THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)

 

 

US $110,000.00

 

 

MAX SOUND CORPORATION.

8% CONVERTIBLE REDEEMABLE NOTE DUE NOVEMBER 4, 2015

BACK END

 

 

FOR VALUE RECEIVED, Max Sound Corporation. (the “Company”) promises to pay to
the order of LG CAPITAL FUNDING, LLC and its authorized successors and permitted
as- signs ("Holder"), the aggregate principal face amount of One Hundred ten
Thousand Dollars ex- actly (U.S. $110,000.00) on November 4, 2015 ("Maturity
Date") and to pay interest on the prin- cipal amount outstanding hereunder at
the rate of 8% per annum commencing on November 4, 2014. The interest will be
paid to the Holder in whose name this Note is registered on the records of the
Company regarding registration and transfers of this Note. The principal of, and
interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY
11225, initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time. The Company
will pay each interest payment and the outstanding principal due upon this Note
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Note by check or wire transfer addressed to
such Holder at the last address appearing on the records of the Company. The
forwarding of such check or wire transfer shall constitute a payment of
outstanding principal hereunder and shall sat- isfy and discharge the liability
for principal on this Note to the extent of the sum represented by such check or
wire transfer. Interest shall be payable in Common Stock (as defined below) pur-
suant to paragraph 4(b) herein.

 

This Note is subject to the following additional provisions:

 

 

 

GH

Initials

 

 

1.                  This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration or transfer or exchange, except that Holder shall pay any tax or
other governmental charges payable in connection therewith.

 

2.                  The Company shall be entitled to withhold from all payments
any amounts required to be withheld under applicable laws.

 

3.                  This Note may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Any attempted transfer to a non-qualifying party shall be
treated by the Company as void. Prior to due present- ment for transfer of this
Note, the Company and any agent of the Company may treat the person in whose
name this Note is duly registered on the Company's records as the owner hereof
for all other purposes, whether or not this Note be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this Note electing to exercise the right of conversion set forth
in Section 4(a) hereof, in addition to the requirements set forth in Section
4(a), and any prospective transferee of this Note, also is required to give the
Company written confirmation that this Note is being converted ("Notice of
Conversion") in the form annexed hereto as Exhibit A. The date of receipt
(including receipt by telecopy) of such Notice of Conversion shall be the
Conversion Date.

 

4.                  (a) The Holder of this Note is entitled, at its option, to
convert all or any amount of the principal face amount of this Note then
outstanding into shares of the Compa- ny's common stock (the "Common Stock")
without restrictive legend of any nature, at a price ("Conversion Price") for
each share of Common Stock equal to 65% of the lowest daily VWAP of the Common
Stock as reported on the National Quotations Bureau OTCQB exchange which the
Company’s shares are traded or any exchange upon which the Common Stock may be
traded in the future ("Exchange"), for the ten prior trading days including the
day upon which a Notice of Conversion is received by the Company (provided such
Notice of Conversion is delivered by fax or other electronic method of
communication to the Company after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price). If the shares
have not been delivered within 3 business days, the Notice of Conversion may be
rescind- ed. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the
Company of the Notice of Conver- sion. Once the Holder has received such shares
of Common Stock, the Holder shall surrender this Note to the Company, executed
by the Holder evidencing such Holder's intention to convert this Note or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued, but unpaid interest shall be subject to conversion. No fractional
shares or scrip repre- senting fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
In the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to 55% instead of 65% while that “Chill” is in effect.
In the event the Company is not “Current” in its SEC filings at the time this
note is cash funded, the discount shall be decreased to 40%. In no event shall
the Holder be allowed to effect a conversion if such conversion, along with all
other shares of Company Common Stock benefi- cially owned by the Holder and its
affiliates would exceed 9.9% of the outstanding shares of the Common Stock of
the Company.

 

 

 

 

(b)               Interest on any unpaid principal balance of this Note shall be
paid at the rate of 8% per annum. Interest shall be paid by the Company in
Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice
of Conversion to the Company for In- terest Shares based on the formula provided
in Section 4(a) above. The dollar amount converted into Interest Shares shall be
all or a portion of the accrued interest calculated on the unpaid prin- cipal
balance of this Note to the date of such notice.

 

 

(c)                This Note may not be prepaid, except that if the $110,000
Rule 144 con- vertible redeemable note issued by the Company of even date
herewith is redeemed by the Com- pany within 6 months of the issuance date of
such Note, all obligations of the Company under this Note and all obligations of
the Holder under the Holder issued Back End Note will be auto- matically be
deemed satisfied and this Note and the Holder issued Back End Note will be auto-
matically be deemed cancelled and of no further force or effect.

 

 

(d)               Upon (i) a transfer of all or substantially all of the assets
of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or
exchange of outstanding shares of the Common Stock, other than a forward or
reverse stock split or stock dividend, or (iii) any consolidation or merger of
the Company with or into another person or entity in which the Company is not
the surviving entity (other than a merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock) (each of items (i), (ii) and (iii) being re- ferred to as a
"Sale Event"), then, in each case, the Company shall, upon request of the
Holder, redeem this Note in cash for 150% of the principal amount, plus accrued
but unpaid interest through the date of redemption, or at the election of the
Holder, such Holder may convert the un- paid principal amount of this Note
(together with the amount of accrued but unpaid interest) into shares of Common
Stock immediately prior to such Sale Event at the Conversion Price.

 

(e)                In case of any Sale Event (not to include a sale of all or
substantially all of the Company’s assets) in connection with which this Note is
not redeemed or converted, the Company shall cause effective provision to be
made so that the Holder of this Note shall have the right thereafter, by
converting this Note, to purchase or convert this Note into the kind and number
of shares of stock or other securities or property (including cash) receivable
upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Note and at the same Conversion
Price, as defined in this Note, immediately prior to such Sale Event. The
foregoing provisions shall similarly apply to successive Sale Events. If the
considera- tion received by the holders of Common Stock is other than cash, the
value shall be as deter- mined by the Board of Directors of the Company or
successor person or entity acting in good faith.

 

5.No provision of this Note shall alter or impair the obligation of the Com-

 

 

pany, which is absolute and unconditional, to pay the principal of, and interest
on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6.                  The Company hereby expressly waives demand and presentment
for pay- ment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and diligence in
taking any action to collect amounts called for hereunder and shall be directly
and primarily liable for the payment of all sums owing and to be owing hereto.

 

7.                  The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees and expenses, which may be incurred by the Holder in
collecting any amount due under this Note.

 

8.If one or more of the following described "Events of Default" shall occur:

 

(a)                  The Company shall default in the payment of principal or
interest on this Note or any other note issued to the Holder by the Company; or

 

(b)                 Any of the representations or warranties made by the Company
herein or in any certificate or financial or other written statements heretofore
or hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Note, or the Se- curities Purchase Agreement
under which this note was issued shall be false or misleading in any respect; or

 

(c)                  The Company shall fail to perform or observe, in any
respect, any cove- nant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or

 

(d)                 The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4)
apply for or consent to the appointment of a trus- tee, liquidator or receiver
for its or for a substantial part of its property or business; (5) file a peti-
tion for bankruptcy relief, consent to the filing of such petition or have filed
against it an invol- untary petition for bankruptcy relief, all under federal or
state laws as applicable; or

 

(e)                  A trustee, liquidator or receiver shall be appointed for
the Company or for a substantial part of its property or business without its
consent and shall not be discharged with- in sixty (60) days after such
appointment; or

 

(f)                  Any governmental agency or any court of competent
jurisdiction at the in- stance of any governmental agency shall assume custody
or control of the whole or any substan- tial portion of the properties or assets
of the Company; or

 

(g)                 One or more money judgments, writs or warrants of
attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its
properties or other assets and shall remain unpaid, unvacated,

 

 

unbonded or unstayed for a period of fifteen (15) days or in any event later
than five (5) days prior to the date of any proposed sale thereunder; or

 

(h)                 The Company shall have defaulted on or breached any term of
any other note of similar debt instrument into which the Company has entered and
failed to cure such de- fault within the appropriate grace period; or

 

(i)                   The Company shall have its Common Stock delisted from an
exchange (including the OTCBB exchange) or, if the Common Stock trades on an
exchange, then trading in the Common Stock shall be suspended for more than 10
consecutive days;

 

(j)                   If a majority of the members of the Board of Directors of
the Company on the date hereof are no longer serving as members of the Board;

 

(k)                 The Company shall not deliver to the Holder the Common Stock
pursuant to paragraph 4 herein without restrictive legend within 3 business days
of its receipt of a Notice of Conversion; or

 

(l)                   The Company shall not replenish the reserve set forth in
Section 12, with- in 3 business days of the request of the Holder.

 

(m)                  The Company’s Common Stock has a closing bid price of less
than $0.04 per share for at least 5 consecutive trading days; or

 

(n)                 The aggregate dollar trading volume of the Company’s Common
Stock is less than fifty thousand dollars ($50,000.00) in any 5 consecutive
trading days; or

 

(o)                 The Company shall cease to be “current” in its filings with
the Securities and Exchange Commission.

 

(p)     The Company shall lose the “bid” price for its stock and a market
(including the OTCBB marketplace or other exchange)

 

Then, or at any time thereafter, unless cured (except for 8(m) and 8(n) which
are incurable de- faults, the sole remedy of which is to allow the Holder to
cancel both this Note and the Holder Issued Note, and in each and every such
case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subse- quent
default) at the option of the Holder and in the Holder's sole discretion, the
Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (fur- ther) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwith- standing, and
the Holder may immediately, and without expiration of any period of grace, en-
force any and all of the Holder's rights and remedies provided herein or any
other rights or reme- dies afforded by law. Upon an Event of Default, interest
shall be accrue at a default interest rate of 24% per annum or, if such rate is
usurious or not permitted by current law, then at the highest rate of interest
permitted by law. Further, if the Note becomes due and payable, the Holder may

 

5

 

 

use the outstanding principal and interest due under the Note to offset any
payment obligations it may have to the Company. In the event of a breach of 8(k)
the penalty shall be $250 per day the shares are not issued beginning on the 4th
day after the conversion notice was delivered to the Company. This penalty shall
increase to $500 per day beginning on the 10th day. Once cash funded, the
penalty for a breach of Section 8(p) shall be an increase of the outstanding
principal amounts by 20%. Once cash funded, in the event of a breach of Section
8(i), the outstanding principal due under this Note shall increase by 50%. If
this Note is not paid at maturity, the out- standing principal due under this
Note shall increase by 10%.

 

If the Holder shall commence an action or proceeding to enforce any provisions
of this Note, in- cluding, without limitation, engaging an attorney, then, if
the Holder prevails in such action, the Holder shall be reimbursed by the
Company for its attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.

 

9.                  In case any provision of this Note is held by a court of
competent jurisdic- tion to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be ad- justed rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Note will not in
any way be affected or impaired thereby.

 

10.              Neither this Note nor any term hereof may be amended, waived,
dis- charged or terminated other than by a written instrument signed by the
Company and the Holder.

 

11.              The Company represents that it is not a “shell” issuer and has
never been a “shell” issuer or that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported form 10 type
information indicating it is no longer a “shell issu- er. Further. The Company
will instruct its counsel to either (i) write a 144- 3(a(9) opinion to al- low
for salability of the conversion shares or (ii) accept such opinion from
Holder’s counsel.

 

12.            Prior to cash funding of this Note, The Company will issue
irrevocable transfer agent instructions reserving 2x the number of shares of
Common Stock necessary to al- low the holder to convert this note based on the
discounted conversion price set forth in Section 4(a) herewith and in accordance
with Section 12 of the $110,000 144 note of even date herewith. The reserve
shall be replenished as needed to allow for conversions of this Note. Upon full
con- version of this Note, the reserve representing this Note shall be
cancelled. The Company will pay all transfer agent costs associated with issuing
and delivering the shares.

 

13.              The Company will give the Holder direct notice of any corporate
actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as
possible under law.

 

14.              This Note shall be governed by and construed in accordance with
the laws of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the successors and
assigns of each party hereto. The Holder and the Company hereby mutually waive
trial by jury and consent to exclusive jurisdiction and venue in the courts of
the State of New York. This Agreement may be executed in counterparts, and

 

 

the facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.

 

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an
officer thereunto duly authorized.

 

 

Dated: November 4, 2014

 

 

 

[image_026.gif]MAX SOUND CORPORATION

 

By:

 

Title: CFO

 

 

EXHIBIT A

 

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $ of the above Note into
Shares of Common Stock of Max Sound Corporation. (“Shares”) accord- ing to the
conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer and other taxes and charges payable with
respect thereto.

 

Date of Conversion: Applicable Conversion Price: Signature:

[Print Name of Holder and Title of Signer]

Address:

 

 

 

SSN or EIN:

Shares are to be registered in the following name:

 

Name: Address: Tel: Fax: SSN or EIN:

 

Shares are to be sent or delivered to the following account:

 

Account Name: Address: