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Unassociated Document

    NOTE
PURCHASE AGREEMENT

    

    THIS NOTE
PURCHASE AGREEMENT (this "Agreement"), dated as of June
30, 2009 by and between China Broadband, Inc. a Nevada corporation (the “Company”) and the subscribers
identified on the signature page hereto (each a “Subscriber” and collectively
the "Subscribers").

    

    RECITALS

    

    WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act (as defined below), the Company desires to issue and sell to the
Subscribers, and the Subscribers desire to purchase from the Company certain
securities of the Company, as more fully described in this
Agreement;

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers as provided herein, and the Subscribers,
in the aggregate, shall purchase a minimum of $200,000 and a maximum of up to
$400,000 (the "Purchase
Price" or “Principal
Amount”) of principal amount of 5% Convertible Promissory Notes of the
Company (“Note” or
“Notes”), a form of
which is annexed hereto as Exhibit
A, convertible into shares of the Company's Common Stock, $0.001 par
value (the "Common
Stock") at a per share conversion price set forth in the Note (“Conversion
Price”).  The Notes and shares of Common Stock issuable upon
conversion of the Notes (the “Shares”), are collectively
referred to herein as the "Securities";

    

    NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Subscribers agree as
follows:

     

    

    1.           Agreement to
Purchase.

     

    1.1           Closing
Date.  The
“Closing
Date” shall be the date
that the Purchase Price is transmitted by wire transfer or otherwise credited to
or for the benefit of the Company. This offering may be consummated in one or
more closings and each such date a “Closing Date.”  The consummation
of the transactions contemplated herein shall take place not later than July 1,
2009 upon the satisfaction or waiver of all conditions to closing set forth in
this Agreement.

    

    1.2           Closing.   Subject to the
satisfaction or waiver of the terms and conditions of this Agreement, on the
Closing Date, each Subscriber shall purchase and the Company shall sell to each
Subscriber a Note in the Principal Amount designated on the signature page
hereto for the Purchase Price indicated thereon.

    

    2.           Representations,
Warranties and Covenants of the Subscriber.  Each
Subscriber  represents and warrants to the Company, and covenants for
the benefit of the Company and each other Subscriber, as follows:

     

    (a)           The
Subscriber is an "accredited investor" as defined under Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act");

     

    (b)           The
Subscriber is acquiring the Notes for its own account and not with a view to any
distribution of the Notes in violation of the Securities Act;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (c)           The
Subscriber acknowledges that it has significant prior investment experience,
including investment in non-listed and non-registered securities, and that the
Subscriber recognizes the highly speculative nature of this
investment.  In particular, and without limitation, the Subscriber
represents that it understands that the Company’s securities have suffered
significant illiquidity and decline in stock price and that other restricted
shareholders are eligible to sell securities pursuant to Rule 144 of the
Securities Act.  In addition, the Subscriber represents that it
understands the dilutive effect resulting from the issuance of these Notes as
well as from the issuance of Common Stock to certain investors in a separate
contemporaneous offering, and the resulting dilutive effect that will be caused
as a result of the adjustment to the conversion price of existing similar notes
issued to the Subscriber and/or other investors in January 2008.  The
Subscriber represents that it has been furnished with, and has reviewed, all of
the Company’s securities filings and all documents and other information
regarding the Company that the Subscriber had requested or desired to know and
all other documents which could be reasonably provided have been made available
for the Subscriber’s inspection and review;

     

    (d)           The
Subscriber acknowledges that the Securities have not been passed upon or
reviewed by the Securities and Exchange Commission.  The Subscriber
agrees that it will not sell, transfer or otherwise dispose of any of the Shares
until they are registered under the Securities Act, or unless an exemption from
such registration is available and that a legend substantially in the form as
provided in Section 4 below will be placed on the certificate(s) representing
the shares to such effect;

     

    (e)           This
Agreement constitutes a valid and binding agreement and obligation of the
Subscriber enforceable against the Subscriber in accordance with its terms,
subject to limitations on enforcement by general principles of equity and
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;

     

    (f)           Subscriber
is not acquiring the Securities as part of a group, as such term is defined in
Section 13 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and is not
acting in concert with any person acting in such manner.  Subscriber
makes its own voting and dispositive decisions and has not agreed to grant any
proxy or enter into any form of voting trust, agreement or similar arrangement
with respect to the Shares other than as set forth in the Waiver of even date
herewith; and

     

    (g)           This
Agreement has been duly authorized, validly executed and delivered on behalf of
the Subscriber, and the Subscriber has full power and authority to execute and
deliver this Agreement and the other agreements and documents contemplated
hereby and to perform his obligations hereunder and thereunder.

     

    (h)           Subscriber
understands and acknowledges that certain existing holders of notes (the “Existing Notes”) and Warrants
(the “Warrants”) issued
in January of 2008 to Subscriber and certain other investors and the placement
agent in such transaction (the “Note Holders”) have certain
full ratchet and other anti dilutions protections attached to their Existing
Notes and Warrants, and that the Company has obtained waivers from the Note
Holders which generally provide, in relevant part, that (A) the Note Holders
waive their anti dilution rights in connection with a contemporaneous common
stock offering by the Company and (B) the conversion price (as defined in the
Notes) of such Existing Notes be reduced to (i) $0.20 if such Note Holder makes
an additional investment in the Company in the form of a convertible note or
(ii) $0.25 per share if such Note Holder does not make such an additional
investment.   Subscriber further understands and acknowledges
that notwithstanding the terms of such waiver, the Company has subsequently
agreed to reduce the conversion price for those Note Holders that do not make
such an additional investment to $0.25.

     

    
      
         

      

      
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    3.           Representations,
Warranties and Covenants of the Seller.  The Company
represents and warrants to the Subscriber, and covenants for the benefit of the
Subscriber, as follows:

     

    (a)           Organization and
Qualification.  The Company is duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.  The Company is not in any material violation of any of the
provisions of its certificate of incorporation, bylaws or other organizational
or charter documents.

     

    (b)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated herein
and otherwise to carry out its obligations hereunder, subject to consents and
waiver of anti dilution provisions of various existing
shareholders.  The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Company and no further action is required by the Company in connection
therewith.  This Agreement has been duly executed by the Company and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies, or (ii) laws relating to the availability of specific
performance, injunctive relief or other equitable principles of general
application.

     

    (c)           No Violation or
Conflict. Assuming the representations and warranties of the Subscribers
in Section 2 are true and correct, neither the issuance and sale of the
Securities nor the performance of the Company’s obligations under this
Agreement, the Note and all other agreements entered into by the Company
relating thereto by the Company will:

     

     (i)
violate, conflict with, result in a breach of, or constitute a default (or an
event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the articles or certificate
of incorporation, charter or bylaws of the Company, (B) to the Company's
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or

    

    
      
         

      

      
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    (ii)
result in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
as described herein; or

    

    (iii)
except as have been waived, result in the activation of any anti-dilution rights
or a reset or repricing of any debt or security instrument of any other creditor
or equity holder of the Company, nor result in the acceleration of the due date
of any obligation of the Company.

    

    (d)           Issuance of the
Securities.  The Securities have been, or will be, duly and
validly authorized and on the date of issuance of the Shares upon conversion of
the Notes, the Shares will be duly and validly issued, fully paid and
non-assessable and if registered pursuant to the 1933 Act and resold pursuant to
an effective registration statement will be free trading and unrestricted, free
and clear of all liens.

     

    (e)           SEC Reports; Financial
Statements.  The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof
(or such shorter period as the Company was required by law to file such reports)
(the foregoing materials, as finally amended being collectively referred to
herein as the "SEC
Reports") on a timely basis or has timely filed a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any
such extension.  As of their respective dates, the SEC Reports, as
amended, complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent that such SEC Reports may have been
subsequently amended or supplemented to correct such misstatement or omission or
to correct information relating to the Company’s internal
controls.  The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing.  Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit
adjustments.

     

    
      
         

      

      
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    (e)           Certain Registration
Matters. Assuming the accuracy of each Subscriber’s representations and
warranties, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Subscriber under this
Agreement.

     

    4.           Other
Agreements of the Parties. 

     

    4.1           Other
Agreements of the Parties. (a) The Company and each Subscriber agrees
that the Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of the Securities
other than pursuant to an effective registration statement, to the Company, to
an affiliate of a Subscriber or in connection with a pledge as contemplated in
Section 4.1(b),
the Company may require the transferor thereof to provide to the Company with an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Shares under the
Securities Act.  As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement.

    

    (b)           (i)
Certificates evidencing the Shares will contain substantially the following
legend, until such time as such securities are sold pursuant to an exemption
from the Securities Act registration requirements:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

     

    (ii)  The
Note shall bear the following legend:

     

    “NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. "

     

    
      
         

      

      
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    4.2           Conversion
of Notes.  (a)  Upon the conversion of a Note or part
thereof, the Company shall, at its own cost and expense, take all necessary
action, including obtaining and delivering, an opinion of counsel to assure that
the Company's transfer agent shall issue stock certificates in the name of
Subscriber (or its permitted nominee) or such other persons as designated by
Subscriber and in such denominations to be specified at conversion representing
the number of shares of Common Stock issuable upon such
conversion.  The Company warrants that no instructions other than
these contradictory instructions have been or will be given to the transfer
agent of the Company's Common Stock and that the certificates representing such
shares shall contain no legend other than the usual Securities Act restriction
from transfer legend.  In the event that the Shares are sold in a
manner that complies with an exemption from registration, the Company will
promptly instruct its counsel to issue to the transfer agent an opinion
permitting removal of the legend indefinitely, if pursuant to Rule 144(k) of the
Securities Act, provided that Subscriber delivers all reasonably requested
representations in support of such opinion.  When referred to herein,
Rule 144(k)
shall mean such sections of Rule 144 under the Securities Act which allow
resales of “restricted
stock” (as employed in Rule 144) by non-affiliates of the Company without
volume limitations and without further restriction on transfer.

     

    (b)           A
Subscriber will give notice of its decision to exercise its right to convert the
Note, interest, or part thereof by telecopying, or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as “Exhibit A” to the
Note) to the Company via confirmed telecopier transmission or otherwise pursuant
to Section 13(a) of this Agreement.  Such Subscriber will not be
required to surrender the Note until the Note has been fully converted or
satisfied.  Each date on which a Notice of Conversion is telecopied to
the Company in accordance with the provisions hereof by 6 PM Eastern Time
(“ET”) (or if received
by the Company after 6 PM ET or at any time or a non-business day then the next
business day) shall be deemed a “Conversion
Date.”  The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Shares issuable upon conversion of the Note to such Subscriber via express
courier for receipt by such Subscriber within seven (7) business days after
receipt by the Company of the Notice of Conversion (such seventh day being the
"Delivery
Date").  In the event the Shares are electronically
transferable, then delivery of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber.   A Note representing the balance of the Note
not so converted will be provided by the Company to such Subscriber if requested
by Subscriber, provided such Subscriber delivers the original Note to the
Company. In the event that a Subscriber elects not to surrender a Note for
reissuance upon partial payment or conversion of a Note, such Subscriber hereby
indemnifies the Company against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note.

     

    
      
         

      

      
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    (c)           The
Company understands that a delay in the delivery of the Shares in the form
required pursuant to Section 4.2 hereof later than the Delivery Date could
result in economic loss to the Subscriber. As compensation to a Subscriber for
such loss, the Company agrees to pay (as liquidated damages and not as a
penalty) to such Subscriber for late issuance of Shares in the form required
pursuant to Section 4.2 hereof upon Conversion of the Note in the amount of $100
per business day after the Delivery Date for each $10,000 of Note principal
amount (and proportionately for other amounts) being converted of the
corresponding Shares which are not timely delivered. The Company shall pay any
payments incurred under this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be available to the
Subscriber, in the event that the Company fails for any reason to effect
delivery of the Shares within seven (7) business days after the Delivery Date,
such Subscriber will be entitled to revoke all or part of the relevant Notice of
Conversion by delivery of a notice to such effect to the Company whereupon the
Company and such Subscriber shall each be restored to their respective positions
immediately prior to the delivery of such notice, except that the liquidated
damages described above shall be payable through the date notice of revocation
or rescission is given to the Company.

     

    4.3           Delivery
of Unlegended Shares.  (a)  Within seven business
days (such seventh business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Shares or Warrant Shares or any other Common Stock held by a
Subscriber have been sold pursuant to a registration statement, if any, or Rule
144, (ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable and if required, have been satisfied,
(iii) the original share certificates representing the shares of Common Stock
that have been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and/or a Subscriber’s broker regarding
compliance with the requirements of manner of sale and similar related
requirements of Rule 144, the Company at its expense, (y) shall deliver, and
shall cause, legal counsel selected by the Company to deliver to its transfer
agent (with copies to Subscriber) an appropriate instruction and opinion of such
counsel, directing the delivery of shares of Common Stock to the transferee
without any legends including the legend set forth in Section 4(b)(i) above (the
“Unlegended Shares”);
and (z) cause the transmission of the certificates representing the Unlegended
Shares together with a legended certificate representing the balance of the
submitted certificate, if any, to the Subscriber at the address specified in the
notice of sale, via express courier, by electronic transfer or otherwise on or
before the Unlegended Shares Delivery Date.

     

    (b)           In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of a Subscriber, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company will cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system.  Such delivery must be made on or before the Unlegended
Shares Delivery Date.

     

    
      
         

      

      
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    (c) The Company understands that a
delay in the delivery of the Unlegended Shares pursuant to Section 4 hereof
later than the Unlegended Shares Delivery Date could result in economic loss to
a Subscriber. As compensation to a Subscriber for such loss, the Company agrees
to pay late payment fees (as liquidated damages and not as a penalty) to the
Subscriber for late delivery of Unlegended Shares in the amount of $100 per
business day after the Delivery Date for each $10,000 of purchase price of the
Unlegended Shares subject to the delivery default. In the event damages are
payable pursuant to the foregoing sentence, then the Subscriber may elect to
receive liquidated damages under this Section 4.3(c) or Section 4.6 below. If
during any 360 day period, the Company fails to deliver Unlegended Shares as
required by this Section 4.3 for an aggregate of 30 days, then each Subscriber
or assignee holding Securities subject to such default may, at its option,
require the Company to redeem all or any portion of the Shares subject to such
default at a price per share equal to the greater of (i) 120% of the purchase
price of such Shares, or (ii) a fraction in which the numerator is the highest
closing price of the Common Stock during the aforedescribed 30 day period and
the denominator of which is the purchase price of the Shares, during such 30 day
period, multiplied by the purchase price of the Shares (“Unlegended Redemption
Amount”). The Company shall pay any payments incurred under this Section in
immediately available funds upon demand.

     

    (d)  In
addition to any other rights available to a Subscriber, if the Company fails to
deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement, within three business days after the Unlegended Shares Delivery Date
and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an open
market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by such Subscriber of the shares of Common Stock which
the Subscriber was entitled to receive from the Company (a "Buy-In"), then the
Company shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (B) the aggregate purchase price
of the shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares together with interest thereon at a rate of 15% per annum
accruing until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a penalty). For
example, if a Subscriber purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the
Buy-In.

     

    (e) In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 4.3 and the Company is required to deliver such Unlegended Shares
pursuant to Section 4.3, the Company may not refuse to deliver Unlegended Shares
based on any claim that such Subscriber or any one associated or affiliated with
such Subscriber has been engaged in any violation of law, or for any other
reason, unless, an injunction or temporary restraining order from a court, on
notice, restraining and or enjoining delivery of such Unlegended Shares shall
have been sought and obtained by the Company or at the Company’s request or with
the Company’s assistance, and the Company has posted a surety bond for the
benefit of such Subscriber in the amount of 120% of the amount of the aggregate
purchase price of the Shares which are subject to the injunction or temporary
restraining order, which bond shall remain in effect until the final
unappealable disposition of the litigation of the dispute and the proceeds of
which shall be payable to such Subscriber to the extent Subscriber obtains
judgment in Subscriber’s favor.

     

    
      
         

      

      
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    4.4.           In
the event commencing one hundred and eighty-one (181) days after the Closing
Date and ending five years thereafter, the Subscriber is not permitted to resell
any of the Shares without any restrictive legend or if such sales are permitted
but subject to volume limitations or further restrictions on resale as a result
of the unavailability to Subscriber of Rule 144(k) under the 1933 Act or any
successor rule (a “144 Default”), for any reason except for Subscriber’s status
as an Affiliate or “control person” of the Company, then the Company shall pay
such Subscriber as liquidated damages (“Liquidated Damages”) and not as a
penalty an amount equal to one percent (1%) for the first day of such occurrence
and one percent (1%) for each thirty (30) days (or such lesser pro-rata amount
for any period less than thirty (30) days) thereafter of the purchase price of
the Shares owned by the Subscriber during the pendency of the 144
Default.

     

    
      	
               
      

            	
              4.5.

            	
              Anti-Dilution.

            

    

     

    (a) Other
than in connection with an Excepted Issuance (as defined in Section 4.5(c)
below), if within three years after the Closing Date and to the extent that the
Notes are outstanding, the Company shall agree to or actually issue or grant the
right to receive any Common Stock or securities convertible, exercisable or
exchangeable for shares of Common Stock (or modify any of the foregoing which
may be outstanding) (“Common Stock Equivalent”) to any person or entity at a
price per share or Conversion Price which shall be less than the Conversion
Price in respect of the Shares, (“Lower Price Issuance”), without the consent of
each Subscriber, then the Conversion Price and Notes then outstanding shall
automatically and without further action be reduced to such other lower
price.

     

    (b)
Effective Price. For purposes of Section 4.5 in connection with any issuance of
any Common Stock Equivalents, (A) the maximum number of shares of Common Stock
potentially issuable at any time upon conversion, exercise or exchange of such
Common Stock Equivalents (the “Deemed Number”) shall be deemed to be outstanding
upon issuance of such Common Stock Equivalents, (B) the deemed issue price
(“Effective Price”)
applicable to such Common Stock shall equal the minimum dollar value of
consideration payable to the Company to purchase such Common Stock Equivalents
and to convert, exercise or exchange them into Common stock (net of any
discounts, fees, commissions and other expenses), divided by the Deemed number,
and (C) no further adjustment shall be made to the Conversion Price upon the
actual issuance of Common Stock upon conversion exercise or exchange of such
Common Stock Equivalents if issued at or higher than the Effective Price. If, at
any time while the Note is outstanding, the Company directly or indirectly
issues Common Stock Equivalents with an Effective Price or a number of
underlying shares that floats or resets or otherwise varies or is subject to
adjustment based (directly or indirectly) on market prices of the Common Stock
(a “Floating Price
Security”), then for purposes of Section 4.5 in connection with any
subsequent conversion, the Effective Price will be determined separately on each
Conversion Date and will be deemed to equal the lowest Effective Price at which
any holder of such Floating Price Security is entitled to acquire Common Stock
on such Conversion Date (regardless of whether any such holder actually acquires
any shares on such date). Common Stock issued or issuable by the Company for no
consideration will be deemed to have been issued or to be issuable for $0.0001
per share of Common Stock.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

       

    

     (d)
Excepted Issuances. Each Subscriber is granted the rights described in Section
4.4 hereof in relation to the additional shares of Common Stock issuable in
connection with the adjustment described in this Section 4.5. The rights of each
Subscriber set forth in this Section 4.5 are in addition to any other rights the
Subscriber has pursuant to this Agreement, the Note, and any other agreement
referred to or entered into in connection herewith or to which such Subscriber
and Company are parties. For purposes of Section 4.5, “Excepted Issuance” shall
mean (i) the Company’s issuance of Common Stock or Common Stock Equivalent
described in Reports filed not later than five business days before the Closing
Date, and (ii) as a result of the conversion of Notes which are granted or
issued pursuant to this Agreement.

     

    4.6                       Damages.
In the event the Subscriber is entitled to receive any liquidated damages
pursuant to the Transactions, the Subscriber may elect to receive the greater of
actual damages or such liquidated damages.

     

    4.7                       Existing
Notes. The Company hereby acknowledges and agrees that in accordance with
the Waiver agreements between the Company and the Subscriber and certain other
Subscribers as holders of Existing Notes and Warrants investing herein, the
Conversion Price (as such term is defined in the Existing Notes) shall be
reduced to $0.20 per share, subject to further reduction in accordance with the
Subscription Agreement, dated January 11, 2008, pursuant to which such Existing
Notes were issued without effect to any of the Warrants (or Placement Agent
Warrants).

    

    5.           Binding
Effect; Assignment.  This Agreement is
not assignable by the Company or the Subscriber without the prior written
consent of the other party.  This Agreement and the provisions hereof
shall be binding and shall inure to the benefit of the Company and its
successors and permitted assigns with respect to the obligations of the
Subscriber under this Agreement, and to the benefit of the Subscriber and its
successors and permitted assigns with respect to the obligations of the Company
under this Agreement.

     

    6.           Governing
Law; Jurisdiction.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
New York without giving effect to conflicts of law principles that would result
in the application of the substantive laws of another jurisdiction.

     

    7.           Entire
Agreement.  This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein.  This
Agreement may not be amended or any provision hereof waived in whole or in part,
except by a written amendment signed by both of the parties.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

       

    

    8.           Survival.  The
representations and warranties of the Company and the Subscriber shall survive
the Closing hereunder.

     

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
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    [Counter
Part Signature Page of China Broadband, Inc., to Note Purchase Agreement Between
Subscriber and China Broadband, Inc., Dated as of June 30, 2009]

    

    IN
WITNESS WHEREOF, this Agreement was duly executed on the date first written
above.

     

    
      
        	 	CHINA
      BROADBAND, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name:
      Marc Urbach	 
	 	 	Title:
      President	 
	 	 	 	 

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    [Counter
Part Signature Page of Subscriber, to Note Purchase Agreement Between

    Subscriber
and China Broadband, Inc., Dated as of June 30, 2009]

     

    
      	 	      
                                                                                                   .

              Print
      Name of Subscriber:

              

              __________________________________________

              (Signature)

              

              __________________________________________

              Print
      name and title, if Subscriber is an entity

              

              Investment
      Amount:
      $                                                                           

              

              Principal
      Amount of Note: $_ ___________

              

              Social
      Security
      No./EIN:                                                                           

               

               

              ADDRESS
      FOR NOTICE

              

              Street:
      _______________________________________

              City/State/Zip:
      _________________________________

               

              Attention:
      ____________________________________

               

              Tel:
      __________________________________________

              Fax:
      __________________________________________

               

               

              DELIVERY
      INSTRUCTIONS

              (if
      different from above)

              c/o:                                                                           

              

              Street:
      _______________________________________                                                                        

              

                    
                City/State/Zip:
      _________________________________

                 

                Attention:
      ____________________________________

                 

                Tel:
      __________________________________________Unassociated Document

    NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

    

    Principal Amount: $[100,000]                                                                                                                                Issue
Date: June __, 2009

    

    CONVERTIBLE PROMISSORY
NOTE

    

    FOR VALUE
RECEIVED, CHINA BROADBAND, INC., a Nevada corporation (hereinafter called “Borrower”), hereby promises to
pay
to                                    .,  (the
“Holder”) or its
registered assigns or successors in interest or order, without demand, the sum
of [ONE
HUNDRED THOUSAND DOLLARS ($100,000.00)]  (“Principal Amount”), with
interest compounded quarterly at the annual rate of five percent (5%) on May 27,
2010 (the “Maturity
Date”), if not sooner paid.

    

    This Note
has been entered into pursuant to the terms of a Note Purchase Agreement between
the Borrower, the Holder and certain other holders (the “Other Holders”) of convertible
promissory notes (the “Other
Notes”), dated of even date herewith (the “Note Purchase Agreement”), and shall be
governed by the terms of such Note Purchase Agreement.  Unless
otherwise separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Note Purchase
Agreement.  The following terms shall apply to this Note:

    

    ARTICLE
I

    

    INTEREST

    

               1.1.           Interest
Rate.   Interest on this Note shall compound quarterly and
shall accrue at the annual rate of five percent (5%).  Interest shall
accrue commencing May 27, 2009 and will be payable commencing September 30, 2009
and on the last business day of each calendar quarter thereafter and on the
Maturity Date, accelerated or otherwise, when the principal and remaining
accrued but unpaid interest shall be due and payable, or sooner as described
below.  Interest will be payable in cash, or at the election of the
Borrower, and subject to Section 2.2, with shares of Common Stock at a per share
value equal to the Conversion Price set forth in Section
2.1.  Interest may be paid at the Company’s election in cash,
registered Common Stock or Common Stock immediately to the extent resellable
pursuant to Rule 144 to the extent such share issuance is not limited by
transfer or volume restrictions, provided such payment in Common Stock would not
cause the Holder to exceed the restrictions on ownership set forth in Section
2.2.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.2.             Default Interest
Rate.  Following the occurrence and during the continuance of
an Event of Default, which, if susceptible to cure is not cured within the cure
periods (if any) set forth in Article III,
otherwise then from the first date of such occurrence until cured, the annual
interest rate on this Note shall (subject to Section 4.7) be ten percent (10%),
and be due on demand.

    

    ARTICLE
II

    

    CONVERSION
RIGHTS

    

               2.1.           Holder’s Conversion
Rights.   Subject to Section 2.2, for so long as this Note
remains outstanding and not fully paid, the Holder shall have the right, but not
the obligation, to convert all or any portion of the then aggregate outstanding
Principal Amount of this Note, together with interest, into shares of Common
Stock, subject to the terms and conditions set forth in this Article III, at the
rate of $0.20 per share of
Common Stock (“Conversion
Price”), as the same may be adjusted pursuant to this Note.  The
Holder may exercise such right by delivery to the Borrower of a written Notice
of Conversion pursuant to Section 2.3.

    

               2.2.           Conversion
Limitation.   Neither Holder nor the Borrower may convert
on any date that amount of the Note Principal or interest in connection with
that number of shares of Common Stock which would be in excess of the sum of (i)
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates on a Conversion Date, (ii) any Common Stock issuable in connection
with the unconverted portion of the Note, and (iii) the number of shares of
Common Stock issuable upon the conversion of the Note with respect to which the
determination of this provision is being made, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock of the Borrower on such Conversion Date.  For
the purposes of the provision to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder.  Subject to the foregoing, the Holder shall not be limited
to aggregate conversions of only 4.99% and aggregate conversion by the Holder
may exceed 4.99%.  The Holder shall have the authority and obligation
to determine whether the restriction contained in this Section 2.2 will limit
any conversion hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of which portion
of the Notes are convertible shall be the responsibility and obligation of the
Holder.  The Holder may waive the conversion limitation described in
this Section 2.2, in whole or in part, upon and effective after 61 days prior
written notice to the Borrower to increase such percentage to up to
9.99%.  Once a Holder has waived this limitation, the same shall be
deemed waived for all other future conversions, warrant exercises, or share
issuances by the Holder.

    

               2.3.           Mechanics of
Holder’s
Conversion.

    

                          (a)           In
the event that the Holder elects to convert any amounts outstanding under this
Note into Common Stock, the Holder shall give notice of such election by
delivering an executed and completed notice of conversion (a “Notice of Conversion”) to the
Borrower, which Notice of Conversion shall provide a breakdown in
reasonable detail of the Principal Amount, accrued interest and amounts being
converted.  The original Note is not required to be surrendered to the
Borrower until all sums due under the Note have been paid.  On each
Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records.  Each
date on which a Notice of Conversion is delivered or telecopied to the Borrower
in accordance with the provisions hereof shall be deemed a “Conversion
Date.”  A form of Notice of Conversion to be employed by the Holder is
annexed hereto as Exhibit
A.

    

                          (b)           Pursuant
to the terms of a Notice of Conversion, the Borrower will issue instructions to
the transfer agent accompanied by an opinion of counsel (if so required by the
Borrower’s transfer agent), and, except as otherwise provided below, shall cause
the transfer agent to transmit the certificates representing the Conversion
Shares to the Holder by crediting the account of the Holder’s designated broker
with the Depository Trust Corporation (“DTC”) through its Deposit
Withdrawal Agent Commission (“DWAC”) system within seven (7) business days after
receipt by the Borrower of the Notice of Conversion (the “Delivery Date”).  In
the case of the exercise of the conversion rights set forth herein, the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by the Borrower of the Notice of Conversion. The Holder
shall be treated for all purposes as the beneficial holder of such shares of
Common Stock, or, in the case that Borrower delivers physical certificates as
set forth below, the record holder of such shares of Common Stock, unless the
Holder provides the Borrower written instructions to the contrary or unless the
same is subject to a limitation as provided in Section 2.2, which has not been
waived.  Notwithstanding the foregoing to the contrary, the
Borrower or its transfer agent shall only
be obligated to issue and deliver the shares to the DTC on the
Holder’s behalf via DWAC (or certificates free of restrictive
legends) provided the Holder has complied with all applicable securities
laws in connection with the sale of the
Common Stock, including, if
applicable, prospectus delivery
requirements and has provided representations accordingly.  In the event that Conversion Shares cannot
be delivered to the Holder via DWAC, the Borrower shall deliver physical
certificates representing the Conversion
Shares by the Delivery Date to an address
designated by Holder.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

               2.4.           Adjustments to Conversion
Price.

    

                          (a)           The
number of shares of Common Stock to be issued upon each conversion of this Note
pursuant to this Article II shall be
determined by dividing that portion of the Principal Amount and interest and
fees to be converted, if any, by the then applicable Conversion
Price.

    

    (b)           The
Conversion Price and number and kind of shares or other securities to be issued
upon conversion shall be subject to adjustment from time to time as described in
the Note Purchase Agreement and upon the happening of certain events while this
conversion right remains outstanding, as follows:

    

    A.           Merger, Sale of Assets,
etc.  If (A) the Company effects any merger
or  consolidation of the Company with or into another entity, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions,  (C) any tender offer or exchange
offer (whether by the Company or another entity) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, (D) the Company consummates a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "person" or "group" (as these terms are
used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall
become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate Common Stock of the Company
(other than through open market purchases), or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a
"Fundamental  Transaction"), this Note, as to the unpaid
principal portion thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to convert into such number and kind of shares or
other securities and property as would have been issuable or distributable on
account of such Fundamental Transaction, upon or with respect to the securities
subject to the conversion right immediately prior to such Fundamental
Transaction.  The foregoing provision shall similarly apply to
successive Fundamental Transactions of a similar nature by any such successor or
purchaser.  Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such Fundamental Transaction.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    B.           Reclassification,
etc.  If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes, this Note, as to the unpaid principal
portion hereof and accrued interest hereon, shall thereafter be deemed to
evidence the right to convert into an adjusted number of such securities and
kind of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.

    

    C.           Stock Splits, Combinations
and Dividends.  If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.

    

    (c)           Whenever
the Conversion Price is adjusted pursuant to Section 2.4(b) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring such
adjustment.

    

    2.5.           Reservation.   During
the period the conversion right exists, Borrower will make best efforts, to
reserve from its authorized and unissued Common Stock not less than one hundred and ten percent (150%) of the number of shares to provide for the
issuance of Common Stock upon the full conversion of this Note.  Borrower represents that
upon issuance, such shares will be duly and validly issued, fully paid and
non-assessable. Borrower acknowledges that it may be required to amend its
Articles of Incorporation so as to increase its authorized capital from time to
time in order to satisfy this covenant, and agrees to make best efforts to make
such filings, proxy or information statement distributions, and obtain such
board, shareholder or other third party consents as are necessary from time to
time to maintain the adequate number of Common Stock reserved and available for
issuance.

    

    2.6           Issuance of Replacement
Note.  Upon any partial conversion of this Note, a replacement
Note containing the same date and provisions of this Note shall, at the written
request of the Holder, be issued by the Borrower to the Holder for the
outstanding Principal Amount of this Note and accrued interest which shall not
have been converted or paid, provided Holder has surrendered an original Note to
the Borrower.  In the event that the Holder elects not to surrender a
Note for reissuance upon partial payment or conversion, the Holder hereby
indemnifies the Borrower against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due
under the Note, and the Borrower is hereby expressly authorized to offset any
such amounts mutually agreed upon by Borrower and Holder or pursuant to a
judgment in Borrower’s favor against amounts then due under the
Note.

    

    ARTICLE
III

    

    EVENTS
OF DEFAULT

    

    The
occurrence of any of the following events of default (“Event of Default”) shall, at
the option of the Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:

    

    
      
         

      

      
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    3.1    Failure to Pay Principal or
Interest.  The Borrower fails to pay any installment of
Principal Amount, interest or other sum due under this Note when due and such
failure continues for a period of five (5) business days after the due
date.

    

    3.2    Breach of
Covenant.  The Borrower breaches any material covenant or other
term or condition of the Note Purchase Agreement in any material respect and
such breach, if subject to cure, continues for a period of ten (10) business
days after written notice to the Borrower from the
Holder.  Notwithstanding the foregoing, in the event that the
provisions of Section 2.2 wherein the Borrower does not have sufficient number
of shares available for issuance pursuant to its Articles of Incorporation, as
amended, then the default shall be deemed cured at the time of the initial
filing of a preliminary information statement or proxy statement, provided,
that the Company makes best efforts to obtain effectiveness of the same and
complete the filing of any Amendment to the Articles of Incorporation (or
amended and restated Articles of Incorporation) within 45 days
thereafter.

    

    3.3    Breach of Representations and
Warranties.  Any material representation or warranty of the
Borrower made herein or in the Note Purchase Agreement or in any agreement,
statement or certificate given in writing pursuant hereto or in connection
herewith or therewith shall be false or misleading in any material respect as of
the date made and the Closing Date.

    

    3.4    Receiver or
Trustee.  The Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for them or for a substantial part of their property or business; or
such a receiver or trustee shall otherwise be appointed.

    

    3.5    Judgments.  Any
money judgment, writ or similar final process shall be entered or filed against
Borrower or any subsidiary of Borrower in the United States or any of their
property or other assets in the United States for more than $200,000, and shall
remain unvacated, unbonded, unappealed, unsatisfied, or unstayed for a period
of forty-five (45) days.

    

    3.6    Non-Payment.   A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $200,000 for more than twenty (20) days after the
due date, unless the Borrower is contesting the validity of such obligation in
good faith and has segregated cash funds equal to not less than one-half of the
contested amount.

    

    3.7    Bankruptcy.  Bankruptcy,
insolvency, reorganization, or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or
against the Borrower or any Subsidiary of Borrower and if instituted against
them are not dismissed within forty-five (45) days of
initiation.

    

    3.8    Delisting.   Delisting
of the Common Stock from any Principal Market for a period of seven consecutive
trading days; or notification from a Principal Market that the Borrower is not
in compliance with the conditions for such continued listing on such Principal
Market.

    

    3.9    Stop Trade.  An SEC
or judicial stop trade order or Principal Market trading suspension with respect
to Borrower’s Common Stock that lasts for five or more consecutive trading
days.

    

    3.10    Failure to Deliver Common
Stock or Replacement Note.  Borrower’s failure to timely
deliver Common Stock to the Holder pursuant to and in the form required by this
Note or the Note Purchase Agreement, or if required, a replacement Note.

    

    3.11    144
Default.  The occurrence of a 144 Default as described in
Section 4.4 of the Note Purchase Agreement.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    3.12    Cross Default. A
default by the Borrower of a material term, covenant, warranty or undertaking of
any Transaction Document which is not cured after any required notice and/or
cure period.

    

    3.12    Reservation
Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note the amount of Common Stock as set forth in
this Note and the Note Purchase Agreement.

    

    3.13    Financial Statement
Restatement.   The restatement of any financial statements
filed by the Borrower for any date or period from two years prior to the Issue
Date of this Note and until this Note is no longer outstanding, if the
result of such restatement would, by comparison to the unrestated financial
statements, have constituted a Material Adverse Effect.

    

    ARTICLE
IV

     

    MISCELLANEOUS

    

    4.1    Failure or Indulgence Not
Waiver.  No failure or delay on the part of Holder hereof in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.  All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

    

    4.2    Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be: (i) if to the Borrower
to: China Broadband, Inc., 1900 Ninth Street, 3rd Floor,
Boulder, CO 80302, Attn: Marc Urbach, President, fax: (303) 449-7799, with a
copy by facsimile only to: Hodgson Russ LLP, 1540 Broadway, 24th Floor,
New York, NY 10036, Attn: Ronniel Levy, Esq., fax: (646) 943-7078, and (ii) if
to the Holder, to the name, address and facsimile number set forth on the front
page of this Note.

    

    4.3    Amendment
Provision.  The term “Note” and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.

    

    4.4    Assignees.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
assigns.

    

    4.5    Cost of
Collection.  If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys’ fees.

    

    
      
         

      

      
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    4.6    Governing
Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York, including, but not limited to, New
York statutes of limitations.  Any action brought by either
party against the other concerning the transactions contemplated by the Note
Purchase Agreement or this Note shall be brought only in the civil or state
courts of New York or in the federal courts located in the State and county of
New York.  Both parties and the individual signing this Agreement on
behalf of the Borrower agree to submit to the jurisdiction of such
courts.  The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.  In the event
that any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Note. Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal
action against the Borrower in any other jurisdiction to collect on the
Borrower's obligations to Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other decision in
favor of the Holder.  This Note shall be deemed an
unconditional obligation of Borrower for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against Borrower by
summary proceeding pursuant to New York Civil Procedure Law and Rules Section
3213 or any similar rule or statute in the jurisdiction where enforcement is
sought.  For purposes of such rule or statute, any other document or
agreement to which Holder and Borrower are parties or which Borrower delivered
to Holder, which may be convenient or necessary to determine Holder’s rights
hereunder or Borrower’s obligations to Holder are deemed a part of this Note,
whether or not such other document or agreement was delivered together herewith
or was executed apart from this Note.

    

    4.7    Maximum
Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to
the Borrower.

    

    4.8    Construction.   Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.

    

    4.9    Redemption.  This
Note may not be redeemed or called without the consent of the Holder except as
described in this Note.

    

    4.10    Shareholder
Status.  The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this
Note.  However, the Holder will have the rights of a shareholder of
the Borrower with respect to the Shares of Common Stock to be received after
delivery by the Holder of a Conversion Notice to the Borrower.

    

    4.11    Non-Business
Days.   Whenever any payment or any action to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due or action shall be required on the
next succeeding business day and, for such payment, such next succeeding day
shall be included in the calculation of the amount of accrued interest payable
on such date.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

       

    

    IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by an authorized officer as of the
____ day of June, 2009.

     

    
      	 	      
              CHINA
      BROADBAND, INC.

              

              

              

              

              By:________________________________

                         Name:
      Marc Urbach

                         Title:
      President

            

    

     

    WITNESS:

    

    

    

    ______________________________________

    [Print
Name]

    Chief
Financial Officer

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    NOTICE OF
CONVERSION

    

    (To be
executed by the Registered Holder in order to convert the Note)

    

    

    The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the 5% Convertible Note issued by China Broadband, Inc.
on June  30, 2009 into Shares of Common Stock of China Broadband,
Inc. (the “Borrower”) according to the conditions set forth in such Note,
as of the date written below.

    

    

    

    Date of
Conversion:____________________________________________________________________

    

    

    Conversion
Price:______________________________________________________________________

    

    

    Number of Shares of Common Stock Beneficially Owned on
the Conversion Date: Less than 5% of the
outstanding Common Stock of China
Broadband, Inc.

    

    

    Shares To
Be
Delivered:_________________________________________________________________

    

    

    Signature:____________________________________________________________________________

    

    

    Print
Name:___________________________________________________________________________

    

    

    Address:_____________________________________________________________________________

    

       ____________________________________________________________________________

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