NEITHER THEISSUANCE ANDSALEOF THESECURITIESREPRESENTED BY THISCERTIFICATE NOR THE SECURITIES INTOWHICH THESE SECURITIES ARECONVERTIBLE HAVEBEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,ORAPPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BEOFFEREDFOR SALE, SOLD,TRANSFERREDORASSIGNED IN THE ABSENCE OF (A) ANEFFECTIVE REGISTRATIONSTATEMENTFOR THE SECURITIES UNDER THESECURITIES ACT OF 1933, ASAMENDED, OR (B) ANOPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THEHOLDER), IN AGENERALLY ACCEPTABLE FORM, THAT REGISTRATION ISNOT REQUIREDUNDERSAID ACT. NOTWITHSTANDING THEFOREGOING, THE SECURITIESMAY BEPLEDGED IN CONNECTION WITH ABONA FIDE MARGIN ACCOUNTOROTHER LOAN OR FINANCING ARRANGEMENTSECUREDBY THE SECURITIES.
Principal Amount: $78,000.00IssueDate: February6,2018 Purchase Price:$78,000.00
CONVERTIBLEPROMISSORYNOTE
FOR VALUE RECEIVED,MAX SOUND CORPORATION, aDelaware corporation (hereinafter called the “Borrower”), hereby promises topayto the order ofPOWER UPLENDINGGROUP LTD., aVirginia corporation, or registered assigns (the “Holder”) thesum of$78,000.00 together withanyinterest as setforth herein, onNovember 15,2018 (the “Maturity Date”), and topayinterest onthe unpaid principal balance hereof at the rate oftwelve percent (12%) (the “Interest Rate”) perannumfrom the date hereof (the “Issue Date”) until the samebecomes due and payable, whether at maturity orupon acceleration orby prepayment orotherwise. This Note may not be prepaid in whole orinpartexcept as otherwise explicitly set forth herein. Any amount ofprincipal orinterest onthis Notewhichis not paid when due shall bear interestattherate oftwenty two percent (22%)perannumfrom the duedate thereof untilthe sameis paid (“Default Interest”). Interest shall commence accruing onthe datethat the Noteisfullypaid and shall be computed onthe basis of a365-day yearandthe actual number ofdays elapsed. All payments due hereunder (to the extent not converted into common stock, $0.00001parvalue per share(the“Common Stock”) in accordance withtheterms hereof) shall be made inlawfulmoneyoftheUnited States ofAmerica. All payments shall be made at such address as the Holdershallhereafter give totheBorrowerbywrittennoticemade in accordance with the provisions ofthis Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed theretointhat certain Securities Purchase Agreement dated the date hereof, pursuant towhich this Note was originally issued (the “Purchase Agreement”).
This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights orother similar rights ofshareholders ofthe Borrower and will notimpose personal liability upon the holder thereof.
The following terms shallapply tothis Note:
ARTICLE I.CONVERSION RIGHTS
Conversion Right. TheHoldershall have the right from time to time, andatany timeduring the period beginning onthe date which is onehundred eighty (180) days following thedate ofthis Note and ending onthe later of:(i) the Maturity Date and (ii) the date ofpayment oftheDefault Amount (as defined in Article III), each in respect ofthe remaining outstanding principal amount ofthis
Note toconvert all orany part ofthe outstanding and unpaid principal amount ofthis Note into fullypaidand non-assessable shares ofCommon Stock, as such Common Stock exists onthe Issue Date, oranyshares ofcapital stock orother securities ofthe Borrower into which such Common Stock shall hereafter be changed orreclassifiedatthe conversionprice(the “Conversion Price”) determined as providedherein (a“Conversion”);provided,however, that in no event shall the Holder be entitled to convertany portion ofthis Note in excess ofthatportion ofthisNoteupon conversionofwhichthe sum of(1) the number ofshares ofCommonStockbeneficially owned bytheHolder and its affiliates (other than shares ofCommon Stockwhich maybe deemed beneficially ownedthrough the ownership ofthe unconverted portion ofthe Notes orthe unexercised orunconverted portion ofany othersecurity ofthe Borrower subject to alimitation onconversion orexercise analogous to the limitations contained herein) and (2) the number of shares ofCommon Stockissuableupon the conversion ofthe portion ofthisNotewith respect to which the determination ofthis proviso is being made, would result in beneficial ownership by the Holderandits affiliates ofmore than 4.99% ofthe outstanding shares ofCommon Stock. For purposes ofthe proviso totheimmediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) ofthe Securities Exchange Act of1934,asamended (the “Exchange Act”),and Regulations 13D-G thereunder, except as otherwise provided in clause (1) ofsuch proviso,provided,further,however, thatthelimitations onconversion may be waived by the Holder upon,atthe election ofthe Holder, not less than 61 days’ prior notice tothe Borrower,andthe provisions ofthe conversion limitation shall continue to apply until such 61st day (or such laterdate,as determinedbytheHolder,as maybespecified in such notice of waiver). The number ofshares ofCommon Stock to be issued upon each conversion ofthis Note shallbedetermined by dividingtheConversion Amount(asdefined below)bythe applicable Conversion Price then in effect onthedate specified in the notice ofconversion, in the form attached hereto as Exhibit A(the “Notice ofConversion”), delivered to the Borrower bytheHolder in accordance with Section 1.4 below; provided that theNotice ofConversion is submitted by facsimile ore-mail (or by othermeans resulting in, or reasonably expected to result in, notice) totheBorrower before 6:00 p.m., New York, New York time onsuch conversion date (the “Conversion Date”); however, if the Notice of Conversionissent after 6:00pm,NewYork, New York time the Conversion Dateshallbe the next business day. The term “Conversion Amount” means, with respect toany conversion ofthis Note, thesum of(1) the principal amount ofthisNote to be converted in such conversionplus (2) attheHolder’s option, accrued and unpaid interest, if any, onsuch principal amount at the interest rates provided in this Note tothe Conversion Date,plus (3)at the Holder’s option, Default Interest, if any, onthe amounts referred toin the immediately preceding clauses (1)and/or (2)plus (4)at the Holder’s option, any amounts owed tothe Holder pursuant toSections 1.4 hereof.
Conversion Price. The conversionprice(the “Conversion Price”) shall equal the Variable Conversion Price(asdefined herein) (subject toequitable adjustmentsbythe Borrower relating tothe Borrower’s securities orthesecurities ofany subsidiary ofthe Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 61% multiplied by the Market Price (as defined herein) (representing adiscount rate of39%). “Market Price” means theaverage ofthe lowest three (3) Trading Prices (as defined below) forthe CommonStockduring the ten(10) Trading Day period ending onthe latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as ofany date, the closing bid price onthe OTCQB, OTCQX, Pink Sheets electronic quotationsystem orapplicable trading market (the “OTC”) as reported by areliable reporting service (“Reporting Service”) designatedby theHolder (i.e. Bloomberg) or,if the OTCis not theprincipaltrading market forsuch security, the closing bid price ofsuch security ontheprincipal securities exchange ortrading market where such security is listed ortraded or,if no closing bid price ofsuch securityisavailable inany oftheforegoing manners, the average ofthe closing bid prices ofanymarket makers forsuch security thatarelisted inthe“pink sheets”. If the Trading Price cannot be calculated for such security onsuch date in the manner provided above,the
Trading Price shall be thefairmarket value as mutually determinedbythe Borrower and the holders of amajority in interest ofthe Notesbeingconverted for which the calculation oftheTrading Price is required in order to determine the Conversion Price ofsuch Notes. “Trading Day” shall mean any day onwhich the Common Stock is tradable foranyperiod onthe OTC, or onthe principal securities exchange or othersecurities market onwhich the Common Stock is then being traded.
Authorized Shares. The Borrower covenantsthatduring the periodtheconversion right exists, the Borrower will reserve from its authorized and unissued Common Stock asufficient number ofshares, freefrompreemptive rights, toprovide for the issuance ofCommon Stock upon the full conversion ofthis Note issued pursuant tothe Purchase Agreement. The Borrowerisrequired at all times to have authorized andreservedthree times the number ofshares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to timeinitially234,000,000)(the “Reserved Amount”). The Reserved Amount shall be increased fromtime to time in accordance with the Borrower’s obligations hereunder. The Borrower represents thatuponissuance, such shares will bedulyandvalidlyissued, fully paid and non- assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then currentConversion Price, the Borrower shall at the same time make proper provision so that thereafter thereshall be asufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i)acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of thisNote,and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessarycertificates for shares of Common Stock in accordance with the terms and conditions of this Note.
If, atanytimetheBorrower doesnot maintain the Reserved Amount it will be considered an Event of Default under Section 3.2ofthe Note.
Method ofConversion.
(a) Mechanics ofConversion. As setforth in Section 1.1 hereof, from time totime, and at any time during the period beginning onthe date which is onehundredeighty (180) days following the date ofthis Note and ending onthe later of:(i) the Maturity Dateand(ii) the date ofpayment ofthe Default Amount, this Notemay be converted by the Holder in whole orinpart at any time from timeto time after the Issue Date, by (A) submittingtothe Borrower aNotice ofConversion (by facsimile, e-mail orother reasonable means ofcommunication dispatched onthe Conversion Date prior to6:00 p.m., New York, New York time) and(B)subject to Section 1.4(b), surrendering this Note at the principal office ofthe Borrower(uponpayment in full ofanyamounts owed hereunder).
(b) Surrender ofNote Upon Conversion. Notwithstanding anything tothecontrary set forth herein, upon conversion ofthis Note in accordance with the terms hereof, the Holder shall notbe required to physically surrender this Note totheBorrower unless the entire unpaid principal amount ofthis Note issoconverted. The Holderandthe Borrower shall maintain records showing the principal amount soconverted andthedates ofsuch conversions orshall use such other method, reasonably satisfactory to the Holder and the Borrower,so asnot to require physical surrender ofthis Noteupon each such conversion.
(c) Delivery ofCommon Stock Upon Conversion. Upon receiptbythe Borrowerfromthe Holder of afacsimile transmission ore-mail (or other reasonable means of
communication) of aNotice ofConversion meeting the requirements forconversion as provided in this Section 1.4, the Borrowershallissue and deliver orcause to be issued and delivered toorupon the order ofthe Holder certificates forthe Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case ofconversion oftheentire unpaid principal amount hereof, surrender ofthis Note) in accordance with the terms hereof and the PurchaseAgreement.Upon receiptbythe Borrower of aNotice ofConversion, the Holder shall be deemed tobethe holder ofrecord ofthe Common Stock issuable upon such conversion, the outstandingprincipalamount andtheamount ofaccrued andunpaidinterest onthis Note shall be reduced toreflect such conversion, and, unless the Borrower defaults onits obligationshereunder,all rights withrespect tothe portion ofthis Notebeingsoconvertedshallforthwith terminate except the right to receive the Common Stock orother securities, cash orother assets, as herein provided, on such conversion. If the Holder shall have given aNotice ofConversion as provided herein,theBorrower’s obligation to issue and deliver the certificatesforCommon Stock shall be absolute and unconditional, irrespective ofthe absence ofanyaction by the Holder to enforce the same, any waiver orconsent with respect toanyprovision thereof,therecoveryofany judgment againstanyperson orany action to enforce the same, any failure ordelayin the enforcement ofany other obligation ofthe Borrower totheholder of record, orany setoff, counterclaim, recoupment, limitation ortermination, oranybreach oralleged breach by theHolder ofanyobligation tothe Borrower, and irrespective ofanyother circumstance which might otherwise limit such obligation ofthe Borrower tothe Holder in connection with such conversion.
(d) Delivery ofCommon Stock by Electronic Transfer. In lieu ofdelivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request ofthe Holder and its compliance with the provisions setforth herein, the Borrower shall use its best efforts to cause its transfer agent toelectronically transmit the Common Stockissuable upon conversion to the Holderby crediting the account ofHolder’s Prime Broker with DTC through its Deposit Withdrawal AgentCommission (“DWAC”) system.
(e) Failure toDeliver Common StockPrior to Deadline. Without inanyway limiting the Holder’s right to pursue other remedies,includingactual damages and/or equitable relief, the parties agree that if delivery ofthe Common Stockissuableupon conversionofthis Noteisnot delivered by the Deadline due toaction and/or inaction oftheBorrower,theBorrower shallpay tothe Holder
$2,000per dayin cash, for eachdaybeyondtheDeadline thattheBorrower fails todeliver suchCommon Stock(the “Fail to Deliver Fee”); provided; however thattheFail toDeliver Fee shall not be due ifthefailure is aresult of athird party (i.e., transfer agent;and notthe result ofanyfailuretopaysuch transfer agent) despite the best efforts oftheBorrower toeffect delivery ofsuch Common Stock. Such cash amount shall be paid toHolder bythefifthday ofthe month following the month in which it has accrued or,at theoptionofthe Holder(by written notice totheBorrower by the first dayofthemonth following the month in whichithas accrued), shall be added tothe principal amount ofthis Note,in which event interest shall accrue thereon in accordance with the terms ofthisNoteand such additional principal amount shall be convertible into Common Stock in accordance withtheterms ofthis Note.The Borrower agrees that the right to convert is avaluable right to the Holder. The damages resulting from afailure, attempt to frustrate, interference with such conversion right are difficult ifnotimpossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1.4(e)arejustified.
Concerning the Shares. The shares ofCommon Stock issuable upon conversion ofthis Note may not be sold ortransferred unless: (i) such shares are sold pursuant toan effective registration statementunder the Act or(ii) the Borrower orits transferagent shallhave been furnished
with an opinionofcounsel (which opinion shall be in form, substance and scope customary for opinions ofcounsel in comparable transactions) to the effectthat theshares tobe sold ortransferred maybesold ortransferred pursuant toan exemption from such registration (such as Rule 144 or asuccessorrule)(“Rule 144”); or(iii) such shares are transferred toan “affiliate” (as defined inRule144) oftheBorrower who agrees tosell orotherwise transfertheshares only in accordance with this Section 1.5 andwhoisanAccredited Investor (as defined in the Purchase Agreement).
