THISNOTEANDTHECOMMONSTOCKISSUABLEUPONCONVERSIONOFTHISNOTEHAVENOTBEENANDWILLNOTBEREGISTEREDWITHTHEUNITEDSTATESSECURITIESANDEXCHANGE COMMISSION OR THESECURITIESCOMMISSIONOF ANY STATEPURSUANTTOANEXEMPTIONFROMREGISTRATIONPROVIDEDUNDER THESECURITIESACTOF 1933,ASAMENDED,ANDTHERULES AND REGULATIONSPROMULGATEDTHEREUNDER(THE "1933ACT”)
US $46,316.00
MAX SOUND CORPORATION
8% CONVERTIBLEREDEEMABLENOTEDUE NOVEMBER 23, 2016
BACKENDNOTE
FORVALUERECEIVED,MaxSoundCorporation(the“Company”)promisestopaytotheorderofROCKCAPITAL,LLCanditsauthorizedsuccessorsandpermittedassigns("Hold-er"),theaggregateprincipalfaceamountofFortySixThousandThreeHundredSixteendollars exactly(U.S. $46,316.00) onNovember 23, 2016 ("MaturityDate")and to payinterest on theprincipalamountoutstandinghereunderat the rate of 8%perannumcommencingon February 23,2016.ThisNotecontainsa5%OIDsuchthatthepurchasepriceshall be$44,000.Theinter-est will bepaid to the Holder in whose name this Note isregistered on therecords of the Compa- nyregardingregistrationandtransfersofthisNote. Theprincipalof,andintereston, thisNotearepayableat 3820EastMercerWay, MercerIsland WA 98040,initially,and ifchanged, lastappearing on the records of the Companyasdesignated in writing by theHolderhereof from time to time.The Company will payeach interestpaymentand the outstanding principal due uponthisNotebeforeoronthe MaturityDate, lessanyamountsrequiredbylaw tobededucted or withheld,totheHolder of thisNote bycheckor wiretransferaddressedtosuchHolderatthelastaddressappearing on therecords of theCompany. Theforwarding of such check or wiretransfer shallconstituteapayment ofoutstanding principalhereunder andshallsatisfyanddis-charge the liabilityforprincipalonthisNote tothe extentof the sumrepresented bysuchcheck or wiretransfer.Interest shallbepayable inCommonStock(asdefinedbelow)pursuanttopar-agraph 4(b)herein.
This Note issubject to thefollowing additional provisions:
GH
Initials
1. ThisNoteisexchangeableforanequalaggregateprincipalamountof
Notesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame.Noservicechargewillbemadeforsuchregistrationortransferorexchange,exceptthatHoldershall payanytaxorothergovernmentalchargespayable inconnectiontherewith.
2. TheCompanyshallbeentitledto withholdfrom allpaymentsanyamountsrequired to bewithheldunderapplicable laws.
3. ThisNotemaybetransferredorexchangedonlyincompliancewiththeSecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattemptedtransfertoanon-qualifying party shall betreatedby theCompanyas void. Priorto duepresent- mentfor transferof thisNote,theCompanyandany agent ofthe Companymaytreat theperson in whose namethis Note is dulyregisteredontheCompany'srecordsas theownerhereofforallother purposes, whether or not this Notebeoverdue,and neither the Company norany suchagent shall beaffectedor boundbynotice to thecontrary.AnyHolder of this Noteelectingtoexercise theright of conversionsetforth in Section4(a)hereof, inaddition to therequirementssetforthinSection4(a),andanyprospective transferee ofthisNote,alsoisrequiredtogivethe Company writtenconfirmationthatthisNote isbeingconverted("Notice of Conversion") intheformannexedheretoasExhibit A.Thedateofreceipt(includingreceiptbytelecopy)ofsuch Notice ofConversion shall betheConversionDate.
4. 
