THIS NOTEAND THECOMMON STOCKISSUABLE UPON CONVERSION OFTHIS NOTE HAVE NOTBEEN AND WILL NOTBE REGISTERED WITH THEUNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THESECURITIES COMMISSION OF ANY STATEPURSUANT TO ANEXEMPTION FROM REGISTRATION PROVIDED UNDER THESECURITIES ACT OF 1933, ASAMENDED, AND THERULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933ACT”)
US $105,000.00
MAXSOUND CORPORATION.
8%CONVERTIBLE REDEEMABLE NOTE DUE AUGUST 3, 2018
BACK END
FOR VALUE RECEIVED, Max SoundCorporation. (the“Company”) promises to pay to theorderof GS CapitalPartners, LLC and itsauthorized successors and permitted assigns ("Holder"), theaggregate principal face amount of OneHundred Five ThousandDollars exactly(U.S. $105,000.00) onAugust 3, 2018 ("Maturity Date")and topayinterest on the principalamount outstanding hereunderat therate of 8% perannum commencingonAugust 3, 2017. Theinterest will bepaid to theHolder in whose name this Note isregistered on therecordsof the Company regardingregistration and transfers of thisNote. Theprincipalof,and interest on, this Note arepayable at 110 WallStreet, Suite 5-070New York, NY 10005,initially, and ifchanged, lastappearing on the records of the Companyas designated inwriting by theHolder hereof from time to time. The Company willpayeach interestpayment and the outstanding principal due upon this Notebeforeor on the Maturity Date, less anyamounts requiredby law tobededucted or withheld, to theHolder of this Notebycheck or wiretransfer addressed to suchHolder at the lastaddress appearingon therecords of theCompany. Theforwarding of suchcheck or wiretransfer shall constitute apayment of outstanding principal hereunder and shall satisfyand dis-charge the liability for principal on this Note to the extent of the sumrepresented by suchcheck or wiretransfer. Interest shall bepayable in Common Stock(as defined below) pursuant to par-agraph 4(b)herein.
This Note issubject to thefollowing additional provisions:
GH
Initials
1. This Note is exchangeable foran equalaggregate principal amount of
Notes ofdifferent authorizeddenominations, as requestedby the Holdersurrendering thesame. Noservice charge will be made for such registration ortransfer orexchange, except thatHolder shall payany tax orother governmental charges payable inconnection therewith.
2. The Company shallbe entitled to withholdfrom allpaymentsanyamounts required to be withheldunder applicable laws.
3. This Notemay betransferred orexchanged only incompliance with theSecurities Act of 1933, asamended ("Act")and applicable state securitieslaws.Anyattempted transfer to anon-qualifying party shall betreatedby the Companyas void. Prior to duepresent- ment for transfer of thisNote, the Companyand any agent of the Companymaytreat the person in whose name this Note is dulyregistered on theCompany's records as the owner hereof forall other purposes, whether or not this Notebeoverdue,and neither the Company norany suchagent shall beaffectedor boundby notice to thecontrary.AnyHolder of this Noteelecting toexercise theright of conversionset forth in Section4(a) hereof, inaddition to therequirements set forth inSection 4(a), andanyprospective transferee of thisNote, also isrequired togive the Company written confirmation that this Note isbeing converted ("Notice of Conversion") in theform annexed hereto asExhibit A. Thedate ofreceipt (including receiptby telecopy) of such Notice ofConversion shall be theConversion Date.
