Exhibit 10.3

FORM OF CONVERTIBLE PROMISSORY NOTE

Schedule of Convertible Promissory Note holders and amount of each note. The
form of the Convertible Promissory Note follows

HOLDER

 

AMOUNT

Thomas G. Schuster

1421 W. Westport Circle

Mequon, WI 53092

$

50,000

Antaues Capital Partners, LLC

Attn: Cesar Moya

1875 Century Park East, Suite 1460

Century City, CA 90067

Telephone: (310) 788-8653

Telefax: (310) 943-2371

$

110,000

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THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY
NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B)
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS
ARE AVAILABLE.

$50,000

Principal Amount of Note

SILVERGRAPH INTERNATIONAL, INC.

CONVERTIBLE PROMISSORY NOTE

No. PN-40

Issuance Date:  February 1, 2008

1.0

Note.  FOR VALUE RECEIVED, Silvergraph International, Inc. a company
incorporated under the laws of the State of Nevada (the “Company” or
“Borrower”), promises to pay to the order of Thomas G. Schuster (the “Holder”),
the principal amount of Fifty Thousand U.S. Dollars (US $50,000).  The unpaid
balance of the principal amount shall accrue interest at the rate of seven (7%)
percent per annum based on a 365-day year. Interest shall be paid in cash or
Common Stock upon Maturity.

2.0

Maturity.  Except as otherwise provided herein, the principal and interest
hereunder shall become due and payable May 31, 2008. (the “Maturity Date”).

3.0

Prepayment.  Other than as set forth in Section 5(a) and 5(b) hereof, the
Borrower may not prepay the Note.

4.0

Ranking.  With respect to rights of liquidation, winding up and dissolution of
the Borrower, this Note shall rank senior to all classes of Common Stock and
Preferred Stock of the Borrower. All Notes issued and outstanding hereunder rank
on a parity with each other without preference, priority or distinction of any
one thereof over any other by reason of difference in time of issuance or
otherwise.

5.0

Conversion Rights.  

(a)

Optional Conversion.  On or before the payment of the Note in full, the Holder
may convert the principal amount owing on this Note, together with all accrued
and unpaid interest, into fully paid and nonassessable shares of Common Stock at
a conversion price per share equal to $0.08 (the “Conversion Price”), subject to
adjustment as set forth herein.

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(b)

Mandatory Conversion.  Simultaneous with the closing of a transaction whereby
the Company combines via merger, acquisition, reverse merger or similar process
with a private company doing business in the wall art industry (“Merger”), this
Note and accrued but unpaid interest shall immediately and automatically convert
into fully paid and nonassessable shares of Common Stock at the lower of the
Conversion Price  or a price per share equal to the price per share of a funding
event closed concurrently with the Merger, subject to a floor of $.01.  Upon the
Mandatory Conversion, this Note shall cease to exist and all rights and
obligations of the Borrower and Holder shall terminate.

(c)

Mechanics of Conversion. In order to convert this Note into full shares of
Common Stock, the Holder shall surrender this Note by either overnight courier
or 2-day courier, or in person to the office of the Company or of any transfer
agent for its Common Stock, and shall give concurrent written notice to of its
decision to exercise its right to convert this Note, or part thereof by
telecopying an executed and completed Notice of Conversion (a form of which is
attached as Annex A to this Note) to the Company; provided, however, that the
Company shall not be obligated to issue certificates evidencing the shares of
Common Stock issuable upon such conversion unless either the Note is delivered
to the Company or its transfer agent as provided above, or the Holder notifies
the Company or its transfer agent that such certificates have been lost, stolen
or destroyed and executes an agreement satisfactory to the Company to evidence
such loss and to indemnify the Company from any loss incurred by it in
connection with such certificates.

After delivery of the Note and executed Notice of Conversion by Holder as set
forth herein, the Company shall deliver as soon as reasonably practicable to
such Holder at the address of the Holder on the books of the Company, a
certificate or certificates for the number of shares of Common Stock to which
the Holder shall be entitled as aforesaid and, at the request of Holder, shall
issue to Holder a new Note containing the same date and provisions of this Note
for the principal balance of this Note and interest which shall not have been
converted or paid.   The date on which notice of conversion is given (the
“Conversion Date”) shall be deemed to be the date set forth in such notice of
conversion provided that delivery and advance facsimile notice is made as
provided above and that the original Note to be converted are received by the
transfer agent or the Company within five (5) business days thereafter, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.  If the original Note to be
converted is not received by the transfer agent or the Company within five (5)
business days after the Conversion Date, the notice of conversion shall be
deemed null and void. The Company agrees to have its counsel provide a legal
opinion in connection with a sale under Rule 144 promulgated under the
Securities Act of 1933.

6.0

Anti Dilution Provision.  Should at any time from the date of making this Note
until the conversion of the Note, the Company issue a stock dividend, combine
outstanding shares into a lessor number of shares (reverse split) or increase
the number of outstanding shares without a receipt of new consideration (forward
split) then the number of shares into which the Note may be converted and the
conversion price shall be adjusted to reflect such event so that the relative
interest of the Holder shall be fully protected from dilution resulting from
such an event.  Notice of the required adjustment including the number of shares
and the new conversion price shall be promptly mailed to each Holder subsequent
to each such adjustment event.   So long as this Note is outstanding, if the
Borrower shall issue or agree to issue any shares of Common Stock, except for
Excepted Issuances as defined in the Subscription Agreement, for a consideration
less than the Conversion Price in effect at the time of such issue, then, and
thereafter successively upon each such issue, the Conversion Price shall be
reduced to such other lower issue price.  In no event shall the conversion price
be less than $0.01 per share of common stock.

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7.0

Protective Provisions.  So long as the Notes are outstanding, the Company shall
not without first obtaining the approval (by voting or written consent, as
provided by California law) of the holders of at least a majority of the then
outstanding Notes:

1.

alter or change the rights, preferences or privileges of the Notes so as to
materially adversely affect the Notes;

2.

issue debt beyond the ordinary course of business;

3.

complete an acquisition or sale of a material asset;

4.

issue debt that ranks senior to the Notes;

5.

issue a dividend to the common shareholders;

6.

materially increase the common shares reserved for the Employee stock option
plan.

7.

permit any Liens pursuant to Section 8(j) of the Subscription Agreement.

8.0

Future Financings.  So long as any of this Note remains outstanding, Holder
shall have the right of first refusal on all equity financings contemplated by
the Company. However, the Company shall not issue any additional debt without
the written consent of the Holder as long as principal and interest is due under
this Note.

9.0

Default.  In the event of an occurrence of any event of default specified below,
the principal and all accrued interest on this Note shall become immediately due
and payable without notice, except as specified below.  The occurrence of any of
the following events shall constitute an event of default under this Note:

The Company fails to make any payment hereunder when due, which failure has not
been cured within fifteen (15) days following such failure.

If the Company shall default in the payment or performance of any other material
obligation of this Note or other debt of the Company.  

If the Borrower or an operating wholly-owned subsidiary of the Borrower shall
file a petition to take advantage of any insolvency act; make an assignment for
the benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself of a whole or any
substantial part of its property; file a petition or answer seeking
reorganization or arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute of the United States of America or
of any state.

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If a court of competent jurisdiction shall enter an order, judgment or decree
appointing a custodian, receiver, trustee, liquidator or conservator of the
Borrower or an operating wholly-owned subsidiary of the Borrower, of the whole
or any substantial part of its properties, or approve a petition filed against
the Borrower seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States of America or of any state; or if, under the provisions of any other law
for the relief or aid of debtors, a court of competent jurisdiction shall assume
custody or control of the Borrower or of the whole or any substantial part of
its properties; or if there is commenced against the Borrower any proceeding for
any of the foregoing relief and such proceeding or petition remains undismissed
for a period of 30 days; or if the Borrower by any act indicates its consent to
or approval of any such proceeding or petition.

9.1

Default – [private company].

If the Company does not complete the proposed merger transaction with [private
company] (“[private company]”), by the Maturity Date whereby [private company]
owns up to 80% of the surviving entity, the Conversion Price shall automatically
be reduced to the lower of (i) $0.002 or (ii) the conversion price that would
cause the majority holder of the Notes to own upon conversion the number of
shares of common stock of the Company determined to be 51% of the outstanding
Common Stock on a fully-diluted basis and the remaining holders of the Notes to
own a pro rata number of common shares of common stock of the Company (the
“Liquidated Damages Shares”). Should at any time after a default in accordance
with Section 9.1, the Company issue a stock dividend, combine outstanding shares
into a lessor number of shares (reverse split) or increase the number of
outstanding shares, the Company shall issue to the majority holder of the Notes
additional shares of common stock so that the majority holder of the Notes shall
be fully protected from dilution so that in no case that the majority holder of
the Note’s ownership falls below 51% of the outstanding Common Stock on a
fully-diluted basis. All shares issued pursuant to this Section 9.1 shall be
issued and delivered to Holders within five (5) business days from the date of
the event causing such issuance.  

10.0

Security.  This Note is secured by all the assets of the Company’s wholly-owned
subsidiary, New Era Studios, Inc., a Nevada corporation, pursuant to that
certain Security Agreement entered into on the date hereof, a form of which is
attached hereto as Exhibit A. The Buyer (as defined in the Security Agreement)
shall disperse Cash Proceeds pro rata to the Note holders

11.0

Successors and Assigns.  This Note is transferable and assignable by the Holder
subject to the requirement that any such assignment or transfer be, in the
opinion of the Company’s counsel, in full compliance with applicable federal and
state securities laws.  All covenants, agreements and undertakings in this Note
by or on behalf of any of the parties shall bind and inure to the benefit of the
respective successors and assigns of the parties whether so expressed or not.

12.0

Notices.  Any and all notices, requests, consents and demands required or
permitted to be given hereunder shall be in writing and shall be deemed given
and received (i) upon personal delivery, (ii) upon the first business day
following the receipt of confirmation of facsimile transmission to the telefax
number as indicated below, or (iii) upon the third business day after deposit in
the United States mail, by certified or registered mail, postage prepaid and
addressed as follows:

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To Holder:

Thomas G. Schuster

 

1421 W. Westport Circle

 

Mequon, WI 53092

 

Telephone:     (414) 405-4848

To the Company:

Silvergraph International, Inc.

 

Attn: James Simpson

 

1191 Burke Street

 

Santa Fe Springs, CA  90670-2507

 

Telephone:     (562) 693-3737

 

Telefax:      (562) 696-0090

Either party may change by notice the address to which notices to that party are
to be addressed.

13.0

Amendment.  This Note may only be amended or modified by written agreement
signed by the Company and Holder.

14.0

Expenses.  In the event that Holder brings legal action against the Company, or
the Company brings legal action against Holder, to enforce or otherwise
determine the meaning or enforceability of this Note or any provision hereof,
each party shall bear its own expenses, including attorney fees, directly
attributable to such action.  However, in any action for breach of this Note,
including nonpayment, the prevailing party in any such dispute shall be entitled
to recover all reasonable costs and attorney fees incurred in connection with
such action.

15.0

Note Holder is Not a Shareholder.  No Holder of this Note, solely by virtue of
the ownership of this Note, shall be considered a shareholder of the Company for
any purpose, nor shall anything in this Note be construed to confer on any
Holder of this Note any rights of a shareholder of the Company including,
without limitation, any right to vote, give or withhold consent to any corporate
action, receive notice of meetings of shareholders or receive dividends.

16.0

Choice of Law.  This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to conflicts of laws
principles that would result in the application of the substantive laws of
another jurisdiction. Any dispute relating to this Note shall be adjudicated in
the county of Los Angeles, in the State of California. The parties and the
individuals executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to the
jurisdiction of such courts and 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 Agreement 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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17.

 Piggy-Back Registrations.  If at any time when there is not an effective
Registration Statement covering the Common Stock, the Company shall determine to
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, the Company shall send to Holder written notice
of such determination and, if within thirty (30) days after receipt of such
notice, or within such shorter period of time as may be specified by the Company
in such written notice as may be necessary for the Company to comply with its
obligations with respect to the timing of the filing of such registration
statement, Holder shall so request in writing, the Company will cause the
registration under the Securities Act of all the shares of Common Stock which
the Company has been so requested to register by the Holder, to the extent
requisite to permit the disposition of the Common Stock so to be registered,
provided that if at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 7(d) for the
same period as the delay in registering such other securities.  The Company
shall include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 7(d) that are eligible for sale without restriction pursuant to
Rule 144(k) of the Securities Act.  In the case of an underwritten public
offering, if the managing underwriter(s) or underwriter(s) should reasonably
object to the inclusion of the Registrable Securities in such registration
statement, then if the Company after consultation with the managing underwriter
should reasonably determine that the inclusion of such Registrable Securities
would materially adversely affect the offering contemplated in such registration
statement, and based on such determination recommends inclusion in such
registration statement of fewer or none of the Registrable Securities of the
Holders, then (x) the number of Registrable Securities of the Holders included
in such registration statement shall be reduced pro-rata among such Holders
(based upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided, however, that
before any such reduction in the number of Registrable Securities shall occur,
all securities proposed to be sold by all other selling stockholders (other than
the Company) shall be excluded from such registration statement (it being the
intent of the parties that all of the Registrable Securities are to be included
in such registration statement prior to the inclusion of any securities to be
sold by any other selling stockholders other than the Company).  For the
purposes of this Section 7(d), the term “Registrable Securities” shall include
all unregistered shares of Common Stock issued to the Holder including the
Liquidated Damages Shares.

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IN WITNESS WHEREOF, this Note has been executed and delivered on the date
specified on the first page hereof by the duly authorized representative of the
Company and the Holder.

COMPANY:

SILVERGRAPH INTERNATIONAL, INC.

 

By:

/s/ James R. Simpson

 

Name:

James R. Simpson

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

HOLDER:

 

 

 

 

 

 

/s/ Thomas G. Schuster

 

Name:  

Thomas G. Schuster

 

Title:

 

ANNEX A - NOTICE OF CONVERSION

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