NEITHERTHISNOTENORTHESECURITIESTHATMAYBEISSUEDBYTHEBORROWERUPONCONVERSIONHEREOF(COLLECTIVELY,THE“SECURITIES”)HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED(THE“1933ACT”),ORTHESECURITIESLAWSOFANYSTATEOROTHERJURISDICTION.NEITHERTHESECURITIESNORANYINTERESTORPARTICIPATIONTHEREINMAYBEOFFEREDFORSALE,SOLD,TRANSFERREDORASSIGNED:(I)INTHEABSENCEOFANEFFECTIVEREGISTRATIONSTATEMENTFORTHESECURITIESUNDERTHE1933ACT,ORAPPLICABLESTATESECURITIESLAWS;OR(II)INTHEABSENCEOFANOPINIONOFCOUNSEL,INAFORMACCEPTABLETOTHEISSUER,THATREGISTRATIONISNOTREQUIREDUNDERTHE1933ACTOR;(III)UNLESSSOLD,TRANSFERREDORASSIGNEDPURSUANTTORULE144UNDERTHE1933ACT.
8%CONVERTIBLENOTE
MATURITYDATEOFMARCH15,2016*THE“MATURITYDATE”
$50,000SEPTEMBER15,2015*THE“ISSUANCEDATE”
FORVALUERECEIVED,MaxSoundCorporation,aDelawareCorporation(the“Company”)doing business inSantaMonica,CA,herebypromisestopaytotheorderofJSJInvestmentsInc.,anaccreditedinvestorandTexasCorporation,oritsassigns(the“Holder”),theprincipalamountofFiftyThousandDollars($50,000),ondemandoftheHolderatanytimeonorafterMarch15,2016(the“MaturityDate”),andtopayinterestontheunpaidprincipalbalancehereofattherateofEightPercent(8%)perannum(the“InterestRate”)commencingonthedatehereof(the“IssuanceDate”).
1. PaymentsofPrincipalandInterest.
a. PaymentofPrincipal.UntiltheNinetieth(90th)dayaftertheIssuanceDatetheCompanymaypaytheprincipalatacashredemptionpremiumof140%,inadditiontooutstandinginterest,withouttheHolder’sconsent;fromthe90thdaytotheOneHundredandTwentieth(120th)dayaftertheIssuanceDate,theCompanymaypaytheprincipalatacashredemptionpremiumof150%,inadditiontooutstandinginterest,withouttheHolder’sconsent.Afterthe120thday,uptoandupontheMaturityDate,thisnotehasacashredemptionpremiumof150%oftheprincipalamount,inadditiontooutstandinginterest,butthisprovisionmayonlybeexercisediftheconsentoftheHolderisobtained.AftertheMaturityDateofMarch15,2016theCompanymaynotrepaytheNote,inwholeorinpart,underanycircumstancewithoutobtainingtheHolder’sconsent.IftheCompanyrequeststorepaytheNoteaftertheMaturityDate and obtains theHolder’sconsenttodoso,theCompanymustpaytheNote’soutstandingprincipalatacashredemptionpremiumof150%,inadditiontooutstandinginterest.
b. DemandofRepayment.
.
c. Interest.ThisNoteshallbearinterest(“Interest”)attherateofEightPercent(8%)perannumfromtheIssuanceDateuntilthesameispaid,orotherwiseconvertedinaccordancewithSection2below,infullandtheHolder,attheHolder’ssolediscretion,mayincludeanyaccrued butunpaidInterestintheConversionAmount.InterestshallcommenceaccruingontheIssuanceDate,shallbecomputedonthebasisofa365-dayyearandtheactualnumberofdayselapsedandshallaccruedailyand,aftertheMaturityDate,compoundquarterly.UponanEventofDefault,asdefinedinSection10below,theInterestRateshallincreasetoEighteenPercent(18%)perannumforsolongastheEventofDefaultiscontinuing(“DefaultInterest”),providedhowever,ifHolderdoesnotdemandrepaymentonoraftertheMaturityDatetheinterestrateshallremainatEightPercent(8%).
d. GeneralPaymentProvisions.ThisNoteshallbemadeinlawfulmoneyoftheUnitedStatesofAmericabychecktosuchaccountastheHoldermayfromtimetotimedesignatebywrittennoticetotheCompanyinaccordancewiththeprovisionsofthisNote.WheneveranyamountexpressedtobeduebythetermsofthisNoteisdueonanydaywhichisnotaBusinessDay(asdefinedbelow),thesameshallinsteadbedueonthenextsucceedingdaywhichisaBusinessDayand,inthecaseofanyinterestpaymentdatewhichisnotthedateonwhichthisNoteispaidinfull,theextensionoftheduedatethereofshallnotbetakenintoaccountforpurposesofdeterminingtheamountofinterestdueonsuchdate.ForpurposesofthisNote,“BusinessDay”shallmeananydayotherthanaSaturday,SundayoradayonwhichcommercialbanksintheStateofTexasareauthorizedorrequiredbylaworexecutiveordertoremainclosed.
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”meansa40%discounttothelowesttradingpriceduringthepreviousten(10)tradingdaystothedateofaConversionNotice.
iii. “Person”meansanindividual,alimitedliabilitycompany,apartnership,a joint venture,acorporation,atrust,anunincorporatedorganizationandagovernmentorany department oragencythereof.
iv. “Shares”meanstheSharesoftheCommonStockoftheCompanyintowhichanybalanceonthisNotemaybeconverteduponsubmissionofa“ConversionNotice”totheCompanysubstantiallyintheformattachedheretoasExhibit1.
b. Holder’sConversionRights.AtanytimeortimesonoraftertheIssuanceDate,theHoldershallbeentitledtoconvertalloftheoutstandingandunpaidprincipalamountofthisNoteintofullypaidandnon-assessablesharesofCommonStockinaccordancewiththestatedConversionPrice.TheHoldershallnotbeentitledtoconvertonaConversionDatethatamountoftheNoteinconnectionwiththatnumberofsharesofCommonStockwhichwouldbeinexcessofthesumofthenumberofsharesofCommonStockissuableupontheconversionoftheNotewithrespecttowhichthedeterminationofthisprovisionisbeingmadeonaConversionDate,whichwouldresultinbeneficialownershipbytheHolderanditsaffiliatesofmorethan4.99%oftheoutstandingsharesofCommonStockoftheCompanyonsuchConversionDate.Forthepurposesoftheprovisiontotheimmediatelyprecedingsentence,beneficialownershipshallbedeterminedinaccordancewithSection13(d)oftheSecuritiesExchangeActof1934,asamended,andRegulation13d-3thereunder.Subjecttotheforegoing,theHoldershallnotbelimitedtoaggregateconversionsof4.99%(“ConversionLimitation1”).TheHoldershallhavetheauthoritytodeterminewhethertherestrictioncontainedinthisSection2(b)willlimitanyconversionhereunder.TheHoldermaywaivetheconversionlimitationdescribedinthisSection2(b),
,uponandeffectiveafter61dayspriorwrittennoticetotheBorrowertoincreasesuchpercentagetoupto9.99%(“Conversion Limitation2”).
c. FractionalShares.TheCompanyshallnotissueanyfractionofashareofCommonStockuponanyconversion;ifsuchissuancewouldresultintheissuanceofafractionofashareofCommonStock,theCompanyshallroundsuchfractionofashareofCommonStockuptothenearestwholeshareexceptintheeventthatroundingup wouldviolate theconversion limitationset forthin section2(b) above.
d. ConversionAmount.TheConversionAmountshallbeconvertedpursuanttoRule144(b)(1)(ii)andRule144(d)(1)(ii)aspromulgatedbytheSecuritiesandExchangeCommissionundertheSecuritiesActof1933,asamended,intounrestrictedsharesattheConversionPrice.
e. MechanicsofConversion.TheconversionofthisNoteshallbeconductedinthefollowingmanner:
i. Holder’sConversionRequirements.To convert thisNote into shares of Common Stock on anydatesetforthintheConversionNoticebytheHolder(the“ConversionDate”),theHolderhereofshalltransmitbyemail,facsimileorotherwisedeliver,forreceiptonorpriorto11:59p.m.,EasternTime,onsuchdateoronthenextbusinessday,acopyofafullyexecutednoticeofconversionintheformattachedheretoasExhibit1totheCompany.
ii. Company’sResponse.UponreceiptbytheCompanyofacopyofaConversionNotice,theCompanyshallassoonaspracticable,butinnoeventlaterthanone(1)BusinessDayafterreceiptofsuchConversionNotice,send,viaemail,facsimileorovernightcourier,aconfirmationofreceiptofsuchConversionNoticetosuchHolderindicatingthattheCompanywillprocesssuchConversionNoticeinaccordancewiththetermsherein.Withintwo(2)BusinessDaysafterthedate the Conversion Notice is delivered, the Company shall have issued and electronically
transferred the shares to theBrokerindicated inthe ConversionNotice;shouldthe Companybeunabletotransfertheshareselectronically,itshall,withintwo(2)BusinessDaysafterthedatetheConversionwasdelivered,havesurrenderedtoanovernightcourierfordeliverythenextdaytotheaddressasspecifiedintheConversionNotice,acertificate,registeredin the name of theHolder,forthenumberofsharesofCommonStocktowhichtheHoldershallbeentitled.
iii. RecordHolder.ThepersonorpersonsentitledtoreceivethesharesofCommonStockissuableuponaconversionofthisNoteshallbetreatedforallpurposesastherecordholderorholdersofsuchsharesofCommonStockontheConversionDate.
iv. TimelyResponsebyCompany.UponreceiptbyCompanyofaConversionNotice,CompanyshallrespondwithinonebusinessdaytoHolderconfirmingthedetailsoftheConversion,andprovidewithintwobusinessdaystheSharesrequestedintheConversionNotice.
v. LiquidatedDamagesforDelinquentResponse.IftheCompanyfailstodeliverforwhateverreason(includinganyneglectorfailureby,e.g.,theCompany,itscounselorthetransferagent)toHoldertheSharesasrequestedinaConversionNoticewithinthree(3)businessdaysoftheConversionDate,theCompanyshallbedeemedin“DefaultofConversion.”Beginningonthefourth(4th)businessdayafterthedateoftheConversionNotice,aftertheCompanyisdeemedinDefaultofConversion,thereshallaccrueliquidateddamages(the“ConversionDamages”)of AdditionalSharesduetoHolderequaltoTwenty-Fivepercent(25%)ofthenumberstatedintheConversionNoticeandforeveryfive(5)TradingDayswhileaDefaultofConversionisineffectandcontinuingtheCompanyshallcontinuetoincuraConversionPenaltyintheamountofTwenty-Fivepercent(25%)ofthenumberofsharesstatedintheConversionNoticeissuabletoHolder(the“AdditionalShares”),whichmaybeappliedtotheConversionattheHolder’selection.TheAdditionalSharesshallbeissuedandtheamountoftheNoteretiredwillnotbereducedbeyondthatstatedintheConversionNotice.IftheAdditionalSharesowedtheHoldercausetheSharesrequestedbytheConversionNoticetoexceedConversionLimitation1orConversionLimitation2,asapplicable,theHoldermayoptinsteadtohavetheConversionAmountreducedbythevalue,ascalculatedusingtheConversionPrice,oftheAdditionalSharesowing.AtanytimeafteraDefaultofConversiontheHoldermay,attheirsolediscretion,rescindtheConversionThePartiesagreethat,atthetimeofdraftingofthisNote,theHolder’sdamagesastothedelinquentresponseareincapableordifficulttoestimateandthattheliquidateddamagescalledforisareasonableforecastofjustcompensation.
vi. LiquidatedDamagesforInabilitytoIssueShares.IftheCompanyfailstodeliverSharesrequestedbyaConversionNoticeduetoanexhaustionofauthorizedandissuablecommonstocksuchthattheCompanymustincreasethenumberofauthorizedCommonStockbeforetheSharesrequestedmaybeissuedtotheHolder,thediscountsetforthintheConversionPricewillbeincreasedby5%fortheConversionNoticeinquestionandallfutureConversionNoticesuntiltheoutstandingprincipalandinterestoftheNoteisconvertedorpaidinfull.TheseliquidateddamagesshallnotrenderthepenaltiesprescribedbyParagraph2(e)(v)void,andmaybeappliedinconjunctionwithParagraph2(e)(v)attheHolder’selection.ThePartiesagreethat,atthetimeofdraftingofthisNote,theHolder’sdamagesastotheinabilitytoissuesharesareincapableordifficulttoestimateandthattheliquidateddamagescalledforisareasonableforecastofjustcompensation.
vii. RescindmentofConversionNotice.If(i)theCompanyfailstorespondtoHolderwithin onebusinessdayfromthedateofConversionconfirmingthedetailsofConversion,(ii)theCompanyfailstoprovidetheSharesrequestedintheConversionNoticewithinthreebusinessdaysfromthedateofConversion,(iii)theHolderisunabletoprocurealegalopinionrequiredtohavetheSharesissuedunrestrictedand/ordepositedtosellforanyreasonrelatedtotheCompany'sstanding,(iv)theHolderisunabletodeposittheSharesrequestedintheConversionNoticeforanyreasonrelatedtotheCompany'sstanding,(v)iftheHolderisinformedthattheCompanydoesnothavethe authorizedand issuableShares availableto satisfythe Conversion, or (vi)ifOTCMarketschangestheCompany'sdesignationto'LimitedInformation'(Yield),'NoInformation'(StopSign),'CaveatEmptor'(SkullandCrossbones),or'OTC','OtherOTC'or'GreyMarket'(ExclamationMarkSign)onthedayoforanydayafterthedateofConversion,theHoldermaintainstheoptionandsolediscretiontorescindtheConversionNotice("Rescindment")witha"NoticeofRescindment.”
viii. TransferAgentFeesandLegalFees.TheissuanceofthecertificatesshallbewithoutchargeorexpensetotheHolder.TheCompanyshallpayanyandallTransferAgentfees,legalfees,andadvisory feesrequiredforexecutionofthis Convertible NoteandprocessingofanyNoticeofConversion,includingbutnotlimitedtothecostofobtainingalegalopinionwithregardtotheConversion.TheHolderwilldeduct$1,000fromtheprincipalpaymentoftheConvertibleNotesolelytocoverthecostofobtaininganyandalllegalopinionsrequiredtoobtaintheSharesrequestedinanygivenConversionNotice.ThesefeesdonotmakeprovisionfororsufficetodefrayanylegalfeesincurredincollectionorenforcementoftheNoteasdescribedinParagraph
13.TheHolderwilldeduct3rd partyduediligencefeesdueBrightonCapitalLtd.intheamountof
$2,500fromtheprincipalpaymentoftheConvertibleNote.
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,saleofallorsubstantiallyallofthe Company’s assets toanotherPersonorothertransactionwhichiseffectedinsuchawaythatholdersofCommonStockareentitledtoreceive(eitherdirectlyoruponsubsequentliquidation)stock,securitiesorassetswithrespecttoorinexchangeforCommonStockisreferredtohereinas“OrganicChange.”Priortotheconsummationofany(i)OrganicChangeor(ii)otherOrganicChangefollowingwhichtheCompanyisnota surviving entity, the Company will secure from thePersonpurchasingsuchassetsorthesuccessorresultingfromsuchOrganicChange (in each case, the “AcquiringEntity”)awrittenagreement(informandsubstancereasonablysatisfactorytotheHolder)todeliverto Holder inexchangeforthisNote,asecurityoftheAcquiringEntityevidencedbyawritteninstrumentsubstantiallysimilarinformandsubstancetothisNote,andreasonablysatisfactorytotheHolder.PriortotheconsummationofanyotherOrganic Change,the Company shall make appropriate provision (in form and substance reasonably satisfactory totheHoldersofamajorityoftheConversionAmountofthe Notes then outstanding) to ensurethateachoftheHolderswillthereafterhavetherighttoacquireandreceiveinlieuoforinadditionto(asthecasemaybe)thesharesofCommonStockimmediatelytheretoforeacquirable and receivable upon the conversion of such Holder’s Note,suchsharesofstock,securitiesorassetsthatwouldhavebeen issued or payable in such Organic Change withrespecttoorinexchangeforthenumberofsharesofCommonStockwhichwouldhave been acquirable andreceivableupon the conversion ofsuch Holder’sNote as ofthe date ofsuchOrganic Change (withouttaking intoaccountanylimitationsorrestrictionsontheconvertibilityoftheNotesetforthinSection2(b)orotherwise).AllprovisionsofthisNotemustbeincludedtothesatisfactionofHolder in any new Note created pursuant to thissection.
4. RepresentationsandWarrantiesoftheCompany.Inconnectionwiththetransactionsprovidedforherein,theCompanyherebyrepresentsandwarrantstotheHoldersthefollowing.
a. Organization,GoodStandingandQualification.TheCompanyisacorporationdulyorganized,validlyexistingandingoodstandingunderthelawsofthestateofitsincorporationandhasallrequisitecorporatepowerandauthoritytocarryonitsbusinessasnowconducted.TheCompanyisdulyqualifiedtotransactbusinessandisingoodstandingineachjurisdictioninwhichthefailuretosoqualifywouldhaveamaterialadverseeffectonitsbusinessorproperties.
b. Authorization.AllcorporateactionhasbeentakenonthepartoftheCompany,itsofficers,directorsandstockholdersnecessaryfortheauthorization,executionanddeliveryofthisAgreement.TheCompanyhastakenallcorporateactionrequiredtomakealloftheobligationsoftheCompanyreflectedintheprovisionsofthisAgreement,validandenforceableobligations.ThesharesofcapitalstockissuableuponconversionoftheNoteshavebeenauthorizedorwillbeauthorizedpriortotheissuanceofsuchshares.
c. FiduciaryObligations.TheCompanyherebyrepresentsthatitintendstousetheproceedsoftheNotesprimarilyfortheoperationsofitsbusinessandnotforanypersonal,family,orhouseholdpurpose.TheCompanyherebyrepresentsthatitsboardofdirectors,intheexerciseofitsfiduciaryduty,hasapprovedtheexecutionofthisAgreementbaseduponareasonablebeliefthattheloanprovidedforhereinisappropriatefortheCompanyafterreasonableinquiryconcerningitsfinancialobjectivesandfinancialsituation.
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, shall issue anysecuritiesconvertibleintoorexchangeablefor,directlyorindirectly,CommonStock(“ConvertibleSecurities”),otherthantheNote,oranyrightsorwarrantsoroptionstopurchaseanysuchCommonStockorConvertibleSecurities,shallbeissuedorsold(collectively,the“CommonStockEquivalents”)andtheaggregateofthepricepershareforwhichAdditionalSharesofCommonStockmaybeissuablethereafterpursuanttosuchCommonStockEquivalent,plustheconsiderationreceivedbytheCompanyforissuanceofsuchCommon Stock Equivalent divided by thenumberofsharesofCommonStockissuablepursuanttosuchCommonStockEquivalent(the “Aggregate PerCommonSharePrice”)shallbelessthantheapplicableConversionPricethenineffect,orif,afteranysuchissuanceof CommonStockEquivalents, thepriceper sharefor whichAdditional Sharesof CommonStockmay be issuablethereafterisamendedoradjusted,andsuch price as so amended shall make the Aggregate Per Share CommonPricebelessthantheapplicableConversionPriceineffectatthetimeofsuchamendmentoradjustment,thentheapplicableConversionPriceuponeachsuchissuanceoramendmentshallbereducedtothelowerof:(i)theConversionPrice;or(ii)atwenty-fivepercent(25%)discounttothelowestAggregatePerCommon Share Price(whetherornotsuchCommonStockEquivalentsareactuallythenexercisable,convertibleorexchangeableinwholeorinpart)asoftheearlierof(A)thedateonwhichtheCompanyshallenterintoafirmcontractfortheissuanceofsuchCommonStockEquivalent,or(B)thedateofactualissuanceofsuchCommonStockEquivalent.NoadjustmentoftheapplicableConversionPriceshallbemadeunderthisSection6upontheissuanceofanyConvertibleSecuritywhichisoutstandingonthedayimmediatelyprecedingtheIssuanceDate.
7. ReservationofShares.TheCompanyshallatalltimes,solongasanyprincipalamountoftheNoteisoutstanding,reserveandkeepavailableoutofitsauthorizedandunissuedCommonStock,solelyforthepurposeofeffectingtheconversionoftheNote,suchnumberofsharesofCommonStockasshallatalltimesbesufficienttoeffecttheconversionofalloftheprincipalamountoftheNotethenoutstanding.TheinitialnumberofsharesofCommonStockreservedforconversionsoftheNotesshallbecalculatedasfourtimesthenumberofsharesnecessarytoconverttheentirevalueoftheNoteonthedayitwasexecuted,unlesstheHolderstipulatesotherwiseinthe“IrrevocableLetterofInstructionstotheTransferAgent.”
a. Capitalization.SolongasthisNoteisoutstanding,uponwrittenrequestoftheHolderorviatelephoniccommunication,theCompany’sTransferAgentshallfurnishtotheHolderthethen-currentnumberofcommonsharesissuedandoutstanding,thethen-currentnumberofcommonsharesauthorized,thethen-currentnumberofunrestrictedshares,andthethen-currentnumberofsharesreservedforthirdparties.
8. VotingRights.HoldersofthisNoteshallhavenovotingrights,exceptasrequiredbylaw.
9. ReissuanceofNote.IntheeventofaconversionorredemptionpursuanttothisNoteoflessthanalloftheConversionAmountrepresentedbythisNote,theCompanyshallpromptlycausetobeissuedanddeliveredtotheHolder,upontenderbytheHolderoftheNoteconvertedorredeemed,anewnoteofliketenorrepresentingtheremainingprincipalamountofthisNotewhichhasnotbeensoconvertedorredeemedandwhichisinsubstantiallythesameformasthisNote,assetforthabove.
10.DefaultandRemedies.
a. EventofDefault.An“EventofDefault”is:
i. defaultforten(10)daysinpaymentofinterestorDefaultInterestonthisNote;
ii. default inpaymentoftheprincipal amount ofthisNotewhendue;
iii. failurebytheCompanyforthirty(30)daysafternoticetoittocomplywithanyothermaterialprovision of this Note;
iv. breachofanycovenants,warranties,orrepresentationsbytheCompanyherein;
v. cessationofoperationsbytheCompanyoramaterialsubsidiary;
vi. iftheCompanypursuanttoorwithinthemeaningofanyBankruptcyLaw;(a)commencesavoluntarycase;(b)consentstotheentryofanorderforreliefagainstitinaninvoluntarycase;(c)consentstotheappointmentofaCustodianofitorforallorsubstantiallyallofitsproperty;(d)makesageneralassignmentforthebenefitofitscreditors;or(e)admitsinwriting that it isgenerallyunabletopayitsdebtsasthesamebecomedue;
vii.acourtofcompetentjurisdictionentersanorderordecreeunderanyBankruptcyLawthat:(a)isforreliefagainsttheCompanyinaninvoluntarycase;(b)appointsaCustodianoftheCompanyorforallorsubstantiallyallofitsproperty;or(c)orderstheliquidationoftheCompanyoranysubsidiary,andtheorderordecreeremainsunstayedandineffectforthirty(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,ataprice equalto150%oftheoutstandingbalance,plusaccrued InterestandDefaultInterestandanyotheramountsthendueunderthisNote.
11.VotetoChangetheTermsofthisNote.ThisNoteandanyprovisionhereofmayonlybeamendedbyaninstrumentinwritingsignedbytheCompanyandholdersofamajorityoftheaggregateConversionAmountoftheNotesthenoutstanding.
12.LostorStolenNote.UponreceiptbytheCompanyofevidencesatisfactorytotheCompanyoftheloss,theft,destructionormutilationofthisNote,and,inthecaseofloss,theftordestruction,ofanindemnificationundertaking
bytheHoldertotheCompanyinaformreasonablyacceptabletotheCompanyand,inthecaseofmutilation,uponsurrenderandcancellationoftheNotes,theCompanyshallexecuteanddeliveranewNoteofliketenoranddateandinsubstantiallythesameformasthisNote;provided,however,theCompanyshallnotbeobligatedtore-issueaNoteiftheHoldercontemporaneouslyrequeststheCompanytoconvertsuch remaining principal amount into CommonStock.
13.PaymentofCollection,EnforcementandOtherCosts.If:(i)thisNoteisplacedinthehandsof an attorney forcollectionorenforcementoriscollectedorenforcedthroughanylegalproceeding;or(ii)anattorneyisretainedtorepresenttheHolderofthisNoteinanybankruptcy,reorganization,receivershiporotherproceedingsaffectingcreditors’rightsandinvolvingaclaimunderthisNote,thentheCompanyshallpaytothe Holder all reasonableattorneys’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,interpretationandperformanceofthisNoteshallbegovernedby,thelawsoftheStateofTexas,withoutgivingeffecttoprovisionsthereofregardingconflictoflaws.Eachpartyherebyirrevocablysubmitstothenon-exclusivejurisdictionofthestateandfederalcourtssittinginTexasfortheadjudicationofanydisputehereunderorinconnectionherewithorwithanytransactioncontemplatedherebyordiscussedherein,andherebyirrevocablywaives,andagreesnottoassertinanysuit,actionorproceeding,anyclaimthatitisnotpersonallysubjecttothejurisdictionofanysuchcourt,thatsuchsuit,actionorproceedingisbroughtinaninconvenientforumorthatthevenueofsuchsuit,action orproceeding is improper. Eachpartyherebyirrevocablywaivespersonalservice ofprocessandconsentstoprocessbeingservedinanysuchsuit,
,throughcertifiedmailorovernightcourier,acopythereoftosuchpartyattheaddressforsuchnoticestoitunderthisAgreementandagreesthatsuchserviceshallconstitutegoodandsufficientserviceofprocessandnoticethereof.Nothingcontainedhereinshallbedeemedtolimitinanywayanyrighttoserveprocessinanymannerpermittedbylaw.EACHPARTYHEREBYIRREVOCABLYWAIVESANYRIGHTITMAYHAVE,ANDAGREESNOTTOREQUEST,AJURYTRIALFORTHEADJUDICATIONOFANYDISPUTEHEREUNDERORINCONNECTIONHEREWITHORARISINGOUTOFTHISAGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
17.Remedies,Characterizations,OtherObligations,BreachesandInjunctiveRelief.TheremediesprovidedinthisNoteshallbecumulativeandinadditiontoallotherremediesavailableunderthisNote,atlaworinequity(includingadecreeofspecificperformanceand/orotherinjunctiverelief),andnoremedycontainedhereinshallbedeemedawaiverofcompliancewiththeprovisionsgivingrisetosuchremedyandnothinghereinshalllimittheHolder’srighttopursueactualdamagesforanyfailurebytheCompanytocomplywiththetermsofthisNote.TheCompanycovenantstotheHolderthatthereshallbenocharacterizationconcerningthisinstrumentotherthanasexpresslyprovidedherein.Amountssetforthorprovidedforhereinwithrespecttopayments,conversionandthelike(andthecomputationthereof)shallbetheamountstobereceivedbytheHolderthereofandshallnot,exceptasexpresslyprovidedherein,besubjecttoanyotherobligationoftheCompany(ortheperformancethereof).
18.SpecificShallNotLimitGeneral;Construction.NospecificprovisioncontainedinthisNoteshalllimitormodifyanymoregeneralprovisioncontainedherein.ThisNoteshallbedeemedtobejointlydraftedbytheCompanyandtheHolderandshallnotbeconstruedagainstanypersonasthedrafterhereof.
19. FailureorIndulgenceNotWaiver.NofailureordelayonthepartofthisNoteintheexerciseofanypower,rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,rightorprivilegeprecludefurtherexercisethereoforofanyotherright,powerorprivilege.
20. PartialPayment.IntheeventofpartialpaymentbytheHolder,theprincipalsumduetotheHoldershallbeproratedbasedontheconsiderationactuallypaidbytheHoldersuchthattheCompanyisonlyrequiredtorepaytheamountfundedandtheCompanyisnotrequiredtorepayanyunfundedportionofthisNote,withtheexceptionofanyOIDcontemplatedherein.
21. EntireAgreement.ThisAgreementconstitutesthefullandentireunderstandingandagreementbetweenthepartieswithregardtothesubjectsherein.NoneofthetermsofthisAgreementcanbewaivedormodified,exceptbyanexpressagreementsignedbyeachPartyhereto.
22. RepresentationsandWarranties.TheCompanyexpresslyacknowledgesthattheHolder,includingbutnotlimitedtoits officer, directors, employees, agents,andaffiliates, have notmade any representation orwarrantyto itoutside 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,itisincumbentontheCompanytoinformtheHolder.
24. Severability.IfoneormoreprovisionsofthisAgreementareheldtobeunenforceableunderapplicablelaw,suchprovisionshallbeexcludedfromthisAgreementandtherestoftheAgreementshallbeenforceableinaccordancewithitsterms.
25. Usury.Ifitshallbefoundthatanyinterestorotheramountdeemedinterestduehereunderviolatestheapplicablelawgoverningusury,theapplicablerateofinterestduehereundershallautomaticallybeloweredtoequal themaximumrateofinterestpermittedunderapplicablelaw.TheCompanycovenants(totheextentthatitmaylawfullydoso)thatitwillnotseektoclaimortakeadvantageofanylawthatwouldprohibitorforgivetheCompanyfrompayingalloraportionoftheprincipalorinterestonthisNote.
26. SuccessorsandAssigns.This Agreementshallbe bindinguponsuccessorsand assigns.
—SIGNATUREPAGETOFOLLOW—
INWITNESSWHEREOF, theCompanyhascausedthisNotetobesignedbyitsCEO,onandasoftheIssuanceDate.
COMPANY
Signature:
By: Greg Halpern
Title:
Address:
Email:
Phone:
Facsimile:
CFO
Max Sound Corp. 2902 Colorado Ave,Santa Monica, CA 90404
greg@maxsound.com
847-565-9732
858-408-4364
JSJInvestmentsInc.
Signature:
SameerHirji,
.
6060NorthCentralExpressway,Suite500
DallasTX75206
888-503-2599
Exhibit1
ConversionNotice
Referenceismadetothe8%ConvertibleNoteissuedbyMaxSoundCorporation(the"Note"),datedSeptember15,2015intheprincipalamountof$50,000with8%interest.Thisnotecurrentlyholdsaprincipalbalanceof$50,000.ThefeaturesofconversionstipulateaConversionPriceequaltoa40%discounttothelowesttradingpriceduringthepreviousten(10)tradingdaystothedateofaConversionNotice,pursuanttotheprovisionsofSection2(a)(ii)intheNote.
InaccordancewithandpursuanttotheNote,theundersignedherebyelectstoconvert$oftheprincipal/interestbalanceoftheNote,indicatedbelowintosharesofCommonStock(the"CommonStock"),oftheCompany,bytenderingtheNotespecifiedasofthedatespecifiedbelow.
DateofConversion:
Pleaseconfirmthefollowinginformation:ConversionAmount: $
ConversionPrice:$(%discountfrom$_)
NumberofCommonStocktobeissued:CurrentIssued/Outstanding:
IftheIssuerisDWACeligible,pleaseissuetheCommonStockintowhichtheNoteisbeingconvertedinthenameoftheHolderoftheNoteandtransfertheshareselectronicallyto:
[BROKERINFORMATION]
HolderAuthorization:
JSJInvestmentsInc.
6060 North Central Expressway, Suite 500 *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,ACONFIRMATIONOFRECEIPTOFSUCHCONVERSION NOTICE TO SUCH HOLDER INDICATING THAT THE COMPANY WILL PROCESS SUCH CONVERSION NOTICE
inaccordancewiththetermsherein.Withintwo(2)BusinessDaysafterthedateof the Conversion Confirmation, theCompanyshallhaveissuedandelectronicallytransferredthesharestotheBrokerindicatedintheConversionNotice;shouldtheCompanybeunabletotransfertheshareselectronically,theyshall,withintwo(2)BusinessDaysafterthedateoftheConversionConfirmation,havesurrenderedtoFedExfordeliverythenextdaytotheaddressasspecifiedintheConversionNotice,acertificate,registeredinthenameoftheHolder,forthenumberofsharesofCommonStocktowhichtheHoldershallbeentitled.”
Signature:
Chairman
MaxSoundCorporation
