AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT
 
This Amendment No. 1 to Securities Purchase Agreement (this “Amendment”) is
dated September 18, 2008, by and among China Water and Drinks Inc., a Nevada
corporation (the “Company”) and certain of the Investors (as defined below), and
amends that certain Securities Purchase Agreement (the “Agreement”) dated May
31, 2007 by and among the Company and the investors identified on the signature
pages thereto (collectively, the “Investors”).

WHEREAS, Pursuant to Section 6.4 of the Agreement, the Agreement may be amended
in writing provided such amendment is signed by the Company and the Investors
holding a majority of the Securities (as such term is defined in the Agreement);

WHEREAS, the Investors signatory hereto, in the aggregate, own a majority of the
Securities;

WHEREAS, each Investor signatory hereto is signing only on its own behalf, and
not on behalf of any other Investor;

WHEREAS, except as otherwise stated herein, capitalized terms not otherwise
defined in this Amendment shall have the definition given to such terms in the
Agreement;

NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual agreements
contained in this Amendment, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company and Pinnacle,
on behalf of the Investors, hereby agree as follows:

1. Amendment. Section 4.11(a) of the Agreement is hereby amended and restated in
its entirety to read as follows (with changes in italics):

“(a) The Make Good Pledgor agrees that in the event that the After-Tax Net
Income reported in the 2007 Annual Report, after adding back any compensation
expenses relating to the Escrow Shares (as defined in the Make Good Escrow
Agreement) or the return of any Escrow Shares to the Make Good Pledgor due to
the achievement of 2007 Guaranteed ATNI, is less than $19,000,000 (the “2007
Guaranteed ATNI”), the Agent will instruct the Make Good Escrow Agent to release
to the Investors (in accordance with the Make Good Escrow Agreement) on a
pro-rata basis (determined by dividing each Investor’s Investment Amount as of
the Closing Date by the aggregate of all Investment Amounts delivered to the
Company by the Investors hereunder) for no consideration other than their part
of their respective Investment Amount at Closing, 11,194,030 shares of Common
Stock (as equitably adjusted for any stock splits, stock combinations, stock
dividends or similar transactions) (the “2007 Make Good Shares”). In the event
that either (i) the earnings per share reported in the 2008 Annual Report is
less than $0.300 on a fully diluted basis (as equitably adjusted for any stock
splits, stock combinations, stock dividends or similar transactions) (the “2008
Guaranteed EPS”) or (ii) the After-Tax Net Income reported in the 2008 Annual
Report is less than $30,000,000 (the “2008 Guaranteed ATNI”), in each case after
adding back any compensation expense relating to the Escrow Shares or the return
of any Escrow Shares to the Make Good Pledgor due to the achievement of 2008
Guaranteed ATNI and 2008 Guaranteed EPS, or any expense relating to the
beneficial conversion feature attributable to the Company’s 5% convertible notes
issued in January, 2008, the Agent will instruct the Make Good Escrow Agent to
release to the Investors (in accordance with the Make Good Escrow Agreement) on
a pro rata basis (determined by dividing each Investor’s Investment Amount as of
the Closing Date by the aggregate of all Investment Amounts delivered to the
Company by the Investors hereunder) for no consideration other than their part
of their respective Investment Amount at Closing, 11,194,030 shares of Common
Stock (as equitably adjusted for any stock splits, stock combinations, stock
dividends or similar transactions) (the “2008 Make Good Shares”). In the event
that the After-Tax Net Income reported in the 2007 Annual Report is equal to or
greater than the 2007 Guaranteed ATNI, the Agent shall instruct the Make Good
Escrow Agent to release the 2007 Make Good Shares to the Make Good Pledgor in
accordance with the Make Good Escrow Agreement. In the event that both (i) the
earnings per share reported in the 2008 Annual Report is equal to or greater
than the 2008 Guaranteed EPS and (ii) the After-Tax Net Income reported in the
2008 Annual Report is equal to or greater than the 2008 Guaranteed ATNI, in each
case after adding back any compensation expense relating to the Escrow Shares or
the return of any Escrow Shares to the Make Good Pledgor due to the achievement
of 2008 Guaranteed ATNI and 2008 Guaranteed EPS, or any expense relating to the
beneficial conversion feature attributable to the Company’s 5% convertible notes
issued in January, 2008, the Agent shall instruct the Make Good Escrow Agent to
release the 2008 Make Good Shares to the Make Good Pledgor in accordance with
the Make Good Escrow Agreement. Any such release to the Investors or to the Make
Good Pledgor of the 2007 Make Good Shares or the 2008 Make Good Shares shall be
made to the Investors or the Make Good Pledgor, as applicable, within 10
Business Days after the date which the 2007 Annual Report or 2008 Annual Report,
as applicable, is filed.”

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2. Effectiveness. This Amendment shall become effective upon execution.

3. Limited Nature of Amendment. Except as expressly amended hereby, the
Agreement remains in full force and effect in accordance with its terms and this
Amendment shall not by implication or otherwise alter, modify, amend or in any
way affect any of the terms, conditions, obligations, covenants or agreements
contained in the Agreement, all of which are ratified and affirmed in all
respects and shall continue in full force and effect.

4. Counterparts. This Amendment may be executed in several counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same instrument, and shall become effective when counterparts have been signed
by each of the parties and delivered to the other parties; it being understood
that all parties need not sign the same counterpart.
 
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2

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the date first
indicated above.
 

        CHINA WATER AND DRINKS INC.  
   
   
    By: /s/ Xu Hong Bin   Name: Xu Hong Bin   Title: President

            MAJORITY IN INTEREST OF THE INVESTORS           THE PINNACLE FUND,
L.P.  
   
   
        By: Pinnacle Advisors, L.P., its General Partner               By:
Pinnacle Fund Management, LLC, its
General Partner
                By: /s/ Barry M. Kitt       Name: Barry M. Kitt       Title:
Sole Member

 

              PINNACLE CHINA FUND, L.P.  
   
   
          By:
Pinnacle China Advisors, L.P., its
General Partner
                By:
Pinnacle China Management LLC, its
General Partner
                  By:
Kitt China Management, LLC, its
Manager
                    By: /s/ Barry M. Kitt         Name: Barry M. Kitt        
Title: Manager