipal amountat theinterestrates provided in thisNote to theConversionDate,plus

(3)attheHolder’soption,DefaultInterest,ifany,ontheamountsreferredtointheimmediatelyprecedingclauses(1)and/or(2)plus(4)attheHolder’soption,anyamountsowedtotheHolderpursuant toSections 1.3and1.4(g) hereof.

1.2 ConversionPrice.

(a)CalculationofConversionPrice.Theconversionprice(the“ConversionPrice”)shallequaltheVariableConversionPrice(asdefinedherein)(subjecttoequitableadjustmentsforstocksplits,stockdividendsorrightsofferings bytheBorrowerrelatingto theBorrower’ssecurities or thesecurities ofany subsidiary of theBorrower,combinations,recapitalization,reclassifications,extraordinarydistributionsandsimilarevents).The"VariableConversionPrice" shallmean65%multipliedby theMarketPrice(asdefinedherein)(representing adiscountrateof35%).“MarketPrice”meanstheaverageofthelowestthree(3)TradingPrices(asdefinedbelow)fortheCommonStockduringtheten(10)Trading Dayperiodending onthelatestcompleteTrading Day priortotheConversionDate.“TradingPrice”means,forany securityasofany date,theclosingbidpriceon theOver-the-CounterBulletinBoard,PinkSheetselectronicquotationsystemorapplicable tradingmarket(the“OTC”)asreportedby areliablereporting service(“ReportingService”)designatedby theHolder(i.e.Bloomberg)or, if theOTC is not theprincipal tradingmarketforsuchsecurity, theclosingbid priceofsuch security on theprincipalsecuritiesexchange ortradingmarketwheresuch security islisted ortradedor, if noclosingbidprice ofsuchsecurityisavailable in anyof theforegoingmanners, the average of theclosing bidprices ofanymarketmakersforsuch securitythat arelisted in the“pinksheets”. IftheTradingPricecannotbecalculated forsuch security onsuchdate in themannerprovided above, theTradingPrice shall bethefairmarketvalueas mutually determinedby theBorrowerand theholders of amajority ininterest of theNotes beingconverted forwhich thecalculation of the TradingPrice isrequired in order todetermine the ConversionPriceofsuchNotes. “TradingDay” shallmeananydayonwhich the CommonStock istradableforanyperiod on theOTC, or on theprincipalsecuritiesexchangeorother securitiesmarketonwhich theCommonStock isthenbeingtraded.

(b)ConversionPriceDuringMajorAnnouncements.NotwithstandinganythingcontainedinSection1.2(a)tothecontrary,intheeventtheBorrower(i)makesapublicannouncementthatitintendstoconsolidateormergewithanyothercorporation(otherthanamerger inwhich theBorrower is thesurviving orcontinuing corporationand itscapitalstock isunchanged) orsell ortransferall orsubstantiallyall of theassets of theBorrower or(ii)anyperson,group or entity (including theBorrower) publiclyannouncesa tenderoffer topurchase 50% ormore of theBorrower’s CommonStock(oranyothertakeover scheme)(the date of theannouncementreferred to inclause(i)or(ii)ishereinafterreferredtoasthe“AnnouncementDate”),then the ConversionPriceshall,effective upon theAnnouncementDateandcontinuingthrough theAdjusted ConversionPrice TerminationDate(asdefinedbelow), beequal to thelowerof (x)theConversionPricewhichwould havebeenapplicablefor aConversion occurring ontheAnnouncementDateand(y)theConversionPricethatwouldotherwisebeineffect.Fromandafter theAdjustedConversionPriceTerminationDate,theConversionPriceshall bedeterminedassetforthinthisSection1.2(a).Forpurposeshereof,“AdjustedConversionPriceTerminationDate” shallmean,withrespect to any proposed transaction ortenderoffer (ortakeover scheme)for which a public announcementascontemplatedby thisSection1.2(b)hasbeenmade,thedateuponwhichtheBorrower(inthecaseofclause(i)above)ortheperson, grouporentity(inthecaseofclause(ii)above)consummatesorpubliclyannouncesthetermination orabandonment of theproposedtransaction or tender offer(ortakeover scheme)whichcaused this Section1.2(b)tobecomeoperative.

1.3AuthorizedShares.TheBorrowercovenantsthatduringtheperiodtheconversionrightexists,theBorrowerwillreservefromitsauthorizedandunissuedCommonStockasufficientnumberofshares,freefrompreemptiverights,toprovidefortheissuanceofCommonStock upon the fullconversion ofthis Note issuedpursuant to thePurchaseAgreement.TheBorrower isrequiredatalltimes tohaveauthorized andreserved eighttimes thenumber ofsharesthat is actuallyissuable uponfull conversion of theNote(based ontheConversionPrice of theNotes ineffect from time totime)(the“ReservedAmount”). TheReservedAmountshall beincreasedfrom timeto time inaccordance with theBorrower’s obligationshereunder.TheBorrowerrepresentsthat uponissuance, suchshareswill bedulyand validlyissued, fullypaidandnon-assessable.Inaddition, iftheBorrowershall issue anysecurities ormake any changeto itscapitalstructurewhichwouldchange thenumber ofshares of CommonStock intowhich theNotesshallbeconvertibleatthethencurrentConversionPrice,theBorrowershallatthesametimemakeproperprovisionsothatthereafterthereshallbeasufficientnumberofsharesofCommonStockauthorizedandreserved,free frompreemptiverights, forconversion of theoutstandingNotes.TheBorrower(i)acknowledgesthat ithas irrevocablyinstructed itstransferagenttoissuecertificatesfortheCommonStockissuableuponconversionofthisNote,and

(ii)agreesthatitsissuanceofthisNoteshallconstitutefullauthoritytoitsofficersandagentswhoarechargedwiththedutyofexecutingstockcertificatestoexecuteandissuethenecessarycertificatesforsharesof CommonStockinaccordancewiththetermsandconditionsofthisNote.

If,atanytimetheBorrowerdoesnotmaintaintheReservedAmountitwillbeconsideredanEvent of DefaultunderSection 3.2 ofthe Note.

1.4 Method of Conversion.

(a)MechanicsofConversion.SubjecttoSection1.1,thisNotemaybeconverted bytheHolderinwholeorinpartatany timefromtimetotimeaftertheIssueDate, by

(A)submittingtotheBorroweraNoticeofConversion(byfacsimile,e-mailorotherreasonablemeansofcommunicationdispatchedontheConversionDatepriorto6:00p.m.,NewYork,NewYorktime)and(B)subjecttoSection1.4(b),surrenderingthisNoteattheprincipalofficeoftheBorrower.

(b)SurrenderofNoteUponConversion.Notwithstandinganythingtothecontrarysetforthherein,uponconversionofthisNoteinaccordancewiththetermshereof,theHoldershallnotberequiredtophysicallysurrender thisNote totheBorrowerunlesstheentireunpaidprincipalamount of thisNote is soconverted.The Holder and theBorrowershallmaintainrecords showing the principalamount soconvertedand thedates of suchconversions orshall usesuchothermethod,reasonably satisfactory totheHolderandtheBorrower,soas not torequirephysical surrenderofthisNoteuponeachsuchconversion.In theevent of any disputeordiscrepancy,suchrecords oftheBorrowershall,primafacie,becontrollinganddeterminative in theabsence ofmanifesterror.Notwithstanding theforegoing, ifany portion of thisNote isconvertedasaforesaid,theHoldermaynottransfer thisNoteunlesstheHolderfirstphysicallysurrenders thisNote totheBorrower,whereupon theBorrowerwillforthwith issueanddeliver upon theorderoftheHolderanewNoteofliketenor,registeredas theHolder(uponpaymentby theHolderofanyapplicable transfer taxes) mayrequest,representing in theaggregate theremainingunpaidprincipalamount ofthisNote.The Holderandanyassignee,byacceptanceof thisNote,acknowledgeandagreethat,byreasonoftheprovisionsofthisparagraph,followingconversionofaportionofthisNote,theunpaidandunconvertedprincipalamountof thisNoterepresented by thisNotemaybe lessthan theamountstated on the face hereof.

(c)PaymentofTaxes.TheBorrowershallnotberequiredtopayanytaxwhichmaybepayableinrespectofanytransferinvolvedintheissueanddeliveryofsharesof CommonStock orothersecurities or property onconversionofthis Note in anameotherthanthatofthe Holder(orinstreetname),andtheBorrowershallnot berequiredtoissue ordeliver anysuch sharesorothersecuritiesorpropertyunlessanduntilthepersonorpersons(otherthan theHolder or thecustodian inwhosestreetnamesuchshares are to beheldfor theHolder’saccount)requestingtheissuancethereofshallhavepaidtotheBorrowertheamountofany suchtax or shallhave established to the satisfaction ofthe Borrowerthatsuch taxhasbeenpaid.

(d)DeliveryofCommonStockUponConversion.UponreceiptbytheBorrowerfromtheHolderofafacsimiletransmissionore-mail(orotherreasonablemeansofcommunication)ofaNoticeofConversionmeeting therequirementsforconversionasprovided

inthisSection1.4,theBorrowershallissueanddeliverorcausetobeissuedanddeliveredtoorupontheorderoftheHoldercertificatesfortheCommonStockissuableuponsuchconversionwithinthree(3)businessdaysaftersuchreceipt(the“Deadline”)(and,solely inthecase ofconversion of theentireunpaidprincipalamounthereof, surrender of thisNote) in accordancewith the termshereof and the Purchase Agreement.

(e)ObligationofBorrowertoDeliverCommonStock.UponreceiptbytheBorrowerofaNoticeofConversion,theHoldershallbedeemedtobetheholderofrecordoftheCommonStockissuableuponsuchconversion,theoutstandingprincipalamountandtheamount ofaccruedand unpaidinterest on thisNoteshall bereduced toreflectsuchconversion,and,unless theBorrowerdefaults on itsobligationsunder thisArticle I,allrightswithrespect to theportion of thisNotebeing soconverted shallforthwithterminate except theright toreceive the CommonStock orothersecurities,cash orotherassets,ashereinprovided, onsuchconversion.Ifthe Holdershall havegiven aNoticeofConversion asprovidedherein, theBorrower’sobligation to issueand deliver thecertificates for CommonStockshall beabsoluteandunconditional,irrespective of theabsence of any actionby theHolder toenforce the same, anywaiver orconsentwithrespect toany provisionthereof, the recovery ofanyjudgmentagainstany personor any action toenforce the same,anyfailure or delay in theenforcement of any otherobligationoftheBorrowertotheholderofrecord,or anysetoff,counterclaim,recoupment,limitationortermination,oranybreachorallegedbreachbytheHolderofanyobligationtotheBorrower,andirrespective ofany othercircumstance whichmightotherwise limitsuchobligationof theBorrowertothe Holderinconnectionwithsuchconversion. TheConversionDatespecified in theNotice ofConversionshall be theConversionDate so longas theNotice of Conversion isreceivedby theBorrowerbefore 6:00 p.m.,NewYork, NewYorktime, onsuchdate.

(f)DeliveryofCommonStockbyElectronicTransfer.InlieuofdeliveringphysicalcertificatesrepresentingtheCommonStockissuableuponconversion,providedtheBorrower isparticipatinginthe Depository Trust Company(“DTC”)FastAutomatedSecuritiesTransfer(“FAST”)program,uponrequestof theHolderanditscompliancewith the provisionscontained in Section 1.1and in this Section 1.4, theBorrowershall use itsbestefforts tocause itstransferagent toelectronically transmit theCommonStockissuable uponconversiontotheHolderbycrediting theaccount ofHolder’sPrimeBrokerwithDTCthrough itsDepositWithdrawalAgent Commission(“DWAC”) system.

(g)FailuretoDeliverCommonStockPriortoDeadline.WithoutinanywaylimitingtheHolder’sright topursueotherremedies, includingactualdamages and/orequitablerelief,thepartiesagreethatifdeliveryoftheCommonStockissuableuponconversionof thisNote is notdelivered by theDeadline (otherthan afailure due to thecircumstancesdescribedinSection 1.3above, whichfailure shall begoverned bysuchSection) theBorrowershall payto the Holder $2,000per dayin cash,foreach daybeyondtheDeadlinethat theBorrowerfailstodeliversuchCommonStock.SuchcashamountshallbepaidtoHolderby the

fifthdayofthemonthfollowing themonthinwhichithasaccruedor,attheoptionoftheHolder(bywrittennoticetotheBorrowerbythefirstdayofthemonthfollowingthemonthinwhichithasaccrued),shallbeaddedtotheprincipal amountof thisNote, inwhicheventinterestshallaccruethereon inaccordancewith theterms ofthisNoteandsuchadditionalprincipalamountshallbeconvertibleintoCommonStockinaccordancewiththetermsofthisNote.TheBorroweragreesthat theright toconvert is avaluable right to theHolder.The damagesresultingfrom afailure,attempt tofrustrate,interferencewithsuchconversionrightaredifficult if not impossible toqualify.Accordingly the partiesacknowledgethat theliquidateddamagesprovisioncontained in thisSection1.4(g)arejustified.

1.5ConcerningtheShares.ThesharesofCommonStockissuableuponconversionofthisNotemaynotbesoldortransferredunless(i)suchsharesaresoldpursuanttoaneffectiveregistrationstatementundertheAct or(ii)theBorroweroritstransferagentshallhave beenfurnishedwithan opinion ofcounsel(which opinionshall be inform,substanceandscope customaryfor opinions ofcounsel incomparable transactions) to theeffectthat theshares tobesoldortransferredmay besoldortransferredpursuanttoanexemptionfromsuchregistration or(iii) suchsharesare soldortransferredpursuant to Rule 144under theAct(or asuccessorrule)(“Rule 144”)or(iv)suchsharesaretransferredtoan“affiliate”(asdefinedin Rule 144) of theBorrowerwhoagreestosellorotherwisetransfer thesharesonly inaccordancewith thisSection 1.5andwho isanAccreditedInvestor(asdefinedin thePurchaseAgreement).Exceptasotherwiseprovided in thePurchaseAgreement(andsubject to theremovalprovisionssetforthbelow),untilsuchtimeasthesharesofCommonStockissuableuponconversionofthisNotehavebeenregisteredunder theActorotherwisemaybe sold pursuant to Rule 144without anyrestrictionas to thenumber ofsecuritiesas of aparticulardatethat canthen beimmediately sold,eachcertificateforsharesofCommonStockissuableuponconversionofthisNotethathas notbeensoincluded inaneffectiveregistrationstatement orthathas notbeen soldpursuant toaneffectiveregistrationstatementoranexemptionthatpermitsremovalof thelegend,shallbear a legend substantially in the followingform,asappropriate:

“NEITHERTHEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICHTHESESECURITIESAREEXERCISABLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIESMAYNOTBEOFFERED FORSALE,SOLD,TRANSFERRED ORASSIGNED(I)IN THEABSENCEOF(A)ANEFFECTIVEREGISTRATION STATEMENTFOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED, OR(B)ANOPINIONOFCOUNSEL(WHICHCOUNSELSHALL BESELECTEDBY THEHOLDER), IN AGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDERSAIDACT OR (II)UNLESSSOLDPURSUANTTORULE 144 ORRULE 144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAY BEPLEDGED INCONNECTIONWITH A BONAFIDEMARGINACCOUNTOR

OTHERLOANORFINANCINGARRANGEMENTSECUREDBYTHESECURITIES.”

ThelegendsetforthaboveshallberemovedandtheBorrowershallissuetotheHolderanewcertificatethereforefreeofanytransferlegendif(i)theBorroweroritstransferagentshallhavereceivedanopinionofcounsel,inform,substanceandscopecustomaryfor opinions ofcounsel incomparable transactions, to theeffectthat a public sale ortransferofsuch CommonStock may bemade withoutregistrationundertheAct, which opinionshall be acceptedby theCompany sothatthesale ortransferiseffectedor(ii)inthecaseofthe CommonStockissuable uponconversion of thisNote, such security isregisteredforsaleby the Holder underaneffectiveregistrationstatementfiledunder the Act orotherwisemaybe soldpursuant to Rule144withoutany restrictionas to thenumber ofsecuritiesas of a particulardatethat canthen beimmediately sold. In theeventthat theCompanydoes notaccept the opinion ofcounselprovided by the Holderwithrespect to thetransfer ofSecurities pursuant toan exemptionfromregistration,suchas Rule 144 orRegulation S,at theDeadline, itwill beconsideredanEventofDefaultpursuant toSection 3.2 ofthe Note.

1.6 Effect of CertainEvents.

(a)EffectofMerger,Consolidation,Etc.AttheoptionoftheHolder,thesale,conveyanceordispositionofallorsubstantiallyalloftheassetsoftheBorrower,theeffectuationby theBorrowerof atransactionorseries ofrelatedtransactions inwhichmorethan 50% of the votingpower of theBorrower is disposedof,or the consolidation,merger orotherbusinesscombination of theBorrowerwith or into anyotherPerson (asdefined below) orPersonswhen theBorrower is not thesurvivorshalleither:(i) be deemed to beanEvent ofDefault(asdefinedinArticle III)pursuanttowhichtheBorrowershallberequiredtopaytotheHolderuponthe consummationofandasaconditiontosuchtransactionanamountequaltotheDefaultAmount(asdefined inArticle III) or(ii) betreatedpursuant toSection1.6(b)hereof.“Person”shallmeananyindividual,corporation,limitedliabilitycompany,partnership,association,trust or otherentity ororganization.

(b)AdjustmentDuetoMerger,Consolidation,Etc.If,atanytimewhenthisNoteisissuedandoutstandingandpriortoconversionofalloftheNotes,thereshallbeanymerger,consolidation,exchangeofshares,recapitalization,reorganization,orothersimilarevent,asa result of whichshares of CommonStock of theBorrower shall bechanged into thesame or adifferentnumber ofshares ofanotherclassorclasses of stock orsecurities of theBorrower or anotherentity, or incase of anysale orconveyance ofall or substantiallyall of theassets of theBorrowerotherthan inconnectionwith aplan ofcompleteliquidation of theBorrower,thentheHolderofthisNoteshallthereafterhavetherighttoreceiveuponconversion ofthisNote,uponthe basisanduponthetermsandconditionsspecifiedhereinandinlieuofthesharesof CommonStock immediatelytheretoforeissuable upon conversion,suchstock,securitiesorassetswhichtheHolderwouldhavebeenentitledtoreceiveinsuchtransactionhad

thisNotebeenconvertedinfullimmediatelypriortosuchtransaction(withoutregardtoanylimitationsonconversionsetforthherein),andinanysuchcaseappropriateprovisionsshallbemadewithrespect to therightsandinterests of theHolderofthis Noteto theendthat theprovisionshereof(including,withoutlimitation,provisionsforadjustment of theConversionPriceand of the number ofsharesissuable uponconversion of theNote)shall thereafter beapplicable,as nearlyas maybepracticable inrelation toany securities orassetsthereafterdeliverable upon theconversionhereof.TheBorrower shall notaffect anytransactiondescribed in thisSection1.6(b)unless(a) itfirstgives,to the extentpracticable, thirty(30)dayspriorwrittennotice(butinanyeventatleastfifteen(15) dayspriorwrittennotice) of therecorddate ofthespecial meeting ofshareholders to approve, orifthereis nosuchrecord date, theconsummationof, suchmerger, consolidation,exchangeofshares,recapitalization,reorganizationorothersimilareventorsaleof assets(during whichtimetheHoldershallbeentitled toconvert thisNote)and(b) the resultingsuccessor oracquiring entity(if not theBorrower)assumes bywritteninstrument theobligations of thisSection1.6(b).The aboveprovisionsshallsimilarly apply tosuccessive consolidations,mergers,sales,transfers orshareexchanges.

(c)AdjustmentDuetoDistribution.IftheBorrowershalldeclareormakeanydistributionofitsassets(orrightstoacquireitsassets)toholdersofCommonStockasadividend,stockrepurchase,bywayofreturnofcapitalorotherwise(includinganydividendordistribution to theBorrower’sshareholders incash orshares (or rights toacquireshares) ofcapitalstock of asubsidiary(i.e.,aspin-off))(a“Distribution”),then theHolder ofthisNoteshall beentitled, upon anyconversion of thisNoteafter the date ofrecord fordeterminingshareholdersentitled to suchDistribution, to receivethe amountof suchassetswhichwould havebeenpayable to theHolderwithrespect to theshares of CommonStockissuable uponsuchconversionhadsuch Holderbeen the holder of suchshares of CommonStock on therecorddateforthe determination of shareholdersentitled tosuchDistribution.

(d)AdjustmentDuetoDilutiveIssuance.If,atanytimewhenanyNotesareissuedandoutstanding,theBorrowerissuesorsells,orinaccordancewiththisSection1.6(d)hereofisdeemedtohaveissuedorsold,anysharesofCommonStockfornoconsiderationorforaconsiderationper share (beforededuction ofreasonableexpenses orcommissions orunderwritingdiscountsorallowancesinconnectiontherewith)lessthantheConversionPriceineffect on thedate ofsuchissuance(ordeemedissuance) ofsuchshares of CommonStock(a“DilutiveIssuance”),thenimmediatelyupontheDilutiveIssuance,the ConversionPricewill bereduced to theamountoftheconsideration persharereceivedbytheBorrowerin suchDilutiveIssuance.

TheBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorgrantsanywarrants,rightsoroptions(notincludingemployeestockoptionplans),whetherornotimmediatelyexercisable,tosubscribeforortopurchase CommonStock orothersecuritiesconvertibleintoorexchangeableforCommon

Stock(“ConvertibleSecurities”)(suchwarrants,rightsandoptionstopurchaseCommonStockorConvertibleSecuritiesarehereinafterreferredtoas“Options”)andthepricepershareforwhichCommonStockisissuableupontheexerciseofsuchOptionsislessthantheConversionPricethenineffect,thentheConversionPriceshallbeequaltosuchpricepershare.Forpurposes of the precedingsentence, the“price per share forwhich CommonStock isissuable upon theexercise of suchOptions” isdetermined by dividing(i) the totalamount, ifany,received orreceivable bytheBorrowerasconsiderationfor the issuanceorgrantingofallsuchOptions,plustheminimumaggregateamountofadditionalconsideration,ifany,payabletotheBorrowerupon theexerciseofallsuchOptions, plus, in thecaseofConvertibleSecuritiesissuable upon the exercise ofsuchOptions, the minimumaggregateamount ofadditionalconsiderationpayable upon theconversionorexchange thereofat the timesuchConvertibleSecuritiesfirst becomeconvertible or exchangeable, by(ii) the maximumtotalnumber ofshares of CommonStockissuable upon theexercise ofallsuchOptions(assumingfullconversion ofConvertibleSecurities, ifapplicable).Nofurtheradjustment to theConversionPricewill bemadeupon the actualissuanceof such CommonStock upon the exercise of suchOptions orupon the conversion orexchangeof Convertible Securitiesissuableuponexerciseof suchOptions.

Additionally,theBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorsellsanyConvertibleSecurities,whether ornotimmediatelyconvertible(otherthanwhere thesameareissuableupontheexercise ofOptions), and the price per shareforwhich CommonStock isissuable upon suchconversionorexchangeislessthanthe ConversionPricethen ineffect,thenthe ConversionPriceshall beequal to suchprice pershare.For thepurposes of the precedingsentence, the“price per shareforwhich CommonStock isissuable uponsuchconversion orexchange” isdeterminedby dividing(i) thetotalamount, ifany,receivedor receivableby theBorrowerasconsiderationfor the issuance or sale ofallsuchConvertibleSecurities, plus theminimumaggregateamount of additionalconsideration, ifany,payable to theBorrower upon theconversion orexchangethereofat the timesuchConvertibleSecurities firstbecomeconvertible orexchangeable,by(ii) the maximumtotalnumber ofshares of CommonStockissuable upontheconversionorexchangeofallsuchConvertibleSecurities.NofurtheradjustmenttotheConversionPricewillbemadeupontheactualissuanceofsuchCommonStockuponconversion or exchangeofsuchConvertible Securities.

(e)PurchaseRights.If,atanytimewhenanyNotesareissuedandoutstanding,theBorrowerissuesanyconvertiblesecuritiesorrightstopurchasestock,warrants,securitiesorotherproperty(the“PurchaseRights”)proratatotherecordholdersofanyclassofCommonStock,thentheHolder of thisNotewillbeentitledtoacquire,uponthetermsapplicabletosuchPurchaseRights,theaggregatePurchaseRightswhichsuchHoldercouldhaveacquired ifsuchHolderhadheld thenumber ofshares of CommonStockacquirable uponcompleteconversion of thisNote(withoutregard to anylimitations onconversioncontainedherein) immediatelybefore thedate onwhich a recordistakenfor the grant,issuanceorsale of

suchPurchaseRightsor,ifnosuchrecordistaken,thedateasofwhichtherecordholdersofCommonStockareto be determinedforthegrant,issueor saleof such Purchase Rights.

(f)NoticeofAdjustments.UpontheoccurrenceofeachadjustmentorreadjustmentoftheConversionPriceasaresultoftheeventsdescribedinthisSection1.6,theBorrower,atitsexpense,shallpromptlycomputesuchadjustmentorreadjustmentandprepareandfurnish to theHolder acertificate settingforthsuchadjustment orreadjustmentand showing indetail thefacts uponwhichsuchadjustment orreadjustment isbased.The Borrowershall, upon thewrittenrequestat any time of theHolder,furnish tosuch Holder a likecertificatesettingforth(i)suchadjustmentorreadjustment,(ii)theConversionPriceatthetimeineffectand(iii)thenumberofsharesofCommonStockandtheamount,ifany, ofothersecuritiesor propertywhichat thetime would be received uponconversion oftheNote.

1.7TradingMarketLimitations.UnlesspermittedbytheapplicablerulesandregulationsoftheprincipalsecuritiesmarketonwhichtheCommonStockisthenlistedortraded,inno eventshall theBorrower issue uponconversion oforotherwisepursuant tothisNoteandthe other Notesissuedpursuantto thePurchaseAgreement morethanthe maximumnumber ofsharesof CommonStockthattheBorrowercanissue pursuanttoanyrule of theprincipal UnitedStatessecuritiesmarket on which theCommonStock isthentraded (the “MaximumShareAmount”),whichshall be9.99%ofthetotalsharesoutstanding on theClosingDate (asdefined in the PurchaseAgreement), subject toequitableadjustmentfrom time to timeforstock splits,stockdividends,combinations,capitalreorganizationsandsimilareventsrelating to the CommonStockoccurringafter thedatehereof.Once the MaximumShareAmounthasbeenissued, if theBorrower fails toeliminate anyprohibitionsunderapplicablelawor therules orregulations ofany stockexchange,interdealerquotationsystem orotherself-regulatoryorganizationwithjurisdictionovertheBorrower or anyofitssecurities on theBorrower’s ability toissuesharesof CommonStockinexcessofthe MaximumShare Amount,inlieuofanyfurtherright toconvert thisNote, thiswill beconsideredanEvent ofDefaultunderSection 3.3 ofthe Note.

1.8StatusasShareholder.UponsubmissionofaNoticeofConversionbyaHolder,(i)thesharescoveredthereby(otherthantheshares,ifany,whichcannotbeissuedbecause theirissuance wouldexceedsuchHolder’sallocatedportion of theReservedAmount or MaximumShareAmount)shall bedeemedconverted intoshares ofCommonStockand(ii) theHolder’srightsasaHolder ofsuchconvertedportionof thisNoteshallceaseandterminate,exceptingonly therighttoreceivecertificatesforsuchsharesofCommonStockandtoanyremediesprovided herein orotherwiseavailableatlaw or in equity to suchHolderbecause of afailure by theBorrower to complywith theterms of thisNote.Notwithstanding theforegoing, if aHolderhas notreceivedcertificatesforallshares of CommonStockprior to thetenth(10th)business dayafter theexpiration of theDeadlinewithrespect to a conversion of anyportion of thisNotefor anyreason,then(unless theHolderotherwiseelects toretain itsstatusas a holder of CommonStock by sonotifying theBorrower) theHolder shallregain therights of aHolder of

thisNotewithrespecttosuchunconvertedportionsofthisNoteandtheBorrowershall,assoonaspracticable,returnsuchunconvertedNotetotheHolderor,iftheNotehasnotbeensurrendered,adjustitsrecordstoreflectthatsuchportionofthisNotehasnotbeenconverted.Inallcases, theHolder shallretainall of itsrightsandremedies(including, withoutlimitation,(i) theright to receiveConversionDefaultPaymentspursuant toSection 1.3 to the extentrequired therebyforsuchConversionDefaultandanysubsequentConversionDefaultand(ii) therighttohavetheConversionPricewithrespecttosubsequentconversionsdeterminedinaccordancewithSection 1.3) fortheBorrower’sfailuretoconvertthisNote.

1.9Prepayment.NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodssetforthonthetableimmediatelyfollowingthisparagraph(the“PrepaymentPeriods”),theBorrowershall have theright,exercisable onnotlessthan three(3)TradingDays priorwrittennotice to theHolder of theNote to prepay theoutstandingNote(principalandaccruedinterest), infull, inaccordancewith thisSection 1.9. Anynotice ofprepaymenthereunder(an“OptionalPrepaymentNotice”)shallbedeliveredtotheHolderoftheNoteat itsregisteredaddressesandshallstate: (1)that theBorrower isexercising itsright to prepay theNote,and(2) thedate ofprepaymentwhichshall be notmorethanthree(3)TradingDaysfromthedate of theOptionalPrepaymentNotice.Onthedate fixedforprepayment(the“OptionalPrepaymentDate”), theBorrower shallmakepayment of theOptionalPrepaymentAmount(asdefinedbelow)toHolder,orupontheorderoftheHolderasspecifiedby theHolder inwriting to theBorrower,atleast one(1)business dayprior to theOptionalPrepaymentDate. IftheBorrowerexercisesitsrighttoprepay theNote,theBorrowershallmakepaymenttotheHolder ofanamount incash(the“OptionalPrepaymentAmount”) equal to thepercentage(“PrepaymentPercentage”)assetforth in thetableimmediatelyfollowing thisparagraph oppositetheapplicablePrepaymentPeriod,multipliedbythesumof:(w)thethenoutstandingprincipalamount of thisNoteplus(x) accruedand unpaidintereston theunpaidprincipalamount of thisNote totheOptionalPrepaymentDateplus(y)DefaultInterest, ifany, on theamountsreferred to inclauses(w)and(x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and1.4(g) hereof.IftheBorrower deliversanOptional PrepaymentNotice and fails topay theOptionalPrepaymentAmountdue totheHolder oftheNote withintwo(2)businessdaysfollowing the OptionalPrepaymentDate, theBorrowershallforeverforfeit itsright toprepay theNote pursuantto thisSection 1.9.

PrepaymentPeriod	PrepaymentPercentage
1.The periodbeginningon theIssueDate andendingon thedate whichis thirty(30) daysfollowingtheIssue Date.	110%

2. Theperiodbeginningon thedatewhichisthirty-one(31)daysfollowingtheIssueDate andendingonthedatewhichissixty(60)daysfollowingtheIssueDate	115%
3.Theperiodbeginningon thedatewhichissixty-one (61)daysfollowingtheIssueDate andendingon thedatewhichisninety(90)daysfollowingtheIssueDate	120%
4.Theperiodbeginningon thedatethatisninety-one (91)dayfromtheIssueDate andendingonehundredtwenty(120)daysfollowingtheIssueDate	125%
5.Theperiodbeginningon thedatethatisonehundredtwenty-one (121)dayfromtheIssueDate andendingonehundredfifty(150)daysfollowingtheIssueDate	130%
6.Theperiodbeginningon thedatethatisonehundredfifty-one (151)dayfromtheIssueDateandendingonehundredeighty(180)daysfollowingtheIssueDate	135%

Aftertheexpirationofonehundredeighty(180)followingthedateoftheNote,the Borrowershallhavenoright of prepayment.

ARTICLEII.CERTAIN COVENANTS

2.1DistributionsonCapitalStock.Solongas theBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsent(a)pay,declareorsetapartforsuchpayment,anydividendorotherdistribution(whetherincash,propertyorothersecurities)onsharesof capitalstockotherthandividends onsharesofCommonStock solely in theformofadditionalshares of CommonStock or(b) directly or indirectly orthroughany subsidiarymakeany otherpayment ordistribution inrespect of itscapitalstockexceptfor distributionspursuant toanyshareholders’ rightsplanwhich isapproved by amajority ofthe Borrower’sdisinteresteddirectors.

2.2RestrictiononStockRepurchases.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsentredeem,repurchaseorotherwiseacquire(whetherforcashorinexchangeforpropertyorothersecurities or otherwise)inany onetransaction orseries ofrelatedtransactionsanysharesofcapitalstock of the Borroweroranywarrants,rightsoroptions topurchaseor acquireany suchshares.

2.3Borrowings.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,create,incur,assume

guarantee,endorse,contingentlyagreetopurchaseorotherwisebecomeliableupontheobligationofanyperson,firm,partnership,jointventureorcorporation,exceptbytheendorsementofnegotiableinstrumentsfordeposit orcollection,orsuffertoexist anyliability forborrowedmoney,except(a)borrowings inexistence orcommitted on thedatehereofand ofwhich theBorrowerhasinformed Holder in writing prior to the date hereof,(b)indebtedness totradecreditors orfinancial institutionsincurred in theordinary course ofbusiness or(c)borrowings,the proceedsof whichshall be used torepaythisNote.

2.4SaleofAssets.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,sell,leaseorotherwisedisposeofanysignificantportionofitsassets outsidetheordinary courseofbusiness.Anyconsent to thedisposition of anyassetsmaybe conditioned on aspecifieduse of theproceeds of disposition.

2.5AdvancesandLoans.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,lendmoney,givecreditormakeadvancestoanyperson,firm,jointventureorcorporation,including,withoutlimitation,officers,directors,employees,subsidiariesandaffiliates of theBorrower,exceptloans,credits oradvances(a) inexistence or committed on thedatehereofand which theBorrower hasinformedHolder inwritingpriortothedatehereof,(b)made inthe ordinarycourseof businessor(c)not inexcess of$100,000.

ARTICLEIII.EVENTSOFDEFAULT

If anyofthefollowing events of default (each,an“Event of Default”)shalloccur:

3.1FailuretoPayPrincipalorInterest.TheBorrowerfailstopaytheprincipalhereoforinterestthereonwhendueonthisNote,whetheratmaturity,uponaccelerationorotherwise.

3.2ConversionandtheShares.TheBorrowerfailstoissuesharesofCommonStocktotheHolder(orannouncesorthreatensinwritingthatitwillnothonoritsobligationtodoso) uponexercise by theHolder of theconversionrightsof theHolderinaccordancewiththetermsof thisNote,failstotransfer or cause itstransferagenttotransfer(issue) (electronically or incertificatedform) anycertificateforsharesof CommonStockissued to theHolder uponconversion of orotherwisepursuant to thisNoteasandwhen required by thisNote, theBorrowerdirects itstransferagent not totransferordelays,impairs,and/orhinders itstransferagent intransferring(orissuing) (electronically or incertificated form) anycertificate forshares of CommonStock to beissued to theHolderuponconversion of orotherwisepursuant to thisNoteasandwhen required by thisNote, orfails toremove(ordirects itstransfer agent not toremove orimpairs,delays, and/orhinders itstransferagentfromremoving)anyrestrictive

legend(ortowithdrawanystoptransferinstructionsinrespectthereof)onanycertificateforanysharesofCommonStockissuedtotheHolderuponconversionoforotherwisepursuanttothisNoteasandwhenrequiredbythisNote(ormakesanywrittenannouncement,statementorthreatthatitdoesnotintendtohonortheobligationsdescribedinthisparagraph)andanysuchfailureshallcontinueuncured(or anywrittenannouncement,statementorthreatnottohonoritsobligationsshall not berescinded inwriting) forthree(3)businessdaysafter theHoldershallhavedelivereda NoticeofConversion.Itisanobligationof theBorrower toremaincurrentin itsobligations to itstransfer agent.Itshall beanevent ofdefault of thisNote, if aconversion of thisNote isdelayed,hindered orfrustrated due to abalanceowedbytheBorrower to itstransferagent. Ifat the option of theHolder,theHolderadvancesanyfunds to theBorrower’stransferagent inordertoprocess aconversion,suchadvancedfundsshall bepaidbytheBorrowerto theHolder within fortyeight(48) hours ofa demand from the Holder.

3.3BreachofCovenants.TheBorrowerbreachesanymaterialcovenantorothermaterialtermorconditioncontainedinthisNoteandanycollateraldocumentsincludingbutnotlimitedtothePurchaseAgreementandsuchbreachcontinuesforaperiodoften(10)daysafterwrittennotice thereofto the Borrower from the Holder.

3.4BreachofRepresentationsandWarranties.AnyrepresentationorwarrantyoftheBorrowermadehereinorinanyagreement,statementorcertificategiveninwritingpursuantheretoorinconnectionherewith(including,withoutlimitation,thePurchaseAgreement),shall befalse or misleadingin anymaterialrespect whenmadeand thebreach ofwhichhas(orwith the passageoftime willhave)a materialadverseeffect on the rights of theHolder withrespect to thisNoteorthe PurchaseAgreement.

3.5ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershallmakeanassignmentforthebenefitofcreditors,orapplyfororconsenttotheappointmentofareceiverortrusteeforitorforasubstantialpartofitspropertyorbusiness, orsuch areceiverortrustee shallotherwisebeappointed.

3.6Judgments.Anymoneyjudgment,writorsimilarprocessshallbeenteredorfiledagainsttheBorroweroranysubsidiaryoftheBorroweror anyofitspropertyorotherassetsformorethan$50,000,andshallremainunvacated,unbondedorunstayedforaperiodoftwenty

(20)daysunlessotherwiseconsentedtobytheHolder,whichconsentwillnotbeunreasonablywithheld.

3.7Bankruptcy.Bankruptcy,insolvency,reorganizationorliquidationproceedingsorotherproceedings,voluntaryorinvoluntary,forreliefunderanybankruptcylaworanylawforthereliefofdebtorsshall beinstitutedbyoragainst theBorrowerorany subsidiary ofthe Borrower.

3.8DelistingofCommonStock. TheBorrower shallfail to maintain thelistingoftheCommonStockonatleastoneoftheOTC(whichspecificallyincludesthePinkSheetselectronicquotationsystem)oranequivalentreplacementexchange,theNasdaqNationalMarket, theNasdaq SmallCapMarket, theNewYorkStockExchange,or theAmericanStockExchange.

3.9FailuretoComplywiththeExchangeAct.TheBorrowershallfailtocomplywiththereportingrequirementsoftheExchangeAct;and/ortheBorrowershallceasetobesubject to the reportingrequirements ofthe ExchangeAct.

3.10Liquidation.Anydissolution,liquidation,orwindingupofBorroweroranysubstantialportion ofitsbusiness.

3.11Cessation of Operations.AnycessationofoperationsbyBorrowerorBorroweradmitsitisotherwisegenerallyunabletopayitsdebtsassuchdebtsbecomedue,provided,however,thatanydisclosureoftheBorrower’sabilityto continue as a“goingconcern”shall not be anadmissionthat the Borrowercannotpayitsdebtsas theybecome due.

3.12Maintenanceof Assets. ThefailurebyBorrowertomaintainanymaterialintellectualpropertyrights,personal,realpropertyorotherassetswhich arenecessarytoconduct itsbusiness(whethernoworin thefuture).

3.13FinancialStatementRestatement.Therestatementofanyfinancialstatementsfiledby theBorrowerwiththeSECforany dateorperiodfromtwoyearspriortotheIssueDateofthisNoteanduntilthisNoteis nolongeroutstanding, iftheresultofsuchrestatementwould,bycomparisontotheunrestatedfinancialstatement,haveconstitutedamaterialadverseeffect on therights of theHolderwithrespect to thisNote or thePurchaseAgreement.

3.14ReverseSplits.TheBorrowereffectuatesareversesplitofitsCommonStockwithouttwenty(20) days prior writtennoticeto the Holder.

3.15Replacement ofTransferAgent.In theeventthat the Borrower proposes toreplaceitstransferagent,theBorrowerfailstoprovide,priortotheeffectivedateofsuchreplacement,afullyexecutedIrrevocableTransferAgentInstructionsinaformasinitiallydeliveredpursuant tothePurchaseAgreement (including but notlimitedtotheprovisiontoirrevocably reserveshares of CommonStock intheReservedAmount)signedby thesuccessortransferagent toBorrower andtheBorrower.

3.16Cross-Default.NotwithstandinganythingtothecontrarycontainedinthisNoteortheotherrelatedorcompaniondocuments,abreachordefaultbytheBorrowerofanycovenantorothertermorconditioncontainedin anyoftheOtherAgreements,after thepassage of allapplicablenoticeandcureorgraceperiods,shall,at theoption oftheHolder, beconsidered adefault under thisNoteand the Other Agreements, inwhichevent theHoldershall beentitled(but in noevent required) to applyallrightsandremediesof the Holder under the terms of thisNoteandtheOtherAgreementsbyreasonofadefaultundersaidOtherAgreementorhereunder.“OtherAgreements”means,collectively,allagreementsandinstrumentsbetween,among orby:(1) theBorrower,and, orfor thebenefitof,(2)theHolderandanyaffiliate of theHolder,including,withoutlimitation,promissorynotes; provided,however, the term“OtherAgreements”shall not include therelated or companiondocuments to thisNote.Eachof theloantransactionswill becross-defaultedwitheachotherloan transactionandwithallother existingandfuture debtof Borrowerto the Holder.

UpontheoccurrenceofanyEventofDefaultspecifiedinSection3.1(solelywithrespecttofailuretopay theprincipalhereoforinterestthereonwhendueattheMaturityDate),theNoteshallbecomeimmediatelydueandpayableandtheBorrowershallpaytotheHolder,infullsatisfaction ofits obligationshereunder,an amountequal to theDefault Sum(asdefinedherein).UPON THEOCCURRENCEOFANYEVENTOFDEFAULTSPECIFIED INSECTION 3.2,THENOTESHALLBECOMEIMMEDIATELYDUEANDPAYABLEANDTHEBORROWERSHALLPAYTOTHEHOLDER, INFULLSATISFACTION OF ITSOBLIGATIONSHEREUNDER,ANAMOUNTEQUAL TO:(Y)THEDEFAULTSUM(AS

DEFINEDHEREIN);MULTIPLIEDBY(Z)TWO(2).UpontheoccurrenceofanyEventofDefault,otherthanSection3.2,exercisablethroughthedeliveryofwrittennoticetotheBorrowerbysuchHolders(the“DefaultNotice”), theNoteshall becomeimmediatelydueandpayableandtheBorrowershallpay totheHolder, infullsatisfactionofitsobligationshereunder,anamountequalto thegreater of(i) 150%timesthesumof(w) thethenoutstandingprincipalamountofthisNoteplus(x)accruedandunpaidinterestontheunpaidprincipalamountofthisNotetothedateofpayment(the“MandatoryPrepaymentDate”)plus(y)DefaultInterest,ifany, on theamountsreferredto inclauses(w)and/or(x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and1.4(g) hereof(thethenoutstandingprincipalamount of thisNote to thedateofpaymentplustheamountsreferredtoinclauses(x),(y)and(z)shallcollectively beknownasthe“DefaultSum”)or(ii)the“parityvalue”oftheDefaultSum tobeprepaid,where parityvaluemeans (a) thehighestnumberofshares of CommonStockissuable uponconversion oforotherwisepursuant tosuchDefaultSuminaccordancewithArticle I,treatingtheTrading Day immediately preceding the MandatoryPrepaymentDateas the“ConversionDate”forpurposes ofdetermining thelowestapplicable ConversionPrice,unless theDefaultEventarisesas aresult ofabreach inrespect ofaspecificConversion Date in whichcase such ConversionDateshall be the ConversionDate),multipliedby(b) thehighest ClosingPricefor the CommonStockduring theperiodbeginning onthedateoffirstoccurrenceoftheEventofDefaultandending onedayprior tothe MandatoryPrepaymentDate(the“DefaultAmount”)andallotheramountspayable hereundershallimmediately become dueandpayable, allwithoutdemand,

presentmentornotice,allofwhichherebyareexpresslywaived,togetherwithallcosts,including,withoutlimitation,legalfeesandexpenses,ofcollection,andtheHoldershallbeentitled toexercise allother rightsandremediesavailable atlaworinequity.

IftheBorrowerfailstopaytheDefaultAmountwithinfive(5)businessdaysofwrittennoticethatsuchamountisdueandpayable,thentheHoldershallhavetherightatanytime,solongandtotheextentthattherearesufficientauthorizedshares,torequiretheBorrower,uponwrittennotice, toconvert theDefaultAmountintoshares of CommonStock of theBorrowerpursuant toSection 1.1hereof.

ARTICLEIV.MISCELLANEOUS

4.1FailureorIndulgenceNotWaiver.NofailureordelayonthepartoftheHolderintheexerciseofanypower,rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,right or privilege precludeother orfurther exercisethereof or ofanyotherright, power orprivileges.Allrightsandremediesexistinghereunder arecumulativeto,andnotexclusiveof,anyrightsorremediesotherwise available.

4.2Notices.Allnotices,demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershallbeinwritingand,unlessotherwisespecifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,return receiptrequested,postageprepaid,(iii)delivered byreputable aircourierservicewithchargesprepaid,or(iv)transmittedbyhanddelivery,telegram, or facsimile,addressedas setforth belowortosuchotheraddressassuchparty shallhavespecifiedmostrecentlybywrittennotice.Anynotice orothercommunicationrequiredorpermittedtobegivenhereundershallbedeemedeffective (a) uponhanddeliveryor delivery byfacsimile,withaccurateconfirmationgeneratedbythe transmittingfacsimilemachine,attheaddressornumberdesignatedbelow(ifdelivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),or thefirstbusinessdayfollowingsuchdelivery(ifdeliveredotherthanonabusinessdayduringnormalbusinesshourswheresuch notice is to bereceived) or(b) on thesecondbusinessdayfollowing thedate ofmailingbyexpresscourierservice, fully prepaid,addressed tosuchaddress,or uponactualreceipt ofsuchmailing,whichevershallfirstoccur.Theaddressesforsuchcommunicationsshallbe:

Ifto the Borrower, to:

MAX SOUND CORPORATION

2902A ColoradoAvenueSanta Monica, CA90404

Attn:GREG HALPERN,Chief FinancialOfficerfacsimile:

With acopybyfaxonlyto(which copyshall notconstitute notice):[enter nameof lawfirm]

Attn: [attorneyname][enter address line1][enter city,state, zip]

facsimile:[enter faxnumber]

Ifto the Holder:

VISVIRESGROUP,INC.

111GreatNeckRoad –Suite216GreatNeck, NY11021

Attn:CurtKramer,President

e-mail:info@visviresgroup.com

With acopybyfaxonlyto(which copyshall notconstitute notice):NaidichWurmanLLP

Att:JudahA.Eisner, Esq.Attn:Bernard S.Feldman,Esq.facsimile:516-466-3555

4.3Amendments.ThisNoteandanyprovisionhereofmayonlybeamendedbyaninstrumentinwritingsignedbytheBorrowerandtheHolder. Theterm“Note”andallreferencethereto,asusedthroughout thisinstrument,shallmeanthisinstrument(andtheotherNotesissuedpursuanttothePurchaseAgreement)asoriginallyexecuted,or iflateramendedorsupplemented,thenas soamendedor supplemented.

4.4Assignability.ThisNoteshallbebindingupontheBorroweranditssuccessorsandassigns,andshallinuretobethebenefitoftheHolderanditssuccessorsandassigns.Eachtransferee of thisNote must bean“accredited investor” (asdefined in Rule501(a) of the 1933Act).Notwithstandinganything in thisNote to the contrary, thisNote may bepledgedascollateral inconnectionwith abonafidemargin account orotherlendingarrangement.

4.5Cost ofCollection.Ifdefault ismadein thepayment ofthisNote,theBorrowershallpaytheHolder hereof costs ofcollection,includingreasonable attorneys’ fees.

4.6GoverningLaw.ThisNoteshallbegovernedbyandconstruedinaccordancewiththelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws.Anyactionbroughtbyeither partyagainst theother concerningthetransactionscontemplatedbythis

NoteshallbebroughtonlyinthestatecourtsofNewYorkorinthefederalcourtslocatedinthestateandcountyofNassau.ThepartiestothisNoteherebyirrevocablywaiveanyobjectiontojurisdictionandvenueofany actioninstitutedhereunderandshallnotassertany defensebased onlackofjurisdictionorvenueorbaseduponforumnonconveniens.TheBorrowerandHolderwaivetrialbyjury.Theprevailingpartyshall beentitledtorecover from theother party itsreasonableattorney's feesandcosts. In the eventthat any provision of thisNote or anyotheragreementdelivered inconnectionherewith isinvalid orunenforceableunder anyapplicablestatuteorrule oflaw,thensuchprovisionshallbedeemedinoperativeto theextentthatitmayconflicttherewithandshall bedeemedmodifiedtoconformwithsuchstatute orruleoflaw.Anysuchprovision whichmay prove invalid orunenforceableunderanylawshall notaffect the validity orenforceabilityofanyotherprovisionofanyagreement.Eachpartyherebyirrevocablywaives personalserviceofprocess andconsents toprocess beingserved inanysuit,action orproceedinginconnectionwith thisAgreement orany otherTransactionDocumentbymailing a copy thereof viaregisteredorcertifiedmail orovernight delivery(withevidence ofdelivery)tosuchpartyattheaddressineffectfornoticestoitunderthisAgreement andagreesthatsuchserviceshallconstitutegoodandsufficientservice of processandnoticethereof.Nothingcontainedhereinshallbedeemedtolimitinanywayanyrighttoserveprocessinanyother manner permittedbylaw.

4.7CertainAmounts.WheneverpursuanttothisNotetheBorrowerisrequiredtopayanamountinexcessoftheoutstandingprincipalamount(ortheportionthereofrequiredtobepaidatthattime)plusaccruedandunpaidinterestplusDefaultInterestonsuchinterest,theBorrowerand the Holderagreethat theactualdamages to theHolderfrom thereceipt ofcashpayment on thisNote may bedifficult todetermineand theamount to be sopaidby theBorrowerrepresentsstipulateddamagesand not a penaltyand isintended tocompensate theHolder inpartfor lossof the opportunity toconvertthisNoteandtoearnareturnfromthesale ofshares of CommonStockacquired uponconversion of this Noteat aprice inexcess of thepricepaidforsuch sharespursuant to thisNote.TheBorrowerand the Holder herebyagreethatsuchamount ofstipulateddamages is not plainlydisproportionate to the possible loss to theHolderfrom thereceipt of acashpaymentwithout the opportunity toconvert thisNote intoshares ofCommonStock.

4.8PurchaseAgreement.ByitsacceptanceofthisNote,eachpartyagreestobeboundbytheapplicableterms ofthe Purchase Agreement.

4.9NoticeofCorporateEvents.Exceptasotherwiseprovidedbelow,theHolderofthisNoteshallhavenorightsasaHolderofCommonStockunlessandonly totheextentthatitconvertsthisNoteintoCommonStock.TheBorrowershallprovidetheHolderwithpriornotification of any meetingof theBorrower’sshareholders(andcopies of proxymaterialsandotherinformation sent toshareholders).In the event ofanytakingby theBorrower of arecord of itsshareholdersfor thepurpose of determiningshareholderswho areentitled toreceivepayment ofanydividend orotherdistribution,anyright tosubscribefor,purchaseorotherwise

acquire(includingbywayof merger,consolidation,reclassification orrecapitalization)anyshareofanyclassor anyothersecuritiesorproperty,ortoreceive anyotherright,orforthepurposeofdeterminingshareholderswhoareentitledtovoteinconnectionwithanyproposedsale,leaseorconveyanceofall orsubstantiallyall oftheassets oftheBorroweroranyproposedliquidation,dissolution orwinding up of theBorrower, theBorrowershallmail anotice to theHolder,atleast twenty(20) days prior to therecorddatespecifiedtherein(or thirty(30)daysprior to theconsummation of thetransaction orevent,whichever isearlier), of the date onwhichanysuchrecord is to be takenfor thepurposeofsuch dividend,distribution,right orotherevent,and abriefstatement regarding theamountandcharacter ofsuchdividend, distribution,right or otherevent tothe extentknownatsuchtime.TheBorrowershallmakea publicannouncementofanyeventrequiringnotificationtotheHolderhereundersubstantially simultaneouslywiththenotification to the Holderinaccordancewith the terms ofthisSection 4.9.

4.10Remedies.TheBorroweracknowledgesthatabreachbyitofitsobligationshereunderwillcauseirreparableharmtotheHolder,byvitiatingtheintentandpurpose of the transactioncontemplatedhereby.Accordingly, theBorroweracknowledgesthat theremedyatlawforabreachofitsobligationsunderthisNotewill beinadequateandagrees,in the eventofabreach orthreatenedbreach by theBorroweroftheprovisions ofthisNote,that theHoldershallbeentitled,inadditiontoallotheravailableremediesatlaworinequity,andinaddition to thepenaltiesassessableherein, toaninjunction orinjunctionsrestraining,preventing or curinganybreach of thisNoteand toenforcespecifically the terms andprovisionsthereof,withoutthenecessityofshowing economiclossandwithoutanybondorothersecuritybeingrequired.

INWITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnameby itsdulyauthorizedofficerthisApril 21, 2015.

MAX SOUND CORPORATION

By:_GREG HALPERN

Chief FinancialOfficer

EXHIBITA --NOTICEOF CONVERSION

Theundersignedherebyelectstoconvert$principalamountoftheNote(definedbelow)intothatnumberofsharesofCommonStocktobeissuedpursuanttotheconversionoftheNote(“CommonStock”)as setforthbelow,ofMAXSOUNDCORPORATION,aDelawarecorporation(the“Borrower”)accordingto theconditions oftheconvertiblenoteoftheBorrowerdated as ofApril 21, 2015(the“Note”),as of thedatewrittenbelow.No feewill becharged to theHolderfor anyconversion,exceptfortransfertaxes, ifany.

BoxChecked astoapplicableinstructions:

[]TheBorrowershallelectronicallytransmittheCommonStockissuablepursuanttothisNoticeofConversiontotheaccountoftheundersignedoritsnomineewithDTC throughitsDepositWithdrawalAgentCommissionsystem(“DWAC Transfer”).

Name ofDTCPrimeBroker:AccountNumber:

[]TheundersignedherebyrequeststhattheBorrowerissueacertificateorcertificatesforthenumberofsharesofCommonStocksetforthbelow(whichnumbersarebasedontheHolder’scalculationattachedhereto)inthename(s)specifiedimmediatelybelow or,ifadditionalspaceisnecessary, on anattachmenthereto:

VIS VIRESGROUP,INC.

111GreatNeckRoad –Suite 216GreatNeck,NY11021Attention:CertificateDelivery

e-mail:info@visviresgroup.com

DateofConversion:

ApplicableConversionPrice:$NumberofSharesofCommon Stockto beIssued

PursuanttoConversionoftheNotes:AmountofPrincipalBalanceDueremaining

UndertheNoteafterthisconversion:

VIS VIRESGROUP,INC.

By:Name:CurtKramer

Title: PresidentDate: