UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Schedule 13D

 

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO

§240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT OT §240.13d-2(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

MAX SOUND CORPORATION

 

(Name of Issuer)

 

Common Stock, par value $.00001 per share

 

(Title of Class of Securities)

 

57776X109

 

(CUSIP Number)

 

Laura E. Anthony, Esquire

330 Clematis Street, Suite 217

West Palm Beach, FL 33401

(561) 514-0936

 

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

October 7, 2015

 

(Date of Event Which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [  ]

 

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section §240.13d-7 for other parties to whom copies are to be sent.

 

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

     
 

 

CUSIP No. 57776X109

 

1.

Names of Reporting Persons.

I.R.S. Identification Nos. of above persons (entities only)

 

The Vechery Family Trust DTD 10/9/84

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a) [  ]

(b) [  ]

3.

SEC Use Only

 

4.

Source of Funds (See Instructions)

 

PF

5.

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

[  ]

6.

Citizenship or Place of Organization

 

California

 

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power
   
  0
8. Shared Voting Power
   
 

382,851,165 (1)

 

9. Sole Dispositive Power
   
  0
10. Shared Dispositive Power
   
  382,851,165 (1)

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person

 

382,851,165 (1)

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

[  ]

13.

Percent of Class Represented by Amount in Row (11)

 

31.94% (2)

14.

Type of Reporting Person (See Instructions)

 

OO

 

  (1) Includes 350,851,165 shares of Common Stock underlying immediately exercisable warrants and immediately convertible notes as of October 19, 2016.
     
  (2) This percentage is calculated, as of October 19, 2016, using as the numerator 32,000,000 shares of Common Stock held by The Vechery Family Trust DTD 10/9/84 plus 350,851,165 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by The Vechery Family Trust DTD 10/9/84 and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 350,851,165 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by The Vechery Family Trust DTD 10/9/84.

 

  2  
 

 

CUSIP No. 57776X109

 

1.

Names of Reporting Persons.

I.R.S. Identification Nos. of above persons (entities only)

 

The Vechery Grandchildren’s Trust DTD 12/26/12

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a) [  ]

(b) [  ]

3.

SEC Use Only

 

4.

Source of Funds (See Instructions)

 

PF

5.

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

[  ]

6.

Citizenship or Place of Organization

 

California

 

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power
   
  0
8. Shared Voting Power
   
 

12,759,144 (1)

 

9. Sole Dispositive Power
   
  0
10. Shared Dispositive Power
   
  12,759,144 (1)

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person

 

12,759,144 (1)

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

[  ]

13.

Percent of Class Represented by Amount in Row (11)

 

1.5% (2)

14.

Type of Reporting Person (See Instructions)

 

OO

 

  (1) Includes 448,537 shares of Common Stock underlying immediately convertible notes as of October 19, 2016.
     
  (2) This percentage is calculated, as of October 19, 2016, using as the numerator 12,310,607 shares of Common Stock held by The Vechery Grandchildren’s Trust DTD 12/26/12 plus 448,537 shares of Common Stock issuable upon conversion as of October 19, 2016 of immediately convertible notes held by The Vechery Grandchildren’s Trust DTD 12/26/12 and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 448,537 shares of Common Stock issuable upon conversion as of October 19, 2016 of immediately convertible notes held by The Vechery Grandchildren’s Trust DTD 12/26/12.

 

  3  
 

 

CUSIP No. 57776X109

 

1.

Names of Reporting Persons.

I.R.S. Identification Nos. of above persons (entities only)

 

Harvey T. Vechery

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a) [  ]

(b) [  ]

3.

SEC Use Only

 

4.

Source of Funds (See Instructions)

 

AF

5.

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

[  ]

6.

Citizenship or Place of Organization

 

United States of America

 

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7.

Sole Voting Power

 

0

8.

Shared Voting Power

 

395,610,309 (1)

 

9.

Sole Dispositive Power

 

0

10.

Shared Dispositive Power

 

395,610,309 (1)

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person

 

395,610,309 (1)

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

[  ]

13.

Percent of Class Represented by Amount in Row (11)

 

32.99% (2)

14.

Type of Reporting Person (See Instructions)

 

OO

 

  (1) Includes 351,299,702 shares of Common Stock underlying immediately exercisable warrants and immediately convertible notes as of October 19, 2016.
     
  (2) This percentage is calculated, as of October 19, 2016, using as the numerator 44,310,607 shares of Common Stock held by Harvey T. Vechery, as co-trustee of the Trusts, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mr. Vechery, as co-trustee of the Trusts and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mr. Vechery, as co-trustee of the Trusts.

 

  4  
 

 

CUSIP No. 57776X109

 

1.

Names of Reporting Persons.

I.R.S. Identification Nos. of above persons (entities only)

 

Linda Vechery

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a) [  ]

(b) [  ]

3.

SEC Use Only

 

4.

Source of Funds (See Instructions)

 

AF

5.

Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

[X]

6.

Citizenship or Place of Organization

 

United States of America

 

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7.

Sole Voting Power

 

0

 
8.

Shared Voting Power

 

395,610,309 (1)

 

 
9.

Sole Dispositive Power

 

0

 
10.

Shared Dispositive Power

 

395,610,309 (1)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person

 

395,610,309 (1)

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

[  ]

13.

Percent of Class Represented by Amount in Row (11)

 

32.99% (2)

14.

Type of Reporting Person (See Instructions)

 

IN

 

  (1) Includes 351,299,702 shares of Common Stock underlying immediately exercisable warrants and immediately convertible notes as of October 19, 2016.
     
  (2) This percentage is calculated, as of October 19, 2016, using as the numerator 44,310,607 shares of Common Stock held by Linda Vechery, as co-trustee of the Trusts, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mrs. Vechery, as co-trustee of the Trusts, and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mrs. Vechery, as co-trustee of the Trusts.

 

  5  
 

 

Item 1. Security and Issuer.

 

This Schedule 13D is filed with respect to the common stock, par value $0.00001 per share (the “Shares”), of Max Sound Corporation, a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 8837 Villa La Jolla Drive, Unit 12109, La Jolla, California 92039.

 

Item 2. Identity and Background.

 

(a) This Schedule 13D is filed by jointly by The Vechery Family Trust DTD 10/9/84 (the “Vechery Family Trust”), The Vechery Grandchildren’s Trust DTD 12/26/12 (the Vichery Grandchildren’s Trust”), Harvey T. Vechery, and Linda Vechery (together, the “Reporting Persons”), pursuant to the provisions of Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, as separate persons and not as members of a group. See Exhibit 99.1 for their Joint Filing Agreement.
   
(b) The principal business address of each of the Reporting Persons is 16035 East Arrow Highway, Irwindale, California 91706-2049.
   
(c) The Vechery Family Trust and the Vechery Grandchildren’s Trust (collectively, the “Trusts”) are trusts formed under the laws of the State of California which maintain an address at 16035 East Arrow Highway, Irwindale, California 91706-2049. Harvey T. Vechery and Linda Vechery are co-trustees of each of the Trusts.
   
(d) None of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years.
   
(e) None of the Reporting Persons have, within the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
   
(f) Harvey T. Vecher and Linda Vechery are both citizens of the United States of America and the Trusts are each a trust formed under the laws of the State of California.

 

  6  
 

 

Item 3. Source and Amount of Funds or Other Consideration.

 

The Vechery Family Trust expended an aggregate of approximately $3,470,000 of its trust funds to acquire the 382,851,165 shares of Common Stock beneficially held by it (the “VFT Securities”). The Vechery Grandchildren’s Trust expended an aggregate of approximately $130,000 of its trust funds to acquire the 12,759,144 shares of Common Stock beneficially held by it (the “VGT Securities”; and together with the “VFT Securities”, referred to herein as the “Securities”). The Trusts did not acquire beneficial ownership of any Securities with borrowed funds.

 

Item 4. Purpose of Transaction.

 

The Reporting Persons hold the Issuer’s securities for investment purposes. The Reporting Persons intend to participate in and influence the affairs of the Issuer only with respect to its voting rights associated with its shares of Common Stock.

 

The Reporting Persons do not have any present plans or proposals that relate to or would result in the occurrence of any of the events or matters described in Item 4(a)-(j) of Schedule 13D.

 

Item 5. Interest in Securities of the Issuer.

 

(a) As of October 19, 2016:

 

  (i) the Vechery Family Trust beneficially owns 382,851,165 shares of Common Stock, representing approximately 31.94% of the outstanding shares of Common Stock. This percentage is calculated, as of October 19, 2016, using as the numerator 32,000,000 shares of Common Stock held by the Vechery Family Trust plus 350,851,165 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by the Vechery Family Trust and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 350,851,165 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by the Vechery Family Trust;
     
  (ii) the Vechery Grandchildren’s Trust beneficially owns 12,759,144 shares of Common Stock, representing approximately 1.5% of the outstanding shares of Common Stock. This percentage is calculated, as of October 19, 2016, using as the numerator 12,310,607 shares of Common Stock held by the Vechery Grandchildren’s Trust plus 448,537 shares of Common Stock issuable upon conversion as of October 19, 2016 of immediately convertible notes held by the Vechery Grandchildren’s Trust and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 448,537 shares of Common Stock issuable upon conversion as of October 19, 2016 of immediately convertible notes held by the Vechery Grandchildren’s Trust;
     
  (iii) Mr. Vechery, as co-trustee of the Trusts, beneficially owns 395,610,309 shares of Common Stock, representing approximately 32.99%% of the outstanding shares of Common Stock. This percentage is calculated, as of October 19, 2016, using as the numerator 44,310,607 shares of Common Stock held by Mr. Vechery, as co-trustee of the Trusts, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mr. Vechery, as co-trustee of the Trusts and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mr. Vechery, as co-trustee of the Trusts; and
     
  (iv) Mrs. Vechery, as co-trustee of the Trusts, beneficially owns 395,610,309 shares of Common Stock, representing approximately 32.99%% of the outstanding shares of Common Stock. This percentage is calculated, as of October 19, 2016, using as the numerator 44,310,607 shares of Common Stock held by Mrs. Vechery, as co-trustee of the Trusts, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mrs. Vechery, as co-trustee of the Trusts and as the denominator, 847,884,797 shares of Common Stock which were issued and outstanding as of October 19, 2016, as confirmed by the transfer agent of the Issuer, plus 351,299,702 shares of Common Stock issuable upon exercise as of October 19, 2016 of immediately exercisable warrants and conversion as of October 19, 2016 of immediately convertible notes held by Mrs. Vechery, as co-trustee of the Trusts.

 

(b) The information set forth in Item 5(a) of this Schedule 13D is incorporated herein by reference. The Vechery Family Trust and Mr. Vechery and Mrs. Vechery, as co-trustee of the Vechery Family Trust, share voting and dispositive power over the 382,851,165 shares of Common Stock held by the Vechery Family Trust. The Vechery Grandchildren’s Trust and Mr. Vechery and Mrs. Vechery, as co-trustee of the Vechery Grandchildren’s Trust, share voting and dispositive power over the 12,759,144 shares of Common Stock held by the Vechery Grandchildren’s Trust.

 

  7  
 

 

(c) The Reporting Persons effected the following transactions, as applicable, in the Common Stock and derivative securities of the Issuer relating to the Common Stock through the date of event of this filing on October 7, 2015 and through the date of this filing:

 

Date   Nature of Transaction   Number of Shares   Price per Share ($)   Where and How Effected
10/07/2015   Acquisition of Convertible Note   *   *  

Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust, an 8% Redeemable Convertible Note in the amount of $1,000,000

in exchange for $1,000,000.

10/07/2015   Acquisition of Warrant   1,000,000   N/A   Private acquisition of a warrant by Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust to purchase 1,000,000 shares of Common Stock at an exercise price of $0.12 per share
10/26/2015   Acquisition   *   *  

Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust, an 8% Redeemable Convertible Note in the amount of $1,000,000

in exchange for $1,000,000.

10/26/2015   Acquisition of Warrant   1,000,000   N/A   Private acquisition of a warrant by Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust to purchase 1,000,000 shares of Common Stock at an exercise price of $0.12 per share
03/10/2016   Acquisition of Convertible Note   *   *   Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Grandchildren’s Trust, an 8% Redeemable Convertible Note in the amount of $50,000 in exchange for $50,000.
03/14/2016   Acquisition of Convertible Note   *   *   Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Grandchildren’s Trust, an 8% Redeemable Convertible Note in the amount of $80,000 in exchange for $80,000.
03/25/2016   Acquisition of Convertible Note   **   **   Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust, an 8% Redeemable Convertible Note in the amount of $870,000 in exchange for $870,000.
04/08/2016   Acquisition of Convertible Note   ***   ***   Private transaction whereby Issuer issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Family Trust, an 8% Redeemable Convertible Note in the amount of $600,000 in exchange for $600,000.
04/16/2016   Acquisition of Common Stock   32,000,000   0.0018   Private acquisition by partially converting note issued on 10/07/2016 ($57,600 of $1,000,000 principal amount) to purchase 32,000,000 shares of Common Stock at a conversion price of $0.0018 per share
09/21/2016   Acquisition of Common Stock   4,734,849   0.01056   Private acquisition by fully converting the $50,000 note issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Grandchildren’s Trust on 3/10/2016 to purchase 4,734,849 shares of Common Stock at a conversion price of $0.01056 per share
09/21/2016   Acquisition of Common Stock   7,575,758   0.01056   Private acquisition by fully converting the $80,000 note issued to Mr. and Mrs. Vechery as co-trustees of the Vechery Grandchildren’s Trust on 3/14/2016 to purchase 7,575,758 shares of Common Stock at a conversion price of $0.01056 per share

 

  8  
 

 

* The number of converted shares and conversion price per share is determined based on the following formula: The conversion price under the notes is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Issuer’s shares are traded or any exchange upon which the Common Stock may be traded in the future, including the day upon which a Notice of Conversion (as defined in the notes) is received by the Issuer.
   
** The number of converted shares and conversion price per share is determined based on the following: (i) for the first $63,000 of outstanding principal under the note, is $0.0018 and (ii) for the remaining principal outstanding and interest under the note, is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Issuer’s shares are traded or any exchange upon which the Common Stock may be traded in the future, including the day upon which a Notice of Conversion (as defined in the notes) is received by the Issuer.
   
*** The number of converted shares and conversion price per share is determined based on the following: (i) for the first $37,800 of outstanding principal under the note, is $0.0018 and (ii) for the remaining principal outstanding and interest under the note, is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Issuer’s shares are traded or any exchange upon which the Common Stock may be traded in the future, including the day upon which a Notice of Conversion (as defined in the notes) is received by the Issuer.

 

(d) Other than the Reporting Persons, no person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Securities.
   
(e) Not applicable.

 

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

 

Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Persons have entered into an agreement with respect to the joint filing of this statement, and any amendment or amendments hereto.

 

Of the Securities beneficially held by the Reporting Persons, an aggregate of 351,299,702 shares of Common Stock are subject to warrants to purchase shares of Common Stock and convertible notes to acquire shares of Common Stock (which Common Stock may be issued upon the exercise of such warrants and/or conversion of such convertible notes).

 

Pursuant to the 8% Convertible Redeemable Note due October 7, 2016, the outstanding principal and accrued interest under the note may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust. The conversion price under the note is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $942,400 and the accrued interest under the note was $83,196. As of October 19, 2016, at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the aggregate principal and accrued interest amount of $1,125,596 is convertible into 84,733,460 shares of Common Stock.

 

Pursuant to the Class A Common Stock Purchase Warrant dated October 7, 2015, Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust, have the right to acquire up to 1,000,000 shares of Common Stock at an exercise price of $0.12 per share for a period of three years from the issuance date.

 

  9  
 

 

Pursuant to the 8% Convertible Redeemable Note due October 26, 2016, the outstanding principal and accrued interest under the note may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust. The conversion price under the note is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $1,000,000 and the accrued interest under the note was $81,093. As of October 19, 2016, at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the aggregate principal and accrued interest amount of $1,081,093 is convertible into 89,318,552 shares of Common Stock.

 

Pursuant to the Class A Common Stock Purchase Warrant dated October 26, 2015, Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust, have the right to acquire up to 1,000,000 shares of Common Stock at an exercise price of $0.12 per share for a period of three years from the issuance date.

 

With respect to the 8% Convertible Redeemable Note due March 10, 2017, there is no outstanding principal amount as the original principal amount of $50,000 was converted into 4,734,848 shares of common stock on September 21, 2016 at a conversion price of $0.01056 (based on the formula mentioned in this paragraph). However, accrued interest under the note is still outstanding. Pursuant to such note, the accrued interest may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the the Vechery Grandchildren’s Trust. The conversion price under the note is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $0 and the accrued interest under the note was $2,115. As of October 19, 2016, at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the accrued interest amount of $2,115 is convertible into 174,739 shares of Common Stock.

 

With respect to the 8% Convertible Redeemable Note due March 14, 2017, there is no outstanding principal amount as the original principal amount of $80,000 was converted into 7,575,758 shares of common stock on September 21, 2016 at a conversion price of $0.01056 ((based on the formula mentioned in this paragraph). However, accrued interest under the note is still outstanding. Pursuant to such note, the accrued interest may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the the Vechery Grandchildren’s Trust. The conversion price under the note is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $0 and the accrued interest under the note was $3,314. As of October 19, 2016 at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the accrued interest amount of $3,314 is convertible into 273,798 shares of Common Stock.

 

Pursuant to the 8% Convertible Redeemable Note due March 25, 2017, the outstanding principal and accrued interest under the note may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust. The conversion price under the note (i) for the first $63,000 of outstanding principal under the note, is $0.0018 and (ii) for the remaining principal and interest under the note, is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $870,000 and the accrued interest under the note was $41,761. As of October 19, 2016, at a conversion price of $0.0018, $63,000 of the outstanding principal is convertible into 35,000,000 shares of Common Stock, while at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the remaining $807,000 of the outstanding principal and $41,761 of accrued interest, in the aggregate amount of $848,761 is convertible into 70,123,573 shares of Common Stock.

 

Pursuant to the 8% Convertible Redeemable Note due April 8, 2017, the outstanding principal and accrued interest under the note may be converted into Common Stock at the option of Mr. and Mrs. Vechery, as co-trustees, on behalf of the Vechery Family Trust. The conversion price under the note (i) for the first $37,800 of outstanding principal under the note, is $0.0018 and (ii) for the remaining principal outstanding and interest under the note, is 65% of the average of the three (3) lowest daily volume weighted average price with a 10-day look back of the common stock as reported on the OTCQB (including the day the Notice of Conversion (as defined in the note) is received). As of October 19, 2016, the outstanding principal under the note was $600,000 and the accrued interest under the note was $26,959. As of October 19, 2016, at a conversion price of $0.0018, $37,800 of the outstanding principal is convertible into 21,000,000 shares of Common Stock, while at a conversion price of $0.01210379 (based on the formula mentioned in the preceding sentence), the remaining $562,200 of the outstanding principal and $26,959 of accrued interest, in the aggregate amount of $589,159 is convertible into 48,675,580 shares of Common Stock.

 

  10  
 

 

Item 7. Material to be Filed as Exhibits.

 

Exhibit No.   Description of Document
     
99.1*   Joint Filing Agreement, dated as of October 26, 2016, by and among the Reporting Persons.
     
99.2   8% Convertible Redeemable Note due October 7, 2016 for original principal amount of $1,000,000 issued to the Vechery Family Trust (incorporated by reference to the Exhibit 10.34 to Form 10-K for year ended December 31, 2015 filed by the Issuer on March 30, 2016).
     
99.3*   Class A Common Stock Purchase Warrant dated October 7, 2015 to purchase 1,000,000 shares of common stock issued to the Vechery Family Trust.
     
99.4   8% Convertible Redeemable Note due October 26, 2016 for original principal amount of $1,000,000 issued to the Vechery Family Trust (incorporated by reference to the Exhibit 10.26 to Form 10-K for year ended December 31, 2015 filed by the Issuer on March 30, 2016).
     
99.5*   Class A Common Stock Purchase Warrant dated October 26, 2015 to purchase 1,000,000 shares of common stock issued to the Vechery Family Trust.
     
99.6   8% Convertible Redeemable Note due March 10, 2017 for original principal amount of $50,000 issued to the Vechery Grandchildren’s Trust (incorporated by reference to the Exhibit 5 to Form 10-Q for quarter ended March 31, 2016 filed by the Issuer on May 18, 2016).
     
99.7   8% Convertible Redeemable Note due March 14, 2017 for original principal amount of $80,000 issued to the Vechery Grandchilidren’s Trust (incorporated by reference to the Exhibit 7 to Form 10-Q for quarter ended March 31, 2016 filed by the Issuer on May 18, 2016).
     
99.8   8% Convertible Redeemable Note due March 25, 2017 for original principal amount of $870,000 issued to the Vechery Family Trust (incorporated by reference to the Exhibit 8 to Form 10-Q for quarter ended March 31, 2016 filed by the Issuer on May 18, 2016).
     
99.9*   8% Convertible Redeemable Note due April 8, 2017 for original principal amount of $600,000 issued to the Vechery Family Trust.
     
*Filed herewith

 

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SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: October 26, 2016

 

  THE VECHERY FAMILY TRUST DTD 10/9/84
     
  By: /s/ Harvey T. Vechery
  Name: Harvey T. Vechery
  Title: Co-Trustee
     
  By: /s/ Linda Vechery
  Name: Linda Vechery
  Title: Co-Trustee
     
  THE VECHERY GRANDCHILDREN’S TRUST DTD 12/26/12
     
  By: /s/ Harvey T. Vechery
  Name: Harvey T. Vechery
  Title: Co-Trustee
     
  By: /s/ Linda Vechery
  Name: Linda Vechery
  Title: Co-Trustee
     
  /s/ Harvey T. Vechery
  Harvey T. Vechery
   
  /s/ Linda Vechery
  Linda Vechery

 

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Exhibit 99.1

 

Joint Filing Agreement

 

In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), the undersigned hereby agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including any and all amendments thereto, the “ Schedule 13D “) relating to the common stock, par value $0.00001 per share, of Max Sound Corporation which may be deemed necessary pursuant to Regulation 13D or 13G promulgated under the Exchange Act.

 

The undersigned further agree that each party hereto is responsible for the timely filing of the Schedule 13D, and for the accuracy and completeness of the information concerning such party contained therein; provided, however, that no party is responsible for the accuracy or completeness of the information concerning any other party, unless such party knows or has a reason to believe that such information is inaccurate.

 

It is understood and agreed that a copy of this Joint Filing Agreement shall be attached as an exhibit to the Schedule 13D, filed on behalf of each of the parties hereto.

 

IN WITNESS WHEREOF, each of the Filing Persons has executed this Joint Filing Agreement as of October 26, 2016.

 

  THE VECHERY FAMILY TRUST DTD 10/9/84
     
  By: /s/ Harvey T. Vechery
  Name: Harvey T. Vechery
  Title: Co-Trustee
     
  By: /s/ Linda Vechery
  Name: Linda Vechery
  Title: Co-Trustee

 

  THE VECHERY GRANDCHILDREN’S TRUST DTD 12/26/12
                                      
  By: /s/ Harvey T. Vechery
  Name: Harvey T. Vechery
  Title: Co-Trustee
     
  By: /s/ Linda Vechery
  Name: Linda Vechery
  Title: Co-Trustee

 

  /s/ Harvey T. Vechery
  Harvey T. Vechery
     
  /s/ Linda Vechery
  Linda Vechery

 

 
   

 

 

 

 

 Exhibit 99.3

 

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  1,000,000  shares  of  Common  Stock  of  MAX SOUND CORPORATION (subject to adjustment as provided herein)

 

CLASS A COMMON STOCK PURCHASE WARRANT

  

No. 2010-A-001 Issue Date: October 7, 2015

 

MAX SOUND CORPORATION, a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, The Vechery Family Trust , or his 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 1,000,000 fully paid and non-assessable shares of Common Stock at a per share purchase price of $0.12. The afore-described 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, $0.00001 par value per share, as authorized on the date of the Letter of Agreement, 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.

 

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(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 herein or otherwise.

 

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

 

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 New York Stock Exchange or the NYSE Amex Equities, 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 New York Stock Exchange or the NYSE Amex Equities, 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;

 

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(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.

 

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.

 

3
 

 

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

 

2.1. 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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2.2. 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.

 

3. 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.

 

4. 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).

 

5. 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.

 

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6. 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.

 

7. 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.

 

8. Registration Rights . The Holder of this Warrant has been granted certain piggy-back registration rights by the Company. These registration rights are set forth in the Letter of Agreement. The terms of the Letter of Agreement are incorporated herein by this reference.

 

9. 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%.

 

10. 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.

 

11. 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.

 

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12. 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. The addresses for such communications shall be:

 

If to the Company, to:

 

Max Sound Corporation

10685-B Hazelhurst Drive #6572 Houston, Texas 77043

facsimile: ( 858) 408-4364

 

With a copy by fax only to (which copy shall not constitute notice):

 

McMenamin Law Group

460 Park Avenue South 12th Floor New York, NY 10016

facsimile: (646) 670-7370

 

If to the Holder:

 

The Vechery Family Trust

16035 East Arrow Highway

Irwindale, CA 91706

Tel: (626) 337-5200

 

To the address and facsimile number listed on the first paragraph of this Warrant

 

13. 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 of California and County of San Diego. 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.

 

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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.

 

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

 

  MAX SOUND CORPORATION
     
  By: /s/ Greg Halpern
    Greg Halpern – Chairman and 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 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 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)

 

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Exhibit B

 

FORM OF TRANS 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)    

 

1
 

 

Exhibit 99.5

 

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 1,000,000 shares of Common Stock of MAX SOUND CORPORATION (subject to adjustment as provided herein)

 

CLASS A COMMON STOCK PURCHASE WARRANT

 

No. 2010-A-001 Issue Date: October 26, 2015        

 

MAX SOUND CORPORATION, a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, The Vechery Family Trust , or his 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 1,000,000 fully paid and non-assessable shares of Common Stock at a per share purchase price of $0.12. The afore-described 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, $0.00001 par value per share, as authorized on the date of the Letter of Agreement, 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.

 

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(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 herein or otherwise.

 

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

 

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 New York Stock Exchange or the NYSE Amex Equities, 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 New York Stock Exchange or the NYSE Amex Equities, 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;

 

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(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.

 

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.

 

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

 

2.1. 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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2.2. 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.

 

3. 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.

 

4. 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).

 

5. 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.

 

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6. 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.

 

7. 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.

 

8. Registration Rights . The Holder of this Warrant has been granted certain piggy-back registration rights by the Company. These registration rights are set forth in the Letter of Agreement. The terms of the Letter of Agreement are incorporated herein by this reference.

 

9. 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%.

 

10. 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.

 

11. 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.

 

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12. 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. The addresses for such communications shall be:

 

If to the Company, to:

 

Max Sound Corporation

10685-B Hazelhurst Drive #6572

Houston, Texas 77043

facsimile: (858) 408-4364

 

With a copy by fax only to (which copy shall not constitute notice):

 

McMenamin Law Group

460 Park Avenue South 12th Floor New York, NY 10016

facsimile: (646) 670-7370

 

If to the Holder:

 

The Vechery Family Trust

16035 East Arrow Highway

Irwindale, CA 91706

Tel: (626) 337-5200

 

To the address and facsimile number listed on the first paragraph of this Warrant

 

13. 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 of California and County of San Diego. 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.

 

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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.

 

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

 

  MAX SOUND CORPORATION
     
  By: /s/ Greg Halpern
  Greg Halpern – Chairman and 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 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 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)

 

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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)    

 

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Exhibit 99.9

 

 

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

 

US $2,000,000.00

 

MAX SOUND CORPORATION

8% CONVERTIBLE REDEEMABLE NOTE

April 8, 2016

 

FOR VALUE RECEIVED, Max Sound Corporation. (the “Company”) promises to pay to the order of The Vechery Family Trust and its authorized successors and permitted assigns (“Holder”), the aggregate principal face amount of two million dollars exactly (U.S. $2,000,000.00) on April 8, 2017 (“Maturity Date”) and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on April 8, 2016. Holder will fund $600,000 by 4-11-16, of which along with the $1,000,000 already funded, will total $1,600,000. Holder at its sole option, can fund the remaining $400,000 upon any one of these three 3 events. (1) License PO from Luna Mobil or Santok or any other Licensee, or (2) Stock dividend from IMHC deal being signed, or (3) Max Sound’s agreement with VSL being upheld in court. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable to the Holder, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

 

 
 

 

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

 

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

 

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

 

4. (a) The Holder of this Note is entitled, at its option, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “ Common Stock ”) without restrictive legend of any nature, at a price (“ Conversion Price ”) for each share of Common Stock equal to 65% of the average of the three lowest daily VWAP’s with a 10 day look back of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future (“ Exchange ”), including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax, email or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder’s intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued, but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share .

 

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

 

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(c) During the first six months this Note is in effect, the Company at its option may redeem this Note by paying to the Holder an amount as follows: (i) if the redemption is within the first 90 days this Note is in effect, then for an amount equal to 130% of the unpaid principal amount of this Note along with any interest that has accrued during that period, (ii) if the redemption is after the 90 th day this Note is in effect, but less than the 181 st day this Note is in effect, then for an amount equal to 140% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be redeemed by the Company after 180 days with the exception of repayment terms ( See Exhibit B Attached ). The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

 

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

 

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

 

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

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

 

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

 

7. If one or more of the following described “Events of Default” shall occur:

 

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

 

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

 

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

 

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

 

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

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

 

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

 

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

 

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

 

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

 

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

 

Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 16% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4 th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10 th day.

 

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

 

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

 

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

 

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

 

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

 

2. This Note shall be governed by and construed in accordance with the Laws of Delaware applicable to contracts made and wholly to be performed within the State of California County of San Diego and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of California County of San Diego. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

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

 

Dated: April 8, 2016

 

  MAX SOUND CORPORATION
     
  By: /s/ Greg Halpern
  Greg Halpern - Chairman & CFO

 

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EXHIBIT A

 

NOTICE OF CONVERSION

 

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

 

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

 

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

 

Date of Conversion: ________________________________________________________

Applicable Conversion Price: _______________________________________________ __

Signature: _____________________________________________________________ ___

[Print Name of Holder and Title of Signer]

 

Address:    
     

 

SSN or EIN: __________________________

Shares are to be registered in the following name: ________________________________ __________________________

 

Name: _________________________________________________________________ __

Address: _________________________________________________________________

Tel: _________________________________

Fax: _________________________________

SSN or EIN: ___________________________

 

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

 

Account Name: ____________________________________________________________

Address: ________________________________________________________________ _

 

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EXHIBIT B

 

MEMORANDUM OF TERMS

CONVERTIBLE DEBT FINANCING

Closing on or before 4-11-16

 

This memorandum summarizes the principal terms proposed to THE VECHERY FAMILY TRUST, with an address of 16035 East Arrow Highway, Irwindale, CA 91706 (the “Investor), with respect to a private investment of $1,000,000 with the sole option of increasing to $2,000,000 of the convertible debt securities of Max Sound Corporation, a Delaware corporation (the “Company”).

 

Proposed Purchase

 

The Investor offers a private purchase of Convertible Securities (“Notes”) on the following terms:

 

Issuer: Max Sound Corporation, a Delaware corporation
   
Security, Term and Maturity: Convertible note, 12 months term
   
Total Amount of Offering: $2,000,000 ($1,000,000 Already Funded)
   
Type of Notes: All Notes will be Rule 144 Notes and will be eligible for conversion into shares 6 month after the issuance of the Notes at which time any or all notes may be converted into free trading shares.
   
Notes funding VECHERY will fund $600,000 by 4-11-16 of which along with the $1,000,000 already funded will total $1,600,000. VECHERY at its sole option can fund the $400,000 upon any one of the three 3 events.

 

  1. License PO from Luna Mobil or Santok or any other Licensee
     
  2. Stock dividend from IMHC deal being signed
     
  3. Max Sound’s agreement with VSL being upheld in court

 

Conversion Discount: The principal and accrued interest under the Notes will be convertible into shares of Common Stock of the Company with a 35% discount to market priced at the average of the three (3) lowest daily VWAPs with a 10-day look back.
   
Interest Rate on Note: The Notes shall bear annual interest of 8%
   
Pre payments: During the first six months this Note is in effect, the Company may redeem this Note at its option by paying to the Holder an amount as follows: (i) if the redemption is within the first 90 days this Note is in effect, then for an amount equal to 130% of the unpaid principal amount of this Note along with any interest that has accrued during that period, (ii) if the redemption is after the 90th day this Note is in effect, but less than the 181st day this Note is in effect, then for an amount equal to 140% of the unpaid principal amount of this Note along with any accrued interest. This Note may not be redeemed by the Company after 180 days.

 

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MAXD Stock: With I he 1 st $1,000,000 funding VECHERY will convert 35,000,0000 shares of MAXD at a basis of .0018. VECHERY has the option of funding 2 nd $1,000,000. VECHERY will convert 35,000,000 shares for a total of 70,000,000 shares.
   
Leakage Agreement: VECHERY will sell only 10% of the daily volume until notes are paid in full using Glendale Securities.
   
VSL Licensing %: Upon funding of the 1 st $1,000,000, VECHERY will receive 10% in perpetuity of all MAXD licensing proceeds on all infringers of the ODT (Optimized Data Transmission) patents throughout the life of the patent revenue. Upon VECHERY at its option funding the 2 nd $600,000 licensing proceeds will be increased to 16% in perpetuity.
   
Licensing Revenue: Until all the original balances of outstanding VECHERY Notes are repaid, 40% of all license revenue received by Maw Round will be paid to VECHERY and be applied as payments to existing original note balance’s including, any notes balances that are beyond the 6-rnonth rule.
   
Preferred Shares Lien: Greg Halpern will allow a lien on his Preferred Shares, excluding voting rights, under any of the following conditions:

 

  1. The MAXD stock market trading ceases for at least 45 trading days and VECHERY cannot sell shares.
     
  2. This note goes into default without such default being cured within 90 days.

 

Lien Release Provisions: VECHERY will release lien under any of the following conditions:

 

  1. VECHERY converts any portion of his existing notes with MAXD into MAXD stock, and is then able to sell in the market, receiving back the investment of $I,600,000 (One Million six hundred thousand dollars) relating to the current Funding term sheet. Or if VECHERY at his sole option funds the second $400,000, then the Lien will stay in place until the second $1,000,000 is returned from selling converted MAXD shares in the market,
     
  2. Proceeds From Licensing of MAXD or VSL recover initial investment of (I.) above.
     
  3. MAXD shares trade at or above .05 30-day Avg share price for 120 days.
     
  4. Stock dividend on the completion of the IMHC deal allowing VECHERY to recover his initial investment related to this term sheet.

 

/s/ John Blaisure   /s/ Harvey Vechery, as co-trustee of The Vechery Family Trust DTD 10/9/84
John Blaisure CEO - Max Sound Corp.   Harvey Vechery

 

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