THISNOTEANDTHECOMMONSTOCKISSUABLEUPONCONVERSIONOFTHISNOTEHAVENOTBEENANDWILLNOTBEREGISTEREDWITHTHEUNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONORTHESECURITIESCOMMISSIONOFANYSTATEPURSUANTTOANEXEMPTIONFROMREGISTRATIONPROVIDEDUNDERTHESECURITIESACTOF1933,ASAMENDED,ANDTHERULES ANDREGULATIONSPROMULGATEDTHEREUNDER(THE"1933ACT”)
US $250,000.00
MAXSOUND CORPORATION
8%CONVERTIBLEREDEEMABLENOTEMay 22, 2018
FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofTheVecheryFamilyTrustanditsauthorizedsuccessorsandpermittedassigns("Holder"), the aggregate principal face amount oftwo hundred and fifty thousand dollarsexactly (U.S. $250,000.00) onMay 22,2019("MaturityDate")andtopayinterestontheprincipalamountoutstandinghereunderattherateof8% perannumcommencingonMay 22, 2018. TheinterestwillbepaidtotheHolderinwhosenamethisNoteisregisteredontherecordsoftheCompanyregardingregistrationandtransfersofthisNote.Theprincipalof,andintereston,thisNotearepayabletotheHolder,initially,andifchanged,lastappearingontherecordsoftheCompanyasdesignatedinwriting bytheHolder hereoffromtimetotime.TheCompanywillpay eachinterestpaymentandtheoutstandingprincipaldueuponthisNotebeforeorontheMaturityDate,lessanyamountsrequiredbylawtobedeductedorwithheld,totheHolderofthisNotebycheckorwiretransferaddressedtosuchHolderatthelastaddressappearingontherecordsoftheCompany.Theforwardingofsuch checkorwiretransfershallconstituteapaymentofoutstandingprincipalhereunderandshallsatisfyanddischargetheliabilityforprincipalonthisNotetotheextentofthesumrepresentedbysuchcheckorwiretransfer.InterestshallbepayableinCommonStock(asdefinedbelow)pursuanttoparagraph4(b)herein.
ThisNoteissubjecttothefollowingadditionalprovisions:
1. ThisNoteisexchangeableforanequalaggregateprincipalamountofNotesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame.Noservicechargewillbemadeforsuchregistrationortransferorexchange,exceptthatHoldershallpayanytaxorothergovernmentalchargespayableinconnectiontherewith.
2. TheCompanyshallbeentitledtowithholdfromallpaymentsanyamountsrequiredtobewithheldunderapplicablelaws.
3. ThisNotemaybetransferredorexchangedonlyincompliancewiththeSecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattemptedtransfertoanon-qualifyingpartyshallbetreatedbytheCompanyasvoid.PriortoduepresentmentfortransferofthisNote,theCompanyandanyagentoftheCompanymaytreatthepersoninwhosenamethisNoteisdulyregisteredontheCompany'srecordsastheownerhereofforallotherpurposes,whetherornotthisNotebeoverdue,andneithertheCompanynoranysuchagentshallbeaffectedorboundbynoticetothecontrary.AnyHolderofthisNoteelectingtoexercisetherightofconversionsetforthinSection4(a)hereof,inadditiontotherequirementssetforthinSection4(a),andanyprospectivetransfereeofthisNote,alsoisrequiredtogivetheCompanywrittenconfirmationthatthisNoteisbeingconverted("NoticeofConversion")intheformannexedheretoasExhibitA.Thedateofreceipt(includingreceiptbytelecopy)ofsuchNoticeofConversionshallbetheConversionDate.
4. (a)TheHolderofthisNoteisentitled,atitsoption,toconvertallorany amount oftheprincipalfaceamount ofthisNotethen outstandingintosharesof theCompany'scommonstock(the"CommonStock")withoutrestrictivelegendofanynature,ataprice("ConversionPrice")foreachshareofCommonStockequalto65%oftheaverageofthethreelowestdailyVWAP'switha10daylookbackoftheCommonStockasreportedontheNationalQuotationsBureauOTCQBexchangewhichtheCompany’ssharesaretradedoranyexchangeuponwhichtheCommonStockmaybetradedinthefuture("Exchange"),includingthedayuponwhichaNoticeofConversionisreceivedbytheCompany(providedsuchNoticeofConversionisdeliveredbyfax,emailorotherelectronicmethodofcommunicationtotheCompanyafter 4P.M.EasternStandardorDaylightSavingsTimeiftheHolderwishestoincludethesamedayclosingprice).Iftheshareshavenotbeendeliveredwithin3businessdays,theNoticeofConversionmayberescinded.SuchconversionshallbeeffectuatedbytheCompanydeliveringtheshares ofCommonStock totheHolderwithin 3businessdaysofreceipt bytheCompanyoftheNoticeofConversion.OncetheHolderhasreceivedsuchsharesofCommonStock,theHoldershallsurrenderthisNotetotheCompany,executedbytheHolderevidencingsuchHolder'sintentiontoconvertthisNoteoraspecifiedportionhereof,andaccompaniedbyproperassignment hereof in blank.Accrued,but unpaidinterestshall besubjectto conversion.No fractionalsharesorscriprepresentingfractionsofshareswillbeissuedonconversion,butthenumberofsharesissuableshallberoundedtothenearestwholeshare.
(b) InterestonanyunpaidprincipalbalanceofthisNoteshallbepaidattherateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("InterestShares").Holdermay,atanytime,sendinaNoticeofConversiontotheCompanyforInterestSharesbasedontheformulaprovidedinSection4(a)above. Thedollaramountconvertedinto
InterestSharesshallbealloraportionoftheaccruedinterestcalculatedontheunpaidprincipalbalanceofthisNotetothedateofsuchnotice.
(c) DuringthefirstsixmonthsthisNoteisineffect,theCompanyatitsoptionmayredeemthisNotebypayingtotheHolderanamountasfollows:(i)iftheredemptioniswithinthefirst90daysthisNoteisineffect,thenforanamountequalto130%oftheunpaid
principalamountofthisNotealongwithanyinterestthathasaccruedduringthatperiod,(ii)iftheredemptionisafterthe90thdaythisNoteisineffect,butlessthanthe181stdaythisNoteisineffect,thenforanamountequalto2,0%oftheunpaidprincipalamountofthisNotealongwithanyaccruedinterest. ThisNotemaynotberedeemedbytheCompanyafter180days.The
redemptionmustbeclosedandpaidforwithin3businessdaysoftheCompanysendingtheredemptiondemandortheredemptionwillbeinvalidandtheCompanymaynotredeemthisNote.
(d) Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompanytoanypersoninasingletransactionorseriesofrelatedtransactions,(ii)areclassification,capitalreorganizationorotherchangeorexchangeofoutstandingsharesoftheCommonStock,otherthanaforward orreversestocksplit orstockdividend,or (iii)anyconsolidation or merger of theCompanywithorintoanotherpersonorentityinwhichtheCompanyisnotthesurvivingentity(otherthanamergerwhichiseffectedsolelytochangethejurisdictionofincorporationoftheCompanyandresultsinareclassification,conversionorexchangeofoutstandingsharesofCommonStocksolelyintosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingreferredtoasa"SaleEvent"),then,ineachcase,theCompanyshall,uponrequestoftheHolder,redeemthisNoteincashfor150%oftheprincipalamount,plusaccruedbutunpaidinterestthroughthedateofredemption, orattheelectionoftheHolder,suchHoldermayconverttheunpaidprincipalamount of thisNote(togetherwiththe amount of accrued butunpaidinterest) intosharesofCommonStockimmediatelypriortosuchSaleEventattheConversionPrice.
(e) In case of anySale Event (not to include asale of all orsubstantiallyall oftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,theCompanyshallcauseeffectiveprovisiontobemadesothattheHolderofthisNoteshallhavetherightthereafter,byconvertingthisNote,topurchaseorconvertthisNoteintothekindandnumberofsharesofstockorothersecuritiesorproperty(includingcash)receivableuponsuchreclassification,capitalreorganizationorotherchange,consolidationormergerbyaholderof thenumberofsharesofCommonStockthatcouldhavebeenpurchaseduponexerciseoftheNoteandatthesameConversionPrice,asdefinedinthisNote,immediatelypriortosuchSaleEvent.TheforegoingprovisionsshallsimilarlyapplytosuccessiveSaleEvents.IftheconsiderationreceivedbytheholdersofCommonStockisotherthancash,thevalueshallbeasdeterminedbytheBoardofDirectorsoftheCompanyorsuccessorpersonorentityactingingoodfaith.
5. NoprovisionofthisNoteshallalterorimpairtheobligationoftheCompany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteatthetime,place,andrate,andintheform,hereinprescribed.
TheCompanyherebyexpresslywaivesdemandandpresentmentforpayment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofacceleration orintenttoaccelerate,
.
6. TheCompanyagreestopayallcostsandexpenses,includingreasonableattorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdueunderthisNote.
| 7. | Ifoneormoreofthefollowingdescribed"EventsofDefault"shalloccur: |
(a) TheCompanyshalldefaultinthepaymentofprincipalorinterestonthisNoteoranyothernoteissuedtotheHolderbytheCompany;or
(b) AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinorinanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyoronbehalfoftheCompanyinconnectionwiththeexecutionanddeliveryofthisNote,ortheSecuritiesPurchaseAgreementunderwhichthisnotewasissuedshallbefalseormisleadinginanyrespect;or
(c) TheCompanyshallfailtoperformorobserve,inanyrespect,anycovenant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteoranyothernoteissuedtotheHolder;or
(d) TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinabilitytopayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsor commenceproceedingsforitsdissolution;(4)applyfororconsenttotheappointmentofatrustee,liquidatororreceiverforitsorforasubstantialpartofitspropertyorbusiness;(5)fileapetitionforbankruptcyrelief,consenttothefilingofsuchpetitionorhavefiledagainstitaninvoluntarypetitionforbankruptcyrelief,allunderfederalorstatelawsasapplicable;or
(e) Atrustee,liquidatororreceivershallbeappointedfortheCompanyorforasubstantialpart of its property or businesswithout its consentandshall not bedischargedwithinsixty(60)daysaftersuchappointment;or
(f) Any governmental agencyor anycourt ofcompetent jurisdiction at theinstanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstantialportionofthepropertiesorassetsoftheCompany;or
(g) Oneor more money judgments,writs orwarrantsofattachment,orsimilarprocess,inexcessoffiftythousanddollars($50,000)intheaggregate,shallbeenteredorfiledagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated,unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive(5)days priortothedateofanyproposedsalethereunder;or
(h) TheCompanyshallhavedefaultedonorbreachedanytermofanyothernoteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde
faultwithintheappropriategraceperiod;or
(i) TheCompanyshallhaveitsCommonStockdelistedfromanexchange(includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentradingintheCommonStockshallbesuspendedformorethan10consecutivedays;
(j) If amajorityof themembersof theBoard ofDirectorsof theCompanyonthedatehereofarenolongerservingasmembersoftheBoard;
(k) TheCompanyshallnotdelivertotheHoldertheCommonStockpursuanttoparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNoticeofConversion;or
Then,oratanytimethereafter,unlesscured,andineachandeverysuchcase,unlesssuchEventofDefault shallhavebeenwaivedinwritingbytheHolder(whichwaiver shallnotbedeemedtobeawaiverofanysubsequentdefault)attheoptionoftheHolderandintheHolder'ssolediscretion,theHoldermayconsiderthisNoteimmediatelydueandpayable,withoutpresentment,demand,protestor(further)noticeofanykind(otherthannoticeofacceleration),allofwhichareherebyexpresslywaived,anythinghereinorinanynoteorotherinstrumentscontainedtothecontrarynotwithstanding,andtheHoldermayimmediately,andwithoutexpirationofanyperiodofgrace,enforceanyandalloftheHolder'srightsandremediesprovidedhereinoranyotherrightsorremediesaffordedbylaw.UponanEventofDefault,interestshallaccrueatadefaultinterestrateof16%perannumor,ifsuch rateisusuriousornotpermittedbycurrentlaw,thenatthehighestrateofinterestpermittedbylaw. IntheeventofabreachofSection8(k)thepenaltyshallbe$250perdaythesharesarenotissuedbeginningonthe4thdayaftertheconversionnoticewas delivered to theCompany. Thispenaltyshallincreaseto $500 perday beginning on the10thday.
IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,including,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,theHoldershallbereimbursedbytheCompanyforitsattorneys’feesandothercostsandexpensesincurredintheinvestigation,preparationandprosecutionofsuchactionorproceeding.
8. In case anyprovision ofthisNoteisheld bya courtof competentjurisdictiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbeadjustedratherthanvoided,ifpossible,sothatitisenforceabletothemaximumextentpossible,andthevalidityandenforceabilityoftheremainingprovisionsofthisNotewillnotinanywaybeaffectedorimpairedthereby.
9. NeitherthisNotenoranytermhereofmaybeamended,waived,dischargedorterminatedotherthanbyawritteninstrumentsignedbytheCompanyandtheHolder.
TheCompanyrepresentsthatitisnota“shell”issuerandhasneverbeena“shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassedsince theCompanyhasreportedform10type information indicating itisnolonger a“shellissuer.Further.TheCompanywillinstructitscounseltoeither(i)writea144-3(a(9)opiniontoallowforsalabilityoftheconversionsharesor(ii)acceptsuchopinionfromHolder’scounsel.
1. TheCompanywillgivetheHolderdirectnoticeofanycorporateactions,includingbutnotlimitedtonamechanges,stocksplits,recapitalizationsetc.ThisnoticeshallbegiventotheHolderassoonaspossibleunderlaw.
2. ThisNoteshallbegovernedbyandconstruedinaccordancewiththeLawsofDelawareapplicabletocontractsmadeandwhollytobeperformedwithintheStateofCaliforniaCountyofSanDiegoandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderandtheCompanyherebymutuallywaivetrialbyjuryandconsenttoexclusivejurisdictionandvenueinthecourtsoftheStateofCaliforniaCountyofSanDiego.ThisAgreementmaybeexecutedincounterparts,andthefacsimiletransmissionofanexecutedcounterparttothisAgreementshallbeeffectiveasanoriginal.
INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecutedbyanofficerthereuntodulyauthorized.
Dated:May 22,2018
MAXSOUND CORPORATION
| By: | GregHalpern-Chairman&CFO |
EXHIBITA
NOTICEOF CONVERSION
(TobeExecutedbytheRegisteredHolderinordertoConverttheNote)
Theundersigned hereby irrevocablyelects toconvert$oftheaboveNoteintoSharesofCommonStockofMaxSoundCorporation.(“Shares”)accordingtotheconditionssetforthinsuchNote,asofthedatewrittenbelow.
IfSharesaretobeissuedinthenameofapersonotherthantheundersigned,theundersignedwillpayalltransferandothertaxesandchargespayablewithrespectthereto.
Dateof Conversion:ApplicableConversionPrice:Signature:
[PrintNameofHolderandTitleofSigner]
Address:
SSNorEIN:
Sharesaretoberegisteredinthefollowingname:
Name:Address:Tel:Fax:SSN orEIN:
Sharesaretobesentordeliveredtothefollowingaccount:
AccountName:Address:
