Document:

Unassociated Document

    EXHIBIT
      10.24

    

    AMENDMENT
      AGREEMENT

    

    

    THIS
      AGREEMENT
      is made
      on 1st
      January
      2006 

    

    BETWEEN:

     

    
      	
              (1)

            	
              Mega
                Century Limited, a company incorporated in Hong Kong whose registered
                office is at 3rd
                Floor, Block A, A3 Fortune Factory Building, 40 Lee Chung Street,
                Chai
                Wan, Hong Kong (the "Party
                A");

            

    

    

    
      	(2)	
              Infosmart
                Technology Limited,
                a
                company incorporated in Hong Kong whose registered address is at
                Unit A2,
                18th
                Floor, Fortune Factory Building, 40 Lee Chung Street, Chai Wan, Hong
                Kong
                (the
                " Party B");
                and

            

    

    

    
      	(3)	
              Infosmart
                International Enterprises Limited, a company incorporated in Hong
                Kong
                whose registered office is at 3rd
                Floor, Block A, A3 Fortune Factory Building, 40 Lee Chung Street,
                Chai
                Wan, Hong Kong (the
                "New Party").
                

            

    

    

    WHEREAS:

    

    
      	
              (A)

            	
              Party
                A and Party B had signed a cooperation agreement dated 1st
                December, 2002 (the "Cooperation
                Agreement")
                pursuant to which Party A and Party B agreed to combine their respective
                resources for manufacturing the Products subject to the terms and
                conditions contained therein. The said Co-Operation Agreement has
                been
                renewed in writing as a separate agreement dated 1st
                January, 2006.

            

    

    

    
      	
              (B)

            	
              Pursuant
                to Clause 3.5 of the said Cooperation Agreement for the purpose stated
                herein, Parties now agree to sign this Agreement as a part of the
                Said
                Co-Operation Agreement. 

            

    

    

    IT
      IS HEREBY AGREED
      as
      follows:

    

    
      	
              1.

            	
              Words
                and expressions defined in the Cooperation Agreement shall have the
                same
                meaning when used herein.

            

    

    

    
      	2.	
              Party
                A, Party B and the New Party hereby agree and confirm that with effect
                from the date hereof:

            

    

    

    
      	 	
              (a)

            	
              the
                New Party shall join in as an additional contracting party to the
                Cooperation Agreement;
                and

            

    

    

    
      	 	
              (b)

            	
              the
                New Party hereby agrees and undertakes with Party A that it agrees
                to
                undertake all of Party B's rights and obligations under the
                Cooperation Agreement,
                and that both Party B and the New Party hereby agree and undertake
                with
                Party A that all such obligations shall be undertaken by them jointly
                and
                severally. 

            

    

     

    
      	
              3.
                

            	
              Save
                as aforesaid, the other provisions of the Cooperation Agreement not
                otherwise amended under this Agreement shall continue in full force
                and
                effect in accordance with its
                terms.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Agreement has been entered into the day and year first before
      written.

     

      
        	
                For
                  and on behalf of

                Mega
                  Century Limited

                 

                /s/
                  Cheung Suen Kuen

                
                  

                

                Name:

              	
                For
                  and on behalf of 

                Infosmart
                  Technology Limited

                 

                /s/
                  Kwok Chung

                
                  
Name:

              

      

     

     

     

    For
      and
      on behalf of

    Infosmart
      International Enterprises Limited

      
      

     

     

    

        /s/
          Kwok
          Chung

      
        

      

    

      Name:Dated:
      March ___, 2006

     

    NEITHER
      THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
      REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS.

     

    
      	
              No.
                VC-1

            	
              $__________

            

    

    

     

    SUB-URBAN
      INDUSTRIES, INC.

     

    Secured
      Convertible Note 

     

    Due
      Date: as set forth herein 

     

    This
      Secured Convertible Note (the “Note”)
      is
      issued by SUB-URBAN
      INDUSTRIES, INC., a
      California corporation (the “Obligor”),
      to
      _____________ (the “Holder”),
      pursuant to that certain Securities Purchase Agreement (the “Securities
      Purchase Agreement”)
      of
      even date herewith. 

     

    FOR
      VALUE RECEIVED,
      the
      Obligor hereby promises to pay to the Holder or its successors and assigns
      the
      principal sum of __________________ Dollars ($________) together with accrued
      but unpaid interest on the
      earliest of: (i) the closing of a reverse merger with a publicly traded entity
      (the “Public
      Entity Merger”)
      and
      the
      consummation of a financing of not less than $6,000,000 in gross proceeds,
      or
      (ii) one year from the date hereof (the
      “Maturity
      Date”),
      in
      accordance with the following terms:

     

    Interest.
      Interest shall accrue on the outstanding principal balance hereof at an annual
      rate equal to ten percent (10%). Interest shall be calculated on the basis
      of a
      360-day year and the actual number of days elapsed, to the extent permitted
      by
      applicable law. Interest hereunder will be paid quarterly in arrears to the
      Holder or its assignee (as defined in Section
      5)
      in
      whose name this Note is registered on the records of the Obligor regarding
      registration and transfers of Notes (the “Note
      Register”).

     

    Right
      of Redemption.
      The
      Obligor at its option shall have the right, with three (3) business days advance
      written notice (the “Redemption
      Notice”),
      to
      redeem a portion or all amounts outstanding under this Note prior to the
      Maturity Date. The Obligor shall deliver to the Holder the Redemption Amount
      on
      the third (3rd)
      business day after the Redemption Notice. 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    Notwithstanding
      the foregoing in the event that the Obligor has elected to redeem a portion
      of
      the outstanding principal amount and accrued interest under this Note the Holder
      shall be permitted to convert all or any portion of this Note during such three
      business day period. 

     

    Security
      Agreements.
      This
      Note is secured by a Security Agreement (the “Security
      Agreement”)
      of
      even date herewith between the Obligor and the Holder.

     

    This
      Note
      is subject to the following additional provisions:

     

    Section
      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 of transfer or
      exchange.

     

    Section
      2. Events
      of Default.

     

    (a) An
      “Event
      of Default”,
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

     

    (i) Any
      default in the payment of the principal of, interest on or other charges in
      respect of this Note, free of any claim of subordination, as and when the same
      shall become due and payable (whether on a Conversion Date or the Maturity
      Date
      or by acceleration or otherwise);

     

    (ii) The
      Obligor shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Note (except as may be covered by Section
      2(a)(i)
      hereof)
      or any Transaction Document (as defined in Section
      5)
      which
      is not cured with in the time prescribed, including without limitation Obligor’s
      obligation to timely deliver shares of Common Stock upon conversion of this
      Note
      and exercise of the Warrant;

     

    (iii) The
      Obligor or any subsidiary of the Obligor shall commence, or there shall be
      commenced against the Obligor or any subsidiary of the Obligor under any
      applicable bankruptcy or insolvency laws as now or hereafter in effect or any
      successor thereto, or the Obligor or any subsidiary of the Obligor commences
      any
      other proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law of
      any
      jurisdiction whether now or hereafter in effect relating to the Obligor or
      any
      subsidiary of the Obligor or there is commenced against the Obligor or any
      subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
      which remains undismissed for a period of 61 days; or the Obligor or any
      subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order
      of
      relief or other order approving any such case or proceeding is entered; or
      the
      Obligor or any subsidiary of the Obligor suffers any appointment of any
      custodian, private or court appointed receiver or the like for it or any
      substantial part of its property which continues undischarged or unstayed for
      a
      period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
      makes a general assignment for the benefit of creditors; or the Obligor or
      any
      subsidiary of the Obligor shall fail to pay, or shall state that it is unable
      to
      pay, or shall be unable to pay, its debts generally as they become due; or
      the
      Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
      with a view to arranging a composition, adjustment or restructuring of its
      debts; or the Obligor or any subsidiary of the Obligor shall by any act or
      failure to act expressly indicate its consent to, approval of or acquiescence
      in
      any of the foregoing; or any corporate or other action is taken by the Obligor
      or any subsidiary of the Obligor for the purpose of effecting any of the
      foregoing;

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (iv) The
      Obligor or any subsidiary of the Obligor shall default in any of its obligations
      under any other Note or any mortgage, credit agreement or other facility,
      indenture agreement, factoring agreement or other instrument under which there
      may be issued, or by which there may be secured or evidenced any indebtedness
      for borrowed money or money due under any long term leasing or factoring
      arrangement of the Obligor or any subsidiary of the Obligor in an amount
      exceeding $200,000, whether such indebtedness now exists or shall hereafter
      be
      created and such default shall result in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable;

     

    (v) Other
      than in the case of the Public Entity Merger, the Obligor or any subsidiary
      of
      the Obligor shall be a party to any Change of Control Transaction (as defined
      in
Section
      5);
      

     

    (vi) The
      Obligor shall fail for any reason to deliver Common Stock certificates to a
      Holder prior to the fifth (5th)
      Trading
      Day after a Conversion Date or the Obligor shall provide notice to the Holder,
      including by way of public announcement, at any time, of its intention not
      to
      comply with requests for conversions of this Note in accordance with the terms
      hereof; and

     

    (vii) The
      Obligor shall fail to complete the Public Entity Merger within 180 days from
      the
      date hereof.

     

    (b) During
      the time that any portion of this Note is outstanding, if any Event of Default
      has occurred and shall continue for a period of ten (10) days after a notice
      of
      such default has been delivered by the Holder to the Obligor (the “Notice
      Period”),
      the
      full principal amount of this Note, together with interest and other amounts
      owing in respect thereof, to the date of acceleration shall become at the
      Holder's election, immediately due and payable in cash, provided
      however,
      the
      Holder may request (but shall have no obligation to request) payment of such
      amounts in Common Stock of the Obligor. In addition to any other remedies,
      the
      Holder shall have the right (but not the obligation) to convert this Note at
      any
      time after (x) an Event of Default or (y) the Maturity Date at the Conversion
      Price then in-effect. The Holder need not provide and the Obligor hereby waives
      any presentment, demand, protest or other notice of any kind, and the Holder
      may
      immediately and without expiration of any grace period (other than the Notice
      Period) enforce any and all of its rights and remedies hereunder and all other
      remedies available to it under applicable law. Such declaration may be rescinded
      and annulled by Holder at any time prior to payment hereunder. No such
      rescission or annulment shall affect any subsequent Event of Default or impair
      any right consequent thereon 

     

    Section
      3. Conversion.

     

    (a) Conversion
      at Option of Holder.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (i) This
      Note
      shall be convertible into shares of Common Stock at the option of the Holder,
      in
      whole or in part at any time and from time to time, after the Original Issue
      Date (as defined in Section
      5)
      (subject to the limitations on conversion set forth in Section
      3(b)
      hereof).
      The number of shares of Common Stock issuable upon a conversion hereunder equals
      the quotient obtained by dividing (x) the outstanding amount of this Note to
      be
      converted by (y) the Conversion Price (as defined in Section
      3(b)(i)).
      The
      Obligor shall deliver Common Stock certificates to the Holder prior to the
      Fifth
      (5th)
      Trading
      Day after a Conversion Date.

     

    (ii) Notwithstanding
      anything to the contrary contained herein, if on any Conversion Date: (1) the
      number of shares of Common Stock at the time authorized, unissued and unreserved
      for all purposes, or held as treasury stock, is insufficient to pay principal
      and interest hereunder in shares of Common Stock; (2) the Common Stock is not
      listed or quoted for trading on the OTC or on a Subsequent Market; or (3) the
      Obligor has failed to timely satisfy its conversion, and the Obligor is unable
      to remedy any of the foregoing within 20 business days, then, at the option
      of
      the Holder, the Obligor, in lieu of delivering shares of Common Stock pursuant
      to Section
      3(a)(i),
      shall
      deliver, within three (3) Trading Days of each applicable Conversion Date,
      an
      amount in cash equal to the product of the outstanding principal amount to
      be
      converted plus any interest due therein divided by the Conversion Price, chosen
      by the Holder, and multiplied by the average closing price of the stock from
      date of the conversion notice till the date that such cash payment is
      made.

     

    Further,
      if the Obligor shall not have delivered any cash due in respect of conversion
      of
      this Note or as payment of interest thereon by the fifth (5th)
      Trading
      Day after the Conversion Date, the Holder may, by notice to the Obligor, require
      the Obligor to issue shares of Common Stock pursuant to Section
      3(c),
      except
      that for such purpose the Conversion Price applicable thereto shall be the
      lesser of the Conversion Price on the Conversion Date and the Conversion Price
      on the date of such Holder demand. Any such shares will be subject to the
      provisions of this Section.

     

    (iii) The
      Holder shall effect conversions by delivering to the Obligor a completed notice
      in the form attached hereto as Exhibit A (a “Conversion
      Notice”).
      The
      date on which a Conversion Notice is delivered is the “Conversion
      Date.”
Unless
      the Holder is converting the entire principal amount outstanding under this
      Note, the Holder is not required to physically surrender this Note to the
      Obligor in order to effect conversions. Conversions hereunder shall have the
      effect of lowering the outstanding principal amount of this Note plus all
      accrued and unpaid interest thereon in an amount equal to the applicable
      conversion. The Holder and the Obligor shall maintain records showing the
      principal amount converted and the date of such conversions. In the event of
      any
      dispute or discrepancy, the records of the Holder shall be controlling and
      determinative in the absence of manifest error.

     

    (b) Conversion
      Price and Adjustments to Conversion Price.

     

    (i) The
      Holder shall be entitled to convert, at its sole option, at any time a portion
      or all amounts of principal and interest due and outstanding under this Note
      into shares of the Obligor’s Common Stock at a price equal to $0.25 (the
“Conversion
      Price”).
      The
      Conversion Price may be adjusted pursuant to the other terms of this
      Note.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (ii) If
      the
      Obligor, at any time while this Note is outstanding, shall (a) pay a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock, (b) subdivide outstanding shares of Common Stock into
      a
      larger number of shares, (c) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (d)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Obligor, then the Conversion Price shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding after
      such
      event. Any adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution and shall become effective immediately
      after the effective date in the case of a subdivision, combination or
      re-classification.

     

    (iii) If
      the
      Obligor, at any time while this Note is outstanding, shall issue rights, options
      or warrants to all holders of Common Stock (and not to the Holder) entitling
      them to subscribe for or purchase shares of Common Stock at a price per share
      less than the Conversion Price, then the Conversion Price shall be multiplied
      by
      a fraction, of which the denominator shall be the number of shares of the Common
      Stock (excluding treasury shares, if any) outstanding on the date of issuance
      of
      such rights or warrants (plus the number of additional shares of Common Stock
      offered for subscription or purchase), and of which the numerator shall be
      the
      number of shares of the Common Stock (excluding treasury shares, if any)
      outstanding on the date of issuance of such rights or warrants, plus the number
      of shares which the aggregate offering price of the total number of shares
      so
      offered would purchase at the Conversion Price. Such adjustment shall be made
      whenever such rights or warrants are issued, and shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such rights, options or warrants. However, upon the expiration of
      any
      such right, option or warrant to purchase shares of the Common Stock the
      issuance of which resulted in an adjustment in the Conversion Price pursuant
      to
      this Section, if any such right, option or warrant shall expire and shall not
      have been exercised, the Conversion Price shall immediately upon such expiration
      be recomputed and effective immediately upon such expiration be increased to
      the
      price which it would have been (but reflecting any other adjustments in the
      Conversion Price made pursuant to the provisions of this Section after the
      issuance of such rights or warrants) had the adjustment of the Conversion Price
      made upon the issuance of such rights, options or warrants been made on the
      basis of offering for subscription or purchase only that number of shares of
      the
      Common Stock actually purchased upon the exercise of such rights, options or
      warrants actually exercised.

     

    (iv) Except
      in
      the case of an Exempt Issuance (as such term is defined in the Securities
      Purchase Agreement), if the Obligor or any subsidiary thereof, as applicable,
      at
      any time while this Note is outstanding, shall issue shares of Common Stock
      or
      rights, warrants, options or other securities or debt that are convertible
      into
      or exchangeable for shares of Common Stock (“Common
      Stock Equivalents”)
      entitling any Person to acquire shares of Common Stock, at a price per share
      less than the Conversion Price (if the holder of the Common Stock or Common
      Stock Equivalent so issued shall at any time, whether by operation of purchase
      price adjustments, reset provisions, floating conversion, exercise or exchange
      prices or otherwise, or due to warrants, options or rights per share which
      is
      issued in connection with such issuance, be entitled to receive shares of Common
      Stock at a price per share which is less than the Conversion Price, such
      issuance shall be deemed to have occurred for less than the Conversion Price),
      then, at the sole option of the Holder, the Conversion Price shall be reduced
      to
      the price (calculated to the nearest one hundredth of a cent) determined by
      multiplying the Conversion Price in effect immediately prior thereto by a
      fraction, the numerator of which shall be the sum of (i) the number of shares
      of
      Common Stock outstanding immediately prior to such issuance, and (ii) the number
      of shares of Common Stock which the aggregate consideration received (or to
      be
      received, assuming exercise or conversion in full of such rights, warrants
      and
      convertible securities) for the issuance of such additional shares of Common
      Stock would purchase at the Conversion Price, and the denominator of which
      shall
      be the sum of the number of shares of Common Stock outstanding immediately
      after
      the issuance of such additional shares. Such adjustment shall be made
      successively whenever such an issuance is made. The Obligor shall notify the
      Holder in writing, no later than three (3) business days following the issuance
      of any Common Stock or Common Stock Equivalent subject to this Section,
      indicating therein the applicable issuance price, or of applicable reset price,
      exchange price, conversion price and other pricing terms. No adjustment under
      this Section shall be made as a result of issuances and exercises of options
      to
      purchase shares of Common Stock issued for compensatory purposes pursuant to
      any
      of the Obligor's stock option or stock purchase plans.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (v) If
      the
      Obligor, at any time while this Note is outstanding, shall distribute to all
      holders of Common Stock (and not to the Holder) evidences of its indebtedness
      or
      assets or rights or warrants to subscribe for or purchase any security, then
      in
      each such case the Conversion Price at which this Note shall thereafter be
      convertible shall be determined by multiplying the Conversion Price in effect
      immediately prior to the record date fixed for determination of stockholders
      entitled to receive such distribution by a fraction of which the denominator
      shall be the Closing Bid Price determined as of the record date mentioned above,
      and of which the numerator shall be such Closing Bid Price on such record date
      less the then fair market value at such record date of the portion of such
      assets or evidence of indebtedness so distributed applicable to one outstanding
      share of the Common Stock as determined by the Board of Directors in good faith.
      In either case the adjustments shall be described in a statement provided to
      the
      Holder of the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

     

    (vi) In
      case
      of any reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is converted into other securities of the
      Company, cash or property, the Holder shall have the right thereafter to, at
      its
      option, (A) convert the then outstanding principal amount, together with all
      accrued but unpaid interest and any other amounts then owing hereunder in
      respect of this Note into the shares of stock and other securities, cash and
      property receivable upon or deemed to be held by holders of the Common Stock
      following such reclassification or share exchange, and the Holder of this Note
      shall be entitled upon such event to receive such amount of securities, cash
      or
      property as the shares of the Common Stock of the Obligor into which the then
      outstanding principal amount, together with all accrued but unpaid interest
      and
      any other amounts then owing hereunder in respect of this Note could have been
      converted immediately prior to such reclassification or share exchange would
      have been entitled, or (B) require the Obligor to prepay the outstanding
      principal amount of this Note, plus all interest and other amounts due and
      payable thereon. The entire prepayment price shall be paid in cash. This
      provision shall similarly apply to successive reclassifications or share
      exchanges.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (vii) The
      Obligor shall at all times reserve and keep available out of its authorized
      Common Stock the full number of shares of Common Stock issuable upon conversion
      of all outstanding amounts under this Note; and within three (3) Business Days
      following the receipt by the Obligor of a Holder's notice that such minimum
      number of Underlying Shares is not so reserved, the Obligor shall promptly
      reserve a sufficient number of shares of Common Stock to comply with such
      requirement.

     

    (viii) All
      calculations under this Section
      3
      shall be
      rounded up to the nearest $0.001 or whole share.

     

    (ix) Whenever
      the Conversion Price is adjusted pursuant to Section
      3
      hereof,
      the Obligor shall promptly mail to the Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment.

     

    (x) If
      (A)
      the Obligor shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Obligor shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Obligor shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Obligor shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Obligor is a party, any sale or transfer of all or substantially all of
      the
      assets of the Obligor, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; or (E) the Obligor shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Obligor; then, in each case, the Obligor shall cause to
      be
      filed at each office or agency maintained for the purpose of conversion of
      this
      Note, and shall cause to be mailed to the Holder at its last address as it
      shall
      appear upon the stock books of the Obligor, at least twenty (20) calendar days
      prior to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange, provided, that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to convert this Note during the 20-day
      calendar period commencing the date of such notice to the effective date of
      the
      event triggering such notice.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (xi) In
      case
      of any (1) merger or consolidation of the Obligor or any subsidiary of the
      Obligor with or into another Person, or (2) sale by the Obligor or any
      subsidiary of the Obligor of more than one-half of the assets of the Obligor
      in
      one or a series of related transactions, a Holder shall have the right to
      exercise any rights under Section
      2(b),
      if
      Obligor fails, at the option of the Holder, (A) to permit the Holder to convert
      the aggregate amount of this Note then outstanding into the shares of stock
      and
      other securities, cash and property receivable upon or deemed to be held by
      holders of Common Stock following such merger, consolidation or sale, and such
      Holder shall not be entitled upon such event or series of related events to
      receive such amount of securities, cash and property as the shares of Common
      Stock into which such aggregate principal amount of this Note could have been
      converted immediately prior to such merger, consolidation or sales would have
      been entitled, or (B) in the case of a merger or consolidation, to require
      the
      surviving entity to issue to the Holder a convertible Note with a principal
      amount equal to the aggregate principal amount of this Note then held by such
      Holder, plus all accrued and unpaid interest and other amounts owing thereon,
      which such newly issued convertible Note shall have terms identical (including
      with respect to conversion) to the terms of this Note, and shall be entitled
      to
      all of the rights and privileges of the Holder of this Note set forth herein
      and
      the agreements pursuant to which this Notes were issued. In the case of clause
      (C), the conversion price applicable for the newly issued shares of convertible
      preferred stock or convertible Notes shall be based upon the amount of
      securities, cash and property that each share of Common Stock would receive
      in
      such transaction and the Conversion Price in effect immediately prior to the
      effectiveness or closing date for such transaction. The terms of any such
      merger, sale or consolidation shall include such terms so as to continue to
      give
      the Holder the right to receive the securities, cash and property set forth
      in
      this Section upon any conversion or redemption following such event. This
      provision shall similarly apply to successive such events.

     

    (c) Other
      Provisions.

     

    (i) The
      Obligor covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of this Note and payment of interest on this Note,
      each
      as herein provided, free from preemptive rights or any other actual contingent
      purchase rights of persons other than the Holder, not less than such number
      of
      shares of the Common Stock as shall (subject to any additional requirements
      of
      the Obligor as to reservation of such shares set forth in this Note) be issuable
      (taking into account the adjustments and restrictions of Sections
      2(b) and 3(c))
      upon
      the conversion of the outstanding principal amount of this Note and payment
      of
      interest hereunder. The Obligor covenants that all shares of Common Stock that
      shall be so issuable shall, upon issue, be duly and validly authorized, issued
      and fully paid.

     

    (ii) The
      issuance of certificates for shares of the Common Stock on conversion of this
      Note shall be made without charge to the Holder thereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificate, provided that the Obligor shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of such Note so converted and the Obligor shall not be required
      to
      issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Obligor the amount of
      such tax or shall have established to the satisfaction of the Obligor that
      such
      tax has been paid.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (iii) Nothing
      herein shall limit a Holder's right to pursue actual damages or declare an
      Event
      of Default pursuant to Section
      2
      herein
      for the Obligor 's failure to deliver certificates representing shares of Common
      Stock upon conversion within the period specified herein and such Holder shall
      have the right to pursue all remedies available to it at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief, in each case without the need to post a bond or provide
      other
      security. The exercise of any such rights shall not prohibit the Holder from
      seeking to enforce damages pursuant to any other Section hereof or under
      applicable law. 

     

    Section
      4. Notices.
       Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof must be in writing and will be deemed to have
      been
      delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
      when
      sent by facsimile (provided confirmation of transmission is mechanically or
      electronically generated and kept on file by the sending party); or (iii) one
      (1) trading day after deposit with a nationally recognized overnight delivery
      service, in each case properly addressed to the party to receive the same.
      The
      addresses and facsimile numbers for such communications shall be:

    

    
      	
              If
                to the Company, to:

            	
              Sub-Urban
                Industries, Inc.

            
	 	
              2222
                E.Washington Blvd Unit B

            
	 	
              Los
                Angeles, CA 90021

            
	 	
              Attention:
                Joe Shortall, CEO

            
	 	
              Telephone: 213-229-2885

            
	 	
              Facsimile: 213-229-8885

            
	 	 
	
              With
                a copy to: 

            	
              Deron
                Colby Esq.

            
	 	
              Abrams
                Garfinkel Margolis Bergson, LLP

            
	 	
              4100
                Newport Place, Suite 830

            
	 	
              Newport
                Beach, California 92660

            
	 	
              Telephone: 949.250.8655

            
	 	
              Facsimile: 949.250.8656

            
	 	 
	
              If
                to the Holder:

            	 
	 	 
	 	 
	 	
              Attention: 

            
	 	
              Telephone: 

            
	 	 
	
              With
                a copy to:

            	
              Sichenzia
                Ross Friedman Ference LLP 

            
	 	
              1065
                Avenue of the Americas

            
	 	
              New
                York, NY 10018

            
	 	
              Telephone: 212-930-9700

            
	 	
              Facsimile: 212-930-9725

            
	 	
              Attention:
                Louis A. Brilleman, Esq.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) business days prior to the effectiveness of such change.
      Written confirmation of receipt (i) given by the recipient of such notice,
      consent, waiver or other communication, (ii) mechanically or electronically
      generated by the sender's facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (iii)
      provided by a nationally recognized overnight delivery service, shall be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    Section
      5. Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday in the United States or a day on which banking institutions are
      authorized or required by law or other government action to close.

     

    “Change
      of Control Transaction”
means
      the occurrence of (a) an acquisition after the date hereof by an individual
      or
      legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
      Exchange Act) of effective control (whether through legal or beneficial
      ownership of capital stock of the Obligor, by contract or otherwise) of in
      excess of fifty percent (50%) of the voting securities of the Obligor (except
      that the acquisition of voting securities by the Holder shall not constitute
      a
      Change of Control Transaction for purposes hereof), (b) a replacement at one
      time or over time of more than one-half of the members of the board of directors
      of the Obligor which is not approved by a majority of those individuals who
      are
      members of the board of directors on the date hereof (or by those individuals
      who are serving as members of the board of directors on any date whose
      nomination to the board of directors was approved by a majority of the members
      of the board of directors who are members on the date hereof), (c) the merger,
      consolidation or sale of fifty percent (50%) or more of the assets of the
      Obligor or any subsidiary of the Obligor in one or a series of related
      transactions with or into another entity, or (d) the execution by the Obligor
      of
      an agreement to which the Obligor is a party or by which it is bound, providing
      for any of the events set forth above in (a), (b) or (c).

     

    “Closing
      Bid Price”
means
      the price per share in the last reported trade of the Common Stock on the OTC
      or
      on the exchange which the Common Stock is then listed as quoted by Bloomberg,
      LP.

     

    “Common
      Stock”
means
      the common stock, par value $0.001, of the Obligor and stock of any other class
      into which such shares may hereafter be changed or reclassified.

     

    “Conversion
      Date”
shall
      mean the date upon which the Holder gives the Obligor notice of their intention
      to effectuate a conversion of this Note into shares of the Company’s Common
      Stock as outlined herein.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Original
      Issue Date”
shall
      mean the date of the first issuance of this Note regardless of the number of
      transfers and regardless of the number of instruments, which may be issued
      to
      evidence such Note.

     

    “Person”
means
      a
      corporation, an association, a partnership, organization, a business, an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Trading
      Day”
means
      a
      day on which the shares of Common Stock are quoted on the OTC or quoted or
      traded on such Subsequent Market on which the shares of Common Stock are then
      quoted or listed; provided, that in the event that the shares of Common Stock
      are not listed or quoted, then Trading Day shall mean a Business
      Day.

     

    “Transaction
      Documents”
means
      the Securities Purchase Agreement or any other agreement delivered in connection
      with the Securities Purchase Agreement, including, without limitation, the
      Security Agreement, the Registration Rights Agreement and Warrants of even
      date
      herewith.

     

    “Underlying
      Shares”
means
      the shares of Common Stock issuable upon conversion of this Note or as payment
      of interest in accordance with the terms hereof.

     

    Section
      6. Except
      as
      expressly provided herein, no provision of this Note shall alter or impair
      the
      obligations of the Obligor, which are absolute and unconditional, to pay the
      principal of, interest and other charges (if any) on, this Note at the time,
      place, and rate, and in the coin or currency, herein prescribed. This Note
      is a
      direct obligation of the Obligor. This Note ranks pari passu with all other
      Notes now or
      hereafter issued under the terms set forth herein. As long as this Note is
      outstanding, the Obligor shall not and shall cause their subsidiaries not to,
      without the consent of the Holder (which shall not be unreasonably withheld),
      (i) amend its certificate of incorporation, bylaws or other charter documents
      so
      as to adversely affect any rights of the Holder; (ii) repay, repurchase or
      offer
      to repay, repurchase or otherwise acquire shares of its Common Stock or other
      equity securities other than as to the Underlying Shares to the extent permitted
      or required under the Transaction Documents; or (iii) enter into any agreement
      with respect to any of the foregoing. 

     

    Section
      7. This
      Note
      shall not entitle the Holder to any of the rights of a stockholder of the
      Obligor, including without limitation, the right to vote, to receive dividends
      and other distributions, or to receive any notice of, or to attend, meetings
      of
      stockholders or any other proceedings of the Obligor, unless and to the extent
      converted into shares of Common Stock in accordance with the terms
      hereof.

     

    Section
      8. If
      this
      Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and
      deliver, in exchange and substitution for and upon cancellation of the mutilated
      Note, or in lieu of or in substitution for a lost, stolen or destroyed Note,
      a
      new Note for the principal amount of this Note so mutilated, lost, stolen or
      destroyed but only upon receipt of evidence of such loss, theft or destruction
      of such Note, and of the ownership hereof, and indemnity, if requested, all
      reasonably satisfactory to the Obligor.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Section
      9. No
      indebtedness of the Obligor is senior
      to
      this Note in
      right
      of payment, whether with respect to interest, damages or upon liquidation or
      dissolution or otherwise. Without the Holder’s consent, the Obligor will not and
      will not permit any of their subsidiaries to, directly or indirectly, enter
      into, create, incur, assume or suffer to exist any indebtedness of any kind,
      on
      or with respect to any of its property or assets now owned or hereafter acquired
      or any interest therein or any income or profits there from that is senior
      in
      any respect to the obligations of the Obligor under this Note.

     

    Section
      10. This
      Note
      shall be governed by and construed in accordance with the laws of the State
      of
      New York, without giving effect to conflicts of laws thereof. Each of the
      parties consents to the jurisdiction of the Courts of the State of New York
      sitting in New York County, New York and the U.S. District Court for the
      Southern District of New York in connection with any dispute arising under
      this
      Note and hereby waives, to the maximum extent permitted by law, any objection,
      including any objection based on forum non conveniens
      to the
      bringing of any such proceeding in such jurisdictions. 

     

    Section
      11. If
      the
      Obligor fails to comply with the terms of this Note, then the Obligor shall
      reimburse the Holder promptly for all fees, costs and expenses, including,
      without limitation, attorneys’ fees and expenses incurred by the Holder in any
      action in connection with this Note, including, without limitation, those
      incurred: (i) during any workout, attempted workout, and/or in connection with
      the rendering of legal advice as to the Holder’s rights, remedies and
      obligations, (ii) collecting any sums which become due to the Holder, (iii)
      defending or prosecuting any proceeding or any counterclaim to any proceeding
      or
      appeal; or (iv) the protection, preservation or enforcement of any rights or
      remedies of the Holder.

     

    Section
      12. Any
      waiver by the Holder of a breach of any provision of this Note shall not operate
      as or be construed to be a waiver of any other breach of such provision or
      of
      any breach of any other provision of this Note. The failure of the Holder to
      insist upon strict adherence to any term of this Note on one or more occasions
      shall not be considered a waiver or deprive that party of the right thereafter
      to insist upon strict adherence to that term or any other term of this Note.
      Any
      waiver must be in writing.

     

    Section
      13. If
      any
      provision of this Note is invalid, illegal or unenforceable, the balance of
      this
      Note shall remain in effect, and if any provision is inapplicable to any person
      or circumstance, it shall nevertheless remain applicable to all other persons
      and circumstances. If it shall be found that any interest or other amount deemed
      interest due hereunder shall violate applicable laws governing usury, the
      applicable rate of interest due hereunder shall automatically be lowered to
      equal the maximum permitted rate of interest. The Obligor covenants (to the
      extent that it may lawfully do so) that it shall not at any time insist upon,
      plead, or in any manner whatsoever claim or take the benefit or advantage of,
      any stay, extension or usury law or other law which would prohibit or forgive
      the Obligor from paying all or any portion of the principal of or interest
      on
      this Note as contemplated herein, wherever enacted, now or at any time hereafter
      in force, or which may affect the covenants or the performance of this
      indenture, and the Obligor (to the extent it may lawfully do so) hereby
      expressly waives all benefits or advantage of any such law, and covenants that
      it will not, by resort to any such law, hinder, delay or impeded the execution
      of any power herein granted to the Holder, but will suffer and permit the
      execution of every such as though no such law has been enacted.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Section
      14. Whenever
      any payment or other obligation hereunder shall be due on a day other than
      a
      Business Day, such payment shall be made on the next succeeding Business
      Day.

     

    Section
      15. THE
      PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
      OF
      THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
      OR
      ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
      DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
      OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
      FOR
      THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

     

    [REMAINDER
      OF PAGE INTENTIONLLY LEFT BLANK]

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Obligor has caused this Secured Convertible Note to be duly executed by a duly
      authorized officer as of the date set forth above.

    
      	 	 	 
	 	
              SUB-URBAN
                INDUSTRIES, INC.

            
	 
 	 
 	 
 
	
            	By:  	 
	 	
              

              Name: Joe
                Shortall

            
	 	
              Title: CEO

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      “A”

     

    NOTICE
      OF CONVERSION

     

    (To
      be executed by the Holder in order to convert the Note)

     

    
      	
              TO:

            

    

    

    The
      undersigned hereby irrevocably elects to convert $_________________________
      of
      the
      principal amount of the above Note into Shares of Common Stock of Sub-Urban
      Industries, Inc., according to the conditions stated therein, as of the
      Conversion Date written below.

     

    
      	
              Conversion
                Date:

            	 	 
	 	 	 
	
              Applicable
                Conversion Price:

            	 	 
	 	 	 
	
              Signature:

            	 	 
	 	 	 
	
              Name:

            	 	 
	 	 	 
	
              Address:

            	 	 
	 	 	 
	
              Amount
                to be converted:

            	 	
              $          

            
	 	 	 
	
              Amount
                of Note unconverted:

            	 	
              $          

            
	 	 	 
	
              Conversion
                Price per share: 

            	 	
              $          

            
	 	 	 
	
              Number
                of shares of Common Stock to be issued:

            	 	 
	 	 	 
	
              Please
                issue the shares of Common Stock in the following name and to the
                following address:

            	 	 
	 	 	 
	
              Issue
                to:

            	 	 
	 	 	 
	
              Authorized
                Signature:

            	 	 
	 	 	 
	
              Name:

            	 	 
	 	 	 
	
              Title:

            	 	 
	 	 	 
	
              Phone
                Number:

            	 	 
	 	 	 
	
              Broker
                DTC Participant Code:

            	 	 
	 	 	 
	
              Account
                Number:

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