THISNOTEANDTHECOMMONSTOCK ISSUABLEUPONCONVERSIONOFTHISNOTE HAVENOTBEENANDWILLNOTBE REGISTEREDWITHTHEUNITEDSTATES SECURITIESANDEXCHANGECOMMISSIONOR THESECURITIESCOMMISSIONOFANYSTATE PURSUANTTOANEXEMPTIONFROM REGISTRATIONPROVIDEDUNDERTHE SECURITIESACTOF1933,ASAMENDED,AND THE RULES AND REGULATIONS PROMULGATEDTHEREUNDER(THE"1933 ACT”)
US$110,250.00
MAXSOUND CORPORATION.
8%CONVERTIBLEREDEEMABLENOTEDUEAPRIL21,2016
FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofUNIONCAPITAL,LLCanditsauthorizedsuccessorsandpermittedassigns("Holder"),theaggregateprincipalfaceamountofOneHundredTenThousandTwoHundred FiftyDollarsexactly(U.S.$110,250.00)onApril21,2016("MaturityDate")andtopayinterest ontheprincipalamountoutstandinghereunderattherateof8%perannumcommencingon April21,2015.TheCompanyacknowledgesthisNotewasissuedwitha5%originalissuedis- count(OID)andas suchtheissuanceprice was$105,000.00.Theinterest willbepaidto the Holder in whose name this Note is registered on the records of the Company regarding registra- tionandtransfersofthisNote. Theprincipalof,andintereston,thisNotearepayableat338 CrownStreet,Brooklyn,NY11225,initially,andif changed,lastappearingon therecordsofthe 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 Ma- turity 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 rec- ords of the Company. The forwarding of such check or wire transfer shall constitute a payment ofoutstandingprincipalhereunderandshallsatisfyanddischargetheliabilityforprincipalon 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.
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%ofthelowestdailyVWAPoftheCommonStockasreportedontheNationalQuotationsBureauOTCQBexchangewhichtheCompany’ssharesaretradedor anyexchangeuponwhichtheCommonStockmaybetradedinthefuture("Exchange"),forthetenprior 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 communicationtothe Companyafter4 P.M.EasternStandard orDaylightSavings Timeif the Holder wishesto includethe samedayclosing price).If theshareshave notbeen deliveredwith- in3 business days, theNotice of Conversion maybe rescinded. Such conversion shallbe effec- tuatedby the Companydelivering the shares ofCommon Stock tothe Holder within 3 business days ofreceiptbytheCompanyoftheNoticeofConversion. OncetheHolderhasreceivedsuch shares of CommonStock, the Holdershall surrender thisNote to theCompany, executed bythe Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied byproperassignment hereofinblank.Accruedbut unpaidinterestshall besubject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, butthenumber of sharesissuableshall beroundedto thenearestwholeshare. Inthe eventtheCompanyexperiencesaDTC“Chill”onitsshares,theconversionpriceshallbede- creasedto 55%instead of65% whilethat “Chill”is ineffect.In noevent shallthe Holderbe al- lowed to effect a conversion if such conversion, along with all other shares of Company Com- monStockbeneficiallyownedbytheHolderanditsaffiliateswouldexceed9.9%oftheout- standing shares of the Common Stock of the Company.
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidatthe rateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("Interest Shares").Holdermay,atanytime,sendinaNoticeofConversiontotheCompanyforInterest SharesbasedontheformulaprovidedinSection4(a)above.Thedollaramountconvertedinto InterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipal balanceofthisNotetothedateofsuchnotice.
(c) DuringthefirstsixmonthsthisNoteisineffect,theCompanymayre- deemthisNotebypayingtotheHolderanamountasfollows:(i)iftheredemptionoccurswithin thefirst90daysthenanamountequalto130%oftheunpaidprincipalamountofthisNotealong
withanyprepaidandearnedinterest,(ii)iftheredemptionoccursafterthefirst90daysbutbe- forethe180thdayfollowingtheissuanceofthisNote,thenanamountequalto135%oftheun- paidprincipalamountofthisNotealongwithanyprepaidandearnedinterest.ThisNotemaynot beredeemedafter180days.Theredemptionmustbeclosedandpaidforwithin3businessdays
oftheCompanysendingtheredemptiondemandortheredemptionwillbeinvalidandtheCom- panymaynotredeemthisNote.
(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 ofCommonStockimmediatelypriortosuchSale EventattheConversionPrice.
(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- untarypetitionforbankruptcyrelief,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.IftheCompanydoesnotreplenishthereserve setforthinSection12,within5businessdaysoftherequestoftheHolderthentheconversiondis- countsetforthinSection4(a)shallbeincreasedfroma35%conversiondiscounttoa50%con- versiondiscountandshallbeincreasedfromthe50%conversiondiscounttheninineffect toan 80%conversiondiscountiftheincreaseisnoteffectivewithin10businessdaysofthereplen- ishmentrequest;or
(m) TheCompanyshallnotbe“current”initsfilingswiththeSecuritiesand ExchangeCommission;or
(n) TheCompanyshalllosethe“bid”priceforitsstockinamarket(including theOTCQBmarketplaceorotherexchange).
Then,oratanytimethereafter,unlesscuredwithin5days,andineachandeverysuchcase,un- lesssuchEventofDefaultshallhavebeenwaivedinwritingbytheHolder(whichwaivershall notbedeemedtobeawaiverofanysubsequentdefault)attheoptionoftheHolderandinthe Holder'ssolediscretion,theHoldermayconsiderthisNoteimmediatelydueandpayable,with- outpresentment,demand,protestor(further)noticeofanykind(otherthannoticeofaccelera- tion),allofwhichareherebyexpresslywaived,anythinghereinorinanynoteorotherinstru- mentscontainedtothecontrarynotwithstanding,andtheHoldermayimmediately,andwithout expiration ofanyperiodof grace,enforceanyandall oftheHolder'srightsand remediesprovid- edhereinoranyotherrightsorremediesaffordedbylaw.UponanEventofDefault,interest shallaccrueatadefaultinterestrateof 24%perannumor,ifsuchrateisusuriousornotpermit- tedbycurrentlaw,thenatthehighestrateofinterestpermittedbylaw. Intheeventofabreach
5
ofSection8(k)thepenaltyshallbe$250perdaythesharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewasdeliveredtotheCompany.Thispenaltyshallincreaseto
$500perdaybeginningonthe10thday.ThepenaltyforabreachofSection8(n)shallbeanin- creaseoftheoutstandingprincipalamountsby20%.IncaseofabreachofSection8(i),theout-
standingprincipaldueunderthisNoteshallincreaseby50%.IfthisNoteisnotpaidatmaturity, theoutstandingprincipaldueunderthisNoteshallincreaseby10%.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in- cluding,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,the HoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpenses incurredintheinvestigation,preparationandprosecutionofsuchactionorproceeding.
Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,ifthe CompanyfailsforanyreasontodelivertotheHoldertheconversionsharesbythebythe3rd businessdayfollowingthedeliveryofaNoticeofConversiontotheCompanyandiftheHolder incursaFailuretoDeliverLoss,thenatanytimetheHoldermayprovidetheCompanywritten noticeindicatingtheamountspayabletotheHolderinrespectoftheFailuretoDeliverLossand theCompanymustmaketheHolderwholeasfollows:
FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num- berofconversionshares)]
TheCompanymustpaytheFailuretoDeliverLossbycashpayment,andanysuchcashpayment mustbemadebythethirdbusinessdayfromthetimeoftheHolder’swrittennoticetotheCom- pany.
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. TheCompanyshallissueirrevocabletransferagentinstructionsreserving 6,000,000sharesofitsCommonStockforconversionsunderthisNote(the“ShareReserve”). UponfullconversionofthisNote,anysharesremainingintheShareReserveshallbecancelled. TheCompanyshallpayallcostsassociatedwithissuinganddeliveringtheshares.Ifsuch amountsaretobepaidbytheHolder,itmaydeductsuchamountsfromtheConversionPrice.
Thecompanyshouldatalltimesreserveaminimumoftwotimestheamountofsharesrequired ifthenotewouldbefullyconverted.Thereserveshallbereplenishedasneededtoallowfor conversionsofthisNoteusingsaid2xreserve,providedanincreasenoticemaynotbedelivered morethanonceevery30daysforthefirst5monthstheNoteisineffect,beginningonthe60thday.
13. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions, includingbutnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbe giventotheHolderassoonaspossibleunderlaw.
14. ThisNoteshallbegovernedbyandconstruedinaccordancewiththelaws ofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNewYorkandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderand theCompanyherebymutuallywaivetrialbyjuryandconsenttoexclusivejurisdictionandvenue inthecourtsoftheStateofNewYork.ThisAgreementmaybeexecutedincounterparts,and thefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasan original.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecutedbyanofficer thereuntodulyauthorized.
Dated:04/21/2015
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:
