NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CONVERTIBLE
PROMISSORY NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED

(I)   IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

 

Original Principal Amount: $171,665.00 Issue Date: October 3, 2016 Purchase
Price: $150,000.00

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, MAX SOUND CORPORATION, a Delaware corporation (the
“Borrower”), hereby promises to pay to the order of ILIAD RESEARCH AND TRADING,
L.P., a Utah limited partnership, or registered assigns (the “Holder”), the sum
of $171,665.00 (the “Original Principal Amount”) together with any additional
charges provided for herein, on the date that is 12 months after the Issue Date
(the “Maturity Date”), and to pay interest on the Outstanding Balance (as
defined below) at the rate of eight percent (8%) per annum from the date hereof
(the “Issue Date”) until the same is paid in full; provided that upon the
occurrence of an Event of Default (as defined below), interest shall thereafter
accrue on the Outstanding Balance both before and after judgment at the rate of
fourteen percent (14%) per annum (“Default Interest”). All interest calculations
hereunder shall be computed on the basis of a 360-day year comprised of twelve
(12) thirty (30) day months, shall compound daily and shall be payable in
accordance with the terms of this Note. The Borrower acknowledges that the
Original Principal Amount exceeds the purchase price of this Note and that such
excess consists of the OID (as defined in the Purchase Agreement (defined
below)) in the amount of

$16,665.00, the Carried Transaction Expense Amount (as defined in the Purchase
Agreement) in the amount of $5,000.00 to cover the Holder’s legal and other
expenses incurred in the preparation of this Note, the Purchase Agreement, the
Irrevocable Transfer Agent Instructions, and all other certificates, documents,
agreements, resolutions and instruments delivered to any party under or in
connection with this Note, as the same may be amended from time to time
(collectively, the “Transaction Documents”), which sum shall be fully earned and
charged to the Borrower upon the execution of this Note and paid to the Holder
as part of the outstanding principal balance as set forth in this Note. This
Note may not be prepaid in whole or in part except as otherwise provided in
Section 1.8. All payments due hereunder (to the extent not converted into common
stock, $0.00001 par value per share, of the Borrower (the “Common Stock”) in
accordance with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at such address as the Holder
shall designate from time to time by written notice made in accordance with the
provisions of this Note. Each capitalized term used herein, and not otherwise
defined, shall have the meaning ascribed thereto in that certain Securities
Purchase Agreement dated the date hereof between the Borrower and the Holder,
pursuant to which this Note was originally issued (the “Purchase Agreement”).
For purposes hereof, the term “Outstanding Balance” means the Original Principal
Amount, as reduced or increased, as the case may be, pursuant to the terms
hereof for conversion, breach hereof or otherwise, plus any accrued but unpaid
interest (including with limitation Default Interest), collection and
enforcements costs, and any other fees or charges incurred under this Note or
under 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 or other similar
rights of stockholders of the Borrower and will not impose personal liability
upon the holder thereof.

 

The following additional terms shall apply to this Note:

 

1.CONVERSION RIGHTS.

 

Conversion Right. Subject to Section 1.7, during the period beginning on the
Issue Date and ending when the Outstanding Balance is paid or converted in full,
the Holder shall, at its option, have the right from time to time, to convert
all or any part of the Outstanding Balance of this Note into fully paid and
non-assessable shares of Common Stock, as such Common Stock exists on the Issue
Date, or any shares of capital stock or other securities of the Borrower into
which such Common Stock shall hereafter be changed or reclassified at the
Conversion Price (as defined below) determined as provided herein (a
“Conversion”). The number of shares of Common Stock to be issued upon each
conversion of this Note (the “Conversion Shares”) shall be determined by
dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the
form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the
Borrower by the Holder in accordance with Section 1.4(a) below; provided that
the Notice of Conversion is submitted by facsimile or e-mail (or by other means
resulting in, or reasonably expected to result in, notice) to the Borrower
before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion Date”). The term “Conversion Amount” means, with respect to any
conversion of this Note, the portion of the Outstanding Balance to be converted.

 

Conversion Price.

 

(a)                Calculation of Conversion Price. The conversion price (as the
same may be adjusted from time to time pursuant to the terms hereof, the
“Conversion Price”) shall mean 65% (the “Conversion Factor”) multiplied by the
Market Price (as defined herein). “Market Price” means the average of the two
(2) lowest Trading Prices (as defined below) for the Common Stock during the ten

(10) Trading Day (as defined below) period ending on the latest complete Trading
Day prior to the Conversion Date. If an Event of Default (as defined below)
other than an Event of Default pursuant to Section 3.1(i) occurs, then the
Conversion Factor will be reduced to 55%. If an Event of Default pursuant to
Section 3.1(i) occurs, then the Conversion Factor will be reduced to 40%.
“Trading Price” means, for the Common Stock as of any date, the closing bid
price on the Principal Market as reported by a reliable reporting service
designated by the Holder (e.g. Bloomberg) or, if the Principal Market is not the
principal trading market for such security, the closing bid price of such
security on the principal securities exchange or trading market where such
security is listed or traded or, if no closing bid price of such security is
available in any of the foregoing manners, the average of the closing bid prices
of any market makers for such security that are quoted in “OTC Pink” by Pink OTC
Markets Inc. (formerly Pink Sheets LLC), or any successor entity or other
publisher thereof. If the Trading Price cannot be calculated for such security
on such date in the manner provided above, the Trading Price shall be the fair
market value as mutually determined by the Borrower and the Holder. “Trading
Day” shall mean any day on which the Common Stock is traded or tradable for any
period on the Principal Market, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.

 

(b)               Conversion Price During Major Announcements. Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to consolidate or merge with any
other corporation (other than a merger in which the Borrower is the surviving or
continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person, group
or entity

 

 

(including the Borrower) publicly announces a tender offer to purchase 50% or
more of the Borrower’s Common Stock (or any other takeover scheme) (the date of
the announcement referred to in clause (i) or

(ii) is hereinafter referred to as the “Announcement Date”), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the
Adjusted Conversion Price Termination Date (as defined below), be equal to the
lower of (1) the Conversion Price which would have been applicable for a
Conversion occurring on the Announcement Date, and (2) the Conversion Price that
would otherwise be in effect. From and after the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in this
Section 1.2(b). For purposes hereof, “Adjusted Conversion Price Termination
Date” shall mean, with respect to any proposed transaction or tender offer (or
takeover scheme) for which a public announcement as contemplated by this Section
1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above)
consummates or publicly announces the termination or abandonment of the proposed
transaction or tender offer (or takeover scheme) which caused this Section
1.2(b) to become operative.

 

Authorized Shares. The Borrower covenants that during the period the conversion
right exists, the Borrower will reserve from its authorized and unissued Common
Stock a sufficient number of shares, free from preemptive rights, to provide for
the issuance of Common Stock upon the full conversion of this Note. The Borrower
is required at all times to have authorized and reserved three times the number
of shares that is actually issuable upon full conversion of this Note (based on
the Conversion Price in effect from time to time) (the “Reserved Amount”). The
Reserved Amount shall be increased from time to time as required to insure
compliance with this Section 1.3. The Borrower represents that upon issuance,
such shares will be duly and validly issued, 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 this Note shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that thereafter there
shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of this Note. The Borrower (i)
acknowledges that it has irrevocably instructed its transfer agent to issue
shares of the Common Stock issuable upon conversion of this Note, 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 issuing the necessary
shares of Common Stock in accordance with the terms and conditions of this Note.
If, at any time the Borrower does not maintain the Reserved Amount it will be
considered an Event of Default under Section 3.1(c).

 

Method of Conversion.

 

(a)                Mechanics of Conversion. Subject to Section 1.7 hereof,
beginning on the date specified in Section 1.1, this Note may be converted by
the Holder in whole or in part at any time from time to time after the Issue
Date, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail
or other reasonable means of communication dispatched on the Conversion Date
prior to 6:00 p.m., New York, New York time), otherwise the Conversion Date will
be the next Trading Day.

 

(b)               Surrender of Note Upon Conversion. Notwithstanding anything to
the contrary set forth herein, upon conversion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this
Note to the Borrower unless the entire Outstanding Balance of this Note is so
converted. The Holder and the Borrower shall maintain records showing the amount
of the Outstanding Balance so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Borrower, so as not to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such records of the
Holder shall, prima facie, be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if any portion of this Note is
converted as aforesaid, the Holder may not

 

 

transfer this Note unless the Holder first physically surrenders this Note to
the Borrower, whereupon the Borrower will forthwith issue and deliver upon the
order of the Holder a new Note of like tenor, registered as the Holder may
request, representing in the aggregate the remaining Outstanding Balance of this
Note. The Holder and any assignee, by acceptance of this Note, acknowledge and
agree that, by reason of the provisions of this paragraph, following conversion
of a portion of this Note, the unpaid and unconverted Outstanding Balance of
this Note represented by this Note may be less than the amount stated on the
face hereof.

 

(c)                Payment of Taxes. Borrower is responsible for the payment of
all charges, fees, and taxes required to deliver Conversion Shares to Holder;
provider, however, that Borrower shall not be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
Conversion Shares or other securities or property on conversion of this Note in
a name other than that of the Holder (or in street name), and the Borrower shall
not be required to issue or deliver any such shares or other securities or
property unless and until the person or persons (other than the Holder or the
custodian in whose street name such shares are to be held for the Holder’s
account) requesting the issuance thereof shall have paid to the Borrower the
amount of any such tax or shall have established to the satisfaction of the
Borrower that such tax has been paid.

 

(d)               Delivery of Common Stock Upon Conversion. On or before the
close of business on the third (3rd) Trading Day following the date of receipt
of a Notice of Conversion from the Holder via facsimile transmission or e-mail
(or other reasonable means of communication) (the “Delivery Date”), the Borrower
shall, provided that all DWAC Eligible Conditions (as defined below) are then
satisfied, credit the aggregate number of Conversion Shares to which the Holder
shall be entitled to the account specified on the Conversion Notice via the DWAC
(as defined below) system. If all DWAC Eligible Conditions are not then
satisfied, the Borrower shall instead issue and deliver or cause to be issued
and delivered (via reputable overnight courier) to the address as specified in
the Notice of Conversion, a certificate, registered in the name of the Holder or
its designee, for the number of Conversion Shares to which the Holder shall be
entitled; provided, however, that, in addition to any other rights or remedies
that the Holder may have under this Note, then the Non-DWAC Eligible Adjustment
Amount (as defined below) shall be added to the Outstanding Balance of this Note
as set forth in Section 1.6(f) below. For the avoidance of doubt, the Borrower
has not met its obligation to deliver Conversion Shares by the Delivery Date
unless the Holder or its broker, as applicable, has actually received the shares
electronically into the applicable account, or if the DWAC Eligible Conditions
are not then satisfied, has actually received the certificate representing the
applicable Conversion Shares no later than the close of business on the relevant
Delivery Date pursuant to the terms set forth above. For purposes hereof, the
term “DWAC Eligible Conditions” means that (i) the Common Stock is eligible at
DTC (as defined below) for full services pursuant to DTC’s operational
arrangements, including without limitation transfer through DTC’s DWAC system,
(ii) the Borrower has been approved (without revocation) by the DTC’s
underwriting department, (iii) the Borrower’s transfer agent is approved as an
agent in the DTC/FAST Program (as defined below), (iv) the Conversion Shares are
otherwise eligible for delivery via DWAC, and (v) the Borrower’s transfer agent
does not have a policy prohibiting or limiting delivery of the Conversion Shares
via DWAC. For purposes of this Note, the term “DWAC” means Deposit Withdrawal at
Custodian as defined by the DTC; the term “DTC” means the Depository Trust
Company; and the term

“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer Program.

 

(e)                Obligation of Borrower to Deliver Common Stock. If the Holder
shall have given a Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the shares of Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof,
the recovery of any judgment against any person or any action to enforce the
same, any failure or delay in the enforcement of any other obligation of the
Borrower to the holder of record, or any setoff, counterclaim,

 

 

recoupment, limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any other
circumstance which might otherwise limit such obligation of the Borrower to the
Holder in connection with such conversion. The Conversion Date specified in the
Notice of Conversion shall be the Conversion Date so long as the Notice of
Conversion is delivered to the Borrower before 6:00 p.m., New York, New York
time, on such date; otherwise, the Conversion Date shall be the next Trading
Day. Once the Holder may freely trade the Common Stock issuable upon a
conversion of this Note pursuant to and in accordance with the terms hereof (and
in the case of any certificates delivered to Holder because not all of the DWAC
Eligible Conditions are then satisfied, once such certificates have been
deposited into Holder’s brokerage account, all legends have been removed
therefrom, and the Common Stock represented by such certificates is freely
tradeable), all rights with respect to the portion of the Outstanding Balance
being so converted shall forthwith terminate; provided, however, that the Holder
shall be deemed to be the holder of record of the Common Stock issuable upon
such conversion as of the date Borrower receives the corresponding Notice of
Conversion.

 

(f)                Delivery of Common Stock via the DWAC System. Notwithstanding
any other provision contained herein, failure to deliver via the DWAC system any
Common Stock to be delivered to the Holder under this Section 1.4 shall
constitute a breach of this Agreement and an Event of Default under Section 3
hereof, including without limitation under Sections 3.1(c) and 3.1(p).

 

(g)                Failure to Deliver Common Stock Prior to Delivery Date.
Without in any way limiting the Holder’s right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if
delivery of the Common Stock issuable upon conversion of this Note is not
delivered as required by Section 1.4(d) by the Delivery Date (a “Conversion
Default”), the Borrower shall pay in cash to the Holder for each calendar day
beyond the Delivery Date that the Borrower fails to deliver such Common Stock an
amount equal to $500 per day (the “Conversion Default Payment”). Such cash
amount shall be paid to the Holder by the fifth day of the month following the
month in which it has accrued (the “Conversion Default Payment Due Date”). In
the event such cash amount is not received by the Holder by the Conversion
Default Payment Due Date, at the option of the Holder (without notice to the
Borrower), the Conversion Default Payment shall be added to the Outstanding
Balance of this Note, in which event interest shall accrue thereon in accordance
with the terms of this Note and such additional principal amount shall be
convertible into Common Stock in accordance with the terms of this Note. The
Borrower agrees that the right to convert is a valuable right to the Holder. The
damages resulting from a failure, attempt to frustrate, or interference with
such conversion right are difficult if not impossible to quantify. Accordingly
the parties acknowledge that the liquidated damages provisions contained in this
Section 1.4(g) are justified.

 

Concerning the Shares. Transfer of the shares of Common Stock issuable upon
conversion of this Note is restricted and certificates representing such shares
may bear a legend as set forth in Sections 4.14 of the Purchase Agreement.

 

Effect of Certain Events.

 

(a)                Fundamental Transaction Consent Right. The Borrower shall not
enter into or be party to a Fundamental Transaction (as defined below), unless
the Borrower obtains the prior written consent of the Holder to enter into such
Fundamental Transaction. For purposes of this Note, “Fundamental Transaction”
means that (i) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding voting stock of the
Borrower, or (ii) (1) the Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, consolidate or merge with or
into (whether or not the

 

 

Borrower or any of its subsidiaries is the surviving corporation) any other
individual, corporation, limited liability company, partnership, association,
trust or other entity or organization (collectively, “Person”), or (2) the
Borrower or any of its subsidiaries shall, directly or indirectly, in one or
more related transactions, sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other Person, or (3) the Borrower or any of its subsidiaries
shall, directly or indirectly, in one or more related transactions, allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of voting stock of the
Borrower (not including any shares of voting stock of the Borrower held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4) the
Borrower or any of its subsidiaries shall, directly or indirectly, in one or
more related transactions, consummate a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with any other Person
whereby such other Person acquires more than 50% of the outstanding shares of
voting stock of the Borrower (not including any shares of voting stock of the
Borrower held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination), or (5) the Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related
transactions, reorganize, recapitalize or reclassify the Common Stock, other
than an increase in the number of authorized shares of the Borrower’s Common
Stock. The provisions of this Section 1.6(a) shall apply similarly and equally
to successive Fundamental Transactions and shall be applied without regard to
any limitations on the conversion of this Note. As a condition to pre-approving
any Fundamental Transaction in writing, which approval may be withheld in the
Holder’s sole discretion, Holder may require the resulting successor or
acquiring entity (if not the Borrower) to assume by written instrument all of
the obligations of the Borrower under this Note and all the other Transaction
Documents with the same effect as if such successor or acquirer had been named
as the Borrower hereto and thereto.

 

(b)               Adjustment Due to Fundamental Transactions. If, at any time
when this Note is issued and outstanding and prior to conversion of all of this
Note, there shall be any Fundamental Transaction that is pre-approved in writing
by the Holder pursuant to Section 1.6(a) above, as a result of which shares of
Common Stock of the Borrower shall be changed into the same or a different
number of shares of another class or classes of stock or securities of the
Borrower or another entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in connection with a
plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter have the right to receive upon conversion of this Note, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been entitled to receive
in such transaction had this Note been converted in full immediately prior to
such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect
to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of shares issuable upon conversion of
this Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter deliverable upon the conversion
hereof. The above provisions shall similarly apply to successive Fundamental
Transactions.

 

(c)                Adjustment Due to Distribution. If the Borrower shall declare
or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a dividend, stock repurchase, by way of return of
capital or otherwise (including any dividend or distribution to the Borrower’s
stockholders in cash or shares (or rights to acquire shares) of capital stock of
a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this
Note shall be entitled, upon any conversion of this Note after the date of
record for determining stockholders entitled to such Distribution, to receive
the amount of such assets which would have been payable to the Holder with
respect to the shares of

 

 

Common Stock issuable upon such conversion had such Holder been the holder of
such shares of Common Stock on the record date for the determination of
stockholders entitled to such Distribution.

 

(d)               Adjustment Due to Dilutive Issuance. If, at any time when this
Note is issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of
Common Stock for no consideration or for a consideration per share (before
deduction of reasonable expenses or commissions underwriting discounts or
allowances in connection therewith) less than the Conversion Price in effect on
the date of such issuance (or deemed issuance) of such shares of Common Stock (a
“Dilutive Issuance”), then immediately upon the Dilutive Issuance, the
Conversion Price will be reduced to the amount of the consideration per share
received by the Borrower in such Dilutive Issuance.

 

The Borrower shall be deemed to have issued or sold shares of Common Stock if
the Borrower in any manner issues or grants any warrants, rights or options (not
including employee stock option plans), whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities convertible
into or exchangeable for Common Stock (“Convertible Securities”) (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as “Options”) and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Conversion
Price then in effect, then the Conversion Price shall be equal to such price per
share. For purposes of the preceding sentence, the “price per share for which
Common Stock is issuable upon the exercise of such Options” is determined by
dividing (i) the total amount, if any, received or receivable by the Borrower as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower
upon the exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum aggregate
amount of additional consideration payable upon the conversion or exchange
thereof at the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible
Securities issuable upon exercise of such Options.

 

Additionally, the Borrower shall be deemed to have issued or sold shares of
Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible, and the price per share for
which Common Stock is issuable upon such conversion or exchange is less than the
Conversion Price then in effect, then the Conversion Price shall be equal to
such price per share. For the purposes of the preceding sentence, the “price per
share for which Common Stock is issuable upon such conversion or exchange” is
determined by dividing (1) the total amount, if any, received or receivable by
the Borrower as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Borrower upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (2) the
maximum total number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment to the
Conversion Price will be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.

 

(e)                Purchase Rights. If, at any time when this Note is issued and
outstanding, the Borrower issues any convertible securities or rights to
purchase stock, warrants, securities or other property (the “Purchase Rights”)
pro rata to the record holders of any class of Common Stock, then the Holder of
this Note will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of

 

 

shares of Common Stock acquirable upon complete conversion of this Note (without
regard to any limitations on conversion contained herein) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

 

(f)                Adjustment Due to Non-DWAC Eligibility. If, at any time when
this Note is issued and outstanding, the Holder delivers a Notice of Conversion
and at such time all DWAC Eligible Conditions are not then satisfied, the
Borrower shall deliver certificated Conversion Shares to the Holder pursuant to
Section 1.4(d) and the Non-DWAC Eligible Adjustment Amount shall be added to the
Outstanding Balance of this Note, without limiting any other rights of the
Holder under this Note or the other Transaction Documents. The “Non-DWAC
Eligible Adjustment Amount” is the amount equal to the number of applicable
Conversion Shares multiplied by the excess, if any, of (i) the Trading Price of
the Common Stock on the Conversion Date, over (ii) the Trading Price of the
Common Stock on the date the certificated Conversion Shares are freely tradable,
clear of any restrictive legend and deposited in the Holder’s brokerage account.
In any such case, Holder will use reasonable efforts to timely deposit such
certificates in its brokerage account after it receives them and cause such
restrictive legends to be removed, and, without limiting any other provision
hereof, Borrower agrees to fully cooperate with Holder in accomplishing the
same.

 

(g)                Adjustment Due to Late Clearing of DWAC Eligible Shares. If,
at any time when this Note is issued and outstanding, the Holder delivers a
Notice of Conversion and at such time the Common Stock is DWAC Eligible and the
applicable DWAC Eligible Conversion Shares are delivered to Holder or its
broker, but it takes longer than five (5) business days after such delivery for
such Conversion Shares to be electronically cleared for trading in Holder’s
brokerage account, then the Late Clearing Adjustment Amount (as defined below)
shall be added to the Outstanding Balance of this Note, without limiting any
other rights of the Holder under this Note or the other Transaction Documents.
The “Late Clearing Adjustment Amount” is the amount equal to the number of
applicable Conversion Shares multiplied by the excess, if any, of (1) the
Trading Price of the Common Stock on the Conversion Date, over (2) the Trading
Price of the Common Stock on the date the certificated DWAC Eligible Conversion
Shares are electronically cleared for trading in the Holder’s brokerage account.
In any such case, and without limiting any other provision hereof, each of
Holder and the Borrower agrees to take all action reasonably necessary on its
part to help ensure that the applicable Conversion Shares are electronically
cleared for trading in the Holder’s brokerage account within the five-day period
described above.

 

(h)               Notice of Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Price or the addition of the Non-DWAC Eligible
Adjustment Amount or Late Clearing Adjustment Amount to the Outstanding Balance
as a result of the events described in this Section 1.6, the Borrower, at its
expense, shall promptly compute such adjustment or readjustment and prepare and
furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Borrower shall, upon the written request at any time
of the Holder, furnish to such Holder a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price at the time in effect and
(iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of
this Note.

 

(i)                 Adjustments for Stock Split. Notwithstanding anything herein
to the contrary, any references to share numbers or share prices shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction.

 

 

Ownership Limitation. Notwithstanding anything to the contrary contained in this
Note or the other Transaction Documents, if at any time the Holder shall or
would be issued shares of Common Stock under any of the Transaction Documents,
but such issuance would cause the Holder (together with its Affiliates) to
beneficially own a number of shares exceeding 4.99% of the number of shares of
Common Stock outstanding on such date (including for such purpose the shares of
Common Stock issuable upon such issuance) (the “Maximum Percentage”), then the
Company must not issue to the Holder shares of the Common Stock which would
exceed the Maximum Percentage. For purposes of this Section, beneficial
ownership of Common Stock will be determined under the 1934 Act. The shares of
Common Stock issuable to the Holder that would cause the Maximum Percentage to
be exceeded are referred to herein as the "Ownership Limitation Shares". The
Company will reserve the Ownership Limitation Shares for the exclusive benefit
of the Holder. From time to time, the Holder may notify the Company in writing
of the number of the Ownership Limitation Shares that may be issued to the
Holder without causing the Holder to exceed the Maximum Percentage. Upon receipt
of such notice, the Company shall be unconditionally obligated to immediately
issue such designated shares to the Holder, with a corresponding reduction in
the number of the Ownership Limitation Shares. Notwithstanding the forgoing, the
term “4.99%” above shall be replaced with “9.99%” at such time as the Market
Capitalization of the Common Stock is less than $5,000,000.00. Notwithstanding
any other provision contained herein, if the term “4.99%” is replaced with
“9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall
remain at 9.99% until increased, decreased or waived by the Holder as set forth
below. For purposes of this Note, the term “Market Capitalization of the Common
Stock” shall mean the product equal to (A) the average VWAP of the Common Stock
for the immediately preceding fifteen

(15) Trading Days, multiplied by (B) the aggregate number of outstanding shares
of Common Stock as reported on the Company’s most recently filed Form 10-Q or
Form 10-K. By written notice to the Company, the Holder may increase, decrease
or waive the Maximum Percentage as to itself but any such waiver will not be
effective until the 61st day after delivery thereof. The foregoing 61-day notice
requirement is enforceable, unconditional and non-waivable and shall apply to
all Affiliates and assigns of the Holder.

 

Prepayment. So long as the Borrower has not received a Notice of Conversion from
the Holder, then at any time during the period beginning on the Issue Date and
ending on the date which is one hundred eighty (180) calendar days following the
Issue Date, the Borrower shall have the right, exercisable on not less than
thirty (30) Trading Days prior written notice to the Holder to prepay the
Outstanding Balance of this Note, in full, in accordance with this Section 1.8.
Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be
delivered to the Holder at its registered addresses and shall state: (a) that
the Borrower is exercising its right to prepay this Note, and (b) the date of
prepayment, which shall be not more than three (3) Trading Days from the date of
the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional
Prepayment Date”), the Borrower shall make payment of the Optional Prepayment
Amount (as defined below) to or upon the order of the Holder as specified by the
Holder in writing to the Borrower at least one (1) Trading Day prior to the
Optional Prepayment Date. If the Borrower exercises its right to prepay this
Note, the Borrower shall make payment to the Holder of an amount in cash (the
“Optional Prepayment Amount”) equal to 120%, multiplied by the then Outstanding
Balance of this Note. If the Borrower delivers an Optional Prepayment Notice and
fails to pay the Optional Prepayment Amount due to the Holder within two (2)
Trading Days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay this Note pursuant to this Section 1.8.

 

 

2.CERTAIN COVENANTS.

 

Distributions on Capital Stock. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder’s written
consent (a) pay, declare or set apart for such payment, any dividend or other
distribution (whether in cash, property or other securities) on shares of
capital stock other than dividends on shares of Common Stock solely in the form
of additional shares of Common Stock, or (b) directly or indirectly or through
any subsidiary make any other payment or distribution in respect of its capital
stock except for distributions pursuant to any stockholders’ rights plan which
is approved by a majority of the Borrower’s disinterested directors.

 

Restriction on Stock Repurchases. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder’s written
consent redeem, repurchase or otherwise acquire (whether for cash or in exchange
for property or other securities or otherwise) in any one transaction or series
of related transactions any shares of capital stock of the Borrower or any
warrants, rights or options to purchase or acquire any such shares.

 

Borrowings. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not, without the Holder’s prior written consent, create,
incur, assume guarantee, endorse, contingently agree to purchase or otherwise
become liable upon the obligation of any person, firm, partnership, joint
venture or corporation, except by the endorsement of negotiable instruments for
deposit or collection, or suffer to exist any liability for borrowed money,
except (a) borrowings in existence or committed on the date hereof and of which
the Borrower has informed the Holder in writing prior to the date hereof, (b)
indebtedness to trade creditors or financial institutions incurred in the
ordinary course of business, (c) borrowings, the proceeds of which shall be used
to repay this Note or (d) as permitted by the Purchase Agreement.

 

Sale of Assets. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder’s prior written consent, sell,
lease or otherwise dispose of any significant portion of the Borrower’s assets
outside the ordinary course of business. Any consent to the disposition of any
assets may be conditioned on a specified use of the proceeds of disposition.

 

Advances and Loans. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder’s written consent, lend money,
give credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, subsidiaries and
Affiliates of the Borrower, except loans, credits or advances (a) in existence
or committed on the date hereof and which the Borrower has informed Holder in
writing prior to the date hereof, (b) made in the ordinary course of business,
or (c) not in excess of $100,000.

 

3.EVENTS OF DEFAULT.

 

Events of Default. The occurrence of any of the following events of default
(each, an “Event of Default”) shall be an event of default hereunder:

 

(a)                Failure to Pay Amounts Due. The Borrower fails to pay any
amount when due on this Note, whether at maturity, upon acceleration or
otherwise.

 

(b)               Conversion and the Shares. The Borrower (i) fails to issue
Conversion Shares to the Holder or the Holder’s broker (as set forth in the
applicable Conversion Notice) by the Delivery Date, (ii) fails to transfer or
cause its transfer agent to transfer (issue) any shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note or any of the other Transaction Documents, (iii) the
Borrower directs its transfer agent not to

 

 

transfer or delays, impairs, and/or hinders its transfer agent in transferring
(or issuing) any shares of Common Stock to be issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this
Note or any of the other Transaction Documents, or (iv) fails to remove (or
directs its transfer agent not to remove or impairs, delays, and/or hinders its
transfer agent from removing) any restrictive legend (or to withdraw any stop
transfer instructions in respect thereof) on any shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note or any of the other Transaction Documents.

 

(c)                Breach of Covenants and Obligations. The Borrower breaches
any covenant or obligation or other term or condition contained in this Note and
any collateral documents including but not limited to the other Transaction
Documents.

 

(d)               Breach of Representations and Warranties. Any representation
or warranty of the Borrower made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith
(including, without limitation, the Purchase Agreement and any other Transaction
Documents), shall be false or misleading in any material respect when made.

 

(e)                Receiver or Trustee. The Borrower or any subsidiary of the
Borrower shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee shall otherwise
be appointed.

 

(f)                Judgments. Any money judgment, writ or similar process shall
be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $100,000, and shall remain
unvacated, unbonded or unstayed for a period of twenty

(20) calendar days unless otherwise consented to by the Holder, which consent
will not be unreasonably withheld.

 

(g)                Bankruptcy. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings, voluntary or involuntary, for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the Borrower.

 

(h)               Delisting of Common Stock. The Borrower shall fail to maintain
the listing and/or quotation, as applicable, of the Common Stock on the
Principal Market.

 

(i)                 Failure to Comply with the 1934 Act. The Borrower shall fail
to comply with the reporting requirements of the 1934 Act; and/or the Borrower
shall cease to be subject to the reporting requirements of the 1934 Act.

 

(j)                 Liquidation. Any dissolution, liquidation, or winding up of
Borrower or any substantial portion of its business.

 

(k)               Cessation of Operations. Any cessation of operations by the
Borrower or the Borrower admits it is otherwise generally unable to pay its
debts as such debts become due; provided, however, that any disclosure of the
Borrower’s ability to continue as a “going concern” shall not be an admission
that the Borrower cannot pay its debts as they become due.

 

(l)                 Maintenance of Assets. The failure by the Borrower to
maintain any material intellectual property rights, personal, real property or
other assets which are necessary to conduct its business (whether now or in the
future).

 

 

(m)             Financial Statement Restatement. The restatement of any
financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no
longer outstanding, if the result of such restatement would, by comparison to
the unrestated financial statement, have constituted a material adverse effect
on the rights of the Holder with respect to this Note or any other Transaction
Documents.

 

(n)               Reverse Splits. The Borrower effectuates a reverse split of
its Common Stock without twenty (20) calendar days prior written notice to the
Holder.

 

(o)               Replacement of Transfer Agent. In the event that the Borrower
proposes to replace its transfer agent, the Borrower fails to provide, prior to
the effective date of such replacement, a fully executed Irrevocable Transfer
Agent Instructions in a form as initially delivered pursuant to the Purchase
Agreement (including but not limited to the provision to irrevocably reserve
shares of Common Stock in the Reserved Amount) signed by the successor transfer
agent to the Holder and the Borrower.

 

(p)               DWAC Eligibility. The failure of any of the DWAC Eligible
Conditions to be satisfied at any time during which the Borrower has obligations
under this Note.

 

Default Effects; Automatic Acceleration. Upon the occurrence of any Event of
Default, (a) the Outstanding Balance shall immediately increase to 105% of the
Outstanding Balance immediately prior to the occurrence of the Event of Default
(the “Balance Increase”), and (b) this Note shall then accrue interest at the
Default Interest rate (collectively, the “Default Effects”); provided, however,
that (x) in no event shall the Balance Increase be applied more than once, and
(y) notwithstanding any provision to the contrary herein, in no event shall the
applicable interest rate at any time exceed the maximum interest rate allowed
under applicable law. The Default Effects shall automatically apply upon the
occurrence of an Event of Default without the need for any party to give any
notice or take any other action. Further, upon the occurrence and during the
continuation of any Event of Default, the Holder may by written notice to the
Borrower declare the entire Outstanding Balance immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the other
Transaction Documents to the contrary notwithstanding; provided, however, that
upon the occurrence or existence of any Event of Default described in Sections
3.1(e), 3.1(g), 3.1(j), or 3.1(k), immediately and without notice, all
outstanding obligations payable by the Borrower hereunder shall automatically
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Transaction Documents to the contrary (“Automatic
Acceleration”). For avoidance of doubt, except in the case of Automatic
Acceleration resulting from an Event of Default under Sections 3.1(e), 3.1(g),
3.1(j), or 3.1(k), the Holder shall retain all rights under this Note and the
Transaction Documents, including the ability to convert the then Outstanding
Balance of this Note pursuant to Section 1 hereof, at all times following the
occurrence of an Automatic Acceleration until the entire Outstanding Balance at
that time has been paid in full.

 

4.MISCELLANEOUS.

 

Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privileges. All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

 

Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with the
subsection of the Purchase Agreement titled “Notices.”

 

Amendments. This Note and any provision hereof may only be amended by an
instrument in writing signed by the Borrower and the Holder. The term “Note” and
all reference thereto, as used throughout this instrument, shall mean this
instrument (and the other Notes issued pursuant to the Purchase Agreement) as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.

 

Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to be the benefit of the Holder and its successors
and assigns; provided, however, that this Note may not be transferred, assigned
or conveyed by the Borrower without the prior written consent of the Holder.
Each transferee of this Note must be an “accredited investor” (as defined in
Rule 501(a) of the Securities Act of 1933 (as amended, the “1933 Act”)).
Notwithstanding anything in this Note to the contrary, this Note may be pledged
as collateral in connection with a bona fide margin account or other lending
arrangement.

 

Cost of Collection; Attorneys’ Fees . Upon the occurrence of any Event of
Default, the Borrower shall pay to the Holder hereof all costs and reasonable
attorneys’ fees incurred by the Holder in connection with such Event of Default.
In the event of any action at law or in equity to enforce or interpret the terms
of this Note or any of the other Transaction Documents, the parties agree that
the party who is awarded the most money shall be deemed the prevailing party for
all purposes and shall therefore be entitled to an additional award of the full
amount of the attorneys’ fees and expenses paid by such prevailing party in
connection with the litigation and/or dispute without reduction or apportionment
based upon the individual claims or defenses giving rise to the fees and
expenses. Nothing herein shall restrict or impair a court’s power to award fees
and expenses for frivolous or bad faith pleading.

 

Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of Utah without regard to principles of conflicts of laws.
Any action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in the state courts of Utah or
in the federal courts located in Salt Lake County, Utah. The parties to this
Note hereby irrevocably waive any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. In the event that any
provision of this Note or any other agreement delivered in connection herewith
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement. Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other related or companion documents by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

 

Fees and Charges. The parties acknowledge and agree that upon the Borrower’s
failure to comply with the provisions of this Note, the Holder’s damages would
be uncertain and difficult (if not impossible) to accurately estimate because of
the parties’ inability to predict future interest rates, the Holder’s increased
risk, and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder, among other reasons. Accordingly, any
fees, charges, and interest due under this Note are intended by the parties to
be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of
its investment opportunity and not a penalty, and shall not be deemed in any way
to limit any other right or remedy Holder may have hereunder, at law or in
equity.

 

Remedies. The Borrower acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Borrower
acknowledges that the remedy at law for a breach of its obligations under this
Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law or in equity, and
in addition to the charges assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Note and to enforce
specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

Purchase Agreement. By its acceptance of this Note, each party agrees to be
bound by the applicable terms of the Purchase Agreement and the other
Transaction Documents.

 

Notice of Corporate Events. Except as otherwise provided herein, the Holder of
this Note shall have no rights as a Holder of Common Stock unless and only to
the extent that it converts this Note into Common Stock. The Borrower shall
provide the Holder with prior notification of any meeting of the Borrower’s
stockholders (and copies of proxy materials and other information sent to
stockholders). In the event of any taking by the Borrower of a record of its
stockholders for the purpose of determining stockholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation,
reclassification or recapitalization) any share of any class or any other
securities or property, or to receive any other right, or for the purpose of
determining stockholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Borrower or any proposed liquidation, dissolution or winding up of the
Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20)
calendar days prior to the record date specified therein (or thirty (30)
calendar days prior to the consummation of the transaction or event, whichever
is earlier), of the date on which any such record is to be taken for the purpose
of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or
other event to the extent known at such time. The Borrower shall make a public
announcement of any event requiring notification to the Holder hereunder
substantially simultaneously with the notification to the Holder in accordance
with the terms of this Section 4.10.

 

Pronouns. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may permit or require.

 

Time of the Essence. Time is expressly made of the essence of each and every
provision of this Note.

 

[Remainder of page intentionally left blank; signature page to follow]

 

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name
by its duly authorized officer as of the Issue Date set forth above.

 

[image_003.gif]MAX SOUND CORPORATION

 

 

By:Greg Halpern, Chief Financial Officer

 

 

EXHIBIT A

 

ILIAD RESEARCH AND TRADING, L.P.

303 EAST WACKER DRIVE, SUITE 1040

CHICAGO, ILLINOIS 60601

Date: MAX SOUND CORPORATION

Hazelhurst Drive #6572 Houston, TX 77043

Attn: Greg Halpern, Chief Financial Officer

 

CONVERSION NOTICE

 

The above-captioned Holder hereby gives notice to MAX SOUND CORPORATION, a
Delaware corporation (the “Company”), pursuant to that certain Convertible
Promissory Note made by the Company in favor of the Holder on October 3, 2016
(the “Note”), that the Holder elects to convert the portion of the Outstanding
Balance of the Note set forth below into fully paid and non- assessable shares
of Common Stock of the Company as of the date of conversion specified below.
Such conversion shall be based on the Conversion Price set forth below. In the
event of a conflict between this Conversion Notice and the Note, the Note shall
govern, or, in the alternative, at the election of the Holder in its sole
discretion, the Holder may provide a new form of Conversion Notice to conform to
the Note.

A.Date of conversion:

B.Conversion #:

C.Conversion Amount:

D.Market Price_ (Average of 2 lowest Trade Prices of last 10 Trading Days as per
Exhibit A-1)

E.Conversion Factor: 65% [as may adjusted upon certain Events of Default]

F.Conversion Price: (D multiplied by E)

G.Conversion Shares: (C divided by F)

H.Remaining Outstanding Balance of Note: *

* Subject to adjustments for corrections, defaults, and other adjustments
permitted by the Transaction Documents.

 

[image_004.gif]Please transfer the Conversion Shares electronically (via DWAC)
to the following account:

 

Broker:    Address:   DTC#:        Account #:        Account Name:       

 

To the extent the Conversion Shares are not able to be delivered to the Holder
electronically via the DWAC system, please deliver a certificate representing
all such shares to the Holder via reputable overnight courier after receipt of
this Conversion Notice (by facsimile transmission or otherwise) to:

 

 

 

 

 

 

 

 

(Signature Page Follows)

 

 

Sincerely,

 

ILIAD RESEARCH AND TRADING, L.P.

 

By: Iliad Management, LLC, its General Partner By: Fife Trading, Inc., its
Manager

 

By:John M. Fife, President

 

 

EXHIBIT A-1

 

CONVERSION WORKSHEET

 

      Trading Day Lowest Trade Price Lowest 3 (Yes or No)                      
                                                                               
                  Average