Document:

SECOND
      AMENDMENT TO CONVERTIBLE PROMISSORY NOTE

    MENDOCINO
      BREWING COMPANY, INC.

     

    This
      Second Amendment to Convertible Promissory Note (this "Amendment") is effective
      as of December 31, 2006 by and between United
      Breweries of America, Inc., a
      Delaware corporation ("Holder") and Mendocino
      Brewing Company, Inc.,
      a
      California corporation (the "Company"). 

     

    RECITALS

     

    A. The
      Company issued a convertible promissory note (the "Note") to Holder in the
      principal amount of Four Hundred Thousand Dollars ($400,000) dated March 2,
      2005.

     

    B. The
      Holder and the Company entered into the First Amendment to Convertible
      Promissory Note effective August 31, 2006, which provides that the term of
      the Note made by the Company in favor of Holder shall be extended until
      December 31, 2006.

     

    C. Subject
      to the terms and conditions of this Amendment, the parties now wish to further
      extend the term of the Note.

     

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which is hereby agreed, the parties agree as follows:

     

    1. Extension
      of Term.
      The
      first sentence of Paragraph 1 of the Note is hereby amended and restated to
      read
      as follows:

     

    "Mendocino
      Brewing Company, Inc., a California corporation having its principal office
      at
      1601 Airport Road, Ukiah, California 95482 and any successor (the "Company"),
      for value received, promises to pay to United Breweries of America, Inc., a
      Delaware corporation or to its registered successors or assigns (the "Holder")
      the principal sum of Four Hundred Thousand Dollars ($400,000.00) on presentation
      and surrender of this Convertible Note ("Note") on June 30, 2007 (the
      "Maturity Date"), and to pay interest on that principal sum at a rate equal
      to
      the lesser of (i) one and one-half percent (1.5%) per annum above the prime
      rate offered from time to time by the Bank of America in San Francisco,
      California, or (ii) ten percent (10%)."

     

    2. Governing
      Law.
      This
      Amendment shall be governed by and construed in accordance with the laws of
      the
      State of California, without regard to the conflicts of laws principles of
      that
      or any other jurisdiction.

     

    3. Counterparts.
      This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original, and all taken together shall constitute one and the same
      instrument.

     

    4. Miscellaneous.
      This
      Amendment contains all of the agreements, conditions, promises and covenants
      between the parties with respect to the subject matter hereof and supersedes
      all
      prior or contemporaneous agreements, representations or understandings with
      respect to the subject matter hereof. In the event of any conflict between
      the
      terms of the Note and this Amendment, the terms of this Amendment shall govern.
      Except as set forth in this Amendment, the terms of the Note shall remain in
      full force and effect. This Amendment may not be amended, modified, altered
      or
      otherwise changed in any respect except by written agreement signed by
      authorized representatives on behalf of Borrower and Holder. If any one or
      more
      of the provisions contained in this Amendment shall be invalid, illegal or
      unenforceable in any respect, the validity, legality or enforceability of the
      remaining provisions contained herein shall not in any way be affected or
      impaired.

     

    [signature
      page to follow]

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, duly executed representatives of each of the parties hereto
      have executed and delivered this Amendment, to be effective as of the Effective
      Date first stated above.

    

      
        	
                Borrower:

                 

                MENDOCINO
                  BREWING COMPANY, INC.

                a
                  California corporation

              	
                 

              	
                 

              	
                
                  Holder:

                   

                UNITED
                  BREWERIES OF AMERICA, INC.

                a
                  Delaware corporation

                 

                 

              
	
                 By:

              	
                /s/ N.
                  Mahadevan

              	
                 

              	
                 

              	
                 By:

              	
                /s/ Anil
                  Pisharody

              
	
                 

              	
                Name: 
                  N.
                  Mahadevan 

                Title: 
                  Chief Financial Officer and Secretary

              	
                 

              	
                 

              	
                 

              	
                Name:
                  Anil Pisharody

                Title: Secretary

              
	
                 

              	 	
                 

              	
                 

              	
                 

              	
                 

              

      

    

     

    
      
         

      

      
        2THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD
      OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE
      STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT
      TO
      AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
      LAWS.

     

     CONVERTIBLE
      NOTE

     

     

    
      	October_, 2006	
              $______

            

    

     

    

    CREATIVE
      ENTERPRISES INTERNATIONAL, INC.,
      a
      Nevada corporation (the “Company” or the
      “Maker”)
      hereby
      promises to pay to ___________
      (the
      “Holder”)
      the
      sum of ____________________ Dollars ($___________) (the “Principal”)
      on the
      earlier of (i) October__ 2008 (the “Maturity
      Date”),
      and
      (ii) the date on which there is an acceleration pursuant to the terms of this
      Convertible Note (the “Note”),
      and
      to pay interest on the Principal, which shall accrue at the rate of 10% per
      annum (except as provided in Section 1.3), calculated for the actual number
      of
      days the Principal is outstanding and interest is accrued and unpaid based
      on a
      360-day year, in accordance with the terms hereof. Such payment shall be made
      in
      lawful money of the United States of America at such address as the Holder
      shall
      hereafter give to the Maker by written notice made in accordance with the
      provisions hereof.

    

    The
      Company has issued this Note pursuant to a Subscription Agreement, dated as
      of
      the date set forth above (the “Subscription
      Agreement”)
      between the Maker and the Holder and other signatories thereto, if any, all
      terms of which are incorporated herein by this reference and hereby made a
      part
      of this Note. By its acceptance of this Note, each Holder agrees to be bound
      by
      the terms of the Subscription Agreement. All capitalized terms not otherwise
      defined herein shall have the meanings ascribed to such terms in the
      Subscription Agreement. 

     

    The
      following terms apply to this Note:

    

    ARTICLE
      I

    ACCELERATION;
      INTEREST; PREPAYMENT

    

    1.1
       Acceleration
      of Maturity Date.
      Subject
      to Article III of this Note, the Principal and accrued and unpaid Interest
      shall
      become immediately due and payable upon the occurrence of an Event of Default
      (as defined herein), which event shall be deemed an Acceleration
      Date.

     

    1.2 Payment
      of Interest.
      Payment
      of accrued Interest on the Principal shall be paid in cash in full on the
      Maturity Date or such earlier date on which the Principal is paid to the Holder
      or on which the Note is converted pursuant to the terms hereof. Notwithstanding
      the foregoing, unless previously converted in full in accordance with Section
      2
      hereof, the accrued but unpaid interest on this Note may be paid, at the sole
      option of the Company, in cash or in shares (the “Interest Shares”) of Common
      Stock, par value $.001 per share, of the Company. In such event, the holder
      of
      this Note shall be entitled to receive that number of Interest Shares equal
      to
      (i) the then-accrued but unpaid interest of this Note divided by the average
      closing price for the five (5) consecutive trading days ending not more than
      three (3) days prior to the date on which the Interest payment is to be made
      by
      the Company. All payments made by the Maker on this Note shall be applied first
      to the payment of accrued and unpaid Interest on this Note and then to the
      reduction of the unpaid principal balance of this Note. Payments of Principal
      and Interest shall be deemed made on the date such payment is deposited or,
      if
      mailed, on the date deposited in the mail with proper postage and addressed
      to
      the Holder at the address shown on the records of the Company, or such other
      address as provided to the Maker in writing by the Holder. In the event that
      the
      date for the payment of any amount payable under this Note falls due on a
      Saturday, Sunday or public holiday under the laws of the State of New York,
      the
      time for payment of such amount shall be extended to the next succeeding
      business day and Interest shall continue to accrue on any principal amount
      so
      effected until the payment thereof on such extended due date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.3
       Prepayment.
      The
      principal of and accrued interest on this Note may be prepaid in full or in
      part, at any time without premium or penalty. If this Note is called for
      prepayment pursuant this Section 1.3, the Company shall give written notice
      to
      the Holder not less than ten (10) days nor more than sixty (60) days prior
      to
      the date the Company intends to effect the prepayment (the “Prepayment
      Date”),
      setting forth the prepayment price to be paid, instructions for presentation
      of
      the Notes for prepayment and the Prepayment Date. The Holder shall, upon receipt
      of notice of prepayment, cause this Note to be timely delivered to the Company
      at its principal offices. If on or before the Prepayment Date all funds
      necessary to pay for the Notes to be prepaid shall have been set aside by the
      Company for the benefit of such Holders, then, on and after such date,
      notwithstanding that any Note subject to prepayment shall not have been
      surrendered for prepayment, the obligation evidenced by all Notes not
      surrendered for prepayment shall be deemed no longer outstanding, and all rights
      with respect thereto shall forthwith cease and terminate, except only the right
      of the holder of each Note subject to prepayment to receive the prepayment
      amount to which he would be entitled upon receiving notice of prepayment.
      Holders may convert their Notes pursuant to Article II of this Note during
      the
      period from the date of notice of prepayment until 5:00 p.m. Eastern Time on
      the
      business day immediately prior to the Prepayment Date.

    

    1.4 Holder
      Deemed Owner.
      The
      registered Holder hereof may be deemed the absolute owner of this Note (whether
      or not this Note shall be overdue and notwithstanding any notice of ownership
      or
      writing hereon made by anyone other than the Maker, for the purpose of receiving
      payment hereof or thereof or on account hereof and for all other purposes)
      and
      the Maker shall not be affected by notice to the contrary.

    

    ARTICLE
      II

    CONVERSION
      RIGHTS; CONVERSION PRICE

    

    2.1. Conversion
      Rights.

     

    
      
         

      

      
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    (a) Voluntary
      Conversion.
      Commencing
      on the date hereof, the Holder shall have the right prior to the Maturity Date,
      to convert the entirety of the outstanding Principal amount of this Note, into
      shares of Common Stock of the Company, par value $.001 per share (the
“Common
      Stock”),
      at
      the Conversion Rate (as defined herein) determined as provided herein. The
      initial Conversion Rate of this Note is $0.05, subject to adjustment in
      accordance with the provisions of this Article II (the “Conversion
      Rate”).
      The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      shall be determined by dividing (i) the amount of Principal to be converted
      by
      (ii) the Conversion Rate in effect on the date the Conversion Notice is
      delivered to the Maker by the Holder. Upon
      the
      conversion of this Note,
      all
      rights of the Holder, except the right to receive certificates representing
      shares of Common Stock of the Company in accordance with this Article II and
      the
      right to receive payment of all accrued and unpaid interest in accordance with
      Section 1.3, shall cease and this Note shall no longer be deemed to be
      outstanding.
      

    

    (b) Method
      of Conversion.
      Except
      as otherwise provided in this Note or agreed to by the Holder, this Note may
      be
      converted by the Holder pursuant to its conversion rights set forth in Section
      2.1 in whole at any time or in part (provided such partial conversion is at
      least $10,000) as follows. In the event of a Holder electing to exercise its
      conversion rights, submitting to the Maker a Conversion Notice (by facsimile
      dispatched on the Conversion Date and confirmed by U.S. mail or overnight mail
      service sent within two business days thereafter) and surrendering this Note
      with the mailed confirmation of the Conversion Notice at the principal office
      of
      the Maker. Upon a partial conversion of this Note, a new Note containing the
      same date and provisions as this Note shall be issued by the Maker to the Holder
      for the balance due hereunder which shall not have been converted. The Company
      shall, as soon as practicable thereafter, issue and deliver to Holder, at the
      address set forth in this Note, a certificate or certificates representing
      the
      shares of Common Stock (bearing such legends as may be required or advisable
      in
      the opinion of counsel of the Company) determined in accordance with provisions
      of this Article II, together with a check payable to the Holder for accrued
      and
      unpaid Interest and any cash amounts payable as described in Section 2(c) below.
      

    

    (c) No
      Fractional Shares.
      No
      fractional shares shall be issued upon conversion of this Note. In lieu of
      the
      Company issuing any fractional shares to the Holder upon the conversion of
      this
      Note, the Company shall pay to the Holder an amount in cash equal to the product
      obtained by multiplying the Conversion Rate by the fraction of a share not
      issued pursuant to the previous sentence. Upon conversion of this Note in full
      and the payment of the amounts specified in this Note, the Company shall be
      released from all its obligations and liabilities under this Note.

    

    2.2 Adjustment
      to Conversion Rate.
      The
      Conversion Rate shall be subject to adjustment from time to time upon the
      happening of certain events as set forth below.

    

    (a) Subdivision.
      If the
      Company, at any time while Notes remain outstanding, shall (i) subdivide or
      forward split the Common Stock (or effect a similar transaction), the Conversion
      Rate shall be proportionately reduced or (ii) effect a reverse stock split
      or
      similar transaction, the Conversion Rate shall be proportionately increased,
      as
      the case may be, as of the effective date of such subdivision, reverse or
      forward stock split or similar transaction, or, if the Company shall take a
      record of holders of its Common Stock for the purpose of any such transaction,
      as of such record date, whichever is earlier (provided if such transaction
      does
      not actually occur, such adjustment shall not be made).

     

    
      
         

      

      
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    (b) Stock
      Dividends.
      If the
      Company at any time while any Notes are outstanding shall pay a dividend in
      shares of, or make other distribution of shares of, the Common Stock, then
      the
      Conversion Rate shall be adjusted, as of the date the Company shall take a
      record of the holders of its Common Stock for the purpose of receiving such
      dividend or other distribution (or if no such record is taken, as at the date
      of
      such payment or other distribution), to that price determined by multiplying
      the
      Conversion Rate in effect immediately prior to such payment or other
      distribution by a fraction (i) the numerator of which shall be the total number
      of shares of Common Stock outstanding immediately prior to such dividend or
      distribution, and (ii) the denominator of which shall be the total number of
      shares of Common Stock outstanding immediately after such dividend or
      distribution.

    

    2.3  Reclassification,
      Consolidation or Merger.
      At any
      time while this Note remains outstanding, in case of any reclassification or
      change of Common Stock (other than a change in par value, or from par value
      to
      no par value per share, or from no par value per share to par value or as a
      result of a subdivision or combination of Common Stock for which an adjustment
      has been made pursuant to Section 2.2), or in case of any consolidation or
      merger of the Company with or into another corporation (other than a merger
      with
      another corporation in which the Company is a continuing corporation and which
      does not result in any reclassification or change, other than a change in par
      value, or from par value to no par value per share, or from no par value per
      share to par value, or as a result of a subdivision or combination of Common
      Stock for which an adjustment has been made pursuant to Section 2.3) or in
      the
      case of any sale or transfer of the property or assets of the Company as an
      entirety or substantially as an entirety, the Company, or such successor or
      purchasing corporation, as the case may be, shall, without payment of any
      additional consideration therefor, execute new notes providing that the holders
      of the Notes shall have the right to convert such new notes (upon terms not
      less
      favorable to the holders than those then applicable to the Notes) and to receive
      upon such exercise, in lieu of each share of Common Stock theretofore issuable
      upon exercise of the Notes, the kind and amount of shares of stock, other
      securities, money or property receivable upon such reclassification, change,
      consolidation, merger, sale or transfer by the Holder as if the Notes had been
      converted immediately prior to such reclassification, change, consolidation,
      merger, sale or transfer. The provisions of this Section 2.3 shall similarly
      apply to successive reclassifications, changes, consolidations, mergers, sales
      and transfers.

    

    2.4 Restrictions
      on Shares.
      This
      Note has been issued by the Maker pursuant to an exemption from registration
      under the Securities Act of 1933 (the “Act”).
      Neither this Note nor the shares of Common Stock, as the case may be, issuable
      upon conversion of this Note may be offered, sold or otherwise transferred
      unless (i) they first shall have been registered under the Act and applicable
      state securities laws or (ii) the Maker shall have been furnished with an
      opinion of legal counsel (in form, substance and scope reasonably acceptable
      to
      Maker) to the effect that such sale or transfer is exempt from the registration
      requirements of the Act. Each certificate for shares of Common Stock issuable
      upon conversion of this Note that has not been so registered and that have
      not
      been sold pursuant to an exemption that permits removal of the applicable
      legend, shall bear a legend substantially in the following form, as
      appropriate:

     

    
      
         

      

      
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    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD
      OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE
      STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT
      TO
      AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
      LAWS.

     

    Upon
      the
      request of a holder of a certificate representing any shares of Common Stock
      issuable upon conversion of this Note, the Maker shall remove the foregoing
      legend from the certificate or issue to such Holder a new certificate therefor
      free of any transfer legend, if (i) with such request, the Maker shall have
      received an opinion of counsel, reasonably satisfactory to the Maker in form,
      substance and scope, to the effect that any such legend may be removed from
      such
      certificate or (ii) a registration statement under the Act covering such
      securities is in effect. 

    

    2.5 Reservation
      of Shares.
      The
      Company shall at all times have authorized and reserved, for the purpose of
      issuance, a sufficient number of shares of Common Stock to provide for the
      issuance of shares of Common Stock underlying the then outstanding aggregate
      Principal amount of the Notes.

    

    2.6 Limitation
      on Right to Convert.
      In no
      event shall the Holder be permitted to convert Principal of this Note if, upon
      such conversion, (x) the number of shares of Common Stock to be issued pursuant
      to such Conversion plus
      (y) the
      number of shares of Common Stock of the Company beneficially owned by the Holder
      would exceed 9.99% of the number of shares of Common Stock of the Company then
      issued and outstanding, it being the intent of the Company and the Holder that
      the Holder not be deemed at any time to have the power to vote or dispose of
      greater than 9.99% of the number of shares of Common Stock of the Company issued
      and outstanding at any time. Nothing contained herein shall be deemed to
      restrict the right of the Holder to convert such excess Principal amount at
      such
      time as such Conversion will not violate the provisions of this Section
      2.6.
      As
      used
      herein, beneficial ownership shall be determined in accordance with Section
      13(d) of the Exchange Act. To the extent that the limitation contained in this
      Section
      2.6)
      applies
      (and without limiting any rights the Company may otherwise have), the Company
      may rely on the Holder’s determination of whether this Note
      is
      convertible pursuant to the terms hereof,
      the
      Company shall have no obligation whatsoever to verify or confirm the accuracy
      of
      such determination, and the submission of a Conversion Notice by the Holder
      shall be deemed to be the Holder’s representation that this Note is
      convertible
      pursuant
      to the terms hereof.
      Notwithstanding the foregoing, however, the Holder shall have the right, upon
      sixty-one (61) days’ prior written notice to the Company, to waive the
      provisions of this Section
      2.6).
      

    

    2.7 Automatic
      Conversion.
      Notwithstanding anything herein to the contrary, at such time as the conversion
      of the Principal of this Note in its entirety would not result in Holder being
      deemed the beneficial owner of 9.99% or more of the total number of issued
      and
      outstanding shares of the Company’s Common Stock, then the Company may deliver a
      notice to the Holder (a “Forced
      Conversion Notice”
and
      the
      date such notice is received by the Holder, the “Forced
      Conversion Notice Date”)
      to
      cause the Holder to immediately convert all or part of the then outstanding
      Principal amount of this Note pursuant to Section
      2.1
      and the
      Holder shall surrender (if the entire Note is converted) this Note to the
      Company for conversion within 5 business days of the Forced Conversion Notice
      Date. The Company may only effect a Forced Conversion Notice if each of the
      following shall be true: (i) there is a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock for the issuance of
      all
      the shares of Common Stock that are issuable to the Holder upon conversion
      in
      full of the Notessubject to the Forced Conversion Notice; and (ii) no Event
      of
      Default nor any event that with the passage of time would constitute an Event
      of
      Default has occurred and is continuing.

    

    
      
         

      

      
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    ARTICLE
      III

    EVENTS
      OF DEFAULT

    

    3.1 Default.
      If one
      or more of the following events shall occur for any reason whatsoever (and
      whether such occurrence shall be voluntary or involuntary or come about or
      be
      effected by operation of law or pursuant to or in compliance with any judgment,
      decree or order of any court or any order, rule or regulation of any
      administrative or governmental body):

    

    (a) default
      in the due and punctual payment of the Principal of, or Interest on this Note
      when and as the same shall become due and payable, whether at the Maturity
      Date,
      the Acceleration Date or otherwise and continuance of such default for a period
      of 20 days;

    

    (b) The
      Company makes, or consents to, an assignment for the benefit of creditors or
      admits in writing its inability to pay its debts generally as they become due;
      

    

    (c) An
      order,
      judgment or decree is entered adjudicating the Company or any Subsidiary
      bankrupt or insolvent; 

    

    (d) The
      Company or any Subsidiary, petitions or applies to any tribunal for the
      appointment of a trustee or receiver of the Company or any Subsidiary, or of
      any
      substantial part of the assets of the Company or any Subsidiary, or commences
      any proceedings (other than proceedings for the voluntary liquidation and
      dissolution of a Subsidiary) relating to the Company or a Subsidiary under
      any
      bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
      dissolution or liquidation law of any jurisdiction whether now or hereafter
      in
      effect; 

    

    (e) Any
      such
      petition or application is filed, or any such proceedings are commenced, against
      the Company or any Subsidiary, and the Company or any Subsidiary by any act
      indicates its approval thereof, consent or acquiescence therein, or an order,
      judgment or decree is entered appointing any such trustee or receiver, or
      approving the petition in any such proceedings, and such order, judgment or
      decree remains unstayed and in effect for more than 60 days; 

    

    (f) Any
      order, judgment or decree is entered in any proceedings against the Company
      or
      any Subsidiary decreeing the dissolution of the Company and such order, judgment
      or decree remains unstayed and in effect for more than 60 days; 

    

    (g) Any
      order, judgment or decree is entered in any proceedings against the Company
      or
      any Subsidiary decreeing a split-up of the Company which requires the
      divestiture of in excess of 25% of the consolidated assets of the Company and
      its Subsidiaries, or the divestiture of the stock of a Subsidiary and such
      order, judgment or decree remains unstayed and in effect for more than 60 days;
      or

     

    
      
         

      

      
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    (h)
       The
      dissolution of Maker or any material Subsidiary of Maker or any vote in favor
      thereof by the board of directors and shareholders of Maker or any material
      Subsidiary of Maker;

    

    and
      the
      holders of the holders of not less than 50% of principal amount of the Note
      outstanding at the time (the “Majority Holders”) shall have given fifteen (15)
      days prior written notice to the Company by certified or registered mail, return
      receipt requested (or such longer period of time as may be specified for any
      particular subsection of this Section 3.1), and the Company shall not have
      cured
      the default within such applicable time period, then an event of default shall
      be deemed to have occurred (herein called, after the giving of such notice
      as is
      applicable, an “Event of Default”).

    

    3.2 Upon
      the
      occurrence of any Event of Default described in Sections 3.1, and so long as
      such Event of Default shall not have been remedied, the holder of this Note,
      by
      notice in writing to the Company, may declare the principal of this Note then
      outstanding and the interest accrued thereon if not already due and payable,
      to
      be due and payable immediately, and upon any such declaration the same shall
      become and shall be immediately due and payable, anything in this Note contained
      to the contrary notwithstanding.

    

    ARTICLE
      IV

    REGISTRATION
      RIGHTS

    

    The
      Holder shall be entitled to all of the rights and subject to all of the
      obligations regarding registration of the shares of Common Stock issuable upon
      Conversion of this Note, as described in the Subscription Agreement between
      the
      Company and the original holder hereof. 

    

    ARTICLE
      V

    MISCELLANEOUS

    

    5.1 Failure
      or Indulgency Not Waiver.
      No
      failure or delay on the part of the Holder 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.

     

    5.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the Maker;
      and the address of the Maker shall be 461 Park Avenue South, Suite 303, New
      York, New York 10016. Both the Holder and the Maker may change the address
      for
      service by delivery of written notice to the other as herein provided.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    4.3 Amendment
      Provision.
      This
      Note and any provision hereof may be amended only by an instrument in writing
      signed by the Maker and the Holder. 

    

    5.4 Assignability.
      This
      Note shall be binding upon the Maker and its successors and assigns and shall
      inure to be the benefit of the Holder and its successors and assigns;
provided,
      however,
      that
      so
      long as no Event of Default has occurred, this Note shall only be transferable
      in whole or in increments of $10,000 subject to the restrictions contained
      in
      the restrictive legend on the first page of this Note.

    

    5.5 No
      Recourse.
      Each
      Note is issued upon the express condition, to which each successive holder
      expressly assents and by receiving the same agrees, that no recourse under
      or
      upon any obligation, covenant or agreement of the Notes, or for the payment
      of
      the Principal of, or premium, if any, or the Interest on, a Note, or for any
      claim based on a Note, or otherwise in respect hereof, shall be had against
      any
      incorporator or any past, present or future stockholder, officer or director,
      as
      such, of the Company or of any successor corporation, whether by virtue of
      the
      constitution, statute or rule of law or by any assessment or penalty or
      otherwise howsoever, all such individual liability being hereby expressly waived
      and released as a condition of and as a part of the consideration for the
      execution and issue of the Notes; provided, however, that nothing herein shall
      prevent enforcement of the liability, if any, of any stockholder or subscriber
      to capital stock upon or in respect of capital stock not fully paid.

    

    5.6 Waiver
      of Demand.
      Maker
      hereby expressly waives demand and presentment for payment notice of nonpayment,
      notice of dishonor, protest, notice of protest, bringing of suit, and diligence
      in taking any legal action or remedy to collect amounts called for
      hereunder. 

    

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

    

    5.8 Governing
      Law.
      This
      Note shall be governed by the internal laws of the State of New York, without
      regard to conflicts of laws principles. The parties hereto hereby submit to
      the
      exclusive jurisdiction of the state or federal courts located in the City of
      New
      York, in the State of New York with respect to any dispute arising under this
      Note.

    

    5.9 Suits
      for Enforcement and Remedies.
      If any
      one or more Events of Default shall occur, the Holder may proceed to (i) protect
      and enforce Holder’s rights either by suit in equity or by action at law, or
      both, whether for the specific performance of any covenant, condition or
      agreement contained in this Note or in any agreement or document referred to
      herein or in aid of the exercise of any power granted in this Note or in any
      agreement or document referred to herein, (ii) enforce the payment of this
      Note,
      or (iii) enforce any other legal or equitable right of the Holder. No right
      or
      remedy herein or in any other agreement or instrument conferred upon the Holder
      of this Note is intended to be exclusive of any other right or remedy, and
      each
      and every such right or remedy shall be cumulative and shall be in addition
      to
      every right and remedy given hereunder or now or hereafter existing at law
      or in
      equity or by statute or otherwise.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    5.10 Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Maker shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations of at least $10,000 as the Holder shall
      request.

    

    5.11 Replacement
      of Note.
      Upon
      receipt of evidence reasonably satisfactory to the Maker of the loss, theft,
      destruction or mutilation of this Note and, in the case of any such loss, theft
      or destruction, upon delivery of an indemnity agreement reasonably satisfactory
      in form and amount to the Maker, or, in the case of any such mutilation, upon
      surrender and cancellation of this Note, the Maker, at its expense, will execute
      and deliver, in lieu thereof, a new Note of like tenor.

    

    5.12 Withholding
      Tax.
      The
      Holder of this Note agrees to bear the cost of any U.S. withholding tax on
      interest payable under this Note. 

    

    5.13 Investment
      Purpose.
      The
      Holder of this Note, by acceptance hereof, agrees that this Note is being
      acquired for investment and that such Holder will not offer, sell or otherwise
      dispose of this Note or the Conversion Securities issuable upon the conversion
      of this Note except under circumstances that will not result in a violation
      of
      the Act or any applicable state securities laws or similar laws relating to
      the
      sale of securities.

    

    5.14 Severability.
      In case
      any provision of this Note is held by a court of competent jurisdiction to
      be
      excessive in scope or otherwise invalid or unenforceable, such provision shall
      be adjusted rather than voided, if possible, so that it is enforceable to the
      maximum extent possible, and the validity and enforceability of the remaining
      provisions of this Note will not in any way be affected or impaired
      thereby.

    

    5.15 Interest
      Rate.
      If any
      interest rate specified herein is held to be impermissible, then the rate
      charged on the indebtedness represented hereby shall be reduced to the highest
      rate then permitted by law.

    

    5.16 Headings.
      The
      headings of the sections of this Note are inserted for convenience only and
      do
      not affect the meaning of such section.

    

    IN
      WITNESS WHEREOF, the Maker has caused this Note to be executed this __th day
      of
      October, 2006.

    

    

    
      	[SEAL]	CREATIVE ENTERPRISES INTERNATIONAL,
              INC.
	 	 
	 	 
	 	 
	 	
              By:_______________________________

                    Name:

                   
                Title:

            

    

        

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Exhibit
      1

    NOTICE
      OF CONVERSION

    OF
      CONVERTIBLE NOTE

    

    TO:
      [______________________]

    

    

    1. 
      Pursuant
      to the terms of the attached Convertible Note (the "Note"), the undersigned
      hereby elects to convert $ 
      principal amount of the Note into Conversion Securities of Creative Enterprises
      International, Inc. (the "Maker"). Capitalized terms used herein and not
      otherwise defined herein have the respective meanings provided in the
      Note.

    

    2. 
      Please
      issue a certificate or certificates for the number of Conversion Securities
      into
      which such principal amount of the Note is convertible in the name(s) specified
      immediately below or, if additional space is necessary, on an attachment
      hereto:

     

    

      
        	 	 	 
	
                Name

              	 	
                Name

              
	 	 	 
	 	 	 
	
                Address

              	 	
                Address

              
	 	 	 
	 	 	 
	
                SS
                  or Tax ID Number

              	 	
                SS
                  or Tax ID Number

              

      

    

    
 

    3. 
      In the
      event of partial exercise, please reissue an appropriate Note(s) for the balance
      that shall not have been converted.

    

    4. 
      The
      undersigned represents and warrants that (i) all of the requirements of the
      Securities Act of 1933, as amended (the "Act"),
      applicable to the undersigned have been complied with by the undersigned and
      (ii) the undersigned has not engaged in any transaction or series of
      transactions that is a part of or a plan or scheme to evade the registration
      requirements of the Act.

    

    
      	
               

               

              Date:
                _______________________

            	
               

              _________________________________

              Signature
                of Registered Holder

            
	 	
              (Must
                be signed exactly as name appears in the 

              Note.
                The signature must be notarized.)

            

    

    

     

    
      
         

      

      
        10

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