Any restrictive legend oncertificates representing shares ofCommonStockissuable upon conversion ofthis Note shall be removed and the Borrower shall issue to the Holder anewcertificate therefore free ofany transfer legend if the Borrower orits transferagentshall have received an opinion ofcounsel from Holder’s counsel, inform,substance and scope customary for opinions ofcounsel in comparable transactions, to the effect that (i) apublic sale ortransfer ofsuch Common Stock may be made without registration under the Act, which opinion shall be accepted by the Companyso thatthe sale ortransfer is effected; or(ii) in the case ofthe Common Stock issuable upon conversion ofthis Note, such securityisregistered for salebythe Holder under an effective registration statement filed under the Act; orotherwise maybe sold pursuant to an exemptionfromregistration. In the event thattheCompany does notreasonably accept the opinion ofcounsel provided by the Holder with respect tothe transfer ofSecurities pursuant to an exemption from registration (such as Rule 144), at the Deadline, it will be considered an Event ofDefault pursuant to Section 3.2 ofthe Note.
Effect ofCertain Events.
(a) Effect ofMerger, Consolidation, Etc.Attheoption ofthe Holder, thesale,conveyance or dispositionofall or substantially all ofthe assets ofthe Borrower, the effectuation bytheBorrower of atransaction orseries ofrelated transactions in which more than 50% ofthe voting power ofthe Borrower is disposed of, ortheconsolidation, merger orother business combination ofthe Borrower with orintoany otherPerson (as defined below) orPersons when the Borrower is not the survivor shallbedeemed tobe an Event ofDefault (as defined in Article III) pursuant towhich the Borrower shall be required topayto the Holder upon the consummation ofand as acondition to such transaction an amountequal tothe Default Amount (as defined in Article III). “Person” shall meanany individual, corporation, limited liability company, partnership, association, trust orother entity ororganization.
(b) Adjustment Due toMerger,Consolidation, Etc.If, atanytime when this Noteis issued and outstanding and prior toconversion ofall oftheNote, there shall be any merger, consolidation, exchange ofshares, recapitalization, reorganization, orother similar event, as aresult ofwhich shares ofCommonStock ofthe Borrower shall be changed into the same or adifferent number ofshares ofanother class orclasses ofstock orsecurities oftheBorrower oranother entity, orin case ofanysale orconveyance of all orsubstantially all ofthe assets ofthe Borrower otherthanin connection with aplanofcomplete liquidationofthe Borrower, thentheHolder ofthis Note shall thereafter have the right toreceive upon conversion ofthis Note, upon the basis and upon the termsandconditions specified herein and in lieu oftheshares ofCommon Stock immediately theretofore issuable upon conversion, such stock, securities orassets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior tosuch transaction (without regard toanylimitations onconversion set forthherein),and inanysuch case appropriate provisions shall be made with respect tothe rights and interests ofthe Holder of this Note to the end that the provisions hereof (including, without limitation, provisions foradjustment ofthe Conversion Price and ofthe number ofshares issuable upon conversion ofthe Note) shall thereafter be applicable, as nearly as maybe practicable in relation toany securities orassets thereafter deliverable upon the conversion hereof. The Borrower shall not affect
any transaction describedinthis Section 1.6(b) unless (a) it first gives, tothe extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) ofthe record date of the special meetingofshareholders toapprove, orif there isnosuch record date, the consummation of, such merger, consolidation, exchange ofshares, recapitalization, reorganization or othersimilar event orsale ofassets (during which timetheHolder shall be entitled to convert this Note) and (b) the resulting successor oracquiring entity (if notthe Borrower) assumes by written instrument the obligations ofthis Note.The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers orshare exchanges.
(c) Adjustment Due to Distribution. If the Borrower shall declare ormake any distribution ofits assets (or rights to acquire its assets) to holders ofCommon Stock as adividend, stock repurchase,byway ofreturn ofcapital orotherwise (including any dividend ordistribution totheBorrower’s shareholders in cash orshares (or rights to acquire shares) ofcapital stock of asubsidiary (i.e., aspin-off))(a“Distribution”), then the Holder ofthis Noteshallbeentitled, upon any conversion ofthis Noteafter the date ofrecord for determining shareholders entitled tosuch Distribution, to receivetheamount ofsuch assets which would have been payable to the Holder with respect to the shares ofCommonStockissuable upon such conversion had such Holder been the holder ofsuch shares ofCommon Stock onthe record date for the determinationofshareholders entitled to such Distribution.
Prepayment. Notwithstanding anything tothecontrary contained in this Note, at any time during the periods set forth onthetable immediately following this paragraph (the “Prepayment Periods”),theBorrower shall have the right, exercisable onnot more than three (3) Trading Days prior writtennotice tothe Holder ofthe Note to prepay the outstanding Note(principal andaccruedinterest), in full, in accordance with this Section 1.7.Any notice ofprepayment hereunder (an “Optional Prepayment Notice”) shall be delivered tothe Holder ofthe Note at its registered addresses and shall state: (1)that the Borrower is exercising its right to prepay the Note, and (2) the date ofprepayment which shall be not morethanthree (3) Trading Days from the date oftheOptional Prepayment Notice. Onthe date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment ofthe Optional Prepayment Amount (as defined below) to Holder, orupon the direction ofthe Holderasspecified bytheHolder in awriting tothe Borrower (which shall direction to be sent to Borrower by the Holderatleast one(1) business day prior tothe OptionalPrepayment Date). If the Borrower exercises its right toprepaytheNote, the Borrower shall make payment totheHolder ofan amount in cash equal tothe percentage (“Prepayment Percentage”) as set forth inthe table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal amount ofthis Noteplus (x) accrued and unpaid interest onthe unpaid principal amount ofthis Note tothe Optional Prepayment Dateplus (y)Default Interest, if any, ontheamounts referred to in clauses (w) and (x)plus (z) any amounts owed totheHolder pursuant toSection 1.4 hereof (the “Optional Prepayment Amount”). If the Borrower delivers an Optional PrepaymentNoticeandfails topay the Optional Prepayment Amount due to the Holder ofthe Note within two (2) business days followingtheOptional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.7.
| Prepayment Period | Prepayment Percentage |
| 1.The periodbeginning onthe Issue Date and ending onthe date which is thirty(30)days following the Issue Date. | 120% |
2. The period beginning onthe date which is thirty-one (31)days following the Issue Date and endingonthedatewhich is sixty (60) days followingtheIssue Date. | 125% |
3. The period beginning onthe date which is sixty-one (61)days following the Issue Date and endingonthedatewhich is ninety(90)days following the Issue Date. | 130% |
4. The periodbeginning onthedate that is ninety-one (91)day fromthe Issue Date and ending one hundred twenty (120) days following the Issue Date. | 135% |
| 5.Theperiod beginning on the date that is onehundredtwenty-one (121) day from the Issue Date and ending one hundred fifty (150) days followingtheIssue Date. | 140% |
| 6.Theperiod beginning on the date that is onehundredfifty-one (151) dayfromthe Issue Date and ending onehundred eighty (180) days following the Issue Date. | 150% |
After the expiration ofone hundred eighty (180) days followingtheIssue Date, the Borrower shall haveno right ofprepayment.
ARTICLE II. CERTAIN COVENANTS
2.1Sale ofAssets.Solongasthe Borrower shall have any obligation under this Note, the Borrower shall not,without the Holder’s written consent, sell, lease orotherwise dispose ofany significant portion ofits assets outside the ordinarycourseofbusiness. Any consent tothedisposition ofany assets may be conditionedon aspecified use ofthe proceeds ofdisposition.
ARTICLE III.EVENTS OF DEFAULT
If anyofthe following events ofdefault (each, an“Event ofDefault”) shall occur:
Failure toPayPrincipal and Interest. The Borrower fails topaytheprincipal hereof orinterest thereon when due onthis Note, whetheratmaturity orupon acceleration and such breach continues for aperiodoffive (5) days after written notice from theHolder.
Conversion and the Shares. The Borrower fails toissue shares ofCommonStock tothe Holder (orannounces orthreatens in writing that it will not honor its obligation todoso) upon exercise by the Holder ofthe conversion rights ofthe Holder in accordance with the terms ofthis Note, fails totransfer orcause its transfer agent to transfer (issue) (electronically orincertificated form) any certificate for shares ofCommon Stock issued totheHolder upon conversion of orotherwise pursuant tothis Note as and when required by this Note, the Borrower directs its transfer agent not totransfer ordelays, impairs, and/or hinders its transfer agent in transferring (orissuing) (electronically orincertificated form) any certificate forshares ofCommonStock tobe issued to the Holder upon conversion of orotherwise pursuant to this Note as and when required by this Note, orfails toremove (or directs its transfer agent not to remove orimpairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) onany certificate forany shares ofCommonStockissued tothe Holderuponconversionof orotherwise pursuant to thisNoteas and when required bythisNote (or makes any written announcement, statement orthreat that it does notintend tohonor the obligations described in this paragraph) and any such failure shallcontinueuncured (oranywritten announcement, statement orthreat not tohonor its obligations shall not be rescinded in writing) forthree (3) business days after the Holder shall have delivered aNotice ofConversion. It is an obligationofthe Borrower toremaincurrent in its obligations toits transfer agent.Itshall be an event ofdefault ofthis Note, if aconversion ofthis Note is delayed, hindered orfrustrateddue
to abalance owed by the Borrower toits transfer agent. If at the option of the Holder, the Holder advances any funds totheBorrower’stransferagentin order to process aconversion, such advanced funds shall be paid by the Borrower to the Holder within forty-eight (48)hours of ademandfrom theHolder.
Breach ofCovenants. The Borrower breaches any material covenant orother materialterm orcondition contained in this Note and any collateral documents including but notlimited tothePurchase Agreement and such breach continues for aperiod oftwenty (20) days after writtennoticethereof totheBorrower from the Holder.
Breach ofRepresentations and Warranties. Any representation orwarranty ofthe Borrower made herein orin any agreement, statement orcertificate given in writing pursuanthereto orin connection herewith (including, without limitation, the Purchase Agreement), shall befalseor misleading in any material respect when made andthebreach ofwhich has (orwith the passage oftimewill have) amaterial adverse effect onthe rights oftheHolder with respect tothisNote orthePurchase Agreement.
ReceiverorTrustee. The Borrower oranysubsidiary ofthe Borrower shall make an assignment forthebenefit ofcreditors, orapply for orconsent to the appointment of areceiver ortrustee for it or for asubstantial part ofits property orbusiness, orsuch areceiver ortrustee shall otherwisebeappointed.
Bankruptcy. Bankruptcy, insolvency, reorganization orliquidation proceedings or otherproceedings, voluntary orinvoluntary, for relief under any bankruptcylaw orany law for the relief ofdebtors shall be instituted byoragainst the Borrower oranysubsidiaryoftheBorrower.
DelistingofCommonStock.The Borrower shall fail tomaintain the listingofthe CommonStock onat least one ofthe OTC (which specifically includes the quotation platforms maintained by the OTCMarketsGroup) oran equivalent replacement exchange, theNasdaqNational Market, the Nasdaq SmallCap Market, the New York Stock Exchange, orthe American Stock Exchange.
Failure toComplywith the Exchange Act. The Borrower shall fail to comply with the reporting requirements oftheExchange Act; and/or the Borrower shallceaseto be subject to the reporting requirements ofthe Exchange Act.
Liquidation. Any dissolution, liquidation, orwinding up ofBorrower oranysubstantial portion ofitsbusiness.
Cessation ofOperations. Any cessation ofoperations by Borrower orBorrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure ofthe Borrower’s ability to continue as a“going concern” shall notbean admission that the Borrower cannot pay its debts as they become due.
Financial Statement Restatement. The restatement ofanyfinancial statements filedby theBorrower with the SEC at any time after 180 days aftertheIssuance Date foranydate orperiod until this Noteisnolonger outstanding, if the result ofsuch restatement would, by comparison totheun-restated financial statement, have constituted amaterial adverse effect onthe rights ofthe Holder with respect to this Note orthe Purchase Agreement.
Replacement ofTransfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date ofsuch replacement, afully executed Irrevocable Transfer Agent Instructions in aform as initially delivered pursuant tothe Purchase Agreement (including but notlimited to theprovision toirrevocably reserve shares of Common Stockin the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
Cross-Default. Notwithstanding anything tothe contrary contained in this Note orthe otherrelated or companion documents, abreach ordefaultby theBorrower ofany covenant or otherterm orcondition contained inany oftheOtherAgreements, after the passage ofall applicable notice and cure orgraceperiods, shall, at the option oftheHolder, be considered adefault under this Noteand the Other Agreements, in which eventtheHolder shall be entitled(butin no event required) to apply all rights and remedies ofthe Holder under the terms ofthis Note andtheOther Agreements by reason of adefault undersaidOther Agreement orhereunder. “Other Agreements” means, collectively, all agreements and instruments between, among orby:(1) the Borrower, and, orfor the benefit of, (2)theHolder and anyaffiliate ofthe Holder,including, withoutlimitation, promissory notes; provided, however, theterm“Other Agreements” shall not includetherelated orcompanion documents tothis Note. Each ofthe loan transactions will be cross-defaulted with each otherloan transactionandwith all otherexisting and future debt ofBorrower to the Holder.
Upon the occurrence and during the continuation ofany Event ofDefault specified in Section 3.1 (solely with respect tofailure topaythe principal hereof orinterestthereon when due at the Maturity Date), the Noteshall become immediately due and payable and the Borrower shallpaytotheHolder, in full satisfactionofits obligations hereunder, an amount equal tothe Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OFANY EVENT OFDEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUEANDPAYABLEANDTHE BORROWER SHALL PAY TOTHE HOLDER, IN FULL SATISFACTION OFITS OBLIGATIONS HEREUNDER, ANAMOUNTEQUAL TO: (Y)THE
DEFAULTSUM(AS DEFINED HEREIN); MULTIPLIEDBY(Z) TWO(2). Upon the occurrence and during the continuation ofany Event ofDefault specified in Sections 3.1 (solely with respect to failure topaythe principal hereof orinterest thereon when due onthis Note upon aTrading Market PrepaymentEventpursuant toSection 1.7 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or3.14exercisable throughthedelivery ofwritten notice totheBorrower by such Holders (the “Default Notice”), and upon the occurrence of an Event ofDefault specified the remaining sections ofArticles III (other than failure topaytheprincipal hereof orinterest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay totheHolder, in full satisfaction ofits obligations hereunder, an amount equal tothe greater of(i) 150%timesthesum of(w) the then outstandingprincipalamount ofthis Noteplus (x)accrued and unpaid interest ontheunpaid principal amount ofthis Note to the date ofpayment (the “Mandatory Prepayment Date”)plus (y)DefaultInterest, ifany, onthe amounts referred to in clauses (w)and/or (x)plus (z) any amounts owed tothe Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount ofthis Note to the date ofpaymentplus the amounts referredtoin clauses (x), (y)and (z) shall collectively be known as the “DefaultSum”) or(ii) the “parity value” oftheDefaultSum tobeprepaid, where parity value means
(a) the highest number ofshares ofCommonStockissuable upon conversion ofor otherwise pursuant tosuch DefaultSumin accordance with Article I, treating the Trading Day immediately precedingtheMandatory Prepayment Date as the “Conversion Date” for purposes ofdeterminingthe lowest applicable Conversion Price, unlesstheDefault Event arises as aresult of abreach in respect of aspecific Conversion Date in which case such Conversion Date shall betheConversion Date),multiplied by (b) the highest Closing Price forthe Common Stock duringtheperiod beginning onthe date offirstoccurrence ofthe Event ofDefault and ending oneday prior to the Mandatory Prepayment Date (the “Default Amount”) and all otheramounts payable hereunder shall immediatelybecomedueandpayable, all without
demand, presentment ornotice, all ofwhich hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, ofcollection, and the Holder shall be entitled to exercise all other rightsandremedies available atlaworin equity.
If the Borrowerfailsto pay the Default Amount within five (5) business days ofwritten notice that such amount is due and payable, then the Holder shall havetheright at any time, solong as the Borrower remains in default (andsolong and to the extent that there are sufficient authorized shares), torequirethe Borrower, upon written notice, toimmediately issue, in lieu ofthe Default Amount,thenumber of shares ofCommon Stock of the Borrower equal totheDefault Amount divided by the Conversion Price then in effect.
ARTICLE IV.MISCELLANEOUS
Failure orIndulgence Not Waiver. No failure ordelay onthe part oftheHolderinthe exercise ofany power, right orprivilege hereunder shall operate as awaiver thereof, norshall any single orpartial exercise ofany such power, right orprivilege preclude other orfurther exercise thereof or ofany otherright, power orprivileges. All rightsandremedies existinghereunderare cumulative to, andnotexclusive of,anyrights orremedies otherwise available.
Notices. All notices, demands, requests, consents, approvals, and othercommunications required orpermitted hereundershallbe in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) depositedinthe mail, registered orcertified, return receipt requested, postage prepaid, (iii) delivered byreputableair courier service with charges prepaid, or(iv) transmitted by hand delivery, telegram, orfacsimile, addressed as set forth below orto such other address as such party shall have specified most recently by written notice. Any notice or othercommunication required orpermitted tobegiven hereunder shall be deemed effective (a) upon hand delivery ordelivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, attheaddress ornumber designated below (if delivered on abusiness day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered otherthan on abusiness day during normal business hours where such notice is to bereceived) or(b) onthe second business day following the date ofmailing by express courier service, fully prepaid, addressed tosuch address, orupon actual receipt ofsuch mailing, whichever shall first occur. The addresses for such communications shall be:
If tothe Borrower, to:
MAXSOUND CORPORATION
8837 Villa LaJolla Drive,Unit12109 LaJolla, California 92039
Attn: Greg Halpern, Chief Financial Officer andChairmanFax:
Email: greg@maxsound.com If totheHolder:
POWERUPLENDING GROUP LTD.
111 Great Neck Road, Suite 214 Great Neck,NY 11021
Attn: Curt Kramer, Chief Executive Officer
e-mail: info@poweruplending.com
Withacopy byfaxonlyto(which copy shall not constitute notice): Naidich WurmanLLP
111 Great Neck Road, Suite 216 Great Neck,NY11021
Attn: Allison Naidich facsimile:516-466-3555
e-mail: allison@nwlaw.com
Amendments. This Noteandany provision hereof may only be amendedbyan instrument in writing signed by the Borrower and the Holder. The term “Note”andall reference thereto, as used throughout this instrument, shall meanthis instrument (andtheother Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended orsupplemented, thenas soamended orsupplemented.
Assignability. This Noteshallbe binding upon the Borrower and its successors and assigns, and shall inure tobe the benefit oftheHolderand its successors and assigns. Each transferee ofthis Note must be an “accredited investor” (as defined in Rule 501(a) ofthe Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note maybepledged as collateral in connection with abona fide margin account or otherlending arrangement; and may be assigned bytheHolder without the consent ofthe Borrower.
Cost ofCollection. Ifdefaultis made in the payment ofthis Note, the Borrower shall pay the Holder hereof costs ofcollection, including reasonable attorneys’ fees.
Governing Law. This Noteshallbe governedbyand construed in accordance with the laws ofthe State ofVirginiawithout regard to principles of conflicts oflaws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts ofNew York orinthefederal courts located in the state and county ofNassau. The parties to this Note hereby irrevocably waive any objection to jurisdictionandvenue ofany action instituted hereunder andshall notassert any defense based onlack ofjurisdiction orvenue orbased uponforum non conveniens.TheBorrower and Holder waive trialbyjury.The prevailingparty shall be entitled torecoverfromthe otherparty its reasonable attorney's fees and costs. In the eventthat any provision ofthis Note oranyother agreement delivered in connection herewith is invalid orunenforceable under any applicable statute orrule oflaw, then such provision shall be deemedinoperative tothe extent that it mayconflict therewithandshall be deemed modified to conform with such statute orrule oflaw. Any such provision which may prove invalid orunenforceable under any law shall notaffect the validity orenforceability ofanyother provision ofany agreement. Each party hereby irrevocably waives personal service ofprocess and consents to process being served inanysuit, action orproceeding in connection with this Note, any agreement orany otherdocument delivered in connection with this Noteby mailing a copythereof viaregistered orcertified mail orovernight delivery (with evidence ofdelivery) tosuch party attheaddress in effect fornotices to it under this Noteand agrees that such service shall constitute goodand sufficient service ofprocess and notice thereof. Nothing contained herein shall be deemed to limit inanywayanyright to serve process in any other manner permitted bylaw.
Purchase Agreement. By its acceptance ofthis Note, each party agrees to be bound by the applicable terms ofthePurchase Agreement.
Remedies.TheBorrower acknowledges that abreachby it ofits obligations hereunder will causeirreparableharm tothe Holder, by vitiating the intent and purpose ofthe transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedyat law for abreach ofits obligations under this Notewill be inadequateandagrees, in the event of abreach or threatened breach bytheBorrower ofthe provisions ofthis Note, that the Holder shall be entitled, in addition to all otheravailableremediesatlaw orin equity, and in addition to the penalties assessable herein, to an injunction orinjunctions restraining, preventing orcuring any breach ofthis Noteand to enforce specifically the terms and provisions thereof, without the necessity ofshowing economic loss and without any bond or othersecurity being required.
IN WITNESS WHEREOF, Borrower has caused this Noteto be signed in its name by its duly authorized officer this onFebruary 6,2018
MAXSOUNDCORPORATION
Chief Financial Officer and Chairman
EXHIBITA-- NOTICE OFCONVERSION
The undersigned hereby elects to convert $principalamount oftheNote(defined below) into that number ofshares ofCommonStock to be issued pursuant tothe conversion of the Note (“Common Stock”) as set forth below, ofMAX SOUND CORPORATION, aDelaware corporation (the “Borrower”) according tothe conditions ofthe convertible note ofthe Borrower dated as ofFebruary 6,2018 (the “Note”), as ofthe date written below. No fee will be charged totheHolder foranyconversion,except fortransfer taxes, if any.
BoxChecked as toapplicable instructions:
[ ]The Borrower shall electronically transmit the Common Stock issuable pursuant tothis Notice ofConversion to the account ofthe undersignedorits nominee with DTC through its Deposit Withdrawal Agent Commission system(“DWACTransfer”).
Name of DTCPrime Broker: Account Number:
[ ]The undersigned hereby requests thattheBorrower issue acertificate orcertificates for the number ofshares ofCommon Stock set forth below (which numbers are based ontheHolder’s calculation attached hereto) inthename(s) specified immediately below or,ifadditional space is necessary, onan attachment hereto:
POWERUPLENDING GROUP LTD.
111 Great Neck Road, Suite 214 Great Neck,NY11021 Attention: Certificate Delivery
e-mail: info@poweruplendinggroup.com
Date ofconversion:
Applicable ConversionPrice:$Number ofshares of common stock to be issued
pursuant to conversion ofthe Notes: Amount ofPrincipalBalancedue remaining under the Note after this conversion:
POWERUPLENDING GROUP LTD.
By:Name: Curt Kramer
Title: Chief Executive Officer
Date:
