SUB-URBAN INDUSTRIES, INC. Secured Convertible Note Due Date: as set forth herein
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.
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No.
VC-1
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$__________
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SUB-URBAN
INDUSTRIES, INC.
Due
Date: as set forth herein
This
Secured Convertible Note (the “Note”)
is
issued by SUB-URBAN
INDUSTRIES, INC., a
California corporation (the “Obligor”),
to
_____________ (the “Holder”),
pursuant to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith.
FOR
VALUE RECEIVED,
the
Obligor hereby promises to pay to the Holder or its successors and assigns
the
principal sum of __________________ Dollars ($________) 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 Xxxxxx 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.
|
|
0000
X.Xxxxxxxxxx Xxxx Xxxx X
|
|
|
Los
Angeles, CA 90021
|
|
|
Attention:
Xxx Xxxxxxxx, CEO
|
|
|
Telephone: 000-000-0000
|
|
|
Facsimile: 000-000-0000
|
|
|
With
a copy to:
|
Xxxxx
Xxxxx Xxx.
|
|
Xxxxxx
Xxxxxxxxx Xxxxxxxx Xxxxxxx, LLP
|
|
|
0000
Xxxxxxx Xxxxx, Xxxxx 000
|
|
|
Newport
Beach, California 92660
|
|
|
Telephone: 000.000.0000
|
|
|
Facsimile: 949.250.8656
|
|
|
If
to the Holder:
|
|
|
Attention:
|
|
|
Telephone:
|
|
|
With
a copy to:
|
Xxxxxxxxx
Xxxx Xxxxxxxx Xxxxxxx LLP
|
|
0000
Xxxxxx xx xxx Xxxxxxxx
|
|
|
New
York, NY 10018
|
|
|
Telephone: 000-000-0000
|
|
|
Facsimile: 212-930-9725
|
|
|
Attention:
Xxxxx X. Xxxxxxxxx, 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: Xxx
Xxxxxxxx
|
||
|
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:
|
