Max Sound (MAXD) 10-K 2015 FY Annual report

THISNOTEANDTHECOMMONSTOCK ISSUABLEUPONCONVERSIONOFTHISNOTE HAVENOTBEENANDWILLNOTBE REGISTEREDWITHTHEUNITEDSTATES SECURITIESANDEXCHANGECOMMISSIONOR THESECURITIESCOMMISSIONOFANYSTATE PURSUANTTOANEXEMPTIONFROM REGISTRATIONPROVIDEDUNDERTHE SECURITIESACTOF1933,ASAMENDED,AND THE RULES AND REGULATIONS PROMULGATEDTHEREUNDER(THE"1933 ACT”)

US$115,500.00

MAXSOUND CORPORATION.

8%CONVERTIBLEREDEEMABLENOTEDUEFEBRUARY27,2016

BACKENDNOTE

FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofTOLEDOADVISORS,LLCanditsauthorizedsuccessorsandpermittedassigns("Holder"),theaggregateprincipalfaceamountofOneHundredFifteenThousandFiveHundred Dollarsexactly(U.S.$115,500.00)onFebruary27,2016("MaturityDate")andtopayinterest ontheprincipalamountoutstandinghereunderattherate of8%perannumcommencingonFeb- ruary27,2015.TheCompanyacknowledgesthisNotewasissuedwitha5%originalissuedis- count(OID)andassuchtheissuancepricewas$110,000.00.Theinterestwillbepaidtothe HolderinwhosenamethisNoteisregisteredontherecordsoftheCompanyregardingregistra-

tionandtransfersofthisNote.Theprincipalof,andintereston,thisNotearepayableat6415thStreet,Lakewood,NJ08701,initially,andifchanged,lastappearingontherecordsoftheCom-

panyasdesignatedinwritingbytheHolderhereoffromtimetotime.TheCompanywillpay eachinterestpaymentandthe outstandingprincipaldueupon thisNotebeforeor ontheMaturity Date,lessanyamountsrequiredbylawtobedeductedorwithheld,totheHolderofthisNoteby checkorwiretransferaddressedtosuchHolderatthelastaddressappearingontherecordsof theCompany.Theforwardingofsuchcheckorwiretransfershallconstituteapaymentofout- standingprincipalhereunderandshallsatisfyanddischargetheliabilityforprincipalonthis Notetotheextentofthesumrepresentedbysuchcheckorwiretransfer.Interestshallbepaya- bleinCommonStock(asdefinedbelow)pursuanttoparagraph4(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,whetherornotthisNotebeoverdue,andneithertheCompanynoranysuch agentshallbeaffectedorboundbynoticetothecontrary.AnyHolderofthisNoteelectingto exercisetherightofconversionsetforthinSection4(a)hereof,inadditiontotherequirements setforthinSection4(a),andanyprospectivetransfereeofthisNote,alsoisrequiredtogivethe CompanywrittenconfirmationthatthisNoteisbeingconverted("NoticeofConversion")inthe formannexedheretoasExhibitA.Thedateofreceipt(including receiptbytelecopy)ofsuch Notice of Conversion shall be the Conversion Date.

4.(a)TheHolderofthisNoteisentitled,atitsoption,toconvertallor anyamountoftheprincipalfaceamountofthisNotethenoutstandingintosharesoftheCompa- ny'scommonstock(the"CommonStock")ataprice("ConversionPrice")foreachshareof CommonStockequalto65%ofthelowestdailyVWAPoftheCommonStockasreportedon theNationalQuotationsBureauOTCQBexchangewhichtheCompany’ssharesaretradedor anyexchangeuponwhichtheCommonStockmaybetradedinthefuture("Exchange"),forthetenpriortradingdaysincludingthedayuponwhichaNoticeofConversionisreceivedbythe 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 within3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such 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, but the number of shares issuable shall be rounded to the nearest whole share. In the eventtheCompanyexperiencesaDTC“Chill”onitsshares,theconversionpriceshallbede- creased to 55 % instead of 65% while that “Chill” is in effect.In no event shall the Holder be al- lowed toeffectaconversionifsuchconversion,along withallothersharesofCompanyCom- monStockbeneficiallyownedbytheHolderanditsaffiliateswouldexceed9.9%oftheout- standing shares of the Common Stock of the Company.

(b)InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidatthe rateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("Interest Shares").Holdermay,atanytime,sendinaNoticeofConversiontotheCompanyforInterestSharesbasedontheformulaprovidedinSection4(a)above.Thedollaramountconvertedinto InterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipal balanceofthisNotetothedateofsuchnotice.

(c)ThisNotemaynotbeprepaid,exceptthatifthe$115,500Rule144con- vertible redeemablenoteissuedbytheCompanyofevendateherewithisredeemedby theCom- panywithin6monthsoftheissuancedateofsuchNote,allobligationsoftheCompanyunder thisNoteandallobligationsoftheHolderundertheHolderissuedBackEndNotewillbeauto- maticallybedeemedsatisfiedandthisNoteandtheHolderissuedBackEndNotewillbeauto- maticallybedeemedcancelledand ofnofurtherforceoreffect.

(d)Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompany toanypersoninasingletransactionorseriesofrelatedtransactions,(ii)areclassification,capital reorganizationorotherchangeorexchangeofoutstandingsharesoftheCommonStock,other thanaforwardorreversestocksplitorstockdividend,or(iii)anyconsolidationormergerofthe CompanywithorintoanotherpersonorentityinwhichtheCompanyisnotthesurvivingentity (otherthanamergerwhichiseffectedsolelytochangethejurisdictionofincorporationofthe 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 orsubstantiallyalloftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,the CompanyshallcauseeffectiveprovisiontobemadesothattheHolderofthisNoteshallhave therightthereafter,byconvertingthisNote,topurchaseorconvertthisNoteintothekindand numberofsharesofstockorothersecuritiesorproperty(includingcash)receivableuponsuch reclassification,capitalreorganizationorotherchange, consolidationormergerbyaholderof thenumberofsharesofCommonStockthatcouldhavebeenpurchaseduponexerciseofthe NoteandatthesameConversionPrice,asdefinedinthisNote,immediatelypriortosuchSale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the considera- 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 onbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNoteshallbe falseormisleadinginanyrespect;or

(c)TheCompanyshallfailtoperformorobserve,inanyrespect,anycove- nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteorany othernoteissuedtotheHolderandnotcuresuchbreachwithin10days;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)One or more money judgments, writsor warrants of attachment, orsimilar process,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredorfiled againsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated, unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive(5)days priortothedateofanyproposedsalethereunder;or

(h)TheCompanyshallhavedefaultedonorbreachedanytermofanyother noteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde- faultwithintheappropriategraceperiod;or

(i)TheCompanyshallhaveitsCommonStockdelistedfromamarket(in- cludingtheOTCQBmarketplace)or,iftheCommonStocktradesonanexchange,thentrading intheCommonStockshallbesuspendedformorethan10consecutivedays;

(j) IntentionallyDeleted;

(k)TheCompanyshallnotdelivertotheHoldertheCommonStockpursuant toparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNotice ofConversion;or

(l)Once cash funded, theCompany shall notreplenish the reserve setforth in Section12,within5businessdaysoftherequestoftheHolderinwhichcasetheconversiondis- countsetforthinSection4(a)shallbeincreasedfroma35%conversiondiscounttoa50%con- versiondiscountandshallbeincreasedfromthe50%conversiondiscountthenineffecttoan 80%conversiondiscountiftheincreaseisnoteffectivewithin10businessdaysofthereplen- ishmentrequest;or

(m)TheCompany’sCommonStockhasaclosingbidpriceoflessthan$0.02 pershareforatleast5consecutivetradingdays;or

(n)TheaggregatedollartradingvolumeoftheCompany’sCommonStockis lessthanfiftythousanddollars($50,000.00)inany5consecutivetradingdays;or

(o)TheCompanyshallceasetobe“current”initsfilingswiththeSecurities andExchangeCommission;or.

(p)TheCompanyshalllosethe“bid”priceforitsstockandamarket(including theOTCBBmarketplaceorotherexchange)

Then,oratanytimethereafter,unlesscured(exceptfor8(m)and8(n)whichareincurablede- faults,thesoleremedyofwhichistoallowtheHoldertocancelboththisNoteandtheHolder IssuedNote,andineachandeverysuchcase,unlesssuchEventofDefaultshallhavebeen waivedinwritingbytheHolder(whichwaivershallnotbedeemedtobeawaiverofanysubse- quentdefault)attheoptionoftheHolderandintheHolder'ssolediscretion,theHolder may considerthisNoteimmediatelydueandpayable,withoutpresentment,demand,protestor(fur- ther)noticeofanykind(otherthannoticeofacceleration),allofwhichareherebyexpressly waived,anythinghereinorinanynoteorotherinstrumentscontainedtothecontrarynotwith- standing, and theHolder mayimmediately, andwithout expirationof anyperiod ofgrace, en- force any and all of the Holder's rights and remedies provided herein or any other rights or reme- dies affordedbylaw. UponanEventofDefault,interestshallbeaccrueata defaultinterestrate of24%perannumor,ifsuchrateisusuriousornotpermittedbycurrentlaw,thenatthehighest

rateofinterestpermittedbylaw.Further,iftheNotebecomesdueandpayable,theHoldermay use the outstanding principal and interest due underthe Note to offset any payment obligations it mayhavetotheCompany.Intheeventofabreachof8(k)thepenaltyshallbe$250perdaythe sharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewasdeliveredtothe Company.Thispenaltyshallincreaseto$500perdaybeginningonthe10thday.Oncecash funded,thepenaltyforabreachofSection8(p)shallbeanincreaseoftheoutstandingprincipal amountsby20%.Oncecashfunded,intheeventofabreachofSection8(i),theoutstanding

principaldueunderthisNoteshallincreaseby50%.IfthisNoteisnotpaidatmaturity,theout-standingprincipaldueunderthisNoteshallincreaseby10%.

IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in- cluding,withoutlimitation,engaginganattorney,then,iftheHolderprevailsinsuchaction,the HoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpenses incurredintheinvestigation,preparationandprosecutionofsuchactionorproceeding.

Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,iftheCompanyfailsforany reasontodelivertotheHoldertheconversionsharesbythebythe3rdbusinessdayfollowing thedeliveryofaNoticeofConversiontotheCompanyandiftheHolderincursaFailuretoDe- liverLoss,thenatanytimetheHoldermayprovidetheCompanywrittennoticeindicatingthe amountspayabletotheHolderinrespectoftheFailuretoDeliverLossandtheCompanymust maketheHolderwhole asfollows:

FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num- berofconversionshares)]

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)writea“144-3(a)(9)”opinionto allowforsalabilityoftheconversionsharesor(ii)acceptsuchopinionfromHolder’scounsel.

12.PriortocashfundingofthisNote,TheCompanywillissueirrevocable transferagentinstructionsreserving2xthenumberofsharesofCommonStocknecessarytoal- lowtheholdertoconvertthisnotebasedonthediscountedconversionpricesetforthinSection 4(a)herewith.ThereserveshallbereplenishedasneededtoallowforconversionsofthisNote using said 2xreserve, providedan increasenotice may notbe deliveredmore than onceevery 30 daysforthefirst5monthstheNoteisineffect.UponfullconversionofthisNote, thereserve

representingthisNoteshallbecancelled.TheCompanywillpayalltransferagentcostsassoci- atedwithissuinganddeliveringtheshares.

13.TheCompanywillgivetheHolderdirectnoticeofanycorporateactions includingbutnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbe giventotheHolderassoonaspossibleunderlaw.

14.ThisNoteshallbegovernedbyandconstruedinaccordancewiththelawsofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNew Yorkandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderand theCompanyherebymutuallywaivetrialbyjuryandconsenttoexclusivejurisdictionandvenue inthecourtsoftheStateofNewYork.ThisAgreementmaybeexecutedincounterparts,and thefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasan original.

INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecutedbyan officerthereuntodulyauthorized.

Dated:02/27/2015

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: