Document:

ex10iv.htm

Exhibit 10.4

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

	 	
Right to Purchase 200,000 shares of Common Stock of Max Sound Corporation 

(subject to adjustment as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

	No. 2013-001	Issue Date: August 19, 2013

 

MAX SOUND CORPORATION, a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, TONAQUINT, INC., a Utah corporation or its assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on the third anniversary of the Issue Date (the “Expiration Date”), up to 200,000 fully paid and nonassessable shares of Common Stock at a per share purchase price of $0.40. The aforedescribed purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price." The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The Company may reduce the Purchase Price for some or all of the Warrants, temporarily or permanently, provided such reduction is made as to all outstanding Warrants for all Holders of such Warrants

 

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

(a)           The term “Company” shall mean Max Sound Corporation, a Delaware corporation, and any corporation which shall succeed or assume the obligations of Max Sound Corporation hereunder.

 

(b)           The term “Common Stock” includes (i) the Company's Common Stock, $0.0001 par value per share, as authorized as of the date hereof, and (ii) any other securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

(c)           The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

(d)           The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.

 

  

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1.             Exercise of Warrant.

 

1.1.         Number of Shares Issuable upon Exercise. From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 4.

 

1.2.         Full Exercise. This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. The original Warrant is not required to be surrendered to the Company until it has been fully exercised.

 

1.3.         Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by delivery of a Subscription Form in the manner and at the place provided in subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial exercise provided the Holder has surrendered the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of Common Stock for which such Warrant may still be exercised.

 

1.4.         Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the "Determination Date") shall mean:

 

(a)           If the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the Delaware Stock Exchange or the American Stock Exchange, LLC, then the average of the closing sale prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Determination Date;

 

(b)           If the Company's Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the Delaware Stock Exchange or the American Stock Exchange, Inc., but is traded on the OTC Bulletin Board or in the over-the-counter market or Pink Sheets, then the average of the closing bid and ask prices reported for the five (5) Trading Days immediately prior to (but not including) the Determination Date;

 

(c)           Except as provided in clause (d) below and Section 3.1, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or

 

(d)           If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

 

  

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1.5.         Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof, acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

 

1.6.         Delivery of Stock Certificates, etc. on Exercise. The Company agrees that, provided the full purchase price listed in the Subscription Form is received as specified in Section 1.2, the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which delivery of a Subscription Form shall have occurred and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $100 per business day after the Warrant Share Delivery Date for each $10,000 of Purchase Price of Warrant Shares for which this Warrant is exercised which are not timely delivered. The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

1.7.         Buy-In. In addition to any other rights available to the Holder, if the Company fails to deliver to a Holder the Warrant Shares as required pursuant to this Warrant, within three (3) business days after the Warrant Share Delivery Date and the Holder or a broker on the Holder’s behalf, purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by such Holder of the Warrant Shares which the Holder was entitled to receive from the Company (a "Buy-In"), then the Company shall pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (A) the Holder's total purchase price (including brokerage commissions, if any) for the shares of common stock so purchased exceeds (B) the aggregate Purchase Price of the Warrant Shares required to have been delivered together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of Purchase Price of Warrant Shares to have been received upon exercise of this Warrant, the Company shall be required to pay the Holder $1,000, plus interest. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

  

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2.            Cash Exercise.

 

Payment upon exercise may be made in cash, wire transfer or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Purchase Price, , for the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein.

 

3.             Adjustment for Reorganization, Consolidation, Merger, etc.

 

3.1.           Fundamental Transaction. If, at any time while this Warrant is outstanding, (A)the Company effects any merger or consolidation of the Company with or into another entity, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, or spin-off) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), (E) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) 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 Common Stock of the Company, or (F) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in (1) a transaction where the consideration paid to the holders of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the 1934 Act, or (3) a transaction involving a person or entity not traded on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, cash equal to the Black-Scholes Value. For purposes of any such exercise, the determination of the Purchase Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such fundamental Transaction, and the Company shall apportion the Purchase Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3.1 and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. “Black-Scholes Value” shall be determined in accordance with the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of such request and (iii) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction.

 

  

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3.2.           Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in full force and effect after the consummation of the transaction described in this Section 3, then only in such event will the Company's securities and property (including cash, where applicable) receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by Section 3.2.

 

4.             Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

 

5.             Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

 

  

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6.             Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. This Warrant entitles the Holder hereof, upon written request, to receive copies of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock.

 

7.             Assignment; Exchange of Warrant. Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor"). On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form") and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor.

 

8.             Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

9.            Warrant Holder Not Deemed Stockholder. Except as otherwise specifically provided herein, the Holder, solely in such person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant shares which such person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

10.           Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Rule 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction described in this paragraph may be waived, in whole or in part, upon sixty-one (61) days prior notice from the Holder to the Company to increase such percentage to up to 9.99%, but not in excess of 9.99%. The Holder may decide whether to convert a Convertible Note or exercise this Warrant to achieve an actual 4.99% or up to 9.99% ownership position as described above, but not in excess of 9.99%.

  

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11.          Warrant Agent. The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

 

12.          Transfer on the Company's Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

13.           Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

 

14.           Law Governing This Warrant. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of California or in the federal courts located in the state and county of Los Angeles. The parties to this Warrant 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. The Company and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Warrant 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 Transaction Document 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.

  

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

 

	 	
MAX SOUND CORPORATION

	 	 	 
	 	
By:

	/s/ Greg Halpern
	 	 	
Name: Greg Halpern

	 	 	
Title:   CFO

 

 

  

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Exhibit A

 

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

 

TO: MAX SOUND CORPORATION

 

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.______), hereby irrevocably elects to purchase (check applicable box):

 

                ____________shares of the Common Stock covered by such Warrant; or

 

___    the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2.

 

The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $________. Such payment takes the form of (check applicable box or boxes):

 

___          $                   in lawful money of the United States; and/or

 

___          the cancellation of such portion of the attached Warrant as is exercisable for a total of shares of Common Stock (using a Fair Market Value of $________ per share for purposes of this calculation); and/or

 

___          the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2.

 

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to _____________________________________________ whose address is____________________________________________________.

 

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from registration under the Securities Act.

 

	Dated:___________________	 	 
	 	 	
(Signature must conform to name of holder as 

specified on the face of the Warrant)

	 	 	 
	 	 	 
	 	 	 
	 	 	
(Address)

 

  

  

  

 

Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of MAX SOUND CORPORATION to which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of MAX SOUND CORPORATION with full power of substitution in the premises.

 

	Transferees	 	
Percentage Transferred

	 	
Number Transferred

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

	
Dated:                                 ,                              

	 	 
	 	 	
(Signature must conform to name of holder as 

specified on the face of the warrant)

 

	
Signed in the presence of:

	  	  
	 	 	 
	 	 	 
	
(Name)

	  	  
	  	
(address)

	
ACCEPTED AND AGREED:

	  	  
	
[TRANSFEREE]

	 	 
	 	 	
(address)

	 	 	 
	
(Name)Unassociated Document

Exhibit 10.1 

Document No.: CMBC-HT-469 (S.Y. 2012)

 

 

 

 

 

 

 

 

 

 

 

 

Loan Contract

 

 

 

 

 

 

No.: (matching) Z.R.J.D.Z. 20130005

 

 

 

 

 

 

  

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Party A: Jiangxi Zhangshu Yida Tourism and Development Co., Ltd. (Lender)

Valid ID: Business License 360982210009287

Domicile: No. 99, Gexuan Rd., Zhangshu City

Postal code:

Tel.:

Fax:

 

Party B: Wang Qiaoqia (Borrower)

Valid ID: 142724196910203122

Domicile: Unit 401, Building 18, Jintai Residential Quarters, Gulou District, Fuzhou

Postal code:

Tel.:

Fax:

 

Party C: China Minsheng Banking Corp., Ltd., Fuzhou Branch (Supplier)

Domicile: No. 280, Hudong Rd., Fuzhou City

Legal representative: Su Suhua

Postal code:

Tel.:

Fax:

 

In order to perform the Financial Advisor Contract (Contract No. (Matching Finance), R.Z. 20130006) between Party A and Party C and the Financial Consultant Contract (Contract No.      /    ) or Finance Entrustment (No. L.C.W.Z. 20130006) between Party B and Party C, with Party C as the mediator, based on the equality and voluntariness, the Contract is made by and between Party A and Party B, regarding loan issued by Party B to Party A, funds borrowed by Party A from Party B and the service provided by Party C, in accordance with relevant state laws and regulations in good faith.

 

The loan and debt herein have the same meaning.

 

Chapter I Loan Amount, Term and Purpose

 

Article 1 The loan amount hereunder is RMB (in words) TWELVE MILLION FIVE HUNDRED THOUSAND, (in figure RMB 12,500,000).

 

Article 2 The loan term hereunder is from July 22, 2013 to July 22, 2014. The interests shall be calculated since the loan is issued to the loan account opened by Party A at Party C (account number 1502014210009425, opening bank Sales Department of China Minsheng Banking Corp., Ltd., Fuzhou Branch), regardless of actual use.

 

Article 3 The purpose of the loan is for Jiangxi Zhangshu Yang-sheng Paradise tourism project only. Party A shall not use the loan hereunder for illegal activities, illegal business or areas prohibited by state laws and regulations; Party A shall not change the purpose for the loan or embezzle the loan.

 

  

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Article 4 The annual interest rate for the loan hereunder is 10% (I); monthly interest rate hereunder = annual interest rate/12, daily interest rate = annual interest rate/360. After the issuance of the loan, if the People's Bank of China (hereinafter referred to as PBC) adjusts relevant benchmark interest rate, then      1     :

 

1. The loan interest rate hereunder shall not change;

 

2. The loan interest rate shall be calculated through the following format: I' (adjusted interest rate) = (newly published loan benchmark interest rate at the same period by PBC/the loan benchmark interest rate at the same period by PBC on the loan issuing date) * I.

 

Notwithstanding the agreement herein, the loan interest rate hereunder shall not exceed 4 times of benchmark interest rate. Both parties agree that the exceeding part shall be deemed as a loan interest rate 4 times higher than benchmark interest rate.

 

Chapter II Default Interest

 

Article 5 Where Party A fails to pay off the loan principal and interests, since the due date, the default interest shall be calculated based on account payable in accordance with default interest and overdue days, till the day on which Party A pays off.

 

The default rate shall be [50%] more in addition to the loan interest rate hereunder.

 

Article 6 Where Party A fails to use the loan in accordance with the purpose agreed herein, Party B may charge Party A of default interests, which shall be calculated based on the embezzled loan amount in accordance with default interest rate hereunder and actual default days, since the default date till Party A pays off principal and interest.

 

The default interest rate hereunder shall be [100%] in addition to loan interest rate hereunder.

 

Article 7 Compound interest is not calculated under the interest rate.

 

Chapter III Loan Issuance and Repayment

 

Article 8 Party B shall issue the loan to Party A in accordance with    1     , provided that the Contract is effective, and Party A has completed loan transaction, guarantee transaction and all other transactions agreed herein: (1) where the aforesaid conditions are met, the payment shall be made in a lump sum within three (3) days; (2) others    /     .

 

Article 9 Three parties agree that, the day when Party B entrusted Party C to transfer the loan amount agreed herein to the loan account opened by Party A at Party C shall be deemed that Party B has performed the loan issuance obligation. Party B shall not issue the loan to Party A directly.

 

Article 10 Party A shall repay the loan to Party B in accordance with the payment method and term agreed herein. The payment method of the principal and interest of the loan hereunder will be the following item 1  :

 

1. The principal and the interest shall be paid together, i.e., the loan principal and interest shall be paid off on due date;

 

2. The payment shall be made monthly with principal and interest repaid in a lump sum. The settlement date is the    /    day every month. When the loan is due, the interest shall be paid with the principal;

 

3. Others:                   /       

 

Article 11 Three parties agree that, where Party A repays the amount payable to the loan account opened by Party A at Party C before repayment date, it shall be deemed that Party A has performed the relevant loan repayment obligation. Party A will not repay the loan to Party B directly.

 

Article 12 Where Party A wishes to repay the loan in advance, prior consent shall be obtained from Party B. Where Party B agrees prior repayment by Party A, Party C shall be informed of date of prior repayment, repayment principal and interest agreed by Party A and Party B in written form. In addition, Party A shall pay penalty of              /               to Party B upon repayment of principal.

 

  

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Chapter IV Guarantee

 

Article 13 In order to ensure the loan hereunder can be paid off, Party A and/or the third party shall provide Party B with the following       /           guarantee:

 

1. (Matching) Z.R.D.B.Z No.              /                Guarantee Contract;

 

2. Others              /                .

 

Chapter V Agent Receipt and Payment

 

Article 14 Party B entrusts Party C to transact funds receipt and payment regarding loan issuance and loan payment hereunder.

 

Article 15 Where Party C transfers the funds deposited by Party B to the loan account opened by Party A at Party C within three (3) working days under the instruction of Party B, it shall be deemed that Party C has performed entrusted issuance of loan.

 

Article 16 Party A hereby makes an irrevocable authorization to Party C that Party C shall automatically deduct the funds equal to the amount due in the loan account opened by Party A at Party C on repayment date, and transfer the funds within one (1) working day to account opened by Party B at Party C (account No. 6226221580758446, account name  Wang Qiaoqia  ). And it shall be deemed that Party C has performed the entrusted loan repayment transfer obligation.

 

Article 17 Where multiple creditors are involved, Party A shall not only deposit sufficient repayment principal and interest agreed into the loan account, but also provide distribution lists for every creditor. Party C shall check the validity of the list in accordance with the Loan Contract before transfer the money. Where any lists are not valid, they shall be reported to Party A and Party B in time.

 

Article 18 Party C may charge 1.2% of the loan amount as the entrustment remuneration. Three parties agreed that Party A shall pay such remuneration to the appointed account by Party C: 9988150001000011 in a lump sum within three (3) days after loan issuance. Where Party A fails to make actual payment, Party C may require Party B to pay for the remuneration. The undertaking of such remuneration by Party A shall not affect the interest undertaking agreed in Article 4 hereof.

 

Chapter VI Funds (Account) Supervision

 

Article 19 Party B entrusts Party C to supervise the loan usage by Party A.

 

Article 20 After Party B issues the loan to the account opened by Party A at Party C, three parties agree that Party C shall supervise such account. Three parties also agree that after Party A provides the basic transaction documents consistent with loan purpose, it may apply to require Party C to make entrusted payment to relevant funds or payment in other methods agreed by Party B in written form, otherwise Party A shall not use the funds in the account.

 

Three parties agree that, the aforesaid entrusted payment means the payment to □ bank account of transaction counterpart in transaction documents of Party A; □ other bank accounts appointed by Party A.

 

Article 21 Party C shall carry out formal examination to the basic transaction document provided by Party A and reserve the right to refuse funds transfer for application with inconsistent loan purpose. Where Party A disagrees with the refusal, Party B will make a decision. Where Party B agrees to transfer the funds, a written consent for funds transfer shall be sent to Party C; Party B shall not make unreasonable refusal to the application consistent with loan purpose, otherwise Party B shall be liable for the breach of contract.

 

Article 22 The basic transaction documents which need to be provided by Party A to Party C shall include but not limited to: relevant Guarantee Contract, copies of relevant mortgage and pledge and trading background files, and the copies shall be consistent with the original copies.

 

Article 23 Party C shall make formal examination within _____ days after the application proposed by Party A. Where funds transfer decision is made or payment instructed by Party B, the payment shall be made to the appointed account by Party A within ___ working days after examination or instruction.

 

  

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Article 24 Party B entrusts Party C to monitor loan usage of Party A in compliance with the frequency of the following item     1     , and Party A agrees to cooperate with Party C:

 

1. Post loan examination for every half a year;

 

2. Post loan examination for every quarter;

 

3. Post loan examination for every monthly.

 

Article 25 After Party C has made post loan examination, it shall provide Party B with a written report which shall include 1. Party A's financial information; 2. Guaranty value information; 3. Other information required by Party B__________________.

 

Article 26 Party C may charge     /    % of the loan amount as the entrustment remuneration. Three parties agree that such remuneration shall be paid by Party A to the account appointed by Party C in a lump sum after the issuance of loan:    /    . The undertaking of such remuneration by Party A shall not affect the interest undertaking agreed in Article 4 hereof.

 

Chapter VII Other Entrustments

 

Article 27 Party B reserves the right to decide whether to entrust Party C for the guarantee registration and the like, with the fee of    /      yuan/transaction.

 

Article 28 Provided that the local government carries out the registration filing system on private lending, Party B has the right to decide whether or not to entrust Party C for registration filing, with the fee of     /      yuan/transaction.

 

Article 29 The pledge guarantee hereunder which requires Party C to occupy the guaranty entrusted by Party B shall be stipulated in a separate agreement by and between both parties.

 

Chapter VIII Rights and Obligations of Three Parties

 

Article 30 Rights and Obligations of Party A

 

1. Party A shall guarantee that the loan is properly authorized. Where Party A is a natural person who is married, the loan shall be deemed as the joint loan of both spouses.

 

2. Party A shall use the loan in compliance with the agreements agreed herein without changing loan purpose or embezzling the loan, or engaged in illegal activities with borrowed funds;

 

3. Party A shall guarantee that it does not make fictitious transaction, the provided transactions and counterparts exist, and all the information, documents and materials provided are genuine, complete, legal and effective;

 

4. Party A has the right to use the whole loan amount herein within agreed time.

 

5. Party A shall provide Party B with corresponding transaction documents, voucher or other transaction certificate as required, and ensure the provided materials are genuine, complete, legal and effective.

 

6. Party A shall accept the research from Party B or entrusted Party C by Party B regarding its credit status and contractual capability; it shall also actively cooperate with Party B for the loan usage checking;

 

7. Where Party A changes the contact address, work unit, domicile or habitual residence, telephone number etc., it shall inform Party B within five (5) days after such changes.

 

8. Party A agrees to be liable for the fee of the Contract and the registration, storage, insurance, notarization, identification, evaluation, registration filing and legal service hereunder;

 

9. Party A shall inform Party B and Party C within three (3) days after loan and guarantee transaction. Where singe loan or guaranteed amount exceeds RMB     /     or balance exceeds RMB    /    , prior consent shall be obtained from Party B and Party C shall be informed.

 

10. Party A authorizes Party C to inquire its information in credit system.

 

  

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11. Party A or its major responsible person shall inform Party B and Party C with three (3) days after marriage status change or other properties division events.

 

12. Party A is obliged to pay the entrustment remuneration and post loan supervision remuneration to Party C, and it shall not have the right to file a claim for recovery to Party B.

 

Article 31 Rights and Obligations of Party B

 

1. Party B shall pay for the loan to Party A in full specified amount as scheduled, provided that Party A has fully performed the duty hereunder and meet the requirements for loan payment;

 

2. Party B has the right to check the loan usage hereunder;

 

3. Party B shall guarantee that it has the full right to conclude the Contract; make the commitment to keep the personal information and trade secrets confidential, unless otherwise stipulated by laws and regulations;

 

4. Party B shall guarantee that it has the legal right to control the funds and the funds resource is legal.

 

5. Party B has the right to charge principals and interests agreed hereunder.

 

Article 30 Rights and Obligations of Party C

 

1. Party C shall accept the entrustment to provide service for agent receipt and payment of loan funds and post loan supervision to Party A.

 

2. It has the right to get the remuneration for entrusted items agreed herein.

 

3. Party C is entrusted by Party B as the funds (account) supervisor. After the examination of loan purpose, which is consistent with the agreements hereunder, Party C may make the payment directly.

 

4. Except for the entrusted matters by Party B agreed herein, any other loan repayment or any other forms to undertake guarantee responsibility.

 

XI Liability for Breach of Contract

 

Article 31 Where Party A fails to repay the principal and interest of loan agreed herein or fails to use the loan to agreed purpose, it shall be liable for breach of contract.

 

Article 31 Where one the following situation occurs, Party B reserves the right to terminate the Contract and charge Party A of     5%    of contract amount as the penalty; where Party B terminates the Contract in accordance with this article, the issued loan hereunder shall be due immediately. Party B has the right to require Party A repay all or part of the loan principal and interest in advance, and has the right to stop repaying unpaid loan and handle mortgage/pledge and/or require guarantor to undertake guarantee responsibility:

 

31.1 Party A fails to repay the loan principal and interest within 15 days after due date;

 

31.2 Party A changes the loan purpose or embezzles the loan without prior consent from Party B, or use the loan and assets bought by loan to be engaged in illegal activities;

 

31.3 Relevant materials provided by Party A are not genuine or covering major events, endangering the loan safety of Party B;

 

31.4 Where the guaranteed property is torn down, sold, transferred, exchanged, given away or in other condition, or is damaged, destroyed or the value is obviously reduced, while Party A fails to provide new, valid and sufficient guaranty as required by Party B;

 

31.5 Party A or its guarantor shows that it refuses to perform any obligations hereunder through clear expression or its actual performance;

 

31.6 Party A defaults any of the obligations hereunder.

 

  

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Article 32 Where Party B fails to issue the loan in accordance with the agreement, it shall pay Party A the penalty for the delay, based on amount payable and due interest rate; where the delay exceeds 15 days, Party A has the right to terminate the Contract and charge _____% of contract amount as the penalty; where Party A terminates the Contract in accordance with the agreement, the paid loan shall continue to be in accordance with the Contract, while the unpaid loan shall not be paid.

 

Article 33 Either Party A or Party B leads to the invalidity or impossible of performance of the Contract, it shall be deemed as breach the contract. The other party has the right to charge the default party of     /    % of contract loan amount as the penalty, and the default party shall be liable for the actual damage of the other party.

 

Article 34 Notwithstanding the agreements in the Contract, Party C shall not be liable for any indirect damage, and the liability for breach of contract hereunder or any other possible infringement responsibility shall not exceed received amount by Party C under the Contract.

 

X. Miscellaneous

 

Article 35 The Contract shall be effective upon the signatures and seals of all parties. Where the Guarantee Contract and the agreement of the Contract are not concluded by Party A and its Guarantor as required by Party B, Party B shall not assume the responsibility to issue the loan.

 

Article 36 After the effectiveness of the Contract, unless otherwise stipulated by laws and regulations or agreed herein, Party A and Party B shall not modify the Contract or terminate the Contract in advance. Where modification or termination is required, it shall be effective after it is confirmed by both parties in written form and informed Party C.

 

Article 37 Any disputes arising out of or in connection with the Contract shall be settled through consultation. Where no agreement is reached, it shall be referred to competent people's court at the signing place. The signing place of the Contract is    Fuzhou    .

 

Article 38 Where Party B files a lawsuit to protect its credit due to the breach of contract by Party A, Party A shall be liable for the fees paid by Party B for protection of credit and guarantee right (including but not limited to lawyer fees and travel fees).

 

Article 39 Any matters uncovered herein may be concluded in separate agreements in written form by all parties. The appendixes of the Contract are internal parts of the Contract, and have the same legal effect with the Contract.

 

Article 40 The contract is made in triplicate with the same legal effect, with Party A, Party B and Party C holding one copy(s).

 

(This space intentionally left blank)

 

 

 

	 	 	 	 	China Minsheng Banking Corp., Ltd.
	 	 	 	 	 
	 	 	 	 	
Special Seal for Legal Contract Check

	 	 	 	 	 
	 	 	 	 	
Fuzhou Branch

 

  

7

  

 

(The page is for signature)

 

Party A (or agent): Jiangxi Zhangshu (Yida) Tourism and Development Co., Ltd.

Chen Minhua (seal)

Date: July 22, 2013

 

Party B (or agent): Wang Qiaoqia (signature)

Date: July 22, 2013

 

Party C (or agent): China Minsheng Banking Corp., Ltd.

Su Suhua (seal)

Date: July 22, 2013

 

Spouse/other joint debtor of Party A (or agent):   (signature)

Date:

 

 

 

	 	 	 	 	China Minsheng Banking Corp., Ltd.
	 	 	 	 	 
	 	 	 	 	
Special Seal for Legal Contract Check

	 	 	 	 	 
	 	 	 	 	
Fuzhou Branch

 

 8

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