(a)TheHolderofthisNoteisentitled,atitsoption,atanytimeaftercashpayment,toconvertalloranyamountoftheprincipalfaceamountofthisNotethenout-standingintosharesoftheCompany'scommonstock(the"CommonStock")ataprice("Con-versionPrice") foreach share of Common Stockequal to 65% of thelowest dailyVWAPof the Common Stockasreported on theNationalQuotationsBureau OTCQBexchangewhich theCompany’ssharesaretradedoranyexchange uponwhichtheCommonStockmay betradedin thefuture("Exchange")for thetenprior tradingdays including theday uponwhicha Notice ofConversionisreceivedbytheCompanyoritstransferagent(providedsuchNoticeofConver- sion isdeliveredbyfax or otherelectronic method ofcommunication to the Companyor itstransferagentafter4 P.M.EasternStandardorDaylight Savings TimeiftheHolderwishes toin-clude thesamedayclosingprice). If theshares have notbeendeliveredwithin 3businessdays, the NoticeofConversion may berescinded.Suchconversion shallbe effectuated bytheCompa-nydeliveringtheshares of Common Stock to theHolder within 3businessdays of receiptbythe CompanyoftheNoticeofConversion.Accrued butunpaidinterestshallbesubjecttoconver- sion.Nofractional shares orscriprepresentingfractions ofshares will beissued onconversion, but the number of sharesissuable shall be rounded to thenearest whole share.The Companyagrees to honorall conversions submittedpending thisincrease.In the event the Companyexpe-riences a DTC “Chill” onits shares,theconversionprice shallbe decreasedto 55%insteadof 65%whilethat“Chill”is ineffect.In noevent shall theHolderbeallowed toeffect aconversion ifsuchconversion,alongwithallothersharesofCompany CommonStockbeneficially ownedby the Holderand itsaffiliates would exceed 9.9% of the outstandingsharesof the Common Stock of theCompany.
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidattherateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("InterestShares").Holdermay, atany time, send in a Notice ofConversion to the Company forInterest
SharesbasedontheformulaprovidedinSection4(a)above.ThedollaramountconvertedintoInterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipalbalanceof this Note to thedate ofsuchnotice.
(c) ThisNotemaynotbeprepaid,exceptthatifthe$46,316Rule144con-vertibleredeemablenoteissuedbytheCompanyofevendateherewithisredeemedbytheCom-pany within 6 months of theissuancedate of suchNote,allobligations of the Company under this Noteandallobligations of the Holderunder theHolderissuedBack End Note will beauto- matically be deemed satisfiedand this Noteand theHolderissuedBack End Notewill be auto- matically bedeemedcancelledand ofnofurtherforceoreffect.
(d) Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompanyto anypersonin asingletransaction orseriesofrelatedtransactions, (ii) a reclassification,capitalreorganizationorotherchangeorexchangeofoutstandingsharesofthe CommonStock,other than aforwardorreverse stock splitorstockdividend, or(iii) anyconsolidation ormergerofthe Company with or intoanotherperson or entity in which the Company is not the surviving entity(otherthanamergerwhichiseffectedsolely tochangethejurisdictionofincorporationofthe Companyandresults in areclassification, conversion orexchange ofoutstandingshares of CommonStocksolely intosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingre-ferredtoasa"SaleEvent"),then, ineachcase,theCompany shall,uponrequestof theHolder,redeem this Note in cash for 150% of the principalamount, plusaccrued butunpaidinterestthroughthedateofredemption,orattheelectionoftheHolder,suchHolder may converttheun-paid principalamount of this Note(togetherwith theamountofaccrued butunpaidinterest) intoshares of Common Stock immediately priorto suchSaleEvent atthe ConversionPrice.
(e) Incase of any SaleEvent(nottoincludeasaleofallorsubstantially alloftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,theCompany shall causeeffectiveprovision to be made so that the Holderof this Note shallhave therightthereafter,by converting thisNote, topurchase or convert this Note into the kindand number ofshares of stock or othersecurities or property (including cash)receivable upon suchreclassification,capitalreorganization or otherchange,consolidation ormergerby a holder of the number ofshares of CommonStock thatcouldhavebeen purchased uponexercise of the Noteandat thesame ConversionPrice,as defined in thisNote, immediatelypriorto suchSaleEvent.The foregoingprovisionsshallsimilarly apply tosuccessiveSaleEvents.Iftheconsidera- tionreceivedby theholders of Common Stock is other than cash, the value shallbeasdeter-minedby theBoardofDirectors of the Companyorsuccessorperson or entity acting ingoodfaith.
5. NoprovisionofthisNoteshallalterorimpairtheobligationoftheCom-pany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteatthetime,place,andrate,and in the form,hereinprescribed.
6. TheCompanyherebyexpresslywaivesdemandandpresentmentforpay-ment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofaccelerationorintenttoaccelerate,anddiligenceintakinganyactiontocollectamountscalledforhereunder
andshallbedirectlyandprimarilyliableforthepaymentofallsumsowingandtobeowinghereto.
7. TheCompanyagreestopayallcostsandexpenses,includingreasonableattorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdueunder this Note.
| 8. | Ifoneor moreof the followingdescribed"Events ofDefault"shalloccur: |
(a) TheCompanyshalldefaultinthepaymentofprincipalorinterestonthisNoteor anyother note issued to the HolderbytheCompany; or
(b) AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinorinanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyoronbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNote,ortheSe-curitiesPurchaseAgreementunderwhichthisnotewasissued shallbefalseormisleading inanyrespect; or
(c) TheCompanyshallfailtoperformorobserve,inanyrespect,anycove-nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteoranyother note issued to theHolder; or
(d) TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinabilitytopayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsorcommenceproceedingsforitsdissolution;(4) applyfororconsenttotheappointmentofatrus-tee, liquidatororreceiverforits orforasubstantialpart ofits property orbusiness;(5) fileapeti- tionforbankruptcyrelief,consenttothe filingof suchpetitionorhave filedagainst itaninvol- untary petitionfor bankruptcyrelief,allunderfederal or statelawsas applicable; or
(e) Atrustee,liquidatororreceivershallbeappointedfortheCompanyorforasubstantialpartofitspropertyorbusinesswithoutitsconsentandshallnotbedischargedwith-in sixty(60) daysafter suchappointment; or
(f) Anygovernmentalagencyoranycourtofcompetentjurisdictionatthein-stanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstan-tial portion oftheproperties or assets of the Company; or
(g) Oneormoremoneyjudgments,writsorwarrantsofattachment,orsimilarprocess,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated,unbondedorunstayedforaperiodoffifteen (15)daysorinanyeventlaterthanfive(5)days prior to the date ofany proposed salethereunder; or
(h) TheCompanyshallhavedefaultedonorbreachedanytermofanyothernoteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde-
fault within theappropriategrace period; or
(i) TheCompanyshallhaveitsCommonStockdelistedfromanexchange(includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentradingintheCommonStockshallbesuspendedfor more than10consecutivedays orceasestofileits 1934act reports with theSEC;
(j) IfamajorityofthemembersoftheBoardofDirectorsoftheCompanyonthedatehereofareno longerservingasmembersof theBoard;
(k) TheCompanyshallnotdelivertotheHoldertheCommonStockpursuanttoparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNoticeof Conversion; or
(l) TheCompanyshallnotreplenishthereservesetforthinSection12,with-in 3 businessdays of therequest of theHolder.
| (m) | TheCompany’sCommonStockhasaclosingbidprice oflessthan |
$0.001 pershare forat least 5consecutivetradingdays; or
(n) TheaggregatedollartradingvolumeoftheCompany’sCommonStockisless thanthirtythousanddollars($30,000.00)inany5consecutivetradingdays; or
(o) TheCompanyshallceasetobe“current”initsfilingswiththeSecuritiesandExchange Commission.
(p) TheCompanyshalllosethe“bid”priceforitsstockandamarket(includingtheOTCBBmarketplaceorotherexchange)
Then,oratanytimethereafter,unlesscured(exceptfor8(m)and8(n)whichareincurablede-faults,thesoleremedyofwhichistoallowtheHoldertocancelboththisNoteandtheHolderIssuedNote,andineachandeverysuchcase,unlesssuchEventofDefaultshall nothavebeencured within 5days (excluding thoseEvents ofDefaultswhichhave shorter time periods) orhave beenwaivedinwritingby the Holder (whichwaiver shallnotbe deemed tobe a waiverof any subsequentdefault)attheoptionoftheHolder andin theHolder'ssolediscretion,theHolder mayconsider this Note immediatelydueand payable, withoutpresentment,demand,protest or(further)notice ofany kind(other thannotice ofacceleration),allofwhichare hereby expresslywaived, anythinghereinor inany noteor otherinstrumentscontained tothe contrarynotwith-standing,andtheHolder mayimmediately,and withoutexpirationofany period ofgrace,en-forceany andallof theHolder's rightsandremediesprovidedhereinorany otherrightsorreme- diesaffordedbylaw.UponanEventofDefault,interest shall accrueatadefaultinterestrate of 24%perannumor, if suchrate is usurious or notpermittedbycurrentlaw, thenat thehighestrateofinterest permittedbylaw. In theeventof a breach ofSection 8(k) the penaltyshallbe
$250perdaythesharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewasdelivered totheCompany.This penaltyshall increaseto $500 perdaybeginningonthe10thday.
Thepenaltyfor abreachof Section 8(p)shallbeanincreaseof theoutstandingprincipal amountsby20%.IncaseofabreachofSection8(i),theoutstandingprincipaldueunderthisNoteshallincreaseby 50%.Further, if abreach of Section 8(o)occurs or is continuingafter the 6 monthanniversary oftheNote,thentheHoldershall beentitledto usethelowest closing bid pricedur- ing the delinquencyperiodasabase price for theconversion.Forexample,ifthelowestclosing bidprice during the delinquency period is $0.01pershareand the conversion discount is50%theHoldermay elect to convert future conversionsat $0.005pershare.Ifthis Note is notpaidatmaturity, the outstandingprincipal dueunder this Noteshallincreaseby10%.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in-cluding,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,theHoldershall bereimbursedbythe Companyfor itsattorneys’feesandothercostsandexpensesincurred in theinvestigation,preparationandprosecution ofsuchaction orproceeding.
Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,iftheCompanyfailsforanyreasontodelivertotheHoldertheconversionsharesbythebythe3rdbusinessdayfollowing the deliveryof a Notice ofConversion totheCompanyand if theHolderincurs aFailure toDeliverLoss, thenatany time theHoldermayprovide the Companywrittennoticeindicating the amountspayable totheHolder inrespectof theFailure toDeliverLossand the Company must make theHolder wholeas follows:
FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num-ber ofconversion shares)]
TheCompanymustpaythe Failureto DeliverLossbycash payment,andanysuch cashpaymentmustbemadebythethirdbusinessdayfromthetimeoftheHolder’swrittennoticetotheCom-pany.
9. Incaseany provisionofthisNoteisheldbyacourtofcompetentjurisdic-tiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbead-justedratherthan voided,ifpossible, sothatitisenforceable tothe maximumextentpossible,andthevalidityandenforceabilityoftheremainingprovisionsofthisNotewillnot inanyway be affected orimpairedthereby.
10. NeitherthisNotenoranytermhereofmaybeamended,waived,dis-chargedorterminated otherthanbyawritteninstrumentsignedbytheCompanyand theHolder.
11. The Companyrepresentsthatitisnota“shell”issuerandhasneverbeena“shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassedsincetheCompany hasreportedform10typeinformationindicatingitisnolongera“shellissu-er.Further.The Company willinstruct itscounsel toeither(i)writea144 opinion toallowfor salability of the conversionshares or(ii)accept such opinionfrom Holder’scounsel.
12. PriortocashfundingofthisNote,TheCompanywillissueirrevocabletransferagentinstructionsreserving3xthenumberofsharesofCommonStocknecessarytoal-lowtheholdertoconvertthisnotebasedonthediscountedconversionpricesetforthinSection4(a)herewith. ThereserveshallbereplenishedasneededtoallowforconversionsofthisNote
usingsaid3xreserve.UponfullconversionofthisNote,thereserverepresentingthisNoteshallbecancelled.TheCompanywillpayalltransferagentcostsassociatedwithissuinganddeliver-ingtheshares.If suchamountsare to bepaidbythe Holder, itmaydeduct suchamountsfrom theConversionPrice. ConversionNoticesmaybesent to the Companyor itstransferagent viaelectricmail.
13. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions,including butnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbegiven to the Holderas soonas possible underlaw.
14. ThisNoteshallbegovernedbyandconstruedinaccordancewiththelawsofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNewYorkandshallbebindinguponthesuccessorsandassignsofeachparty hereto.TheHolderand the Company hereby mutuallywaivetrialbyjuryand consent to exclusivejurisdictionand venue in thecourts of the StateofNewYork. ThisAgreementmaybe executed incounterparts,and thefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasanoriginal.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecut-edbyanofficer thereunto dulyauthorized.
Dated:2/24/16
MAX SOUND CORPORATION
By:_GregHalpern_Title:_Chairman and CFO
EXHIBIT A
NOTICE OFCONVERSION
(To be ExecutedbytheRegisteredHolder in order toConvert theNote)
Theundersignedherebyirrevocablyelectstoconvert$oftheaboveNoteintoSharesof Common Stock of MaxSoundCorporation(“Shares”) accordingto the conditionssetforth insuchNote,as of thedatewrittenbelow.
IfSharesaretobeissuedinthenameofapersonotherthantheundersigned,theundersigned willpayall transferand othertaxes and chargespayablewithrespectthereto.
DateofConversion:ApplicableConversionPrice:Signature:
[PrintName ofHolder and TitleofSigner]
Address:
SSN or EIN:
Shares areto beregistered in the followingname:
Name:Address:Tel:Fax:SSN orEIN:
Shares areto besent ordelivered to thefollowing account:
Account Name:Address:
