THISNOTEANDTHECOMMONSTOCKISSUABLEUPONCONVERSIONOFTHISNOTEHAVENOTBEENANDWILLNOTBEREGISTEREDWITHTHEUNITEDSTATESSECURITIESANDEXCHANGECOMMISSION OR THESECURITIESCOMMISSIONOF ANY STATE PURSUANTTOAN EXEMPTIONFROMREGISTRATIONPROVIDEDUNDER THE SECURITIESACTOF1933,ASAMENDED,ANDTHE	RULES	AND	REGULATIONSPROMULGATEDTHEREUNDER(THE "1933 ACT”)

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**US $225,750.00**

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MAXSOUND CORPORATION.

8%CONVERTIBLEREDEEMABLENOTEDUE DECEMBER 24, 2015

 

 

FORVALUERECEIVED,MaxSoundCorporation.(the“Company”)promisestopaytotheorderofBLUECITI,LLCanditsauthorizedsuccessorsandpermittedassigns("Holder"),the aggregateprincipalfaceamountof TwoHundredTwentyFiveThousand SevenHundredFif-tyDollarsexactly(U.S.$225,750.00)onDecember24,2015("MaturityDate")andtopayinter- est on the principal amount outstandinghereunder at the rateof8% per annum commencing on December 22,2014. The Companyacknowledges this Notewasissuedwitha 5% original issue discount (OID)andas such the issuance price was $215,000.00.The interest will be paid to the Holderin whose name this Note is registeredon the records of the Companyregardingregistra- tionandtransfersofthisNote. The principalof,andintereston,thisNotearepayableat440East79thStreetSuite4M,NewYork,NY10075,initially,andifchanged,lastappearingonthe records of the Company asdesignated in writingbythe Holderhereof from time to time.The Companywillpayeachinterestpaymentandtheoutstandingprincipaldue uponthisNotebefore or on the Maturity Date,less any amountsrequiredbylaw to be deducted or withheld, to the HolderofthisNotebycheckorwire transferaddressedtosuchHolderatthelastaddressappear-ingon the records of the Company.The forwardingof such checkor wire transfer shall consti- tute apayment ofoutstandingprincipalhereunderandshallsatisfyanddischarge theliabilityfor principalonthisNoteto theextentofthesum representedbysuchcheckorwire transfer.Inter-estshall be payable in CommonStock (asdefinedbelow)pursuant to paragraph4(b) herein.

 

This Note is subjectto the following additional provisions:

 

 

GH

Initials

1.                 ThisNoteisexchangeableforanequalaggregateprincipalamountof

Notesofdifferentauthorizeddenominations,asrequestedbytheHoldersurrenderingthesame.Noservicechargewillbemadeforsuchregistrationortransferorexchange,exceptthatHoldershall payanytaxor othergovernmentalcharges payable in connectiontherewith.

 

2.                 TheCompanyshall beentitled to withhold from all paymentsanyamountsrequired to bewithheld underapplicable laws.

 

3.                 ThisNotemaybetransferredorexchangedonlyincompliancewiththeSecuritiesActof1933,asamended("Act")andapplicablestatesecuritieslaws.Anyattemptedtransfertoanon-qualifying party shall betreatedby theCompany as void. Priorto duepresent- mentfor transferof thisNote,theCompany andany agent ofthe Company maytreat theperson in whose namethis Note is duly registeredonthe Company'srecordsastheownerhereofforallother purposes, whether or not this Note beoverdue,and neither the Company nor any such agentshall be affectedor bound bynotice to the contrary. AnyHolderof this Note electingto exercisethe right of conversion setforthin Section 4(a)hereof, in additionto the requirementssetforthinSection4(a),andanyprospective transferee ofthisNote,alsoisrequiredtogivethe Company written confirmationthatthisNote isbeingconverted("Notice of Conversion")inthe formannexedheretoasExhibitA.Thedateofreceipt(includingreceiptbytelecopy)ofsuch Notice of Conversion shallbethe ConversionDate.

 

4.                 (a)TheHolderofthisNoteisentitled,atitsoption, toconvertalloranyamountoftheprincipalfaceamountofthisNotethenoutstandingintosharesoftheCompa-ny'scommon stock (the "CommonStock")without restrictive legend ofanynature,ata price ("ConversionPrice")for each share of Common Stock equaltothe lowerof**(i)**65% of the **low-est daily VWAP**of the CommonStock asreported on the NationalQuotations BureauOTCQB exchangewhich the Company’ssharesare traded or anyexchangeupon which the Common Stockmaybetradedin thefuture("Exchange"),forthe***ten***priortrading days includingthe dayuponwhicha Notice ofConversionisreceivedbythe Company (providedsuch Notice of Con-version is deliveredbyfax or other electronic method of communicationto the Companyafter4

P.M.  EasternStandardorDaylightSavingsTimeiftheHolderwishestoincludethesamedayclosingprice)or**(ii)$0.18pershare**.Iftheshareshavenotbeendeliveredwithin3businessdays,the Notice ofConversionmayberescinded.Suchconversionshallbe effectuatedby theCompanydeliveringthe sharesofCommonStocktotheHolderwithin3businessdays of receiptby the Company of the Notice of Conversion.Once the Holderhasreceived such shares of CommonStock, the Holder shallsurrender thisNote tothe Company,executed bythe Holderevidencingsuch Holder'sintention to convertthisNote or a specified portion hereof,and accom- paniedbyproperassignmenthereofin blank.Accruedbut unpaidinterest shall besubjecttoconversion.No fractionalshares or scriprepresentingfractions of shares willbe issued on con- version,butthenumber ofsharesissuableshallbe roundedtothenearestwhole share*. Inthe event theCompany experiences a DTC “Chill”on its shares, the conversion price shall be de-creasedto55%insteadof65%whilethat“Chill”isineffect.*Innoevent shalltheHolderbe al- lowedtoeffectaconversion ifsuchconversion,along withallothersharesofCompany Com- mon StockbeneficiallyownedbytheHolderandits affiliateswouldexceed9.9%oftheout-standingshares of theCommon Stock of the Company.

 

(b)              Intereston anyunpaidprincipalbalanceofthisNote shallbepaidat

therateof8%perannum.InterestshallbepaidbytheCompanyinCommonStock("InterestShares").Holdermay,atanytime,sendinaNotice ofConversiontotheCompany forInterestSharesbasedontheformulaprovidedinSection4(a)above.Thedollaramountconvertedinto InterestShares shall beall or a portion of theaccruedinterestcalculatedon the unpaid principal balanceof this Noteto thedate of such notice.

 

(c)               DuringthefirstsixmonthsthisNoteisineffect,theCompanymayre-deemthisNote bypayingtotheHolderanamountasfollows:(i)iftheredemptionoccurswithinthefirst90daysthenanamountequalto125%oftheunpaidprincipalamountofthisNotealongwith any prepaid andearnedinterest, (ii) if the redemptionoccursafter the first90 days but be-forethe 150thdayfollowing the issuance of this Note, then anamount equal to 135% of the un-paidprincipalamountof this Note along with any prepaidandearned interest and (iii) if the re-demptionoccursafterthe first 150 days but before the 181stday following the issuanceofthis Note, then anamountequal to 145% of the unpaidprincipalamount of this Note alongwith any prepaidandearnedinterest. This Note maynot be redeemedafter 180 days. The redemptionmust be closedandpaidfor within 3 businessdays of the Companysending the redemptionde-

mand orthe redemption will be invalidand the Companymaynot redeem this Note.

 

 

(d)              Upon(i)atransferofallorsubstantiallyalloftheassetsoftheCompanyto anypersonin a singletransactionorseriesofrelatedtransactions,(ii) a reclassification,capitalreorganizationorotherchangeorexchangeofoutstandingsharesofthe CommonStock,other than aforwardorreverse stock splitorstock dividend, or(iii) anyconsolidation ormergerofthe Company with or into anotherperson or entity in which the Companyis not the surviving entity (otherthanamergerwhichiseffectedsolely to changethejurisdictionofincorporationofthe Company andresults in a reclassification,conversion orexchange of outstandingshares of CommonStocksolely intosharesofCommonStock)(eachofitems(i),(ii)and(iii)beingre-ferredtoasa"SaleEvent"),then, ineachcase,theCompany shall,upon requestof theHolder, redeem this Notein cash for 150% of the principal amount, plus accruedbut unpaidinterestthroughthedateofredemption,orattheelectionoftheHolder,suchHolder may convert theun-paidprincipalamount of this Note(togetherwith the amountofaccrued but unpaidinterest)into shares of Common Stock immediately priorto such SaleEvent at the ConversionPrice.

 

(e)               Incaseof any SaleEvent(nottoincludeasaleofallorsubstantially alloftheCompany’sassets)inconnectionwithwhichthisNoteisnotredeemedorconverted,theCompany shall cause effectiveprovisionto be made so that the Holder of this Note shall havethe rightthereafter,byconverting this Note, to purchase orconvert this Note into the kind and number of sharesof stock or other securities or property(including cash) receivable upon such reclassification,capitalreorganization or other change,consolidation or mergerbya holder of the number of shares of Common Stockthat couldhavebeenpurchased upon exercise of the Note andat the same Conversion Price,as defined in this Note, immediatelyprior to such SaleEvent.The foregoingprovisionsshallsimilarly apply tosuccessiveSaleEvents.Iftheconsidera- tion receivedby theholders of Common Stock is other than cash, the value shall beasdeter-minedby the BoardofDirectors of the Company orsuccessorperson or entity acting in goodfaith.

5.                 NoprovisionofthisNoteshallalterorimpairtheobligationoftheCom-pany,whichisabsoluteandunconditional,topaytheprincipalof,andintereston,thisNoteatthe time,place,andrate,andin the form,hereinprescribed.

 

6.                 TheCompanyherebyexpresslywaivesdemandandpresentmentforpay-ment,noticeofnon-payment,protest,noticeofprotest,noticeofdishonor,noticeofaccelerationorintenttoaccelerate,anddiligenceintakinganyactiontocollectamountscalledforhereunderandshallbedirectly andprimarily liablefor thepaymentofallsumsowingandtobeowing hereto.

 

7.                 TheCompanyagreestopayallcostsandexpenses,includingreasonableattorneys'feesandexpenses,whichmaybeincurredbytheHolderincollectinganyamountdue under this Note.

 

 

(a)               TheCompanyshalldefaultinthepaymentofprincipalorinterestonthisNoteor anyother noteissued to theHolderbytheCompany; or

 

(b)              AnyoftherepresentationsorwarrantiesmadebytheCompanyhereinorinanycertificateorfinancialorotherwrittenstatementsheretoforeorhereafterfurnishedbyoronbehalfoftheCompanyinconnectionwiththeexecutionanddelivery ofthisNote,ortheSe-curitiesPurchaseAgreementunderwhichthisnotewasissued shallbefalseormisleadingin any respect; or

 

(c)               TheCompanyshallfailtoperformorobserve,inanyrespect,anycove-nant,term,provision,condition,agreementorobligationoftheCompanyunderthisNoteoranyother note issued to theHolder; or

 

(d)              TheCompanyshall(1)becomeinsolvent;(2)admitinwritingitsinabilitytopayitsdebtsgenerallyastheymature;(3)makeanassignmentforthebenefitofcreditorsorcommenceproceedingsforitsdissolution;(4) applyfororconsenttotheappointmentofa trus-tee, liquidatororreceiverfor its orforasubstantial part ofits property orbusiness; (5) fileapeti- tionforbankruptcy relief,consenttothe filingof such petitionor have filed against it aninvol- untary petition for bankruptcyrelief,allunderfederal or statelaws as applicable; or

 

(e)               Atrustee,liquidatororreceivershallbeappointedfortheCompanyorforasubstantialpartofitspropertyorbusinesswithoutitsconsentandshallnotbedischargedwith-in sixty(60) daysafter such appointment; or

 

(f)               Anygovernmentalagencyoranycourtofcompetentjurisdictionatthein-stanceofanygovernmentalagencyshallassumecustodyorcontrolofthewholeoranysubstan-tial portion ofthe properties or assets of theCompany; or

 

(g)              Oneormoremoneyjudgments,writsorwarrantsofattachment,orsimilarprocess,in excessof fifty thousanddollars($50,000)intheaggregate,shallbeenteredor

filedagainsttheCompanyoranyofitspropertiesorotherassetsandshallremainunpaid,unvacated,unbondedorunstayedforaperiodoffifteen(15)daysorinanyeventlaterthanfive

(5)days priorto thedateofanyproposed sale thereunder; or

 

(h)              TheCompanyshallhavedefaultedonorbreachedanytermofanyothernoteofsimilardebtinstrumentintowhichtheCompanyhasenteredandfailedtocuresuchde-faultwithin the appropriategrace period;or

 

(i)                TheCompanyshallhaveitsCommonStockdelistedfromanexchange(includingtheOTCBBexchange)or,iftheCommonStocktradesonanexchange,thentrading in theCommon Stockshall be suspended for morethan 10 consecutive days;

 

(j)                IfamajorityofthemembersoftheBoardofDirectorsoftheCompanyonthe datehereofareno longer servingasmembersof theBoard;

 

(k)              TheCompanyshallnotdelivertotheHoldertheCommonStockpursuanttoparagraph4hereinwithoutrestrictivelegendwithin3businessdaysofitsreceiptofaNoticeof Conversion; or

 

(l)                TheCompanyshallnotreplenishthereservesetforthinSection12,with-in 3 business days of therequestof theHolder. (m)TheCompanyshallnotbe“current”initsfilingswith the Securities and Exchange Commission;or

 

(m)            TheCompanyshallnotbe“current”initsfilingswiththeSecuritiesandExchangeCommission; or

 

(n)              The Companyshalllosethe“bid”pricefor itsstockinamarket(includingthe OTCQBmarketplaceor otherexchange).

 

Then,oratanytimethereafter,unlesscuredwithin5days,andineachandeverysuchcase,un-lesssuchEventofDefaultshallhavebeenwaivedinwritingbytheHolder(whichwaivershallnotbedeemedtobeawaiver ofanysubsequentdefault)attheoptionof theHolderandinthe Holder'ssolediscretion,theHoldermayconsider thisNoteimmediatelydueandpayable,with- out presentment, demand,protest or (further) notice of anykind (other than notice of accelera-tion), all of which areherebyexpressly waived, anythingherein or in anynote orother instru- ments contained to the contrarynotwithstanding,and the Holdermay immediately,and without expirationof anyperiodof grace,enforceanyandall of theHolder'srightsandremediesprovid-edhereinor anyother rightsor remediesaffordedbylaw. Upon an Event of Default,interestshallaccrueatadefaultinterestrateof24%perannumor,ifsuchrateisusuriousornotpermit- tedbycurrentlaw,thenatthehighestrateofinterestpermittedbylaw.Intheeventofabreach

ofSection8(k)thepenaltyshallbe$250perdaythesharesarenotissuedbeginningonthe4th

dayaftertheconversionnoticewasdeliveredtotheCompany.Thispenaltyshallincreaseto

$500perdaybeginningonthe10thday.ThepenaltyforabreachofSection8(n)shallbeanin-creaseoftheoutstandingprincipalamountsby20%.IncaseofabreachofSection8(i),theout- standing principaldueunderthisNoteshallincreaseby 50%.IfthisNoteisnotpaidatmaturity,the outstandingprincipal due underthis Note shall increase by10%.

5

 

IftheHoldershallcommenceanactionorproceedingtoenforceanyprovisionsofthisNote,in-cluding,withoutlimitation,engaginganattorney,theniftheHolderprevailsinsuchaction,theHoldershall bereimbursedbythe Companyfor its attorneys’feesandothercostsandexpenses incurred in theinvestigation,preparationandprosecutionofsuchaction orproceeding.

 

Make-WholeforFailuretoDeliverLoss.AttheHolder’selection,iftheCompanyfailsforanyreasontodelivertotheHoldertheconversionsharesbythebythe3rdbusinessdayfollowing the deliveryof a Notice ofConversion to the Companyandif the Holderincurs a FailuretoDeliverLoss,thenatanytime the Holdermayprovidethe Company writtennoticeindicatingthe amounts payable to the Holder inrespect of the Failure to DeliverLossand the Company must makethe Holder wholeasfollows:

FailuretoDeliverLoss=[(Hightradepriceatanytimeonorafterthedayofexercise)x(Num-ber ofconversion shares)]

 

TheCompanymust paythe Failure to DeliverLossbycashpayment, andanysuch cash paymentmustbemadebythethirdbusinessdayfromthetimeoftheHolder’swrittennoticetotheCom-pany.

 

9.                 Incaseany provisionofthisNoteisheldbyacourtofcompetentjurisdic-tiontobeexcessiveinscopeorotherwiseinvalidorunenforceable,suchprovisionshallbead-justedrather than voided,ifpossible, sothatit is enforceabletothemaximumextentpossible, andthevalidity andenforceability oftheremaining provisionsofthisNotewillnot inany waybe affected or impairedthereby.

 

10.             NeitherthisNotenoranytermhereofmaybeamended,waived,dis-chargedorterminated other thanbyawritteninstrumentsignedbytheCompanyand the Holder.

 

11.             The Companyrepresentsthatitisnota“shell”issuerandhasneverbeena“shell”issuerorthatifitpreviouslyhasbeena“shell”issuerthatatleast12monthshavepassedsincetheCompany hasreportedform10typeinformationindicatingitisnolongera“shellissu-er.Further.TheCompanywillinstructitscounsel toeither(i)writea144-3(a)(9)opiniontoal-low for salabilityofthe conversion sharesor(ii)accept such opinion fromHolder’s counsel.

 

12.           TheCompanyshallissueirrevocabletransferagentinstructionsreserving10,000,000sharesofitsCommonStockforconversionsunderthisNote(the“ShareReserve”).ThereserveshallbereplenishedasneededtoallowforconversionsofthisNote.Uponfullconversionof this Note, any shares remainingin the Share Reserve shall be cancelled.The Com- pany shall pay allcostsassociated with issuing and delivering the shares.

 

13.             TheCompanywillgivetheHolderdirectnoticeofanycorporateactions,including butnotlimitedtonamechanges,stocksplits,recapitalizationsetc.Thisnoticeshallbegivento the Holder as soon as possibleunderlaw.

 

14.             ThisNoteshallbegovernedby andconstruedinaccordancewiththelawsofNewYorkapplicabletocontractsmadeandwhollytobeperformedwithintheStateofNew

Yorkandshallbebindinguponthesuccessorsandassignsofeachpartyhereto.TheHolderandthe Companyherebymutuallywaivetrial byjuryand consent to exclusivejurisdictionand venueinthecourtsoftheStateofNewYork. ThisAgreementmaybeexecutedincounterparts,and the facsimiletransmissionof anexecuted counterpart to this Agreementshall be effectiveasanoriginal.

 

INWITNESSWHEREOF,theCompanyhascausedthisNotetobedulyexecut-edbyanofficer thereunto dulyauthorized.

 

 

Dated:12/23/14

 

 

 

MAX SOUNDCORPORATION