EX 10.3


     

     

    EXHIBIT
      10.3

     

    THIS
      NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
      AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT
      IN
      ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES
      ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE
      SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
      THE
      SECURITIES ACT. THIS
      NOTE MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION
      PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER TRANSFER OF ANY
      INTEREST IN ANY OF THE SECURITIES REPRESENTED BY THIS
      NOTE.

     

    ORGANIC
      TO GO FOOD CORPORATION

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    
      	
              $[_______________]

            	
              [____________,
                200_]

            
	 	
              Seattle,
                Washington

            


    

     

    FOR
      VALUE
      RECEIVED, Organic To Go Food Corporation, a Delaware corporation (the
“Company”)
      promises to pay to W.Health L.P., a limited partnership organized under the
      laws
      of the Bahamas (“Investor”),
      or
      its registered assigns, in lawful money of the United States of America the
      principal sum of [__________] Dollars ($[_________]), payable in shares of
      common stock, par value $0.001 (“Common
      Stock”),
      of
      the Company on [to insert a date that is 21 months after the Initial Closing
      Date] (the “Maturity
      Date”)
      in
      accordance with the terms hereof. This Note is one of the “Notes” issued
      pursuant to the Note and Warrant Purchase Agreement, dated as of June 1, 2008
      (as amended, modified or supplemented, the “Note
      and Warrant Purchase Agreement”)
      between the Company and the Investor (as defined in the Note and Warrant
      Purchase Agreement). 

     

    Capitalized
      terms not otherwise defined herein shall have the meaning set forth in the
      Note
      and Warrant Purchase Agreement. 

     

    The
      following is a statement of the rights of Investor and the conditions to which
      this Note is subject, and to which Investor, by the acceptance of this Note,
      agrees:

     

    1. Definitions.
      As used
      in this Note, the following capitalized terms have the following
      meanings:

     

    (a) “Adjusted
      Closing Price” has
      the
      meaning given in Section
      2(c)(ii).

     

    (b) “Base
      Amount” has
      the
      meaning given in
      Section 2(c)(i).


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (c) “Change
      in Control” shall
      mean:  (1) the consummation of the sale, transfer, conveyance or other
      disposition (including any merger, reorganization or consolidation) in one
      or a
      series of related transactions of the voting equity securities of the Company
      or
      a similar transaction (or transactions) such that immediately following such
      transaction (or transactions) any “person” or related “group” of “persons” (as
      such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
      Act) (other than the Company or an Affiliate of the Company) beneficially owns
      more than fifty percent (50%) of the total voting equity securities of the
      Company outstanding immediately after such transaction; (2) the sale or
      transfer of all or substantially all of the assets of the Company to another
      entity which is not an Affiliate of the Company; or (3) the consummation of
      a merger or consolidation of the Company with any other entity that is not
      an
      Affiliate of the Company, other than a merger or consolidation which would
      result in the voting securities of the Company outstanding immediately prior
      thereto continuing to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity or its parent) at
      least
      fifty percent (50%) of the total voting power of the voting securities of the
      Company or such surviving entity or its parent outstanding immediately after
      such merger or consolidation.

     

    (d) “Pre-Sale
      Trading Price” has
      the
      meaning given in Section 2(f)(iii)

     

    (e) “Trading
      Day”
      means
      (i) a day on which the Common Stock is traded on a Trading Market (other than
      the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
      Market (other than the OTC Bulletin Board), a day on which the Common Stock
      is
      traded in the over-the-counter market, as reported by the OTC Bulletin Board,
      or
      (iii) if the Common Stock is not quoted on any Trading Market, a day on which
      the Common Stock is quoted in the over-the-counter market as reported by the
      Pink Sheets LLC (or any similar organization or agency succeeding to its
      functions of reporting prices); provided, that in the event that the Common
      Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
      Trading Day shall mean a Business Day. 

     

    2. Conversion.

     

    (a) Automatic
      Conversion. The
      outstanding principal amount of this Note shall automatically convert into
      shares of Common Stock upon the earliest to occur of the following:


     

    (i) the
      Maturity Date; or

     

    (ii) subject
      to Section
      2(f)
      below,
      the date upon which the closing price of the Common Stock on the Trading Market
      it is listed or quoted on is and has been $3.00 per share (subject to
      adjustments in accordance with Section
      3)
      or more
      on each Trading Day during a period of 60 consecutive calendar days preceding
      such date.

     

    Upon
      such
      conversion of this Note, the Investor hereby agrees to deliver the original
      of
      this Note (or a notice to the effect that the original Note has been lost,
      stolen or destroyed and an agreement acceptable to the Company whereby the
      holder agrees to indemnify the Company from any loss incurred by it in
      connection with this Note) for cancellation; provided,
      however,
      that
      upon satisfaction of the conditions set forth in this Section 2(a),
      this
      Note shall be deemed converted and


    
      
         

      

      
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    of
      no
      further force and effect, whether or not it is delivered for cancellation as
      set
      forth in this sentence.

     

    (b) Optional
      Conversion. Subject
      to Sections
      2(d) and 2(e)
      below,
      if this Note has not been converted pursuant to Section
      2(a),
      then
      all, but not less than all, of the outstanding principal amount of this Note
      shall be convertible into shares of Common Stock at the option of the Investor
      any time before the Maturity Date. Before the Investor shall be entitled to
      convert this Note into shares of Common Stock under this Section
      2(b),
      the
      Investor shall surrender this Note, duly endorsed, at the office of the Company
      and shall give written notice to the Company at its principal corporate office,
      of the election to convert the same pursuant to this Section
      2(b),
      and
      shall state the name in which the certificate for shares of Common Stock are
      to
      be issued. The Company shall, as soon as practicable thereafter, issue and
      deliver at such office to Investor a certificate for the number of shares of
      Common Stock to which Investor shall be entitled upon conversion (bearing such
      legends as are required by the Note and Warrant Purchase Agreement and
      applicable state and federal securities laws in the opinion of counsel to the
      Company) and any other securities and property to which Investor is entitled
      upon such conversion under the terms of this Note. The conversion shall be
      deemed to have been made immediately prior to the close of business on the
      date
      of the surrender of this Note, and the Person entitled to receive the shares
      of
      Common Stock upon such conversion shall be treated for all purposes as the
      record holder of such shares of Common Stock as of such date.

     

    (c) Conversion
      Calculation.
      The
      number of shares of Common Stock the Investor is entitled to receive upon
      conversion of this Note in accordance with this Section
      2
      shall be
      determined as follows:

     

    (i) Except
      as
      otherwise provided in Section
      2(c)(ii),
      the
      Investor shall receive such number of shares of Common Stock as determined
      by
      the following formula (the “Base
      Amount”):

     

    A/10,000,000*4,333,333

     

    where:

     

    A
      = the
      principal amount of this Note. 

     

    For
      example, for a Note with a principal amount of $5,000,000, the Investor would
      receive 2,166,667 shares of Common Stock calculated as follows:

     

    
      	
              Investment
                amount

            	 	
              $

            	
              5,000,000

            	 
	
              Divided
                by total investment

            	 	
              $

            	
              10,000,000

            	 
	
              Percent
                of total investment

            	 	 	
              50

            	
              %

            
	
              Multiplied
                by total shares for $10MM

            	 	 	
              4,333,333

            	 
	
              Shares
                issued for $5MM investment

            	 	 	
              2,166,667

            	 


    

     

     

    
      
         

      

      
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    (ii)
      If this
      Note is converted on the Maturity Date and the average closing price of the
      Common Stock on the Trading Market it is listed or quoted on during the ten
      (10)
      Trading Days ending three (3) days before the date of conversion (the
“Adjusted
      Closing Price”)
      is less
      than $3.00 (subject to adjustment in accordance with Section
      3 and
      subject to Section 2(f)),
      then
      the Investor shall receive such number of shares of Common Stock as determined
      by the following formula: 

     

    A*3/(B*.70)

     

    where:

     

    A
      = the
      Base Amount; and

     

    B
      = the
      Adjusted Closing Price.

     

    For
      example, if the Adjusted Closing Price is $2.95, the Investor would receive
      3,147,700 shares of Common Stock calculated as follows:

     

    
      	
              Base
                Amount

            	 	 	
              2,166,667

            	 
	
              Multiplied
                by 3

            	 	 	
              3.00

            	 
	 	 	 	
              6,500,000

            	 
	
              Divided
                by 70% of the Adjusted Closing Price

            	 	 	
              2.065

            	 
	
              Adjusted
                number of shares 

            	 	 	
              3,147,700

            	 


    

     

    (d) Conversion
      upon a Change in Control.
      Upon
      the occurrence of a Change in Control in the Company, the principal balance
      of
      this Note shall be due and payable immediately in cash plus accrued and
      unpaid interest at the rate of 25% per annum, compounded on an annual
      basis.

     

    (e) Event
      of Default. If
      an
      Event of Default shall occur, then at the election of the Investor, upon a
      notice to the Company (a) this Note shall be immediately converted into shares
      of Common Stock pursuant to the formula detailed in Section
      2(c)(ii)
      (where
“B” equals the closing price of the Common Stock on the date of the Event of
      Default), or (b) the principal balance of this Note plus accrued and unpaid
      interest at the rate of 25% per annum, compounded on an annual basis,
      shall become due and payable immediately in cash.

     

    (f) Price
      Manipulation.
      

     

    (i) In
      case
      the Company or any of its Subsidiaries or Affiliates, or any of the
      directors or officers of the Company or their Affiliates, purchase shares
      of Common Stock of the Company or cause others to purchase shares of Common
      Stock of the Company and, during the next full three (3) Trading Days
      following any such purchase the stock price rises above $3.00 per
      share, then principal balance of this Note shall be due and payable
      immediately in cash plus accrued and unpaid interest at the rate of
      50% per annum, compounded on an annual basis.  


    
      
         

      

      
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    (ii) In
      case
      the Investor engages in any activity designed to manipulate the trading price
      of
      the Common Stock or sells shares of Common Stock beneficially owned by the
      Investor, or over which the Investor has dispositive control, (A) more than
      two (2) times every three (3) months or more than seven (7) times in the
      aggregate during the period beginning on the Initial Closing Date and ending
      on
      the Maturity Date, or (B) in blocks of less than 250,000 shares of Common Stock
      per sale, then this Note will automatically convert into shares of Common Stock
      pursuant to the formula set forth in Section
      2(c)(i).
      

     

    (iii) During
      the three (3) months immediately prior to the Maturity Date, if the Investor
      sells shares of Common Stock and, during the next full three (3) Trading Days
      following any such sale the trading price of the Common Stock falls below the
      trading price of the Common Stock immediately prior to such sale (the
“Pre-Sale
      Trading Price”),
      and
      the Pre-Sale Trading Price is less than $3.00, then this Note will automatically
      convert into shares of Common Stock pursuant to the formula set forth in
Section
      2(c)(ii)
      (where
“B” equals the Pre-Sale Trading Price); provided, however, if the Pre-Sale
      Trading Price is $3.00 or more, then this Note will automatically convert into
      shares of Common Stock pursuant to the formula set forth in Section
      2(c)(i).

     

    (g) Fractional
      Shares; Interest; Effect of Conversion. No
      fractional shares shall be issued upon conversion of this Note. Upon conversion
      of this Note in full, the Company shall be forever released from all its
      obligations and liabilities under this Note

     

    3. Adjustments.
      

     

    (a) Adjustments
      for distributions, splits or subdivisions. In
      the
      event the Company at any time or from time to time after the date of issuance
      hereof fixes a record date for the effectuation of a split or subdivision of
      any
      outstanding shares of Common Stock or the determination of holders of any shares
      of Common Stock entitled to receive a distribution without payment of any
      consideration by such holder, then, as of such record date (or the date of
      such
      distribution, split or subdivision if no record date is fixed), then the closing
      price of the Common Stock referenced in Sections
      2(a)(ii), 2(c)(ii) and 2(f) and
      the
      conversion formulas referenced in Section
      2(c)(i) and 2(c)(ii)
      shall be
      adjusted appropriately.

     

    (b) Adjustment
      for Reclassification, Exchange and Substitution.
      If
      the
      shares of Common Stock issuable upon the conversion of this Note are changed
      into the same or a different number of shares or units of any class or classes
      of capital stock, whether by recapitalization, reclassification, or otherwise,
      then, and in any such event, the Investor shall have the right thereafter to
      convert this Note into the kind and amount of such capital stock and property
      receivable upon such reorganization, reclassification, or other change in
      accordance with the number of shares of Common Stock into which this Note would
      have been converted immediately prior to such reorganization, reclassification,
      or change.

     

    4. Successors
      and Assigns.
      Subject
      to the restrictions on transfer described in the Note and Warrant Purchase
      Agreement, the rights and obligations of the Company and Investor shall be
      binding upon and benefit the successors, assigns, heirs, administrators and
      transferees of the parties.


    
      
         

      

      
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    5. Waiver
      and Amendment.
      Any
      provision of this Note may be amended, waived or modified upon the written
      consent of the Company and the Investor.

     

    6. Notices.
      All
      notices, requests, demands, consents, instructions or other communications
      required or permitted hereunder shall in be in accordance with the notice
      provisions set forth in the Note and Warrant Purchase Agreement. 

     

    7. Pari
      Passu Notes.
      Investor
      acknowledges and agrees that the payment of all or any portion of the
      outstanding principal amount of this Note and all interest hereon shall be
      pari
      passu in
      right
      of payment and in all other respects to the other Notes issued pursuant to
      the
      Note and Warrant Purchase Agreement or pursuant to the terms of such Notes.
      In
      the event the holder of this Note receives payments in excess of its pro rata
      share of the Company’s payments to the holders of all of the Notes, then such
      holder shall hold in trust all such excess payments for the benefit of the
      holders of the other Notes and shall pay such amounts held in trust to such
      other holders upon demand by such holders.

     

    8. Usury.
      In the
      event any interest is paid on this Note which is deemed to be in excess of
      the
      then legal maximum rate, then that portion of the interest payment representing
      an amount in excess of the then legal maximum rate shall be deemed a payment
      of
      principal and applied against the principal of this Note.

     

    9. Waivers.
      The
      Company hereby waives notice of default, presentment or demand for payment,
      protest or notice of nonpayment or dishonor and all other notices or demands
      relative to this instrument.

     

    10. Governing
      Law.
      This
      Note and all actions arising out of or in connection with this Note shall be
      governed by and construed in accordance with the laws of the State of New York,
      without regard to the conflicts of law provisions of the State of New York,
      or
      of any other state.

     

    11. Arbitration.
      Any
      dispute, controversy, or claim arising in relation to this Note, including
      with
      regard to its validity, invalidity, breach, enforcement or termination, shall
      be
      resolved by binding arbitration in London, England, in accordance with the
      rules
      of arbitration which are in force in the United Kingdom on the date when the
      notice of arbitration is submitted. The arbitrability of such dispute, claim
      or
      controversy shall also be determined in such arbitration. Such arbitration
      proceeding shall be conducted in the English language before one (1) arbitrator
      agreed to by the parties. Both the foregoing agreement of the parties to
      arbitrate any and all such disputes, claims and controversies, and the results,
      determinations, findings, judgments and/or awards rendered through any such
      arbitration shall be final and binding on the parties hereto and may be
      specifically enforced by legal proceedings.

     

     

    [Signature
      Page Follows]

     

     

    
      
         

      

      
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    The
      Company has caused this Note to be issued as of the date first written
      above.

     

    Organic
      To Go Food Corporation

    a
      Delaware corporation

     

     

    By: 
      ___________________________

    Name:
      Jason Brown

    Title:
      Chief Executive Officer

     

     

     

     

     

     

       

      [Signature
        page to Convertible Promissory Note]