NEITHERTHISNOTENORTHESECURITIESTHATMAYBEISSUEDBYTHEBORROWERUPONCONVERSIONHEREOF(COLLECTIVELY,THE“SECURITIES”)HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED(THE“1933ACT”),ORTHESECURITIESLAWSOFANYSTATEOROTHERJURISDICTION.NEITHERTHESECURITIESNORANYINTERESTORPARTICIPATION THEREINMAYBEOFFERED FORSALE, SOLD,TRANSFERREDOR ASSIGNED: (I)INTHE ABSENCEOFANEFFECTIVEREGISTRATIONSTATEMENTFOR THESECURITIESUNDERTHE1933ACT,ORAPPLICABLESTATE SECURITIESLAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THATREGISTRATIONISNOTREQUIREDUNDERTHE 1933ACTOR;(III)UNLESSSOLD,TRANSFERREDORASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.
8%CONVERTIBLENOTE
MATURITYDATEOFDECEMBER22,2015*THE“MATURITYDATE”
$150,000JUNE22,2015*THE“ISSUANCEDATE”
FORVALUERECEIVED,MaxSoundCorporation,aDelawareCorporation(the“Company”)doingbusinessinSantaMonica,CA,herebypromisesto payto theorderofJSJInvestments Inc.,an accredited investorand TexasCorporation, orits assigns (the “Holder”), theprincipalamountofOneHundredandFiftyThousandDollars($150,000),ondemandoftheHolderatanytimeon orafterDecember22,2015(the“MaturityDate”), and topay intereston the unpaidprincipal balance hereof at the rate ofEightPercent(8%) per annum (the“InterestRate”) commencing on the date hereof (the“Issuance Date”).
| 1. | PaymentsofPrincipalandInterest. |
| a. | PaymentofPrincipal.UntiltheNinetieth(90th)dayaftertheIssuanceDatetheCompanymaypaytheprincipalatacashredemptionpremiumof140%,inadditiontooutstandinginterest,withouttheHolder’sconsent;fromthe90thdaytotheOneHundredandTwentieth(120th)dayaftertheIssuanceDate,theCompany may pay the principal at a cash redemption premium of 150%, in addition to outstanding interest,without theHolder’s consent. Afterthe120thday, up toanduponthe MaturityDate, this notehasacash redemption premium of150%oftheprincipalamount, inadditiontooutstandinginterest, butthisprovision may only be exercised if the consent of the Holder is obtained. After the Maturity Date of December 22, 2015 theCompanymaynotrepaytheNote, inwholeor inpart, underanycircumstancewithoutobtaining the Holder’s consent. If the Company requests to repay the Note after the Maturity Date and obtains theHolder’s consent to do so, the Company must pay the Note’s outstanding principal at a cash redemption premium of 150%, in addition to outstanding interest. |
| b. | DemandofRepayment.TheprincipalandinterestbalanceofthisNoteshallbepaidtotheHolderhereofondemandbytheHolderatanytimeonoraftertheMaturityDate. |
| c. | Interest.ThisNoteshallbearinterest(“Interest”)attherateofEightPercent(8%)perannumfromtheIssuanceDateuntilthesameispaid,orotherwiseconvertedinaccordancewithSection2below,infullandtheHolder,attheHolder’ssolediscretion,mayincludeanyaccruedbutunpaidInterestin the Conversion Amount. Interest shall commence accruing on the Issuance Date, shall be computed on the basisofa365-dayyearandthe actualnumber ofdays elapsedand shallaccrue dailyand,afterthe Maturity Date, compound quarterly. Upon an Event of Default, as defined in Section 10 below, the Interest Rate shall increase to EighteenPercent (18%)per annumfor solong asthe Eventof Default iscontinuing (“Default Interest”),provided however,if Holderdoes notdemand repayment on or afterthe Maturity Date the interest rateshall remainatEightPercent(8%). |
| d. | GeneralPaymentProvisions.ThisNoteshallbemadeinlawfulmoneyoftheUnitedStatesofAmericabychecktosuchaccountastheHoldermayfrom |
time to timedesignate by written notice to the Company inaccordancewiththeprovisionsofthisNote.WheneveranyamountexpressedtobeduebythetermsofthisNoteisdueonanydaywhichisnotaBusinessDay(asdefinedbelow),thesameshallinsteadbedueonthenextsucceedingdaywhichisaBusinessDayand,inthecaseofanyinterestpaymentdatewhichisnotthedateonwhichthisNoteispaidinfull,theextensionoftheduedatethereofshallnotbetakenintoaccountforpurposes ofdeterminingtheamountofinterestdueonsuchdate.ForpurposesofthisNote, “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of Texas are authorized or required by law or executive order to remain closed.
| 2. | ConversionofNote.Atanytimepriorto,upon,oraftertheMaturityDate,theConversionAmount(seeParagraph2(a)(i))ofthisNoteshallbeconvertibleintosharesoftheCompany’scommonstock(the“CommonStock”)accordingtotheterms andconditionssetforthinthisParagraph2. |
| a. | CertainDefinedTerms.ForpurposesofthisNote,thefollowingtermsshallhavethefollowingmeanings: |
| i. | “ConversionAmount”meansthesumof(a)theprincipalamountofthisNotetobeconvertedwithrespecttowhichthisdeterminationisbeingmade,(b)Interest;and(c)DefaultInterest,ifany,onunpaidinterestandprincipal,ifsoincludedattheHolder’ssolediscretion. |
| ii. | “ConversionPrice”means:a40%discounttothelowesttradingpriceduringthepreviousten(10)tradingdaystothedateofaConversionNotice. |
| iii. | “Person”meansanindividual,alimitedliabilitycompany,apartnership,a jointventure,acorporation,atrust,anunincorporatedorganizationandagovernmentoranydepartmentoragencythereof. |
| iv. | “Shares”meanstheSharesoftheCommonStockoftheCompanyintowhichanybalanceonthisNotemaybeconverteduponsubmissionofa“ConversionNotice”totheCompanysubstantiallyintheformattachedheretoasExhibit1. |
| b. | Holder’sConversionRights.AtanytimeortimesonoraftertheIssuanceDate,theHoldershallbeentitledtoconvertalloftheoutstandingandunpaidprincipalamountofthisNoteintofullypaidandnon-assessablesharesofCommonStockinaccordancewiththestatedConversionPrice.TheHoldershallnotbeentitledtoconvertonaConversionDatethatamountoftheNoteinconnectionwiththatnumberofsharesofCommonStockwhichwouldbeinexcess ofthesumof(i)thenumber ofshares ofCommonStockbeneficiallyownedbytheHolderanditsaffiliatesonaConversionDate,(ii)anyCommonStockissuableinconnectionwiththeunconvertedportion oftheNote,and(iii)thenumber ofshares ofCommonStockissuableupontheconversion oftheNotewithrespecttowhichthedeterminationofthisprovisionisbeingmadeon aConversionDate,whichwouldresultinbeneficialownership bytheHolderanditsaffiliates ofmorethan4.99% oftheoutstandingshares ofCommonStock oftheCompany onsuchConversionDate.Forthepurposes oftheprovisiontotheimmediatelyprecedingsentence,beneficialownershipshallbedeterminedinaccordancewithSection13(d)oftheSecuritiesExchangeAct of1934,asamended,andRegulation13d-3thereunder.Subjecttotheforegoing,theHoldershallnot belimitedtoaggregateconversions of4.99%(“ConversionLimitation1”).TheHoldershallhavetheauthoritytodeterminewhethertherestrictioncontainedinthisSection2(b)willlimitanyconversionhereunder.TheHoldermaywaivetheconversionlimitationdescribedinthisSection2(b),inwhole orinpart,uponandeffectiveafter61dayspriorwrittennoticetotheBorrowertoincreasesuchpercentagetoupto 9.99%(“ConversionLimitation2”). |
| c. | FractionalShares.TheCompanyshallnotissueanyfractionofashareofCommonStockuponanyconversion;ifsuchissuancewouldresultintheissuanceofafractionofashareofCommonStock,theCompanyshallroundsuchfractionofashareofCommonStockuptothenearestwholeshareexcept intheeventthat roundingup wouldviolate theconversion limitationset forthin section2(b) above. |
| d. | ConversionAmount.TheConversionAmountshallbeconvertedpursuanttoRule144(b)(1)(ii)andRule144(d)(1)(ii)aspromulgatedbytheSecuritiesandExchangeCommissionundertheSecuritiesActof1933,asamended,intofreetradingsharesattheConversionPrice. |
| e. | MechanicsofConversion.TheconversionofthisNoteshallbeconductedinthefollowingmanner: |
| i. | Holder’sConversionRequirements.To convert this Noteinto shares of Common Stock onanydatesetforthintheConversionNoticebytheHolder(the“ConversionDate”),theHolderhereofshalltransmitbyemail,facsimileorotherwisedeliver,forreceiptonorpriorto11:59p.m.,EasternTime,onsuchdateoronthenextbusinessday, acopyof afullyexecutednoticeofconversioninthe form attached hereto as Exhibit 1 to the Company. |
| ii. | Company’sResponse.UponreceiptbytheCompanyofacopyofaConversionNotice,theCompanyshallassoonaspracticable,butinnoeventlaterthanone(1)BusinessDayafterreceiptofsuchConversionNotice,send,viaemail,facsimileorovernightcourier,aconfirmationofreceiptofsuchConversionNoticetosuchHolderindicatingthattheCompanywillprocesssuch |
ConversionNoticeinaccordancewiththetermsherein.Withintwo(2)BusinessDaysafterthedatetheConversionNoticeisdelivered,theCompanyshallhaveissuedandelectronicallytransferredthesharestotheBrokerindicatedintheConversionNotice;shouldtheCompanybeunabletotransfertheshareselectronically,itshall,withintwo(2)BusinessDaysafterthedatetheConversionwasdelivered,havesurrenderedtoanovernightcourierfordeliverythenextdaytotheaddress asspecified inthe ConversionNotice,a certificate,registered in thename oftheHolder,forthenumberofsharesofCommonStocktowhichtheHoldershallbeentitled.
| iii. | RecordHolder.ThepersonorpersonsentitledtoreceivethesharesofCommonStockissuableuponaconversionofthisNoteshallbetreatedforallpurposesastherecordholderorholdersof such shares of Common Stock on the Conversion Date. |
| iv. | TimelyResponsebyCompany.UponreceiptbyCompanyofaConversionNotice,CompanyshallrespondwithinonebusinessdaytoHolderconfirmingthedetailsoftheConversion,andprovidewithintwobusinessdaystheSharesrequestedintheConversionNotice. |
| v. | PenaltyforDelinquentResponse. If the Company fails to deliver for whatever reason (includinganyneglectorfailureby,e.g.,theCompany,itscounselorthetransferagent)toHoldertheSharesasrequestedinaConversionNoticeandwithinthree(3)businessdaysoftheConversionDate,theCompanyshallbedeemedin“DefaultofConversion.”Beginningonthefourth(4th)businessdayafter thedateof theConversionNotice, after theCompanyis deemedinDefault of Conversion,there shallaccrue a penalty (the “ConversionPenalty”) ofAdditionalShares due to Holderequalto Five percent (5%) of the number stated in the Conversion Notice (the “Additional Shares”),which maybeappliedto theConversionattheHolder’s election. TheAdditionalShares shallbe issuedandtheamountoftheNoteretiredwillnotbereducedbeyondthatstatedinthe Conversion Notice. If the Additional Shares owedthe Holder causethe Sharesrequested bythe Conversion Notice to exceed Conversion Limitation 1 or Conversion Limitation 2, as applicable, the Holder may opt instead to have the Conversion Amount reduced by the value, as calculated using theConversion Price,ofthe AdditionalSharesowing.Atany time aftera DefaultofConversion the Holder may, attheirsolediscretion, rescindtheConversion. |
| vi. | PenaltyforInabilitytoIssueShares.IftheCompanyfailstodeliverSharesrequestedbyaConversionNoticeduetoanexhaustionofauthorizedandissuablecommonstocksuchthattheCompanymustincreasethenumberofauthorizedCommonStockbeforetheSharesrequestedmaybeissuedtotheHolder,thediscountsetforthintheConversionPricewillbeincreasedby5%for the Conversion Notice in question and all future Conversion Notices until the outstanding principal andinterest of the Noteisconvertedor paidinfull. This penaltyshall notrender thepenalties prescribed by Paragraph 2(e)(v) void, and may be applied in conjunction with Paragraph 2(e)(v) at the Holder’s election. |
| vii. | RescindmentofConversionNotice.If(i)theCompanyfailstorespondtoHolderwithinonebusinessdayfromthedateofConversionconfirmingthedetailsofConversion,(ii)theCompanyfailstoprovidetheSharesrequestedintheConversionNoticewithinthreebusinessdaysfromthedateofConversion,(iii)theHolderisunabletoprocurealegalopinionrequiredtohavetheSharesissuedunrestrictedand/ordepositedtosellforanyreasonrelatedtotheCompany'sstanding,(iv) the Holder is unable to deposit the Shares requested in the Conversion Notice for any reason related to the Company's standing, (v) if the Holder is informed that the Company does nothave the authorized andissuable Sharesavailable tosatisfy theConversion, or(vi) ifOTC Markets changes the Company's designation to 'Limited Information' (Yield), 'No Information' (Stop Sign),'Caveat Emptor' (Skull and Crossbones), or 'OTC', 'Other OTC' or 'Grey Market' (Exclamation Mark Sign) on the day of or any day after the date of Conversion, the Holder maintains the option and solediscretiontorescindtheConversionNotice("Rescindment")witha"NoticeofRescindment.” |
| viii. | TransferAgentFeesandLegalFees.TheissuanceofthecertificatesshallbewithoutchargeorexpensetotheHolder.TheCompanyshallpayanyandallTransferAgentfees,legalfees,andadvisory feesrequired for executionofthis ConvertibleNote andprocessingofany Notice ofConversion,includingbutnotlimitedtothecostofobtainingalegalopinionwithregardtotheConversion.TheHolderwilldeduct$3,000fromtheprincipalpaymentoftheConvertibleNotesolelytocover thecost of obtaininganyandall legal opinions requiredtoobtaintheSharesrequestedinanygivenConversionNotice.Thesefeesdonotmakeprovisionfororsufficetodefray any legal fees incurred in collection or enforcement of the Note as described in Paragraph13. |
| ix. | ConversionRightUnconditional.IftheHoldershallprovideaNoticeofConversionasprovidedherein,theCompany’sobligationstodeliverCommonStockshallbeabsoluteandunconditional,irrespectiveofanyclaimofsetoff,counterclaim,recoupment,orallegedbreachbytheHolderofanyobligationtotheCompany. |
| 3. | Other Rights of Holders: Reorganization,Reclassification,Consolidation, Merger or Sale.Anyrecapitalization,reorganization,reclassification,consolidation,merger,saleofallorsubstantiallyalloftheCompany’sassetstoanotherPersonorothertransactionwhichiseffectedinsuchawaythatholdersofCommonStockareentitledtoreceive(eitherdirectlyoruponsubsequentliquidation)stock,securitiesorassetswithrespecttoorinexchangeforCommonStock is referred to herein as “Organic Change.”Prior to the consummation of any (i) Organic Change or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to the Holder) to deliver to Holder in exchange for this Note, a security of the AcquiringEntity evidenced by a writteninstrument substantiallysimilar inform andsubstancetothisNote,andreasonablysatisfactorytotheHolder. Priortotheconsummationofanyother Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to theHoldersofamajorityoftheConversionAmountoftheNotesthenoutstanding)toensurethat each of the Holders will thereafter have the rightto acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such Holder’s Note, such shares ofstock, securitiesor assetsthat would have been issued orpayable in such Organic Change withrespect toorinexchangefor thenumber ofshares of CommonStockwhichwouldhave beenacquirableand receivable upon the conversion ofsuch Holder’s Note as ofthe date of such Organic Change (withouttaking into account anylimitations orrestrictionsontheconvertibilityoftheNoteset forthinSection2(b)or otherwise). All provisions of this Note must be included to the satisfaction of Holder in any new Note created pursuant to this section. |
| 4. | RepresentationsandWarrantiesoftheCompany.Inconnectionwiththetransactionsprovidedforherein,theCompanyherebyrepresentsandwarrantstotheHoldersthefollowing. |
| a. | Organization,GoodStandingandQualification.TheCompanyisacorporationdulyorganized,validlyexistingandingoodstandingunderthelawsofthestateofitsincorporationandhasallrequisitecorporatepowerandauthoritytocarryonitsbusinessasnowconducted.TheCompanyisdulyqualifiedtotransactbusinessandisingoodstandingineachjurisdictioninwhichthefailuretosoqualifywouldhaveamaterialadverseeffectonitsbusinessorproperties. |
| b. | Authorization.AllcorporateactionhasbeentakenonthepartoftheCompany,itsofficers,directorsandstockholdersnecessaryfortheauthorization,executionanddeliveryofthisAgreement.TheCompanyhastakenallcorporateactionrequiredtomakealloftheobligationsoftheCompanyreflectedintheprovisionsofthis Agreement,valid andenforceable obligations.The sharesof capitalstock issuableupon conversion oftheNoteshavebeenauthorizedorwillbeauthorizedpriortotheissuanceofsuchshares. |
| c. | FiduciaryObligations.TheCompanyherebyrepresentsthatitintendstousetheproceedsoftheNotesprimarilyfortheoperationsofitsbusinessandnotforanypersonal,family,orhouseholdpurpose.TheCompanyherebyrepresentsthatitsboardofdirectors,intheexerciseofitsfiduciaryduty,hasapprovedtheexecutionofthisAgreementbaseduponareasonablebeliefthattheloanprovidedforhereinisappropriateforthe Company afterreasonable inquiryconcerningitsfinancialobjectives and financial situation. |
| 5. | CovenantsoftheCompany.SolongastheCompanyshallhaveanyobligationsunderthisNote,theCompanyshallnotwithouttheHolder’spriorwrittenconsentpay,declareorsetapartforsuchpaymentanydividendorotherdistribution(whetherincash,property,orothersecurities)onshareofcapitalstocksolelyintheformofadditionalsharesofCommonStock. |
| a. | SolongastheCompanyshallhaveanyobligationsunderthisNote,theCompanyshallnotwithouttheHolder’spriorwrittenconsentredeem,repurchase,orotherwiseacquire(whetherforcashorinexchangeforpropertyorothersecurities)inanyonetransactionorseriesoftransactionsanysharesofcapitalstockoftheCompanyoranywarrants,rights,oroptionstoacquireanysuchshares. |
| b. | SolongastheCompanyshallhaveanyobligationsunderthisNote,theCompanyshallnotwithouttheHolder’spriorwrittenconsentincuranyliabilityforborrowedmoney,except(a)borrowingsinexistenceasofthisdateandofwhichtheCompanyhasinformedtheHolderinwritingbeforethedatehereofor(b)indebtednesstotradecreditorsorfinancialinstitutionsincurredintheordinarycourseofbusiness. |
| c. | SolongastheCompanyshallhaveanyobligationsunderthisNote,theCompanyshallnotwithouttheHolder’spriorwrittenconsentsell,lease,orotherwisedisposeofasignificantportionofitsassetsoutsidetheordinarycourseofbusiness.Anyconsenttothedispositionofanyassetsmaybeconditioneduponaspecifieduseoftheproceedsthereof. |
| 6. | IssuanceofCommonStockEquivalents.IftheCompany,atanytimeaftertheIssuanceDate,shallissueanysecuritiesconvertibleintoorexchangeablefor,directlyorindirectly,CommonStock(“ConvertibleSecurities”),otherthantheNote,oranyrightsorwarrantsoroptionstopurchaseanysuchCommonStockorConvertibleSecurities,shallbeissuedorsold (collectively,the“Common Stock Equivalents”)and theaggregateofthepricepershareforwhichAdditionalShares of CommonStock maybe issuable thereafterpursuant tosuch Common StockEquivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by thenumber of shares of Common Stock issuablepursuant to such Common Stock Equivalent(the “AggregatePer CommonSharePrice”)shallbelessthantheapplicableConversionPricethenineffect,orif,afteranysuchissuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Pricebe less than the applicable Conversion Price in effectatthe time ofsuch amendment oradjustment,then theapplicable Conversion Price upon each such issuance or amendment shall be reduced to the lower of: (i) the Conversion Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per Common Share Price (whetherornotsuchCommonStockEquivalentsareactuallythenexercisable,convertibleorexchangeableinwhole or inpart) as of theearlier of (A) thedateonwhichtheCompanyshall enter intoafirmcontract for theissuance ofsuchCommonStockEquivalent,or(B)thedateofactualissuanceofsuchCommonStockEquivalent.Noadjustment oftheapplicableConversionPriceshallbemadeunderthisSection6upontheissuanceofanyConvertibleSecuritywhich is outstanding on the day immediately preceding the Issuance Date. No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of anyConvertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as aresultoftheissuanceorpurchaseofanyConvertibleSecurityorCommonStockEquivalent. |
| 7. | ReservationofShares.TheCompanyshallatalltimes,solongasanyprincipalamountoftheNoteisoutstanding,reserveandkeepavailableoutofitsauthorizedandunissuedCommonStock,solelyforthepurposeofeffectingtheconversionoftheNote,suchnumberofsharesofCommonStockasshallatalltimesbesufficienttoeffecttheconversionofalloftheprincipalamountoftheNotethenoutstanding.TheinitialnumberofsharesofCommon Stock reserved for conversions of the Notes shall be calculated as four times the number of shares necessary to convert theentire valueof theNote onthe dayit wasexecuted,unless theHolder stipulatesotherwise inthe “Irrevocable Letter of Instructions to the Transfer Agent.” |
| a. | Capitalization.SolongasthisNoteisoutstanding,uponwrittenrequestoftheHolderorviatelephoniccommunication,theCompany’sTransferAgentshallfurnishtotheHolderthethen-currentnumberofcommonsharesissuedandoutstanding,thethen-currentnumberofcommonsharesauthorized,thethen-currentnumberofunrestrictedshares,andthethen-currentnumberofsharesreservedforthirdparties. |
| 8. | VotingRights.HoldersofthisNoteshallhavenovotingrights,exceptasrequiredbylaw. |
| 9. | ReissuanceofNote.IntheeventofaconversionorredemptionpursuanttothisNoteoflessthanalloftheConversionAmountrepresentedbythisNote,theCompanyshallpromptlycausetobeissuedanddeliveredtotheHolder,upontenderbytheHolderoftheNoteconvertedorredeemed,anewnoteofliketenorrepresentingtheremainingprincipalamountofthisNotewhichhasnotbeensoconvertedorredeemed |
andwhichisinsubstantiallythesameformasthisNote,assetforthabove.
