THIS
NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED
UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”)
SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.
THIS LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS
NOTE.

 

WAKO
LOGISTICS GROUP, INC.

 

6%
Convertible Promissory Note

 

April
1, 2005

 

FOR
VALUE RECEIVED,
Wako
Logistics Group, Inc.,
a Delaware corporation (the “Company”)
with its principal executive office at 3606-8, 36/F, Citibank Tower, Citibank
Plaza, 3 Garden Road Central, Hong Kong, promises to pay to the order of
Christopher
Wood (the
“Holder”
or “Payee”)
or registered assigns the principal amount of One
Million Dollars ($1,000,000)
(the “Principal
Amount”)
on March 31, 2008 (the “Maturity
Date”),
subject to earlier conversion as more specifically described herein. The
Principal Amount is payable in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts. 

 

This
convertible promissory note (the “Note”)
is being issued to the Holder, pursuant to the terms and conditions of a
Subscription Agreement of even date herewith (the “Subscription
Agreement”).
Notwithstanding any provision to the contrary contained herein or elsewhere,
this Note is subject and entitled to certain terms, conditions, covenants and
agreements contained in the Subscription Agreement including, without limitation
certain registration rights with respect to the shares of common stock, par
value $.001 per share (the “Common
Stock”),
issuable to the Holder upon the conversion of this Note, as provided in
Paragraph
3
hereafter. Any transferee of this Note, by its acceptance hereof, assumes the
obligations of the Payee in the Subscription Agreement with respect to the
conditions and procedures for transfer of this Note. Reference to the
Subscription Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both the Principal Amount and interest thereon
as provided herein. 

 

Interest
on this Note shall accrue on the Principal Amount outstanding from time to time
at a rate per annum computed in accordance with Paragraph 2
hereof and shall be payable in accordance with Paragraph 2
hereof. All payments by the Company hereunder shall be applied first to pay any
interest which is due, but unpaid, then to reduce the Principal
Amount.

 




















 

The
Company (i) waives presentment, demand, protest or notice of any kind in
connection with this Note and (ii) agrees, in the event of an Event of
Default (as defined below), to pay to the Payee, on demand, all costs and
expenses (including reasonable legal fees) incurred in connection with the
enforcement and collection of this Note.

 

1.  Prepayment.
This Note may be prepaid prior to the Maturity Date, in whole or in part,
without any premium or penalty. All such payments shall be applied first to
accrued interest and then to the outstanding Principal Amount.

 

2.  Computation
of Interest.

 

(a)  Interest
Rate.
Subject to Paragraph 2(b)
below, the outstanding Principal Amount shall bear interest at the rate of six
percent (6%) per annum compounded on a quarterly basis.

 

(b)  Maximum
Rate.
In the event that it is determined that, under the applicable laws relating to
usury applicable to the Company or the indebtedness evidenced by this Note
(“Applicable
Usury Laws”),
the interest charges and fees payable by the Company in connection herewith or
in connection with any other document or instrument executed and delivered in
connection herewith (collectively, the “Effective
Interest Rate”)
cause the Effective Interest Rate applicable to the indebtedness evidenced by
this Note to exceed the maximum rate allowed by law (the “Maximum
Rate”),
then such interest shall be recalculated for the period in question and any
excess over the Maximum Rate paid with respect to such period shall be credited,
without further agreement or notice, to the Principal Amount outstanding
hereunder to reduce said balance by such amount with the same force and effect
as though the Company had specifically designated such extra sums to be so
applied to principal and the Payee had agreed to accept such extra payment(s) as
a premium-free prepayment. All such deemed prepayments shall be applied to the
principal balance payable at maturity. 

 

(c)  Payment
of Interest.
All accrued but unpaid interest on the Principal Amount shall be payable on the
Maturity Date; provided, however,
that in the event that the entire Principal Amount is converted into Common
Stock, pursuant to the provisions of Paragraph
3
hereafter, prior to the Maturity Date, then all interest accrued through the
date of the Final Conversion (as such term is defined in Paragraph
3)
shall be payable to the Holder upon such Final Conversion. All interest payable
under this Note shall be payable to the Holder in cash, Common Stock, or in both
cash and Common Stock, as elected, in writing, by the Holder. Interest payable
in Common Stock shall be based on the same value as determined for Conversion
(as such term is defined in Paragraph
3).

 

3.  Conversion.
At
any time prior to the Maturity Date, the Holder may, at his sole election,
convert all or a portion of the Principal Amount into shares of Common Stock, by
sending written notice to the Company, in the form of Exhibit 1 annexed hereto
(each a “Conversion”
and the conversion which results in the conversion of the entire outstanding
Principal Amount being referred to as the “Final
Conversion”).
Upon any Conversion of this Note, the Principal Amount to be converted shall be
converted into Common Stock at a price per share of Common Stock equal to the
lesser of (i) the Fair Market Value of the Common Stock (defined hereafter) and
(ii) $.50 per share. For the purposes of this Note, “Fair
Market Value”
shall mean, as of the date of the Company’s receipt of any such election notice:
(i) if shares of the Common Stock are listed on a national securities
exchange, the average of the closing prices as reported for composite
transactions during the three (3) consecutive trading days preceding the trading
day immediately prior to such date or, if no sale occurred on a trading day,
then the mean between the closing bid and asked prices on such exchange on such
trading day; (ii) if shares of the Common Stock are not so listed but are
traded on the Nasdaq SmallCap Market (“NSCM”),
the average of the closing prices as reported on the NSCM during the three (3)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the highest
bid and lowest asked prices as of the close of business on such trading day, as
reported on the NSCM; or if applicable, the Nasdaq National Market
(“NNM”),
or if not then included for quotation on the NNM or NSCM, the average of the
highest reported bid and lowest reported asked prices as reported by the OTC
Bulletin Board or the National Quotations Bureau, as the case may be; or
(iii) if the shares of the Common Stock are not then publicly traded, the
fair market price of the Common Stock as determined in good faith by at least a
majority of the Board of Directors of the Company.

 







- 2
-












 

4.  Covenants
of Company.
The Company covenants and agrees that, so long as this Note shall be
outstanding, it will perform the obligations set forth in this Paragraph 4:

 

(a)  Taxes
and Levies.
The Company will promptly pay and discharge all material taxes, assessments, and
governmental charges or levies imposed upon the Company or upon its income and
profits, or upon any of its property including, before the same shall become
delinquent, as well as all claims for labor, materials and supplies which, if
unpaid, might become a lien or charge upon such properties or any part thereof;
provided,
however,
that the Company shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and the Company shall set
aside on its books adequate reserves in accordance with generally accepted
accounting principles (“GAAP”)
with respect to any such tax, assessment, charge, levy or claim so
contested;

 

(b)  Maintenance
of Existence.
The Company will do or cause to be done all things reasonably necessary to
preserve and keep in full force and effect its existence as a corporation, and
comply with all laws applicable to the Company, except where the failure to
comply would not have a material adverse effect on the Company;

 

(c)  Maintenance
of Property.
The Company will at all times maintain, preserve, protect and keep its property
used or useful in the conduct of its business in good repair, working order and
condition, and from time to time make all needful and proper repairs, renewals,
replacements and improvements thereto as shall be reasonably required in the
conduct of its business;

 

(d)   Insurance.
The Company will, to the extent necessary for the operation of its business,
keep adequately insured by financially sound reputable insurers, all property as
shall be reasonably required in the conduct of its business;










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(e)  Books
and Records.
The Company will at all times keep true and correct books, records and accounts
reflecting all of its business affairs and transactions in accordance with GAAP.
Such books and records shall be open at reasonable times and upon reasonable
notice to the inspection of the Payee or its agents; 

 

(f)  Notice
of Certain Events.
The Company will give prompt written notice (with a description in reasonable
detail) to the Payee of:

 

(i)  the
occurrence of any Event of Default (defined hereafter) or any event which, with
the giving of notice or the lapse of time, would constitute an Event of Default;
and

 

(ii)  the
delivery of any notice to the Company effecting the acceleration of any
indebtedness of the Company in excess of $50,000; and

 

(iii)  
the occurrence of any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Payee in writing which
has been instituted against the Company or to which any of its properties,
assets or revenues is subject which, if adversely determined, would reasonably
be expected to have a material adverse effect on the Company; and

 

5.  Events
of Default.

 

(a)  The
term “Event
of Default”
shall mean any of the events set forth in this Section 5(a):

 

(i)  Non-Payment
of Obligations.
The Company shall default in the payment of the Principal Amount or accrued
interest on this Note as and when the same shall become due and payable, whether
by acceleration or otherwise.

 

(ii)  Non-Performance
of Covenants.
The Company shall default in the due observance or performance of any covenant
set forth in Paragraph 4,
which default shall continue uncured for five (5) business days.

 

(iii)  Bankruptcy,
Insolvency, etc.
The Company shall:

 

(A)  admit
in writing its inability to pay its debts as they become due;

 

(B)  apply
for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator or other custodian for the Company or any of its property, or make
a general assignment for the benefit of creditors;

 

(C)  in
the absence of such application, consent or acquiesce in, permit or suffer to
exist the appointment of a trustee, receiver, sequestrator or other custodian
for the Company or for any part of its property;

 







- 4
-












 

(D)  permit
or suffer to exist the commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding, in respect of the
Company, and, if such case or proceeding is not commenced by the Company or
converted to a voluntary case, such case or proceeding shall be consented to or
acquiesced in by the Company or shall result in the entry of an order for
relief; or

 

(E)  take
any corporate or other action authorizing, or in furtherance of, any of the
foregoing.

 

(iv)  Termination
of Business; Dissolution.
The termination of the Company’s business and/or the dissolution of the Company.


 

(b)  Action
if Bankruptcy; or Termination of Business or Dissolution.
If any Event of Default described in clauses (iii)(A) through (E), or (iv)
of Paragraph 5(a)
shall occur, the outstanding Principal Amount, all accrued but unpaid interest
and all other obligations under this Note shall automatically be and become
immediately due and payable, without notice or demand.

 

(c)  Action
if Other Event of Default.
If any Event of Default (other than any Event of Default described in clause (b)
immediately preceding) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Payee may, upon notice to the Company,
declare all or any portion of the outstanding Principal Amount, together with
interest accrued on this Note, to be due and payable and any or all other
obligations hereunder to be due and payable, whereupon the full unpaid Principal
Amount hereof, such accrued interest and any and all other such obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand, or presentment. 

 

6.  Amendments
and Waivers.

 

(a)  The
provisions of this Note may from time to time be amended, modified or waived, if
such amendment, modification or waiver is in writing and consented to in writing
by the Company and the Holder.

 

(b)  No
failure or delay on the part of the Payee in exercising any power or right under
this Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Company in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Payee shall, except as may be
otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.

 







- 5
-












 

(c)  To
the extent that the Company makes a payment or payments to the Payee, and such
payment or payments or any part thereof are subsequently for any reason
invalidated, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not
occurred.

 

(d)  After
any waiver, amendment or supplement under this Paragraph 6
becomes effective, the Company shall mail to the Holder a copy
thereof.

 

7.  Miscellaneous.

 

(a)  Parties
in Interest.
All covenants, agreements and undertakings in this Note binding upon the Company
or the Payee shall bind and inure to the benefit of the successors and permitted
assigns of the Company and the Payee, respectively, whether so expressed or
not.

 

(b)  Governing
Law, Etc.
This Note shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to the conflicts of laws principles
thereof. The parties hereto hereby agree that any suit or proceeding arising
directly and/or indirectly pursuant to or under this Note, shall be brought
solely in a federal or state court located in the City, County and State of New
York. By its execution hereof, the parties hereby covenant and irrevocably
submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally served upon them in New York City. The parties hereto waive any
claim that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in
personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of its reasonable counsel fees and disbursements in an amount
judicially determined.

 

(c)  Waiver
of Jury Trial.
THE PAYEE AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE OR ANY OTHER
DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF THE PAYEE OR THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PAYEE’S PURCHASING THIS NOTE.










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-












 

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

 


	 	 	 
	 	WAKO LOGISTICS
      GROUP, INC.
	 
 	 
 	 
 
		By:  	/s/ Christopher Wood
	 	
      

      Name: Christopher Wood
	 	Title: CEO



 







- 7
-











 


EXHIBIT
1 TO WAKO LOGISTICS GROUP, INC.

6%
CONVERTIBLE PROMISSORY NOTE







_________________,
200__




Wako
Logistics Group, Inc.

3606-8,
36/F, Citibank Tower

Citibank
Plaza, 3 Garden Road

Central,
Hong Kong




Re: Conversion
Election




Gentlemen:




In
connection with that certain 6% Convertible Promissory Note, dated April 1,
2005, in the principal amount of $1,000,000, issued by Wako Logistics Group,
Inc. (the “Note”),
I am hereby providing notice pursuant to the provisions of Paragraph 3 of the
Note, of my election to convert the principal amount into shares of the
Company’s common stock, par value $.001 per share (the “Common
Stock”),
as provided herein:




(Please
check next to the applicable statement)

 

______
 I
hereby elect to convert the entire remaining outstanding principal amount of the
Note into shares of Common Stock at the applicable conversion rate determined
under the provisions of the Note. Please pay all accrued interest to
me:




__________
In Cash  _________
By converting to Common Stock




______ I
hereby elect to convert $______________ of the outstanding principal amount of
the Note into shares of Common Stock at the applicable conversion rate
determined under the provisions of the Note.




Please
issue certificates for the shares of Common Stock, with applicable restrictive
legends, in the following name(s):




_____________________________________. 







 


	__________________    
      Date
	
      _________________________________

      Signature

      


      _________________________________

      Print
      Name

      


      _________________________________

      Address