4. (a) TheHolder of this Note isentitled, at its option, toconvert all or anyamount of the principalface amount of this Note then outstanding intosharesof theCompa-ny's common stock (the"Common Stock") at aprice ("Conversion Price") foreach share of Common Stockequal to65% of thelowestclosing price of the Common Stockas reported on theNational Quotations Bureau OTCQBexchange which the Company’sshares aretraded or anyexchange upon which the Common Stockmay betraded in thefuture ("Exchange"), for theten prior tradingdays including theday upon which a Noticeof Conversion isreceivedby the Companyor itstransfer agent (provided such Notice ofConversion isdeliveredby fax or otherelectronic method ofcommunication to theCompany or itstransfer agentafter 4 P.M.Eastern Standard orDaylight Savings Time if theHolder wishes to include thesame day closingprice). If theshares have not beendelivered within 3 businessdays, the NoticeofConversionmay berescinded. Such conversion shall beeffectuatedby the Company delivering theshares ofCom- mon Stock to theHolder within 3business days ofreceiptby the Company of the Notice ofCon-version. Accrued but unpaidinterest shall be subject toconversion. Nofractional sharesorscrip representing fractions ofshares will beissued onconversion, but the number ofshares issuable shall berounded to thenearest whole share. To the extent the ConversionPrice of the Compa-ny’s Common Stockcloses below thepar value pershare, the Company will takeall stepsneces- sary tosolicit the consent of thestockholders toreduce the parvalue to thelowest value possibleunder law. The Company agrees to honorall conversions submitted pending thisincrease.In theevent the Companyexperiences a DTC“Chill” on its shares, theconversion price shall bede-creased to 55%insteadof 65% while that “Chill” is ineffect. In noevent shall the Holder be al-lowed toeffect a conversion if suchconversion, along withall othershares of CompanyCom- mon Stockbeneficially ownedby the Holder and itsaffiliates would exceed 9.9% of theout- standingshares of the Common Stock of theCompany.
(b) Interest onany unpaidprincipal balance of this Note shall bepaid at therate of 8% per annum.Interest shall bepaidby the Company in Common Stock("Interest Shares"). TheHolder may, atany time,send in a Notice of Conversionto the Company for In-terest Shares based on theformula provided in Section4(a) above. The dollaramount converted intoInterest Shares shall beall or a portion of theaccrued interest calculated on theunpaidprin-cipal balanceof this Note to thedate of such notice.
(c) This Note may not beprepaid, except that if the $105,000 Rule 144 con-vertible redeemable noteissuedby the Companyofeven dateherewith is redeemedby theCom- pany within 6 months of theissuance date of suchNote, all obligations of the Company under this Noteand all obligations of the Holderunder theHolder issued Back End Note will be auto- matically be deemed satisfiedand this Noteand theHolder issued Back End Note will beauto- matically be deemedcancelled and of nofurther forceoreffect.
(d) Upon (i) atransfer ofall or substantiallyall of theassets of the Company to anyperson in asingle transaction orseries ofrelated transactions, (ii) areclassification, capital reorganization or other change or exchange of outstandingshares of the CommonStock, other than aforward orreverse stock split or stockdividend, or (iii) any consolidation ormerger of the Company with or intoanother person or entity inwhich the Company is not the surviving entity(other than amerger which iseffected solely tochange thejurisdictionof incorporation of the Companyand results in areclassification, conversion orexchange ofoutstanding shares of CommonStock solely intoshares of CommonStock) (each ofitems (i), (ii)and (iii)beingre-ferred toas a"Sale Event"), then, ineach case, the Company shall, uponrequest of the Holder,redeem this Note in cash for 150% of the principalamount, plusaccrued butunpaid interest through thedate of redemption, orat theelection of the Holder, such Holdermayconvert theun-paid principal amount of this Note(together with theamountofaccrued butunpaid interest) intoshares of Common Stock immediately prior to suchSale Event at the Conversion Price.