| a. | EventofDefault.An“EventofDefault”is: |
| i. | defaultforten(10)daysinpaymentofinterestorDefaultInterestonthisNote; |
| ii. | default inpaymentoftheprincipal amountofthisNotewhendue; |
| iii. | failurebytheCompanyforthirty(30)daysafternoticetoittocomplywithanyothermaterialprovision of thisNote; |
| iv. | breachofanycovenants,warranties,orrepresentationsbytheCompanyherein; |
| v. | cessationofoperationsbytheCompanyoramaterialsubsidiary; |
| vi. | iftheCompanypursuanttoorwithinthemeaningofanyBankruptcyLaw;(a)commencesavoluntarycase;(b)consentstotheentryofanorderforreliefagainstitinaninvoluntarycase;(c)consentstotheappointmentofaCustodianofitorforallorsubstantiallyallofitsproperty;(d)makesageneralassignmentforthebenefitofitscreditors;or(e)admitsinwritingthatitisgenerallyunabletopay itsdebtsasthesamebecomedue; |
| vii. | acourtofcompetentjurisdictionentersanorderordecreeunderanyBankruptcyLawthat:(a)isforreliefagainsttheCompanyinaninvoluntarycase;(b)appointsaCustodianoftheCompanyorforallorsubstantiallyallofitsproperty;or(c)orderstheliquidationoftheCompanyoranysubsidiary, and the order or decree remains unstayed and in effect forthirty(30)days; |
| viii. | theCompanyfilesaForm15; |
| ix. | theCompany’sfailuretotimelyfileallreportsrequiredtobefiledbyitwiththeSecuritiesandExchangeCommission;or |
| x. | OTCMarkets changesthe Company's designationto 'No Information' (Stop Sign), 'CaveatEmptor'(SkullandCrossbones),or'OTC','OtherOTC'or'GreyMarket'(ExclamationMarkSign). |
TheTerm“BankruptcyLaw”meansTitle11,U.S.Code,oranysimilarFederalorStateLawforthereliefofdebtors.Theterm“Custodian”meansanyreceiver,trustee,assignee,liquidatororsimilarofficialunderanyBankruptcyLaw.
| b. | Remedies.IfanEventofDefaultoccurs,theHoldermayinitssolediscretiondeterminetorequestimmediaterepaymentofalloranyportionoftheNotethatremainsoutstanding;atsuchtimetheCompanywillberequiredtoredeemalloranyportionoftheNotesodemanded(includingallaccruedandunpaidinterest),incash, ata priceequalto150% oftheoutstandingbalance,plusaccruedInterestandDefaultInterest and any other amounts then due under this Note. |
| 11. | VotetoChangetheTermsofthisNote.ThisNoteandanyprovisionhereofmayonlybeamendedbyaninstrumentinwritingsignedbytheCompanyandholdersofamajorityoftheaggregateConversionAmountoftheNotesthenoutstanding. |
| 12. | LostorStolenNote.UponreceiptbytheCompanyofevidencesatisfactorytotheCompanyoftheloss,theft,destructionormutilationofthisNote,and,inthecaseofloss,theftordestruction,ofanindemnificationundertakingbytheHoldertotheCompanyinaformreasonablyacceptabletotheCompanyand,inthecaseofmutilation,uponsurrenderandcancellationoftheNotes,theCompanyshallexecute |
anddeliveranewNoteofliketenoranddateandinsubstantiallythesameformasthisNote;provided,however,theCompanyshallnotbeobligatedtore-issueaNoteiftheHoldercontemporaneouslyrequeststheCompany toconvertsuchremainingprincipalamountintoCommonStock.
| 13. | PaymentofCollection,EnforcementandOtherCosts.If:(i)thisNoteisplacedinthehandsofanattorneyforcollectionorenforcementoriscollectedorenforcedthroughanylegalproceeding;or(ii)anattorneyisretainedtorepresenttheHolderofthisNoteinanybankruptcy,reorganization,receivershiporotherproceedingsaffectingcreditors’rightsandinvolvingaclaimunderthisNote,thentheCompanyshallpaytotheHolderallreasonable attorneys’fees,costsandexpensesincurredinconnectiontherewith,inadditiontoallotheramountsduehereunder. |
| 14. | Cancellation.Afterallprincipal,accruedInterestandDefaultInterest,ifany,atanytimeowedonthisNotehasbeenpaidinfull,thisNoteshallautomaticallybedeemedcanceled,shallbesurrenderedtotheCompanyforcancellationandshallnotbereissued. |
| 15. | WaiverofNotice.Totheextentpermittedbylaw,theCompanyherebywaivesdemand,notice,protestandallotherdemandsandnoticesinconnectionwiththedelivery,acceptance,performance,defaultorenforcementofthisNote. |
| 16. | GoverningLaw.ThisNoteshallbeconstruedandenforcedinaccordancewith,andallquestionsconcerningtheconstruction,validity, interpretationand performanceof thisNote shallbe governedby,the lawsof theState ofTexas,withoutgivingeffecttoprovisionsthereofregardingconflictoflaws.Eachpartyherebyirrevocablysubmitstothenon-exclusive jurisdiction ofthe stateandfederal courtssittinginTexasforthe adjudication of anydisputehereunder orinconnectionherewith orwithanytransactioncontemplatedherebyordiscussedherein,andherebyirrevocablywaives,andagreesnottoassertinanysuit,actionorproceeding,anyclaimthatitisnotpersonallysubjecttothejurisdictionofanysuchcourt,thatsuchsuit,actionorproceedingisbroughtinaninconvenientforumorthatthevenueofsuchsuit,actionorproceedingisimproper.Eachpartyherebyirrevocablywaivespersonalserviceofprocessand consents to process being served in any such suit, action or proceeding by sending, through certified mail orovernightcourier, acopythereoftosuchpartyattheaddressforsuchnoticestoitunderthisAgreementand agrees thatsuchserviceshallconstitutegoodandsufficientserviceofprocessandnoticethereof.Nothingcontainedhereinshall bedeemedtolimitinanywayanyrighttoserveprocessinanymannerpermitted bylaw. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. |
| 17. | Remedies,Characterizations,OtherObligations,BreachesandInjunctiveRelief.TheremediesprovidedinthisNoteshallbecumulativeandinadditiontoallotherremediesavailableunderthisNote,atlaworinequity(includingadecreeofspecificperformanceand/orotherinjunctiverelief),andnoremedycontainedhereinshallbedeemedawaiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenantstotheHolderthatthereshallbenocharacterizationconcerningthisinstrumentotherthanasexpressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computationthereof)shallbetheamountstobereceivedbytheHolderthereofandshallnot,exceptasexpressly provided herein, be subject to any other obligation of the Company (or the performance thereof). |
| 18. | SpecificShallNotLimitGeneral;Construction.NospecificprovisioncontainedinthisNoteshalllimitormodifyanymoregeneralprovisioncontainedherein.ThisNoteshallbedeemedtobejointlydraftedbytheCompanyandthe Holder and shall not be construed against any person as the drafter hereof. |
| 19. | FailureorIndulgenceNotWaiver.NofailureordelayonthepartofthisNoteintheexerciseofanypower,rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,rightorprivilege preclude further exercise thereoforof any otherright,power orprivilege. |
| 20. | PartialPayment.IntheeventofpartialpaymentbytheHolder,theprincipalsumduetotheHoldershallbeproratedbasedontheconsiderationactuallypaidbytheHoldersuchthattheCompanyisonlyrequiredtorepaytheamountfundedandtheCompanyisnotrequiredtorepayanyunfundedportionofthisNote,withtheexceptionofanyOIDcontemplatedherein. |
| 21. | EntireAgreement.ThisAgreementconstitutesthefullandentireunderstandingandagreementbetweenthepartieswithregardtothesubjectsherein.NoneofthetermsofthisAgreementcanbewaivedormodified,exceptbyanexpressagreementsignedbyeachPartyhereto. |
| 22. | RepresentationsandWarranties.TheCompanyexpresslyacknowledgesthattheHolder,includingbutnotlimitedtoits officer, directors, employees, agents, and affiliates, have not madeany representation or warrantyto it outside thetermsofthisAgreement.TheCompanyfurtheracknowledgesthattherehavebeennorepresentationsorwarrantiesaboutfuturefinancingorsubsequenttransactionsbetweentheparties. |
| 23. | Notices.AllnoticesandothercommunicationsgivenormadetotheCompanypursuantheretoshallbeinwriting(includingfacsimileorsimilarelectronictransmissions)andshallbedeemedeffectivelygiven:(i)uponpersonaldelivery,(ii)whensentbyelectronicmailorfacsimile,asdeemedreceivedbythecloseofbusinessonthedatesent, |
(iii) five(5)daysafterhavingbeensentbyregisteredorcertifiedmail,returnreceiptrequested,postageprepaidor
(iv) one(1)dayafterdepositwithanationallyrecognizedovernightcourier, specifyingnextdaydelivery.Allcommunicationsshallbesenteitherbyemail,orfax,ortotheaddressspecifiedonthesignaturepage.Thephysicaladdress,emailaddress,andphonenumberprovidedonthesignaturepageshallbeconsideredvalidpursuanttotheabovestipulations;shouldtheCompany’scontactinformationchangefromthatlistedonthesignaturepage,itisincumbenton the Company to inform the Holder.
| 24. | Severability.IfoneormoreprovisionsofthisAgreementareheldtobeunenforceableunderapplicablelaw,suchprovisionshallbeexcludedfromthisAgreementandtherestoftheAgreementshallbeenforceableinaccordancewithitsterms. |
| 25. | Usury.Ifitshallbefoundthatanyinterestorotheramountdeemedinterestduehereunderviolatestheapplicablelawgoverningusury,theapplicablerateofinterestduehereundershallautomaticallybeloweredtoequalthemaximumrateofinterestpermittedunderapplicablelaw.TheCompanycovenants(totheextentthatitmaylawfullydoso)thatitwillnotseektoclaimortakeadvantageofanylawthatwouldprohibitorforgivetheCompanyfrompayingallora portionofthe principalorintereston thisNote. |
| 26. | SuccessorsandAssigns.ThisAgreementshallbebindinguponsuccessorsand assigns. |
—SIGNATUREPAGETOFOLLOW—
INWITNESSWHEREOF,theCompanyhascausedthisNotetobesignedbyitsCEO,onandasoftheIssuanceDate.
COMPANY
Signature:
Greg Halpern
By:
CFO
Title:
Address:
2902 AColorado Ave. Santa Monica, CA 90404
Greg@maxsound.com
Email:
Phone:847.565.9732
Facsimile:
JSJInvestmentsInc.
Signature:
SameerHirji,PresidentJSJInvestmentsInc.
6060NorthCentralExpressway,Suite500
DallasTX75206
888-503-2599
Exhibit1
ConversionNotice
Referenceismadetothe8%ConvertibleNoteissuedbyMaxSoundCorporation(the"Note"),datedJune22,2015intheprincipalamountof$150,000with8%interest.Thisnotecurrentlyholdsaprincipalbalanceof$150,000.ThefeaturesofconversionstipulateaConversionPriceequaltoa40%discounttothelowesttradingpriceduringthepreviousten(10)tradingdaystothedateofaConversionNotice,pursuanttotheprovisionsofSection2(a)(ii)intheNote.
InaccordancewithandpursuanttotheNote,theundersignedherebyelectstoconvert$oftheprincipal/interestbalanceoftheNote,indicatedbelowintosharesofCommonStock(the"CommonStock"),oftheCompany,bytenderingtheNotespecifiedasofthedatespecifiedbelow.
DateofConversion:
Pleaseconfirmthefollowinginformation:ConversionAmount:$
ConversionPrice:$(%discountfrom$)
NumberofCommonStocktobeissued:CurrentIssued/Outstanding:
IftheIssuerisDWACeligible,pleaseissuetheCommonStockintowhichtheNoteisbeingconvertedinthenameoftheHolderoftheNoteandtransfertheshareselectronicallyto:
[BROKERINFORMATION]
HolderAuthorization:
JSJInvestmentsInc.
6060NorthCentralExpressway,Suite500 *Donotsendcertificatestothisaddress
Dallas,TX75206
888-503-2599
TaxID:20-2122354
SameerHirji,President
[DATE]
[CONTINUEDONNEXTPAGE]
PLEASEBEADVISED,pursuanttoSection2(e)(2)oftheNote,“UponreceiptbytheCompanyofacopyoftheConversionNotice,theCompanyshallassoonaspracticable,butinnoeventlaterthanone(1)BusinessDayafterreceiptofsuchConversionNotice,SEND,VIAEMAIL,FACSIMILEOROVERNIGHTCOURIER,ACONFIRMATIONOFRECEIPTOFSUCHCONVERSIONNOTICETOSUCHHOLDERINDICATINGTHATTHECOMPANYWILLPROCESSSUCHCONVERSIONNOTICE
inaccordancewiththetermsherein.Withintwo(2)BusinessDaysafterthedateoftheConversionConfirmation,theCompanyshallhaveissuedandelectronicallytransferredthesharestotheBrokerindicatedintheConversionNotice;shouldtheCompanybeunabletotransfertheshareselectronically,theyshall,withintwo(2)BusinessDaysafterthedateoftheConversionConfirmation,havesurrenderedtoFedExfordeliverythenextdaytotheaddressasspecifiedintheConversionNotice,acertificate,registeredinthenameoftheHolder,forthenumberofsharesofCommonStocktowhichtheHoldershall be entitled.”
Signature:
CFO
Max SoundCorporation
