Document:

fsb2a5ex10v_royalspring.htm

     

    

    

    FORM
      OF REGISTRATION RIGHTS AGREEMENT

    

     

    
      
        
        

        
        

      

      
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      REGISTRATION
        RIGHTS AGREEMENT

      

      REGISTRATION
        RIGHTS AGREEMENT (this “Agreement”), dated as of December ___, 2006,
        between Royal Spring Water, Inc., a Nevada corporation (the “Company”), and GCA
        Strategic Investment Fund Limited (the “Fund”).

      

      1.           Introduction.

      

      1.1                      Securities
        Purchase Agreement.  The Company and the Fund have today
        executed that certain Securities Purchase Agreement (the “Securities Purchase
        Agreement”), pursuant to which the Company has agreed, among other things, to
        issue (the “Offering”) up to an aggregate of One Million Two Hundred Fifty
        Thousand Dollars ($1,250,000) (U.S.) principal amount of Convertible Notes
        of
        the Company (the “Notes”) to the Fund or its successors, assigns or transferees
        (collectively, the “Holders”).  The Notes are convertible into an
        indeterminable number of shares (the “Note Conversion Shares”) of the Company’s
        common stock par value, $0.001 per share (the “Common Stock”) pursuant to the
        terms of the Notes.  In addition, pursuant to the terms of the
        Securities Purchase Agreement and the transactions contemplated thereby,
        the
        Company has agreed to issue to the Fund Common Stock Purchase Warrants
        exercisable for 500,000 shares of the Company’s Common Stock (the “Warrant
        Shares”).  The number of Note Conversion Shares and Warrant Shares is
        subject to adjustment upon the occurrence of stock splits, recapitalizations
        and
        similar events occurring after the date hereof.

      

      1.2                      Definition
        of Securities.  The Note Conversion Shares and the Warrant
        Shares are herein referred to as the “Securities.”

      

      1.3                      National
        Market Representation.  The Company represents and warrants
        that the Company’s Common Stock is currently quoted in the Pink Sheets and
        pending listing and trading on the Over-the-Counter Bulletin Board (“OTCBB”)
        operated and maintained by the National Association of Securities Dealers
        (“NASD”) under the symbol “RSPG.”  Certain capitalized terms used in
        this Agreement are defined in Section 3 hereof; references to sections shall
        be
        to sections of this Agreement.

      

      2.           Registration
        under Securities Act, etc.

      

      2.1                      Mandatory
        Registration.

      

                      (a)               Registration
        of Registrable Securities. The Company shall prepare and file on or
        before the 30th
        day following the date hereof (the “Filing Date”) a registration statement (the
“Registration Statement”) to register no less than 3,000,000 shares of Common
        Stock covering the resale of the Registrable Securities.  The Company
        shall use its best efforts to cause the Registration Statement to be declared
        effective by the Commission on the earlier of (i) 60 days following the date
        hereof, (ii) ten (10) days following the receipt of a “No Review” or similar
        letter from the Commission or (iii) the first business day following the
        day the
        Commission determines the Registration Statement eligible to be declared
        effective (the “Required Effectiveness Date”).

    

     

     

    
      
        
        

        
        

      

      
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      Nothing
        contained herein shall be deemed to limit the number of Registrable Securities
        to be registered by the Company hereunder.  As a result, should the
        Registration Statement not relate to the maximum number of Registrable
        Securities acquired by (or potentially acquirable by) the Holders thereof
        upon
        conversion of the Notes, or exercise of the Common Stock Purchase Warrants
        described in Section 1 above, the Company shall be required to promptly file
        a
        separate registration statement (utilizing Rule 462 promulgated under the
        Securities Act, where applicable) relating to such Registrable Securities
        which
        then remain unregistered.  The provisions of this Agreement shall
        relate to any such Registration Statement and any such separate registration
        statement as if it were an amendment to the Registration Statement.

      

      (b)                      Registration
        Statement Form.  Registrations under this Section 2.1 shall
        be on Form S-3, SB2 or such other appropriate successor registration form
        of the
        Commission as shall permit the disposition of such Registrable Securities
        in
        accordance with the intended method or methods of disposition specified by
        the
        Fund; provided, however, such intended method of disposition shall not include
        an underwritten offering of the Registrable Securities.

      

      (c)                     
        Expenses.  The Company will pay all Registration
        Expenses in connection with any registration required by this Section
        2.1.

      

      (d)                      Effective
        Registration Statement.  A registration pursuant to this
        Section 2.1 shall not be deemed to have been effected (i) unless a registration
        statement with respect thereto has become effective within the time period
        specified herein, provided that a registration which does not become effective
        after the Company filed a registration statement with respect thereto solely
        by
        reason of the refusal to proceed of any holder of Registrable Securities
        (other
        than a refusal to proceed based upon the advice of counsel in the form of
        a
        letter signed by such counsel and provided to the Company relating to a
        disclosure matter unrelated to such holder) shall be deemed to have been
        effected by the Company unless the Holders of the Registrable Securities
        shall
        have elected to pay all Registration Expenses in connection with such
        registration, (ii) if, after it has become effective, such registration becomes
        subject to any stop order, injunction or other order or extraordinary
        requirement of the Commission or other governmental agency or court for any
        reason or (iii) if, after it has become effective, such registration ceases
        to
        be effective for more than an aggregate of twenty (20) days.

      

                      (e)                Plan
        of Distribution.  The Company hereby agrees that the
        Registration Statement shall include a plan of distribution section reasonably
        acceptable to the Fund;  provided, however, such plan of distribution
        section shall be modified by the Company so as to not provide for the
        disposition of the Registrable Securities on the basis of an underwritten
        offering.

       

       

      
        
          
          

          
          

        

        
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      2.2                      Incidental
        Registration.

      

      (a)           Right
        to Include Registrable Securities.  If at any time after the
        date hereof but before the second (2nd) anniversary
        of
        the date hereof the Company proposes to register any of
        its securities under the Securities Act (other than by a registration in
        connection with an acquisition in a manner which would not permit registration
        of Registrable Securities for sale to the public, on Form S-8, or any successor
        form thereto, on Form S-4, or any successor form thereto and other than pursuant
        to Section 2.1), on an underwritten basis (either best-efforts or
        firm-commitment), then, the Company will each such time give prompt written
        notice to all Holders of Registrable Securities of its intention to do so
        and of
        such Holders’ rights under this Section 2.2.  Upon the written request
        of any such holder made within twenty (20) days after the receipt of any
        such
        notice (which request shall specify the Registrable Securities intended to
        be
        disposed of by such holder and the intended method of disposition thereof),
        the
        Company will, subject to the terms of this Agreement, use its commercially
        reasonable best efforts to effect the registration under the Securities Act
        of
        the Registrable Securities, to the extent requisite to permit the disposition
        (in accordance with the intended methods thereof as aforesaid) of such
        Registrable Securities so to be registered, by inclusion of such Registrable
        Securities in the registration statement which covers the securities which
        the
        Company proposes to register, provided that if, at any time after written
        notice
        of its intention to register any securities and prior to the effective date
        of
        the registration statement filed in connection with such registration, the
        Company shall determine for any reason either not to register or to delay
        registration of such securities, the Company may, at its election, give written
        notice of such determination to each holder and, thereupon, (i) in the case
        of a
        determination not to register, shall be relieved of this obligation to register
        any Registrable Securities in connection with such registration (but not
        from
        its obligation to pay the Registration Expenses in connection therewith),
        and
        (ii) in the case of a determination to delay registering, shall be permitted
        to
        delay registering any Registrable Securities, for the same period as the
        delay
        in registering such other securities.  No registration effected under
        this Section 2.2 shall relieve the Company of its obligation to effect any
        registration upon request under Section 2.1, nor shall any such registration
        hereunder be deemed to have been effected pursuant to Section
        2.1.  The Company will pay all Registration Expenses in connection
        with each registration of Registrable Securities requested pursuant to this
        Section 2.2.  The right provided the Holders of the Registrable
        Securities pursuant to this Section shall be exercisable at their sole
        discretion and will in no way limit any of the Company’s obligations to pay the
        Note according to their terms.

      

      (b)              Priority
        in Incidental Registrations.  If the managing underwriter of
        the underwritten offering contemplated by this Section 2.2 shall inform the
        Company and Holders of the Registrable Securities requesting such registration
        by letter of its belief that the number of securities requested to be included
        in such registration exceeds the number which can be sold in such offering,
        then
        the Company will include in such registration, to the extent of the number
        which
        the Company is so advised can be sold in such offering, (i) first securities
        proposed by the Company to be sold for its own account, and

    

     

     

    
      
        
        

        
        

      

      
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      (ii)
        second Registrable Securities and securities of other selling security Holders
        requested to be included in such registration pro rata on the basis of the
        number of shares of such securities so proposed to be sold and so requested
        to
        be included; provided, however, the Holders of Registrable Securities shall
        have
        priority to all shares sought to be included by officers and directors of
        the
        Company as well as Holders of ten percent (10%) or more of the Company’s Common
        Stock.

      

      2.3                      Registration
        Procedures.  If and whenever the Company is required to
        effect the registration of any Registrable Securities under the Securities
        Act
        as provided in Section 2.1 and, as applicable, 2.2, the Company shall, as
        expeditiously as possible:

      

      (a)           prepare
        and file with the Commission the Registration Statement or amendments thereto,
        to effect such registration (including such audited financial statements
        as may
        be required by the Securities Act or the rules and regulations promulgated
        thereunder) and thereafter use its commercially reasonable best efforts to
        cause
        such registration statement to be declared effective by the Commission, as
        soon
        as practicable, but in any event no later than the Required Effectiveness
        Date
        (with respect to a registration pursuant to Section 2.1); provided, however,
        that before filing such registration statement or any amendments thereto,
        the
        Company will furnish to the counsel selected by the Holders of Registrable
        Securities which are to be included in such registration, copies of all such
        documents proposed to be filed;

      

      (b)           with
        respect to any registration statement pursuant to Section 2.1, prepare and
        file
        with the Commission such amendments and supplements to such registration
        statement and the prospectus used in connection therewith as may be necessary
        to
        keep such registration statement effective and to comply with the provisions
        of
        the Securities Act with respect to the disposition of all Registrable Securities
        covered by such registration statement until the earlier to occur of five
        (5)
        years after the date of this Agreement (subject to the right of the Company
        to
        suspend the effectiveness thereof for not more than 10 consecutive days or
        an
        aggregate of 30 days in such five (5) years period) or such time as all of
        the
        securities which are the subject of such registration statement cease to
        be
        Registrable Securities (such period, in each case, the “Registration Maintenance
        Period”);

      

      (c)           furnish
        to each of the sellers of Registrable Securities covered by such registration
        statement such number of conformed copies of such registration statement
        and of
        each such amendment and supplement thereto (in each case including all
        exhibits), such number of copies of the prospectus contained in such
        registration statement (including each preliminary prospectus and any summary
        prospectus) and any other prospectus filed under Rule 424 under the Securities
        Act, in conformity with the requirements of the Securities Act, and such
        other
        documents, as such seller and underwriter, if any, may reasonably request
        in
        order to facilitate the public sale or other disposition of the Registrable
        Securities owned by such seller; provided, however, if any such
        documents are available on the SEC website or another website, the Company
        shall
        not be required to provide copies of such documents;

       

      
        
          G;/GCA
            Deals/Royal Springs Water/Registration Rights 1.DOC4

          
          

        

        
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        (d)           use
          its commercially reasonable best efforts to register or qualify all Registrable
          Securities and other securities covered by such registration statement
          under
          such other securities laws or blue sky laws as any seller thereof shall
          reasonably request, to keep such registrations or qualifications in effect
          for
          so long as such registration statement remains in effect, and take any
          other
          action which may be reasonably necessary to enable such seller to consummate
          the
          disposition in such jurisdictions of the securities owned by such seller,
          except
          that the Company shall not for any such purpose be required to qualify
          generally
          to do business as a foreign corporation in any jurisdiction wherein it
          would not
          but for the requirements of this subdivision (d) be obligated to be so
          qualified
          or to consent to general service of process in any such
          jurisdiction;

        

        (e)           use
          its commercially reasonable best efforts to cause all Registrable Securities
          covered by such registration statement to be registered with or approved
          by such
          other governmental agencies or authorities as may be necessary to enable
          the
          seller or sellers thereof to consummate the disposition of such Registrable
          Securities;

        

        (f)           furnish
          to each seller of Registrable Securities a signed counterpart, addressed
          to such
          seller, and the underwriters, if any, of:

        

        (1)           an
          opinion of counsel for the Company, dated the effective date of such
          registration statement (or, if such registration includes an underwritten
          public
          offering, an opinion dated the date of the closing under the underwriting
          agreement), reasonably satisfactory in form and substance to such seller,
          and

        

        (2)           a
          “comfort” letter (or, in the case of any Person which does not satisfy the
          conditions for receipt of a “comfort” letter specified in Statement on Auditing
          Standards No. 72, an “agreed upon procedures” letter), dated the effective date
          of such registration statement (and, if such registration includes an
          underwritten public offering, a letter of like kind dated the date of the
          closing under the underwriting agreement), signed by the independent public
          accountants who have certified the Company’s financial statement included in
          such registration statement, covering substantially the same matters with
          respect to such registration statement (and the prospectus included therein)
          and, in the case of the accountants’ letter, with respect to events subsequent
          to the date of such financial statements, as are customarily covered in
          accountants’ letters delivered to the underwriters in underwritten public
          offerings of securities (with, in the case of an “agreed upon procedures”
letter, such modifications or deletions as may be required under Statement
          on
          Auditing Standards No. 35) and, in the case of the accountants’ letter, such
          other financial matters, as such seller (or the underwriters, if any) may
          reasonably request;

        

        (g)           notify
          the Sellers’ Representative and its counsel promptly and confirm such advice in
          writing promptly after the Company has knowledge thereof:

        

                             

        
          
            
            

            
            

          

          
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      (1)           when
        the Registration Statement, the prospectus or any prospectus supplement related
        thereto or post-effective amendment to the Registration Statement has been
        filed, and, with respect to the Registration Statement or any post-effective
        amendment thereto, when the same has become effective;

      

      (2)           of
        any request by the Commission for amendments or supplements to the Registration
        Statement or the prospectus or for additional information;

      

      (3)           of  the
        issuance by the Commission of any stop order suspending the effectiveness
        of the
        Registration Statement or the initiation of any proceedings by any Person
        for
        that purpose; and

      

      (4)           of
        the receipt by the Company of any notification with respect to the suspension
        of
        the qualification of any Registrable Securities for sale under the securities
        or
        blue sky laws of any jurisdiction or the initiation or threat of any proceeding
        for such purpose;

      

      (h)           notify
        each seller of Registrable Securities covered by such registration statement,
        at
        any time when a prospectus relating thereto is required to be delivered under
        the Securities Act, upon discovery that, or upon the happening of any event
        as a
        result of which, the prospectus included in such registration statement,
        as then
        in effect, includes an untrue statement of a material fact or omits to state
        any
        material facts required to be stated therein or necessary to make the statements
        therein not misleading in the light of the circumstances then existing, and
        at
        the request of any such seller promptly prepare and furnish to such seller
        a
        reasonable number of copies of a supplement to or an amendment of such
        prospectus as may be necessary so that, as thereafter delivered to the
        purchasers of such securities, except if such documents are available on
        the SEC
        or another website, such prospectus shall not include an untrue statement
        of a
        material fact or omit to state a material fact required to be stated therein
        or
        necessary to make the statements therein not misleading in the light of the
        circumstances then existing;

      

      (i)           use
        its best efforts to obtain the withdrawal of any order suspending the
        effectiveness of the Registration Statement at the earliest possible
        moment;

      

      (j)           otherwise
        use its commercially reasonable best efforts to comply with all applicable
        rules
        and regulations of the Commission, and make available to its security Holders,
        as soon as reasonably practicable, an earnings statement covering the period
        of
        at least twelve months, but not more than eighteen months, beginning with
        the
        first full calendar month after the effective date of such registration
        statement, which earnings statement shall satisfy the provisions of Section
        11(a) of the Securities Act and Rule 158 thereunder;

      

      (k)           enter
        into such agreements and take such other actions as the Sellers’ Representative
        shall reasonably request in writing (at the expense of the requesting or
        benefiting seller) in order to expedite or facilitate the disposition of
        such
        Registrable Securities; and

       

       

      
        
          
          

          
          

        

        
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        (l)           use
          its commercially reasonable best efforts to list all Registrable Securities
          covered by such registration statement on any securities exchange on which
          any
          of the Registrable Securities are then listed.

        

        The
          Company may require each seller of Registrable Securities as to which any
          registration is being effected to furnish the Company such information
          regarding
          such seller and the distribution of such securities as the Company may
          from time
          to time reasonably request in writing.  The failure to provide such
          information shall toll any Default Fee until such information is
          provided.

        

        The
          Company will not file any registration statement pursuant to Section 2.1,
          or
          amendment thereto or any prospectus or any supplement thereto (including
          such
          documents incorporated by reference and proposed to be filed after the
          initial
          filing of the Registration Statement) to which the Sellers’ Representative shall
          reasonably object, provided that the Company may file such documents in
          a form
          required by law or upon the advice of its counsel.

        

        The
          Company represents and warrants to each holder of Registrable Securities
          that it
          has obtained all necessary waivers, consents and authorizations necessary
          to
          execute this Agreement and consummate the transactions contemplated hereby
          other
          than such waivers, consents and/or authorizations specifically contemplated
          by
          the Securities Purchase Agreement.

        

        The
          Fund
          agrees that, upon receipt of any notice from the Company of the occurrence
          of
          any event of the kind described in subdivision (h) of this Section 2.3,
          the Fund
          will forthwith discontinue the Fund’s disposition of Registrable Securities
          pursuant to the Registration Statement relating to such Registrable Securities
          until such Fund’s receipt of the copies of the supplemented or amended
          prospectus contemplated by subdivision (h) of this Section 2.3 and, if
          so
          directed by the Company, will deliver to the Company (at the Company’s expense)
          all copies, other than permanent file copies, then in the Fund’s possession of
          the prospectus relating to such Registrable Securities current at the time
          of
          receipt of such notice.

        

        2.4                      Underwritten
          Offerings.

        

        (a)           Incidental
          Underwritten Offerings.  If the Company at any time proposes
          to register any of its securities under the Securities Act as contemplated
          by
          Section 2.2 and such securities are to be distributed by or through one
          or more
          underwriters, the Company will, if requested by any holder of Registrable
          Securities as provided in Section 2.2 and subject to the provisions of
          Section
          2.2(a), use its commercially reasonable best efforts to arrange for such
          underwriters to include all the Registrable Securities to be offered and
          sold by
          such holder among the securities to be distributed by such
          underwriters.

        

                        (b)            Holdback
          Agreements.  Subject to such other reasonable requirements as
          may be imposed by the underwriter as a condition of inclusion of holder’s
          Registrable Securities in the registration statement, each holder agrees
          by
          acquisition of Registrable Securities, if so required by the managing
          underwriter, not to sell, make any short sale of, loan, 

      

       

       

      
        
          
          

          
          

        

        
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      grant
        any
        option for the purchase of, effect any public sale or distribution of or
        otherwise dispose of, except as part of such underwritten registration, any
        equity securities of the Company, during such reasonable period of time
        requested by the underwriter; provided however, such period shall not exceed
        the
        150 day period commencing 30 days prior to the commencement of such underwritten
        offering and ending 120 days following the completion of such underwritten
        offering.

      

      (c)           Participation
        in Underwritten Offerings.  No holder of Registrable
        Securities may participate in any underwritten offering under Section 2.2
        unless
        such holder of Registrable Securities (i) agrees to sell such Person’s
        securities on the basis provided in any underwriting arrangements approved,
        subject to the terms and conditions hereof, by the Holders of a majority
        of
        Registrable Securities to be included in such underwritten offering and (ii)
        completes and executes all questionnaires, indemnities, underwriting agreements
        and other documents (other than powers of attorney) required under the terms
        of
        such underwriting arrangements.  Notwithstanding the foregoing, no
        underwriting agreement (or other agreement in connection with such offering)
        shall require any holder of Registrable Securities to make any representations
        or warranties to or agreements with the Company or the underwriters other
        than
        representations and warranties contained in a writing furnished by such holder
        expressly for use in the related registration statement or representations,
        warranties or agreements regarding such holder, such holder’s Registrable
        Securities and such holder’s intended method of distribution and any other
        representation required by law.

      

      2.5                      Preparation;
        Reasonable Investigation.  In connection with the preparation
        and filing of each registration statement under the Securities Act pursuant
        to
        this Agreement, the Company will give the Holders of Registrable Securities
        registered under such registration statement, and their respective counsel
        and
        accountants for Sellers’ Representative, the opportunity to participate in the
        preparation of such registration statement, each prospectus included therein
        or
        filed with the Commission, and each amendment thereof or supplement thereto,
        and
        will give each of them such access to its books and records and such
        opportunities to discuss the business of the Company with its officers and
        the
        independent public accountants who have certified its financial statements
        as
        shall be necessary, in the reasonable opinion of such Holders’ and such
        underwriters’ respective counsel, to conduct a reasonable investigation within
        the meaning of the Securities Act.

      

      2.6                      Registration
        Default Fee.  Other than as a result of actions by the Fund,
        if the Registration Statement contemplated in Section 2.1 is (x) not declared
        effective by the Required Effectiveness Date or (y) such effectiveness is
        not
        maintained for the Registration Maintenance Period, then the Company shall
        pay
        to the Fund the Default Fee specified in Section 10.4 of the Securities Purchase
        Agreement.

      

      2.7                      Indemnification.

      

                      (a)           Indemnification
        by the Company.  In the event of any registration of any
        Securities under the Securities Act, the Company will, and hereby does

       

       

      
        
          
          

          
          

        

        
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      agree
        to
        indemnify and hold harmless the holder of any Registrable Securities covered
        by
        such registration statement, its directors and officers, each other Person
        who
        participates as an underwriter in the offering or sale of such securities
        and
        each other Person, if any, who controls such holder or any such underwriter
        within the meaning of the Securities Act against any losses, claims, damages
        or
        liabilities, joint or several, to which such holder or any such director
        or
        officer or underwriter or controlling person may become subject under the
        Securities Act or otherwise, insofar as such losses, claims, damages or
        liabilities (or actions or proceedings, whether commenced or threatened,
        in
        respect thereof) arise out of or are based upon any untrue statement or alleged
        untrue statement of any material fact contained in any registration statement
        under which such securities were registered under the Securities Act, any
        preliminary prospectus, final prospectus or summary prospectus contained
        therein, or any amendment or supplement thereto, or any omission or alleged
        omission to state therein a material fact required to be stated therein or
        necessary to make the statements therein not misleading, and the Company
        will
        reimburse such holder and each such director, officer, underwriter and
        controlling person for any legal or any other expenses reasonably incurred
        by
        them in connection with investigating or defending any such loss, claim,
        liability, action or proceeding, provided that in no event shall the Company
        be
        liable in any such case to the extent that any such loss, claim, damage,
        liability, (or action or proceeding in respect thereof) or expense arises
        out of
        or is based upon an untrue statement or alleged untrue statement or omission
        or
        alleged omission made in such registration statement, any such preliminary
        prospectus, final prospectus, summary prospectus, amendment or supplement
        in
        reliance upon and in conformity with written information furnished to the
        Company by such holder or underwriter stating that it is for use in the
        preparation thereof and, provided further that the Company shall not be liable
        to any Person who participates as an underwriter in the offering or sale
        of
        Registrable Securities or to any other Person, if any, who controls such
        underwriter within the meaning of the Securities Act, in any such case to
        the
        extent that any such loss, claim, damage, liability (or action or proceeding
        in
        respect thereof) or expense arises out of such Person’s failure to send or give
        a copy of the final prospectus, as the same may be then supplemented or amended,
        within the time required by the Securities Act to the Person asserting the
        existence of an untrue statement or alleged untrue statement or omission
        or
        alleged omission at or prior to the written confirmation of the sale of
        Registrable Securities to such Person if such statement or omission was
        corrected in such final prospectus or an amendment or supplement
        thereto.  Such indemnity shall remain in full force and effect
        regardless of any investigation made by or on behalf of such holder or any
        such
        director, officer, underwriter or controlling person and shall survive the
        transfer of such securities by such holder.

      

    

    
      (b)             Indemnification
        by the Sellers.  The Company may require, as a condition to
        including any Registrable Securities in any registration statement filed
        pursuant to this Agreement, that the Company shall have received an undertaking
        satisfactory to it from the prospective seller of such Registrable Securities,
        to indemnify and hold harmless (in the same manner and to the same extent
        as set
        forth in subdivision (a) of this Section 2.7) the Company, each director
        of the
        Company, each officer of the Company and each other Person, if any, who controls
        the Company within the meaning of the Securities Act, with respect to any
        statement or alleged statement in or omission or alleged omission from such
        registration statement, any preliminary prospectus, final prospectus or summary
        prospectus contained therein, 

       

       

      
        
          
          

          
          

        

        
          10

          
            

          

        

        
          
          

        

         

        or
          any
          amendment or supplement thereto, if such statement or alleged statement
          or
          omission or alleged omission was made in reliance upon and in conformity
          with
          written information furnished to the Company through an instrument duly
          executed
          by such seller specifically stating that it is for use in the preparation
          of
          such registration statement, preliminary prospectus, final prospectus,
          summary
          prospectus, amendment or supplement.  Any such indemnity shall remain
          in full force and effect, regardless of any investigation made by or on
          behalf
          of the Company or any such director, officer or controlling person and
          shall
          survive the transfer of such securities by such seller.

      

      

      (c)           Notices
        of Claims, etc.  Promptly after receipt by an indemnified
        party of notice of the commencement of any action or proceeding involving
        a
        claim referred to in the preceding subdivisions of this Section 2.7, such
        indemnified party will, if a claim in respect thereof is to be made against
        an
        indemnifying party, give written notice to the latter of the commencement
        of
        such action, provided that the failure of any indemnified party to give notice
        as provided herein shall not relieve the indemnifying party of its obligations
        under the preceding subdivisions of this Section 2.7, except to the extent
        that
        the indemnifying party is actually prejudiced by such failure to give
        notice.  In case any such action is brought against an indemnified
        party, unless in the opinion of the indemnified party’s counsel a conflict of
        interest between such indemnified and indemnifying parties may exist in respect
        of such claim, the indemnifying party shall be entitled to participate in
        and to
        assume the defense thereof, jointly with any other indemnifying party similarly
        notified, to the extent that the indemnifying party may wish, with counsel
        reasonably satisfactory to such indemnified party, and after notice from
        the
        indemnifying party to such indemnified party of its election so to assume
        the
        defense thereof, the indemnifying party shall not be liable to such indemnified
        party for any legal or other expenses subsequently incurred by the latter
        in
        connection with the defense thereof other than reasonable costs of
        investigation.  No indemnifying party shall, without the consent of
        the indemnified party, consent to entry of any judgment or enter into any
        settlement of any such action which does not include as an unconditional
        term
        thereof the giving by the claimant or plaintiff to such indemnified party
        of a
        release from all liability, or a covenant not to sue, in respect to such
        claim
        or litigation.  No indemnified party shall consent to entry of any
        judgment or enter into any settlement of any such action the defense of which
        has been assumed by an indemnifying party without the consent of such
        indemnifying party.

      

      (d)           Other
        Indemnification.  Indemnification similar to that specified
        in the preceding subdivisions of this Section 2.7 (with appropriate
        modifications) shall be given by the Company and each seller of Registrable
        Securities (but only if and to the extent required pursuant to the terms
        of
        Section 2.7(b)) with respect to any required registration or other qualification
        of securities under any Federal or state law or regulation of any governmental
        authority, other than the Securities Act.

      

      (e)           Indemnification
        Payments.  The indemnification required by this Section 2.7
        shall be made by periodic payments of the amount thereof during the course
        of
        the investigation or defense, as and when bills are received or expense,
        loss,
        damage or liability is incurred.

       

       

      
        
          
          

          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      (f)           Contribution.  If
        the indemnification provided for in the preceding subdivision of this Section
        2.7 is unavailable to an indemnified party in respect of any expense, loss,
        claim, damage or liability referred to therein, then each indemnifying party,
        in
        lieu of indemnifying such indemnified party, shall contribute to the amount
        paid
        or payable by such indemnified party as a result of such expense, loss, claim,
        damage or liability (i) in such proportion as is appropriate to reflect the
        relative benefits received by the Company on the one hand and the holder
        or
        underwriter, as the case may be, on the other from the distribution of the
        Registrable Securities or (ii) if the allocation provided by clause (i) above
        is
        not permitted by applicable law, in such proportion as is appropriate to
        reflect
        not only the relative benefits referred to in clause (i) above but also the
        relative fault of the Company on the one hand and of the holder or underwriter,
        as the case may be, on the other in connection with the statements or omissions
        which resulted in such expense, loss, damage or liability, as well as any
        other
        relevant equitable considerations.  The relative benefits received by
        the Company on the one hand and the holder or underwriter, as the case may
        be,
        on the other in connection with the distribution of the Registrable Securities
        shall be deemed to be in the same proportion as the total net proceeds received
        by the Company from the initial sale of the Registrable Securities by the
        Company to the purchasers bear to the gain, if any, realized by all selling
        Holders participating in such offering or the underwriting discounts and
        commissions received by the underwriter, as the case may be.  The
        relative fault of the Company on the one hand and of the holder or underwriter,
        as the case may be, on the other shall be determined by reference to, among
        other things, whether the untrue or alleged untrue statement of a material
        fact
        or omission to state a material fact relates to information supplied by the
        Company, by the holder or by the underwriter and the parties’ relative intent,
        knowledge, access to information supplied by the Company, by the holder or
        by
        the underwriter and the parties’ relative intent, knowledge, access to
        information and opportunity to correct or prevent such statement or omission,
        provided that the foregoing contribution agreement shall not inure to the
        benefit of any indemnified party if indemnification would be unavailable
        to such
        indemnified party by reason of the provisions contained in the first sentence
        of
        subdivision (a) of this Section 2.7, and in no event shall the obligation
        of any
        indemnifying party to contribute under this subdivision (f) exceed the amount
        that such indemnifying party would have been obligated to pay by way of
        indemnification if the indemnification provided for under subdivision (b)
        of
        this Section 2.7 had been available under the circumstances.

      

      The
        Company and the Holders of Registrable Securities agree that it would not
        be
        just and equitable if contribution pursuant to this subdivision (f) were
        determined by pro rata allocation (even if the Holders and any underwriters
        were
        treated as one entity for such purpose) or by any other method of allocation
        that does not take account of the equitable considerations referred to in
        the
        immediately preceding paragraph.  The amount paid or payable by an
        indemnified party as a result of the losses, claims, damages and liabilities
        referred to in the immediately preceding paragraph shall be deemed to include,
        subject to the limitations set forth in the preceding sentence and subdivision
        (c) of this Section 2.7, any legal or other expenses reasonably incurred
        by such
        indemnified party in connection with investigating or defending any such
        action
        or claim.

      

      Notwithstanding
        the provisions of this subdivision (f), no holder of Registrable Securities
        or
        underwriter shall be required to contribute any amount in excess of the amount
        by which 

       

      
        
          
          

          
          

        

        
          12

          
            

          

        

        
          
          

        

         

        (i)
          in
          the case of any such holder, the net proceeds received by such holder from
          the
          sale of Registrable Securities or (ii) in the case of an underwriter, the
          total
          price at which the Registrable Securities purchased by it and distributed
          to the
          public were offered to the public exceeds, in any such case, the amount
          of any
          damages that such holder or underwriter has otherwise been required to
          pay by
          reason of such untrue or allege untrue statement or omission.  No
          Person guilty of fraudulent misrepresentation (within the meaning of Section
          11(f) of the Securities Act) shall be entitled to contribution from any
          person
          who was not guilty of such fraudulent misrepresentation.

      

      

      3.           Definitions.  As
        used herein, unless the context otherwise requires, the following terms have
        the
        following respective meanings:

      

      “Agreement”:  As
        defined in Section 1.

      

      “Commission”:  The
        Securities and Exchange Commission or any other Federal agency at the time
        administering the Securities Act.

      

      “Common
        Stock”:  As defined in Section 1.

      

      “Company”:  As
        defined in the introductory paragraph of this Agreement.

      

      “Exchange
        Act”:  The Securities Exchange Act of 1934, as amended, and the
        rules and regulations of the Commission promulgated thereunder.

      

      “Note
        Conversion Shares”:  As defined in Section 1.

      

      “Notes”:  As
        defined in Section 1, such term to include any securities issued in substitution
        of or in addition to such Notes.

      

      “Person”:  A
        corporation, association, partnership, limited liability company, trust,
        organization, business, individual, governmental or political subdivision
        thereof or a governmental agency.

      

      “Registrable
        Securities”:  The Securities and any securities issued or
        issuable with respect to such Securities by way of stock dividend or stock
        split
        or in connection with a combination of shares, recapitalization, merger,
        consolidation or other reorganization or otherwise.  Once issued such
        securities shall cease to be Registrable Securities when (a) a registration
        statement with respect to the sale of such securities shall have become
        effective under the Securities Act and such securities shall have been disposed
        of in accordance with such registration statement, (b) they shall have been
        distributed to the public pursuant to Rule 144 (or any successor provision)
        under the Securities Act, (c) they shall have been otherwise transferred,
        new
        certificates for them not bearing a legend restricting further transfer shall
        have been delivered by the Company and subsequent disposition of them shall
        not
        require registration or qualification of them under the Securities Act or
        any
        similar state law then in force, (d) they shall have ceased to be outstanding,
        

       

       

      
        
          
          

          
          

        

        
          13

          
            

          

        

        
          
          

        

         

         

        (e)
          on
          the expiration of the applicable Registration Maintenance Period or (f)
          any and
          all legends restricting transfer thereof have been removed in accordance
          with
          the provisions of Rule 144(k) (or any successor provision) under the Securities
          Act.

      

      

      “Registration
        Expenses”:  All expenses incident to the Company’s performance of
        or compliance with this Agreement, including, without limitation, all
        registration, filing and NASD fees, all stock exchange and OTC Bulletin Board
        or
        other NASD or stock exchange listing fees, all fees and expenses of complying
        with securities or blue sky laws, all word processing, duplicating and printing
        expenses, messenger and delivery expenses, the fees and disbursements of
        counsel
        for the Company and of its independent public accountants, including the
        expenses of any special audits or “cold comfort” letters required by or incident
        to such performance and compliance, the reasonable fees and disbursements
        of not
        more than one law firm (not to exceed $25,000) retained by the holder or
        Holders
        of more than 50% of the Registrable Securities, premiums and other costs
        of
        policies of insurance of the Company against liabilities arising out of the
        public offering of the Registrable Securities being registered and any fees
        and
        disbursements of underwriters customarily paid by issuers or sellers of
        securities, but excluding underwriting discounts and commissions and transfer
        taxes, if any, provided that, in any case where Registration Expenses are
        not to
        be borne by the Company, such expenses shall not include salaries of Company
        personnel or general overhead expenses of the Company, auditing fees, premiums
        or other expenses relating to liability insurance required by underwriters
        of
        the Company or other expenses for the preparation of financial statements
        or
        other data normally prepared by the Company in the ordinary course of its
        business or which the Company would have incurred in any event.

      

      “Registration
        Maintenance Period”:  As defined in Section 2.3.

      

      “Required
        Effectiveness Date”:  As defined in Section 2.1.

      

      “Securities”:
        As defined in Section 1.2.

      

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

      

      “Securities
        Purchase Agreement”:  As defined in Section 1.

      

      “Sellers’
        Representative”: Global Capital Advisors LLC or such Person designated by
        Global Capital Advisors LLC as of the time of disposition of the last of
        the
        Notes held by the Fund (or subsequent Sellers’ Representative).

      

      “Warrant
        Shares”: As defined in Section 1.

      

      4.           Rule
        144.  The Company shall timely file the reports required to
        be filed by it under the Securities Act and the Exchange Act (including but
        not
        limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
        to in subparagraph (c) 

       

      
        
          
          

          
          

        

        
          14

          
            

          

        

        
          
          
of
          Rule
          144 adopted by the Commission under the Securities Act) and the rules and
          regulations adopted by the Commission thereunder (or, if the Company is
          not
          required to file such reports, will, upon the request of any holder of
          Registrable Securities, make publicly available other information) and
          will take
          such further action as any holder of Registrable Securities may reasonably
          request, all to the extent reasonably required from time to time to enable
          such
          holder to sell Registrable Securities without registration under the Securities
          Act within the limitation of the exemptions provided by (a) Rule 144 under
          the
          Securities Act, as such Rule may be amended from time to time, or (b) any
          similar rule or regulation hereafter adopted by the Commission.  Upon
          the request of any holder of Registrable Securities, the Company will deliver
          to
          such holder a written statement as to whether it has complied with the
          requirements of this Section 4.

      

      

      5.           
        Amendments and Waivers.  This Agreement may be amended and
        the Company may take any action herein prohibited, or omit to perform any
        act
        herein required to be performed by it, only if the Company shall have obtained
        the written consent to such amendment, action or omission to act, of the
        holder
        or Holders of the sum of 51% or more of the shares of (i) Registrable Securities
        issued at such time, plus (ii) Registrable Securities issuable upon exercise
        or
        conversion of the Securities then constituting derivative securities (if
        such
        Securities were not fully exchanged or converted in full as of the date such
        consent if sought).  Each holder of any Registrable Securities at the
        time or thereafter outstanding shall be bound by any consent authorized by
        this
        Section 5, whether or not such Registrable Securities shall have been marked
        to
        indicate such consent.

      

      6.           Nominees
        for Beneficial Owners.  In the event that any Registrable
        Securities are held by a nominee for the beneficial owner thereof, the
        beneficial owner thereof may, at its election, be treated as the holder of
        such
        Registrable Securities for purposes of any request or other action by any
        holder
        or Holders of Registrable Securities pursuant to this Agreement or any
        determination of any number of percentage of shares of Registrable Securities
        held by an holder or Holders of Registrable Securities contemplated by this
        Agreement.  If the beneficial owner of any Registrable Securities so
        elects, the Company may require assurances reasonably satisfactory to it
        of such
        owner’s beneficial ownership of such Registrable Securities.

      

      7.           Notices.  Except
        as otherwise provided in this Agreement, all notices, requests and other
        communications to any Person provided for hereunder shall be in writing and
        shall be given to such Person (a) in the case of a party hereto other than
        the
        Company, addressed to such party in the manner set forth in the Securities
        Purchase Agreement or at such other address as such party shall have furnished
        to the Company in writing, or (b) in the case of any other holder of Registrable
        Securities, at the address that such holder shall have furnished to the Company
        in writing, or, until any such other holder so furnishes to the Company an
        address, then to and at the address of the last holder of such Registrable
        Securities who has furnished an address to the Company, or (c) in the case
        of
        the Company, at the address set forth on the signature page hereto, to the
        attention of its President, or at such other address, or to the attention
        of
        such other officer, as the Company shall have furnished to each holder of
        Registrable Securities at the time outstanding.  Each such notice,
        request or other communication shall be effective 

       

       

      
        
          
          

          
          

        

        
          15

          
            

          

        

        
          
          

        

         

        (i)
          if
          given by mail, four (4) days after such communication is deposited in the
          United
          States mails with first class postage prepaid, addressed as aforesaid or
          (ii) if
          given by any other means (including, without limitation, by fax or air
          courier),
          when delivered at the address specified above, provided that any such notice,
          request or communication shall not be effective until
          received.

      

      

      8.           Assignment.  This
        Agreement shall be binding upon and inure to the benefit of and be enforceable
        by the parties hereto.  In addition, and whether or not any express
        assignment shall have been made, the provisions of this Agreement which are
        for
        the benefit of the parties hereto other than the Company shall also be for
        the
        benefit of and enforceable by any subsequent holder of any Registrable
        Securities.  Each of the Holders of the Registrable Securities agrees,
        by accepting any portion of the Registrable Securities after the date hereof,
        to
        the provisions of this Agreement including, without limitation, appointment
        of
        the Sellers’ Representative to act on behalf of such holder pursuant to the
        terms hereof which such actions shall be made in the good faith discretion
        of
        the Sellers’ Representative and be binding on all persons for all
        purposes.

      

      9.           Descriptive
        Headings.  The descriptive headings of the several sections
        and paragraphs of this Agreement are inserted for reference only and shall
        not
        limit or otherwise affect the meaning hereof.

      

      10.           Governing
        Law.  THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
        ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
        LAWS OF
        THE STATE OF NAVADA WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF
        LAWS.

      

      11.           Counterparts.  This
        Agreement may be executed by facsimile and may be signed simultaneously in
        any
        number of counterparts, each of which shall be deemed an original, but all
        such
        counterparts shall together constitute one and the same instrument.

      

      12.           Entire
        Agreement.  This Agreement embodies the entire agreement and
        understanding between the Company and each other party hereto relating to
        the
        subject matter hereof and supercedes all prior agreements and understandings
        relating to such subject matter.

      

      13.           Severability.  If
        any provision of this Agreement, or the application of such provisions to
        any
        Person or circumstance, shall be held invalid, the remainder of this Agreement,
        or the application of such provision to Persons or circumstances other than
        those to which it is held invalid, shall not be affected thereby.

       

      [Signature
        Page Follows]

       

       

       

      
        
          
          

          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       

       

      IN
        WITNESS WHEREOF, the parties have caused this Agreement to be executed
        and delivered by their respective officers thereunto duly authorized as of
        the
        date first above written.

      

      ROYAL
        SPRING WATER, INC.

      

      By: __________________________               

      Name:            Alex
        Hazan

      Title:               President

      Address:       
        14553 Delano Street

      Suite
        217

      Van
        Nuys,
        CA  91411

      
 

      Fax:

      Tel.:

      

      

      GCA
        STRATEGIC INVESTMENT FUND LIMITED

      

      

      By: _____________________________             

      Name:              Lewis
        N. Lester

      Title:               
        Director

      Address:        c/o
        Prime Management Limited

      Mechanics
        Building

      12
        Church
        Street

      Hamilton
        HM II, Bermuda

      Fax:           441-295-3926

      Tel.:           441-295-0329

      

      

      

      
        
          
          

          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      

      Registration
        Rights Agreement

      

      

      

      dated
        as of

      

      

      

      December
        ___, 2006

      

      

      by
        and between

      

      

      

      Royal
        Spring Water, Inc.,

      

      and

      

      GCA
        Strategic Investment Fund Limitedfsb2a5ex10vi_royalspring.htm

     

    

    FORM
      OF COMMON STOCK PURCHASE WARRANT

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    THIS
      COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY
      PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE
      COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
      ONLY
      (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
      SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE SECURITIES LAWS.  IN ADDITION, A SECURITIES PURCHASE AGREEMENT
      (“PURCHASE AGREEMENT”), DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED
      FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
      AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH
      LIMIT THE EXERCISE RIGHTS OF THE HOLDER AND SPECIFY MANDATORY REDEMPTION
      OBLIGATIONS OF THE COMPANY.

    

    _______________________________________

    

    ROYAL
      SPRING WATER, INC.

    

    COMMON
      STOCK PURCHASE WARRANT

    
      
        	 	 	
                No.
                  1

              	 
	
                Number
                  of shares

              	
                100,000

              	
                Holder:

              	
                GCA
                  Strategic Investment

              
	 	 	 	
                Fund
                  Limited

              
	
                Expiration
                  Date:

              	
                December___,
                  2011

              	 	
                Mechanics
                  Building

              
	 	 	 	
                12
                  Church Street

              
	
                Purchase
                  Price Per Share:

              	
                $2.00

              	 	
                Hamilton,
                  Bermuda HM11

              

      

    

    
      For
        identification only.  The governing terms of this Warrant are set
        forth below.

    

    

    Royal
      Spring Water, Inc., a Nevada corporation (the “Company”), hereby
      certifies that, for value received, GCA Strategic Investment Fund Limited or
      its
      assigns (the “Holder”), is entitled, subject to the terms set forth
      below, to purchase from the Company at any time or from time to time after
      the
      date hereof and prior to the fifth anniversary hereof (the “Exercise
      Period”), at the Purchase Price hereinafter set forth, One Hundred Thousand
      (100,000) shares of the fully paid and nonassessable shares of common stock
      of
      the Company, $0.001 par value per share (the “Common Stock”).  The
      number and character of such shares of Common Stock and the Purchase Price
      are
      subject to adjustment as provided herein.

    

    The
      purchase price per share of Common Stock issuable upon exercise of this Warrant
      (the “Purchase Price”) shall initially be equal to $2.00;
provided, however, that the Purchase Price shall be adjusted
      from time to time as provided herein.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    Capitalized
      terms used herein not otherwise defined shall have the meanings ascribed thereto
      in the Purchase Agreement.  As used herein the following terms, unless
      the context otherwise requires, have the following respective
      meanings:

    

    (a)           The
      term “Company” shall include Royal Spring Water, Inc. and any
      corporation that shall succeed or assume the obligations of such corporation
      hereunder.

    

    (b)           The
      term “Common Stock” includes (a) the Company’s common stock, par value
      $0.001 per share, (b) any other capital stock of any class or classes (however
      designated) of the Company, authorized on or after the date hereof, the holders
      of which shares shall have the right, without limitation as to amount, to share
      ratably in the balance of current dividends and liquidating dividends after
      the
      payment of dividends and distributions on any shares entitled to preference,
      and
      all the holders of shares that are entitled to vote for the election of the
      directors of the Company and (c) any other securities into which or for which
      any of the securities described in (a) or (b) may be converted or exchanged
      pursuant to a plan of recapitalization, reorganization, merger, sale of assets
      or otherwise.

    

    (c)           The
      term “Other Securities” refers to any stock (other than Common Stock)
      and other securities of the Company or any other person (corporate or otherwise)
      that the Holder of this Warrant at any time shall be entitled to receive, or
      shall have received, on the exercise of this Warrant, in lieu of or in addition
      to Common Stock, or that at any time shall be issuable or shall have been issued
      in exchange for or in replacement of Common Stock or Other Securities pursuant
      to Section 4 or otherwise.

    

    1.           Exercise
      of Warrant.

    

    1.1           Method
      of Exercise.

    

    (a)           This
      Warrant may be exercised in whole or in part (but not as to a fractional share
      of Common Stock), at any time and from time to time during the Exercise Period
      by the Holder hereof by delivery of a notice of exercise (a “Notice of
      Exercise”) substantially in the form attached hereto as Exhibit A
      via facsimile to the Company.  Promptly thereafter the Holder shall
      surrender this Warrant (if the entire amount of the Warrant is subject to the
      Notice of Exercise) to the Company at its principal office via overnight
      delivery service, accompanied by payment of the Purchase Price multiplied by
      the
      number of shares of Common Stock for which this Warrant is being exercised
      (the
“Exercise Price”).  Payment of the Exercise Price shall be
      made, at the option of the Holder, (i) by check or bank draft payable to the
      order of the Company, or (ii) by wire transfer to the account of the
      Company.  Upon exercise, the Holder shall be entitled to receive
      within three Trading Days after the Exercise Date (as defined herein), one
      or
      more certificates, issued in the Holder’s name or in such name or names as the
      Holder may direct, subject to the limitations on transfer contained herein,
      for
      the number of shares of Common Stock so purchased.  The shares of
      Common Stock so purchased shall be deemed to be issued as of the close of
      business on the date on which the Company shall have received from the Holder
      payment in full of the Exercise Price (the “Exercise
      Date”).

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    (b)           Upon
      exercise of a portion of this Warrant in accordance with the terms hereof,
      records showing the amount so exercised and the date of exercise shall be
      maintained on a ledger substantially in the form of Annex B attached
      hereto (an originally signed and executed copy of which shall be delivered
      to
      the Company with each Notice of Exercise).  The Company shall maintain
      the originally signed and executed ledger and the Holder shall maintain a copy
      thereof.  Upon execution of the exercise of the Warrants contemplated
      by the Notice of Exercise, the Company shall deliver to the Holder a copy of
      Annex B signed and executed by the Company, and the Holder shall deliver
      to the Company a copy of Annex B signed by the Holder. It is specifically
      contemplated that the Company shall act as the calculation agent for all
      exercises of this Warrant.  The Holder and any assignee, by acceptance
      of this Warrant, acknowledges and agrees that, by reason of the provisions
      of
      this paragraph, following an exercise of a portion of this Warrant, the number
      of shares of Common Stock represented by this Warrant will be the amount
      indicated on Annex B attached hereto (which may be less than the amount
      stated on the face hereof).

    

    (c)           In
      the event there is a dispute as to the number of shares of Common Stock the
      Holder is entitled to receive upon exercise of this Warrant, the Company shall
      issue to the Holder the number of shares not in dispute and the Company and
      the
      Holder will use their best efforts to resolve such dispute within one Business
      Day following the receipt of a Notice of Exercise.  If such dispute
      cannot be resolved within such one-day period, the Company and the Holder shall
      submit the dispute to an independent accountant mutually agreed upon by the
      Company and the Holder to make a final and binding determination of the number
      of shares owed to the Holder.  The Company shall issue shares of
      Common Stock owed to Holder as a result of the resolution of the dispute within
      two Business Days following the receipt of the accountant’s independent
      determination.

    

    1.2            Regulation
      D Restrictions.  The Holder hereof represents and warrants to
      the Company that it has acquired this Warrant and anticipates acquiring the
      shares of Common Stock issuable upon exercise of the Warrant solely for its
      own
      account for investment purposes and not with a view to or for resale of such
      securities unless such resale has been registered with the Commission or an
      applicable exemption is available therefor and provided that the Holder shall
      have furnished to the Company an opinion of counsel in form and substance
      reasonably satisfactory to the Company, to the effect that such transfer is
      exempt from the registration requirements of the Securities Act and any
      applicable state securities laws.

    

    1.3             Company
      Acknowledgment.  The Company will, at the time of the
      exercise of this Warrant, upon request of the Holder hereof, acknowledge in
      writing its continuing obligation to afford to such Holder the registration
      rights to which such Holder shall continue to be entitled after such exercise
      in
      accordance with the provisions of a Registration Rights Agreement dated the
      date
      hereof (the “Registration Rights Agreement”).

    

    1.4              Limitation
      on Exercise.  Notwithstanding the rights of the Holder to
      exercise all or a portion of this Warrant as described herein, such exercise
      rights shall be limited, solely to the extent set forth in the Purchase
      Agreement as if such provisions were specifically set forth
      herein.  In addition, the number of shares of Common Stock issuable
      upon exercise of this Warrant is subject to reduction as specified in Section
      10.3 of the Purchase Agreement.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    2.           Delivery
      of Stock Certificates, etc., on Exercise.  As soon as
      practicable after the exercise of this Warrant, and in any event within three
      (3) Business Days thereafter, the Company at its expense (including the payment
      by it of any applicable issue, stamp or transfer taxes) will cause to be issued
      in the name of and delivered to the Holder thereof, or, to the extent
      permissible hereunder, to such other person as such Holder may direct, a
      certificate or certificates for the number of fully paid and nonassessable
      shares of Common Stock (or Other Securities) to which such Holder shall be
      entitled on such exercise, plus, in lieu of any fractional share to which such
      Holder would otherwise be entitled, cash equal to such fraction multiplied
      by
      the then applicable Purchase Price, together with any other stock or other
      securities and property (including cash, where applicable) to which such Holder
      is entitled upon such exercise pursuant to Section 1 or otherwise.

    

    3.           Adjustment
      for Extraordinary Events.  The Purchase Price to be paid by
      the Holder upon exercise of this Warrant, and the consideration to be received
      upon exercise of this Warrant, shall be adjusted in case at any time or from
      time to time pursuant to Article 11 of the Purchase Agreement as if such
      provisions were specifically set forth herein.

    

    4.           No
      Impairment.  The Company will not, by amendment of its
      Certificate of Incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such action as may
      be
      necessary or appropriate in order to protect the rights of the Holder of this
      Warrant against impairment.  Without limiting the generality of the
      foregoing, the Company (a) will not increase the par value of any shares of
      stock receivable on the exercise of this Warrant above the amount payable
      therefor on such exercise, (b) will take all such action as may be necessary
      or
      appropriate in order that the Company may validly and legally issue fully paid
      and unassessable shares of stock on the exercise of this Warrant, and (c) will
      not transfer all or substantially all of its properties and assets to any other
      person (corporate or otherwise), or consolidate with or merge into any other
      person or permit any such person to consolidate with or merge into the Company
      (if the Company is not the surviving person), unless such other person shall
      expressly assume in writing and will be bound by all the terms of this
      Warrant.

    

    5.           Certificate
      as to Adjustments.     In each case of any
      adjustment or readjustment in the shares of Common Stock (or Other Securities)
      issuable on the exercise of this Warrant, the Company will promptly cause its
      principal financial officer to compute such adjustment or readjustment in
      accordance with the terms of this Warrant and prepare a certificate setting
      forth such adjustment or readjustment and showing in detail the facts upon
      which
      such adjustment or readjustment is based, including a statement of (a) the
      consideration received or receivable by the Company for any additional shares
      of
      Common Stock (or Other Securities) issued or sold or deemed to have been issued
      or sold, (b) the number of shares of Common Stock (or Other Securities)
      outstanding or deemed to be outstanding, and (c) the Purchase Price and the
      number of shares of Common Stock to be received upon exercise of this Warrant,
      in effect immediately prior to such issue or sale and as adjusted and readjusted
      as provided in this Warrant.  

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    The
      Company will forthwith mail a copy of each such certificate to the Holder of
      this Warrant, and will, on the written request at any time of the Holder of
      this
      Warrant, furnish to such Holder a like certificate setting forth the Purchase
      Price at the time in effect and showing how it was calculated.

    

    6.           Notices
      of Record Date, etc.

    

    In
      the event of

    

    (a)           any
      taking by the Company of a record of the Holders of any class of securities
      for
      the purpose of determining the Holders thereof who are entitled to receive
      any
      dividend or other distribution, or any right to subscribe for, purchase or
      otherwise acquire any shares of stock of any class or any other securities
      or
      property, or to receive any other right, or

    

    (b)           any
      capital reorganization of the Company, any reclassification or recapitalization
      of the capital stock of the Company or any transfer of all or substantially
      all
      the assets of the Company to or consolidation or merger of the Company with
      or
      into any other Person, or

    

    (c)           any
      voluntary or involuntary dissolution, liquidation or winding-up of the
      Company,

    

    then
      and
      in each such event the Company will mail or cause to be mailed to the Holder
      of
      this Warrant a notice specifying (i) the date on which any such record is to
      be
      taken for the purpose of such dividend, distribution or right, and stating
      the
      amount and character of such dividend, distribution or right, and (ii) the
      date
      on which any such reorganization, reclassification, recapitalization, transfer,
      consolidation, merger, dissolution, liquidation or winding-up is to take place,
      and the time, if any, as of which the Holders of record of Common Stock (or
      Other Securities) shall be entitled to exchange their shares of Common Stock
      (or
      Other Securities) for securities or other property deliverable on such
      reorganization, reclassification, recapitalization, transfer, consolidation,
      merger, dissolution, liquidation or winding-up.  Such notice shall be
      mailed at least 20 days prior to the date specified in such notice on which
      any
      action is to be taken.

    

    7.           Reservation
      of Stock, etc.  Issuable on Exercise of
      Warrant.  The Company will at all times reserve and keep
      available, solely for issuance and delivery on the exercise of this Warrant,
      all
      shares of Common Stock (or Other Securities) from time to time issuable on
      the
      exercise of this Warrant.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    8.           Exchange
      of Warrant.  On surrender for exchange of this Warrant,
      properly endorsed and in compliance with the restrictions on transfer set forth
      in the legend on the face of this Warrant, to the Company, the Company at its
      expense will issue and deliver to or on the order of the Holder thereof a new
      Warrant of like tenor, in the name of such Holder or as such Holder (on payment
      by such Holder of any applicable transfer taxes) may direct, calling in the
      aggregate on the face or faces thereof for the number of shares of Common Stock
      called for on the face of the Warrant so surrendered or for such lesser number
      of shares of Common Stock as may be reflected on the Warrant Exercise Ledger
      attached as Annex B.

    

    9.           Replacement
      of Warrant.  On receipt of evidence reasonably satisfactory
      to the Company of the loss, theft, destruction or mutilation of this Warrant
      and, in the case of any such loss, theft or destruction of this Warrant, on
      delivery of an indemnity agreement or security reasonably satisfactory in form
      and amount to the Company or, in the case of any such mutilation, on surrender
      and cancellation of this Warrant, the Company at its expense will execute and
      deliver, in lieu thereof, a new Warrant of like tenor.

    

    10.           Remedies.  The
      Company stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Company in the performance
      of
      or compliance with any of the terms of this Warrant are not and will not be
      adequate, and that such terms may be specifically enforced by a decree for
      the
      specific performance of any agreement contained herein or by an injunction
      against a violation of any of the terms hereof or otherwise.

    

    11.           Negotiability,
      etc..  This Warrant is issued upon the following terms, to
      all of which each Holder or owner hereof by the taking hereof consents and
      agrees:

    

     (a)           until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered Holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary; and

    

    (b)           this
      Warrant may not be sold, transferred or assigned except pursuant to an effective
      registration statement under the Securities Act or pursuant to an applicable
      exemption therefrom.

    

    12.           Registration
      Rights.     The Company is obligated to
      register the shares of Common Stock issuable upon exercise of this Warrant
      in
      accordance with the terms of the Registration Rights Agreement.

    

    13.           Warrant
      Redemption.  Upon occurrence of the events described in
      Sections 3.4 and 10.4(c) of the Purchase Agreement, the Company, at the request
      of Holder, shall redeem all outstanding Warrants that remain unexercised at
      a
      redemption price equal to the greater of (x) an appraised value of the Warrants,
      as determined by Black Scholes,  on the date they are called for
      redemption and (y) the number of Warrants being redeemed multiplied by the
      excess of (A) the average Closing Bid Price of the Common Stock for the five
      trading days immediately prior to the date that the Warrants are called for
      redemption over (B) the exercise price of the Warrants.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    14.           Notices,
      etc..  All notices and other communications from the Company
      to the Holder of this Warrant shall be mailed by first class registered or
      certified mail, postage prepaid, at such address as may have been furnished
      to
      the Company in writing by such Holder or, until any such Holder furnishes to
      the
      Company any address, then to, and at the address of, the last Holder of this
      Warrant who has so furnished an address to the Company.

    

    15.           Miscellaneous.  This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought.  This
      Warrant shall be construed and enforced in accordance with and governed by
      the
      internal laws of the State of California.  The headings in this
      Warrant are for the purposes of reference only, and shall not limit or otherwise
      affect any of the terms hereof.  The invalidity or unenforceability of
      any provision hereof shall in no way affect the validity or enforceability
      of
      any other provision.

    

    [Signature
      Page Follows]

    

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    DATED
      as
      of December ___, 2006

    

    

    ROYAL
      SPRING WATER, INC.

    

    

    By:  /s/ 
      Alex Hazan                                                                                 

    Name:  Alex
      Hazan

    Title:  President

    

    [Corporate
      Seal]

    

    

    Attest:

    

    By:   __________________________                                                   

         _______________,
      Secretary

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    FORM
      OF NOTICE EXERCISE - WARRANT

    (To
      be
      executed only upon exercise

    of
      the
      Warrant in whole or in part)

    

    To
      ____________________________________________

    

    The
      undersigned registered Holder of the accompanying Warrant, hereby exercises
      such
      Warrant or portion thereof for, and purchases thereunder, __________1 shares of Common Stock (as defined
      in such
      Warrant) and herewith makes payment therefor in the amount and manner set forth
      below, as of the date written below.  The undersigned requests that
      the certificates for such shares of Common Stock be issued in the name of,
      and
      delivered to,   whose address is .

    

    The
      Exercise Price is paid as follows:

    

    o           Certified
      Bank draft payable to the Company in the amount of $_____________.

    o           Wire
      transfer to the account of the Company in the amount of
      $___________.

    

    Upon
      exercise pursuant to this Notice of Exercise, the Holder will be in compliance
      with the Limitation on Exercise (as defined in the Securities Purchase Agreement
      pursuant to which this Warrant was issued).

    

    The
      Holder of the shares of Common Stock received upon exercise of the Warrant
      (the
“Common Shares”), covenants and agrees that the Common Shares are being acquired
      as an investment and not with a view to the distribution thereof in violation
      of
      the Securities Act and that the Common Shares may not be transferred, sold,
      assigned, hypothecated or otherwise disposed of, in whole or in part except
      as
      provided in the legend on the first page of this Warrant and provided that
      the
      Holder shall have furnished the Company an opinion of counsel in form and
      substance reasonably acceptable to the Company to the effect that such transfer
      is exempt from the registration requirements of the Securities Act and any
      applicable state securities laws.*

    

    Date: ___________________________                       _______________________________________                                        

    (Name
      must conform to name of Holder as

    specified
      on the face of the Warrant)

    

    By: ____________________________________                                                                          

         Name:   _______________________________                                                                        

         Title:   ________________________________                                                                        

    

    Address
      of
      Holder:      ______________________

    _______________________________________

    _______________________________________                                                                     

    

    

    Date
      of
      exercise:    ___________________________________                                                                  

     

     

    ____________________________

        1Insert
      the number of shares of Common
      Stock as to which the accompanying Warrant is being exercised.  In the
      case of a partial exercise, a new Warrant or Warrants will be issued and
      delivered, representing the unexercised portion of the accompanying Warrant,
      to
      the Holder surrendering the same.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ANNEX
      B

    

    WARRANT
      EXERCISE LEDGER

    

    
      	
               

               

              Date

            	
               

              Original
                Number of Warrants

            	
               

              Warrants

              Exercised

            	
               

              Exercise
                Price

              Paid

            	
               

              New
                Balance

              of
                Warrants

            	
               

              Issuer

              Initials

            	
               

              Holder

              Initials

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

    

    ROYAL
      SPRING WATER,
      INC.                                                                                                                              
HOLDER:

    

    

    By:           ______________________________                                                                                                By:
      _________________________

    Name:      ______________________________                                                                                               
      Name:_______________________

    Title:        ______________________________                                                                                                Title:________________________

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