(e) In caseof anySale Event (not to include asale ofall or substantiallyall of theCompany’s assets)inconnection with which this Note is not redeemed orconverted, the Company shall causeeffective provision to be made so that the Holderof this Note shallhave theright thereafter,by converting thisNote, topurchase or convert this Note into the kindand number ofshares of stock or othersecurities or property (including cash)receivable upon suchreclassification, capital reorganization or otherchange, consolidation ormergerby a holder of the number ofshares of CommonStock that couldhave been purchased uponexercise of the Noteand at thesame ConversionPrice, as defined in thisNote, immediatelyprior to suchSale Event. The foregoing provisions shall similarly apply tosuccessive Sale Events.If the considera- tionreceivedby theholders of Common Stock is other than cash, the value shallbeas deter-minedby theBoardofDirectors of the Companyorsuccessor person or entity acting ingood faith.
5. Noprovision of this Note shallalter orimpair theobligation of theCom-pany, which isabsolute and unconditional, topay the principalof, and interest on, this Noteat thetime, place, and rate, and in theform, herein prescribed.
6. The Company hereby expressly waivesdemand andpresentment forpay- ment,notice ofnon-payment, protest, notice ofprotest, notice of dishonor,notice ofacceleration orintent toaccelerate, anddiligence in takinganyaction tocollect amountscalled for hereunderand shall be directly and primarily liable for thepayment ofall sumsowing and to be owinghereto.
7. The Companyagrees to payall costs and expenses, includingreasonable attorneys' fees and expenses,whichmay be incurredby theHolder incollectinganyamount dueunder this Note.
| 8. | If one or more of the followingdescribed "Events ofDefault" shalloccur: |
(a) The Company shalldefault in thepayment of principal orinterest on this Note or any other noteissued to theHolderby theCompany; or
(b) Any of therepresentations orwarranties madeby the Companyhereinor inanycertificateor financial or otherwritten statementsheretofore orhereafter furnishedby or onbehalf of the Company inconnection with theexecution and deliveryof thisNote, or theSe- curities Purchase Agreement under which this notewas issued shall be false ormisleading inanyrespect; or
(c) The Company shallfail toperform orobserve, in anyrespect,any cove-nant, term, provision, condition,agreementorobligation of the Companyunder this Noteor any other note issued to theHolder; or
(d) The Company shall (1) becomeinsolvent; (2) admit inwriting itsinability to pay itsdebts generally asthey mature; (3) makean assignment for thebenefit ofcreditorsorcommence proceedings for its dissolution; (4) apply for or consent to theappointment of atrus-tee, liquidator orreceiver forits orfor a substantialpart of its property or business;(5) file apeti- tion for bankruptcyrelief, consent to the filing of such petition orhave filedagainst itan invol- untary petitionfor bankruptcyrelief, all under federal or state lawsas applicable; or
(e) Atrustee, liquidator orreceiver shall be appointed for the Company or for asubstantial part of itspropertyor business without itsconsent and shallnot bedischarged with- in sixty(60) days after suchappointment; or
(f) Anygovernmental agencyor anycourt of competentjurisdiction at thein-stance ofanygovernmental agency shallassume custody orcontrol of thewhole orany substan-tial portion of theproperties orassets of theCompany; or
(g) One or more money judgments,writs orwarrants ofattachment, orsimilar process, inexcess of fiftythousand dollars ($50,000) in theaggregate, shall beenteredor filedagainst the Companyor any of its propertiesor otherassets and shallremain unpaid, unvacated, unbonded orunstayed for aperiod offifteen (15)daysor inanyevent later than five (5)days prior to thedate ofany proposed salethereunder; or
(h) The Company shallhave defaulted onor breachedany term ofany other note ofsimilar debt instrument intowhich the Company hasentered and failed tocure suchde-fault within theappropriate graceperiod; or
(i) The Company shall have its Common Stock delistedfrom a trading mar-ket (including the OTCmarkets) or,if the Common Stocktrades onan exchange, then trading in the Common Stock shall besuspended for more than 10consecutive days orceases to fileits 1934act reports with the SEC;
(j) If a majority of the members of theBoard of Directors of the Company on thedate hereof are no longerserving as membersof theBoard;
(k) The Company shall notdeliver to theHolder the Common Stockpursuant toparagraph 4herein withoutrestrictive legend within 3business daysof itsreceipt of a Notice ofConversion; or
(l) The Company shall notreplenish thereserve set forth inSection 12,with- in 3 businessdays of therequest of the Holder.
| (m) | TheCompany’s Common Stockhas aclosing bidprice of less than |
$0.008per share for at least 5consecutivetradingdays; or
(n) Theaggregate dollar trading volume of theCompany’s Common Stockis less than thirtyfive thousanddollars ($35,000.00) in any 5consecutivetradingdays; or
(o) The Company shallcease to be“current” in itsfilings with theSecurities and Exchange Commission.
(p) The Company shall lose the“bid” price for its stockand amarket (including the OTCmarketplaceor otherexchange)
Then, oratany timethereafter, unlesscured (except for 8(m)and 8(n) whichare incurablede-faults, thesoleremedyofwhich is toallow theHolder tocancel both this Noteand theHolder Issued Note, and in eachand every suchcase, unless suchEvent ofDefault shallhave beenwaived inwritingbytheHolder (which waiver shall not bedeemed to be awaiver ofany subse-quent default) at the option of theHolder and in theHolder's sole discretion, theHolder mayconsider this Note immediately dueand payable, withoutpresentment, demand,protest or (fur-ther) notice ofany kind(other thannotice of acceleration),all ofwhich are hereby expresslywaived, anythingherein or inany noteor otherinstruments contained to the contrarynotwith-standing, and theHolder mayimmediately, and withoutexpiration ofany period ofgrace,en-forceanyand all of theHolder's rights and remedies provided herein orany otherrights orreme- diesaffordedbylaw. Uponan EventofDefault, interest shallaccrueat adefault interest rate of 24%per annum or, if suchrate is usurious or notpermittedbycurrent law, thenat thehighest rateofinterest permittedbylaw. In theeventof a breach ofSection 8(k) the penalty shallbe
$250perday theshares are notissued beginning on the 4th dayafter theconversion notice wasdelivered to theCompany. This penalty shall increase to $500 perday beginning on the10thday.
The penalty for a breach ofSection 8(p)shallbe anincreaseof the outstanding principal amountsby 20%.In caseof abreachofSection 8(i), theoutstanding principal dueunder this Note shallincreaseby 50%.Further, if abreach of Section 8(o)occurs or is continuingafter the 6 monthanniversary of theNote, then theHolder shall be entitled to use thelowest closing bid price dur- ing the delinquency periodas abase price for theconversion. Forexample, if thelowest closing bidprice during the delinquency period is $0.01per share and the conversion discount is50% theHoldermay elect to convert future conversionsat $0.005per share.If this Note is notpaid at maturity, the outstandingprincipal due under this Noteshall increaseby 10%.
If the Holder shallcommence an action or proceeding toenforceany provisions of thisNote,in-cluding, withoutlimitation, engaging an attorney, then if the Holder prevails in suchaction, theHolder shall bereimbursedby the Company for itsattorneys’ fees and othercosts and expensesincurred in the investigation,preparation and prosecution of such action orproceeding.
Make-Whole forFailure toDeliver Loss. At theHolder’s election, if the Companyfails foranyreason to deliver to theHolder the conversionsharesby theby the3rd business day following the deliveryof a Notice of Conversion to theCompany and if the Holderincurs aFailure to De-liver Loss, thenatany time theHoldermay provide the Companywritten notice indicating theamounts payable to theHolder inrespect of theFailure toDeliver Loss and the Company must make theHolder whole as follows:
Failure toDeliver Loss = [(Highest VWAP for the 30days on orafter theday ofexercise) x(Number ofconversion shares)]
The Company mustpay theFailureto DeliverLossbycash payment,andany such cashpayment must be madeby the thirdbusiness day from thetime of theHolder’s written notice to theCom-pany.
9. Incaseanyprovision of this Note isheldby a court ofcompetentjurisdic- tion to beexcessive in scopeorotherwise invalid orunenforceable, suchprovision shallbe ad-justed rather than voided, if possible, so that it isenforceable to the maximum extent possible,and the validityand enforceabilityof the remainingprovisions of thisNote will not in anyway beaffected orimpaired thereby.
10. Neither this Note norany termhereofmay beamended, waived,dis-chargedorterminated otherthanby awritten instrument signedby the Companyand theHolder.
11. The Companyrepresents that it isnot a“shell” issuer and has never been a“shell” issuer or that if it previously hasbeen a “shell”issuer thatat least12 monthshave passed since the Companyhas reported form 10type informationindicating it is nolonger a“shellissu-er. Further. The Company willinstruct itscounsel toeither (i)write a 144 opinion toallow for salability of the conversionshares or (ii)accept such opinionfrom Holder’s counsel.
12. Prior tocash funding of thisNote, TheCompany will issueirrevocable transfer agent instructionsreserving 3x the number ofshares of Common Stock necessary to al- low the holder toconvert this notebased on thediscounted conversion price set forth inSection
4(a) herewith. The reserve shall bereplenished asneeded toallow for conversions of thisNote. Upon fullconversion of thisNote, thereserve representing this Note shall becancelled. The Company will payall transfer agent costs associated with issuingand delivering theshares. If suchamounts are to bepaid by theHolder, it may deduct suchamounts from the ConversionPrice. Conversion Notices may besent to the Company or itstransfer agent viaelectric mail. The Company willinstruct itstransfer agent to provide theoutstanding share information to theHolder inconnection with itsconversions.
13. The Company willgive theHolder direct notice ofany corporate actions, including but not limited toname changes, stock splits,recapitalizations etc. Thisnotice shallbegiven to the Holderas soonas possibleunder law.
14. If it shallbe found that anyinterest or otheramount deemed interest duehereunder violates theapplicable lawgoverning usury, theapplicable provision shall automati- cally berevised to equal the maximumrate ofinterest or otheramount deemedinterest permittedunder applicable law. The Companycovenants (to the extent that it may lawfully do so) that it will notseek toclaim or takeadvantageof any law that wouldprohibit orforgive the Companyfrom payingall or a portion of theprincipal orinterest on this Note.
15. This Note shallbegovernedbyand construed inaccordance with thelaws ofNew Yorkapplicable tocontracts madeand wholly to beperformed within the State ofNew York and shall be binding upon the successors andassigns ofeach partyhereto. TheHolder and the Company hereby mutuallywaive trialbyjuryand consent to exclusivejurisdiction and venue in thecourtsof the State ofNew Yorkor in theFederal courts sitting in the countyor city ofNew York. ThisAgreement may beexecuted incounterparts, andthefacsimile transmission ofan executed counterpartto thisAgreement shall beeffective as an original.
INWITNESS WHEREOF, the Company has caused this Note to be dulyexecut-edbyan officer thereunto dulyauthorized.
Dated:8/3/2017
MAXSOUND CORPORATION
By:_Title:Chairman and CFO
EXHIBIT A
NOTICE OFCONVERSION
(To beExecutedby theRegistered Holder in order toConvert the Note)
Theundersigned hereby irrevocablyelects to convert $of theabove Note intoShares of Common Stockof Max SoundCorporation. (“Shares”) accord- ing to theconditions set forth insuch Note, as of thedate written below.
IfShares are to beissued in thename of aperson other than theundersigned, theundersigned willpayall transferand other taxes andcharges payable withrespect thereto.
Date of Conversion:Applicable Conversion Price:Signature:
[PrintName ofHolder and Title ofSigner]
Address:
SSN orEIN:
Shares are to beregistered in thefollowing name:
Name:Address:Tel:Fax:SSN orEIN:
Shares are to besent ordelivered to the followingaccount:
Account Name:Address: