NEITHER THEISSUANCE ANDSALE OFTHE SECURITIES REPRESENTEDBY THISCERTIFICATENORTHESECURITIES INTO WHICH THESE SECURITIES AREEXERCISABLEHAVEBEENREGISTERED UNDERTHESECURITIES ACTOF 1933, ASAMENDED, OR APPLICABLESTATESECURITIES LAWS.THESECURITIES MAYNOTBE OFFERED FOR SALE, SOLD,TRANSFERRED ORASSIGNED (I) INTHE ABSENCE OF (A) ANEFFECTIVE REGISTRATION STATEMENTFORTHESECURITIES UNDERTHESECURITIES ACTOF 1933, ASAMENDED, OR (B)ANOPINION OFCOUNSEL (WHICH COUNSEL SHALL BESELECTEDBYTHEHOLDER), IN AGENERALLY ACCEPTABLE FORM, THATREGISTRATION ISNOT REQUIRED UNDER SAID ACTOR (II)UNLESSSOLDPURSUANT TO RULE 144,RULE144A UNDER SAID ACTOR SUCH OTHER APPLICABLEEXEMPTIONFROM REGISTRATION.NOTWITHSTANDING THE FOREGOING, THESECURITIES MAY BE PLEDGED INCONNECTIONWITH A BONAFIDE MARGINACCOUNTOR OTHER LOAN OR FINANCINGARRANGEMENT SECUREDBYTHE SECURITIES.
US$120,000.00
MAX SOUND CORPORATION
8%CONVERTIBLE REDEEMABLE NOTE DUEMAY11, 2018
FOR VALUE RECEIVED, Max Sound Corporation.(the “Company”) promises topay to the orderof Bellridge Capital,LP. and its authorizedsuccessors andpermitted assigns(“Holder”), the aggregate principalface amount of OneHundred twentyThousand Dollars exactly(US$120,000.00) on MAY 11, 2018(“Maturity Date”) and topay intereston theprincipal amount outstanding hereunder at the rate of 8% per annum commencing on MAY 11,2018. This Note contains a US$9,600 original issue discountsuch that the purchaseprice of the Note shallbe US105,400.00 afterdeduction of expensesof
US$5,000.00.Theinterest willbe paid to theHolder inwhosename this Note is registeredon the recordsof theCompany regarding registration andtransfers of this Note.The principalof, and interest on,this Noteare payable at Suite 403 - 2727 SteelesAve.W., Toronto, OntarioM3J 3G9, initially, and if changed,last appearing on the recordsof theCompany asdesignated inwriting by the Holder hereof from time totime. TheCompanywill pay each interest payment and the outstanding principaldue uponthis Notebefore or on the Maturity Date, lessanyamounts required by law tobe deducted or withheld, tothe Holder of this Note by check or wire transfer addressed to such Holder at thelast address appearingon therecords of theCompany.Interest shall bepayable in Common Stock (as defined below) at the election of the Holder pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
| 1. | This Note is exchangeablefor an equalaggregate principalamount of Notesof different authorized denominations,as requested by the Holder surrendering the same. No service charge willbe made for such registration or transfer or exchange, except that Holder shall pay anytaxor other governmental charges payable in connection therewith. |
| 2. | TheCompanyshall be entitled towithhold from all payments any amounts required to be withheld under applicable laws. |
| 3. | This Note may be transferred or exchanged onlyincompliance with theSecuritiesAct of 1933,as amended (“Act”) and applicablestate securities laws.Anyattempted transfer to anon-qualifying partyshall betreatedby theCompany as void. Prior to due presentmentfor transferof this Note, theCompanyandany agentof theCompany maytreat thepersoninwhose name this Noteis duly registered on theCompany’s records as theowner hereof forall other purposes, whetheror |
CAN: 21236632.2
notthis Notebe overdue, and neither theCompany nor any suchagent shall beaffected or boundby notice to thecontrary.Any Holderof this Note electing toexercise the rightof conversion set forth in Section4(a) hereof, in addition to therequirements set forth in Section4(a), andany prospective transfereeof this Note, also is required togive theCompany written confirmation thatthis Note is being converted(“Notice ofConversion”) in theform annexed hereto as Exhibit A.The dateof receipt (includingreceiptby telecopyor email) of such Notice of Conversion shall be the Conversion Date.
4.
| (a) | The Holderof this Note is entitled, at its optionatanytime andfrom time to time after the date which is 180 days after the of issuance of this Note,toconvert all or any amount of the principal face amount of this Note then outstanding into shares of theCompany’scommonstock (the“CommonStock”) at a price(“ConversionPrice”) for each shareofCommonStock equal to 65%of the lowest pricefor any tradeof theCommon Stock during the ten(10) trading dayperiod prior toconversion. Such trading price shall be determined based ontrades of theCommonStock as reportedon theOTC Pink markets (the“OTCP”) which theCompany’s shares are traded on or, at the election of theHolder, any other exchange upon which theCommon Stockmay be traded inthe future(“Exchange”), for the ten (10) prior trading days includingthe dayuponwhich aNotice of Conversion isreceivedby theCompany or its transfer agent (provided suchNotice of Conversion isdelivered by fax or other electronicmethod of communication to theCompany or its transfer agent after 4P.M. Eastern Standard orDaylight SavingsTimeif the Holder wishes to include thesame day trading prices). If the shares have notbeen delivered within 3business days, the Notice of Conversion may be rescinded by the Holder. Such conversion shallbe effectuatedby theCompany delivering theshares ofCommon Stockto theHolder within 3business daysof receiptby theCompany of theNotice of Conversion.Accrued but unpaidinterest shall be payableincash, subject toconversion at theConversion Price inthe same manner as the principal face amount at the election of the Holder. No fractional shares or scrip representing fractionsofshares willbe issued on conversion, but thenumber of shares issuableshall be rounded to the nearestwhole share.To the extent theConversion Priceof the Company’sCommonStock closes below the par value per share, theCompanywill take all steps necessary to solicit the consentof thestockholders to reduce the par value to the lowest value possibleunder law.The Company agrees to honorall conversions submitted pendingthis increase.Inthe event theCompanyexperiences aDTC “Chill” onitsshares, the conversion price shallbe decreased to45% instead of 55% while that “Chill” isin effect. Inno event shallthe Holder be allowed to effect a conversion if such conversion, along with all other sharesof Company Common Stock beneficiallyowned by the Holder and its affiliates wouldexceed 9.9% of the outstanding shares of theCommon Stock of theCompany. |
| (b) | Interest onany unpaid principal balanceof this Noteshall accrue andbe paid at therate of 8% per annum withoutcompounding based on a 365day year. Interest shall bepaid by theCompany in cashon the Maturity Date (as defined below) unless earlier converted bytheHolder intoCommonStock (“Interest Shares”). Holdermay, atany time andfrom time totime, send in aNotice of Conversion to theCompanyto convert accrued interest into InterestShares based on theformula provided inSection 4(a) above.The dollaramount convertedinto InterestShares may atthe electionof theHolder be all or a portionof theaccrued interest calculatedon theunpaid principal balanceof this Noteto the date of such notice. |
| (c) | During thefirst sixmonths this Note isineffect, theCompanymayredeem this Notebypaying tothe Holder an amount as follows: (i) ifthe redemption ispriortothe 30th day this Note is ineffect (including the30th day), thenfor anamount equal to 110%of theunpaid principalamount of this Note along with any interest that has accrued during that period; (ii) if theredemption ison the31stday this Note is ineffect, up to and including the60th daythis Note is ineffect, thenfor anamount equal to 115%of the unpaid principalamount of this Note along withany accrued interest;(iii) if the redemption is on the 61st daythis Note isineffect, up to and including the120th daythis Note is ineffect,thenfor anamount equal to135% of the unpaid principalamount of this Note along withany |
accrued interest; (iv) if the redemption ison the121st daythis Note is ineffect, up toand including the180thdaythis Note is ineffect, thenfor anamount equal to150% of the unpaid principalamount of this Note along withany accrued interest.This Notemay notbe redeemed after the180thday this Note is ineffect. The redemptionmust be closed and paidfor within 3 business daysof theCompany sending the redemptiondemand or theredemption willbe invalid and theCompany maynot redeem this Note. In the event theHolder has delivered a Noticeof Conversion tothe Company prior to the receiptof a redemption notice from theCompany, the Notice of Conversion shall prevail.
| (d) | Upon (i) atransfer of all or substantially all of the assets of theCompany toany person in a single transaction orseries of related transactions,(ii) areclassification, capitalreorganization or other change or exchange of outstanding shares of theCommon Stock, other than a forward or reversestock split orstock dividend, or (iii)any consolidationor mergerof theCompanywith or into another person or entity inwhich theCompany isnotthe surviving entity (other thanamerger whichiseffected solely tochange the jurisdiction of incorporation of theCompanyand results in areclassification, conversion orexchangeof outstandingshares ofCommon Stock solely intoshares ofCommonStock) (eachof items (i), (ii)and (iii) being referred to as a“Reorganization Event”), then, ineach case, theCompanyshall, upon request of the Holder, redeem this Note incash for 150% of the principalamount, plus accrued but unpaid interest through the dateof redemption, orat theelection of the Holder, such Holder mayconvert the unpaid principalamount of this Note (together with theamount of accrued but unpaid interest) into sharesofCommonStock at theConversion Price determined in accordance with Section 4(a) atanytime prior to the ReorganizationEvent. The foregoing provisions shall similarly applyto successive Reorganization Events. |
| (e) | In caseofany ReorganizationEvent (not to include a saleof all or substantially allof theCompany’s assets)in connection with whichthis Note is notredeemed or converted, theCompany shall cause effective provision to bemade so that the Holderof this Note shall have the right thereafter, by converting this Note (together with theamount of accruedbut unpaid interest), to purchase or convertthis Noteinto the kind andnumber of sharesof stock or other securities or property(including cash) receivableupon such reclassification, capital reorganization or otherchange, consolidation ormerger by a holderof thenumberofshares of Common Stock that could have been purchasedupon conversionof the Note (together with theamount of accrued but unpaid interest) and at thesame Conversion Price, asdefined inthis Note, immediately prior tosuch ReorganizationEvent.The foregoing provisionsshall similarlyapply to successive ReorganizationEvents. If the consideration receivedby theholders ofCommonStockis otherthan cash, the value shall be asdetermined by theBoard of Directors of theCompany or successor person or entity acting in good faith. |
| 5. | No provisionof this Noteshall alter orimpair the obligationof theCompany, which is absolute and unconditional, topaythe principalof, andinterest on, this Note at thetime, place, and rate, and in the form, herein prescribed. |
| 6. | The Company hereby expressly waivesdemand and presentment for payment, noticeof non- payment, protest, noticeof protest, noticeof dishonor, noticeof acceleration or intent toaccelerate, and diligence intaking any action tocollect amounts called for hereunder and shall be directly and primarily liablefor the payment of allsums owing and to be owing hereto. |
| 7. | The Company agrees topay allcosts andexpenses, includingreasonable attorneys’ fees and expenses on a solicitor-client basis, which may be incurredby theHolder in collecting anyamount due under this Note. |
| 8. | If one ormore of the following described“Events ofDefault” shall occur: |
| (a) | The Company shalldefault in thepayment of principal or intereston this Note orany other note issued to the Holder by theCompany; or |
| (b) | Anyof therepresentations or warrantiesmade by theCompanyherein orinany certificate or financial or other writtenstatements heretofore or hereafter furnishedby oron behalf of theCompanyin connection with the execution anddelivery of this Note, or the securities purchaseagreement under whichthis Notewas issuedshall be false ormisleading in any respect;or |
| (c) | The Company shall failtoperform or observe, in anyrespect,anycovenant, term, provision, condition,agreement or obligationof theCompanyunder thisNote or any other note issued to theHolder or the securities purchaseagreement under whichthis Notewas issued;or |
| (d) | The Company shall (1)become insolvent; (2)admitin writing its inability topay its debts generally asthey mature; (3)make an assignmentfor the benefitof creditorsorcommence proceedingsfor its dissolution; (4)apply for or consent to theappointment of a trustee, liquidator or receiverfor its or for a substantialpart of its property orbusiness; (5) file a petitionfor bankruptcyrelief, consent tothe filingof such petition or have filed againstit aninvoluntary petitionfor bankruptcy relief,all under federal orstate laws as applicable; or (6) the boardof directorsof theCompany shall resolve toundertake any actions which could lead to or to confirm any of the foregoing;or |
| (e) | A trustee, liquidator or receiver shall be appointedfor theCompany orfor a substantial part of its property or business without its consent and shall not be discharged within sixty |
(60)daysafter such appointment; or
| (f) | Any governmentalagency or any courtof competent jurisdiction at theinstance of any governmentalagency shall assume custody or controlof the whole orany substantial portion of the properties or assets of theCompany; or |
| (g) | One ormoremoney judgments, writs or warrantsof attachment, or similar process,inexcess of fiftythousand dollars ($50,000)in theaggregate, shallbe entered or filed against theCompany orany of its properties or other assets and shallremain unpaid, unvacated, unbonded orunstayed for a periodof fifteen (15) days or inany event laterthan five (5)days prior to the date of any proposed sale thereunder;or |
| (h) | The Company shall have defaulted on or breached anyterm, covenant or conditionof any other debt instrument or debt obligationbywhich it is bound, or if, in the reasonableopinion of the Holder, an adverse material change occurs inthe financial condition ofany of theCompany; or |
| (i) | The Company shall have itsCommonStock delistedfrom anexchange (including theOTCP) or, if theCommonStock tradeson an exchange, then trading in theCommon Stock shall be suspended formore than 10 consecutive days; |
| (j) | If amajority ofthe members of the Board of Directors of theCompany on thedatehereof are no longer serving asmembers of theBoard; |
| (k) | TheCompanyshall not deliver tothe HoldertheCommonStock pursuant toparagraph 4 herein without restrictive legend within 3 business daysof itsreceipt of aNoticeof Conversion;or |
| (l) | The Company shall not replenish the reserve setforth inSection 13, within 3 business days of the request of the Holder. |
| (m) | The Company shall notbe “current” in itsfilings with the Securities andExchangeCommission;or |
| (n) | The Company shall losethe “bid” pricefor itsstock and amarket (including theOTCBBmarketplace or other exchange). |
Then, or at any time thereafter, unless cured within 5days, and ineach and every such case, un- less such Event of Default shall have been waived inwriting by the Holder (which waiver shallnot bedeemed to be a waiverof any subsequent default) at the optionof the Holder andin the Holder’s sole discretion, theHoldermay considerthis Note immediately due and payable, with- out presentment,demand, protest or (further) noticeofanykind (other thannoticeof acceleration),all of which are hereby expressly waived, anything herein orinanynote or other instruments contained to the contrary notwithstanding, and the Holdermay immediately,and without expirationof any periodof grace, enforce any and allof the Holder’s rights andremedies provided herein or any other rights or remedies afforded by law.
| 9. | Upon anEvent of Default, in addition to any other rights or remedies of the Holder: |
| (a) | interest shall accrue at a default interestrate of 24% perannum or, if such rate is usurious or not permittedby current law, then at the highest rateof interest permittedby law; |
| (b) | in the eventof a breachof Section8(k), theCompany shallpaythe Holder $250 perday theshares are not issued beginningon the 4th day after the conversion noticewas delivered to theCompany. This penalty shall increase to $500 perdaybeginning on the 10thday(provided that in either case if such rate is usurious or not permittedbycurrent law, then at aper diem penalty that is equal to the highest rateof interestpermitted bylaw).Amountspayable hereunder shall be convertible at the election of the Holder inthe same manner as the principal amount; |
| (c) | in the event of a breach of Section8(n) the outstanding principalamount shall bedeemed tobe increasedby 20% withoutfurther actionbythe Company or the Holder and theCompany shall issue a replacement certificate reflectingsuch increase atthe requestof the Holder; |
| (d) | in the eventof a breachof Section8(i), the outstanding principal dueunder this Note shall increaseby 50% without furtheractionby theCompany orthe Holder and theCompany shall issue a replacement certificate reflectingsuch increase atthe requestof the Holder; |
| (e) | if this Note is notpaid when due, the outstanding principal due underthis Noteshall increaseby 50% without further actionby theCompany or the Holder and the Company shall issue a replacement certificate reflecting such increase at the request of the Holder; |
| (f) | if the Holder shallcommence an action orproceeding to enforceanyprovisions of this Note, including, without limitation, engagingan attorney, then if theHolder prevails in such action, theHolder shall be reimbursedby theCompanyfor its attorneys’fees and othercosts and expenses incurred in the investigation, preparation and prosecutionof such action or proceeding on a solicitor-client basis; |
| (g) | at the Holder’s election, if theCompany failsfor any reason to deliver to theHolder theCommonStock issuable uponconversion of this Note (orany interest asapplicable) by the 3rdbusiness day following thedeliveryof aNotice of Conversion tothe Company and if the Holder incurs a Failure to Deliver Loss(as defined below), then atanytime the Holder may provide theCompanywritten notice indicating theamounts payable to the Holder in respectof the Failure to Deliver Loss and theCompany mustmake the Holder whole as follows: |
“Failureto Deliver Loss” = (Highest trade price atanytime on or after the Conversion Date) x(Number of shares subject to the Notice of Conversion)
TheCompany mustpay the Failure toDeliver Loss by cash payment, andanysuchcashpaymentmust bemadeby the 3rd businessday from thetime of theHolder’s written notice to theCompany.
| 10. | In caseanyprovision of this Note isheldby acourt of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shallbe adjusted rather than voided, if possible, so that it is enforceable to themaximum extent possible, and the validityand enforceabilityof the remainingprovisions of this Note will not inanyway be affected orimpaired thereby. |
| 11. | Neither this Notenor anyterm hereofmaybe amended, waived, discharged or terminated other than by a written instrument signed by theCompany and the Holder. |
| 12. | The Company represents thatit is not a “shell” issuer and has never been a “shell” issuer or that ifit previously has been a “shell” issuer that at least12 months have passedsince theCompany hasreported form 10type information indicatingit isno longer a “shell” issuer. Further,theCompanywill instruct its counsel toeither (i)write a 144 opinion to allowfor salabilityof the |
ConversionShares or (ii) accept such opinion from Holder’s counsel.
| 13. | The Company shall issue irrevocable transfer agent instructionsreserving 20,000,000 sharesof itsCommonStock for conversions under this Note (the“Share Reserve”). Upon full conversionof this Note, any shares remaining inthe ShareReserveshall be cancelled. TheCompanyshallpay allcosts associated with issuing and delivering theshares. If suchamounts are to be paidby the Holder,the Holdermay deduct suchamountsfrom the Conversion Price. ConversionNotices may besent to theCompany or itstransfer agent via electronicmail. TheCompany shall at alltimes reserve aminimum of threetimes the amount of shares required ifthe Note were to befully converted. The Holder may reasonably request increases from time to time to reservesuch amounts. |
| 14. | The Companywill give the Holder direct noticeof any corporate actions, including but not limited toname changes,stock splits, recapitalizations etc.This noticeshall be given to the Holderas soon as possible under law. |
| 15. | This Note shall begovernedby and construed in accordance with the lawsof the Provinceof Ontario and shallbe binding upon thesuccessors and assignsof each party hereto.The Holder andtheCompanyhereby mutually consent toexclusive jurisdiction and venue inthe courts of the Provinceof Ontario. ThisAgreementmay be executedincounterparts, and the facsimile or email transmission of an executed counterpart to thisAgreement shall be effective as an original. All references to “$”,“US$” or “dollars” herein are to United States dollars unless otherwise indicated. |
INWITNESSWHEREOF,theCompanyhas caused this Note tobe duly executed by anofficer thereunto duly authorized.
Dated: May 12th2017
MAXSOUNDCORPORATION.
By:
Title: CEO
EXHIBITANOTICEOFCONVERSION
(To be Executed by the Registered Holder in order toConvert the Note)
The undersigned hereby irrevocably elects toconvert$of the [principalamount] [accrued interest]of the Note intoShares ofCommon Stock ofMax Sound Corporation.(“Shares”) according to the conditions set forth in such Note, as of the date written below.
IfShares are to be issued in thenameof a person other than the undersigned, the undersigned willpay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion:
Applicable Conversion Price:
Address:
SSN orEIN:
Shares are to be registered in the followingname:
Name:
Address:
Tel:
Fax:
SSN orEIN:
Shares are to be sent or delivered to the following account:
Account Name:
Address:
